UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 3)
For
the fiscal year ended
or
For the transition period from ___________________________ to ___________________________
Commission
file number
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| None | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | 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 pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of
the Registrant’s most recently completed fiscal year was $
shares of common stock were issued and outstanding as of March 15, 2024.
Documents Incorporated by Reference: None.
Explanatory Note
This Amendment No. 3 to Form 10-K (this “Amendment No. 3”) amends the Annual Report to Form 10-K for the fiscal year ended December 31, 2023 originally filed on April 5, 2024 (the “Original Filing”) by Fintech Scion Limited, a Nevada corporation (“Fintech,” the “Company,” “we,” or “us”), which inadvertently included the wrong audit report from Pan-China Singapore PAC.
We are filing this Amendment No. 3 to include the correct audit report from Pan-China Singapore PAC as of December 31, 2023 (the “Audit Report”) and to amend Item 15 of Part IV, solely to include, as Exhibits 31.1, 31.2 and 32.1, new certifications of our principal executive officer and principal financial officer pursuant to Rule 13a-14(a) and 13a-14(b) under the Exchange Act of 1934 (the “Exchange Act”). by Rule 13a-14(b) under the Exchange Act
Other than the Audit Report and the filing of related certifications added to the list of Exhibits in Item 15 of Part IV, this Amendment No.3 makes no other changes to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing, respectively, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment No. 3 should be read in conjunction with our Original Filing and our other filings made with the SEC subsequent to the filing of the Form 10-K.
FINANCIAL STATEMENTS
| Page Number | |
| FINTECH SCION LIMITED, Audited Consolidated Financial Statements | |
| Report of Independent Registered Public Accounting Firms | F-2 |
| Consolidated Balance Sheets as of December 31, 2023 and 2022 | F-4 |
| Consolidated Statements of Income or Loss and Comprehensive Income or Loss for the years ended December 31, 2023 and 2022 | F-5 |
| Consolidated Statements of Stockholders’ Equity | F-6 |
| Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 | F-7 |
| Notes to the Consolidated Financial Statements | F-8–F-22 |
F-1
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.
F-2
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 |
Chartered Accountants
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
F-3
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 | $ | $ | ||||||
| Accounts receivable | ||||||||
| Amount due from related parties | ||||||||
| Other receivables, prepayments and other current assets | ||||||||
| Inventories | ||||||||
| Total Current Assets | ||||||||
| Non-current assets | ||||||||
| Intangible asset | ||||||||
| Goodwill | ||||||||
| Property and equipment, net | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Amounts due to related parties | $ | $ | ||||||
| Accounts payable | ||||||||
| Accruals and other payables | ||||||||
| Total Current Liabilities | ||||||||
| Non-current liabilities | — | — | ||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 11) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock par value $: shares authorized; and outstanding | ||||||||
| Common stock par value $: and $: shares authorized, respectively; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Merger reserves | ( | ) | ( | ) | ||||
| Accumulated surplus/(deficit) | ( | ) | ||||||
| Accumulated other comprehensive income | ||||||||
| Equity attributable to equity holders of the parent | ||||||||
| Non-controlling interests | ||||||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-4
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 | $ | $ | ||||||
| COST OF REVENUE | ( | ) | ( | ) | ||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling expense | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Impairment of goodwill | ( | ) | ||||||
| Total Operating Expenses | ( | ) | ( | ) | ||||
| PROFIT/(LOSS) FROM OPERATIONS | ( | ) | ||||||
| OTHER INCOME / (EXPENSE), NET | ||||||||
| Other income | ||||||||
| Other expense | ( | ) | ( | ) | ||||
| Total other income / (expense), net | ||||||||
| NET INCOME / (LOSS) BEFORE TAX | ( | ) | ||||||
| Income tax | ( | ) | ( | ) | ||||
| NET INCOME / (LOSS) | $ | ( | ) | $ | ||||
| Loss attributable to non-controlling interest | ||||||||
| NET INCOME / (LOSS) FOR THE PERIOD | ( | ) | ||||||
| OTHER COMPREHENSIVE INCOME / (LOSS) | ||||||||
| Foreign currency translation adjustment | ||||||||
| TOTAL COMPREHENSIVE INCOME / (LOSS) | $ | ( | ) | $ | ||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| Net income / (loss) per share - basic and diluted | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of the consolidated financial statements.
