As filed with
the Securities and Exchange Commission on May 10, 2024
Registration
No. 333-278956
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No.
1 to
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
FINTECH
SCION LIMITED
(Exact
name of registrant as specified in its charter)
| Nevada |
|
6199 |
|
30-0803939 |
(State or other jurisdiction of
incorporation or organization) |
|
(Primary Standard Industrial
Classification Code Number) |
|
(I.R.S. Employer
Identification Number) |
M
Floor & 1st Floor,
No.
33, Jalan Maharajalela,
50150,
Kuala Lumpur, Malaysia
+603
9226 0908
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Lim
Chun Hoo
M
Floor & 1st Floor,
No.
33, Jalan Maharajalela,
50150,
Kuala Lumpur, Malaysia
+603
9226 0908
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Jeffery
J. Fessler, Esq.
Emily
A. Mastoloni, Esq.
Sheppard,
Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112
Telephone: (212) 653-8700
|
|
Ross
David Carmel, Esq.
Philip
Magri, Esq.
Sichenzia
Ross Ference Carmel LLP
1185
Avenue of the Americas, 31st Floor
New
York, NY 10036
Telephone:
(212) 930-9700
|
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration
statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
☐ |
|
Accelerated filer |
☐ |
| Non-accelerated filer |
☒ |
|
Smaller reporting company |
☒ |
| |
|
|
Emerging growth company |
☐ |
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 to Section 7(a)(2)(B) of the Securities Act. ☐
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may
determine.
EXPLANATORY
NOTE
This
Registration Statement contains two forms of prospectuses: one to be used in connection with the initial public offering of shares
of our common stock through the underwriters named on the cover page of this prospectus (the “IPO Prospectus”) and
one to be used in connection with the potential resale by certain selling stockholders of an aggregate amount up to 2,050,000
shares of our Common Stock, as adjusted for the 1-for-10 reverse split (the “Selling Stockholder Prospectus”). The
IPO Prospectus and the Selling Stockholder Prospectus will be identical in all respects except for the alternate pages for the
Selling Stockholder Prospectus included herein which are labeled “Alternate Pages for Selling Stockholder Prospectus.”
The
Selling Stockholder Prospectus is substantively identical to the IPO Prospectus, except for the following principal points:
| ● |
they contain different
outside and inside front covers; |
| |
|
| ● |
they contain different Offering sections in
the Prospectus Summary section; |
| |
|
| ● |
they contain different Use of Proceeds sections; |
| |
|
| ● |
the Capitalization section is deleted from the
Selling Stockholder Prospectus; |
| |
|
| ● |
the Dilution section is deleted from the Selling
Stockholder Prospectus; |
| |
|
| ● |
a Selling Stockholder section is included in
the Selling Stockholder Prospectus; |
| |
|
| ● |
the Underwriting section from the IPO Prospectus
is deleted from the Selling Stockholder Prospectus and a Plan of Distribution is inserted in its place; and |
| |
|
| ● |
the Legal Matters section in the Selling Stockholder
Prospectus deletes the reference to counsel for the underwriters. |
We
have included in this Registration Statement, after the financial statements, a set of alternate pages to reflect the foregoing
differences of the Selling Stockholder Prospectus as compared to the IPO Prospectus.
While
the selling stockholders have expressed an intent not to sell the shares of common stock registered pursuant to the Selling Stockholder
Prospectus concurrently with the initial public offering, the sales of our common stock registered in the IPO Prospectus and the
Selling Stockholder Prospectus may result in two offerings taking place concurrently, which could affect the price and liquidity
of, and demand for, our common stock. This risk and other risks are included in “Risk Factors” beginning on page [ ] of the IPO Prospectus.
The
information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until
the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
| PRELIMINARY
PROSPECTUS |
SUBJECT
TO COMPLETION |
DATED
MAY 10, 2024
|
Shares
Common
Stock
Fintech
Scion Limited
This
is a firm commitment public offering of shares of our common stock at an assumed public offering price of $_______, based
on the last sale price of our common stock as reported on the OTC Pink Market of the OTC Markets Group (the “OTC”)
on , 2024 and giving effect to a one-for-ten share reverse stock split of our common stock to be effected prior to or upon
the date of this prospectus. The assumed public offering price used throughout this prospectus has been included for illustration
purposes only. The actual offering price may differ materially from the assumed price used in the prospectus and will be determined
by negotiations between us and the underwriters and may not be indicative of prices of the actual offering price.
Our
common stock is quoted on the OTC Pink Market under the symbol “FINR.” We intend to apply to list our common stock
on The Nasdaq Capital Market under the symbol “FINR,” which listing is a condition to this offering. No assurance
can be given that our application will be approved.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page . Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| |
|
Per
Share |
|
|
Total |
|
| Public offering price |
|
$ |
|
|
|
$ |
|
|
| Underwriting discounts and commissions(1) |
|
$ |
|
|
|
$ |
|
|
| Proceeds, before expenses, to us (2) |
|
$ |
|
|
|
$ |
|
|
| (1) | Represents
underwriting discounts equal to 7% per share. |
| (2) | Does
not include a non-accountable expense allowance equal to 1% of the gross proceeds of
this offering, payable to the underwriters, or the reimbursement of certain expenses
of the underwriters. We have also agreed to issue the representative of the underwriters
a warrant to purchase a number of shares of common stock equal to 5.0% of the total number
of shares of common stock sold in this offering at an exercise price equal to 120% of
the initial public offering price of the shares of common stock sold in this offering.
For additional information regarding underwriters’ compensation, see “Underwriting”
beginning on page . |
We have granted the underwriters a 45-day option to purchase up to additional shares of our common stock at the public offering
price, less underwriting discounts and commissions.
The
underwriters expect to deliver the shares on or about , 2024.
Spartan
Capital Securities, LLC
The
date of this prospectus is , 2024
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus and any free writing prospectus that we have authorized for use
in connection with this offering. Neither we nor the underwriters have authorized anyone to provide you with information that
is different. We are offering to sell and seeking offers to buy the securities covered hereby only in jurisdictions where offers
and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or any sale of the securities covered hereby. Our business, financial condition, results
of operations, and prospects may have changed since that date. We are not, and the underwriters are not, making an offer of these
securities in any jurisdiction where the offer is not permitted. This prospectus contains summaries of certain provisions contained
in some of the documents described herein, but reference is made to the actual documents for complete information. All of the
summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been
filed or will be filed as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies
of those documents as described below under the heading “Where You Can Find Additional Information.”
For
investors outside the United States: Neither we nor any of the underwriters have taken any action that would permit this offering
or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in
the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about
and observe any restrictions relating to the offering of the securities covered hereby and the distribution of this prospectus
outside of the United States.
Unless
otherwise indicated, the information contained in this prospectus concerning our industry and the markets in which we operate,
including our general expectations and market position, market opportunity and market share, is based on information from our
own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted
by third parties. Industry publications, third-party research, surveys and studies generally indicate that their information has
been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
We believe that the data obtained from these industry publications and third-party research, surveys and studies are reliable.
Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based
on such information and knowledge, which we believe to be reasonable. Our management estimates have not been verified by any independent
source, and we have not independently verified any third-party information. In addition, assumptions and estimates of our and
our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors,
including those described in “Risk Factors.” These and other factors could cause our future performance to differ
materially from our assumptions and estimates. See “Cautionary Note Regarding Forward-Looking Statements.” We are
ultimately responsible for all disclosure included in this prospectus.
This
prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience,
trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references
are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the
rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’
trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
PRESENTATION
OF FINANCIAL INFORMATION
All
references in this prospectus to “US$,” “U.S. dollars,” and “dollars” mean U.S. dollars, and
all references to “RM” mean the Malaysian ringgit, unless otherwise noted. This report contains translations of ringgit
and pound stealing amounts into U.S. dollars solely for the convenience of the reader.. We make no representation that the ringgit,
pound stealing or U.S. dollar amounts referred to herein could have been or could be converted into U.S. dollars, pound stealing
or ringgit, as the case may be, at any particular rate or at all.
Any
discrepancies in tables included herein between the total sum of amounts listed and the totals thereof are due to rounding. Accordingly,
figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
PROSPECTUS
SUMMARY
The
following summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the
more detailed information and financial statements included elsewhere in this prospectus. It does not contain all the information
that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters
set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” and our financial statements and related notes included elsewhere in this prospectus. In this prospectus,
unless the context requires otherwise, references to “we,” “us,” “our,” “Fintech,”
or “the Company” refer to Fintech Scion Limited.
The
share and per share information in this prospectus reflects, other than in our Financial Statements and the Notes thereto, a reverse
stock split of the authorized and outstanding common stock at an anticipated ratio of one-for-ten (1:10) to occur immediately
following the effective date but prior to the closing of the offering.
Overview
We are a fintech enterprise looking to revolutionize the financial landscape through our digital Software-as-a-Service (SaaS)
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.
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, 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. Notably, we cater
to a specific subset of online businesses that grapple with establishing and maintaining physical bank accounts across multiple
territories. This subset includes but not limited to small and medium enterprises (SMEs) and online businesses.
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 integrate e-money remittance solutions within the global marketplace, spanning open banking and credit
card processing to wire transfers. Our 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
diverse merchant base ranges from small to medium-sized enterprises, or SMEs, to large enterprises. 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.
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.
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.
| 1. | Payment
Services Provider (PSP): Operating under the brand name FintechCashier, we excel
as a PSP, facilitating international payment solutions for merchants by collaborating
with card acquiring banks and alternative payment solution providers. Our expertise in
this domain empowers merchants to effortlessly navigate the complexities of cross-border
transactions. |
| 2. | Business
Accounts: Our specialized business account services extend across diverse industries
and currencies, offering tailored solutions to corporate entities. We assist our clients
in establishing and managing corporate accounts, ensuring they can seamlessly operate
on a global scale, irrespective of their sector. |
| 3. | SEPA
& SWIFT Payments: Our proficient settlement services encompass SEPA and SWIFT
payments, enabling swift and secure fund transfers for merchants and business clients
across international banks. Our streamlined process involves efficient inter-account
fund transfers, culminating in the issuance of SWIFT or SEPA payments. |
| 4. | Foreign
Exchange (FX) Conversion: Through strategic partnerships, we provide foreign exchange
payment solutions, facilitating seamless currency conversion for clients. Whether it’s
settling invoices, processing payrolls, or making payments for goods and services, our
FX conversion services ensure seamless and efficient transactions. |
| 5. | Acquirer
Services: As a global player, we specialize in offering debit and credit card acquiring
services to online merchants across the globe. |
| 6. | Whitelabelling:
Our whitelabelling service presents a fully customizable merchant back office platform,
complete with comprehensive access to an array of banking payment methods. This tailored
solution empowers merchants to seamlessly integrate their operations within a unified
framework. |
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 use of an Electronic Money Directive (EMD) agency service to instead implement an individual and case by case approach to ensure
our operations comply with the varying regulatory requirements throughout multiple jurisdictions. Our management team remains committed
to collaborating with various firms across these 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.
Market
Opportunity
By
targeting three different layers within the payment space, FintechCashier expands its reach across
multiple layers in the payment space, unlocking substantial potential instead of confining itself to a single market. This approach
minimizes the necessity to compete for a dominant market share within any specific layer, opting instead to pursue smaller market
shares across multiple layers, thereby fostering opportunities for growth.
The
global digital payment market is estimated to reach $361.30 billion by 2030 with a CAGR of 20.5% according
to a September 2022 report published by Grand View Research, Inc.
The
global cashless transactions are likely to foresee significant growth amid the usage and preference for cashless transactions
and by 2025, a growth of 1.9 trillion transactions is estimated.
Accenture
conducted a research study that shows transactions worth US$7 trillion is expected to shift from cash to card and other
digital payments by 2023 and grow to US$48 trillion by 2030.
The
COVID-19 pandemic brought a positive impact to the digital payment market with an increase in online shopping and the fear of
virus transmission through physical monetary transactions.
The
key market trends include:
| a) | The
increasing preference for online shopping is a driving factor for the market. It offers
the users a number of benefits such as fast checkout options, customized customer experience,
and multiple payment options. In addition, companies are also designing enhanced
smartwatches that are capable of making contactless payments, similar to the process
used in smartphones. For instance, Xiaomi launched the brand new Mi Smart Band 6
in collaboration with Master Card in December 2021, which is capable of conducting
contactless payments at Master Card terminals. |
| b) | Smart
city initiative is a significant component in the digital payment market growth, as digital
payments are used throughout the various departments to cover multiple Citizen-to-Government
(C2G), and Government-to-Citizen (G2C) payments. |
| c) | Introduction
of digital wallets, and the decreasing number of worldwide unbanked population, seem
favorable for the digital payment vendors to expand their customer base. Overall, the
digital payment market is expected to witness a much higher rate of growth, owing to
the driving factors like the promotion of digital payments, rise in internet penetration,
high proliferation of smartphones that enables m-commerce growth, and a hike in e-commerce
sales. |
| d) | Constant
acceleration of e-commerce supports the use of ePayments and brings about significant
benefits. ePayments help overcome the complicated and costly process of physically collecting
cash for a product purchased or sold online. Furthermore, innovations in ePayments can
ease the process of carrying out payments and other financial services, which can boost
additional e-commerce opportunities. Thus, rising e-commerce sales are expected to positively
impact the growth of the payment processing solutions market. |
| e) | Internet
access has reached all corners of the world, and this has led to a boost in the online
shopping industry. Smartphones have also become an essential part of several people in
the 21st century. The growth of e-commerce is driven by the rapid technology adoption,
which is led by the rising use of devices, such as smartphones and tablets, and access
to the internet through 4G, 5G, and so on. |
To
take advantage of this trend, merchants worldwide are actively pursuing international expansion, thereby increasing their demand
for seamless payment processing across diverse methods and channels within intricate and fragmented payment ecosystems.
| ● | Contactless
Payment Market - The global contactless payment market size is expected to reach
USD 6.25 trillion by 2028, according to a new report by Grand View Research, Inc. In
a survey conducted by Thales Group in November 2022, it stated it is anticipated to register
a CAGR of 20.3% from 2021 to 2028. Various benefits, such as improved service delivery
and reduction in transaction time offered by contactless payments, are expected to propel
the market growth over the forecast period. |
| ● | Mobile
Payment Market - The global mobile payment market size is expected to reach USD 587.52
billion by 2030, expanding at a CAGR of 35.3% from 2022 to 2030, according to a new report
by Grand View Research, Inc. The market growth can be attributed to the increasing shift
toward contactless payment amid the COVID-19 pandemic. Moreover, the increasing popularity
of the e-commerce industry across the globe is expected to accelerate the adoption of
mobile payment over the forecast period. |
| ● | Payment
As A Service Market - The global payment as a service market size is expected to
reach USD 25.7 billion by 2027, expanding at a CAGR of 16.9%, according to a new report
by Grand View Research, Inc. Digital disruption in the money transfer ecosystem, combined
with the rise in need for quick money transfer methods, has transformed the payment gateway
model. As a result of digital money transfer methods, consumers now demand secure digital
transaction processing systems to transfer money to their merchants and individuals. |
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
| Layer |
Market
Sector |
Competitors |
| Technical |
Payment
Gateway Market |
Crassula,
Contis, Mambu, SBlock |
| Payments |
Payment
Processing Market |
Nuvei,
Worldpay, Checkout, Ayden |
| Banking |
Digital
Payment Market |
Solaris
Bank, Tide Mollie, Revolut, |
| Issuing |
Issuing
Layer |
Marqueta |
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, Revolut, a competitor on our banking
layer, cites a $33 billion market cap, while Marqueta, our competitor in the issuing layer 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.
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.
Recent
Developments
On
December 27, 2023, our Board of Directors appointed Lim Chun Hoo as Chief Executive Officer of the Company concurrently with its
acceptance of the resignation of Shalom Dodun as the Company’s CEO and as a member of the Company’s Board of Directors.
Mr. Lim previously served as Chief Financial Officer of the Company since November 2022 and is a member of the Board. Mr. Dodoun’s
resignation was not the result of any disagreement with the Company relating to its operations, policies or practices. In connection
with Mr. Dodoun’s resignation from the Board, the Board approved a reduction in the size of the Board to three directors.
On December 27, 2023, the Board appointed Colin Ellis as Chief Financial Officer of the Company. Mr. Ellis had served as a non-executive
director of the Company since February 2023 and transitioned to an executive director upon his appointment as Chief Financial
Officer of the Company.
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. 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 newly issued shares of the Company’s common stock. 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 10,000,000 restricted shares
of common stock of the Company, par value $0.01 per share, as adjusted for the 1-for-10 reverse split (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 current corporate structure:
Risk
Factor Summary
Our
business is subject to a number of risks of which you should be aware before making an investment decision. You should carefully
consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth
under “Risk Factors” in deciding whether to invest in our securities. Among these important risks are the following:
Risks
Related to Our Business and Industry
| ● | We
have a limited operating history with financial results that may not be indicative of future performance, and our revenue growth
rate is likely to slow down as our business matures. |
| ● | Impairment
of goodwill may adversely impact future results of operations. |
| ● | 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. |
| ● | 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. |
| ● | Cybersecurity
risks, including cyber-attacks, data breaches, and system vulnerabilities could adversely affect our business and disrupt our
operations. |
| ● | Our
reliance on the platform and internal systems from third parties may adversely affect our business operations and financial results. |
| ● | If
we cannot retain our key personnel, our business, financial condition and results of operations may be adversely affected. |
| ● | 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. |
| ● | If
we fail to raise additional capital, our ability to implement our business model and strategy could be compromised. |
| ● | The
financial technology industry in which we operate is characterized by rapid technological changes, new product introductions,
evolving industry standards and changing customer needs. |
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. |
| ● | Claims
by others that we have infringed their proprietary technology or other intellectual property rights could harm our business. |
| ● | 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. |
| ● | Third
parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated
trade secrets. |
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. |
| ● | 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 subject to costs and risks associated with new or changing laws and regulations and governmental action affecting our business. |
| ● | Changes
in tax law, changes in our effective tax rate or exposure to additional tax liabilities could affect our profitability and financial
condition. |
| ● | Transfer
pricing rules may result in increased tax costs. |
| ● | 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
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. |
| ● | 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. |
| ● | We
are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations. |
| ● | We
may be subject to further queries or requests regarding the SEC Subpoena. |
Risks
Related to Our Common Stock and This Offering
| ● | If
you purchase our common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares. |
| ● | We
presently do not intend to pay cash dividends on our common stock. |
| ● | If
we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet
our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory
scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on
the market price for shares of our common stock. |
| ● | The
price of our stock may be volatile, and you could lose all or part of your investment. |
| ● | Even
if our common stock is listed on Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards
of Nasdaq, a failure of which could result in a delisting of our common stock. |
| ● | Certain
shareholders may exercise significant control over our business policies. |
| ● | The
requirements of being a public company are expensive and administratively burdensome. |
| ● | Anti-takeover
provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay or prevent a change in control of
our company and may affect the trading price of our common stock. |
| ● | Our
Articles of Incorporation allow for our board of directors to create new series of preferred stock without further approval by
our shareholders which could adversely affect the rights of the holders of our common stock. |
| ● | If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our
stock price and any trading volume could decline. |
| ● | Future
sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plan or
otherwise, could result in dilution of the percentage ownership of our shareholders and could cause our stock price to fall. |
| ● | Our
common stock may be subject to the “penny stock” rules of the SEC, which may make it more difficult for shareholders
to sell our common stock. |
| ● | We
have never paid cash dividends on our capital stock and do not anticipate paying dividends in the foreseeable future. |
Proposed
Changes to Our Capital Structure
We
plan to effect a 1-for-10 reverse split of our outstanding shares of common stock prior to the date of this prospectus. No fractional
shares will be issued in connection with the reverse stock split and all such fractional interests will be rounded up to the nearest
whole number of shares of common stock. The conversion and/or exercise prices of our issued and outstanding convertible securities,
including shares issuable upon exercise of outstanding stock options and warrants, and conversion of our outstanding convertible
notes will be adjusted accordingly. All information presented in this prospectus assumes the 1-for-10 reverse split of our outstanding
shares of common stock, and unless otherwise indicated, all such amounts and corresponding conversion price and/or exercise price
data set forth in this prospectus have been adjusted to give effect to the assumed reverse stock split.
Implications
of Being a Smaller Reporting Company
We
are a “smaller reporting company” as defined in the Securities Exchange Act of 1934 as amended (the “Exchange
Act”). We may continue to be a smaller reporting company so long as either (i) the market value of our common stock held
by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual
revenue was less than $100 million during the most recently completed fiscal year and the market value of our common stock held
by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. Specifically, as a
smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our
Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging
growth companies, if we are a smaller reporting company under the requirements of (ii) above, we would not be required to obtain
an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
Corporate
Information
Our
principal executive office is located at M Floor & 1st 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 prospectus and is not incorporated herein by reference.
THE
OFFERING
| Common stock offered by us: |
|
___
shares of common stock |
| |
|
|
| Common stock outstanding prior to this Offering: |
|
___ shares
of common stock |
| |
|
|
| Common
stock to be outstanding immediately after this Offering: |
|
___
shares (__ shares if the underwriters exercise their option to cover over-allotments, if any) |
| |
|
|
| Over-allotment Option: |
|
We have granted
the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to an additional __ shares
of common stock, representing 15% of the shares of common stock sold in the offering at a purchase price per additional share
of common stock equal to the public offering price per share of common stock, less the underwriting discount. |
| |
|
|
| Representative’s Warrant: |
|
We have agreed to
issue Spartan Capital Securities, LLC, the representative of the underwriters in this offering, a warrant to issue the number
of shares of common stock equal to 5.0% of the shares of common stock being offered in this offering (the “Representative’s
Warrant”). The Representative’s Warrant will be exercisable at any time, and from time to time, in whole or in
part, commencing on a date that is 180 days after the commencement of sales of the share of common stock in this offering
and expiring four and a half years from the date of the commencement of sales at an exercise price of $[●] (120% of
the offering price per share). See “Underwriting.” |
| |
|
|
| Lock-up Agreements: |
|
We have agreed with
the underwriters not to sell additional equity securities for a period of 180 days after the effective date of this Offering.
Our directors and officers have agreed with the underwriters not to offer for sale, sell, contract to sell, pledge or otherwise
dispose of any of their shares of our common stock or securities convertible into our common stock, subject to certain exceptions,
for a period of 180 days after the date of this prospectus, which restriction may be waived in the discretion of the Representative. |
| |
|
|
| Use of Proceeds: |
|
We
estimate that the net proceeds from this offering will be approximately $ million,
assuming a public offering price of $_______, based on the last sale price of our common stock as reported on the OTC
Pink Market of the OTC Markets Group (the “OTC”) on , 2024 or approximately $
million if the underwriters exercise their over-allotment option in full, after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us.
We
intend to use the net proceeds of this offering for continuing operating expenses and working capital. See “Use of Proceeds.” |
| |
|
|
| Risk Factors: |
|
Investing in our
securities involves a high degree of risk. See “Risk Factors” starting on page ______ of this prospectus
for a discussion of factors you should carefully consider before investing in our securities. |
| |
|
|
| Trading Symbol/Nasdaq Listing Application: |
|
Our
common stock is currently quoted on the OTC Pink Market under the trading symbol “FINR.”
We
intend to apply to list our common stock on The Nasdaq Capital Market under the symbol “FINR.” However, no assurance
can be given that our listing application will be approved. If Nasdaq does not approve our listing application, we will not consummate
this offering. |
Except
as otherwise indicated herein, all information in this prospectus reflects or assumes:
| ● | a
one-for-ten share reverse stock split of our common stock to be effected on ________, 2024; |
| ● | no
exercise of the underwriters’ option to purchase up to an additional [ ] shares of our common stock to cover over-allotments,
if any; and |
| ● | the
cancellation, on January 30, 2024, of the 10,000,000 shares that were issued to CICO for the acquisition of assets. |
SUMMARY
HISTORICAL CONSOLIDATED FINANCIAL DATA
The
following tables summarize consolidated financial data for the periods indicated. We have derived the consolidated statement of
operations data for the years ended December 31, 2023, and 2022. Our historical results are not necessarily indicative of the
results that may be expected in the future. The following summary of financial data should be read with “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and
related notes and other information included elsewhere in this prospectus.
Consolidated
Statement of Operations Data:
| | |
| | |
| |
| | |
For the Years Ended
December, 31 | |
| | |
2023 | | |
2022 | |
| REVENUE | |
$ | 2,420,184 | | |
$ | 3,084,279 | |
| | |
| | | |
| | |
| COST OF REVENUE | |
| (688,630 | ) | |
| (430,281 | ) |
| | |
| | | |
| | |
| GROSS PROFIT | |
| 1,731,554 | | |
| 2,653,998 | |
| | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | |
| Selling expense | |
| — | | |
| (9,790 | ) |
| General and administrative expenses | |
| (3,415,786 | ) | |
| (1,863,982 | ) |
| Impairment of goodwill | |
| (39,136,871 | ) | |
| — | |
| Total Operating Expenses | |
| (42,552,657 | ) | |
| (1,873,772 | ) |
| | |
| | | |
| | |
| PROFIT/(LOSS) FROM OPERATIONS | |
| (40,821,103 | ) | |
| 780,226 | |
| | |
| | | |
| | |
| OTHER INCOME / (EXPENSE), NET | |
| | | |
| | |
| Other income | |
| 397,532 | | |
| 5,531,606 | |
| Other expense | |
| (73,660 | ) | |
| (387,805 | ) |
| Total other income / (expense), net | |
| 323,872 | | |
| 5,143,801 | |
| NET INCOME / (LOSS) BEFORE TAX | |
| (40,497,231 | ) | |
| 5,924,027 | |
| | |
| | | |
| | |
| Income tax | |
| (165,485 | ) | |
| (5,057 | ) |
| NET INCOME / (LOSS) | |
$ | (40,662,716 | ) | |
$ | 5,918,970 | |
| | |
| | | |
| | |
| Loss attributable to non-controlling interest | |
| 913 | | |
| — | |
| NET INCOME / (LOSS) FOR THE PERIOD | |
| (40,661,803 | ) | |
| 5,918,970 | |
| | |
| | | |
| | |
| OTHER COMPREHENSIVE INCOME / (LOSS) | |
| | | |
| | |
| Foreign currency translation adjustment | |
| 3,404 | | |
| 308,288 | |
| | |
| | | |
| | |
| TOTAL COMPREHENSIVE INCOME / (LOSS) | |
$ | (40,658,399 | ) | |
$ | 6,227,258 | |
| | |
| | | |
| | |
| Weighted average number of common shares outstanding - basic and diluted | |
| 298,742,643 | | |
| 198,742,643 | |
| | |
| | | |
| | |
| Net
income / (loss) per share - basic and diluted | |
$ | (0.14 | ) | |
$ | 0.03 | |
Consolidated
Balance Sheet Data:
| | |
December 31, 2023 | |
| | |
| | |
| |
| | |
Actual | | |
As Adjusted (1) | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 3,765,959 | | |
| | |
| Working capital | |
$ | 1,591,522 | | |
| | |
| Total assets | |
$ | 21,078,344 | | |
| | |
| Total stockholders’ equity | |
$ | 18,322,482 | | |
| | |
(1)
On an as adjusted basis giving effect to the sale by us of ________ shares of common stock at an assumed public offering price
of $_____ per share in this offering (based on the last reported sale price of $____ per share of our common stock as reported
on the OTC Pink Market on ___, 2024) after deducting the estimated underwriting discounts and commissions and estimated offering
expenses payable by us in connection with this offering.
RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should carefully consider the risks and information below and elsewhere
in this prospectus, including our consolidated financial statements and the related notes thereto, before making an investment
decision. We describe risks below that we currently believe are the material risks of our business, our industry and our securities.
These are not the only risks we face. We are subject to risks that are currently unknown to us, or that we may currently believe
are remote or immaterial. If any of these risks or events occurs, our business, financial condition and operating results could
be harmed. In that case, the trading price of our securities could decline, and you might lose all or part of your investment
in our securities.
Risks
Related to Our Business and Industry
We
have a limited operating history with financial results that may not be indicative of future performance, and our revenue growth
rate is likely to slow down as our business matures.
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.
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 prospectus, our auditors expressed any further goodwill impairment will cause a significant
adverse financial impact on the Company. Furthermore, the Company generate losses for the year 2023 and the Company cannot guarantee
that it will generate profits in the future. The impact of the goodwill impairment and the losses generated by the Company could
raise substantial doubt about the Company’s ability to continue as a going concern and this may significantly affect the
stock price of the Company
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.
Cybersecurity
risks, including cyber-attacks, data breaches, and system vulnerabilities could adversely affect our business and disrupt our
operations.
We
rely heavily on our platform and internal systems rely on software developed by us or third parties for the effective operation
of our business. We routinely collect, receive, process, and store personal information and sensitive data via our information
technology systems, including intellectual property and other proprietary information about our business and that of our customers,
employees, suppliers, business partners, and others. These information technology systems are subject to damage or interruption
from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, malware,
bugs, viruses, system vulnerabilities, power failures, phishing attacks, denial-of-service attacks, cyber-attacks, internal
negligence, malfeasance, or other events.
Cyber-attacks
are increasing in number and sophistication, are well-financed, in some cases supported by state actors, and are designed to not
only attack, but also to evade detection. Since the techniques used to obtain unauthorized access to systems and data, or to otherwise
sabotage them, change frequently and are often not recognized until launched against a target, we may be unable to anticipate
these techniques or to implement adequate preventative measures. Accidental or willful security breaches or other unauthorized
access to our information technology systems or the systems of our third-party service providers, or the existence of computer
viruses, malware (such as ransomware), or vulnerabilities in our or their data or software could expose us to a risk of information
loss, business disruption, or misappropriation of proprietary and confidential information, including information relating to
our products or customers or the personal information of our employees or third parties. Despite our internal controls and investment
in security measures, we have in the past, and may again in the future, be subject to cyber-attacks or unauthorized network intrusions.
These events, should they occur, could disrupt our business and result in, among other things, unfavorable publicity, damage to
our reputation, loss of our trade secrets and other competitive information, litigation by affected parties and possible financial
obligations for liabilities and damages related to the theft or misuse of such information, significant remediation costs, disruption
of key business operations, and significant diversion of our resources, as well as fines and other sanctions resulting from any
related breaches of data privacy laws and regulations, any of which could have a material adverse effect on our business, profitability,
and financial condition.
In
addition, despite our internal controls and processes, malicious code, and cybersecurity vulnerabilities in our products and services
may expose our customers to cyberattacks and other security risks, which may result in claims, regulatory action, or reputational
damage. While we may be entitled to damages if an adverse event arises from our third-party service providers’ failure to
perform under their agreements with us, any award may be insufficient to cover the actual costs incurred by us and, as a result
of a service provider’s failure to perform, we may be unable to collect any damages. Although to date no such cyber security
incidents have had a material adverse impact on our business, we cannot guarantee that future incidents or breaches will not have
a materially adverse impact on our business.
We
may in the future incur significant costs in order to implement, maintain, and/or update security systems that are designed to
protect our information technology systems and the design of our products and services, and we may miscalculate the level of investment
necessary to protect our systems adequately. Since the techniques used to obtain unauthorized access or to sabotage systems change
frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to
implement adequate preventive measures.
To
the extent that any system failure, known or unknown vulnerability, incident or security breach results in material disruptions
or interruptions to our operations or the theft, loss, unauthorized access or disclosure of, or damage to our data (including
personal information) or confidential information, including our intellectual property, or exposes our customers to cybersecurity
threats and attacks, our reputation, business, results of operations, and/or financial condition could be materially adversely
affected.
Our
reliance on the platform and internal systems from third parties may adversely affect our business operations and financial results.
The
use of the third-party software and reliance on third-party platform services may adversely affect our business operations and
financial results. For example, we are dependent on our relationship with a third-party platform provider to provide us with a
platform that facilitates transactions across various payment options, acquiring processors, and jurisdictions, and also facilitates
user management services from onboarding to monitoring transactions and customer data. If the platform is unavailable or our users
are unable to proceed with transactions through the platform within a reasonable amount of time or at all, our business could
be harmed.
If
we experience an interruption in platform for any reason, our services would similarly be interrupted. An interruption in our
services to our customers could cause our customers unable to process the payment, which could have a material adverse effect
on our business, operations, financial results, customer relationships, and reputation.
If
we cannot retain our 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 make any assurances 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 both in the United States and abroad, including conditions resulting from changes
in gross domestic product growth, financial and credit market fluctuations, inflation and efforts to control further inflation,
including rising interest rates, bank failures, international trade relations, political turmoil, including the conflict in Israel
and the surrounding area and the ongoing conflict between Russia and Ukraine, potential U.S. federal government shutdowns, natural
catastrophes, warfare, and terrorist attacks 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. 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.
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:
| ● | failure
to implement our business plan for the combined business; |
| ● | unanticipated
issues in integrating logistics, information, communications, and other systems; |
| ● | unanticipated
changes in applicable laws and regulations; |
| ● | negative
impacts on our internal control over financial reporting accounting; and |
| ● | other
unanticipated issues, expenses, or liabilities that could impact, among other things,
our ability to realize any expected synergies on a timely basis, or at all. |
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:
| ● | greater
name recognition, longer operating histories, larger customer bases, and larger market
shares; |
| ● | larger
sales and marketing budgets and organizations; |
| ● | more
established marketing, banking, and compliance relationships; |
| ● | greater
resources to make acquisitions; |
| ● | lower
labor, compliance, risk mitigation, and research and development costs; |
| ● | larger
and more mature intellectual property portfolios; |
| ● | substantially
greater financial, technical, and other resources; and |
| ● | operations
in certain jurisdictions with lower compliance costs and greater flexibility to explore
new product offerings. |
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.
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
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.
We
may be subject to further queries or requests regarding the SEC Subpoena.
We
received a subpoena from the SEC on November 29, 2017. The subpoena was related to an investigation on certain parties, which
we believe, after consulting with our legal counsel, that are not related to us. On December 18, 2017, our legal counsel replied
to the SEC regarding the subpoena, including all documents required by the SEC. There has been no further response from the SEC
(that we know of) since December 18, 2017. However, since we have not received further response from the SEC nor there is any
clearance letter from the SEC, we are unable to confirm if the case has been resolved. The SEC may have further queries or request
further documents from us and we may or may not be a party to the investigation until the SEC provides us the clearance letter.
Furthermore, if any further subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we
do not prevail in any possible civil or criminal proceeding, our business, financial condition, and results of operations could
be harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s
attention and resources and significant defense costs and other professional fees.
Risks
Related to Our Common Stock and This Offering
If
you purchase our common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares.
The
public offering price of the common stock sold in this offering will be substantially higher than the as adjusted net tangible
book value per share of our common stock after this offering. Investors purchasing common stock in this offering will pay a price
per share that substantially exceeds the as adjusted net tangible book value per share after this offering. As a result, investors
purchasing common stock in this offering will incur immediate dilution of $ per share, at an assumed public offering price
of $ per share, based on the last sale price of our common stock on , 2024, as reported on the OTC Pink Market, representing
the difference between our as adjusted net tangible book value per share after giving effect to this offering and the assumed
public offering price.
This
dilution is due to our investors who purchased shares prior to this offering having paid substantially less when they purchased
their shares than the price offered to the public in this offering. To the extent outstanding options are exercised, there will
be further dilution to new investors. As a result of the dilution to investors purchasing shares in this offering, investors may
receive significantly less than the purchase price paid in this offering, if anything, in the event of our liquidation. For a
further description of the dilution that you will experience immediately after this offering, see the section entitled “Dilution”.
We
presently do not intend to pay cash dividends on our common stock.
We
expect that no cash dividends will be paid on the common stock in the foreseeable future. While our dividend policy will be based
on the operating results and capital needs of the business, it is anticipated that all earnings, if any, will be retained to finance
the future expansion of our business.
If
we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet
our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory
scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on
the market price for shares of our common stock.
Effective
internal controls are necessary for us to provide reliable financial reports and to prevent fraud effectively. We maintain a system
of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal
executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles.
As
a public company, we have significant requirements for enhanced financial reporting and internal controls. We are required to
document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.
The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and
react to changes in our business and economic and regulatory environments, and to expend significant resources to maintain a system
of internal controls that is adequate to satisfy our reporting obligations as a public company.
We
cannot assure you that we will, in the future, identify areas requiring improvement in our internal control over financial reporting.
We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we
will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth.
If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet
our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory
scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on
the market price for shares of our common stock.
Our
disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our
disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports
we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or
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 acts of some persons, 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, misstatements or insufficient disclosures due to error or fraud may
occur and not be detected.
The
price of our stock may be volatile, and you could lose all or part of your investment.
The
trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations
in response to various factors, some of which are beyond our control, including limited trading volume. In addition to the factors
discussed in this “Risk Factors” section and elsewhere in this prospectus, these factors include:
| ● | our
failure to commercialize our product candidates, if approved; |
| ● | additions
or departures of key scientific or management personnel; |
| ● | unanticipated
serious safety concerns related to the use of our product candidates; |
| ● | introduction
of new products offered by us or our competitors; |
| ● | announcements
of significant acquisitions, strategic partnerships, joint ventures or capital commitments
by us or our competitors; |
| ● | our
ability to effectively manage our growth; |
| ● | actual
or anticipated variations in quarterly operating results; |
| ● | our
failure to meet the estimates and projections of the investment community or that we
may otherwise provide to the public; |
| ● | publication
of research reports about us or our industry, or product candidates in particular, or
positive or negative recommendations or withdrawal of research coverage by securities
analysts; |
| ● | changes
in the market valuations of similar companies; |
| ● | changes
in the structure of the healthcare payment systems; |
| ● | overall
performance of the equity markets; |
| ● | sales
of our common stock by us or our stockholders in the future; |
| ● | trading
volume of our common stock; |
| ● | changes
in accounting practices; |
| ● | ineffectiveness
of our internal controls; |
| ● | disputes
or other developments relating to proprietary rights, including patents, litigation matters
and our ability to obtain patent protection for our technologies; |
| ● | significant
lawsuits, including patent or stockholder litigation; |
| ● | general
political and economic conditions; and |
| ● | other
events or factors, many of which are beyond our control. |
In
addition, the stock market in general, and the market for diagnostic companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies, including
as a result of the COVID-19 pandemic. Broad market and industry factors may negatively affect the market price of our common stock,
regardless of our actual operating performance. If the market price of our common stock after this offering does not exceed the
public offering price, you may not realize any return on your investment in us and may lose some or all of your investment. In
the past, securities class action litigation has often been instituted against companies following periods of volatility in the
market price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a
diversion of management’s attention and resources.
We
could be subject to securities class action litigation.
In
the past, securities class action litigation has often been brought against a company following a decline in the market price
of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant stock
price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s
attention and resources, which could harm our business.
There
is no guarantee that our common stock will be listed on Nasdaq.
We
intend to apply to have our shares of common stock listed on The Nasdaq Capital Market. Upon completion of this offering, we believe
that we will satisfy the listing requirements and expect that our common stock will be listed on The Nasdaq Capital Market. Such
listing, however, is not guaranteed. If the application is not approved for listing on The Nasdaq Capital Market, we will not
proceed with this offering. Even if such listing is approved, there can be no assurance any broker will be interested in trading
our common stock. Therefore, it may be difficult to sell any shares you purchase in this offering if you desire or need to sell
them. Our lead underwriter, Spartan Capital Securities is not obligated to make a market in our common stock, and even after making
a market, can discontinue market making at any time without notice. Neither we nor the underwriters can provide any assurance
that an active and liquid trading market in our common stock will develop or, if developed, that the market will continue.
Even
if our common stock is listed on Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards
of Nasdaq, a failure of which could result in a delisting of our common stock.
To
maintain a listing on Nasdaq, we must satisfy minimum financial and other continued listing standards, including those regarding
minimum stockholders’ equity, minimum publicly available shares, director independence and independent committee requirements
and other corporate governance requirements. We do not currently satisfy the director independence requirements and independent
committee requirements and will need to satisfy both requirements prior to consummation of this offering. If we are unable to
satisfy these standards, we could be subject to delisting, which would have a negative effect on the price of our common stock,
impair your ability to sell or purchase our common stock or warrants when you wish to do so, and potentially cause you to lose
the value of your investment in us. In the event of a delisting, we would expect to take actions to restore our compliance with
the listing standards, but we can provide no assurance that any action we take to restore our compliance would allow our common
stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock
from dropping below the minimum bid price requirement, or prevent future noncompliance with the listing requirements.
If
the Company is delisted from Nasdaq, its common stock may be eligible for trading on an over-the-counter market. If the Company
is not able to obtain a listing on another stock exchange or quotation service for its common stock, it may be extremely difficult
or impossible for stockholders to sell their shares of common stock. Moreover, if the Company is delisted from Nasdaq, but obtains
a substitute listing for its common stock, it will likely be on a market with less liquidity, and therefore experience potentially
more price volatility than experienced on Nasdaq. Stockholders may not be able to sell their shares of common stock on any such
substitute market in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading
market. As a result of these factors, if the Company’s common stock is delisted from Nasdaq, the value and liquidity of
the Company’s common stock would likely be significantly adversely affected. A delisting of the Company’s common stock
from Nasdaq could also adversely affect the Company’s ability to obtain financing for its operations and/or result in a
loss of confidence by investors, employees and/or business partners.
Our
management will have broad discretion in how we use the net proceeds of this offering and might not use them effectively.
Our
management will have considerable discretion over the use of proceeds from this offering. You will not have the opportunity, as
part of your investment decision, to assess whether the proceeds are being used in a manner which you may consider most appropriate.
Our management might spend a portion or all of the net proceeds from this offering in ways that our stockholders do not desire
or that might not yield a favorable return. The failure by our management to apply these funds effectively could harm our business.
Furthermore, you will have no direct say on how our management allocates the net proceeds of this offering. Until the net proceeds
are used, they may be placed in investments that do not produce significant income or that may lose value.
The
market price of our common stock will likely fluctuate.
The
market price of our common stock has been volatile. There is currently only a limited public market for our common stock, which
is listed on the OTC Pink Market of OTC Markets, and there can be no assurance that a trading market will develop further or be
maintained in the future. The trading price of our common stock is likely to be highly volatile and could be subject to wide fluctuations
in response to various factors, some of which are beyond our control, including the following:
| ● | quarterly
variations in operating and financial results; |
| ● | general
market conditions in each party’s respective industry and market; |
| ● | announcements
and actions by competitors; |
| ● | the
limited trading volume of our securities on the OTC Pink Market; |
| ● | regulatory
and judicial actions; and |
| ● | general
economic conditions. |
Certain
shareholders may exercise significant control over our business policies.
Lim
Chun Hoo, who is an officer and director of us or our subsidiaries, has ownership of approximately 14.88% of our equity securities
as of April 15, 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, including the
adoption of amendments to our articles of incorporation, the 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
the other shareholders.
The
requirements of being a public company are expensive and administratively burdensome.
As
a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are subject
to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules
and regulations related thereto, including compliance with the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”).
Complying with these laws and regulations requires the time and attention of our board of directors and management and increases
our expenses. Among other things, we are required to:
| ● | maintain
and evaluate a system of internal controls over financial reporting in compliance with
the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations
of the SEC and the Public Company Accounting Oversight Board (“PCAOB”); |
| ● | maintain
policies relating to disclosure controls and procedures; |
| ● | prepare
and distribute periodic reports in compliance with our obligations under federal securities
laws; |
| ● | institute
a more comprehensive compliance function, including with respect to corporate governance;
and |
| ● | involve,
to a greater degree, our outside legal counsel and accountants in the above activities. |
The
costs of preparing and filing annual and quarterly reports, proxy statements, when required, and other information with the SEC
and furnishing audited reports to shareholders is expensive and much greater than that of a privately-held company, and compliance
with these rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel,
and will involve a material increase in regulatory, legal and accounting expenses and the attention of management. There can be
no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. In addition, being
a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required
to accept reduced coverage or incur substantially higher costs to obtain this coverage.
Anti-takeover
provisions in our Articles of Incorporation and Bylaws and Nevada law could discourage, delay or prevent a change in control of
our company and may affect the trading price of our common stock.
The
anti-takeover provisions of the Nevada law may discourage, delay or prevent a change in control by prohibiting us from engaging
in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder,
even if a change in control would be beneficial to our existing stockholders. Our Articles of Incorporation and our Bylaws may
discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our Articles
of Incorporation and Bylaws:
| |
● |
provide
that vacancies on our Board of Directors, including newly created directorships, may be filled only by a majority vote of
directors then in office; |
| |
● |
provide that special
meetings of stockholders may only be called by our Chairman and/or President, our Board of Directors of our stockholders; |
| |
● |
place restrictive
requirements (including advance notification of stockholder nominations and proposals) on how special meetings of stockholders
may be called by our stockholders; |
| |
● |
not provide stockholders
with the ability to cumulate their votes; and provide that only a majority of our stockholders or our Board of Directors may
amend our amended and restated bylaws and a member of the Board of Directors may be removed by stockholders holding a super-majority
of the votes. |
These
provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it
more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members
of our management.
Our
Articles of Incorporation allow for our board of directors to create new series of preferred stock without further approval by
our shareholders which could adversely affect the rights of the holders of our common stock.
Our
board of directors has the authority to fix and determine the relative rights and preferences of preferred stock without shareholder
approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to
holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed
to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption
of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has
greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting
power of our common stock or result in dilution to our existing shareholders. As of the date hereof, we have 25,000,000 shares
designated as Redeemable Convertible Preferred Stock, par value $0.01 per share, , although no shares of Redeemable Convertible
Preferred Stock were ever issued.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our
stock price and any trading volume could decline.
Any
trading market for our common stock that may develop will depend in part on the research and reports that securities or industry
analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research
on us or our business. If no securities or industry analysts commence coverage of our company, the trading price for our common
stock could be negatively affected. If securities or industry analysts initiate coverage, and one or more of those analysts downgrade
our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more
of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our common stock could
decrease, which might cause our stock price and any trading volume to decline.
Future
sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plan or
otherwise, could result in dilution of the percentage ownership of our shareholders and could cause our stock price to fall.
We
expect that we will need significant additional capital in the future to continue our planned operations. To raise capital, we
may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner
we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction,
including issuance of equity securities pursuant to any future stock incentive plan to our officers, directors, employees and
non-employee consultants for their services to us, investors in a prior transaction may be materially diluted by subsequent sales.
Additionally, any such sales may result in material dilution to our existing shareholders, and new investors could gain rights,
preferences and privileges senior to those of holders of our common stock. Further, any future sales of our common stock by us
or resales of our common stock by our existing shareholders could cause the market price of our common stock to decline. Any future
grants of options, warrants or other securities exercisable or convertible into our common stock, or the exercise or conversion
of such shares, and any sales of such shares in the market, could have an adverse effect on the market price of our common stock.
Our
common stock may be subject to the “penny stock” rules of the SEC, which may make it more difficult for shareholders
to sell our common stock.
The
SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as
any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving
a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny
stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity
and quantity of the penny stock to be purchased.
In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information
and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating
the risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating
to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination,
and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally,
brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make
it more difficult for investors to dispose of our common stock if and when such shares are eligible for sale and may cause a decline
in the market value of our stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to
be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny
stock.
We
have never paid cash dividends on our capital stock and do not anticipate paying dividends in the foreseeable future.
We
have never paid cash dividends on our capital stock and currently intend to retain any future earnings to fund the growth of our
business. Any determination to pay dividends in the future will be at the discretion of the board of directors and will depend
on financial condition, operating results, capital requirements, general business conditions and other factors that the board
may deem relevant. As a result, capital appreciation, if any, of common stock will be the sole source of gain for the foreseeable
future.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these
forward-looking statements. All statements other than statements of historical facts contained in this prospectus are forward-looking
statements. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements
largely on our current expectations and projections about future events and financial trends that we believe may affect our business,
financial condition and results of operations. In some cases, you can identify these forward-looking statements by terms such
as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimate,”
“expects,” “intend,” “may,” “ongoing,” “plan,” “potential,”
“predict,” “project,” “should,” “will,” “would” or the negative of
those terms or other similar expressions, although not all forward-looking statements contain those words. We have based these
forward-looking statements on our current expectations and projections about future events and trends that we believe may affect
our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial
needs.
These
forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk
Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time.
It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated
or implied in the forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance
or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required
by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.
We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus
to conform these statements to actual results or to changes in our expectations.
You
should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to
the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of
activity, performance and events and circumstances may be materially different from what we expect.
INDUSTRY
AND MARKET DATA
This
prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth
and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as
from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions
and limitations and contains projections and estimates of the future performance of the industries in which we operate that are
subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue
weight to such projections, assumptions and estimates. Further, industry and general publications, studies and surveys generally
state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness
of such information. While we believe that these publications, studies and surveys are reliable, we have not independently verified
the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable,
such results and estimates have not been verified by any independent source.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering will be approximately $ million (or $ million if the underwriters exercise
their over-allotment option in full), assuming a public offering price of $_______, based on the last sale price of our common
stock as reported on the OTC Pink Market of the OTC Markets Group (the “OTC”) on , 2024, after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable by us.
Each
$1.00 increase or decrease in the public offering price per share would increase or decrease, as applicable, our net proceeds,
after deducting estimated underwriting discounts and commissions by approximately $ million (assuming no exercise of the underwriters’
option to purchase additional shares). Each increase or decrease of shares in the number of shares offered by us would increase
or decrease, as applicable, our net proceeds by approximately $ million, assuming a public offering price of $_______, based
on the last sale price of our common stock as reported on the OTC Pink Market of the OTC Markets Group (the “OTC”)
on , 2024, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable
by us.
We
currently intend to use the net proceeds from this offering is as follows:
| ● | 30%
of net proceeds used to increase investments in our technology to complement our existing
product portfolio and meet the evolving needs of our merchants; |
| ● | 30%
of net proceeds used to expand our network globally by obtaining regulatory licenses
and/or partnering with financial institutions; |
| ● | 30%
of net proceeds used to pursue opportunities that enable us to expand our presence rapidly
and introduce our services to emerging markets more swiftly. This may involve acquiring
cross-border payment processing companies, software development companies, or other payment-related
firms; |
| ● | 10%
of net proceeds to be allocated for general corporate purposes. |
Our
Board of Directors will have considerable discretion in determining how to allocate the net proceeds generated from this offering.
While our current plan is to utilize the net proceeds as outlined above, there may arise situations where a redistribution of
funds becomes necessary. We would consider pursuing acquisitions, if deemed appropriate, as part of our strategic initiatives
to expand our business, which may involve increasing our merchant base, expanding our geographic presence, or diversifying our
product offerings. The specific amounts and timing of our expenditures will be influenced by various factors, including those
outlined under “Risk Factors” in this prospectus. As a result, our management will possess flexibility in the utilization
of the net proceeds derived from this offering. Investors will not have the opportunity to assess the economic, financial, or
other information upon which we base our decisions regarding the utilization of these proceeds.
DIVIDEND
POLICY
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.
CAPITALIZATION
The
following table sets forth our cash and capitalization as of December 31, 2023:
| ● | on
an as adjusted basis giving effect to our issuance and sale of shares
of our common stock in this offering at an assumed public offering price of $ per
share, which is based upon the last reported sale price of our common stock on the OTC Pink
Market on ,
2024, after deducting underwriting discounts and commissions and our estimated offering expenses. |
You
should read this table in conjunction with the sections titled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.
| | |
As of December 31, 2023 | |
| | |
Actual | | |
As Adjusted (1) | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 3,765,959 | | |
| | |
| | |
| | | |
| | |
| Shareholders’ Equity | |
| | | |
| | |
| Preferred stock par value $0.001: 25,000,000 shares authorized; and 0 issued and outstanding at December 31, 2023 and as adjusted | |
$ | — | | |
| | |
| Common stock par value $0.001: 400,000,000 shares authorized; 29,874,265 shares issued and outstanding at December 31, 2023, shares as adjusted | |
$ | 298,743 | | |
| | |
| Additional paid-in capital | |
$ | 111,770,998 | | |
| | |
| Merger reserves | |
$ | (55,000,000 | ) | |
| | |
| Accumulated surplus/(deficit) | |
$ | (39,319,015 | ) | |
| | |
| Accumulated other comprehensive income | |
$ | 569,339 | | |
| | |
| Equity attributable to equity holders of the parent | |
$ | 18,320,065 | | |
| | |
| Non-controlling interests | |
$ | 2,417 | | |
| | |
| Total Stockholders’ Equity | |
$ | 18,322,482 | | |
| | |
(1)
Each $1.00 increase (decrease) in the assumed public offering price of $ per share which is based upon, the last reported sale
price of our common stock on the OTC Pink Market on , 2024, would increase (decrease) the as adjusted amount of each of cash,
total stockholders’ equity and total capitalization by $ , assuming that the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated
offering expenses payable by us. An increase (decrease) of shares in the number of shares offered by us, as set forth on the cover
page of this prospectus, would increase (decrease) the as adjusted amount of each of cash, total stockholders’ equity and
total capitalization by $ , assuming no change in the assumed public offering price per share and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us.
