UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the Quarterly Period Ended March 31, 2024

 

Or

 

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

 

For the transition period from _____ to _____

 

Commission File Number: 001-41037

 

SOCIETY PASS INCORPORATED

(Exact name of registrant as specified in its charter)

 

Nevada   83-1019155
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

701 S. Carson StreetSuite 200 Carson CityNevada 89701

(Address of principal executive offices)

 

(+65) 6518-9385

(Registrant’s telephone number, including area code)

 

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

 

Title of Each Class   Trading Symbol   Name of each exchange on which registered
Common Stock, par value $0.0001 per share   SOPA   The Nasdaq Stock Market LLC

 

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

 

Yes  No

 

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

 

Yes  No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

 

Yes  No 

 

As of May 14, 2024, there were 2,639,948 shares of the registrant’s common stock, $0.0001 par value, outstanding.

 

 

 

 

 

 

Table of Contents

 

    Page
PART I FINANCIAL INFORMATION 1
Item 1. Financial Statements (Unaudited) 1
  Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 1
  Condensed Consolidated Statements of Operations and Other Comprehensive Loss for the Three ended March 31, 2024 and 2023 2
  Condensed Consolidated Statements of Shareholders’ Equity for the Three Months ended March 31, 2024 and 2023 3
  Condensed Consolidated Statements of Cash Flows for the Three  Months ended March 31, 2024 and 2023 4
  Notes to Condensed Consolidated Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 50
Item 3. Quantitative and Qualitative Disclosures About Market Risk 72
Item 4. Controls and Procedures 72
PART II OTHER INFORMATION 73
Item 1. Legal Proceedings 73
Item 1A. Risk Factors 73
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 73
Item 3. Defaults Upon Senior Securities 73
Item 4. Mining Safety Disclosure 73
Item 5. Other Information 73
Item 6. Exhibits 74
SIGNATURES 75

 

i

 

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

SOCIETY PASS INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

(Currency expressed in United States Dollars (“US$”))

 

   March 31, 2024
(Unaudited)
   December 31, 2023
(Audited)
 
         
ASSETS        
Current assets:        
Cash and cash equivalents  $1,619,232   $3,628,670 
Restricted cash   54,000    95,312 
Accounts receivable, net   1,338,080    1,338,170 
Inventories   379,736    431,483 
Contract assets   120,459    247,368 
Deposits, prepayments and other receivables   1,884,386    2,207,774 
Deferred tax assets   145,247    149,858 
Total current assets   5,541,140    8,098,635 
           
Non-current assets:          
Intangible assets, net   5,953,068    6,081,728 
Goodwill   88,197    88,197 
Property, plant and equipment, net   598,623    686,658 
Right of use assets, net   1,095,077    1,407,956 
Total non-current assets   7,734,965    8,264,539 
TOTAL ASSETS  $13,276,105   $16,363,174 
           
LIABILITIES AND SHAREHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payables  $1,827,955   $1,690,651 
Contract liabilities   1,270,220    1,265,753 
Accrued liabilities and other payables   5,736,948    6,866,169 
Due to related parties   9,567    9,900 
Deferred tax liabilities   69,000    69,000 
Operating lease liabilities   441,938    563,276 
Loan   18,980    21,313 
Total current liabilities   9,374,608    10,486,062 
           
Non-current liabilities          
Operating lease liabilities   655,215    847,950 
TOTAL LIABILITIES   10,029,823    11,334,012 
           
COMMITMENTS AND CONTINGENCIES   
 
    
 
 
Convertible preferred shares; $0.0001 par value, 5,000,000 shares authorized, 4,916,500 and 4,916,500 shares undesignated as of March 31, 2024 and December 31, 2023, respectively   
 
    
 
 
Series A shares: 10,000 shares designated; 0 and 0 Series A shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   
    
 
Series B shares: 10,000 shares designated; 0 and 0 Series B shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   
    
 
Series B-1 shares: 15,000 shares designated; 0 and 0 Series B-1 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   
    
 
Series C shares: 15,000 shares designated; 0 and 0 Series C shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, net of issuance cost   
    
 
Series C-1 shares: 30,000 shares designated; 0 and 0 Series C-1 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively, net of issuance cost   
    
 
           
SHAREHOLDERS’ EQUITY          
Series X Super Voting Preferred Stock, $0.0001 par value, 3,500 shares designated; 3,500 and 3,500 Series X shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   
    
 
Common shares; $0.0001 par value, 6,333,333 shares authorized; 2,517,528 and 2,217,491 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively   252    222 
Additional paid-in capital   106,423,748    105,606,538 
Less: Common shares held in treasury, at cost; 64,439 and 74,107 shares at March 31, 2024 and December 31, 2023   (186,782)   (785,525)
Accumulated other comprehensive gain (loss)   1,925    (242,129)
Accumulated deficit   (102,721,638)   (99,272,691)
Total equity attributable to Society Pass Incorporated   3,517,505    5,306,415 
Non-controlling interest   (271,223)   (277,253)
TOTAL EQUITY   3,246,282    5,029,162 
TOTAL LIABILITIES AND EQUITY  $13,276,105   $16,363,174 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

1

 

 

SOCIETY PASS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

OTHER COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Currency expressed in United States Dollars (“US$”))

 

   Three months ended
March 31,
 
   2024   2023 
         
Revenue, net        
Sales – online ordering  $20,728   $257,602 
Sales – digital marketing   1,552,420    1,283,774 
Sales – online ticketing and reservation   264,574    410,230 
Sales – data   4,566    14,302 
Software sales   4,791    195 
Hardware sales   
    
 
Total revenue   1,847,079    1,966,103 
           
Cost of sales:          
Cost of online ordering   (19,164)   (235,246)
Cost of digital marketing   (1,273,115)   (964,161)
Cost of data   (50,110)   (18,646)
Software sales   (12,041)   (61,813)
Total cost of revenue   (1,354,430)   (1,279,866)
Gross income   492,649    686,237 
           
Operating expenses:          
Sales and marketing expenses   (127,135)   (130,664)
Software development costs   (13,504)   (13,919)
General and administrative expenses   (3,243,671)   (5,991,886)
Total operating expenses   (3,384,310)   (6,136,469)
           
Loss from operations   (2,891,661)   (5,450,232)
           
Other income (expense):          
Dividend income   
    3,148 
Gain on early lease termination   
    1,064 
Impairment loss   (75)   
 
Interest income   5,086    39,986 
Interest expense   (173)   (352)
Written-off fixed assets   (8,461)   
 
Other income (expense)   57,170    16,787 
Total other income (expense)   53,547    60,633 
Loss before income taxes   (2,838,114)   (5,389,599)
           
Income taxes   (1,110)   (614)
           
NET LOSS   (2,839,224)   (5,390,213)
NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTEREST   701    (95,286)
           
NET LOSS ATTRIBUTABLE TO SOCIETY PASS INCORPORATED  $(2,839,925)  $(5,294,927)
           
Other comprehensive income (loss):          
Net loss   (2,839,224)   (5,390,213)
Foreign currency translation adjustment   249,383    (400,416)
           
COMRPEHENSIVE LOSS  $(2,589,841)  $(5,790,629)
           
Net income (loss) attributable to non-controlling interest   701    (95,286)
Foreign currency translation adjustment attributable to non-controlling interest   5,329    (18,199)
Comprehensive loss attributable to Society Pass Incorporated  $(2,595,871)  $(5,677,144)
           
Net loss per share attributable to Society Pass Incorporated :          
– Basic  $(1.21)  $(3.00)
– Diluted  $(1.21)  $(3.00)
           
Weighted average common shares outstanding          
– Basic   2,341,300    1,805,523 
– Diluted   2,341,300    1,805,523 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

2

 

 

SOCIETY PASS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Currency expressed in United States Dollars (“US$”))

 

    Three Months ended March 31, 2024  
    Preferred Stock     Common Stock     Treasury Stock     Additional      Accumulated
other
          Non-     Total   
    Number of
Shares
    Amount     Number of
Shares
    Amount     Number of
Shares
    Amount     Paid in 
Capital
    comprehensive
income
    Accumulated
deficits
    controlling
interest
    Stockholders’
Equity
 
Balances at January 1, 2024     3,500     $       2,217,491     $ 222       74,107     $ (785,525 )   $ 105,606,538     $ (242,129 )   $ (99,272,691 )   $ (277,253 )   $ 5,029,162  
Shares issued for services                 133,333       13                   329,987                         330,000  
Share issued for treasury stock                 166,667       17                   487,223                         487,240  
Shares repurchase during the period                             166,667       (487,240 )                             (487,240 )
Sale of treasury stock                             (176,335 )     1,085,983                   (609,022 )           476,961  
Foreign currency translation adjustment                                               244,054             5,329       249,383  
Net loss for the period                                                     (2,839,925 )     701       (2,839,224 )
Balances at March 31, 2024     3,500     $       2,517,491     $ 252       64,439     $ (186,782 )   $ 106,423,748     $ 1,925     $ (102,721,638 )   $ (271,223 )   $ 3,246,282  

 

   Three Months ended March 31, 2023 
   Preferred Stock   Common Stock   Treasury Stock   Additional    Accumulated
other
       Non-   Total  
   Number of
Shares
   Amount   Number of
Shares
   Amount   Number of
Shares
   Amount   Paid in 
Capital
   comprehensive
income
   Accumulated
deficits
   controlling
interest
   Stockholders’
Equity
 
Balances at January 1, 2023   3,500   $    1,805,523   $181       $   $101,429,687   $56,527   $(81,138,563)  $(336,515)  $20,011,317 
Shares issued for services           13,072    1            200,008                200,009 
Shares issued for accrued salaries           7,277    1            113,490                113,491 
Shares issued upon the exercise options           52,229    5            1,226,788                1,226,793 
Shares repurchase during the period                   511,760    (541,988)                   (541,988)
Foreign currency translation adjustment                               (382,217)       (18,199)   (400,416)
Net loss for the year                                   (5,294,927)   (95,286)   (5,390,213)
Balances at March 31, 2023   3,500   $    1,878,101   $188    511,760   $(541,988)  $103,316,473   $(325,690)  $(86,433,490)  $(450,000)  $15,565,493 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3

 

 

SOCIETY PASS INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Currency expressed in United States Dollars (“US$”))

 

   Three Months ended
March 31,
 
   2024   2023 
         
Cash flows from operating activities:        
Net loss  $(2,839,224)  $(5,390,213)
Adjustments to reconcile net loss to net cash used in operating activities          
Bad debts   75,612    
 
Depreciation and amortization   165,115    863,917 
Amortization of right of use assets   131,858    134,455 
Gain from early lease termination   
    (1,064)
Stock based compensation for services   330,000    1,886,793 
Treasury stock   487,240    
 
Written-off of fixed assets   8,461    
 
Deferred tax assets   4,611    
 
Change in operating assets and liabilities:          
Accounts receivable   (75,522)   93,216 
Inventories   51,747    81,922 
Deposits, prepayments and other receivables   323,388    768,803 
Contract assets   126,909    15,239 
Contract liabilities   4,467    (140,365)
Accounts payables   137,303    166,895 
Accrued liabilities and other payables   (1,129,221)   (2,376,133)
Advances to related parties   (333)   (65)
Operating lease liabilities   (163,897)   (118,601)
Net cash used in operating activities   (2,361,485)   (4,015,201)
           
Cash flows from investing activities:          
Purchase of property, plant, and equipment   
    (190,061)
Net cash used in investing activities   
    (190,061)
           