F-5
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 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | |||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ( |
) | |||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||||||
| Reverse stock split | ( |
) | ||||||||||||||||||||||||||||||
| Issuance of stock | ||||||||||||||||||||||||||||||||
| Acquisition of subsidiaries | — | ( |
) | |||||||||||||||||||||||||||||
| Reserve release upon disposal of subsidiaries | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Reverse merger recapitalization | — | ( |
) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||
| Net income | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||
| Issuance of stock | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-6
FINTECH SCION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income / (loss) | $ | ( | ) | $ | ||||
| Items not involving cash: | ||||||||
| Depreciation and amortization of– property, plant and equipment and right-of-use assets | ||||||||
| Gain on disposal of subsidiaries | ( | ) | ||||||
| Impairment on goodwill | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | ( | ) | ||||||
| Other receivables, prepayments and other current assets | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Commission payables | ( | ) | ||||||
| Accrued expense and other payables | ||||||||
| Net (used in) / cash generated by operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Disposal of subsidiaries, net of cash disposed | ( | ) | ||||||
| Acquisition of subsidiaries, net cash acquired | ||||||||
| Net (used in) / cash generated by investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| (Repayment to) / proceed from related parties | ( | ) | ||||||
| Proceeds from issuance of shares | ||||||||
| Net cash generated by / (used in) financing activities | ( | ) | ||||||
| EFFECT OF EXCHANGE RATES ON CASH | ( | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | ||||||||
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ | $ | ||||||
| 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.
F-7
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”) | |||||||||||
| 2 | HWG Cash Singapore Pte Ltd (“HCS”) | |||||||||||
| 3 | HWGC KZ Limited (“HKZ”) | |||||||||||
| 4 | Fintech Scion Limited (“Fintech”) | |||||||||||
| 5 | Fintech Digital Solutions Limited (“FDS”) | |||||||||||
| 6 | Fintech Digital Consulting Limited (“FDC”) | |||||||||||
| 7 | Aelora Sdn Bhd, previously known as Vitaxel Sdn Bhd (“ASB”) | |||||||||||
| 8 | Vitaxel Online Mall Sdn Bhd (“VOM”) | |||||||||||
| (1) |
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 |
F-8
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,
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 .
Acquisition of Fintech
On
August 9, 2022, the Company entered into a share exchange agreement with Fintech. Under this share exchange agreement with Fintech,
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 $, 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 .
Goodwill recognized is further disclosed in Note 5: Goodwill.
F-9
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.
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. | $ | $ | $ | |||||||||
| Rights-of-use assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Other receivables, prepayments and other current assets | ||||||||||||
| Other payables | ( | ) | ( | ) | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||||||
| Net liabilities disposed | $ | ( | ) | $ | ( | ) | ( | ) | ||||
| Consideration received, satisfied in assignment of intercompany debt | ( | ) | ( | ) | ( | ) | ||||||
| Net gain on disposal of subsidiaries | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
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 restricted shares of common stock of the Company, par value $ 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.
F-10
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 $
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 $ and $ respectively, of its inventories that have been obsolete.
F-11
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 | |||
| Computer equipment | |||
| Furniture and fixtures | |||
| Electrical & fitting | |||
| Software and website |
The residual values, useful lives and methods of depreciation of property and equipment are reviewed and adjusted if appropriate, on an annual basis.
F-12
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.
F-13
Research and Development Costs
Research
and development (“R&D”) costs are charged to expense in the periods incurred. There were
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 $
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.
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.
F-14
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.
F-15
| 3. | ACCOUNTS RECEIVABLES |
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 $
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) | $ | $ | ||||||
| Deposits (2) | $ | $ | ||||||
| Prepayments (3) | $ | $ | ||||||
| Common stock not paid (4) | $ | $ | ||||||
| Total | $ | $ | ||||||
| (1) |
| (2) | ||
| (3) |
| (4) |
F-16
| 5. | Goodwill |
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) | ||||||||
| Accumulated impairment | $ | $ | ||||||
| Impairment (2) | ( | ) | ||||||
| — | — | |||||||
| Goodwill, net | $ | $ | ||||||
| (1) |
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 $
| As of December 31, 2022 | ||||
| Property, plant and equipment, net. | $ | |||
| Intangible asset | ||||
| Current assets | $ | |||
| Current liabilities | ( | ) | ||
| Net assets acquired | $ | |||
| (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 $
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
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.