The
information above is based on 29,874,265 shares of our common stock outstanding as of December 31, 2023, and excludes as
of such date, the following:
| ● | shares
of common stock issuable upon the exercise of outstanding options to purchase shares
of common stock under our 2023 Omnibus Equity Incentive Plan at a weighted average exercise
price of $ ____. |
DILUTION
If
you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the public offering
price per share of our common stock and the as adjusted net tangible book value per share of our common stock immediately after
this offering.
As of December 31, 2023, we had a historical
net tangible book (deficit) of $18,322,482, or $0.06 per share of common stock, based on 29,874,265 shares of common stock outstanding
at December 31, 2023. Our historical net tangible book value per share is the amount of our total tangible assets less our total
liabilities at December 31, 2023, divided by the number of shares of common stock outstanding at December 31, 2023.
After
giving effect to the sale of shares of common stock in this offering
at an assumed public offering price of $ per
share, which is based upon the last reported sale price of our common stock on the OTC Pink Market on ,
2024, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted
net tangible book value per share as of December 31, 2023 was $ , or $ per
share of common stock. This represents an immediate increase in as adjusted net tangible book value of $ per
share to existing stockholders and immediate dilution of $ per share to new investors purchasing
shares of common stock in this offering.
The
following table illustrates this dilution on a per share basis:
| Assumed
public offering price per share |
|
|
|
|
|
$ |
|
|
| Historical
net tangible book value per share as of December 31, 2023 |
|
$ |
0.06 |
|
|
|
|
|
| As adjusted
net tangible book value per share immediately after this offering |
|
$ |
|
|
|
|
|
|
| Dilution
per share to new investors in this offering |
|
|
|
|
|
$ |
|
|
The
information discussed above is illustrative only, and the dilution information following this offering will be adjusted based
on the actual public offering price and other terms of this offering determined at pricing.
A
$__ increase (decrease) in the assumed public offering price of $ per share, which is based upon the last reported sale price
of our common stock on the OTC Pink Market on , 2024, would increase (decrease) our as adjusted net tangible book value after
this offering to $ per share and the dilution to new investors purchasing common stock in this offering to $ per share, assuming
that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting
underwriting discounts and commissions and estimated offering expenses payable by us. An increase of shares in the number of shares
offered by us, as set forth on the cover page of this prospectus, would increase our as adjusted net tangible book value after
this offering to $ per share and decrease the dilution to new investors purchasing common stock in this offering to $ per share,
assuming no change in the assumed public offering price per share and after deducting underwriting discounts and commissions and
estimated offering expenses payable by us. A decrease of shares in the number of shares offered by us would decrease the as adjusted
net tangible book value after this offering to $ per share and increase the dilution to new investors purchasing common stock
in this offering to $ per share, assuming no change in the assumed public offering price per share and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us.
If
the underwriters exercise their over-allotment option to purchase additional shares in full, the as adjusted net tangible book
value per share after giving effect to the offering would be $ per share. This represents an increase in as adjusted net tangible
book value of $ per share to existing stockholders and dilution in as adjusted net tangible book value of $ per share to new investors.
The
information above is based on 29,874,265 shares of our common stock outstanding as of December 31, 2023, and excludes as
of such date, the following:
| ● | shares
of common stock issuable upon the exercise of outstanding options to purchase shares
of common stock under our 2023 Omnibus Equity Incentive Plan at a weighted average exercise
price of $ |
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 the Company’s
consolidated financial statements and the related notes thereto and other financial information included elsewhere in this prospectus.
Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information
with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections
of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results
described in or implied by the forward-looking statements contained in the following discussion and analysis. All amounts in this
discussion and analysis of our financial condition and results of operations are in U.S. dollars unless otherwise noted.
Overview
We
are a fintech enterprise poised to revolutionize the financial landscape through our digital Software-as-a-Service (SaaS) 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.
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, 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. Notably, we cater
to a specific subset of online businesses that grapple with establishing and maintaining physical bank accounts across multiple
territories. This subset includes but not limited to small and medium enterprises (SMEs) and online businesses.
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 integrate e-money remittance solutions within the global marketplace, spanning open banking and credit
card processing to wire transfers. Our 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
diverse merchant base ranges from small to medium-sized enterprises, or SMEs, to large enterprises. 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.
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.
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 $664,095 from sales of $3,084,279 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.
Cost
of Sales
Cost
of sales for the year ended December 31, 2023 was $688,630, compared to $430,281 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.
Gross
Profit
Gross
profit for the year ended December 31, 2023 was $1,731,554, compared to $2,653,998 for the year ended December 31, 2022. The decrease
resulted primarily from the restructuring of revenue streams as described above and led to a 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 $1,873,772, comprised of selling expenses of $9,790 and general
and administrative expenses of $1,863,982. The decrease of $9,790 or 100% for the selling expenses, and the increase of $1,551,804,
or 83% 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 $40,678,885 or 2171%.
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 $39,319,015. Net cash generated by operating activities was $295,531 and net cash used in by operating activities
was $320,584 for the years ended December 31, 2023 and 2022, respectively. We incurred a loss of approximately $40,661,803 and
a profit of $5,918,970 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 used in
operating activities totaled $320,584, net cash generated by investing activities totaled $3,715,989 and net cash generated by
financing activities totaled $391,805. The resulting change in cash for the period was $3,754,345.
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 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:
| | |
For the Year Ended December 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Net (used in) / cash generated by operating activities | |
$ | 295,531 | | |
$ | (320,584 | ) |
| Net (used in) / cash generated by investing activities | |
$ | (12,496 | ) | |
$ | 3,715,989 | |
| Net cash generated by / (used in) financing activities | |
$ | (311,858 | ) | |
$ | 391,805 | |
| Effect of exchange rates on cash | |
$ | 3,404 | | |
$ | (32,865 | ) |
| Change in cash and cash equivalents | |
$ | (25,419 | ) | |
$ | 3,754,345 | |
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.
BUSINESS
Overview
We
are a fintech enterprise poised to revolutionize the financial landscape through our digital Software-as-a-Service (SaaS) 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.
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, 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. Notably, we cater
to a specific subset of online businesses that grapple with establishing and maintaining physical bank accounts across multiple
territories. This subset includes but not limited to small and medium enterprises (SMEs) and online businesses.
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 integrate e-money remittance solutions within the global marketplace, spanning open banking and credit
card processing to wire transfers. Our 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
diverse merchant base ranges from small to medium-sized enterprises, or SMEs, to large enterprises. 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.
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.
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.
| 1. | Payment
Services Provider (PSP): Operating under the brand name FintechCashier, we excel
as a PSP, facilitating international payment solutions for merchants by collaborating
with card acquiring banks and alternative payment solution providers. Our expertise in
this domain empowers merchants to effortlessly navigate the complexities of cross-border
transactions. |
| 2. | Business
Accounts: Our specialized business account services extend across diverse industries
and currencies, offering tailored solutions to corporate entities. We assist our clients
in establishing and managing corporate accounts, ensuring they can seamlessly operate
on a global scale, irrespective of their sector. |
| 3. | SEPA
& SWIFT Payments: Our proficient settlement services encompass SEPA and SWIFT
payments, enabling swift and secure fund transfers for merchants and business clients
across international banks. Our streamlined process involves efficient inter-account
fund transfers, culminating in the issuance of SWIFT or SEPA payments. |
| 4. | Foreign
Exchange (FX) Conversion: Through strategic partnerships, we provide foreign exchange
payment solutions, facilitating seamless currency conversion for clients. Whether it’s
settling invoices, processing payrolls, or making payments for goods and services, our
FX conversion services ensure seamless and efficient transactions. |
| 5. | Acquirer
Services: As a global player, we specialize in offering debit and credit card acquiring
services to online merchants across the globe. |
| 6. | Whitelabelling:
Our whitelabelling service presents a fully customizable merchant back office platform,
complete with comprehensive access to an array of banking payment methods. This tailored
solution empowers merchants to seamlessly integrate their operations within a unified
framework. |
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) 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.
| a) | Technology
Layer: At the vanguard of our architecture is the Technology Layer, meticulously engineered to target key verticals within
the market. This layer seamlessly integrates a plethora of service providers. From credit card acquirers to issuers, corporate
accounts to open banking, transaction monitoring to Know-Your-Customer and Know Your Business compliance, our technology layer
converges diverse functionalities into a cohesive whole. |
| b) | Payments
Layer: Central to our prowess is the Payments Layer, facilitated through subsidiaries under the FintechCashier umbrella. Endowed
with an array of financial and regulatory licenses, we operate as a Merchant of Record (MOR), vested with the authority and accountability
to oversee a gamut of processing accounts. This dynamic allows us to seamlessly onboard small merchants, expertly managing their
comprehensive payment requisites. Notably, our MOR status holds us responsible for maintaining merchant accounts, processing payments
and managing credit card processing fees. Our proactive stance extends further as we embrace the role of a Payment Initiation
Service Provider (PISP) under PSD2. This enables us to extend direct banking services through an open banking infrastructure,
a feat made possible through strategic partnerships and technological integrations. By deftly incorporating open banking functionality
within our payment gateway, we have etched our place as a leader within the payment stack, a multifaceted assortment of technologies
that coalesce to offer a comprehensive payment solution. |
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:
| 1. | Payment
Gateway: Serving as a crucial bridge, the payment gateway connects a merchant’s website or mobile app to the payment processor.
This pivotal link ensures that customers can make secure transactions using their credit or debit cards, thus enabling seamless
and safe payment experiences. |
| 2. | Payment
Processor: The heartbeat of the payment process, the payment processor assumes the pivotal role of orchestrating the actual
payment transactions. It encompasses the full spectrum of tasks, from authorizing the transaction to settling it with the customer’s
bank or financial institution, culminating in the successful completion of the payment. |
| 3. | Fraud
Detection and Prevention: These vigilant components stand guard against fraudulent activities, functioning as a protective
shield for both merchants and customers. By meticulously scrutinizing transactions and adhering to industry regulations, these
components ensure the integrity and security of each payment. |
| 4. | Risk
Management: A robust risk management framework is integral to navigating the complexities of electronic payments. These components
proactively manage and mitigate risks associated with electronic transactions, including challenges such as chargebacks and potential
fraud. By fostering a secure environment, risk management safeguards the payment ecosystem’s stability. |
| 5. | Payment
Methods: Diverse and adaptable, payment methods encompass a spectrum of options that customers can leverage to initiate transactions.
Ranging from credit and debit cards to e-wallets and bank transfers, this versatility empowers customers with convenient choices
for conducting transactions. |
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.
| c) | Banking
Layer: FintechCashier’s technology extends to our Banking Layer, where we seamlessly integrate virtual bank accounts into
our payment offerings. This strategic augmentation encompasses both “pay-in” and “pay-out” solutions, catering
to diverse corporate needs. For “pay-in” scenarios, our system facilitates effortless fund collection from both individuals
and corporate entities, accommodating various payment methods such as traditional bank transfers, credit or debit card payments,
and popular online platforms like PayPal. Conversely, our “pay-out” capabilities empower businesses to efficiently disburse
funds to their clients, whether they are individuals or corporations. Our automated onboarding process ensures merchants can swiftly
access bank accounts and payment processing, streamlining operations and enhancing efficiency. |
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:
| ● | Currency
Support and Optimized FX Conversion: Seamlessly supporting multiple currencies and optimizing foreign exchange conversion,
we enable businesses to transcend geographic boundaries and operate on a global scale. |
| ● | Multilingual
Support: Our platform’s multilingual capabilities create avenues to explore new markets, fostering expansion opportunities
for our clients. |
| ● | Always-On
Management Portal: Anchored by high availability, cloud-based architecture, and real-time performance, our user-friendly management
portal ensures uninterrupted service continuity, cultivating customer loyalty. |
| ● | Comprehensive
Reporting and Analysis: Clients gain access to robust reporting tools, enabling them to monitor service performance, support
cash flow analysis for various transaction types, and manage chargeback and retrieval disputes. |
| ● | Experienced
Team Support: Our seasoned team provides unparalleled support, guiding clients through the intricacies of the payment landscape. |
| ● | Efficient
Onboarding and Integration: Through a unified platform, we expedite onboarding and integration processes, enabling swift deployment
of new services without hindrances or budgetary constraints. |
| ● | Secured
Accessibility: Clients enjoy secure access to our services through a built-in portal, ensuring the confidentiality and integrity
of sensitive information. |
| ● | Hosted
Payment Page (HPP): Our platform’s integration of a hosted payment page streamlines the checkout process, facilitating “one-click-checkout”
simplicity. |
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:
| ● | Enterprises
and Organizations: Our services resonate with entities across all categories, seeking
to optimize fund transfer costs while ensuring swift and secure transactions. |
| ● | Online
Businesses: For online enterprises, we present an effective end-to-end solution for
the intricate realm of online selling. This encompasses seamless payment collection and
streamlined cross-border transactions, enabling businesses to flourish on a global scale. |
| ● | Specialized
Online Businesses: A distinctive facet of our customer spectrum encompasses specialized
online businesses facing challenges in establishing and maintaining physical bank accounts
across the diverse territories they operate in. This category is particularly relevant
for Small and Medium-sized Enterprises (SMEs) and online businesses. |
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:
| ● | Merchant
Underwriting: Our adept merchant underwriting team meticulously evaluates applications
and assesses risks for new merchants. By focusing on markets with high card-present volume
and minimal fraud and chargeback losses, our underwriting strategy offers low-risk profile
merchants an expedited activation, augmenting their customer journey. |
| ● | Merchant
Onboarding and Activation: Through our user-friendly web-based portal, business proprietors
can swiftly sign up for a merchant account. For enterprises, our dedicated merchant onboarding
and activation team collaborates closely with partners to facilitate a seamless transition
from sales to implementation and activation. Our streamlined process and automated approvals
enable rapid and frictionless onboarding, empowering us and our partners with accelerated
speed-to-market. In fact, even the most intricate and sizable merchants can be onboarded
within a mere 48 hours of application submission. |
| ● | Merchant
Training: We furnish merchants with comprehensive training materials through a dedicated
department and content delivery platform, ensuring their adept utilization of our offerings. |
| ● | Merchant
Risk Management: Our vigilant risk management operations entail ongoing monitoring
of merchant accounts. Supported by dedicated security and regulatory assistance (including
compliance support, vulnerability scanning, system monitoring, and breach aid), our systems
are configured to automatically surveil activities warranting heightened scrutiny. This
proactive approach mitigates losses attributed to fraud and defaults. |
| ● | Merchant
Support: Operating round the clock, seven days a week, 365 days a year, our merchant
support team is unwavering in its dedication to addressing merchant inquiries. Whether
pertaining to systems integration or technical solutions, our team delivers expert customer
support. Additionally, our cadre of merchant account specialists guides merchants through
the entire payment acceptance journey, from onboarding to settlements and reporting.
With a resolute focus on swift issue resolution, we provide unparalleled payment expertise
and support, reducing repeat calls and enhancing operational efficiency. |
| ● | Software
Integrations and Compliance Management: A dedicated team of engineers and technical
support staff oversees software integrations and ensures full compliance with security
and regulatory requisites. This encompasses support for PCI and Payment Application Data
Security Standard compliance, along with system integration and configuration guidance. |
| ● | Partner
Support: Our committed support teams collaborate closely with software providers
to address inquiries or issues pertaining to the integration of our products and solutions
into their software suites. We strive for comprehensive issue resolution by harmonizing
relevant departments, optimizing partner support. We also extend assistance in resolving
matters encompassing our partners’ entire merchant portfolio or incidents affecting
individual merchants. |
| ● | Partner
Services: Through our partner-centric customer relationship management system, partners
can track the real-time activation progress of new merchant accounts. This comprehensive
system empowers partners to monitor their merchant portfolio, encompassing commissions,
residual payments, and even support interactions, all in a precise and real-time manner.
Automation has been seamlessly woven into these processes to ensure an impeccable experience
and heightened financial efficiency. |
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 SaaS 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:
| ● | Robust
Software Model: We are dedicated to crafting a robust software model that aligns
seamlessly with the diverse requirements of businesses of varying scales. |
| ● | Flexibility
in Product Offerings: Flexibility remains at the core of our product offerings, allowing
us to tailor custom solutions that precisely cater to our clients’ unique needs. |
| ● | Market
Leadership and Innovation: As a market leader, we are deeply attuned to the evolving
marketplace. Continuous research and development will be an integral part of our approach,
allowing us to integrate cutting-edge products into our business portfolio and remain
ahead of industry trends. |
| ● | FintechCashier’s
Vision: Our vision for FintechCashier is centered on empowering merchants worldwide
to expand their businesses. This will be achieved through state-of-the-art payment technology
coupled with financial services that are transparent and free of hidden costs. Our motto
is encapsulated in the mantra “One Application, One Integration, Pay as You GO.” |
Our
business cases are compelling, with clear value propositions for various segments:
| ● | SMEs:
Simplifying global payment acceptance through a single integration, streamlining
operations and enhancing their growth prospects. |
| ● | Fintechs:
Amplifying the capabilities of fintech companies, enabling them to construct more
robust and scalable products. |
| ● | PSPs/Card
Acquirers: Elevating these entities into more accessible providers, offering a comprehensive
platform with over 280 API integrations and simplified onboarding processes. |
Value
Addition to Customers
We
augment the value for our customers in the following ways:
| ● | SMEs:
Simplifying global payment acceptance through a single integration, reducing operational
complexity. |
| ● | Fintechs:
Enabling the expansion of their offerings, leading to the creation of more advanced
and scalable products. |
| ● | PSPs/Card
Acquirers: Transforming these entities into easily accessible providers with a comprehensive
platform, streamlined onboarding, and extensive API integrations. |
Marketing
Approach
Our
marketing initiatives encompass a diverse range of channels, ensuring broad and effective outreach:
| ● | Direct
Sales: Our direct sales team employs a multifaceted approach, encompassing techniques
like cold calling, networking, and in-person presentations. They are driven to generate
leads and secure sales, while also nurturing customer relationships and collecting feedback
to inform product development. |
| ● | Social
Media: Our marketing team fosters brand awareness on prominent social media platforms,
including Facebook, Twitter, and LinkedIn, enabling us to reach a vast audience. |
| ● | Website
and Mobile Optimization: A meticulously optimized website and mobile interface are
designed to enhance user experience, foster easy navigation, and improve search engine
visibility. |
| ● | Adwords
and Online Advertising: We leverage pay-per-click (PPC) advertising, cost-per-thousand
advertising, and site-targeted advertising to effectively promote our offerings through
text, banner, and rich-media ads. |
| ● | Affiliate
Program: An affiliate program with a commission-based structure is designed to attract
new customers through affiliates, expanding our customer base. |
Industry
Opportunity
We
believe the fintech industry is attractive for a number of reasons:
| ● | Large
Total Addressable Market: The financial services industry represents a significant
part of the economy. According to a research report by The Business Research Company,
a global market research and consulting firm, the financial services market has experienced
significant growth in recent years. The firm anticipates that the market will continue
to expand, projecting a growth from $31.1 trillion in 2023 to $33.5 trillion in 2024,
with a compound annual growth rate (“CAGR”) of 7.7%. Furthermore, it is forecasted
to reach $44.9 trillion by 2028, with a CAGR of 7.6%. |
| (1) | https://www.thebusinessresearchcompany.com/report/financial-services-global-market-report |
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).
| (2) | https://beinsure.com/ranking/biggest-fintech-unicorn-startups-in-world/ |
| ● | Pace
of Growth and Innovation Across Subsectors: In fintech, we believe the pace of innovation
in the private and public sectors is accelerating. There has been significant disruption
and change in the delivery of financial services across many subsectors in recent years,
including, among others: |
| ○ | APIs,
including open banking and account connectivity; |
| ○ | Big
data, analytics and information technology; |
| ○ | Digital
assets and blockchain technology; |
| ○ | Exchanges
and trading platforms, including capital markets technology; |
| ○ | Insurance
technology and services (“insurtech”); |
| ○ | Lending
and underwriting technology; |
| ○ | Real
estate, mortgage and prop tech services (“proptech”); |
| ○ | Regulatory
technology for financial services (“regtech”); |
| ○ | Risk
technology, including fraud and identity protection and cyber and data security; and |
| ○ | Wealth
management technology (“wealthtech”). |
| ● | Accelerated
Adoption Rate for Innovation in Financial Services: Over the last decade, fintech
has steadily increased its share of the global economy, and the financial services industry
has become one of the largest consumers of technology worldwide, spending over $500 billion
on technology annually. These adoption levels continue to benefit from robust secular
tailwinds including the growth in digital commerce, the proliferation of mobile technology,
the ubiquitous acceptance of digital payments and continuous technological advancement,
positioning the sector for long-term growth. |
| ● | Attractive
for Public Markets: Over the past few years, the public market’s demand for
high-growth fintech prospects has increased, as public market investors continue to seek
access to private fintech companies that offer disruptive technologies and solutions. |
Market
Opportunity
By
targeting three different layers within the payment space, FintechCashier expands its reach across
multiple layers in the payment space, unlocking substantial potential instead of confining itself to a single market. This approach
minimizes the necessity to compete for a dominant market share within any specific layer, opting instead to pursue smaller market
shares across multiple layers, thereby fostering opportunities for growth.
The
global digital payment market is estimated to reach $361.30 billion by 2030 with a CAGR of 20.5% according to a September 2022
report published by Grand View Research, Inc.
The
global cashless transactions are likely to foresee significant growth amid the usage and preference for cashless transactions
and by 2025, a growth of 1.9 trillion transactions is estimated.
Accenture
conducted a research study that shows transactions worth US$7 trillion is expected to shift from cash to card and other digital
payments by 2023 and grow to US$48 trillion by 2030.
The
COVID-19 pandemic brought a positive impact to the digital payment market with an increase in online shopping and the fear of
virus transmission through physical monetary transactions.
The
key market trends include:
| a) | The
increasing preference for online shopping is a driving factor for the market. It offers
the users a number of benefits such as fast checkout options, customized customer experience,
and multiple payment options. In addition, companies are also designing enhanced smartwatches
that are capable of making contactless payments, similar to the process used in smartphones.
For instance, Xiaomi launched the brand new Mi Smart Band 6 in collaboration with Master
Card in December 2021, which is capable of conducting contactless payments at Master
Card terminals. |
| b) | Smart
city initiative is a significant component in the digital payment market growth, as digital
payments are used throughout the various departments to cover multiple Citizen-to-Government
(C2G), and Government-to-Citizen (G2C) payments. |
| c) | Introduction
of digital wallets, and the decreasing number of worldwide unbanked population, seem
favorable for the digital payment vendors to expand their customer base. Overall, the
digital payment market is expected to witness a much higher rate of growth, owing to
the driving factors like the promotion of digital payments, rise in internet penetration,
high proliferation of smartphones that enables m-commerce growth, and a hike in e-commerce
sales. |
| d) | Constant
acceleration of e-commerce supports the use of ePayments and brings about significant
benefits. ePayments help overcome the complicated and costly process of physically collecting
cash for a product purchased or sold online. Furthermore, innovations in ePayments can
ease the process of carrying out payments and other financial services, which can boost
additional e-commerce opportunities. Thus, rising e-commerce sales are expected to positively
impact the growth of the payment processing solutions market. |
| e) | Internet
access has reached all corners of the world, and this has led to a boost in the online
shopping industry. Smartphones have also become an essential part of several people in
the 21st century. The growth of e-commerce is driven by the rapid technology adoption,
which is led by the rising use of devices, such as smartphones and tablets, and access
to the internet through 4G, 5G, and so on. |
To
take advantage of this trend, merchants worldwide are actively pursuing international expansion, thereby increasing their demand
for seamless payment processing across diverse methods and channels within intricate and fragmented payment ecosystems.
| ● | Contactless
Payment Market - The global contactless payment market size is expected to reach
USD 6.25 trillion by 2028, according to a new report by Grand View Research, Inc. In
a survey conducted by Thales Group in November 2022, it stated it is anticipated to register
a CAGR of 20.3% from 2021 to 2028. Various benefits, such as improved service delivery
and reduction in transaction time offered by contactless payments, are expected to propel
the market growth over the forecast period. |
| ● | Mobile
Payment Market - The global mobile payment market size is expected to reach USD 587.52
billion by 2030, expanding at a CAGR of 35.3% from 2022 to 2030, according to a new report
by Grand View Research, Inc. The market growth can be attributed to the increasing shift
toward contactless payment amid the COVID-19 pandemic. Moreover, the increasing popularity
of the e-commerce industry across the globe is expected to accelerate the adoption of
mobile payment over the forecast period. |
| ● | Payment
As A Service Market - The global payment as a service market size is expected to
reach USD 25.7 billion by 2027, expanding at a CAGR of 16.9%, according to a new report
by Grand View Research, Inc. Digital disruption in the money transfer ecosystem, combined
with the rise in need for quick money transfer methods, has transformed the payment gateway
model. As a result of digital money transfer methods, consumers now demand secure digital
transaction processing systems to transfer money to their merchants and individuals. |
In general, FinTech-as-a-Service (FaaS), or financial
technology offered as a service offers a wide range of opportunities to provide solutions to enhance financial technology as a whole.
In the evolving fintech landscape, FaaS provides numerous benefits including its adaptability, cost-savings and efficiency gains that
make its use a strategic choice for financial and non-financial companies alike. 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.
Global
Market Reports published by the business research company suggest that the global financial services market will grow from $2.25
trillion in 2021 to $2.85 trillion in 2025 (CAGR 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.