Cash flows from financing activities:          
Repurchase of common share   (487,240)   (541,988)
Proceed from the Sale of treasury stock   476,961     
Net cash used in financing activities   (10,279)   (541,988)
Effect on exchange rate change on cash and cash equivalents   321,014    (428,145)
NET CHANGE IN CASH AND CASH EQUIVALENTS   (2,050,750)   (5,175,395)
CASH AND CASH EQUIVALENT AT BEGINNING OF YEAR   3,723,982    19,003,336 
           
CASH AND CASH EQUIVALENT AT END OF YEAR  $1,673,232   $13,827,941 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $173   $
 
Cash paid for income tax  $
   $
 
           
Reconciliation to amounts on condensed unaudited consolidated balance sheets:          
Cash and cash equivalents  $1,619,232   $13,755,377 
Restricted cash   54,000    72,564 
           
Total cash, cash equivalents and restricted cash  $1,673,232   $13,827,941 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4

 

 

SOCIETY PASS INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Currency expressed in United States Dollars (“US$”))

 

NOTE1 DESCRIPTION OF BUSINESS AND ORGANIZATION

 

Society Pass Incorporated (the “Company”) was incorporated in the State of Nevada on June 22, 2018, under the name of Food Society Inc. On October 3, 2018, the Company changed its company name to Society Pass Incorporated. The Company, through its subsidiaries, mainly sells and distributes the hardware and software for a Point of Sales (POS) application in Vietnam. The Company also has online lifestyle platform to enable consumers to purchase high-end brands of all categories under its own brand name of “Leflair.” The Company has made several acquisitions in calendar year 2022 to 2024, as follows:

 

  In February 2022, the Company completed the acquisition of 100% of the equity interest of New Retail Experience Incorporated and Dream Space Trading Company Limited through its subsidiary – Push Delivery Pte Limited, which two companies mainly provide an on-line grocery and food delivery platform in the Philippines and Vietnam respectively.
     
  In May 2022, the Company completed another acquisition of 100% of the equity interests of Gorilla Networks Pte Ltd, Gorilla Mobile Pte Ltd, Gorilla Connects Pte Ltd and Gorilla Networks (VN) Co Ltd (collectively, “Gorilla Networks”), a food delivery service.
     
  In July 2022, the Company and its wholly owned subsidiary Thoughtful Media Group Incorporated collectively acquired 100% of the equity interests of Thoughtful Media Group Incorporated and AdActive Media, Inc. (collectively “Thoughtful Media”), whose business provides services to advertisers that helps to make internet advertising more effective.
     
  In July 2022, the Company acquired 100% of the equity interests of Mangan PH Food Delivery Service Corp. (“Mangan), a Philippines restaurant and grocery delivery business.
     
    In August 2022, the Company and its 95%-owned subsidiary SOPA Technology, Pte, Ltd., collectively acquired 75% of the outstanding capital stock of Nusatrip International Pte Ltd. (“Nusatrip”) and also purchased all of the outstanding capital stock of PT Tunas Sukses Mandiri (“Tunas”), a company existing under the law of the Republic of Indonesia, and both engaged in online ticketing and reservation services.
     
  In April 2023, the Company’s 100% owned subsidiary Thoughtful Media Group Inc and Adactive Media CA Inc acquired 100% of outstanding capital stock of PT Wahana Cerita Indonesia, an Indonesia company operating digital marketing and event organizing.
     
  In April 2023, the Company’s 99% owned subsidiary Nusatrip International Pte. Ltd. acquired 100% of the outstanding capital stock of Mekong Leisure Travel Company Limited (changed business nature from Join Stock Company), a Vietnam travel agency.
     
  In July 2023, the Company’s 99% owned subsidiary Mekong Leisure Travel Company Limited acquired 100% of the outstanding capital stock of Vietnam International Travel and Service Joint Stock Company, a Vietnam travel agency.

 

On February 10, 2021, the Company effected a 750 for 1 forward stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares and par value remain unchanged. All share and per share information in these financial statements and its footnotes have been retroactively adjusted for the years presented, unless otherwise indicated, to give effect to the forward stock split.

 

5

 

 

On September 21, 2021, the Company effected a 1 for 2.5 reverse stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares and par value remain unchanged. All share and per share information in these financial statements and its footnotes have been retroactively adjusted for the years presented, unless otherwise indicated, to give effect to the reverse stock split.

 

The registration statement for the Company’s Initial Public Offering became effective on November 8, 2021. On November 8, 2021, the Company entered into an underwriting agreement with Maxim Group LLC (the “Underwriter”) related to the offering of 2,888,889 shares of the Company’s common stock (the “Firm Shares”), at a public offering price of $9.00 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 45 days, to purchase an additional 236,111 shares of common stock (the “Option Shares”) to cover over-allotments. The Company raised gross proceeds of $26,000,001 and $2,124,999 from its initial public offering and from the sale of the Option Shares, respectively.

 

On February 8, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with the “Underwriter, related to the offering of 3,030,300 shares (the “Shares”) of the Company’s common stock and warrants to purchase up to 3,030,300 shares of common stock of the Company (the “Warrants”). Each Share was sold together with one Warrant to purchase one Share at a combined offering price of $3.30. In addition, the Company granted the Underwriter a 45-day over-allotment option to purchase up to an additional 454,545 Shares and/or Warrants, at the public offering price, less discounts and commissions. On February 10, 2022, the Underwriter gave notice to the Company of the full exercise of their over-allotment option and that delivery of the overallotment securities was made on February 11, 2022.

 

On June 30, 2023, NextGen Retail Inc., a Nevada corporation (the “Buyer”), a wholly-owned subsidiary of the Company, entered into a Securities Purchase Agreement with Story-I Ltd., an Australian corporation (“Story-I Australia”), Story-I Pte Ltd., a Singapore corporation (“Story-I Singapore”), a wholly-owned subsidiary of Story-I Australia, and Michael Chan, to purchase 95% of the outstanding shares (the “Majority Shares”) of PT Inetindo Infocom (the “Company”), an Indonesian company and retail reseller of Apple computers and other electronics in Indonesia. The consideration for the Majority Shares to be paid to Story-I Australia and Story-I Singapore by the Buyer is AUS$2,787,173, approximately US$ 1.85 million based on current exchange rates. The Company formally terminated the agreement on April 12, 2024.

 

On May 1, 2024, the Company effected a 1-for-15 reverse stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares has changed to 6,333,333 shares and par value remain unchanged. All share and per share information in these financial statements and its footnotes have been retroactively adjusted for the years presented, unless otherwise indicated, to give effect to the reverse stock split.

 

The forward stock split and reverse stock split transactions described above had no effect on the stated value of the preferred stock and the number of designated shares and outstanding shares of each series of preferred stock was unchanged in accordance with the respective certificate of designations. The number of authorized shares of preferred stock also remained unchanged.

 

6

 

 

Description of subsidiaries incorporated by the Company

 

Schedule of Description of subsidiaries

 

 

Name

  Place and date of
incorporation
  Principal
activities
  Particulars of
registered/ paid
up share capital
  Effective
interest held
 
Society Technology LLC   United States,
January 24, 2019
  IP Licensing   US$1     100 %
SOPA Cognitive Analytics Private Limited   India
February 5, 2019
  Computer sciences consultancy and data analytics   INR 1,238,470     100 %
SOPA Technology Pte. Ltd.   Singapore,
June 4, 2019
  Investment holding   SGD 1,250,000     95 %
SOPA Technology Company Limited   Vietnam
October 1, 2019
  Software production  

Registered: VND 2,307,300,000;

Paid up: VND 1,034,029,911

    100 %
Thoughtful Media (Singapore) Pte. Ltd. (FKA: Hottab Pte Ltd. (HPL))   Singapore
January 17, 2015
  Digital marketing   SGD 620,287.75     100 %
Hottab Vietnam Co. Ltd   Vietnam
April 17, 2015
  Sale of POS hardware and software   VND 1,000,000,000     100 %
Thoughtful Media Group Co. Ltd (FKA: Hottab Asset Company Limited)   Vietnam
July 25, 2019
  Digital marketing   VND 5,000,000,000     100 %
Nextgen Retail Inc (FKA: Leflair Incorporated)   United States
December 7, 2021
  Investment holding   US$1     100 %
SOPA Capital Limited   United Kingdom
December 07, 2021
  Investment holding   GBP 1     100 %
Thoughtful Media (Philippines) Incorporated (FKA: SOPA (Phil) Incorporated)   Philippines
Jan 11, 2022
  Investment holding   PHP 11,000,000     100 %
New Retail Experience Incorporated   Philippines
Jan 16, 2020
  On-line Grocery delivery platform   PHP 3,750,000     100 %
Dream Space Trading Co. Ltd   Vietnam
May 23, 2018
  On-line Grocery and food delivery platform   VND 500,000,000     100 %
Push Delivery Pte Ltd   Singapore
January 7, 2022
  Investment holding   US$2,000     100 %
Gorilla Networks Pte. Ltd.   Singapore
September 3, 2019
  Investment holding   US$2,620,000 and
SGD 730,000
    100 %
Gorilla Connect Pte. Ltd.   Singapore
May 18, 2022
  Telecommunications resellers   SGD 100     100 %
Gorilla Mobile Singapore Pte. Ltd.   Singapore
August 6, 2020
  Telecommunications resellers   SGD 100     100 %
Gorilla Networks (VN) LLC   Vietnam
December 16, 2020
  Telecommunications resellers   VND 233,000,000     100 %
Thoughtful Media Group Incorporated   United States
June 28,2022
  Investment holding   US$10     100 %
Thoughtful (Thailand) Co. Ltd   Thailand
September 2, 2014
  Digital marketing   THB 4,000,000     99.75 %
AdActive Media CA Inc.   United States
April 12, 2010
  Digital marketing   Preferred: US$1,929.1938
Common: US$4,032.7871
    100 %
PT Tunas Sukses Mandiri   Indonesia
February 8, 2010
  Online ticketing and reservation   IDR 26,000,000     99 %
Nusatrip Malaysia Sdn Bhd   Malaysia
March 1, 2017
  Online ticketing and reservation   MYR 52,000     99 %
Nusatrip Singapore Pte Ltd   Singapore
December 6, 2016
  Online ticketing and reservation   SGD 212,206     99 %
Nusatrip International Pte Ltd   Singapore
January 9, 2015
  Online ticketing and reservation   SGD 905,006.51     99 %
PT Thoughtful Media Group Indonesia (FKA: PT Wahana Cerita Indonesia)   Indonesia
January 14, 2022
  Digital marketing and event organizer   IDR 51,000,000     100 %
Mekong Leisure Travel Company Limited   Vietnam
October 6, 2011
  Online ticketing, reservation and system   VND 875,460,000     99 %
Vietnam International Travel and Service Joint Stock Company   Vietnam
November 16, 2012
  Ticketing   VND 1,900,000,000     100 %
Sopa Incorporated   Unites States
May 22, 2023
  Investment holding   Common: US$0.10     100 %
Nusatrip Incorporated   United States
May 22,2023
  Investment holding   Common: US$0.10     100 %
Thoughtful Media (Malaysia) Sdn Bhd   Malaysia
October 18, 2023
  Digital marketing   MYR 1,000     100 %

7

 

 

The Company and its subsidiaries are hereinafter referred to as (the “Company”).

 

On February 23, 2023, Society Pass Incorporated acquired additional issued capital in Nusatrip International Pte Ltd of 2,225,735 number of ordinary stock and increased its shareholding from 75% to 99%, and to the subsidiaries within the group.

 

On May 22, 2023, Thoughtful Media Group Inc and Society Pass Inc acquired additional issued capital in Thoughtful (Thailand) Co Ltd of 397,000 and 2,000 number of ordinary stocks amounted to THB 1,985,000 and THB 10,000 respectively. Total shareholding interest remain unchanged.