F-17
| 6. | PROPERTY AND EQUIPMENT |
Property and equipment, net consist of the following:
| As of December 31, 2023 | As of December 31, 2022 | |||||||
| Office equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Furniture and fittings | ||||||||
| Software and website | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Balance at end of year | $ | $ | ||||||
Depreciation
expenses charged to the statements of loss and comprehensive loss for the years ended December 31, 2023 and 2022 were $
| 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) | $ | $ | ||||||
| Others (2) | ||||||||
| Balance at end of year | $ | $ | ||||||
| (1) | ||
| (2) |
F-18
| 8. | INCOME TAX |
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
Income taxes includes the following components:
| For the year ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| United States | $ | $ | ||||||
| Foreign | ||||||||
| Income tax recovery | $ | $ | ||||||
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.
| 9. | Revenue |
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 | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Total revenue | ||||||||||||||||||||||||
F-19
| 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) | $ | $ | ||||||
| HWG Fintech International Ltd (2) | ||||||||
| Total Amount due from related parties | $ | $ | ||||||
| Amount due to related parties | ||||||||
| Grande Legacy Inc. (1) | $ | $ | ||||||
| HWG Capital Inc. (3) | ||||||||
| HWG Digital Investment Bank (Malaysia) P.L.C. (2) | ||||||||
| Aelora Sdn Bhd (1) | ||||||||
| Ho Wah Genting Group Sdn Bhd (2) | ||||||||
| Shalom Dodoun (4) | 727,624 | |||||||
| Natalie Kastberg (5) | ||||||||
| Total Amount due to related parties | $ | $ | ||||||
The
related party balances are unsecured,
| (1) |
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 $ and $ respectively for the year ended December 31, 2023.
| (2) |
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) | ||
| (4) |
| |
| (5) |
| (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 $ |
| December 31, 2023 | December 31, 2022 | |||||||
| Directors & Officers | ||||||||
| Shalom Dodoun – Previous Director, Chief Executive Officer of the Company | $ | $ | ||||||
| Richard Berman – Non-executive Director of the Company (7) | $ | $ | ||||||
| (7) |
F-20
| 11. | COMMITMENTS AND CONTINGENCIES |
Capital Commitments
F-21
| 12. | STOCKHOLDERS’ EQUITY |
Common stocks
The Company’s authorized common stock is $: shares, with shares issued and outstanding during the year ended December 31, 2023.
The Company’s authorized common stock is $0.001: shares, with shares issued and outstanding during the year ended December 31, 2022.
The Company’s authorized common stock is $: shares, with 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 shares issued and outstanding by shares to . Effectively on April 11, 2022, the Company’s authorized common stock is $: shares, with shares issued and outstanding.
On November 15, 2022 and November 30, 2022, the Company issued and 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 .
On November 15, 2023, the Company issued 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 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 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 shares of Redeemable Convertible Preferred Stock, par value $ 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 | $ | |||||||||||||||||||
| Total assets | $ | |||||||||||||||||||
| Total liabilities | $ | |||||||||||||||||||
| Total stockholders’ equity | $ | |||||||||||||||||||
| 13. | SUBSEQUENT EVENTS |
Following
the financial year end, the shares (
F-22
ITEM 15. Exhibits, Financial Statement Schedules.
(b) Exhibits
The exhibits listed in the Original Filing and the exhibits listed below in this Amendment are filed with, or incorporated by reference in, this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K/A to be signed on its behalf by the undersigned thereunto duly authorized on this 16th day of May, 2024.
| FINTECH SCION LIMITED | ||
| By: | /s/ Lim Chun Hoo | |
| Lim Chun Hoo | ||
Chief Executive Officer (Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Lim Chun Hoo | Chief Executive Officer & Director | May 16, 2024 | ||
| Lim Chun Hoo | (Principal Executive Officer) | |||
| /s/ Colin Ellis | Chief Financial Officer & Director | May 16, 2024 | ||
| Colin Ellis | (Principal Financial and Accounting Officer) | |||
| /s/ Richard Berman | Director | May 16, 2024 | ||
| Richard Berman |