By
targeting three different layers within the payment space, we have positioned ourselves in not one, but several markets simultaneously
thereby creating a huge potential. As such there is less need to compete for a larger market share in any one layer, but rather
compete in many layers with opportunities to grow.
| ● | Technology
Layer–Payment Gateway Market - A market size of $90.9 billion in 2022 expected
to grow to $174.4 billion in 2027. |
| ● | Banking
Layer–Digital Payment Market - A market size of $89.5 billion in 2021 expected
to grow to $374.9 billion in 2030, according to a Polaris Market Research’s Digital
Payment Market Size Report 2022-2030. |
| ● | Payment
Layer–Payment Processing Market - A market size of $60.5 billion in 2021 expected
to grow to $116.2 billion in 2027. |
The
above estimations result in FintechCashier’s current market opportunity comprising of up to approximately $248.9 billion
throughout the three layers.
SaaS
is gaining attention and leveraging modern technology to aid multiple industry segments, including lending, credit, and payments,
in resolving long-standing challenges. Businesses are increasingly turning to SaaS to optimize their processes and increase efficiency.
Customer satisfaction and customer retention are two compelling reasons why numerous companies are now adopting SaaS. Legal compliance
and optimal security mechanisms are additional benefits. Using SaaS, financial and non-financial companies can automate their
financial processes and offer customers hassle-free access to credit and services.
SaaS
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 SaaS, companies can significantly reduce the turnaround time for the entire financial process
and improve customer experience.
In
a report entitled Analyzing the Rapid Growth of Fintech-as-a-Service (FaaS) published by Prove suggest that the global
financial services market will grow from $2.25 trillion in 2021 to $2.85 trillion in 2025 (CAGR 6%)
SaaS
has tremendous potential for growth and is finding many takers. Bringing together the old and the new and bridging the gap between
legacy structures and next-generation technology, SaaS hints at how the hybrid new world will develop going ahead. Moreover, with
companies keen on improving financial processes, reducing human intervention, and increasing personalization, SaaS is likely to
see quick and sustained adoption by financial and non-financial companies in the years to come.
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 :
| ● | Best-in-Class
Sourcing Capabilities: our global network of relationships with financial services
and technology company CEOs, founders, boards of directors and private equity sponsors
provides us with a proprietary avenue for sourcing target businesses. |
| ● | Deep
Insights Across the Fintech Industry: We believe that our management team’s
extensive knowledge of the fintech industry, understanding of economic and regulatory
nuances globally and expertise in technology go-to-market strategies and business models
provide us with a differentiated ability to evaluate promising target businesses. |
| ● | Proven
Experience in Consummating Transactions: We believe that our management team’s
extensive mergers and acquisitions experience, with a distinct reputation for navigating
transaction complexities, is a significant advantage. Our management team have demonstrated
ability to negotiate and structure transactions, evaluate corporate strategies, access
growth capital and develop appropriate capital structures. |
| ● | Significant
Financial Services and Technology Investment Experience: our management team has
extensive experience in analyzing attractive financial services and technology investments
in individual equity opportunities. We believe that our proficiency in this area can
help us evaluate compelling business combination opportunities. |
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
| Layer |
Market
Sector |
Competitors |
| Technical |
Payment
Gateway Market |
Crassula,
Contis, Mambu, SBlock |
| Payments |
Payment
Processing Market |
Nuvei,
Worldpay, Checkout, Ayden |
| Banking |
Digital
Payment Market |
Solaris
Bank, Tide Mollie, Revolut, |
| Issuing |
Issuing
Layer |
Marqueta |
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, Revolut, a competitor on our banking
layer, cites a $33 billion market cap, while Marqueta, our competitor in the issuing layer 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:
| a) | Simplex
- Fully regulated as a financial institution, Simplex processes credit card payments
with a 100% fraud protection guarantee–in case of a fraud chargeback, the merchant
gets paid by Simplex. Utilizing its cutting-edge fraud prevention solution and AI technology,
Simplex blocks fraudulent users and allows legitimate users to complete payments, thereby,
increasing conversion rates and enabling merchants to focus on their business growth.
In today’s banking echo-system Crypto-related businesses are underserved. Simplex
enables personal individuals and businesses to get an EU IBAN account for their banking
activity having all the necessary payment account functions. |
| b) | SafeCharge
- mission is to unleash the transformational capabilities of modern payments technology
for merchants; putting them in control and empowering them to achieve more. SafeCharge
has developed the industry’s first Native+ Payments Engine. Native, because it
has been built from the ground-up as a platform to cover the full payment value chain,
providing merchants with all the benefits of an end-to-end secure payment processing
solution. It enables a connection to other payment and risk management partners. |
| c) | Rapyd
- claims to offer the fastest way to power local payments anywhere in the world,
enabling companies across the globe to access markets quicker than ever before. By utilizing
Rapyd’s payments network and FinTech-as-a-Service platform, businesses and consumers
engage in local and cross-border transactions in any market. The Rapyd platform is unifying
fragmented payment systems worldwide by bringing together 900-plus payment methods in
over 100 countries. |
FintechCashier
believes it can compete with these and other providers in the industry by virtue of:
| a) | Offering
a faster solution–the onboarding offered by FintechCashier is much quicker than
other systems. It is optimized to allow clients to deploy in a minimum of time, with
less hassle, enabling them to focus on their business rather than back office activities. |
| b) | High
level of service– FintechCashier is more flexible and more client centric, with
the ability to respond quickly and personally, and to have the ability to make changes
and create new applications to meet client needs. |
| c) | FintechCashier
understands that small businesses will often grow into large enterprises and it has a
strong interest in nurturing clients as their businesses grow. Our user-friendly and
professional team is always on hand to answer questions and provide professional and
responsive support, before, during and after sign up. |
| d) | Competitive
pricing–FintechCashier’s priority is to be highly competitive in pricing,
as it understands that its’ clients are price sensitive. |
| e) | FintechCashier
has the capability to incorporate additional features to cater to the evolving requirements
of its clients. Recognizing that businesses undergo changes, FintechCashier actively
listens to customer needs and adapts by either providing tailored solutions or integrating
a comprehensive range of services into its offerings. This flexibility empowers clients
to incorporate or switch features as their businesses evolve. |
Employees
As
of the date of this prospectus, 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 prospectus, 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.
We
do not own any patents. FintechCashier Asia P.L.C., our wholly-owned subsidiary, owns licenses in connection with our Money Broking
Business and Payment Operator Business.
Properties
Our
corporate headquarters, which include the majority of our product development, sales, marketing, and business operations, is located
at M Floor & 1st 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. The Bank is also subject to the
Banking Act, Chapter 371 of the laws of Malta, and all subsidiary regulation as well as any banking rules issued by the Malta
Financial Services Authority as the competent authority.
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:
| |
(a) |
the organization,
adaptation or alteration of personal data; |
| |
(b) |
the retrieval, consultation
or utilization of personal data; |
| |
(c) |
the disclosure of
personal data by transmission, transfer, dissemination or otherwise making available; or |
| |
(d) |
the alignment, combination,
correction, erasure, or destruction of personal data. |
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. The Bank is also required to comply with the anti-money laundering law and
regulations applicable in the EU as transposed into Maltese by virtue of the Prevention of Money Laundering Act, Chapter 373 of
the laws of Malta and all subsidiary legislation emanating from it. 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.
MANAGEMENT
The
following table sets forth, as of the date of this prospectus, the names and ages of the current Board of Directors of the Company,
our executive officers and the principal offices and positions held by each person.
| Name |
|
Age |
|
Position(s) |
| Lim Chun Hoo |
|
34 |
|
Chief Executive Officer & Director |
| Colin Ellis |
|
62 |
|
Chief Financial Officer & Director |
| Richard Berman |
|
81 |
|
Director |
Lim
Chun Hoo (Mr. Lim) has been Director of our Company since November 21, 2022 and was appointed as Chief Executive Officer
of the Company on December 27, 2023. Mr. Lim had previously served as our CFO since February 23, 2023. He is the director of FintechCashier
Asia P.L.C. (formally known as HWGG Capital P.L.C.) (“FintechAsia”), a wholly-owned subsidiary of the Company. From
May, 2020 to April, 2022, he served as a director in an investment bank company, HWG Digital Investment Bank (Malaysia) P.L.C.
From November, 2020 to August, 2022, he served as a director under Fintech Bank Limited. He also served as a director of Ho Wah
Genting Holiday Sdn Bhd from November, 2014 until October, 2021. From August, 2013 to May, 2014, he was Senior Share Investment
Executive at Public Bank Berhad. In August, 2010, he joined PT Ho Wah Genting, Indonesia as a business analyst, and served as
an assistant of vice president from December, 2011 until August, 2013. Mr. Lim received a Bachelor of Arts (Honors) in Finance
and Investment Management from the University of Northumbria, Newcastle-upon-Tyne, United Kingdom in 2010. Mr. Lim has 6 years
of experience in the global fintech industry, especially in the Asia. His experience in the organizational development, business
operations, financial and corporate exercise serve as his main contribution to the company’s operation. He is qualified
as a director of our Company.
Colin
Ellis (Mr. Ellis) has been a Director of our Company since February 23, 2023 and was appointed Chief Financial Officer
of the Company on December 27, 2023. He is the Senior Partner of Anstey Bond LLP, a London firm of chartered accountants, which
he founded in January 2011. Mr. Ellis has a well-developed background in international corporate finance, having served as Auditor
and Advisor to UK companies listed on the London Stock Exchange and Alternative Investment Market (AIM), along with other junior
market-listed public companies, including entities in the Mining and Innovation Technology sectors. Mr. Ellis holds several directorships
and provides financial knowledge for a range of companies, from startups to public companies. We believe that Mr. Ellis’
35 years of experience in the international finance industry have enabled Mr. Ellis to develop a sound knowledge of running both
UK-based and international companies and qualifies him as a director of our Company.
Richard
Berman (Mr. Berman) has been a Director of our Company since February 23, 2023 and serves as Chairman of the Audit Committee.
Mr. Berman’s business career spans over 40 years of venture capital, senior management and merger & acquisitions experience.
Mr. Berman has served as a director and/or officer of over a dozen public and private companies. From 2006 to 2011, he was Chairman of
National Investment Managers, a company with $12 billion in pension administration assets. Mr. Berman is currently a director of six
publicly traded companies: Sidus Space, Inc. (NASDAQ: SIDU), Cryoport, Inc., Comsovereign Holding Corp., BioVie, Inc., Context Therapeutics
Inc. (where he is Chairman) and Genius Group Limited. Mr. Berman also serves as Audit Committee Chairman for Cryoport Inc., Biovie Inc.
and Genius Group Limited. Mr. Berman also served as a director of Cuentas, Inc. from 2018 through 2022. Over the last decade he has served
on the board of six companies that have reached over $1 billion in market capitalization–Cryoport, Advaxis, EXIDE, Internet Commerce
Corporation, Strategic Funding Source, Inc. (Kapitus) and Ontrak (Catasys). Previously, Mr. Berman worked at Goldman Sachs; was Senior
Vice President of Bankers Trust Company, where he started the M&A and Leveraged Buyout Departments; created the largest battery company
in the world in the 1980’s by merging Prestolite, General Battery and Exide to form Exide Technologies (XIDE); helped to create
what is now Soho (NYC) by developing five buildings; and advised on over $4 billion of M&A transactions. He is a past Director of
the Stern School of Business of NYU where he obtained his BS and MBA. He also has U.S. and foreign law degrees from Boston College and
The Hague Academy of International Law, respectively. Mr. Berman’s financial and business expertise, including his background in
biotechnology, international management and banking, and his extensive experience as a director in the public company context makes him
well-qualified to serve as a member of our Board of Directors.
Family
Relationships
There
are no other family relationships among any of our officers or directors.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, during the past ten years, none of the following occurred with respect to our present or former director,
executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in
a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type
of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Director
Independence
Prior
to the consummation of this offering, our board of directors undertook a review of the independence of our directors and considered
whether any director has a relationship with us that could compromise that director’s ability to exercise independent judgment
in carrying out that director’s responsibilities. Our board of directors has affirmatively determined that [ ], [ ]
and [ ] are each an “independent director,” as defined under Nasdaq rules.
Board
of Directors Meetings and Committees
Our
Board of Directors will establish an audit committee and is expected to appoint a nominating and corporate governance committee
and a compensation committee prior to the completion of this offering. Each of these committees is expected to be governed by
a charter that will be available on our website following the completion of this offering.
Audit
Committee
Our
audit committee will be responsible for, among other things:
| ● | monitoring
the quality of internal controls and ensuring our financial performance is properly measured
and reported on; |
| ● | consideration
of the Directors’ risk assessment and suggesting items for discussion at the full
Board; |
| ● | receipt
and review of reports from our management and auditors relating to the interim and annual
accounts, including a review of accounting policies, accounting treatment and disclosures
in the financial reports; |
| ● | consideration
of the accounting and internal control systems in use throughout the Company and its
subsidiaries; and |
| ● | overseeing
our relationship with external auditors, including making recommendations to the Board
as to the appointment or re-appointment of the external auditors, reviewing their terms
of engagement, and monitoring the external auditors’ independence, objectivity
and effectiveness. |
Upon
the consummation of this offering, our audit committee will consist of [ ], [ ] and Richard Berman, with Richard Berman
serving as chair. Our board of directors has affirmatively determined that [ ], [ ] and Richard Berman each meet the definition
of “independent director” under Nasdaq rules, and that they meet the independence standards under Rule 10A-3. Each
member of our audit committee meets the financial literacy requirements of Nasdaq. In addition, our board of directors has determined
that Richard Berman will qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5)
of Regulation S-K. Our board of directors will adopt a written charter for the audit committee, which will be available on our
principal corporate website at www.fintechcashier.com concurrently with the consummation of this offering.
Compensation
Committee
Our
compensation committee will be responsible for, among other things:
| ● | the
review of the performance of the Executive Directors and management; |
| ● | recommendations
to the Board on matters relating to the remuneration and terms of service of the Executive
Directors and management; and |
| ● | recommendations
to the Board on proposals for the granting of share options and other equity incentives
pursuant to any share option scheme or equity incentive scheme in operation from time
to time. |
Upon
the consummation of this offering, our compensation committee will consist of [ ], [ ] and [ ], with [ ] serving as
chair. Our board has determined that [ ], [ ] and [ ] are each independent directors under Nasdaq rules. Our board of
directors will adopt a written charter for the compensation committee, which will be available on our principal corporate website
concurrently with the consummation of this offering.
Nominating
and Corporate Governance Committee
Our
nominating and corporate governance committee will be responsible for, among other things:
| ● | drawing
up selection criteria and appointment procedures for Directors; |
| ● | recommending
nominees for election to our Board of Directors and its corresponding committees; |
| ● | assessing
the functioning of individual members of our Board of Directors and executive officers
and reporting the results of such assessment to our Board of Directors; and |
| ● | developing
corporate governance guidelines. |
Upon
the consummation of this offering, our nominating and corporate governance committee will consist of [ ], [ ] and [ ],
with [ ] serving as chair. Our board has determined that [ ], [ ] and [ ] are each independent directors under Nasdaq
rules. Our board of directors will adopt a written charter for the nominating and governance committee, which will be available
on our principal corporate website concurrently with the consummation of this offering.
Code
of Ethics
We
anticipate adopting a formal Code of Business Conduct and Ethics applicable to all Board members, officers and employees prior
to the completion of this offering. Our Code of Business Conduct and Ethics is expected to be available on our website at www.fintechcashier.com.
A
copy of our Code of Business Conduct and Ethics may be obtained without charge upon written request to Secretary, Fintech Scion
Limited, M Floor & 1st Floor, No. 33, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia. If we make any substantive amendments
to our Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct and Ethics to
any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website, www.fintechcashier.com,
and/or in our public filings with the SEC.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table contains compensation information for our executive officers for the years ended December 31, 2023 and 2022:
| Name & Principal Position | |
Year | | |
Salary | | |
Bonus | | |
Stock In
Lieu of
Cash Bonus | | |
Equity
Incentive
Plan Grants | | |
Other(1) | | |
Total | |
| Previous Executive Officers | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shalom Dodoun | |
2023 | | |
$ | 165,659 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 47,786 | | |
$ | 213,445 | |
| (Previous CEO) | |
2022 | | |
$ | 142,005 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | 142,005 | |
| (1) | The
$47,786 was the consultancy fee payable by the Company to Mr. Dodoun for the year ended December
31, 2023. |
Employment
Agreements
None.
Outstanding
Equity Awards as of December 31, 2023
On
January 6, 2017 and March 21, 2017, the Company issued 310,029,000 shares of our Common Stock under 2016 Equity Incentive Plan
(the “2016 Plan”). After effectuating a 1:100 reverse stock split in June 2017 and a 1:10 reverse stock split in March
2022, the issued and outstanding shares under the 2016 Plan were 310,029. Upon the effectiveness of the 1-for-10 reverse split,
the issued and outstanding shares under the 2016 Plan will be 31,003 shares.
Securities
authorized for issuance under equity compensation plans
The
following table provides information relating to our equity compensation plans as of December 31, 2023.
| | |
Equity Compensation Plans | |
| | |
Number
of
securities
issued
under
the Plans | | |
Number
of
securities
remaining
available
For Future
Issuance | |
| Equity compensation plans approved by security holders | |
| — | | |
| — | |
| Equity compensation plans not approved by security holders | |
| 31,003 | | |
| 4,343,851 | |
| Total | |
| 31,003 | | |
| 4,343,851 | |
Director
Compensation
The
Company accrued or paid compensation to its directors for serving in such capacity, as shown in the table below.
| Director | |
Year | | |
Option
Awards | | |
Restricted
Stock
Unit
Awards | | |
Fees
Earned or
Paid in
Cash | | |
Total | |
| Lim Chun Hoo | |
2023 | | |
$ | — | | |
$ | — | | |
$ | 38,876 | | |
$ | 38,876 | |
| Colin Ellis | |
2023 | | |
$ | — | | |
$ | — | | |
$ | 24,000 | (1) | |
$ | 24,000 | |
| Richard Berman(2) | |
2023 | | |
$ | — | | |
$ | — | | |
$ | 100,000 | | |
$ | 100,000 | |
(1)
The $24,000 was the consultancy fee payable by the Company to Mr. Ellis for the year ended December 31, 2023.
(2)
Mr. Berman shall receive a salary of $10,000 a month as independent director of the Company for year 2024. Upon the successful
uplisting to Nasdaq, Mr. Berman, shall be rewarded with up to a maximum of 1% of shares of our common stock. The number of shares
to be issued shall be calculated based on the market share price (as stated on Nasdaq) on the first closing date in which shares
of our common stock are successfully listed on Nasdaq.
2023
Omnibus Equity Incentive Plan
Our
board of directors and stockholders approved the 2023 Omnibus Equity Incentive Plan (the “2023 Plan”) on November
16, 2023, under which we may grant equity incentive awards in order to attract, motivate and retain the talent who are expected
to make important contributions to the Company. The material terms for the 2023 Plan are summarized below.
Types
of Awards. The 2023 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation
rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards. Items
described above in the Section called “Shares Available; Certain Limitations” are incorporated herein by reference.
Administration.
The 2023 Plan will be administered by the Board, or if the Board does not administer the 2023 Plan, any committee of the Board
or any other committee or subcommittee of the Board that complies with the applicable requirements of Section 16 of the Securities
Exchange Act of 1934 (“Exchange Act”), as amended from time to time, and any other applicable legal or stock exchange
listing requirements (each of the Board, or such committee or such subcommittee, the “plan administrator”). The plan
administrator may interpret the 2023 Plan and may prescribe, amend and rescind rules and make all other determinations necessary
or desirable for the administration of the 2023 Plan.
The
2023 Plan permits the plan administrator to select the eligible recipients who will receive awards, to determine the terms and
conditions of those awards, including, but not limited to, the exercise price or other purchase price of an award, the number
of shares of common stock or cash or other property subject to an award, the term of an award and the vesting schedule applicable
to an award, and to amend the terms and conditions of outstanding awards.
Restricted
Stock and Restricted Stock Units. Restricted stock and RSUs may be granted under the 2023 Plan. The plan administrator will
determine the purchase price, vesting schedule and performance goals, if any, and any other conditions that apply to a grant of
restricted stock and RSUs. If the restrictions, performance goals or other conditions determined by the plan administrator are
not satisfied, the restricted stock and RSUs will be forfeited. Subject to the provisions of the 2023 Plan and the applicable
award agreement, the plan administrator has the sole discretion to provide for the lapse of restrictions in installments.
Unless
the applicable award agreement provides otherwise, participants with restricted stock will generally have all of the rights of
a stockholder; provided that dividends will only be paid if and when the underlying restricted stock vests. RSUs will not be entitled
to dividends prior to vesting, but may be entitled to receive dividend equivalents if the award agreement provides for them. The
rights of participants granted restricted stock or RSUs upon the termination of employment or service to us will be set forth
in the award agreement.
Options.
Incentive stock options and non-statutory stock options may be granted under the 2023 Plan. An “incentive stock option”
means an option intended to qualify for tax treatment applicable to incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended (“Code”). A “non-statutory stock option” is an option that is not subject
to statutory requirements and limitations required for certain tax advantages that are allowed under specific provisions of the
Code. A non-statutory stock option under the 2023 Plan is referred to for federal income tax purposes as a “nonqualified”
stock option. Each option granted under the 2023 Plan will be designated as a nonqualified stock option or an incentive stock
option. At the discretion of the plan administrator, incentive stock options may be granted only to our employees, employees of
our “parent corporation” (as such term is defined in Section 424(e) of the Code) or employees of our subsidiaries.
The
exercise period of an option may not exceed ten years from the date of grant and the exercise price may not be less than 100%
of the fair market value of a share of common stock on the date the option is granted (110% of fair market value in the case of
incentive stock options granted to ten percent (10%) shareholders). The exercise price for shares of common stock subject to an
option may be paid in cash, or as determined by the plan administrator in its sole discretion, (i) through any cashless exercise
procedure approved by the plan administrator (including the withholding of shares of common stock otherwise issuable upon exercise),
(ii) by tendering unrestricted shares of common stock owned by the participant, (iii) with any other form of consideration approved
by the plan administrator and permitted by applicable law or (iv) by any combination of these methods. The option holder will
have no rights to dividends or distributions or other rights of a stockholder with respect to the shares of the Company’s
common stock subject to an option until the option holder has given written notice of exercise and paid the exercise price and
applicable withholding taxes.
In
the event of a participant’s termination of employment or service, the participant may exercise his or her option (to the
extent vested as of such date of termination) for such period of time as specified in his or her option agreement.
Stock
Appreciation Rights.
SARs
may be granted either alone (a “Free-Standing SAR”) or in conjunction with all or part of any option granted under
the 2023 Plan (a “Related Right”). A Free-Standing SAR will entitle its holder to receive, at the time of exercise,
an amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the base
price of the Free-Standing SAR (which shall be no less than 100% of the fair market value of the related shares of common stock
on the date of grant) multiplied by the number of shares in respect of which the SAR is being exercised. A Related Right will
entitle its holder to receive, at the time of exercise of the SAR and surrender of the applicable portion of the related option,
an amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the exercise
price of the related option multiplied by the number of shares in respect of which the SAR is being exercised. The exercise period
of a Free-Standing SAR may not exceed ten years from the date of grant. The exercise period of a Related Right will also expire
upon the expiration of its related option.
The
holder of a SAR will have no rights to dividends or any other rights of a shareholder with respect to the shares of the Company’s
common stock subject to the SAR until the holder has given written notice of exercise and paid the exercise price and applicable
withholding taxes.
In
the event of a participant’s termination of employment or service, the holder of a SAR may exercise his or her SAR (to the
extent vested as of such date of termination) for such period of time as specified in his or her SAR agreement.
Other
Stock-Based Awards. The plan administrator may grant other stock-based awards under the 2023 Plan, valued in whole or in part
by reference to, or otherwise based on, shares of common stock. The plan administrator will determine the terms and conditions
of these awards, including the number of shares of common stock to be granted pursuant to each award, the manner in which the
award will be settled, and the conditions to the vesting and payment of the award (including the achievement of performance goals).
The rights of participants granted other stock-based awards upon the termination of employment or service to us will be set forth
in the applicable award agreement. In the event that a bonus is granted in the form of shares of common stock, the shares of common
stock constituting such bonus shall, as determined by the plan administrator, be evidenced in uncertificated form or by a book
entry record or a certificate issued in the name of the participant to whom such grant was made and delivered to such participant
as soon as practicable after the date on which such bonus is payable. Any dividend or dividend equivalent award issued under the
2023 Plan shall be subject to the same restrictions, conditions and risks of forfeiture as apply to the underlying award.
Equitable
Adjustment and Treatment of Outstanding Awards Upon a Change in Control
Equitable
Adjustments. In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase,
reorganization, special or extraordinary dividend or other extraordinary distribution (whether in the form of common shares, cash
or other property), combination, exchange of shares, or other change in corporate structure affecting our common stock, an equitable
substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance
under the 2023 Plan, (ii) the kind and number of securities subject to, and the exercise price of, any outstanding options and
SARs granted under the 2023 Plan, (iii) the kind, number and purchase price of shares of common stock, or the amount of cash or
amount or type of property, subject to outstanding restricted stock, RSUs and other stock-based awards granted under the 2023
Plan and (iv) the terms and conditions of any outstanding awards (including any applicable performance targets). Equitable substitutions
or adjustments other than those listed above may also be made as determined by the plan administrator. In addition, the plan administrator
may terminate all outstanding awards for the payment of cash or in-kind consideration having an aggregate fair market value equal
to the excess of the fair market value of the shares of common stock, cash or other property covered by such awards over the aggregate
exercise price, if any, of such awards, but if the exercise price of any outstanding award is equal to or greater than the fair
market value of the shares of common stock, cash or other property covered by such award, the plan administrator may cancel the
award without the payment of any consideration to the participant. With respect to awards subject to foreign laws, adjustments
will be made in compliance with applicable requirements. Except to the extent determined by the plan administrator, adjustments
to incentive stock options will be made only to the extent not constituting a “modification” within the meaning of
Section 424(h)(3) of the Code.
Change
in Control. The 2023 Plan provides that, unless otherwise determined by the plan administrator and evidenced in an award agreement,
employment, services or other agreement, if a “change in control” (as defined below) occurs and a participant is employed
by, or otherwise providing services to the Company or any of its affiliates immediately prior to the consummation of the change
in control, then the plan administrator, in its sole and absolute discretion, may (i) provide that any unvested or unexercisable
portion of an award carrying a right to exercise will become fully vested and exercisable; and (ii) cause the restrictions, deferral
limitations, payment conditions and forfeiture conditions applicable to any award granted under the 2023 Plan to lapse, and the
awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully
achieved at target performance levels. The plan administrator shall have discretion in connection with such change in control
to provide that all outstanding and unexercised options and SARs shall expire upon the consummation of such change in control.