 

On August 1, 2023, the Company 95% owned subsidiary Sopa Technology Pte. Ltd. disposed one of its 100% owned subsidiary Sopa (Phil) Incorporated to the Company 100% owned subsidiary Thoughtful Media Group Incorporated as internal group restructuring. At the same day, Sopa (Phil) Incorporated changed name to Thoughtful Media (Philippines) Inc and updated its principal activities to digital marketing.

 

On October 25, 2023, the Company 95% owned subsidiary Sopa Technology Pte. Ltd. acquired one of its 100% owned subsidiary Hottab Vietnam Company Limited from its 100% owned subsidiary Hottab Pte. Ltd. and disposed 100% shareholding of Hottab Pte. Ltd. to its 100% owned subsidiary Thought Media Group Incorporated. At the same day, Hottab Pte. Ltd. changed name to Thoughtful Media (Singapore) Pte. Ltd. and updated its principal activities to digital marketing.

 

During the year of 2023, certain operations were progressively discontinued following management’s decision based on operation performance, business strategy and future prospects. This is mainly online F&B and groceries delivery operations under online ordering segment includes “Handycart” under subsidiary Dream Space Trading Co., Ltd in Vietnam and “Pushkart” and “Mangan” under subsidiary New Retail Experience Incorporated in the Philippines. There is also discontinued operation of local mobile in telecommunication reseller under subsidiary Gorilla Mobile Pte Ltd. In view of the operation results which are insignificant to the impact of the group and continued operation involvements are in place in all these operations, therefore no separate disclosure is considered necessary in accordance to the discontinued operation standards.

 

NOTE2 GOING CONCERN AND LIQUIDITY  

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has suffered loss for period of $2,839,224, negative operating cash flow of $2,508,941, working capital deficit of $3,833,468 and accumulated deficit of $102,721,638 as at March 31, 2024 that raise substantial doubt about its ability to continue as a going concern. In assessing the going concern, management and the Board has considered the following:

 

1) Cash and cash equivalents balance of $1,619,232.

 

2) Continued business growth of digital marketing and online ticketing and reservations.

 

While the Company believes that it will be able to continue to grow the Company’s revenue base and control expenditures, there is no assurance that it will be able to achieve these goals. As a result, the Company continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed to finance the Company’s business development activities, general and administrative expenses and growth strategy.

 

Global Events

 

The Russian-Ukraine war, Iran-Pakistan tension and the supply chain disruption have not affected any specific segment of our business.

 

8

 

 

NOTE3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

 

  Basis of presentation

 

The Company has prepared the accompanying unaudited condensed financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These financial statements are unaudited and, in our opinion, include all adjustments consisting of normal recurring adjustments and accruals necessary for a fair presentation of our condensed balance sheets, statements of operations and other comprehensive loss, statements of stockholders’ deficit and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any subsequent quarter or for the full year ending December 31, 2024 due to various factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the 2023 audited financial statements and accompanying notes filed with the SEC.

 

  Emerging Growth Company

 

We are an “emerging growth company” under the JOBS Act. For as long as we are an “emerging growth company,” we are not required to: (i) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (ii) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (iii) comply with any new requirements adopted by the Public Company Accounting Oversight Board (“PCAOB”) or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (iv) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. However, we have elected to “opt out” of the extended transition period discussed in (i) and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

 

Use of estimates and assumptions

 

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. If actual results significantly differ from the Company’s estimates, the Company’s financial condition and results of operations could be materially impacted. Significant estimates in the period include the allowance for doubtful accounts on accounts receivable, the incremental borrowing rate used to calculate right of use assets and lease liabilities, valuation and useful lives of intangible assets, impairment of long-lived assets, valuation of common stock and stock warrants, stock option valuations, imputed interest on amounts due to related parties, inventory valuation, revenue recognition, the allocation of purchase consideration in business combinations, and deferred tax assets and the related valuation allowance.

 

9

 

 

Basis of consolidation

 

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

 

Business combination

 

The Company follows Accounting Standards Codification (“ASC”) ASC Topic 805, Business Combinations (“ASC 805”) and ASC Topic 810, Consolidation (“ASC 810”). ASC Topic 805 requires most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to be recorded at “fair value.” The statement applies to all business combinations. Under ASC 805, all business combinations are accounted for by applying the acquisition method. Accounting for the resulting goodwill requires significant management estimates and judgment. Management performs periodic reviews of the carrying value of goodwill to determine whether events and circumstances indicate that an impairment in value may have occurred. A variety of factors could cause the carrying value of goodwill to become impaired. A write-down of the carrying value of goodwill could result in a non-cash charge, which could have an adverse effect on the Company’s results of operations.

 

Non-controlling interest

 

The Company accounts for non-controlling interests in accordance with ASC Topic 810, which requires the Company to present non-controlling interests as a separate component of total shareholders’ equity on the consolidated balance sheets and the consolidated net loss attributable to its non-controlling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive loss.

 

Segment reporting

 

ASC Topic 280, Segment Reporting (“Topic 280”) establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in consolidated financial statements. The Company currently operates in six reportable operating segments: (i) Online Grocery and Food and Groceries Deliveries, (ii) Digital marketing, (iii) Online ticketing and reservation, (iv) Telecommunications Reseller, (v) e-Commerce, and (vi) Merchant Point of Sale (“merchant POS”).

 

Cash and cash equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of March 31, 2024 and December 31, 2023, the cash and cash equivalents excluded restricted cash amounted to $1,619,232 and $3,628,670, respectively.

 

The Company currently has bank deposits with financial institutions in the U.S. which exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000, so there were uninsured balance of $0 and $83,152 as of March 31, 2024 and December 31, 2023, respectively. In addition, the Company has uninsured bank deposits of $1,490,347 and $3,262,161 with a financial institution outside the U.S as of March 31, 2024 and December 31, 2023, respectively. All uninsured bank deposits are held at high quality credit institutions.

 

Restricted cash

 

Restricted cash refers to cash that is held by the Company for specific reasons and is, therefore, not available for immediate ordinary business use. The restricted cash represented fixed deposit maintained in bank accounts that are pledged. As of March 31, 2024 and December 31, 2023, the restricted cash amounted to $54,000 and $95,312, respectively.

 

10

 

 

Accounts receivable

 

Accounts receivables are recorded at the amounts that are invoiced to customers, do not bear interest, and are due within contractual payment terms, generally 30 to 90-days from completion of service or the delivery of a product. Credit is extended based on an evaluation of a customer’s financial condition, the customer’s creditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Quarterly, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company records bad debt expense and records an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For receivables that are past due or not being paid according to payment terms, appropriate actions are taken to pursue all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. Currently, the Company does not have any off-balance-sheet credit exposure related to its customers, and as of both March 31, 2024 and December 31, 2023, there was no need for allowance for doubtful accounts.

 

Inventories

 

Inventories are stated at the lower of cost or net realizable value, cost being determined on a first-in-first-out method. Costs include hardware equipment and peripheral costs which are purchased from the Company’s suppliers as merchandized goods. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. No allowance for obsolete inventories was recorded by the Company during the three months ended March 31, 2024 and 2023. The inventories amounted to $379,736 and $431,483 at March 31, 2024 and December 31, 2023, respectively.

 

Prepaid expenses

 

Prepaid expenses represent payments made in advance for products or services to be received in the future and are amortized to expense on a ratable basis over the future period to be benefitted by that expense. The benefits associated with the products or services are considered current assets if they are expected to be used during the next twelve months and are considered non-current assets if they are expected to be used over a period greater than one year.

 

Property, plant and equipment

 

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

 

   Expected useful
lives
Computer equipment  3 years
Office equipment  5 years
Renovation  5 years

 

Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

 

Impairment of long-lived assets

 

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and intangible assets held and used by the Company are reviewed 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 evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the three months period ended March 31, 2024 and 2023 presented.

 

11

 

 

Revenue recognition

 

The Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). Under ASU 2014-09, the Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

 

  Identify the contract with a customer;
     
  Identify the performance obligations in the contract;
     
  Determine the transaction price;
     
  Allocate the transaction price to performance obligations in the contract; and
     
  Recognize revenue as the performance obligation is satisfied.

 

The Company generates its revenues from a diversified a mix of e-commerce activities that correspond to our six business segments (business to consumer or “B2C”), grocery and food delivery (B2C), telecommunication reseller (B2C), online ticketing and reservations (B2C) and the services providing to merchants for their business growth (business to business or “B2B”), digital marketing (B2B) and online ticketing and reservations (B2B).

 

The Company’s performance obligations include providing connectivity between merchants and consumers, generally through an online ordering platform. The platform allows merchants to create an account, display a menu and track their sale reports on the merchant facing application. The platform also allows the consumers to create an account and order from merchants on the consumer facing application. The platform allows a delivery company to accept an online delivery request and deliver or ship an order from a merchant to customer.

 

Lifestyle 

 

The Company has developed an online lifestyle platform (the “Lifestyle Platform”) under its own brand name of “Leflair” to enable consumers to purchase high-end brands in many categories. Using the Company’s smart search engine, consumers search or review their favorite brands among hundreds of choices in various categories, including Apparel, Bags & Shoes, Accessories, Health & Beauty, Home & Lifestyle, International, Women, Men and Kids & Babies categories. The Lifestyle Platform also allows customers to order from hundreds of vendor choices with personalized promotions based on their individual purchase history and location. The platform has also partnered with a Vietnam-based delivery company, Amilo, to offer seamless delivery of product from merchant to consumer’s home or office at the touch of a button. Consumers can place orders for delivery or can collect their purchases at the Company’s logistics center.

 

Grocery and Food Delivery 

 

Other online platforms include online platforms in Vietnam, under the brand name of “Handycart”, and Philippines, under the brand names of “Pushkart” and “Mangan”, to enable the consumers to purchase meals from restaurants and food from local grocery and food merchants and deliver to them in their area. This business segment has been progressively ceasing yet the Company has maintained ongoing involvement in specific operational activities during the three months period ended March 31, 2024.

 

12

 

 

Telecommunications

 

The Company operates a Singapore-based online telecommunication reseller platform under brand name of “Gorilla” to enable the consumers to subscribe local mobile data and overseas internet data in different subscription package. Established in Singapore in 2019, Gorilla utilizes blockchain and Web3 technology to operate a MVNO for its users in South East Asia (SEA). With network coverage to over 150 countries, Gorilla offers a full suite of mobile communication services such as local calls, international roaming, data, and SMS texting. More importantly, Gorilla enables its customers to convert unused mobile data into digital assets or Gorilla GO Tokens through its innovative proprietary blockchain-based SwitchBack feature. Gorilla GO Tokens in turn can be redeemed for eVouchers, to offset future bills, or be redeemed for other value-added services. Please visit https://gorilla.global/ for more information. During the financial period ended March 31, 2024, the Company ceased its local mobile data service operation due to business restructuring to refocus on overseas internet data services.

 

Digital Marketing

 

The acquisition of a digital media platform, TMG, amplifies the reach and engagement of the Company’s e-commerce ecosystem and retail partners. Originally founded in 2010, TMG today creates and distributes digital advertising campaigns across its multi-channel network in both SEA and the US. With its intimate knowledge of local markets, digital marketing technology tools and social commerce business focus, advertisers leverage TMG’s wide influencer network throughout SEA to market and sell advertising inventory exclusively with specific placement and effect.

 

As a result, Thoughtful Media’s content creator partners earn a larger share of advertising revenues from international consumer brands. Thoughtful Media’s data-rich multi-channel network has uploaded over 675,000 videos with over 80 billion video views. The current network of 263 YouTube channels has onboarded over 85 million subscribers with an average monthly viewership of over 600 million views.