For
purposes of the 2023 Plan, a “change in control” means, in summary, the occurrence of any of the following events:
(i) a person or entity becomes the beneficial owner of more than 50% of our voting power; (ii) an unapproved change in the majority
membership of our Board; (iii) a merger or consolidation of us or any of our subsidiaries, other than (A) a merger or consolidation
that results in our voting securities continuing to represent 50% or more of the combined voting power of the surviving entity
or its parent and our Board immediately prior to the merger or consolidation continuing to represent at least a majority of the
Board of the surviving entity or its parent or (B) a merger or consolidation effected to implement a recapitalization in which
no person is or becomes the beneficial owner of our voting securities representing more than 50% of our combined voting power;
or (iv) shareholder approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the
sale or disposition of substantially all of our assets, other than (A) a sale or disposition to an entity, more than 50% of the
combined voting power of which is owned by our shareholders in substantially the same proportions as their ownership of us immediately
prior to such sale or (B) a sale or disposition to an entity controlled by our Board. However, a change in control will not be
deemed to have occurred as a result of any transaction or series of integrated transactions following which our stockholders,
immediately prior thereto, hold immediately afterward the same proportionate equity interests in the entity that owns all or substantially
all of our assets.
Tax
Withholding
Each
participant will be required to make arrangements satisfactory to the plan administrator regarding payment of up to the maximum
statutory tax rates in the participant’s applicable jurisdiction with respect to any award granted under the 2023 Plan,
as determined by us. We have the right, to the extent permitted by applicable law, to deduct any such taxes from any payment of
any kind otherwise due to the participant. With the approval of the plan administrator, the participant may satisfy the foregoing
requirement by either electing to have us withhold from delivery of shares of common stock, cash or other property, as applicable,
or by delivering already owned unrestricted shares of common stock, in each case, having a value not exceeding the applicable
taxes to be withheld and applied to the tax obligations. We may also use any other method of obtaining the necessary payment or
proceeds, as permitted by applicable law, to satisfy our withholding obligation with respect to any award.
Amendment
and Termination of the 2023 Plan
The
2023 Plan provides our Board with authority to amend, alter or terminate the 2023 Plan, but no such action may impair the rights
of any participant with respect to outstanding awards without the participant’s consent. The plan administrator may amend
an award, prospectively or retroactively, but no such amendment may materially impair the rights of any participant without the
participant’s consent. Shareholder approval of any such action will be obtained if required to comply with applicable law.
The 2023 Plan will terminate on the tenth anniversary of the Effective Date (although awards granted before that time will remain
outstanding in accordance with their terms).
Clawback
If
the Company is required to prepare a financial restatement due to the Company’s material non-compliance with any financial
reporting requirement under the securities law, then the plan administrator may require any Section 10D-1(d) of the Exchange Act
“executive officer” to repay or forfeit to us that part of the cash or equity incentive compensation received by that
Section 10D-1(d) executive officer during the preceding three completed fiscal years that the plan administrator determines was
in excess of the amount that such Section 10D-1(d) executive officer would have received had such cash or equity incentive compensation
been calculated based on the restated amounts reported in the restated financial statement. The plan administrator may take into
account any factors it deems reasonable in determining whether to seek recoupment of previously paid cash or equity incentive
compensation and how much of such compensation to recoup from each Section 10D-1(d) executive officer (which shall be made irrespective
of any fault, misconduct or responsibility of each Section 10D-1(d) executive officer). The amount and form of the incentive compensation
to be recouped shall be determined by the plan administrator in its sole and absolute discretion, and calculated on a pre-tax
basis.
Shares
Available Under the 2023 Plan.
The
maximum number of shares of common stock that may be issued to participants under the 2023 Plan is 39,748,528, subject to adjustment
for certain corporate changes affecting the shares, such as stock splits.
As
of December 31, 2023, there were no Common Stock issued pursuant to the 2023 Plan.
2016
Equity Incentive Plan
Our
Board of Directors adopted, and our stockholders approved, our 2016 Equity Incentive Plan (the “2016 Plan”) on January
18, 2016, which provides for the issuance of incentive awards to officers, key employees, consultants and directors. The material
terms of the 2016 Plan are summarized below.
Administration
of the 2016 Plan.
The
2016 Plan is administered by our board of directors. Our board of directors may delegate any or all of its powers under the 2017
Plan to one or more committees or subcommittees of the board (a “Committee”). All references in the 2016 Plan to the
“Board” shall mean our board of directors or a Committee of our board of directors to the extent that the board’s
powers or authority under the 2016 Plan have been delegated to such Committee. The Board shall have authority to grant awards
and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the 2016 Plan as it shall deem
advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the 2016 Plan or any award
in the manner and to the extent it shall deem expedient to carry the 2016 Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and
binding on all persons having or claiming any interest in the 2016 Plan or in any award thereunder. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the 2016
Plan made in good faith.
Eligibility
Participants.
The
2016 Plan authorizes the grant of stock options, restricted stock, restricted stock units and/or other stock-based awards to employees,
officers, directors, individual consultants and advisors of the Company. The Board determines, in its sole discretion, who will
receive awards under the 2016 Plan. Notwithstanding anything in the 2016 Plan or any award documentation to the contrary, for
so long as the Company has elected Subchapter S status under Section 1362 of the Internal Revenue Code of 1986, as amended, no
award shall be granted or exercised, as the case may be, if the result of such grant or exercise would result in the termination
of such Subchapter S status, unless such grant or exercise, as the case may be, is consented to by all stockholders of the Company.
Any such purported grant or exercise of an award that does not comply with the foregoing shall be void and have no legal force
or effect and shall not be recognized on the books of the Company as effective.
Shares
Available Under the 2016 Plan.
The
maximum number of shares of common stock (the “Common Stock”) that may be issued to participants under the 2016 Plan
was 100,000,000, subject to adjustment for certain corporate changes affecting the shares, such as stock splits. Shares subject
to an award under the 2016 Plan for which the award is canceled, forfeited or expires again become available for grants under
the 2016 Plan. Shares subject to an award that is settled in cash will not again be made available for grants under the 2016 Plan.
In
June 2017, the Company effectuated a 1:100 reverse stock split, resulting in 10,000,000 shares of our Common Stock being reserved
for issuance under the 2016 Plan. In December 2017, the Company increased number of shares of our Common Stock reserved for issuance
under the 2016 Plan to 40,000,000. In March 2022, the Company effectuated a 1:10 reverse stock split, resulting in 4,000,000 shares
of our Common Stock reserved for issuance under the 2016 Plan.
As
of December 31, 2023, there were an aggregate of 368,998 shares of Common Stock remaining eligible for issuance pursuant to the 2016
Plan.
U.S.
Federal Income Tax Consequences
The
following is a summary of certain United States federal income tax consequences of awards under the 2016 and 2023 Plan. It does
not purport to be a complete description of all applicable rules, and those rules (including those summarized here) are subject
to change. The following summary does not discuss state, local or non-U.S. tax consequences.
Nonqualified
Stock Options
A
participant who has been granted a nonqualified stock option will not recognize taxable income upon the grant of a nonqualified
stock option. Rather, at the time of exercise of such nonqualified stock option, the participant will recognize ordinary income
for income tax purposes in an amount equal to the excess of the fair market value of the shares of common stock purchased over
the exercise price. We generally will be entitled to an income tax deduction at such time and in the same amount that the participant
recognizes ordinary income (subject to possible limitations imposed by the Code). Any gain or loss on the participant’s
subsequent disposition of the shares will generally be taxable as long-term or short-term capital gain or loss (if the shares
are a capital asset of the participant) depending upon the length of time such shares were held by the participant. We do not
receive a tax deduction for any subsequent capital gain realized by the participant.
Incentive
Stock Options
In
general, no taxable income is realized by a participant upon the grant of an incentive stock option (“ISO”). If shares
of common stock are purchased by a participant, or option shares, pursuant to the exercise of an ISO granted under the 2023 Plan
and the participant does not dispose of the option shares within the two-year period after the date of grant or within one year
after the receipt of such option shares by the participant, such disposition a disqualifying disposition, then, generally (1)
the participant will not realize ordinary income upon exercise and (2) upon sale of such option shares, any amount realized in
excess of the exercise price paid for the option shares will be taxed to such participant as capital gain (or loss). We are not
entitled to any deduction under these circumstances. The amount by which the fair market value of the common stock on the exercise
date of an ISO exceeds the purchase price generally will constitute an item which increases the participant’s “alternative
minimum taxable income.” If option shares acquired upon the exercise of an ISO are disposed of in a disqualifying disposition,
the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair
market value of the option shares at the time of exercise (or, if less, the amount realized on the disposition of the option shares),
over the exercise price paid for the option shares. Subject to certain exceptions, an option generally will not be treated as
an ISO if it is exercised more than three months following termination of employment. If an ISO is exercised at a time when it
no longer qualifies as an ISO, such option will be treated as a nonqualified stock option as discussed above. In general, we will
receive an income tax deduction at the same time and in the same amount (subject to possible limitations imposed by the Code)
as the participant recognizes ordinary income.
Stock
Appreciation Rights
A
participant who is granted a SAR generally will not recognize ordinary income upon receipt of the SAR. Rather, at the time of
exercise of such SAR, the participant will recognize ordinary income for U.S. federal income tax purposes in an amount equal to
the value of any cash received and the fair market value on the date of exercise of any shares of common stock received. We generally
will be entitled to a tax deduction at such time and in the same amount, if any, that the participant recognizes as ordinary income.
The participant’s tax basis in any shares of common stock received upon exercise of a SAR will be the fair market value
of the shares of common stock on the date of exercise, and if the shares are later sold or exchanged, then the difference between
the amount received upon such sale or exchange and the fair market value of such shares on the date of exercise will generally
be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon
the length of time such shares were held by the participant.
Restricted
Stock
A
participant generally will not be taxed upon the grant of restricted stock, but rather will recognize ordinary income in an amount
equal to the excess of the fair market value of the shares of common stock at the earlier of the time the shares become transferable
or are no longer subject to a substantial risk of forfeiture (within the meaning of the Code) over the amount paid for such shares
(if any). We generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary
income on account of the lapse of the restrictions. A participant’s tax basis in the shares of common stock will equal their
fair market value at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will
begin at that time. Any cash dividends paid on the shares of common stock before the restrictions lapse will be taxable to the
participant as additional compensation and not as dividend income, unless the individual has made an election under Section 83(b)
of the Code. Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted
shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such stock is subject
to restrictions or transfer and a substantial risk of forfeiture. If such an election is made, no additional taxable income will
be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the shares of common
stock equal to their fair market value on the date of their award, and the participant’s holding period for capital gains
purposes will begin at that time. The election under Section 83(b) of the Code must be made within 30 days from the time the restricted
shares are issued. We generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income
is recognized by such participant.
Restricted
Stock Units
In
general, the grant of RSUs will not result in income for the participant or in a tax deduction for us. Upon the settlement of
such an award in cash or shares of common stock, the participant will recognize ordinary income equal to the aggregate value of
the payment received, and we generally will be entitled to a tax deduction at the same time and in the same amount.
Other
Awards
With
respect to other stock-based awards, generally when the participant receives payment in respect of the award, the amount of cash
and/or the fair market value of any shares of common stock or other property received will be ordinary income to the participant,
and we generally will be entitled to a tax deduction at the same time and in the same amount.
Section
162(m) Limitation.
In
general, under Section 162(m) of the Code, income tax deductions of publicly held corporations may be limited to the extent total
compensation (including base salary, annual bonus, stock option exercises and nonqualified benefits) for covered employees exceeds
$1.0 million (less the amount of any “excess parachute payments” as defined in Section 280G of the Code) in any taxable
year of the corporation. Under the Tax Cuts and Jobs Act, the term “covered employee” now includes any individual
who served as the chief executive officer or chief financial officer at any time during the taxable year and the three other most
highly compensated officers for the taxable year, whether or not employed at year-end. Once an individual becomes a covered employee,
that individual will remain a covered employee for all future years, including after termination or death.
New
Plan Benefits
Future
grants under the 2023 Plan will be made at the discretion of the plan administrator and, accordingly, are not yet determinable.
In addition, benefits under the 2023 Plan will depend on a number of factors, including the fair market value of our common stock
on future dates and the exercise decisions made by participants. Consequently, at this time, it is not possible to determine the
future benefits that might be received by participants receiving discretionary grants under the 2023 Plan.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the beneficial ownership of our common stock as of April 15, 2024, by:
| ● | each
person, or group of affiliated persons, who is known by us to beneficially own more than
5% of our common stock; |
| ● | each
of the named executive officers; |
| ● | each
of our directors; and |
| ● | all
of our current executive officers and directors as a group. |
Beneficial
ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment
power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of
April 15, 2024, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person shown in the table. The percentage of ownership is based on 19,874,265 shares of common stock outstanding
on April 15, 2024. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership
of that person, we deemed to be outstanding all shares of common stock subject to options or other convertible securities held
by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within 60
days of April 15, 2024. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership
of any other person.
Except
as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment
power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by
such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o Fintech Scion
Limited, M Floor & 1st Floor, No. 33, Jalan Maharajalela, 50150, Kuala Lumpur, Malaysia.
| | |
| | |
| |
| | |
Number of Shares | | |
Percentage of Common Stock | |
| Beneficial Owner | |
Beneficially Owned | | |
Beneficially Owned | |
| Directors and Executive Officers | |
| | | |
| | |
| Lim Chun Hoo(1) | |
| 2,958,157 | | |
| 14.88 | % |
| Colin Ellis(2) | |
| — | | |
| — | |
| Richard Berman(3) | |
| — | | |
| — | |
| All Officers and Directors as a Group (3 persons) | |
| 2,958,157 | | |
| 14.88 | % |
| 5% or Greater Stockholders | |
| | | |
| | |
| Shalom Dodoun(4) | |
| 8,325,736 | | |
| 41.89 | % |
| (1) |
Mr. Lim is the CEO, Secretary and Director of
the Company, and the director of FintechAsia, a wholly-owned subsidiary of the Company. |
| (2) |
Mr. Ellis is the CFO and Director of the Company. |
| (3) |
Mr. Berman is the Director of the Company. |
| (4) |
Mr. Dodoun is the previous CEO and Director
of the Company. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The
following is a description of transactions or series of transactions since January 1, 2022 or any currently proposed transaction,
to which we were or are to be a participant and in which the amount involved exceeds the lesser of $120,000 or 1% of the average
of the total assets at December 31, 2023 and 2022, and in which any of our directors, executive officers or persons who we know
hold more than five percent of any class of our capital stock, including their immediate family members, had or will have a direct
or indirect material interest, other than compensation arrangements with our directors and executive officers.
Amounts
due from Related Parties
For
the years ended December 31, 2023 and 2022, the total amounts due from related parties were $nil and $ 1,296,935, respectively.
These advances were unsecured, non-interest bearing and due on demand. The breakdown of certain amount due from related parties
are as below:
Dato’
Lim Hui Boon, the previous president of the Company who resigned in February 2023, is the director of Ho Wah Genting Group Sdn
Bhd (“HWGGSB”). Dato’ Lim Hui Boon, is directly related to Mr. Lim Chun Hoo, the previous CFO and the current
CEO and director of the Company. As of December 31, 2023, and 2022, the amount due from HWGGSB were $nil and $799,094, respectively.
Mr
Lim Chun Hoo, the previous CFO and the current CEO and director of the Company, is also the director of HWG Fintech International
Ltd (“HWGFI”). As of December 31, 2023, and 2022, the amount due from HWGFI were $nil and $497,841, respectively.
Amounts
Due to Related Parties
For
the years ended December 31, 2023 and 2022, the total amounts due to related parties were $746,330 and $2,463,833 respectively.
These advances were unsecured, non-interest bearing and due on demand. The breakdown of certain amount due to related parties
are as below:
Mr.
Leong Yee Ming, the previous CEO, CFO, secretary and director of the Company who resigned in February 2023, is also 1) a director
of Grande Legacy Inc. (“GL”), and the amount due to GL for the years ended December 31, 2023 and 2022 were $nil and
$266,610, respectively; 2) a director of HWG Capital Inc. (“HWG Capital” and previously known as GrandeLife Inc.),
and the amount due to HWG Capital for the years ended December 31, 2023 and 2022 were $nil and $329,565 respectively; 3) a director
of Aelora Sdn Bhd (“ASB” and previously known as Vitaxel Sdn Bhd), a previous subsidiary of the Company, and the amount
due to ASB for the years ended December 31, 2023 and 2022 were $nil and $23,933 respectively.
Mr.
Lim Chun Hoo, the previous CFO and the current CEO and director of the Company, is also a previous director of HWG Digital Investment
Bank (Malaysia) P.L.C. (“HDIB”). As of December 31, 2023, and 2022, the amount due to HDIB were $nil and $1,596,825,
respectively.
Dato’
Lim Hui Boon, the previous president of the Company who resigned in February 2023, is the director of Ho Wah Genting Group Sdn
Bhd (“HWGGSB”). Dato’ Lim Hui Boon, is directly related to Mr. Lim Chun Hoo, the previous CFO and the current
CEO and director of the Company. As of December 31, 2023, and 2022, the amount due to HWGGSB were $25,748 and $nil, respectively.
For
the years ended December 31, 2023 and 2022, the amount due to Shalom Dodoun, the previous CEO and director of the Company, were
$718,914 and $246,900, respectively.
For
the years ended December 31, 2023 and 2022, the amount due to Ms Natalie Kastberg, the director of Fintech, were $1,668 and $nil,
respectively.
DESCRIPTION
OF SECURITIES
The
following summary describes our capital stock and the material provisions of our third amended and restated articles of incorporation,
the Reverse Stock Split Charter Certificate and our amended and restated bylaws, each of which will become effective prior to
the completion of this offering and of the applicable provisions of the Nevada Revised Statutes (“NRS”). Because the
following is only a summary, it does not contain all of the information that may be important to you. For a complete description,
you should refer to our amended and restated articles of incorporation, the Reverse Stock Split Charter Certificate and amended
and restated bylaws, copies of which have been or will be filed as exhibits to the registration statement of which this prospectus
is part.
General
Our
authorized capital stock consists of 425,000,000 shares, consisting of shares of common stock and shares of preferred stock:
| ● | 400,000,000
shares of common stock, $0.01 par value per share; and |
| ● | 25,000,000
shares of preferred stock, $0.01 par value per share. |
As
of April 15, 2024, there are 19,874,265 shares of common stock outstanding and 0 shares of preferred stock outstanding,.
Common
Stock
Voting
Rights. Each holder of our common stock is entitled to one vote for each share of common stock held on all matters submitted
to a vote of stockholders. Holders of common stock do not have cumulative voting rights, which means that the holders of a majority
of our shares of common stock voted can elect all of the directors then standing for election.
Dividend
Rights. Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common
stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors in its
discretion from funds legally available therefor. The NRS provides that no distribution (including dividends on, or redemption
or repurchase of, shares of capital stock) may be made if, after giving effect to such distribution, the corporation would not
be able to pay its debts as they become due in the usual course of business, or, except as specifically permitted by the articles
of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that
would be needed at the time of dissolution to satisfy the preferential rights of preferred shareholders. The Company has never
paid cash dividends on its common stock and does not anticipate paying dividends in the foreseeable future.
Liquidation
and Dissolution Rights. Upon our liquidation, dissolution, or winding-up, the assets legally available for distribution
to our stockholders would be distributable ratably among the holders of our common stock and any participating Preferred Stock
outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of Preferred Stock and payment
of other claims of creditors.
Other
Matters. Our common stock is not entitled to preemptive rights and is not subject to conversion or redemption. The rights
of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any
series of our Preferred Stock that our board of directors may designate and issue in the future.
Preferred
Stock
Our
Board of Directors has the authority, without action by our stockholders, to designate and issue up to 25,000,000 shares of preferred
stock in one or more series or classes and to designate the rights, preferences and privileges of each series or class, which
may be greater than the rights of our common stock. There are no shares of preferred stock designated or outstanding. It is not
possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common
stock until our Board of Directors determines the specific rights of the holders of the preferred stock. However, the effects
might include:
| ● | restricting
dividends on our common stock; |
| ● | diluting
the voting power of our common stock; |
| ● | impairing
liquidation rights of our common stock; or |
| ● | delaying
or preventing a change in control of us without further action by our stockholders. |
The
Board of Directors’ authority to issue preferred stock without stockholder approval could make it more difficult for a third-party
to acquire control of our company and could discourage such attempt. We have no present plans to issue any shares of preferred
stock.
Anti-Takeover
Provisions
The
provisions of the NRS may have the effect of delaying, deferring or preventing another party from acquiring control of the company.
These provisions may discourage and prevent coercive takeover practices and inadequate takeover bids.
The
NRS contains a provision governing “acquisition of controlling interest.” This law provides generally that any person
or entity that acquires 20% or more of the outstanding voting shares of a publicly held Nevada corporation in the secondary public
or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders
of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a
person or entity acquires “control shares” whenever it acquires shares that, but for the operation of the control
share acquisition act, would bring its voting power within any of the following three ranges: 20 to 33-1/3%; 33-1/3 to 50%; or
more than 50%.
A
“control share acquisition” is generally defined as the direct or indirect acquisition of either ownership or voting
power associated with issued and outstanding control shares. The stockholders or Board of Directors of a corporation may elect
to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision
to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not
exempt our common stock from the control share acquisition act.
The
control share acquisition act is applicable only to shares of “Issuing Corporations” as defined by the Nevada law.
An Issuing Corporation is a Nevada corporation which (i) has 200 or more stockholders, with at least 100 of such stockholders
being both stockholders of record and residents of Nevada, and (ii) does business in Nevada directly or through an affiliated
corporation.
At
this time, we do not have 100 stockholders of record that are resident of Nevada and we do not conduct business in Nevada. Therefore,
the provisions of the control share acquisition act are believed not to apply to acquisitions of our shares and will not until
such time as these requirements have been met. At such time as they may apply, the provisions of the control share acquisition
act may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether
such acquisition may be in the interest of our stockholders.
The
Nevada “Combination with Interested Stockholders Statute” may also have an effect of delaying or making it more difficult
to effect a change in control of us. This statute prevents an “interested stockholder” and a resident domestic Nevada
corporation from entering into a “combination,” unless certain conditions are met. The statute defines “combination”
to include any merger or consolidation with an “interested stockholder,” or any sale, lease, exchange, mortgage, pledge,
transfer or other disposition, in one transaction or a series of transactions with an “interested stockholder” having
(i) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (ii) an aggregate
market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (iii) representing
10% or more of the earning power or net income of the corporation.
An
“interested stockholder” means the beneficial owner of 10% or more of the voting shares of a resident domestic corporation,
or an affiliate or associate thereof. A corporation affected by the statute may not engage in a “combination” within
three years after the interested stockholder acquires its shares unless the combination or purchase is approved by the Board of
Directors before the interested stockholder acquired such shares. If approval is not obtained, then after the expiration of the
three-year period, the business combination may be consummated with the approval of the Board of Directors or a majority of the
voting power held by disinterested stockholders, or if the consideration to be paid by the interested stockholder is at least
equal to the highest of (i) the highest price per share paid by the interested stockholder within the three years immediately
preceding the date of the announcement of the combination or in the transaction in which he became an interested stockholder,
whichever is higher, (ii) the market value per common share on the date of announcement of the combination or the date the interested
stockholder acquired the shares, whichever is higher, or (iii) if higher for the holders of preferred stock, the highest liquidation
value of the preferred stock.
Special
Stockholder Meetings
The
NRS provides that, unless otherwise provided in the articles of incorporation or bylaws, special meetings of the shareholders
may be called by the entire board of directors, any two directors or the president. The Company Bylaws modify the NRS provisions
by providing that special meeting of shareholders may be called only at the request of a majority of the board of directors, by
the Chairman of the Board, if any, the Chief Executive Officer, if any, the President or the Secretary. Notice of a Special Meeting
stating the purpose or purposes for which the meeting is called and the date, time and place of the meeting, and the means of
electronic communications, if any, by which shareholders and proxies shall be deemed to be present in person and vote, shall be
given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote
at such meeting.
Requirements
for Advance Notification of Stockholder Nominations and Proposals
Our
bylaws establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election
as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of director
Limitations
on Liability and Indemnification of Officers and Directors
Our
Articles of Incorporation provide indemnification for our directors and officers to the fullest extent permitted by the NRS. Prior
to the completion of this offering, we intend to enter into indemnification agreements with each of our directors that may, in
some cases, be broader than the specific indemnification provisions contained under Nevada law. In addition, as permitted by Nevada
law, our Articles of Incorporation includes provisions that eliminate the personal liability of our directors for monetary damages
resulting from breaches of certain fiduciary duties as a director. The effect of these provisions is to restrict our rights and
the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of fiduciary duties
as a director, except that a director will be personally liable for:
| ● | any
breach of his duty of loyalty to us or our stockholders; |
| ● | acts
or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law; |
| ● | any
transaction from which the director derived an improper personal benefit; or |
| ● | improper
distributions to stockholders. |
These
limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the
availability of equitable remedies such as injunctive relief or rescission.
Our
bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and may indemnify employees
and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance
of the final disposition of any action or proceeding.
We
plan to enter into separate indemnification agreements with our directors and officers. These agreements, among other things,
require us to indemnify our directors and officers for any and all expenses (including reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees) judgments, fines and amounts paid in settlement actually and reasonably incurred
by such directors or officers or on his or her behalf in connection with any action or proceeding arising out of their services
as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides
services at our request provided that such person follows the procedures for determining entitlement to indemnification and advancement
of expenses set forth in the indemnification agreement. We believe that these bylaw provisions and indemnification agreements
are necessary to attract and retain qualified persons as directors and officers.
The
limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative
litigation against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders.
Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
At
present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is
required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Securities Transfer Corporation, located at 2901 N. Dallas Parkway, Suite
380 Plano, TX 75093; Telephone +1 469 633 0101.
Trading
Symbol and Market
We
intend to apply to list our common stock on the Nasdaq Capital Market under the symbol “FINR.” There can be no assurances
that Nasdaq will approve our listing application. We will not move forward with this offering if Nasdaq does not approve to list
our common stock.
UNDERWRITING
Subject
to the terms and conditions set forth in the underwriting agreement, dated _______, 2024, between us and the underwriters named
below, for which Spartan Capital Securities, LLC, is acting as the representative (the “Representative”), we have
agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, the number of shares of our common
stock listed next to its name in the following table:
| Name |
|
Number
of Shares of
Common Stock |
|
| Spartan
Capital Securities, LLC |
|
|
|
|
| Total: |
|
|
|
|
Under
the terms of the underwriting agreement, the underwriters are committed to purchasing all of the shares offered by this prospectus
(other than the shares subject to the underwriters’ option to purchase additional shares) if the underwriters buy any of
such shares. The underwriters’ obligation to purchase the shares is subject to the satisfaction of certain conditions, including,
among others, the continued accuracy of representations and warranties made by us in the underwriting agreement, delivery of legal
opinions, and the absence of any material changes in our assets, business or prospects after the date of this prospectus.
The
underwriters initially propose to offer our common stock directly to the public at the public offering price set forth on the
front cover page of this prospectus and to certain dealers at such offering price less a concession not to exceed $ per share.
After the initial public offering of the shares of our common stock, the offering price and other selling terms may be changed
by the underwriters. Sales of shares of our common stock made outside the United States may be made by affiliates of certain of
the underwriters.
Over-Allotment
Option
We
have granted the underwriters an option to purchase up to additional shares of our common stock, to cover over-allotments, if
any, at the same price per share as they are paying for the shares shown in the table above. The underwriters may exercise this
option in whole or in part at any time within 45 days after the closing of this offering. To the extent the underwriters exercise
this option, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase
a number of additional shares proportionate to that underwriters’ initial commitment as indicated in the table at the beginning
of this section plus, in the event that any underwriter defaults in its obligation to purchase shares under the underwriting agreement,
certain additional shares.
Discounts
and Commission
The
following table summarizes the offering price, underwriting commissions, and proceeds before expenses to us, assuming both no
exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.
| |
|
Per
share |
|
|
Total
without
Over-allotment Option |
|
|
Total
with
Over-allotment Option |
|
| Public
offering price |
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriting discount |
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds, before
expenses, to us |
|
|
|
|
|
|
|
|
|
|
|
|
The
underwriters propose to offer the shares of common stock offered by us to the public at the public offering price per share set
forth on the cover of this prospectus. In addition, the underwriters may offer some of the shares of common stock to other securities
dealers at such price less a concession of $ per share. After the initial offering, the public offering price and concession to
dealers may be changed.
We
have agreed to reimburse the underwriters for accountable legal expenses incurred by the underwriters in connection with the offering,
in an estimated amount of approximately $219,000. We have paid an expense deposit of $50,000 to the Representative, which will
be applied against the actual accountable expenses that will be payable by us to the Representative in connection with this offering.
Additionally, one percent (1.0%) of the gross proceeds of the offering shall be provided to the Representative for non-accountable
expenses.
We
estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately
$ .
Representative’s
Warrant
We
have agreed to issue the Representative a warrant to purchase up to an aggregate of 5.0% of the shares of common stock sold in
this offering (the “Representative’s Warrants”). The Representative’s Warrant will be exercisable 180
days after the commencement of sales of the shares of common stock in this offering until the fifth anniversary of the date commencement
of sales at $ per share (120% of the public offering price). The Representative’s Warrant has been deemed compensation by
FINRA and is therefore subject to a 180-day lock-up pursuant to FINRA Rule 5110(e). The Representative (or its respective permitted
assignees under Rule 5110(e)(2)(B)) will not sell, transfer, assign, pledge, or hypothecate the Representative’s Warrant
or the securities underlying such warrant, nor will they engage in any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of such warrants or the underlying securities for a period of 180 days
following the date of commencement of sales pursuant to the offering. In addition, the Representative’s Warrant provides
for one demand registration right and unlimited “piggy-back” registration rights with respect to the shares underlying
such warrants, exercisable for a period of not more than seven (7) years from the commencement of sales in this offering in compliance
with FINRA Rule 5110(g)(8)(D). We will bear all fees and expenses attendant to registering the securities issuable on the exercise
of the Representative’s Warrant other than underwriting commissions incurred and payable by the holders thereof. The exercise
price and number of shares issuable upon exercise of the Representative’s Warrant may be adjusted in certain circumstances,
including in the event of a stock dividend, extraordinary cash dividend, or our recapitalization, reorganization, merger, or consolidation
in compliance with FINRA Rule 5110(g)(8)(E). However, the exercise price of the Representative’s Warrant or the underlying
shares of such warrants will not be adjusted for issuances of shares of common stock at a price below such warrant’s exercise
price.
Tail
Financing
If,
during the period that is 12 months following the closing of this public offering, we consummate a financing with investors with
whom we have had a conference call or a meeting arranged by the Representative during the period in which we engaged the Representative,
we will pay the representative a fee equal 8% of the proceeds of such financing.
Right
of First Refusal
Until
12 months from the closing date of this offering, the Representative will have an irrevocable right of first refusal, in its sole
discretion, to act as sole investment banker, sole book-runner, and/or sole placement agent, for all future public and private
equity and debt offerings, including all equity-linked financings on terms and conditions customary to the Representative for
such transactions.
Stabilization
In
accordance with Regulation M under the Exchange Act, the underwriters may engage in activities that stabilize, maintain or otherwise
affect the price of our Common stock, including short sales and purchases to cover positions created by short positions, stabilizing
transactions, syndicate covering transactions, penalty bids and passive market making.
| |
● |
Short positions
involve sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase,
which creates a syndicate short position. The short position may be either a covered short position or a naked short position.
In a covered short position, the number of shares involved in the sales made by the underwriters in excess of the number of
shares they are obligated to purchase is not greater than the number of shares that they may purchase by exercising their
option to purchase additional shares. In a naked short position, the number of shares involved is greater than the number
of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising
their option to purchase additional shares or purchasing shares in the open market. |
| |
● |
Stabilizing transactions
permit bids to purchase the underlying security as long as the stabilizing bids do not exceed a specific maximum price. |
| |
● |
Syndicate covering
transactions involve purchases of our Common stock in the open market after the distribution has been completed to cover syndicate
short positions. In determining the source of shares to close out the short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase
shares through the underwriters’ option to purchase additional shares. If the underwriters sell more shares than could
be covered by the underwriters’ option to purchase additional shares, thereby creating a naked short position, the position
can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters
are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could
adversely affect investors who purchase in the offering. |
| |
● |
Penalty bids permit
the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate
member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
| |
● |
In passive market
making, market makers in our common stock who are underwriters or prospective underwriters may, subject to limitations, make
bids for or purchase shares of our common stock until the time, if any, at which a stabilizing bid is made. |
These
activities may have the effect of raising or maintaining the market price of our Common stock or preventing or retarding a decline
in the market price of our Common stock. As a result of these activities, the price of our Common stock may be higher than the
price that might otherwise exist in the open market. These transactions may be effected on The Nasdaq Capital Market or otherwise
and, if commenced, may be discontinued at any time.
Neither
we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our Common stock. In addition, neither we nor any of the underwriters make any representation
that the representative will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued
without notice.
Determination
of Offering Price
In
determining the offering price, we and the Representative have considered a number of factors, including:
| |
● |
the information
set forth in this prospectus and otherwise available to the Representative; |
| |
● |
historical trading
prices of our common stock as quoted on the OTC Pink Market; |
| |
● |
our prospects and
the history and prospects for the industry in which we compete; |
| |
● |
an assessment of
our management; |
| |
● |
our prospects for
future revenue and earnings; |
| |
● |
the general condition
of the securities markets at the time of this offering; |
| |
● |
the recent prices
of, and demand for, shares sold by us prior to this offering; |
| |
● |
the recent market
prices of, and demand for, publicly traded securities of generally comparable companies; and |
| |
● |
other factors deemed
relevant by the Representative and us. |
Indemnification
We
and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities
Act, or to contribute to payments the underwriters may be required to make in respect of such liabilities.
Lock-Up
Agreements
We
have agreed that for a period of 180 days after the closing of this offering, we and any of our successors will not, without the
prior written consent of the representative, subject to customary exceptions, which may be withheld or delayed in the representative’s
sole discretion:
| |
● |
offer, issue, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or submit to, or file with
the SEC a registration statement under the Securities Act relating to, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for common stock or publicly disclose the intention to undertake any of the foregoing;
or |
| |
● |
enter into any swap
or other arrangement that transfers to another entity, in whole or in part, any of the economic consequences of ownership
of any of our common stock or such other securities; whether any such transaction described above is to be settled by delivery
of shares of our capital stock or such other securities, in cash or otherwise. |
Each
of our directors and executive officers and 5% stockholders of our outstanding common stock has entered into lock-up agreements
with the representative prior to the commencement of this offering pursuant to which each of these persons or entities has agreed
that, for a period ending 180 days after the date of this prospectus, none of them will, without the prior written consent of
the representative (which may be withheld or delayed in the representative’s sole discretion):
| |
● |
offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right,
or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any of the Lock-Up Securities; |
| |
● |
enter into any hedging,
swap or other agreement or transaction that transfers to another, in whole or in part, any of the economic consequences of
ownership of the Lock-Up Securities, whether any such transaction described above is to be settled by delivery of the Lock-Up
Securities, in cash or otherwise, make any demand for, or exercise any right with respect to, the registration of any Lock-Up
Securities, or publicly disclose the intention to undertake any of the foregoing; or |
| |
● |
otherwise enter
into any hedging or other transactions or arrangements (including, without limitation, any short sale or the purchase or sale
of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument,
however described or defined) designed or intended, or which could reasonably be expected to lead to or result in, a sale
or disposition or transfer (whether by the locked-up party or any other person) of any economic consequences of ownership,
in whole or in part, directly or indirectly, of any Lock-Up Securities, whether any such transaction or arrangement (or instrument
provided for thereunder) would be settled by delivery of Lock-Up Securities, in cash or otherwise. |
Electronic
Distribution
A
prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling
group members, if any, participating in the offering. The representative may allocate a number of shares to the underwriters and
selling group members, if any, for sale to their online brokerage account holders. Any such allocations for online distributions
will be made by the representative on the same basis as other allocations.
Listing
In
connection with this offering, we have applied to list our common stock for trading on The Nasdaq Capital Market under the symbol
“FINR” There is no assurance, however, that our common stock will be listed on The Nasdaq Capital Market or any other
national securities exchange. We will not proceed with this offering if Nasdaq does not approve our listing application.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Securities Transfer Corporation, located at 2901 N. Dallas Parkway, Suite
380 Plano, TX 75093; Telephone +1 469 633 0101.
Selling
Restrictions
Canada
The
securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principals that are accredited
investors, as defined in National Instrument 45 106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario),
and are permitted clients, as defined in National Instrument 31 103 Registration Requirements, Exemptions and Ongoing Registrant
Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to,
the prospectus requirements of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this
prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission
or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s
province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult with a legal advisor.
Pursuant
to section 3A.3 of National Instrument 33 105 Underwriting Conflicts (NI 33 105), the underwriters are not required to comply
with the disclosure requirements of NI 33 105 regarding underwriter conflicts of interest in connection with this offering.
European
Economic Area
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each, a Relevant Member
State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an
offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
| |
● |
to any legal entity which is a qualified investor
as defined in the Prospectus Directive; |
| |
● |
to fewer than 100
or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or
legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive,
subject to obtaining the prior consent of the representative for any such offer; or |
| |
● |
in any other circumstances
falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result
in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive. |
For
the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock
in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the
offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common
stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State,
the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending
Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant
Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United
Kingdom
Each
underwriter has represented and agreed that:
| |
● |
it has only communicated
or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in
investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, or FSMA) received by
it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA
does not apply to us; and |
| |
● |
it has complied
and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of
our common stock in, from or otherwise involving the United Kingdom. |
Switzerland
The
shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other
stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure
standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards
for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated
trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or
the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this document nor any other offering or marketing material relating to the offering, or the shares have been or will be filed
with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares
will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been and will
not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. Accordingly, no public distribution,
offering or advertising, as defined in CISA, its implementing ordinances and notices, and no distribution to any nonqualified
investor, as defined in CISA, its implementing ordinances and notices, shall be undertaken in or from Switzerland, and the investor
protection afforded to acquirers of interests in collective investment schemes under CISA does not extend to acquirers of shares.
Australia
No
placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian
Securities and Investments Commission, or the ASIC, in relation to the offering.
This
prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations
Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure
statement or other disclosure document under the Corporations Act.
Any
offer in Australia of the shares may only be made to persons, the Exempt Investors, who are “sophisticated investors”
(within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section
708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations
Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.
The
shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after
the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations
Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is
pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe
such Australian on-sale restrictions.
This
prospectus contains general information only and does not take account of the investment objectives, financial situation or particular
needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making
an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives,
and circumstances and, if necessary, seek expert advice on those matters.
LEGAL
MATTERS
Sheppard,
Mullin, Richter & Hampton LLP, New York, New York, will pass upon the validity of the shares of our common stock to be sold
in this offering Sichenzia Ross Ference Carmel LLP, New York, New York, has acted as counsel for the underwriters in connection
with certain legal matters related to this offering.
EXPERTS
The financial statements of Fintech
Scion Limited as of December 31, 2023 and 2022, appearing in this prospectus and registration statement of which this prospectus
forms a part, have been audited by Pan-China Singapore PAC, independent registered public accounting firm, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon such report, given on the authority of such firm
as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities being offered
by this prospectus. This prospectus does not contain all of the information in the registration statement of which this prospectus
is a part and the exhibits to such registration statement. Statements contained in this prospectus as to the contents of any contract
or any other document are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document
incorporated by reference or filed as an exhibit to the registration statement of which this prospectus is a part. Each of these
statements is qualified in all respects by this reference.
You
may read and copy the registration statement of which this prospectus is a part, as well as our reports, proxy statements and
other information, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC, including Fintech Scion Limited. The SEC’s website can be found at http://www.sec.gov. You may also request a copy
of these filings, at no cost, by writing us at Fintech Scion Limited, M Floor & 1st Floor, No. 33, Jalan Maharajalela, 50150,
Kuala Lumpur, Malaysia, or by calling us at +603 9226 0908.
We
are subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, file periodic
reports, proxy statements, and other information with the SEC. These periodic reports, proxy statements and other information
are available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to
above. We also maintain a website at www.fintechcashier.com. You may access these materials free of charge as soon as reasonably
practicable after they are electronically filed with or furnished to the SEC. Information contained on our website is not a part
of this prospectus and the inclusion of our website address in this prospectus is an inactive textual reference only.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
| To:
|
The
Board of Directors and Stockholders of |
| |
Fintech
Scion Ltd |
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 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, in conformity with accounting
principles generally accepted in the United States.
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
| |
● |
We
obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s
goodwill impairment assessment process. For example, we tested controls over the Company’s long range planning process
as well as controls over the review of the significant assumptions in estimating the fair values of the reporting units. |
| |
● |
To
test the fair values of the reporting units, our audit procedures included, among others, assessing methodologies, testing
the significant assumptions described above, and testing the completeness and accuracy of the underlying data used by the
Company. Our testing procedures over the significant assumptions included, among others, comparing forecasted revenue and
operating margins to current industry and economic trends. We assessed the historical accuracy of management’s estimates
by comparing past projections to actual performance and assessed sensitivity analyses of significant assumptions to evaluate
the changes in the fair value of the reporting units resulting from changes in the assumptions. |
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:
| ● |
Conducted background checks, and reviewed
other public research sources for information related to transactions between the Company and its related parties |
| ● |
Performed confirmations for account balances
with related parties |
| ● |
Reviewed transaction details in the director
accounts for transactions with related parties |
| ● |
Examined the Company’s reconciliation
of its related parties’ transactions and balances |
Pan-China Singapore PAC (6255)
Chartered Accountants
Singapore
May 9,2024 except for the amendment
of typo regarding inclusion of year 2022 in the audit report dated April 5, 2024 which is superseded.
We have served as the Company’s
auditor since 2021
FINTECH SCION LIMITED
CONSOLIDATED BALANCE SHEET
(Stated in US Dollars)
| | |
As of | | |
As of | |
| | |
December 31, | | |
December 31, | |
| | |
2023 | | |
2022 | |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 3,765,959 | | |
$ | 3,791,378 | |
| Accounts receivable | |
| 59,974 | | |
| 1,792,195 | |
| Amount due from related parties | |
| — | | |
| 1,296,935 | |
| Other receivables, prepayments and other current assets | |
| 509,451 | | |
| 1,049,292 | |
| Inventories | |
| 12,000 | | |
| 2,272 | |
| Total Current Assets | |
| 4,347,384 | | |
| 7,932,072 | |
| | |
| | | |
| | |
| Non-current assets | |
| | | |
| | |
| Intangible asset | |
| 34,707 | | |
| 59,803 | |
| Goodwill | |
| 16,657,653 | | |
| 55,794,524 | |
| Property and equipment, net | |
| 38,600 | | |
| 38,862 | |
| Total Non-Current Assets | |
| 16,730,960 | | |
| 55,893,189 | |
| | |
| | | |
| | |
| TOTAL ASSETS | |
$ | 21,078,344 | | |
$ | 63,825,261 | |
| | |
| | | |
| | |
| LIABILITIES | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Amounts due to related parties | |
$ | 755,040 | | |
$ | 2,463,833 | |
| Accounts payable | |
| 47,662 | | |
| 617,655 | |
| Accruals and other payables | |
| 1,953,160 | | |
| 1,861,979 | |
| Total Current Liabilities | |
| 2,755,862 | | |
| 4,943,467 | |
| | |
| | | |
| | |
| Non-current liabilities | |
| — | | |
| — | |
| TOTAL LIABILITIES | |
| 2,755,862 | | |
| 4,943,467 | |
| | |
| | | |
| | |
| Commitments and Contingencies (Note 11) | |
| | | |
| | |
| | |
| | | |
| | |
| STOCKHOLDERS’ EQUITY | |
| | | |
| | |
| Preferred stock par value $0.001: 25,000,000 shares authorized; and 0 outstanding | |
| — | | |
| — | |
| Common stock par value $0.001: 400,000,000 and $0.001: 400,000,000
shares authorized, respectively; 298,742,643 and 198,742,643 shares issued and outstanding, respectively | |
| 298,743 | | |
| 198,743 | |
| Additional paid-in capital | |
| 111,770,998 | | |
| 111,770,998 | |
| Merger reserves | |
| (55,000,000 | ) | |
| (55,000,000 | ) |
| Accumulated surplus/(deficit) | |
| (39,319,015 | ) | |
| 1,342,788 | |
| Accumulated other comprehensive income | |
| 569,339 | | |
| 565,935 | |
| Equity attributable to equity holders of the parent | |
| 18,320,065 | | |
| 58,878,464 | |
| Non-controlling interests | |
| 2,417 | | |
| 3,330 | |
| Total Stockholders’ Equity | |
| 18,322,482 | | |
| 58,881,794 | |
| | |
| | | |
| | |
| TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY | |
$ | 21,078,344 | | |
$ | 63,825,261 | |
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
(In U.S. dollars)
| | |
| | |
| |
| | |
For the Years Ended
December, 31 | |
| | |
2023 | | |
2022 | |
| REVENUE | |
$ | 2,420,184 | | |
$ | 3,084,279 | |
| | |
| | | |
| | |
| COST OF REVENUE | |
| (688,630 | ) | |
| (430,281 | ) |
| | |
| | | |
| | |
| GROSS PROFIT | |
| 1,731,554 | | |
| 2,653,998 | |
| | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | |
| Selling expense | |
| — | | |
| (9,790 | ) |
| General and administrative expenses | |
| (3,415,786 | ) | |
| (1,863,982 | ) |
| Impairment of goodwill | |
| (39,136,871 | ) | |
| — | |
| Total Operating Expenses | |
| (42,552,657 | ) | |
| (1,873,772 | ) |
| | |
| | | |
| | |
| PROFIT/(LOSS) FROM OPERATIONS | |
| (40,821,103 | ) | |
| 780,226 | |
| | |
| | | |
| | |
| OTHER INCOME / (EXPENSE), NET | |
| | | |
| | |
| Other income | |
| 397,532 | | |
| 5,531,606 | |
| Other expense | |
| (73,660 | ) | |
| (387,805 | ) |
| Total other income / (expense), net | |
| 323,872 | | |
| 5,143,801 | |
| NET INCOME / (LOSS) BEFORE TAX | |
| (40,497,231 | ) | |
| 5,924,027 | |
| | |
| | | |
| | |
| Income tax | |
| (165,485 | ) | |
| (5,057 | ) |
| NET INCOME / (LOSS) | |
$ | (40,662,716 | ) | |
$ | 5,918,970 | |
| | |
| | | |
| | |
| Loss attributable to non-controlling interest | |
| 913 | | |
| — | |
| NET INCOME / (LOSS) FOR THE PERIOD | |
| (40,661,803 | ) | |
| 5,918,970 | |
| | |
| | | |
| | |
| OTHER COMPREHENSIVE INCOME / (LOSS) | |
| | | |
| | |
| Foreign currency translation adjustment | |
| 3,404 | | |
| 308,288 | |
| | |
| | | |
| | |
| TOTAL COMPREHENSIVE INCOME / (LOSS) | |
$ | (40,658,399 | ) | |
$ | 6,227,258 | |
| | |
| | | |
| | |
| Weighted average number of common shares outstanding - basic and diluted | |
| 298,742,643 | | |
| 198,742,643 | |
| | |
| | | |
| | |
| Net income / (loss) per share - basic and diluted | |
$ | (0.14 | ) | |
$ | 0.03 | |
The accompanying notes are an integral part
of the consolidated financial statements.
FINTECH SCION LIMITED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’
EQUITY
(Stated in US Dollars)
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
Common stock | | |
Additional
paid-in | | |
Merger | | |
Accumulated
gain / | | |
Accumulated
other comprehensive | | |
Non-
controlling | | |
Total
stockholders’ | |
| | |
Shares | | |
Amount | | |
capital | | |
reserves | | |
(deficit) | | |
income / (loss) | | |
interest | | |
equity | |
| Balance, December 31, 2020 | |
| 54,087,903 | | |
$ | 5,409 | | |
$ | 4,749,798 | | |
$ | — | | |
$ | (9,576,061 | ) | |
$ | 87,592 | | |
$ | — | | |
$ | (4,733,262 | ) |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (22,758 | ) | |
| — | | |
| — | | |
| (22,758 | ) |
| Foreign currency translation adjustment | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 170,055 | | |
| — | | |
| 170,055 | |
| Balance, December 31, 2021 | |
| 54,087,903 | | |
$ | 5,409 | | |
$ | 4,749,798 | | |
$ | — | | |
$ | (9,598,819 | ) | |
$ | 257,647 | | |
$ | — | | |
$ | (4,585,965 | ) |
| Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| 5,918,970 | | |
| — | | |
| — | | |
| 5,918,970 | |
| Reverse stock split | |
| (48,678,593 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Issuance of stock | |
| 193,333,333 | | |
| 193,334 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 193,334 | |
| Acquisition of subsidiaries | |
| — | | |
| — | | |
| 113,389,440 | | |
| (55,000,000 | ) | |
| — | | |
| — | | |
| 3,330 | | |
| 58,392,770 | |
| Reserve release upon disposal of subsidiaries | |
| — | | |
| — | | |
| (1,345,603 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,345,603 | ) |
| Reverse merger recapitalization | |
| — | | |
| — | | |
| (5,022,637 | ) | |
| — | | |
| 5,022,637 | | |
| — | | |
| — | | |
| — | |
| Foreign currency translation adjustment | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 308,288 | | |
| — | | |
| 308,288 | |
| Balance, December 31, 2022 | |
| 198,742,643 | | |
$ | 198,743 | | |
$ | 111,770,998 | | |
$ | (55,000,000 | ) | |
$ | 1,342,788 | | |
$ | 565,935 | | |
$ | 3,330 | | |
$ | 58,881,794 | |
| Net income | |
| — | | |
| — | | |
| — | | |
| — | | |
| (40,661,803 | ) | |
| — | | |
| (913 | ) | |
| (40,662,716 | ) |
| Foreign currency translation adjustment | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 3,404 | | |
| | | |
| 3,404 | |
| Issuance of stock | |
| 100,000,000 | | |
| 100,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 100,000 | |
| Balance, December 31, 2023 | |
| 298,742,643 | | |
$ | 298,743 | | |
$ | 111,770,998 | | |
$ | (55,000,000 | ) | |
$ | (39,319,015 | ) | |
$ | 569,339 | | |
$ | 2,417 | | |
$ | 18,322,482 | |
The accompanying notes are an integral part
of the consolidated financial statements.
FINTECH SCION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | |
| | |
| |
| | |
For the Year Ended December 31, | |
| | |
2023 | | |
2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | |
| Net income / (loss) | |
$ | (40,662,716 | ) | |
$ | 5,918,970 | |
| Items not involving cash: | |
| | | |
| | |
| Depreciation and amortization of– property, plant and equipment and right-of-use assets | |
| 37,853 | | |
| 37,471 | |
| Gain on disposal of subsidiaries | |
| — | | |
| (5,481,178 | ) |
| Impairment on goodwill | |
| 39,136,871 | | |
| — | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivables | |
| 1,732,221 | | |
| (1,792,195 | ) |
| Other receivables, prepayments and other current assets | |
| 539,842 | | |
| (1,011,960 | ) |
| Inventories | |
| (9,728 | ) | |
| (2,272 | ) |
| Accounts payable | |
| (569,993 | ) | |
| 617,577 | |
| Commission payables | |
| — | | |
| (126,315 | ) |
| Accrued expense and other payables | |
| 91,181 | | |
| 1,519,318 | |
| Net (used in) / cash generated by operating activities | |
| 295,531 | | |
| (320,584 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Purchase of property and equipment | |
| (12,496 | ) | |
| — | |
| Disposal of subsidiaries, net of cash disposed | |
| — | | |
| (75,389 | ) |
| Acquisition of subsidiaries, net cash acquired | |
| — | | |
| 3,791,378 | |
| Net (used in) / cash generated by investing activities | |
| (12,496 | ) | |
| 3,715,989 | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| (Repayment to) / proceed from related parties | |
| (411,858 | ) | |
| 391,805 | |
| Proceeds from issuance of shares | |
| 100,000 | | |
| — | |
| Net cash generated by / (used in) financing activities | |
| (311,858 | ) | |
| 391,805 | |
| | |
| | | |
| | |
| EFFECT OF EXCHANGE RATES ON CASH | |
| 3,404 | | |
| (32,865 | ) |
| | |
| | | |
| | |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | |
| (25,419 | ) | |
| 3,754,345 | |
| | |
| | | |
| | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | |
| 3,791,378 | | |
| 37,033 | |
| | |
| | | |
| | |
| CASH AND CASH EQUIVALENTS, END OF YEAR | |
$ | 3,765,959 | | |
$ | 3,791,378 | |
| | |
| | | |
| | |
| SUPPLEMENTAL OF CASH FLOW INFORMATION | |
| | | |
| | |
| | |
| | | |
| | |
| Cash paid for interest expenses | |
$ | — | | |
$ | — | |
| Cash paid for income tax | |
$ | — | | |
$ | — | |
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)
| 1. |
ORGANIZATION AND BUSINESS |
Fintech Scion Limited (“the Company”)
previously known as HWGC Holdings Limited, incorporated in Nevada.