 

Travel

 

The Company purchased the NusaTrip Group, a leading Jakarta-based Online Travel Agency (“OTA”) in Indonesia and across SEA. The NusaTrip acquisition extended the Company’s business reach into SEA regional travel industry and marked the Company’s first foray into Indonesia. Established in 2013 as the first Indonesian OTA accredited by the International Air Transport Association, NusaTrip pioneered offering a comprehensive range of airlines and hotels to Indonesian corporate and retail customers. With its first mover advantage, NusaTrip has onboarded over 1.2 million registered users, over 500 airlines and over 200,000 hotels around the world as well as connected with over 80 million unique visitors. During the year, NusaTrip Group also acquired two Vietnam based companies having branding name of “VLeisure” and “VIT” selling air ticket, hotel reservation and providing hotel management software to local market.

 

The Company’s e-Commerce business is primarily conducted using Leflair’s Lifestyle Platform, as follows:

 

 

1)

When a customer places an order on either the Leflair website or app, a sales orders report will be generated in the system. The Company will either fulfill this order from its inventory or purchase the item from the manufacturer or distributor. Once the Company has the item in its distribution center, it will contract with a logistics partner delivered to the end customer. The sale is recognized when the delivery is completed by the logistics partner to the end customer. Sale of products are offered with a limited right of return ranging from 3 to 30 days, from the date of purchase and not subject to any product warranty. The Company is considered the principal in this e-commerce transaction and reports revenue on a gross basis as the Company establishes the price of the product, has responsibility for fulfillment of the order and retains the risk of collection.

 

13

 

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $20,728 and $223,517, respectively, in the Lifestyle sector.

 

The Company’s Merchant POS offers both software and hardware products and services to vendors, as follows:-

 

Software sales consist of:

 

 

1)

Subscription fees consist of the fees that the Company charge merchants to obtain access to the Merchant Marketing Program.
     
  2) The Company provides optional add-on software services which includes Analytics and Chat box capabilities at a fixed fee per month.
     
  3) The Company collects commissions when they sell third party hardware and equipment (cashier stations, waiter tablets and printers) to merchants.

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $0 and $195, respectively, from software fees.

 

Hardware sales — the Company generally is involved with the sale of on-premise appliances and end-point devices. The single performance obligation is to transfer the hardware product (which is to be installed with its licensed software integral to the functionality of the hardware product). The entire transaction price is allocated to the hardware product and is generally recognized as revenue at the time of delivery because the customer obtains control of the product at that point in time. It is concluded that control generally transfers at that point in time because the customer has title to the hardware, physical possession, and a present obligation to pay for the hardware. Payments for hardware contracts are generally due 30 to 90 days after shipment of the hardware product.

 

The Company records revenues from the sales of third-party products on a “gross” basis pursuant to ASC Topic 606 when the Company controls the specified good before it is transferred to the end customer and have the risks and rewards as principal in the transaction, such as responsibility for fulfillment, retaining the risk for collection, and establishing the price of the products. If these indicators have not been met, or if indicators of net revenue reporting specified in ASC Topic 606 are present in the arrangement, revenue is recognized net of related direct costs since in these instances we act as an agent.

 

Software subscription fee — The Company’s performance obligation includes providing customer access to our software, generally through a monthly subscription, where the Company typically satisfies its performance obligations prior to the submission of invoices to the customer for such services. The Company’s software sale arrangements grant customers the right to access and use the software products which are to be installed with the relevant hardware for connectivity at the outset of an arrangement, and the customer is entitled to both technical support and software upgrades and enhancements during the term of the agreement. The term of the subscription period is generally 12 months, with automatic one-year renewal. The subscription license service is billed monthly, quarterly or annually. Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract. Payments are generally due 30 to 90 days after delivery of the software licenses.

 

The Company records its revenues, net of value added taxes (“VAT”), which is levied at the rate of 10% on the invoiced value of sales.

 

14

 

 

Grocery and food delivery consists of online grocery under brand name “Pushkart” and food delivery service under brand name “Handycart” as follows:

 

Customers place order for groceries and take-out food through our online platforms of “Pushkart”, “Mangan” and “Handcart” respectively. When the grocery or food merchant receives and order, our platform will assign a third-party delivery service to pick up and deliver the grocery and/or food order to the customer. Revenue is recognized when the grocery and/or food is delivered, at which time the customer pays for the grocery and /or food order with cash, at Net of merchant cost.

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $0 and $34,085, respectively, from this stream.

 

As a telecommunication reseller we provide local mobile data and overseas internet data plans under the brand name of “Gorilla,” which is a group of company we acquired in May 2022. Our telecommunication revenues are recorded for ASC Topic 606 purposes as follows:

 

Local mobile plan - customers choose and subscribe to a monthly local mobile plan through our “Gorilla” online platform. The Company will proceed to register the sim card (effectively, the mobile telephone number activation card) and arrange delivery of that Sim card to the customer. Following Sim card activation, the system will capture the monthly data usage of each customer, calculated in accordance with the package data capacity and monthly subscription rate, which amounts are aggregated and recorded as revenue. Unused data will be converted to Rewards Points and carried forward to next month for potential subsequent data usage. As a result of the rewards points, the company also recognize revenue from Rewards Point redemption for subscription fees offset, voucher redemption, extra data purchases, that the customer chooses to use via our online platform.

 

Overseas internet data plan – a customer will place order for their desired overseas internet data plan through either the “Gorilla” online platform or third-party partner platforms. Subscription revenue is recognized when the Sim card is delivered and activated.

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $4,566 and $14,302, respectively, from telecommunications.

 

Digital marketing revenues are recognized when the Company has negotiated the terms of the transaction, which includes determining either the overall price, or price for each performance obligation in the form of a service or a product, the service or product has been delivered to the customer, no obligation is outstanding regarding that service or product, and the Company is reasonably assured that funds have been or will be collected from the customer.

 

A summary of each of the Company’s revenue streams under ASC 606 is as follows:

 

Marketing services from customers

 

Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

The Company derives its revenue from the provision of digital marketing services to customers. The Company offers customers with a comprehensive suite of digital marketing services to enhance their social media presence and reach their target audiences, particularly Gen Z and Millennials, to achieve marketing goals. The customers can leverage the Company’s experience in building content and fanbases with creators, their creators’ creativity, engagement, and trust among creators’ loyal fanbases to increase their brand awareness and sell products. The Company offers customized digital marketing solution, including (i) advising on content strategy and budget and recommending specific creators; (ii) communicating with and managing selected creators; (iii) producing and engaging relevant content with creators to promote key messages for customers; (iv) uploading branded content on creators’ social media channels; (v) amplifying the reach of creators’ and customers’ content through precise media planning and buying via boosting marketing services on social media platforms, such as Google; and (vi) providing optimization services through data analysis and reporting.

 

15

 

 

The Company’s customers’ payment terms generally range from 30-60 days of fulfilling its performance obligations and recognizing revenue.

 

Campaign-based marketing services revenue is recognized as a distinct single performance obligation when the Company transfers services to customers, which occurs over time. The performance obligation may be a promise to place branded content on certain social media platforms and is satisfied upon delivery of such related services to customers. The duration of the service period is short, usually over 1-3 months. Such revenue is recognized at over time, for the amount the Company is entitled to receive, as and when the marketing services are provided and completed.

 

Marketing services from social media platforms (“platform revenue”)

 

The Company also derives its advertising revenue generated from its channel pages and posts on social media platforms, such as YouTube by monetizing its contents. The payments are usually received within 30 days upon completion of performance obligation for platform revenue services.

 

The Company recognizes revenue as performance obligations are satisfied as the creation of contents are published on the social media platforms, which occurs at a point in time. The advertisements are delivered primarily based on impressions of contents on social media platforms, hence the Company provided the advertising services by an on-going basis during the publication period and the outcome of the services can be received and consumed by the social media platform simultaneously.

 

The Company records its revenues, net of value added taxes (“VAT”), which is levied at the rate of 10% on the invoiced value of sales.

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $1,552,420 and $1,283,774, respectively, from this stream.

 

Online ticketing and reservation provide information, prices, availability, booking services for domestic and international air ticket, hotels, car, train, and hotel technology as follows:

 

The Company’s revenues are substantially reported on a net basis as the travel supplier is primarily responsible for providing the underlying travel services and the Company does not control the service provided by the travel supplier to the traveler. Revenue from air ticketing services, air ticket commission, hotel reservation and ancillary services including insurance commissions and refund margin are substantially recognized at a point of time when the performance obligations that are satisfied. These revenues cover B2B and B2C sales channel segments.

 

The Company has a software subscription revenue generated from hotel in Vietnam, and online advertising revenue, reported in gross basis, providing a hotel booking management platform for hotel management purposes, and brand advertisement purpose. these revenues are recognized ratably over the time or upon relevant performance obligations being fulfilled.

 

16

 

 

Ticketing services

 

The Company receives spread margin from B2B and B2C customers and commissions from travel suppliers for ticketing reservations through the Company’s transaction and service platform under various services agreements. Spread margin and commissions from ticketing reservations rendered are recognized when tickets are issued as this is when the Company’s performance obligation is satisfied. The Company is not entitled to a spread margin and commission fee for the tickets canceled by the end users. Losses incurred from cancelations are immaterial due to a historical low cancelation rate and minimal administrative costs incurred in processing cancelations. The Company presents revenues from such transactions on a net basis in the statements of income as the Company, generally, does not control the service provided by the travel supplier to the traveler and does not assume inventory risk for canceled ticketing reservations. 100% of the Company’s ticketing services revenues were recognized on a net basis, as an agent, during the three months ended March 31, 2024 and 2023.

 

Hotel reservation services

 

The Company receives spread margin from B2B and B2C customers and commissions from travel suppliers for hotel room reservations through the Company’s transaction and service platform. Commissions from hotel reservation services rendered are recognized when the reservation becomes non-cancelable (when the cancelation period provided by the reservation expires) which is the point at which the Company has fulfilled its performance obligation (successfully booking a reservation, which includes certain post-booking services during the cancelation period). Contracts with certain travel suppliers contain incentive commissions typically subject to achieving specific performance targets. The incentive commissions are considered as variable consideration and are estimated and recognized to the extent that the Company is entitled to such incentive commissions. The Company generally receives incentive commissions from monthly arrangements with hotels based on the number of hotel room reservations where end users have completed their stay. The Company presents revenues from such transactions on a net basis in the statements of income and comprehensive income as the Company, generally, does not control the service provided by the travel supplier to the traveler and does not assume inventory risk for canceled hotel reservations.

 

Hotel technology platform software services

 

The Company receives subscription fee from travel suppliers for hotel room reservation and marketing system through the Company’s reservation and marketing platform.

 

Subscription fee from hotel technology platform software services rendered are recognized ratably over the fixed term of the agreement as services are provided throughout the contract period, where the performance obligations being fulfilled through the usage of our hotel technology platform software services.

 

The Company presents revenues from such transactions on a gross basis in the statements of income and comprehensive income as the Company, generally, control the service provided by the travel supplier to the traveler.

 

Ancillary services

 

Ancillary revenues comprise primarily of the insurance commission and refund margin.

 

Insurance commission revenue received from B2B and B2C customers for selling of travel insurance through the Company’s transaction and service platform. Commission from travel insurance is recognized when the order is confirmed and paid which is the point at which the Company fulfilled its performance obligation. Refund margin revenue received from B2B and B2C customers for the spread arise from reservations cancellation fee between customers and travel suppliers. This is recognized upon the confirmation of refund amount by both customers and travel suppliers which is the point at which the Company fulfilled its performance obligation.