The Company holds the following equity
interests in its subsidiaries:
| |
|
|
|
|
|
Interest |
|
| No. |
|
Name of subsidiary |
|
Country of
incorporation
|
|
2023
%
|
|
|
2022
%
|
|
|
Principal activities |
| 1 |
|
FintechCashier Asia P.L.C., previously known as HWGG Capital P.L.C. (“FintechAsia”) |
|
Malaysia |
|
100 |
|
|
100 |
|
|
Money broking |
| 2 |
|
HWG Cash Singapore Pte Ltd (“HCS”) |
|
Singapore |
|
55 |
|
|
55 |
|
|
Trading of digital assets |
| 3 |
|
HWGC KZ Limited (“HKZ”) |
|
Kazakhstan |
|
100 |
|
|
100 |
|
|
Software development |
| 4 |
|
Fintech Scion Limited (“Fintech”) |
|
United Kingdom |
|
100 |
|
|
100 |
|
|
Holding company and protection of Intellectual Property |
| 5 |
|
Fintech Digital Solutions Limited (“FDS”) |
|
United Kingdom |
|
100 |
|
|
100 |
|
|
Digital payment services |
| 6 |
|
Fintech Digital Consulting Limited (“FDC”) |
|
United Kingdom |
|
100 |
|
|
100 |
|
|
Technology provider and payment consulting |
| 7 |
|
Aelora Sdn Bhd, previously known as Vitaxel Sdn Bhd
(“ASB”)
|
|
Malaysia |
|
— |
|
|
100(1) |
|
|
Direct selling industry |
| 8 |
|
Vitaxel Online Mall Sdn Bhd (“VOM”) |
|
Malaysia |
|
— |
|
|
100(1) |
|
|
Online shopping platforms |
(1) ASB and VOM were disposed
by the Company on December 30, 2022.
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:
| |
i. |
Acquisition of FintechAsia |
| |
ii. |
Acquisition of Fintech |
| |
iii. |
Disposal of ASB and VOM |
| |
|
|
| |
iv. |
Acquisition of Assets and Termination |
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.
Upon completion of the disposal, ASB and
VOM ceased to be the subsidiary of the Company as at December 31, 2022. The disposal had the following financial effects on the
Company for the year ended December 31, 2022:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the year ended December 31, 2022 |
|
| |
|
ASB |
|
|
VOM |
|
|
Total |
|
| Property, plant and equipment, net. |
|
$ |
11,824 |
|
|
$ |
229 |
|
|
$ |
12,053 |
|
| Rights-of-use assets |
|
|
13,854 |
|
|
|
— |
|
|
|
13,854 |
|
| Cash and cash equivalents |
|
|
75,389 |
|
|
|
— |
|
|
|
75,389 |
|
| Other receivables, prepayments and other current assets |
|
|
10,793 |
|
|
|
2,156 |
|
|
|
12,949 |
|
| Other payables |
|
|
(4,365,372 |
) |
|
|
(25,528 |
) |
|
|
(4,390,900 |
) |
| Lease liabilities |
|
|
(79,525 |
) |
|
|
— |
|
|
|
(79,525 |
) |
| Net liabilities disposed |
|
$ |
(4,333,037 |
) |
|
$ |
(23,143 |
) |
|
|
(4,356,180 |
) |
| Consideration received, satisfied in assignment of intercompany debt |
|
|
(1,124,997 |
) |
|
|
(1 |
) |
|
|
(1,124,998 |
) |
| Net gain on disposal of subsidiaries |
|
$ |
(5,458,034 |
) |
|
$ |
(23,144 |
) |
|
$ |
(5,481,178 |
) |
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.
| 2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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:
| |
Office equipment |
5 years |
|
| |
Computer equipment |
5 years |
|
| |
Furniture and fixtures |
5 years |
|
| |
Electrical & fitting |
5 years |
|
| |
Software and website |
5 years |
|
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
(v) recognition of revenue
when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step
model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods
or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception,
the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance
obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective
performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance
obligations are transferred to customers as services are performed over the remaining contractual terms.
Research and Development Costs
Research and development (“R&D”)
costs are charged to expense in the periods incurred. There were no expenditures incurred by the Company for research and development
for the year ended December 31, 2023 and 2022.
Commission expense
Commission expense incurred by the Company
is recognized as cost of revenue and as a liability (commission payable in the consolidated balance sheet. Commission expense is
not recoverable once recognized and is expensed as incurred.
Income Taxes
Income taxes are determined using the liability
method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities
are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes that date of enactment. In addition, a valuation allowance is established to reduce any deferred
tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.
Uncertain Tax Positions
The impact of an uncertain income tax position on the income
tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority.
An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties
on income taxes are classified as a component of the provisions for income taxes. As of December 31, 2023 and 2022, the Company
recognized income tax of expense of $165,485 and $5,057 respectively.
Comprehensive income / loss
Comprehensive income / loss includes net
gain/loss and cumulative foreign currency translation adjustments and is reported in the Consolidated Statement of Comprehensive
Income or Loss.
Income / Loss per share
The income / loss per share is computed
using the weighted average number of shares outstanding during the fiscal years. For the years ended December 31, 2023 and 2022,
there was no dilutive effect due to net gain / loss.
Related party transactions
The Company follows subtopic 850-10 of
the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related
parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required,
absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted
for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts
that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company;
(f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The financial statements
include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of
financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s)
involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for
each of the periods for which income statements are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods
for which income statements are presented and the effects of any change in the method of establishing the terms from that used
in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if
not otherwise apparent, the terms and manner of settlement.
Recently issued accounting pronouncements
Accounting standards promulgated by the
FASB are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The
following are a summary of recent accounting developments.
In August 2020, the FASB issued ASU 2020-06,
Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s
Own Equity (Subtopic 815-40) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models
that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also
introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method
for all convertible instruments. ASU 2020-06 is effective January 1, 2024 for the Company and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning January 1, 2021. The Company has determined not to early adopt ASU
2020-06. The implementation of this accounting treatment is not expected to have a material effect on the Company’s financial
statements.
Other recent accounting pronouncements
issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities and Exchange Commission (“SEC”)
did not, or are not believed by management, to have a material impact on the Company’s present and future consolidated financial
statements.
Accounting Pronouncements Not Yet
Adopted
In November 2023, the Financial Accounting
Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU
2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will
be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025.
Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the
financial statements. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU No.
2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the
transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective
tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve
the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December
31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect
the adoption of this guidance to have a material impact on our consolidated financial statements.
Accounts receivable represent
balances from:
| |
(i) |
transactions fees receivable generated from financial payment and settlement services; |
| |
(ii) |
non-interest-bearing credit tokens issue to authorized agents. |
Services billed are generally
settled upon financial services has been rendered. Only limited clients are extended with credits.
As at December 31, 2023, we had
accounts receivable of $59,974 solely derived from commissions receivables. During the year, the company recognized bad debts of
$39,310. As of December 31, 2022, accounts receivable balances of $1,792,195 mainly derived from commission receivable of $597,986
and non-interest-bearing credit tokens issued to authorized agents of $1,194,208.
The company has assessed the
impairment and considers the remaining accounts receivable to be fully collectible, therefore no further impairment is necessary
as at December 31, 2023.
| 4. |
OTHER RECEIVABLES, PREPAYMENTS AND OTHER CURRENT ASSETS |
Other receivables, prepayments and other current
assets consist of the following:
| |
|
As of
December 31,
2023 |
|
|
As of
December 31,
2022 |
|
| |
|
|
|
|
|
|
| Other receivables (1) |
|
$ |
294,780 |
|
|
$ |
949,430 |
|
| Deposits (2) |
|
$ |
110,161 |
|
|
$ |
87,805 |
|
| Prepayments (3) |
|
$ |
4,510 |
|
|
$ |
12,057 |
|
| Common stock not paid (4) |
|
$ |
100,000 |
|
|
$ |
— |
|
| |
|
$ |
509,451 |
|
|
$ |
1,049,292 |
|
| |
(1) |
Other receivables primarily represent balances in liquidity solution providers. |
| |
(2) |
Deposits represented payments for rental, utilities, and deposit payment to product suppliers. |
| |
(3) |
Prepayments mainly consists of prepayment for insurance and IT related fees. |
| |
(4) |
Common stock not paid consists of the shares issued to CICO as disclosed in Note 1: Organization And Business. |
The table below set forth the
carrying amount of goodwill for the year ended December 31, 2023 and 2022:
| | |
As of
December 31,
2023 | | |
As of
December 31,
2022 | |
| | |
| | |
| |
| Gross carrying amount | |
$ | — | | |
$ | — | |
| Acquired in business combination (1) | |
| 55,794,524 | | |
| 55,794,524 | |
| | |
| 55,794,524 | | |
| 55,794,524 | |
| Accumulated impairment | |
$ | — | | |
$ | — | |
| Impairment (2) | |
| (39,136,871 | ) | |
| — | |
| | |
| — | | |
| — | |
| | |
| | | |
| | |
| Goodwill, net | |
$ | 16,657,653 | | |
$ | 55,794,524 | |
| |
(1) |
Goodwill acquired during the year ended December 31, 2022 resulted from the acquisition of Fintech as disclosed in Note 1: Organization and business. |
Goodwill is calculated based
on the excess in purchase consideration as compared to the fair value of the Company. The acquisition date fair value is $58,245,587
(97,075,997 x $0.60). In order to arrive at the fair value of the Company, fair value adjustments have been made on inventories
and related party balances. The estimated fair value of the Company identifiable net assets after fair value adjustments is as
follows
| | |
As of
December 31,
2022 | |
| | |
| |
| Property, plant and equipment, net. | |
$ | 21,807 | |
| Intangible asset | |
| 59,803 | |
| Current assets | |
$ | 7,239,547 | |
| Current liabilities | |
| (4,870,094 | ) |
| Net assets acquired | |
$ | 2,451,063 | |
| (2) | The Company performs our annual test of goodwill impairment in the fourth quarter of every year.
In connection with the annual goodwill impairment test in the fourth quarter of 2023, the Company estimated the fair value of our
FintechAsia reporting unit using the income and market approaches. In the annual 2023 test, the FintechAsia reporting unit exceeded
the carrying values by more than 50 percent. The Company performed a qualitative test on our FintechAsia reporting unit and concluded
it was more likely than not the fair value of this reporting unit exceeded its carrying value. |
During the year ended December
31, 2023, the Company recorded a goodwill impairment charge of $39,136,871 in our FintechAsia reporting unit, primarily due to
the surrendering of our credit token license and significant impacts on money broking transactional volume following the cryptocurrency
market crash in 2022. Both significantly impacted forecasted cash flows used in our analysis. Moreover, operating expenses did
not decline proportionally to revenue. In addition, inflationary pressures also caused our forecasted expenses to increase. Furthermore,
our discounted cash flows utilized a higher risk-adjusted discount rate for the 2023 impairment test, primarily due to central
banks raising interest rates in 2023 and increased country-specific risk due to macroeconomic factors.
The Company estimated the fair
value of the FintechAsia reporting unit based on 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 unit. Fair value under the market approach utilized
the guideline public company methodology, which uses valuation indicators from publicly-traded companies that are similar to our
FintechAsia reporting unit and considers differences between our reporting unit and the comparable companies.
In estimating the future cash
flows of the FintechAsia reporting unit, the Company utilized a combination of market and company-specific inputs that a market
participant would use in assessing the fair value of the reporting units. The primary market input was revenue growth rates. These
rates were based upon historical trends and estimated future growth drivers such as the money brokering, payment solutions, and
white labelling growth rate. Significant company-specific inputs included assumptions regarding how the reporting unit could leverage
operating expenses as revenue grows.
Under the guideline public
company methodology, the Company took into consideration specific risk differences between our reporting unit and the comparable
companies, such as recent financial performance, size risks and product portfolios, among other considerations.
The
Company used significant unobservable inputs within the income approach valuation method. These include 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.
The Company will continue to monitor the
fair value of our reporting units in our interim and annual reporting periods. If our estimated cash flows decrease, the Company
may have to record further impairment charges in the future. Factors that could result in our cash flows being lower than our current
estimates include: 1) decreased revenues caused by unforeseen changes the market, 2) our inability to achieve the estimated operating
margins in our forecasts from our restructuring programs, cost saving initiatives, and other unforeseen factors, and 3) the weakening
of foreign currencies against the U.S. Dollar. 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. Due to the
significant carrying amount of goodwill recognized, any further impairment may cause a significant adverse financial impact on
the Company that could raise doubt about the Company’s ability to continue as a going concern.
| 6. |
PROPERTY AND EQUIPMENT |
Property and equipment, net consist of the following:
| | |
As of
December 31,
2023 | | |
As of
December 31,
2022 | |
| | |
| | |
| |
| Office equipment | |
$ | 8,628 | | |
$ | 7,067 | |
| Computer equipment | |
| 49,600 | | |
| 31,959 | |
| Furniture and fittings | |
| 4,824 | | |
| 4,501 | |
| Software and website | |
| 10,173 | | |
| 17,202 | |
| | |
| 73,225 | | |
| 60,729 | |
| Less: Accumulated depreciation | |
| (34,625 | ) | |
| (21,867 | ) |
| Balance at end of year | |
$ | 38,600 | | |
$ | 38,862 | |
Depreciation expenses charged
to the statements of loss and comprehensive loss for the years ended December 31, 2023 and 2022 were $12,758 and $7,569 respectively.
| 7. |
ACCRUALS AND OTHER PAYABLES |
Accruals and other payables consist of the following:
| | |
As of
December 31,
2023 | | |
As of
December 31,
2022 | |
| | |
| | |
| |
| Provisions and accruals (1) | |
$ | 319,939 | | |
$ | 163,217 | |
| Others (2) | |
| 1,633,221 | | |
| 1,698,762 | |
| Balance at end of year | |
$ | 1,953,160 | | |
$ | 1,861,979 | |
| |
(1) |
Provisions and accruals consists mainly of audit and accountancy fees and includes $52,000 of share options issued to directors during the year. |
| |
(2) |
Other payables mainly consists of client funds. |
Income taxes consisted of U.S. income tax and foreign
income tax, where foreign income tax consist of United Kingdom income tax and Malaysia income tax.
U.S. income tax rate is 21% (2022: 21%). Foreign income
tax consist of United Kingdom income tax and Malaysia Income Tax. United Kingdom income tax rate is 25% (2022: 19%). Malaysia income
tax rate is 24% (2022: 24%), however, due to FintechAsia enjoy preferential tax rate of 3% (2022: 3%) due to within the territory
of Labuan, Malaysia.
Income taxes includes the following components:
| | |
| | |
| |
| | |
For the year ended | |
| | |
December 31,
2023 | | |
December 31,
2022 | |
| United States | |
$ | 55,692 | | |
$ | — | |
| Foreign | |
| 109,793 | | |
| 5,057 | |
| Income tax recovery | |
$ | 165,485 | | |
$ | 5,057 | |
The foreign income taxes derived
from Malaysia income tax within territory of Labuan. No United Kingdom income taxes are provided due to sufficient tax credits
in the UK subsidiaries for offsetting against its income taxes for the year ended December 31, 2023.
Under IRC Section 382, a corporation
that undergoes an “ownership change” in subject to limitations on its use of pre-change NOL carryforwards to offset
future taxable income. As of each reporting date, the management assessed the realizability of deferred tax assets. Deferred tax
assets had not been recognized in respect of any potential tax benefit that may be derived from non-capital loss carry forward
and property and equipment due to past negative evidence of previous cumulative net losses and uncertainty upon restructuring.
The management will continue to assess at each reporting period to determine the realizability of deferred tax assets.
The Company derives its revenue
mainly from transaction fees earned through financial payment and settlement services. For these transaction fee revenues, the
Company view itself as the agent in these transactions and as a result, records revenue on a net basis. The Company considers its
performance obligation satisfied and recognizes revenue at the point in time the transaction is processed.
The disaggregation of revenue of the Company
by geographical region is as follows:
| | |
United Kingdom | | |
Malaysia | | |
Total | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| Transaction fees | |
| 1,983,139 | | |
| 2,476,385 | | |
| 287,734 | | |
| 547,600 | | |
| 2,270,873 | | |
| 3,023,985 | |
| Other | |
| — | | |
| — | | |
| 149,311 | | |
| 60,294 | | |
| 149,311 | | |
| 60,294 | |
| Total revenue | |
| 1,983,139 | | |
| 2,476,385 | | |
| 437,045 | | |
| 607,894 | | |
| 2,420,184 | | |
| 3,084,279 | |
| 10. |
RELATED PARTY TRANSACTIONS |
| | |
As of
December 31,
2023 | | |
As of
December 31,
2022 | |
| Amount due from related parties | |
| | | |
| | |
| Ho Wah Genting Group Sdn Bhd (2) | |
$ | — | | |
$ | 799,094 | |
| HWG Fintech International Ltd (2) | |
| — | | |
| 497,841 | |
| Total Amount due from related parties | |
$ | — | | |
$ | 1,296,935 | |
| | |
| | | |
| | |
| Amount due to related parties | |
| | | |
| | |
| Grande Legacy Inc. (1) | |
$ | — | | |
$ | 266,610 | |
| HWG Capital Inc. (3) | |
| — | | |
| 329,565 | |
| HWG Digital Investment Bank (Malaysia) P.L.C. (2) | |
| — | | |
| 1,596,825 | |
| Aelora Sdn Bhd (1) | |
| — | | |
| 23,933 | |
| Ho Wah Genting Group Sdn Bhd (2) | |
| 25,748 | | |
| — | |
| Shalom Dodoun (4) | |
| 727,624 | | |
| 246,900 | |
| Natalie Kastberg (5) | |
| 1,668 | | |
| — | |
| Total Amount due to related parties | |
$ | 755,040 | | |
$ | 2,463,833 | |
The related party balances are
unsecured, interest-free and repayable on demand.
| |
(1) |
During the year ended December 31, 2022, Aelora Sdn Bhd (“ASB” and previously known as “Vitaxel Sdn Bhd”) and Vitaxel Online Mall Sdn Bhd (“VOM”), which are dormant, have been disposed as part of the restructuring transactions as disclosed in Note 1: Organization and Business. |
Both ASB and VOM are disposed
to Mr Leong Yee Ming, a previous director and CEO of the Company, which also includes certain intercompany debt assignment. Upon
completion of the disposal, related party balances that are outstanding relating to advances made by Grande Legacy Inc. (“GL”)
and ASB are $nil and $nil respectively for the year ended December 31, 2023.
| |
(2) |
Dato’ Lim Hui Boon, the previous president of the Company, is the director of Ho Wah Genting Group Sdn Bhd (“HWGGSB”). Dato’ Lim Hui Boon, is directly related to Mr Lim Chun Hoo, the previous CFO and the current CEO and director of the Company. |
Mr Lim Chun Hoo, the previous
CFO and the current CEO and director of the Company, is a director in HWG Fintech International Ltd (“HWGFI”) and a
previous director of HWGGSB and HWG Digital Investment Bank (Malaysia) P.L.C. (“HDIB”). HDIB is previously known as
Ho Wah Genting Investment Bank (Labuan) P.L.C.
The amount due from HWGGSB and
HWGFI as at December 31, 2023 and December 31, 2022, were advances made by the Company to HWGGSB and HWGFI. Whilst amount due to
HDIB were advances made by HDIB to the Company.
| |
(3) |
Mr Leong Yee Ming, a previous director and CEO of the Company, is a director of HWG Capital Inc. (previously known as “GrandeLife Inc.”). |
| |
|
|
| |
(4) |
Mr Shalom Dodoun (“Mr Shalom”)
was the previous director and CEO of the Company. The amount due to Mr Shalom as at December 31, 2023, were advances made by Mr
Shalom to the Company. Mr Shalom agreed to grant the Company an unsecured Sterling term loan facility and the Company shall pay
interest on the Loan at the rate of 6% per annum above Barclays Bank Rate.
|
| |
(5) |
Ms Natalie Kastberg (“Ms Kastberg”), is a current director of Fintech. The amount due to Ms Kastberg as at December 31, 2023, were advances made by Ms Kastberg to the Company. |
| |
|
|
| |
(6) |
Total payment made in the form of compensation, which includes salary, bonus, stock awards and all other compensation have been made to the following officer of the Company that are individually in excess of $100,000 annually: |
| | |
December 31,
2023 | | |
December 31,
2022 | |
| Directors & Officers | |
| | | |
| | |
| Shalom Dodoun – Previous Director, Chief Executive Officer of the Company | |
$ | 287,138 | | |
$ | 142,005 | |
| Richard Berman – Non-executive Director of the Company (7) | |
$ | 100,000 | | |
$ | — | |
| |
(7) |
Mr. Richard Berman (“Mr. Berman”), is a current non-executive director of the Company. |
| 11. |
COMMITMENTS AND CONTINGENCIES |
Capital Commitments
Upon the successful uplisting
of the Company to Nasdaq, Mr. Richard Berman, the non-executive director of the Company, shall be rewarded with Company’s
shares, up to a maximum of 1% of the Company’s market capitalization. The number of shares to be issued shall be calculated
based on the market share price (as stated on Nasdaq) on the first closing date of the Company listed on Nasdaq.
Common stocks
The Company’s authorized
common stock is $0.001: 400,000,000 shares, with 298,742,643 shares issued and outstanding during the year ended December 31, 2023.
The Company’s authorized
common stock is $0.001: 400,000,000 shares, with 198,742,643 shares issued and outstanding during the year ended December 31, 2022.
The Company’s authorized
common stock is $0.0001: 70,000,000 shares, with 54,087,903 shares issued and outstanding during the year ended December 31, 2021.
On April 8, 2022, Financial Industry
Regulatory Authority, Inc. (“FINRA”) notified the Company that the Reverse Stock Split will take effect on the over-the-counter
market at the start of business on April 11, 2022. The reverse stock split reduces the 54,087,903 shares issued and outstanding
by 48,678,593 shares to 5,409,310. Effectively on April 11, 2022, the Company’s authorized common stock is $0.001: 400,000,000
shares, with 5,409,310 shares issued and outstanding.
On November 15, 2022 and November
30, 2022, the Company issued 91,666,667 and 101,666,666 shares respectively for the acquisition of FintechAsia and acquisition
of Fintech as disclosed in Note 1: Organization And Business. The total shares issued for the acquisitions totalled to 193,333,333.
On November 15, 2023, the Company
issued 100,000,000 shares (the “Shares”) to CICO for the acquisition of assets as disclosed in Note 1: Organization
And Business. The total issued and outstanding shares of the Company had increased to 298,742,643 shares.
On December
27, 2023, the Company and CICO mutually and voluntarily agreed to unwind the transaction. The Shares were cancelled and removed
from the Company’s issued and outstanding shares of common stock on January 30, 2024, decreasing the total issued and outstanding
shares of the Company to 198,742,643 shares.
Preferred stocks
On March 10, 2022, the Company
filed with the Secretary of State of the State of Nevada a Certificate of Designation of the Relative Rights and Preferences of
The Redeemable Convertible Preferred Stock (the “Certificate of Designation”). Pursuant to the Certificate of Designation,
the board of directors of the Company authorized the creation 25,000,000 shares of Redeemable Convertible Preferred Stock, par
value $0.001 per share (the “RCPS”). The RCPS is ranked senior to all classes or series of the Company’s common
stock and does not have any voting rights. However, the holders of the RCPS are entitled to receive, when declared by the board
of directors, cumulative cash dividends at the rate of 6% per annum on each $1.00 per RCPS. Commencing on the date of issuance,
the dividends on the RCPS shall accrue and be cumulative, payable annually in arrears on the 30th business day on each anniversary
of the issue date. Dividends will accumulate whether or not the Company has earnings or whether funds are legally available or
declared by the Board, and no interest will be payable on any dividends which may be in arrears. Each share of RCPS shall be convertible
into one share of common stock of the Company, upon the Board approving the initiation of the listing process to list the shares
of the Company on any stock exchange, or upon the written approval of the Company. The Company may also, at its option, redeem
the RCPS for cash at a redemption price of $1.00 per share plus any accumulated and unpaid dividends thereon. Notwithstanding,
all outstanding RCPS shall be redeemable by the Company on the second anniversary of the issuance date thereof.
No issuance of RCPS has occurred
as of December 31, 2023. In the scenario of issuance of RCPS, the changes will be as follows:
| |
|
December 31, 2023 |
|
December 31, 2022 |
|
| RCPS issuance scenario |
|
30% |
|
50% |
|
|
100% |
|
30% |
|
50% |
|
100% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SELECTED CONDENSED COMBINED BALANCE SHEET DATA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
11,265,959 |
|
|
16,265,959 |
|
|
|
28,765,959 |
|
|
11,291,378 |
|
|
16,291,378 |
|
|
28,791,378 |
|
| Total assets |
|
$ |
28,578,344 |
|
|
33,578,344 |
|
|
|
46,078,344 |
|
|
71,325,261 |
|
|
76,325,261 |
|
|
88,825,261 |
|
| Total liabilities |
|
$ |
2,755,862 |
|
|
2,755,862 |
|
|
|
2,755,862 |
|
|
4,943,467 |
|
|
4,943,467 |
|
|
4,943,467 |
|
| Total stockholders’ equity |
|
$ |
25,822,482 |
|
|
30,822,482 |
|
|
|
43,322,482 |
|
|
66,381,794 |
|
|
71,381,794 |
|
|
83,881,794 |
|
Following the financial year end, the 100,000,000
shares (10,000,000 shares, as adjusted for the 1-for-10 reverse split) that were issued to CICO for the acquisition of assets as
disclosed in Note 1: Organization And Business, were cancelled and removed from the Company’s issued and outstanding shares
of common stock on January 30, 2024. The total issued and outstanding shares of the Company will be reduced to 198,742,643 (19,874,265
shares, as adjusted for the 1-for-10 reverse split) shares on January 30, 2024.