 

The Company presents revenues from ancillary service transactions on a net basis in the statements of income and comprehensive income as the Company, generally, does not control the service provided by the insurance supplier and travel supplier to the traveler.

 

During the three months ended March 31, 2024 and 2023, the Company generated revenue of $264,574 and $410,230, respectively, from this stream.

 

17

 

 

Principal vs Agent Considerations

 

In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its customers and vendors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue on a gross or net basis depends upon whether the Company has control over the goods prior to transferring it. This evaluation determined that the Company is not in control of establishing the transaction price, not managing all aspects of the terms, even though taking the risk of campaign results and default payment.

 

Contract assets

 

In accordance with ASC Topic 606, a contract asset arises when the Company transfers a good or performs a service in advance of receiving consideration from the customer as agreed upon. A contract asset becomes a receivable once the Company’s right to receive consideration becomes unconditional.

 

There were contract assets balance was $120,459 and $247,368 on March 31, 2024 and December 31, 2023, respectively.

 

Contract liabilities

 

In accordance with ASC Topic 606, a contract liability represents the Company’s obligation to transfer goods or services to a customer when the customer prepays for a good or service or when the customer’s consideration is due for goods and services that the Company will yet provide whichever happens earlier.

 

Contract liabilities represent amounts collected from, or invoiced to, customers in excess of revenues recognized, primarily from the billing of annual subscription agreements. The value of contract liabilities will increase or decrease based on the timing of invoices and recognition of revenue. The Company’s contract liabilities balance was $1,270,220 and $1,265,753 on March 31, 2024 and December 31, 2023, respectively.

 

Software development costs

 

In accordance with the relevant FASB accounting guidance regarding the development of software to be sold, leased, or marketed, the Company expenses such costs as they are incurred until technological feasibility has been established, at and after which time these costs are capitalized until the product is available for general release to customers. Once the technological feasibility is established per ASC Topic 985, Software, the Company capitalizes costs associated with the acquisition or development of major software for internal and external use in the balance sheet. These capitalized software costs are ratably amortized over the period of the software’s estimated useful life. Costs incurred to enhance the Company’s software products, after general market release of the services using the products, is expensed in the period they are incurred. The Company only capitalizes subsequent additions, modifications or upgrades to internally developed software to the extent that such changes allow the software to perform a task it previously did not perform. The Company also expenses website costs as incurred.

 

Research and development expenditures arising from the development of the Company’s own software are charged to operations as incurred. For the three months ended March 31, 2024, and 2023, software development costs were $13,504 and $13,919, respectively. Based on the software development process, technological feasibility is established upon completion of a working model, which also requires certification and extensive testing. Costs incurred by the Company between completion of the working model and the point at which the product is ready for general release have, to date, been immaterial and have been expensed as incurred.

 

18

 

 

  Cost of sales

 

Cost of revenue under online ordering consist of the cost of merchandizes ordered by the consumers and the related shipping and handling costs, which are directly attributable to the sales of online ordering.

 

Cost of revenue related to software sales and licensing consist of the cost of software and payroll costs, which are directly attributable to the sales and licensing of software. Cost of revenue related to hardware sales consist of the cost of hardware and payroll costs, which are directly attributable to the sales of hardware.

 

Cost of revenue related to grocery and food delivery consist of the cost of the outsourced delivery and the outsource payment gateway, which are directly attributable to the sales of grocery and food delivery.

 

Cost of revenue related to our telecommunication data reseller segment consist of the cost of the primary telecommunication service, which are directly attributable to the sales of telecommunication data.

 

Cost of revenue under digital marketing consist of the cost of primary digital marketing service, which are directly attributable to the sales of digital marketing.

 

Shipping and handling costs

 

No shipping and handling costs are associated with the distribution of the products to the customers since those costs are borne by the Company’s suppliers or distributors for our merchant POS business.

 

The shipping and handling costs for all segments other than our e-commerce segment are recorded net in sales. For shipping costs related to our e-commerce business, those shipping costs are recorded in cost of revenue.

 

Sales and marketing

 

Sales and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, seminars, and other programs. Advertising costs are expensed as incurred. Advertising expense was $127,135 and $130,664 for the three months ended March 31, 2024 and 2023, respectively.

 

Product warranties

 

The Company’s provision for estimated future warranty costs is based upon the historical relationship of warranty claims to sales. Based upon historical sales trends and warranties provided by the Company’s suppliers, the Company has concluded that no warranty liability is required as of March 31, 2024 and December 31, 2023. To date, product allowance and returns have been minimal and, based on its experience, the Company believes that returns of its products will continue to be minimal, although it looks at this issue every quarter to continue to support its assertion. 

 

19

 

 

Income tax

 

The Company adopted the ASC 740 Income Tax provisions, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under paragraph ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC Topic 740, nor did it record any uncertain tax positions for the three months ended March 31, 2024 and 2023.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. On a quarterly basis, the Company reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances to reduce those amounts to the amounts management believes will be realized in future income tax returns.

 

In addition to U.S. income taxes, the Company and its wholly-owned foreign subsidiary, is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax, there may be transactions and calculations for which the ultimate tax determination is uncertain. The company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

 

Foreign currencies translation and transactions

 

The reporting currency of the Company is the United States Dollar (“US$”) and the accompanying consolidated unaudited condensed financial statements have been expressed in US$s. In addition, the Company’s subsidiary is operating in the Republic of Vietnam, Singapore, India and Philippines and maintains its books and record in its local currency, Vietnam Dong (“VND”), Singapore Dollar (“SGD”), Indian Rupee (“INR”), Philippines Pesos (“PHP”), Malaysian Ringgit (“MYR), Thailand Baht (“THB”) and Indonesian Rupiah (“IDR”), respectively, which are the functional currencies in which the subsidiary’s operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$s, in accordance with ASC Topic 830, “Translation of Financial Statement” (“ASC 830”) using the applicable exchange rates on the balance sheet date. Shareholders’ equity is translated using historical rates. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited condensed statements of changes in shareholder’s equity.

 

20

 

 

Schedule of Foreign currencies translation and transactions

 

Translation of amounts from SGD into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end SGD:US$ exchange rate  $0.7401   $0.7521 
Period average SGD:US$ exchange rate  $0.7460   $0.7500 

 

Translation of amounts from VND into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end VND:US$ exchange rate  $0.000040   $0.000043 
Period average VND:US$ exchange rate  $0.000041   $0.000042 

 

Translation of amounts from INR into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end INR:US$ exchange rate  $0.01200   $0.01217 
Period average INR:US$ exchange rate  $0.01204   $0.01216 

 

Translation of amounts from PHP into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end PHP:US$ exchange rate  $0.01779   $0.01841 
Period average PHP:US$ exchange rate  $0.01785   $0.01823 

 

Translation of amounts from THB into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end THB:US$ exchange rate  $0.02749   $0.02925 
Period average THB:US$ exchange rate  $0.02803   $0.02944 

 

Translation of amounts from MYR into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end MYR:US$ exchange rate  $0.21155   $0.22646 
Period average MYR:US$ exchange rate  $0.21169   $0.22777 

 

21

 

 

Translation of amounts from IDR into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

 

   March 31,
2024
   March 31,
2023
 
Period-end IDR:US$ exchange rate  $0.000063   $0.000067 
Period average IDR:US$ exchange rate  $0.000064   $0.000066 

 

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

 

Comprehensive income

 

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statements of changes in shareholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Earnings per share

 

Basic per share amounts are calculated using the weighted average shares outstanding during the year, excluding unvested restricted stock units. The Company uses the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments. Under the treasury stock method, only “in the money” dilutive instruments impact the diluted calculations in computing diluted earnings per share. Diluted calculations reflect the weighted average incremental common shares that would be issued upon exercise of dilutive options assuming the proceeds would be used to repurchase shares at average market prices for the years.

 

For the three months ended March 31, 2024 and 2023, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company’s net loss position. Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive.

 

Schedule of computation of diluted net loss per share:

 

   Three months ended
March 31,
 
   2024   2023 
Net loss attributable to Society Pass Incorporated  $(2,839,925)  $(5,294,927)
Weighted average common shares outstanding – Basic and diluted
   2,341,300    1,805,523 
Net loss per share – Basic and diluted
  $(1.21)  $(3.00)

 

22

 

 

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

 

Schedule of Common stock issued:

 

   Three months ended
March 31,
 
   2024   2023 
Options to purchase common stock (a)   129,685    129,685 
Warrants granted to underwriter   253,549    253,549 
Warrants granted with Series C-1 Convertible Preferred Stock   71,200    71,200 
Total of common stock equivalents   454,434    454,434 

 

(a) The Board of Directors have approved a 10-year stock option at an exercise price of $6.49 per share that will be exercisable at any time.

 

Leases

 

The Company adopted Topic 842, Leases (“ASC 842”) to determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets. 

 

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

 

When a lease is terminated before the expiration of the lease term, irrespective of whether the lease is classified as a finance lease or an operating lease, the lessee would derecognize the ROU asset and corresponding lease liability. Any difference would be recognized as a gain or loss related to the termination of the lease. Similarly, if a lessee is required to make any payments or receives any consideration when terminating the lease, it would include such amounts in the determination of the gain or loss upon termination.

 

As of March 31, 2024 and December 31, 2023, the Company recorded the right of use asset of $1,095,077 and $1,407,956, respectively.

 

23

 

 

Retirement plan costs

 

Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying consolidated statements of operation as the related employee service is provided.

 

Share-based compensation

 

The Company follows ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards (employee and non-employee), at grant-date fair value of the equity instruments that an entity is obligated to issue. Restricted stock units are valued using the market price of the Company’s common shares on the date of grant. The Company uses a Black-Scholes option pricing model to estimate the fair value of employee stock options at the date of grant. As of March 31, 2024, those shares issued and stock options granted for service compensation, vest 180 days after the grant date, and therefore these amounts are thus recognized as expense during the three months ended March 31, 2024 and 2023. Stock-based compensation is recorded in general and administrative expenses within the Consolidated Statements of Operations and Other Comprehensive Loss, with corresponding credits to common stock and accumulated paid-in capital.

 

Warrants

 

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its preferred and common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using a Black-Scholes Option Pricing Model as of the measurement date. The Company uses a Black-Scholes option pricing model to estimate the grant date fair value of the warrants. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital (the accounting treatment for common stock issuance costs). All other warrants are recorded at the grant date fair value as an expense over the requisite service period, or at the date of issuance if the warrants vest immediately, with corresponding credits to additional paid-in capital.

 

Related parties

 

The Company follows ASC 850-10, Related Party Disclosures (“ASC 850”) for the identification of related parties and the disclosure of related party transactions.

 

Pursuant to ASC 850, the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under ASC 825, Financial Instruments, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and income-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 consolidated financial statements shall 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 consolidated or combined financial statements is not required by ASC 850. The disclosures shall include: a) the nature of the relationship(s) involved; b) a 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) amount 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.

 

24

 

 

Commitments and contingencies

 

The Company follows the ASC 450, Commitments, to account for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, which assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

  

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available, that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows if the current level of facts and circumstances changes in the future.

 

Fair value of financial instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:

 

  Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
  Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
  Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits, prepayments and other receivables, contract liabilities, accrued liabilities and other payables, amounts due to related parties and operating lease liabilities, approximate their fair values because of the short maturity of these instruments.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date.

 

All other recently issued, but not yet effective, 2024 Accounting Standards Updates are not expected to have an effect on the Company.

 

25

 

 

NOTE4 REVENUE

 

Revenue was generated from the following activities:

 

   Three Months ended March 31, 
   2024   2023 
At a point in time:        
Sales – online ordering  $20,728   $257,602 
Sales – digital marketing   1,552,420    1,283,774 
Sales – online ticketing and reservation   264,574    410,230 
Sales – data   4,566    14,302 
Hardware sales   
    
 
Over a period of time:          
Sales – digital marketing   
    
 
Software subscription sales   4,791    195 
   $1,847,079   $1,966,103 

 

Contract liabilities recognized was related to online ticketing and reservation, digital marketing, telecommunication reseller and software sales and the following is reconciliation for the years presented:

 

Schedule of Contract liabilities:

 

   March 31,   December 31, 
   2024   2023 
Contract liabilities, brought forward  $1,265,753   $1,405,090 
Add: recognized as deferred revenue   1,270,220    1,265,753 
Less: recognized as revenue   (1,265,753)   (1,405,090)
Contract liabilities, carried forward  $1,270,220   $1,265,753 

 

NOTE5 SEGMENT REPORTING

 

Currently, the Company has six reportable business segments:

 

 

(i)

e-Commerce – operates an online lifestyle platform under the brand name of “Leflair” covering a diversity of services and products, such as fashion and accessories, beauty and personal care, and home and lifestyle, all managed by SOPA Technology Company Ltd,

 

  (ii) Merchant point of sale (“POS”) – is involved in the sale of hardware and software to merchants and this segment is managed by Hottab group and SOPA entities except SOPA Technology Company Ltd,

 

  (iii) Online grocery and food deliveries – operate an online food delivery service under the “Handycart” and “Mangan” brand name, managed by Dream Space Trading Co Ltd and New Retail Experience Incorporated respectively and an online grocery delivery under the “Pushkart” brand name, managed by New Retail Experience Incorporated, and

 

  (iv) Telecommunication reseller – provide sales of local mobile phone plans and global internet data provider plans, both services managed by the Gorilla Group.

 

  (v) Digital marketing operates the digital marketing business with creator and digital marketing platform

 

  (vi) Online ticketing and reservation - operates the sale of domestic and overseas air ticket and global hotel reservations

 

The Company’s Chief Finance Officer (CFO) evaluates operating segments using the information provided in the following tables that presents revenues and gross profits by reportable segment, together with information on the segment tangible and intangible assets.

 

26

 

 

Schedule of Segment Reporting:

 

   Three months ended March 31, 2024 
   Online
F&B and
Groceries
Deliveries
   Digital
Marketing
   Online
Ticketing
and
reservation
   e-Commerce   Telecommunication
Reseller
   Merchant
POS
   Total 
Revenue from external customers                            
Sales – online ordering       
    
    20,728    
        —
    
    —
    20,728 
Sales – digital marketing   
    1,552,420        
    
    
    1,552,420 
Sales – online ticketing and reservation   
    
    264,574    
    
    
    264,574 
Sales – data   
    
    
    
    4,566    
    4,566 
Software sales   
        4,791    
    
        4,791 
Hardware sales   
    
    
    
    
    
    
 
Total revenue       1,552,420    269,365    20,728    4,566        1,847,079 
                                    
Cost of revenue:                                   
Cost of online ordering       
    
    (19,164)   
    
    (19,164)
Cost of digital marketing   
    (1,273,115)   
    
    
    
    (1,273,115)
Cost of online platform   
    
    
    
    
    
    
 
Cost of data   
    
    
    
    (50,110)   
    (50,110)
Software cost   
    
    (8,053)   (3,988)   
        (12,041)
Hardware cost   
    
    
    
    
    
    
 
Total cost of revenue       (1,273,115)   (8,053)   (23,152)   (50,110)       (1,354,430)
                                    
Gross income (loss)       279,305    261,312    (2,424)   (45,544)       492,649 
                                    
Operating Expenses                                   
Sales and marketing expenses       (4,959)   (52,641)   (19,411)   11,335    (61,459)   (127,135)
Software development costs   
    
    
    
    
    (13,504)   (13,504)
Depreciation   (5,411)   (6,177)   (22,041)   (11,684)   
    (16,268)   (61,581)
Amortization   
    
    (6,257)   
    (89,779)   (7,498)   (103,534)
General and administrative expenses   (56,795)   (461,965)   (558,452)   (130,193)   (7,376)   (1,863,775)   (3,078,556)
Total operating expenses   (62,206)   (473,101)   (639,391)   (161,288)   (85,820)   (1,962,504)   (3,384,310)
                                    
Income (loss) from operations   (62,206)   (193,796)   (378,079)   (163,712)   (131,364)   (1,962,504)   (2,891,661)
                                    
Other income (expense)        
 
    
 
    
 
    
 
    
 
      
Impairment loss   
    
        
    (75)   
    (75)
Interest income   5    114    500    2    
    4,465    5,086 
Interest expense       
    68    
    (241)   
    (173)
Written-off of plant and equipment       
    
    
    
    (8,461)   (8,461)
Other income   2,618    170    1,009    (6)   228    53,151    57,170 
Total other income (expense)   2,623    284    1,577    (4)   (88)   49,155    53,547 
Income (loss) before income taxes   (59,583)   (193,512)   (376,502)   (163,716)   (131,452)   (1,913,349)   (2,838,114)

 

27

 

 

   Three months ended March 31, 2023 
   Online
F&B and
Groceries
Deliveries
   Digital
Marketing
   Online
Ticketing
and
reservation
   e-Commerce   Telecommunication
Reseller
   Merchant
POS
   Total 
Revenue from external customers                            
Sales – online ordering   34,085    
    
    223,517    
    
    257,602 
Sales – digital marketing   
    1,283,774    
    
    
    
    1,283,774 
Sales – online ticketing and reservation   
    
    410,230    
    
    
    410,230 
Sales – data   
    
    
    
    14,302    
    14,302 
Software sales   
    
    
    
    
    195    195 
Total revenue   34,085    1,283,774    410,230    223,517    14,302    195    1,966,103 
Cost of sales:                                   
Cost of online ordering   (33,266)   
    
    (201,980)   
    
    (235,246)
Cost of digital marketing   
    (964,161)   
    
    
    
    (964,161)
Cost of data   
    
    
    
    (18,646)   
    (18,646)
Software cost   
    
    
    (60,548)   
    (1,265)   (61,813)
Total cost of revenue   (33,266)   (964,161)       (262,528)   (18,646)   (1,265)   (1,279,866)
Gross income (loss)   819    319,613    410,230    (39,011)   (4,344)   (1,070)   686,237 
Operating Expenses                                   
Sales and marketing expenses   (1,709)   (7,994)   (75,928)   (44,981)   (52)   
    (130,664)
Software development costs   
    
    
    
    
    (13,919)   (13,919)
Impairment loss   
    
    
    
    
         
Depreciation   (4,568)   (1,257)   (28,340)   (7,750)       (22,002)   (63,917)
Amortization   
    
    
    
    
    (800,000)   (800,000)
General and administrative expenses, net of depreciation and amortisation   (103,279)   (233,481)   (532,856)   (230,332)   (43,820)   (3,984,201)   (5,127,969)
Total operating expenses   (109,556)   (242,732)   (637,124)   (283,063)   (43,872)   (4,820,122)   (6,136,469)
Loss from operations   (108,737)   76,881    (226,894)   (322,074)   (48,216)   (4,821,192)   (5,450,232)
Other income (expense)                                   
Gain from early lease termination   
    1,064    
    
    
        1,064 
Interest income   4        824    523    
    38,635    39,986 
Interest expense   (27)       
    
    (325)       (352)
JV income   3,148                        3,148 
Warrant modification expense                            
Other income   39    31    934    436    12,471    2,876    16,787 
Total other income (expense)   3,164    1,095    1,758    959    12,146    41,511    60,633 
Loss before income taxes   (105,573)   77,976    (225,136)   (321,115)   (36,070)   (4,779,681)   (5,389,599)

 

 

28

 

 

   March 31, 2024 
   Online
F&B and
Groceries
Deliveries
   Digital Marketing   Online
Ticketing
and
reservation
   e-Commerce   Telecommunication
Reseller
   Merchant
POS
   Total 
Intangible assets, net   
    
    57,607    
    801,680    5,093,781    5,953,068 
Identifiable assets   138,646    2,512,707    2,564,335    312,708    28,833    1,765,808    7,323,037 

 

   December 31, 2023 
   Online
F&B and
Groceries
Deliveries
   Digital Marketing   Online
Ticketing
and
reservation
   e-Commerce   Telecommunication
Reseller
   Merchant
POS
   Total 
Intangible assets, net       
    65,791    
    911,706    5,104,231    6,081,728 
Identifiable assets   167,360    2,495,897    3,188,452    361,421    46,625    4,021,691    10,281,446 

 

The below sales are based on the countries in which the customer is located. Summarized financial information concerning our geographic segments is shown in the following tables:

 

Schedule of geographic segments

 

Schedule of geographic segments        
   Three Months Ended
March 31,
 
   2024   2023 
Indonesia  $272,434   $250,713 
Vietnam   359,667    277,737 
Philippines   58,276    31,671 
Singapore   50,958    172,310 
United States   906,128    1,057,665 
Thailand   199,337    174,415 
Malaysia   279    1,592 
   $1,847,079   $1,966,103 

 

29

 

 

NOTE6 DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES

 

  

March 31,
2024
(Unaudited)

   December 31,
2023
 
Deposits  $448,776   $772,427 
Prepayments   861,880    838,721 
Value added tax   100,967    118,167 
Interest receivable   
    11,552 
Other receivables   472,763    466,907 
Total  $1,884,386   $2,207,774 

 

NOTE7 INVENTORIES

 

  

March 31,
2024
(Unaudited)

   December 31,
2023
 
Finished goods  $379,736   $431,483 
Less:          
Reserve for excess and obsolete inventory   
    
 
Total Inventories  $379,736   $431,483 

 

All finished goods inventories were related to e-commerce business and was held by the third party logistic. The cost of revenue incurred amounted to $19,164 and $235,246 during the three months ended March 31, 2024 and 2023, respectively. The inventories amounted to $379,736 and $431,483 as of March 31, 2024 and December 31, 2023, respectively.

 

NOTE8 INTANGIBLE ASSETS

 

As of March 31, 2024 and December 31, 2023, intangible assets consisted of the following:

 

   Useful life  March 31,
2024
   December 31,
2023
 
At cost:           
Software platform  2.5 years  $8,000,000   $8,000,000 
Apps development  3 years   941,395    966,535 
Computer software  3 years   723,153    744,914 
Software system  3 years   
    
 
Intellectual technology  3 years   
    
 
Identifiable intangible asset  Indefinite   5,100,654    5,100,654 
Other intangible assets  3 – 5 years   
    
 
       14,765,202    14,812,103 
Less: accumulated depreciation      (8,812,134)   (8,730,375)
      $5,953,068   $6,081,728 

 

November 1, 2018, the Company entered into a software development agreement with CVO Advisors Pte Ltd (CVO) 2018 to design and build an App and Web-based platform for the total consideration of $8,000,000. CVO who is a third party vendor in the business of designing, developing, operating computer software applications including mobile and web application for social media, big data, point of sales, loyalty rewards, food delivery and technology platforms in Asia. The CVO developer performed and accepted technical work, of software development phase, which was materially completed by December 23, 2018. The Company obtained a third party license (Wallet Factory International Ltd) for their technology build up by CVO.

 

The delivered platform was further developed by the Company’s in-house technology team (based in Noida that Sopa is currently using for the loyalty platform. The platform can be downloaded from Apple store or Googleplay store (i.e. SoPa App) and the Company’s web version is on www.sopa.asia. The platform was completed developed on September 30, 2020 and has estimated life of 2.5 years. The platform started to be amortized from October 1, 2020.