Shares
of Common Stock
Fintech Scion Limited
Spartan Capital Securities LLC
,
2024
Through and including ,
2024 (25 days after commencement of this offering), all dealers that effect transactions in these securities, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II- INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution.
The following table sets forth the costs
and expenses, other than underwriting discounts and commissions, payable by the Company in connection with the issuance and distribution
of the securities being registered hereunder. All amounts are estimates except the SEC registration fee.
| SEC registration fees | |
$ | 2,214.00 | |
| FINRA filing fee | |
$ | * | |
| Nasdaq listing fee | |
$ | * | |
| Transfer agent and registrar fees | |
$ | * | |
| Printing and engraving expenses | |
$ | * | |
| Accounting fees and expenses | |
$ | * | |
| Legal fees and expenses | |
$ | * | |
| Miscellaneous | |
$ | * | |
| Total | |
$ | | |
* To be filed by amendment.
Item 14. Indemnification of Directors
and Officers.
Section 78.7502(1) of the Nevada Revised
Statutes provides that a corporation may indemnify any person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (except in
an action brought by or on behalf of the corporation) if that person is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise,
against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred
by that person in connection with such action, suit or proceeding, if that person acted in good faith and in a manner which that
person reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal
action or proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, alone, does not create a presumption
that the person did not act in good faith and in a manner which the person reasonably believed to be in, or not opposed to, the
best interests of the corporation, and that, with respect to any criminal action or proceeding, the person had reasonable cause
to believe his action was unlawful.
Section 78.7502(2) of the Nevada Revised
Statutes provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit brought by or on behalf of the corporation to procure a judgment in its favor because
the person acted in any of the capacities set forth above, against expenses, including amounts paid in settlement and attorneys’
fees, actually and reasonably incurred by that person in connection with the defense or settlement of such action or suit, if the
person acted in accordance with the standard set forth above, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom to be liable to the corporation or for amounts paid in settlement to the corporation unless and only to the extent that
the court in which such action or suit was brought or other court of competent jurisdiction determines that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
Section 78.7502(3) of the Nevada Revised
Statutes further provides that, to the extent a director or officer of a corporation has been successful on the merits or otherwise
in the defense of any action, suit or proceeding referred to in subsections 1 and 2 thereof, or in the defense of any claim, issue
or matter therein, that person shall be indemnified by the corporation against expenses (including attorneys’ fees) actually
and reasonably incurred by that person in connection therewith.
Section 78.751 of the Nevada Revised Statutes
provides that unless indemnification is ordered by a court, the determination to provide indemnification must be made by the stockholders,
by a majority vote of a quorum of the board of directors who were not parties to the action, suit or proceeding, or in specified
circumstances by independent legal counsel in a written opinion. In addition, the articles of incorporation, bylaws or an agreement
made by the corporation may provide for the payment of the expenses of a director or officer of the expenses of defending an action
as incurred upon receipt of an undertaking to repay the amount if it is ultimately determined by a court of competent jurisdiction
that the person is not entitled to indemnification. Section 78.751 of the Nevada Revised Statutes further provides that the indemnification
provided for therein shall not be deemed exclusive of any other rights to which the indemnified party may be entitled and that
the scope of indemnification shall continue as to directors, officers, employees or agents who have ceased to hold such positions,
and to their heirs, executors and administrators.
Section 78.752 of the Nevada Revised Statutes
provides that a corporation may purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation
against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether
or not the corporation would have the authority to indemnify him against such liabilities and expenses.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us, we have been informed
that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 15. Recent
Sales of Unregistered Securities.
Set
forth below is information regarding all unregistered securities sold by us since January 1, 2020. Unless otherwise stated,
the issuances of the below securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2)
or 3(a)(9) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the
Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating
to compensation as provided under Rule 701.
On November 15, 2022, pursuant to the terms of a Share Exchange Agreement, dated July 21,
2022, by and among the Company, FintechCashier Asia P.L.C. (formally known as HWGG Capital P.L.C.), a Labuan company (“FintechAsia”),
and all of the shareholders of FintechAsia, all of the FintechAsia Shares
were exchanged for an aggregate of 91,666,667 shares of common stock of the Company.
On
November 30, 2022, pursuant to the terms of a Share Exchange Agreement, dated August 9, 2022, by and among the Company, Fintech
Scion Limited, a private limited company incorporated in the United Kingdom (“Fintech”), and the shareholders of Fintech,
all of the Fintech Shares were exchanged for an aggregate of 101,666,666 shares of common stock of the Company.
The foregoing offers, sales and issuances
were exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D thereunder
Item 16. Exhibits
and Financial Statement Schedules.
(a) Exhibits
Exhibit
No. |
|
Exhibit Description |
| 1.1* |
|
Form of Underwriting Agreement |
| |
|
|
| 3.1** |
|
Articles of Incorporation of the Company (incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on January 5, 2015) |
| |
|
|
| 3.2** |
|
Amended and Restated Articles of Incorporation of the Registrant as filed with the Nevada Secretary of State on January 8, 2016 (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 11, 2016) |
| |
|
|
| 3.3** |
|
Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Form S-1 filed with the SEC on January 5, 2015) |
| |
|
|
| 3.4** |
|
Certificate of Amendment to the Amended and Restated Articles of Incorporation filed with the Nevada Secretary of State on March 2, 2022 (incorporated by reference to Exhibit 3.4 from the Registrant’s Current Report on Form 8-K filed with the SEC on March 8, 2022) |
| |
|
|
| 3.5** |
|
Certificate of Designation of the Relative Rights and Preferences of the Redeemable Convertible Preferred Stock filed with the Nevada Secretary of State on March 10, 2022 (incorporated by reference to Exhibit 3.4 from the Registrant’s Current Report on Form 8-K filed with the SEC on March 17, 2022) |
| |
|
|
| 3.6* |
|
Amended and Restated Bylaws of the Registrant |
| |
|
|
| 4.1* |
|
Form of Representative’s Warrant |
| |
|
|
| 5.1* |
|
Opinion of Sheppard, Mullin, Richter & Hampton LLP |
| |
|
|
| 10.1** |
|
Registrant’s 2016 Equity Incentive Plan (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 22, 2016) |
| |
|
|
| 10.2** |
|
Consulting Agreement, dated November 1, 2015, between Vitaxel and Leong Yee Ming (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on January 22, 2016) |
| |
|
|
| 10.3** |
|
Travel
Agency Services Contract dated November 1, 2015 between Vitaxel SDN BHD and Ho Wah Genting Holiday SDN BHD (incorporated by
reference from the Registrant’s Current Report on Form 8-K filed on January 22, 2016) |
| |
|
|
| 10.11** |
|
License
Agreement by and between Vitaxel Group Limited and Vitaxel Private Limited dated August 6, 2016 (incorporated by reference
from the Registrant’s Current Report on Form 8-K filed on August 11, 2016) |
| |
|
|
| 10.12** |
|
License
Agreement by and between Vitaxel Group Limited and Vitaxel Corp (Thailand) Ltd. dated August 15, 2016, as amended on August
21, 2016 (incorporated by reference from the Registrant’s Current Report on Form 8-K
filed on August 21, 2016) |
| |
|
|
| 10.13** |
|
Share
Sale Agreement among Lim Hui Sing, Leong Yee Ming, Vitaxel Sdn. Bhd. And Vitaxel Group Limited (incorporated by reference
from the Registrant’s Current Report on Form 8-K filed on December 19, 2017) |
| |
|
|
| 10.14** |
|
Agreement
among Lim Hui Song, Leong Yee Ming, Vitaxel Sdn. Bhd. and Vitaxel Group Limited (incorporated by reference from the Registrant’s
Current Report on Form 8-K filed on January 22, 2018) |
| |
|
|
| 10.15** |
|
Grande
Agreement dated as of January 5, 2017 between Vitaxel Group Limited and Grande Legacy Inc. (incorporated by reference from
the Registrant’s Current Report on Form 8-K filed on January 22, 2018) |
| |
|
|
| 10.16** |
|
Termination
and Release Agreement between Vitaxel Group Limited and Grande Legacy Inc., a British Virgin Island Company, dated as of December
5, 2018 (incorporated by reference from the Registrant’s Current Report on Form 8-K
filed on December 7, 2018) |
| |
|
|
| 10.17** |
|
Consulting
Agreement Renewal dated August 1, 2020 between Vitaxel SDN BHD and Leong Yee Ming (incorporated by reference to Exhibit 10.17
from the Registrant's Annual Report on Form 10-K filed with the SEC on April 5, 2024) |
| |
|
|
| 10.18** |
|
Amendment
1 to Consulting Agreement Renewal dated September 1, 2020 between Vitaxel SDN BHD and Leong Yee Ming (incorporated by reference
to Exhibit 10.18 from the Registrant's Annual Report on Form 10-K filed with the SEC on April 5, 2024) |
| |
|
|
| 10.19** |
|
Amendment
2 to Consulting Agreement Renewal dated March 1, 2021 between Vitaxel SDN BHD and Leong Yee Ming (incorporated by reference
to Exhibit 10.19 from the Registrant's Annual Report on Form 10-K filed with the SEC on April 5, 2024) |
| |
|
|
| 10.20†** |
|
Fintech
Scion Limited 2023 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.20 from the Registrant’s S-1 filed
with the SEC on April 26, 2024) |
| |
|
|
| 10.21** |
|
Consultancy
Agreement dated March 1, 2023 by and between Colin Ellis and HWGC Holdings Limited (incorporated by reference to Exhibit 10.21 from the Registrant's S-1 filed with the SEC on April 26, 2024) |
| |
|
|
| 10.22** |
|
Letter of Engagement with Richard Berman dated April 1, 2024 (incorporated by reference to Exhibit 10.22 from the Registrant's S-1 filed with the SEC on April 26, 2024)
|
| |
|
|
| 10.23** |
|
Loan Agreement dated July 13, 2022 by and between Fintech Scion Limited and Shalom Dodoun (incorporated by reference to Exhibit 10.23 from the Registrant's S-1 filed with the SEC on April 26, 2024)
|
| |
|
|
| 10.24** |
|
Deed of Variation to Loan Agreement between Fintech Scion Limited and Shalom Dodoun dated March 22, 2024 (incorporated by reference to Exhibit 10.24 from the Registrant's S-1 filed with the SEC on April 26, 2024)
|
| |
|
|
| 21.1** |
|
Subsidiaries
of the Registrant (incorporated by reference to the Company’s Annual Report on Form
10-K filed with the SEC on April 6, 2020). |
| |
|
|
| 23.1* |
|
Consent of Sheppard,
Mullin, Richter & Hampton LLP (included in Exhibit 5.1) |
| |
|
|
| 23.2 |
|
Consent of Pan-China Singapore PAC, independent registered public accounting firm
|
| |
|
|
| 24.1** |
|
Power of Attorney (incorporated by reference to the signature page of the Registrant’s S-1 filed with the SEC on April 26, 2024) |
| |
|
|
| 107 |
|
Filing Fee Table |
* To be filed
by amendment.
** Previously
filed.
# Schedules
and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
† Management
contract or compensatory plan arrangement.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) to file, during
any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) to include any
prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in
the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any
material information with respect to the plan of distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement;
(2) that, for the
purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) to remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) that, for the
purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the
date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately prior to such date of first use.
(5)
That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to
Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or our securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Kuala Lumpur, Malaysia, on the 10th day of May, 2024.
| |
FINTECH SCION LIMITED |
| |
|
|
| |
By: |
/s/ Lim Chun Hoo |
| |
|
Lim Chun Hoo |
| |
|
Chief Executive Officer and Director (Principal Executive Officer) |
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities held and on the
dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
May 10, 2024
|
| /s/ Lim Chun Hoo |
|
Chief Executive Officer
(Principal Executive Officer)
|
|
| Lim Chun Hoo |
|
|
| |
|
|
|
|
*
|
|
Chief Financial Officer & Director
(Principal Financial and Accounting Officer)
|
|
| Collin Ellis |
|
|
May 10, 2024 |
| |
|
|
|
|
*
|
|
Director |
|
May 10, 2024 |
| Richard Berman |
|
|
| |
|
|
| *By: |
/s/
Lim Chun Hoo |
|
|
| |
Lim Chun Hoo |
|
|
| |
Attorney in Fact |
|
|
ALTERNATE PAGES FOR SELLING STOCKHOLDER
PROSPECTUS
The information in this
prospectus is not complete and may be changed. The selling stockholders named in this prospectus may not sell these securities
until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where
the offer or sale is not permitted.
Subject to Completion,
dated May 10, 2024
PROSPECTUS
Fintech Scion Limited
2,0500,00 Shares of Common Stock
The
selling stockholders plan to sell an aggregate of up to 2,050,000 shares of common stock, as adjusted for the 1-for-10 reverse
split.
The selling stockholders must sell their
shares at a fixed price per share of $____, which is the per share price of the shares being offered in our public offering. Thereafter,
the shares offered by this prospectus may be sold by the selling stockholders from time to time in the open market, through privately
negotiated transactions or a combination of these methods, at market prices prevailing at the time of sale or at negotiated prices.
By separate prospectus (the “IPO Prospectus”), we have registered an aggregate of [ ] shares of our common stock
which we are offering for sale to the public through our underwriters, excluding any shares issuable upon the underwriters’
over-allotment option.
Our common stock is quoted on the OTC Pink
Market under the symbol “FINR.” We intend to apply to list our common stock on The Nasdaq Capital Market under the
symbol “FINR,” which listing is a condition to this offering. No assurance can be given that our application will be
approved. The distribution of the shares by the selling stockholders is not subject to any underwriting agreement. We will not
receive any proceeds from the sale of the shares by the selling stockholders. We will bear all expenses of registration incurred
in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them.
An investment in our common stock may
be considered speculative and involves a high degree of risk, including the risk of a substantial loss of your investment. See
“Risk Factors” beginning on page __ to read about the risks you should consider before buying shares of our common
stock. An investment in our common stock is not suitable for all investors.
Sales of the shares of our common stock
registered in this prospectus and the IPO Prospectus will result in two offerings taking place concurrently which might affect
price, demand, and liquidity of our common stock.
You should rely only on the information
contained in this prospectus and any prospectus supplement or amendment. We have not authorized anyone to provide you with different
information. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus is
only accurate on the date of this prospectus, regardless of the time of any sale of securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is ,
2024
EXPLANATORY NOTE
Concurrent with this offering, the Company
is registering shares of common stock in connection with a public offering of _____ shares of our common stock through the underwriters
(excluding ___ shares which may be sold upon exercise of the underwriters’ over-allotment option). Sales by stockholders
that purchased shares in the public offering may reduce the price of our common stock, demand for our shares and, as a result,
the liquidity of your investment.
SELLING STOCKHOLDERS
This
prospectus relates to the resale from time to time by the selling stockholders identified herein of up to an aggregate of 2,0500,00
shares of our common stock, as adjusted for the 1-for-10 reverse split (the
“Resale Shares”). The selling stockholders have expressed an intent not to sell stock concurrently with the public
offering.
The transactions by which the selling stockholders
acquired their securities from us were exempt under the registration provisions of the Securities Act.
The Resale Shares referred to above are
being registered to permit public sales of the Resale Shares, and the selling stockholders may offer the shares for resale from
time to time pursuant to this prospectus. The selling stockholders may also sell, transfer or otherwise dispose of all or a portion
of their shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective
registration statement covering those shares.
The table below sets forth certain information
regarding the selling stockholders and the Resale Shares offered in this prospectus. The selling stockholders have had no material
relationship with us within the past three years other than as described in the footnotes to the table below or as a result of
their acquisition of our shares or other securities.
Beneficial
ownership is determined in accordance with the rules of the SEC. The selling stockholder’s percentage of ownership of our
outstanding shares in the table below is based upon 19,874,265 shares
of common stock issued and outstanding as of April 15, 2024, as adjusted for the 1-for-10 reverse split.
| Name of Selling Stockholder |
|
Number of
Shares of
Common Stock
Beneficially
Owned Before
this Offering(1) |
|
Percentage of
Common Stock
Beneficially
Owned Before
this Offering |
|
Shares of
Common Stock
Offered in this
Offering |
|
Shares of
Common Stock
Beneficially
Owned After
this Offering(2) |
|
Percentage of
Common Stock
Beneficially
Owned After
this Offering(2) |
| Eight Investment Inc.(3) |
|
625,000 |
|
3.145% |
|
|
625,000 |
|
|
|
|
|
| V Capital Consulting Limited(4) |
|
800,000 |
|
4.025% |
|
|
800,000 |
|
|
|
|
|
| ARBEZON S.A. (5) |
|
625,000 |
|
3.145% |
|
|
625,000 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL |
|
2,050,000 |
|
|
|
|
|
|
|
|
|
|
| (1) | Under applicable SEC rules, a person is deemed to beneficially
own securities which the person has the right to acquire within 60 days through the exercise of any option or warrant or through
the conversion of a convertible security. Also under applicable SEC rules, a person is deemed to be the “beneficial owner”
of a security with regard to which the person directly or indirectly, has or shares (a) voting power, which includes the power
to vote or direct the voting of the security, or (b) investment power, which includes the power to dispose, or direct the disposition,
of the security, in each case, irrespective of the person’s economic interest in the security. To our knowledge, subject
to community property laws where applicable, each person named in the table has sole voting and investment power with respect
to the shares of common stock shown as beneficially owned by such selling stockholder, except as otherwise indicated in the footnotes
to the table. |
Alt-
| (2) | Represents the amount of shares that will be held by
the selling stockholder after completion of this offering based on the assumptions that (a) all Resale Shares registered for sale
by the registration statement of which this prospectus is part will be sold and (b) no other shares of our common stock are acquired
or sold by the selling stockholder prior to completion of this offering. However, each selling stockholder may sell all, some
or none of the Resale Shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own
pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption
from the registration provisions of the Securities Act, including under Rule 144. |
Alt-
| (3) | Eight Investment Inc. is wholly-owned by Amanda Lee Jing
Min, and having its registered address at Lot A020, Level 1, Podium Level, Financial Park, Jalan Merdeka, 87000 Federal Territory
of Labuan, Malaysia. |
| (4) | V Capital Consulting Limited is beneficially owned by Hoo Voon Him, and having its registered address
at Vistra Corporate Services Centre, Wickhams Cay 2, Road Town, Tortola, VG1110, British Virgin Islands. |
| (5) | ARBEZON S.A. is wholly-owned by Leong Yee Ming, a previous director and CEO of the Company, and
having its registered address at 25 Guzman Street, Belama Phase 1, Belize City, Belize. |
Alt-
PLAN OF DISTRIBUTION
The selling stockholders may, from time
to time, sell any or all of their Resale Shares on any stock exchange, market or trading facility on which the shares are traded
or in private transactions. If the Resale Shares are sold through underwriters, the selling stockholders will be responsible for
underwriting discounts or commissions or agent’s commissions. The Resale Shares may be sold in one or more transactions at
a price of $___ per share until our shares are listed on The Nasdaq Capital Market and thereafter at prevailing market prices or
privately negotiated prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale
or at negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:
| ● | ordinary brokerage transactions and transactions in which
the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt
to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale
by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules
of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | settlement of short sales entered into after the effective
date of the registration statement of which this prospectus is a part; |
| ● | in transactions through broker-dealers that agree with
the selling stockholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other
hedging transactions, whether through an options exchange or otherwise; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The selling stockholders may also sell shares
under Rule 144 under the Securities Act, if available, rather than under this prospectus. In general, a person who has beneficially
owned restricted shares of our common stock for at least six months, in the event we have been a reporting company under the Exchange
Act for at least 90 days, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate
of ours at the time of sale or to have been an affiliate of ours at any time during the three months preceding the sale.
The selling stockholders may also engage
in short sales against the box, puts and calls and other transactions in our securities or derivatives of our securities and may
sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.
The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions
involved. Any profits on the Resale Shares by a broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable
to the sale of the Resale Shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the Resale Shares if liabilities are imposed on that
person under the Securities Act.
In connection with the sale of the Resale
Shares, the selling stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales
of the shares of our common stock in the course of hedging in positions they assume. The selling stockholders may also sell Resale
Shares short and deliver shares of our common stock covered by this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. The selling stockholders may also loan or pledge the Resale Shares to broker-dealers
that in turn may sell such shares.
Alt-
The selling stockholders may from time to
time pledge or grant a security interest in some or all of the Resale Shares owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the Resale Shares from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus.
The selling stockholders also may transfer
the Resale Shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the Resale Shares from time to time under this prospectus after
we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of selling stockholders to include the pledgees, transferees or other successors in interest as selling stockholders under
this prospectus. The selling stockholders also may transfer and donate the Resale Shares in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling stockholders and any broker-dealers
or agents that are involved in selling the Resale Shares may be deemed to be an “Underwriter” within the meaning of
the Securities Act in connection with such sales. In such event, any commissions paid, or any discounts or concessions allowed
to, such broker-dealers or agents and any profit realized on the Resale Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the Resale Shares is made, a prospectus
supplement, if required, will be distributed which will set forth the aggregate amount of Resale Shares being offered and the terms
of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting
compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the Resale Shares may be sold in such states only through registered or licensed brokers
or dealers. In addition, in some states the Resale Shares may not be sold unless such shares have been registered or qualified
for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance
that any selling stockholder will sell any or all of the Resale Shares registered pursuant to the registration statement, of which
this prospectus forms a part.
Each selling stockholder has informed us
that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Resale Shares.
None of the selling stockholders who are affiliates of broker-dealers, other than the initial purchasers in private transactions,
purchased the Resale Shares outside of the ordinary course of business or, at the time of the purchase of the Resale Shares, had
any agreements, plans or understandings, directly or indirectly, with any person to distribute the securities.
We are required to pay all fees and expenses
incident to the registration of the Resale Shares. Except as provided for indemnification of the selling stockholders, we are not
obligated to pay any of the expenses of any attorney or other advisor engaged by a selling stockholder. We have agreed to indemnify
the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
If we are notified by any selling stockholder
that any material arrangement has been entered into with a broker-dealer for the sale of the Resale Shares, we will file a post-effective
amendment to the registration statement. If the selling stockholders use this prospectus for any sale of the Resale Shares, they
will be subject to the prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation
M under the Exchange Act may apply to sales of the Resale Shares and activities of the selling stockholders, which may limit the
timing of purchases and sales of any of the Resale Shares by the selling stockholders and any other participating person. Regulation
M may also restrict the ability of any person engaged in the distribution of the Resale Shares to engage in passive market-making
activities with respect to the Resale Shares. Passive market making involves transactions in which a market maker acts as both
our underwriter and as a purchaser of our common stock in the secondary market. All of the foregoing may affect the marketability
of the Resale Shares and the ability of any person or entity to engage in market-making activities with respect to the Resale Shares.
Once sold under the registration statement,
of which this prospectus forms a part, the Resale Shares will be freely tradable in the hands of persons other than our affiliates.
Alt-
USE
OF PROCEEDS
We
will not receive proceeds from sales of the Resale Shares made under this prospectus.
DETERMINATION
OF OFFERING PRICE
There
currently is no public market for our common stock. The shares of common stock may be sold in one or more transactions at a price
of $____ per share until our shares are listed on The Nasdaq Capital Market and thereafter at prevailing market prices or privately
negotiated prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale or at
negotiated prices. See “Plan of Distribution” above for more information.
LEGAL
MATTERS
Certain
legal matters with respect to the validity of the securities being offered by this prospectus will be passed upon by Sheppard,
Mullin, Richter & Hampton LLP, New York, New York.
Alt-
Exhibit 23.2
Consent of Pan-China
Singapore PAC, Independent Registered Public Accounting Firm
We consent to
the use in this Registration Statement No. 333-278956 on Form S-1 Amendment No. 1 of our report dated May 9, 2024, with respect
to the financial statements of Fintech Scion Ltd. for the years ended December 31, 2023 and December 31, 2022.
We also consent
to the reference to our firm under the heading “Experts” in the Registration Statement.
/s/ Pan-China Singapore PAC
Singapore
May 10, 2024
Exhibit 107
Calculation of Filing Fee Tables
FORM S-1
(Form Type)
FINTECH SCION LIMITED
(Exact Name of Registrant as Specified in
its Charter)
Table 1: Newly Registered Securities
| |
Security
Type |
Security
Class
Title |
Fee
Calculation
Rule |
Amount
Registered (1) |
Proposed
Maximum
Offering
Price Per
Share |
Maximum
Aggregate
Offering
Price(1) |
Amount of
Registration
Fee |
| Fees to Be Paid |
Equity |
Common Stock, par value $0.001 per share(2) |
Rule 457(o) |
__ |
__ |
$10,000,000 |
$1,476.00 |
| Fees to Be Paid |
Equity |
Common Stock, par value $0.001 per share(2) |
Rule 457(o) |
__ |
__ |
$3,362,000(3) |
$496.23 |
| |
|
|
|
|
|
|
|
| |
Total Offering Amounts |
|
$13,362,000 |
$1,972.23 |
| |
Total Fees Previously Paid |
|
|
$1,972.23 |
| |
Total Fee Offsets |
|
|
$0 |
| |
Net Fee Due |
|
|
$0 |
| (1) |
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”). |
| (2) |
Pursuant to Rule 416(a) under the Securities Act, there is also being registered hereby an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. |
| (3) |
For purposes of calculating the proposed maximum aggregate offering price, we have multiplied 2,050,000 representing the number of shares covered by the resale prospectus by a per share price of $1.64, based on the last sale price of our common stock as reported on the OTC Pink Market of the OTC Markets Group on April 25, 2024. |
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