 

30

 

 

Further, the Company entered into a subscription agreement with CVO to issue 8,000 shares of preferred stock for the software development, equal to the aggregate of $8,000,000 or at the stated value of $1,000 per share.

 

Pursuant to the subscription agreement entered into with CVO, the Company issued 8,000 shares of Series A convertible preferred stock for the purchase of software development at the stated value of $1,000 per share, totaling $8,000,000. CVO performed and accepted the technical work such as designing, developing, operating computer software applications including mobile and web application for social media, big data, point of sales, loyalty rewards, food delivery and technology platforms. The holder of this series A provided their consent to waive the warrant provision available with them and accordingly the preferred series A accounted in 2018.

 

Also, the owner of CVO entered into a call option agreement with the CEO of the Company to sale all the shares of CVO for the sum of $10 per share, as of date, these options were exercised by the CEO of the Company, but the equity holders of CVO Advisors Pte. Ltd. have not honored the exercise of the call. The parties are currently in litigation (refer Note 20). As a result of this option exercise, there were no accounting effect on the Company’s financial statement during the three months ended March 31, 2024 and 2023.

 

Amortization of intangible assets was $0 and $800,000 for the three months ended March 31, 2024 and 2023, respectively.

 

Apps development costs for the development stage of mobile apps development with blockchain feature used by the subsidiaries under Telecommunications Reseller segment business amounted to $941,395 (2023: $966,535) and pertains to capitalization of the Information Technology consultancy and services incurred in the development process.

 

Computer software including business and operating software and license acquired from third parties.

 

Software system is the existing apps development cost and potential software value estimated base on acquisition exercise of Mangan business unit under New Retail Experience Incorporated, through the finalization of Purchase Price Allocation. This has been written off during the year ended December 31, 2023.

 

Intellectual technology is the identified technology value concluded from acquisition of Pushkart business unit under New Retail Experience Incorporated, through the finalization of Purchase Price Allocation. This has been written off during the year ended December 31, 2023.

 

Identifiable intangible assets are the potential intangible assets as stakeholder values estimated based on acquisition exercise of TMG group, Nusatrip group and VLeisure, through the finalization of Purchase Price Allocation.

 

NOTE9 PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consisted of the following:

 

   March 31,
2024
   December 31,
2023
 
At cost:        
Computer  $515,614   $526,495 
Office equipment   54,326    56,098 
Furniture and fixtures   10,384    10,531 
Renovation   581,109    614,143 
    1,161,433    1,207,267 
Less: accumulated depreciation   (562,810)   (520,609)
    598,623    686,658 

 

Depreciation expense for the three months ended March 31, 2024 and 2023 were $61,581 and $63,917, respectively.

 

31

 

 

NOTE10 AMOUNTS DUE TO RELATED PARTIES

 

Amounts due to related parties consisted of the following:

 

   March 31,
2024
   December 31,
2023
 
Amounts due to related parties (a)  $9,567   $9,900 

 

(a)The amounts represented temporary advances to the Company related parties (two officers), which were unsecured, interest-free and had no fixed terms of repayments. The Company’s due to related parties balance was $9,567 and $9,900 as of March 31, 2024 and December 31, 2023, respectively.

 

NOTE11 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

Accounts payable consisted of the following:

 

   March 31,
2024
   December 31,
2023
 
         
Accounts payable-  $1,827,955   $1,690,651 
Accrued liabilities and other payables (a)   5,736,948    6,866,169 
Total Accounts payable  $7,564,903   $8,556,820 

 

(a)Accrued liabilities and other payables consisted of the following:

 

   March 31,
2024
   December 31,
2023
 
         
Accrued payroll  $88,780   $137,096 
Accrued VAT expenses   27,994    40,855 
Accrued taxes   1,942,520    1,990,994 
Accrued litigation expense (b)   
    1,298,495 
Customer deposit   460,007    402,339 
Customer refund   1,121,340    922,784 
Other payables   796,126    897,566 
Other accrual (c)   1,300,181    1,176,040 
Total Accrued liabilities  $5,736,948   $6,866,169 

 

(b) The accrued litigation expense has been temporarily offset by secured bond paid and issued during the financial period ended March 31, 2024.
   
(c) The March 31, 2024 and December 31, 2023 balance includes long term pension provision and other operation accruals.

 

32

 

 

NOTE12 LEASES

 

We adopted ASU No. 2016-02, - Leases, on January 1, 2019, the beginning of our fiscal 2019, using the modified retrospective approach. We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration. Control of an underlying asset is conveyed if we obtain the rights to direct the use of and to obtain substantially all of the economic benefit from the use of the underlying asset. Some of our leases include both lease and non-lease components which are accounted for as a single lease component as we have elected the practical expedient. Some of our operating lease agreements include variable lease costs, primarily taxes, insurance, common area maintenance or increases in rental costs related to inflation. Substantially all of our equipment leases and some of our real estate leases have terms of less than one year and, as such, are accounted for as short-term leases as we have elected the practical expedient.

 

Operating leases are included in the right-of-use lease assets, other current liabilities and long-term lease liabilities on the Consolidated Balance Sheet. Right-of-use assets and lease liabilities are recognized at each lease’s commencement date based on the present values of its lease payments over its respective lease term. When a borrowing rate is not explicitly available for a lease, our incremental borrowing rate is used based on information available at the lease’s commencement date to determine the present value of its lease payments. Operating lease payments are recognized on a straight-line basis over the lease term. We had no financing leases as of March 31, 2024 and December 31, 2023.

 

The Company used a weighted average incremental borrowing rate of 5.70% to determine the present value of the lease payments. The weighted average remaining life of the lease was 2.81 years.

 

During the three months ended March 31, 2024, no new lease arrangements was entered, and accounted as per ASC Topic 842.

 

The Company excluded short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets. The following tables summarize the lease expense, as follows:

 

   Three months ended
March 31,
 
   2024   2023 
         
Operating lease expense (per ASC 842)  $131,830   $134,455 
Short-term lease expense (other than ASC 842)   16,392    11,418 
Total lease expense  $148,222   $145,873 

 

As of March 31, 2024, right-of-use assets were $1,095,077 and lease liabilities were $1,097,153.

 

As of December 31, 2023, right-of-use assets were $1,407,956 and lease liabilities were $1,411,226.

 

Components of Lease Expense

 

We recognize lease expense on a straight-line basis over the term of our operating leases, as reported within “general and administrative” expense on the accompanying consolidated statement of operations.

 

33

 

 

Future Contractual Lease Payments as of March 31, 2024

 

The below table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of future lease payments for the next three years ending March 31:

 

Years ending March 31,  Operating
lease
amount
 
2025  $488,898 
2026   347,039 
2027   230,456 
2028   118,494 
Total   1,184,887 
Less: interest   (87,734)
Present value of lease liabilities  $1,097,153 
Less: non-current portion   (655,215)
Present value of lease liabilities – current liability  $441,938 

 

NOTE13 LOAN

 

Schedule of loan

 

   March 31,
2024
   December 31,
2023
 
         
Loan – A (i)   18,980    21,313 
   $18,980   $21,313 

 

i)On August 17, 2021, the newly acquired subsidiary, Gorilla Networks Pte. Ltd., received a loan from a bank of SGD 50,000, approximately $35,937 for a term of 60 months until August 31, 2026. The effective interest rate is 4.75%. For the three months ended March 31, 2024 and 2023, the Company recognized the interest expense of $239 and $325, respectively.

 

NOTE14 SHAREHOLDERS’ DEFICIT

 

Authorized stock

 

The Company is authorized to issue two classes of stock. The total number of shares of stock which the Company is authorized to issue is 11,333,333 shares of capital stock, consisting of 6,333,333 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share. On May 1, 2024, the Company effected a 1-for-15 reverse stock split of the issued and outstanding shares of the Company’s common stock. All share and per share information in these financial statements and its footnotes have been retroactively adjusted for the periods presented.

 

The holders of the Company’s common stock are entitled to the following rights:

 

Voting Rights: Each share of the Company’s common stock entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders. Holders of the Company’s common stock are not entitled to cumulative voting rights with respect to the election of directors.

 

Dividend Right: Subject to limitations under Nevada law and preferences that may apply to any shares of preferred stock that the Company may decide to issue in the future, holders of the Company’s common stock are entitled to receive ratably such dividends or other distributions, if any, as may be declared by the Board of the Company out of funds legally available therefor.

 

34

 

 

Liquidation Right: In the event of the liquidation, dissolution or winding up of our business, the holders of the Company’s common stock are entitled to share ratably in the assets available for distribution after the payment of all of the debts and other liabilities of the Company, subject to the prior rights of the holders of the Company’s preferred stock.

 

Other Matters: The holders of the Company’s common stock have no subscription, redemption or conversion privileges. The Company’s common stock does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s common stock are fully paid and non-assessable. The rights, preferences and privileges of the holders of the Company’s common stock are subject to the rights of the holders of shares of any series of preferred stock which the Company may issue in the future.

 

Common stock outstanding

 

As of March 31, 2024 and December 31, 2023, the Company had a total of 2,517,528 and 2,217,491 shares of its common stock issued and outstanding, respectively.

 

On February 10, 2021, the Company effected a 750 for 1 stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares and par value remain unchanged. All share and per share information in this financial statements and footnotes have been retroactively adjusted for the periods presented, unless otherwise indicated, to give effect to the forward stock split.

 

On September 21, 2021, the Company effected a 1 for 2.5 stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares and par value remain unchanged. All share and per share information in this financial statements and footnotes have been retroactively adjusted for the periods presented, unless otherwise indicated, to give effect to the reverse stock split.

 

On November 8, 2021, the Company entered into an underwriting agreement with Maxim Group LLC, related to the offering of 192,593 shares of the Company’s common stock (the “Firm Shares”), at a public offering price of $135.00 per share. Under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 45 days, to purchase an additional 236,111 shares of common stock (the “Option Shares”) to cover over-allotments. The Company’s common stock was listed on the Nasdaq Capital Market on November 9, 2021 and began trading on such date. The closing (the IPO Closing.) of the offering and sale of the Firm Shares and the sale of 236,111 Option Shares occurred on November 12, 2021. Aggregate gross proceeds from the closing related to the Firm Shares and the Option Shares was $26,000,001 and $2,124,999, respectively. The Company incurred expenses of $2,677,846 in connection with the IPO.

 

Upon the closing of the IPO, all outstanding shares of preferred stock series A, B, B-1, C and C-1 were automatically converted into 59,259 shares, 50,960 shares, 3,200 shares, 31,040 shares and 279,680 shares of the Company’s common stock for the value of $8,000,000, $3,412,503, $466,720, $8,353,373 and $5,536,832, respectively.

 

On May 1, 2024, the Company effected a 1-for-15 reverse stock split of the issued and outstanding shares of the Company’s common stock. The number of authorized shares has changed to 6,333,333 shares and par value remain unchanged. All share and per share information in these financial statements and its footnotes have been retroactively adjusted for the years presented, unless otherwise indicated, to give effect to the reverse stock split.

 

The forward stock split and reverse stock split described above had no effect on the stated value of the preferred stock, and the number of designated shares and outstanding shares of each series of preferred stock was unchanged in accordance with the respective certificate of designations. The number of authorized shares of preferred stock remained unchanged.

 

During the three months ended March 31, 2024 and 2023, the Company issued 133,333 and 13,072 shares of common stock to consultants in exchange for consulting services value at $330,000 and $460,000, respectively.

 

During the three months ended March 31, 2024 and 2023, the Company issued 0 and 7,277 shares of common stock to six of its employees as compensation valued at $0 and $200,000, respectively.

 

During the three months ended March 31, 2024 and 2023, the Company issued 0 and 52,229 shares of common stock for staff exercised options, at $23.70 per share, total amounting to $0 and $1,226,793, respectively.

 

35

 

 

Warrants

 

In August 2019, the Company issued 1,400 warrants to purchase 1,400 shares of its common stock to one employee as compensation for his services to the Company, at a fair value of $17,500. Each warrant is convertible into one share of common stock at an exercise price of $0.0015 per share. The warrants will expire on the second (2nd) anniversary of the initial date of issuance. As at December 31, 2019, none of the warrants have been exercised. 1,400 shares were fully exercised during the year ended December 31, 2020.

 

In December 2020, the Company issued a certain number of warrants pursuant to the Series C-1 Subscription Agreement. Each redeemable warrant allows the holder to purchase one C-1 preferred stock at a price of $6,300 per share. The warrants shall be exercisable on or before December 31, 2020, 2021 and 2022. During the year ended December 31, 2022, the Company issued 126 warrants.

 

In December 2020, a total of 56 warrants were exercised in exchange for 56 Series C-1 preferred stocks. (refer note 17 for details).

 

Below is a summary of the Company’s issued and outstanding warrants as of March 31, 2024 and December 31, 2023:

 

   Warrants   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
(in years)
 
Outstanding as of December 31, 2020 (a)   137   $6,300.00    0.60 
Issued (b)   142   $6,300.00    0.50 
Issued (a)   9,630   $148.50    5.00 
Exercised   (21)  $6,300.00    
 
Expired   
    
    
 
Outstanding as of December 31, 2021   9,888   $308.55    4.88 
Issued (c)   248,586   $49.20    4.11 
Exercised   (5,307)  $49.20    0.50 
Expired   (238)  $6,300.00    
 
Outstanding as of December 31, 2022   252,929   $53.55    4.03 
Outstanding as of December 31, 2023   252,929   $53.55    3.02 
Outstanding as of March 31, 2024   252,929   $53.55    2.77 

 

There is no intrinsic value for the warrants as of March 31, 2024 and December 31, 2023.

 

(a) Common stock will be issued upon exercise of the 9,630 warrants having intrinsic value of $0 and $73,667 as of December 31, 2022 and 2021, respectively.
   
(b) Series C-1 Preferred Stock will be issued upon the exercise of the warrants. The Series C-1 Preferred Stock was automatically converted into 0 and 77,200 shares of common stock with the intrinsic value of $0 and $10,433,580 as of December 31, 2022 and 2021, respectively.
   
(c) Common stock will be issued upon warrants exercise of the 243,299 warrants having no intrinsic value as of December 31, 2022.

 

36

 

 

On April 19, 2021, the Company extended the expiry date of the Warrant issued to the Series C-1 Preferred Stockholder by six months from June 30, 2021 to December 31, 2021. Further, on November 16, 2021, the Company extended the expiry date of the Warrant issued to the Series C-1 Preferred Stockholder by six months from December 31, 2021 to June 30, 2022. The Company considered this warrant as permanent equity per ASC Topic 815-40-35-2, the warrants would not be marked to market at each financial reporting date. However, where there is a subsequent change in assumptions related warrants (in the instant case, an extension of the expiration date of the warrants), the difference between the amount originally recorded and the newly calculated amount, based upon the changed assumptions, is determined and the difference between the before and after valuation is recorded as an expense, with the corresponding credit to additional paid-in capital. No additional warrants modification expense were recorded as of March 31, 2024 and December 31, 2023, respectively.

 

The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions.

 

Schedule of Stock options assumptions

 

   Before
modification
   After
Modification
 
Dividend rate   0%   0%
Risk-free rate   0.06%   0.12%
Weighted average expected life (years)   9 months    18 months 
Expected volatility   25%   25%
Exercise price  $1.4   $1.4 

 

The Company considered 25% volatility as from inception through the date of the Company common stocks. 

 

Director’s Stock option

 

On December 8, 2021, the Board of Directors approved a grant to Dennis Nguyen of a 10-year stock option to purchase 129,685 shares of common stock at an exercise price of $97.35 per share that are vested and are exercisable at any time.

 

Schedule of Stock Option

 

Schedule of Director’s stock awards  Share
option
   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
(in years)
 
Outstanding as of December 31, 2022   129,684   $97.35    10 
Granted   
    
    
 
Exercised   
    
    
 
Expired   
    
    
 
Outstanding as of December 31, 2023   129,684   $97.35    10 
Granted            
Exercised   
    
    
 
Expired   
    
    
 
Outstanding as of March 31, 2024   129,684   $97.35    9.25 

 

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The total fair value of options vested during the three months ended March 31, 2024 and 2023 was $0.

 

The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions for the three months ended March 31, 2024 and 2023:

 

   December 8,
2021
 
Dividend rate   0%
Risk-free rate   1.52%
Weighted average expected life (years)   10 years 
Expected volatility   130%
Share price  $6.49 

 

Director’s stock awards

 

   Stock
awards
   Weighted
average
exercise
price
   Weighted
average
remaining
contractual life
 
Unvested as of December 31, 2022   21,732   $114.75    0.92 years 
Issued   
    
    
 
Vested   (21,732)   114.75    
 
Cancelled   
    
    
 
Unvested as of December 31, 2023   
   $
    
 
Issued   
    
    
 
Vested   
    
    
 
Cancelled   
    
    
 
Unvested as of March 31, 2024   
   $
    
 

 

The Company issued 54,330 shares of its common stock on September 1, 2021 (“start date”) of which 43,464 shares shall be subject to vesting. The shares shall vest in accordance with the following vesting schedule: 10,866 vesting shares will vest every six-months for a two-year period from the start date, with the first vesting date being March 1, 2022. For the three months ended March 31, 2024 and 2023, the Company recognized the amortization of stock compensation expense of $0 and $346,500, respectively.  

 

NOTE15 PREFERRED STOCKS AND WARRANTS

 

As of March 31, 2024 and December 31, 2023, the Company’s preferred stocks have been designated as follow:

 

   No. of
shares
   Stated
Value
 
Series A Convertible Preferred Stock   10,000   $1,000 
Series B Convertible Preferred Stock   10,000   $1,336 
Series B-1 Convertible Preferred Stock   15,000   $2,917 
Series C Convertible Preferred Stock   15,000   $5,763 
Series C-1 Convertible Preferred Stock   30,000   $420 
Series X Super Voting Preferred Stock   3,500   $0.0001 

 

All of the Series A, B, B-1, C, and C-1 Preferred Shares were issued at a value of respective stated value per share. These all Series of Preferred Shares contain a conversion option, are convert into a fixed number of common shares or redeemable with the cash repayment at the liquidation, so as a result of this liquidation preference, under U.S GAAP, the Company has classified the all these Series of Preferred Shares within mezzanine equity in the consolidated balance sheet.

 

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Series X Super Voting Preferred Stock was issued a par value per share. This Series of Preferred Shares does not contain a conversion option, so as a result of this liquidation preference, under U.S GAAP, the Company has classified the this Series of Preferred Shares within permanent equity in the consolidated balance sheet.

 

Voting Rights: (1) The affirmative vote of at least a majority of the holders of each series of preferred stock shall be necessary to:

 

(a)increase or decrease the par value of the shares of the Series A Preferred Stock, alter or change the powers, preferences or rights of the shares of Series A Preferred Stock or create, alter or change the powers, preferences or rights of any other capital stock of the Company if after such alteration or change such capital stock would be senior to or pari passu with Series A Preferred Stock; and

 

(a)adversely affect the shares of Series A Preferred Stock, including in connection with a merger, recapitalization, reorganization or otherwise.

 

(2) The affirmative vote of at least a majority of the holders of the shares of the Series A Preferred Stock shall be necessary to:

 

  (a) enter into a transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of the Corporation, or voluntarily liquidate or dissolve;

 

  (b) authorize a merger, acquisition or sale of substantially all of the assets of the Company or any of its subsidiaries (other than a merger exclusively to effect a change of domicile of the Company to another state of the United States);

 

  (c) increase or decrease (other than decreases resulting from conversion of the Series A Preferred Stock) the authorized number of shares of the Company’s preferred stock or any series thereof, the number of shares of the Company’s common stock or any series thereof or the number of shares of any other class or series of capital stock of the Company; and

 

  (d) any repurchase or redemption of capital stock of the Company except any repurchase or redemption at cost upon the termination of services of a service provider to the Company or the exercise by the Company of contractual rights of first refusal as applied to such capital stock.

 

Dividend Rights: The holders of the Company’s preferred stock are not entitled to any dividend rights.

 

Conversion Rights (Series A Preferred Stock): Upon the consummation of this offering, the issued and outstanding shares of Series A Preferred Stock automatically convert into a number of shares of the Company’s common stock equal to the quotient obtained by dividing (x) the aggregate Stated Value of the issued and outstanding Series A Preferred Stock plus any other amounts due to the holders thereof divided by (y) the offering price of the Company’s common stock. If 90 days after conversion, the closing market price of the Company’s common stock as quoted on Nasdaq (the “Market Value”) has decreased below the initial public offering price, each holder of the Series A Preferred Stock shall be issued a warrant to purchase a number of shares of the Company’s common stock equal to 40% of the quotient of the (a) aggregate Stated Value held by such holder before conversion at the initial public offering price and the Market Value of the shares of common stock that were issuable upon conversion divided by (b) the Market Value. The warrants shall have a term of five years and shall be exercisable at the Market Value.

 

Conversion Rights (Preferred Stock other than Series A and Series X Super Voting Preferred Stock): Upon the consummation of this offering, each issued and outstanding share of Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock will automatically convert into 750 shares of the Company’s common stock. Series X Super Voting Preferred stock shall not have any rights to convert into the Company’s common stock.

 

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Liquidation Rights: In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (a “Liquidation Event”), the holders of each series of preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Company’s common stock by reason of their ownership thereof, an amount per share in cash equal to the greater of (x) the aggregate Stated Value for all shares of such series of Preferred Stock then held by then or (y) the amount payable per share of the Company’s common stock which such holder of preferred stock would have received if such holder had converted to common stock immediately prior to the Liquidation Event all of such series of preferred stock then held by such holder (the “Series Stock Liquidation Preference”). If, upon the occurrence of a Liquidation Event, the funds thus distributed among the holders of the preferred stock shall be insufficient to permit the payment to the holders of the preferred stock the full Series Stock Liquidation Preference for all series, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the preferred stock in proportion to the aggregate Series Liquidation Preferences that would otherwise be payable to each of the holders of preferred stock. Such payment shall constitute payment in full to the holders of the preferred stock upon the Liquidation Event. After such payment shall have been made in full, or funds necessary for such payment shall have been set aside by the Company in trust for the account of the holders of preferred stock, so as to be immediately available for such payment, such holders of preferred stock shall be entitled to no further participation in the distribution of the assets of the Company. The sale of all or substantially all of the assets of the Company, or merger, tender offer or other business combination to which the Company is a party in which the voting stockholders of the Company prior to such transaction do not own a majority of the voting securities of the resulting entity or by which any person or group acquires beneficial ownership of 50% or more of the voting securities of the Company or resulting entity shall be deemed to be a Liquidation Event.

 

Other Matters: The holders of the Company’s preferred stock have no subscription or redemption privileges and are not subject to redemption. The Company’s Series Preferred Stock does not entitle its holders to preemptive rights. All of the outstanding shares of the Company’s preferred stock are fully paid and non-assessable.

 

Series A Preferred Shares

 

No Series A Preferred Stocks were issued during the three months ended March 31, 2024 and 2023.

 

Upon the IPO Closing, all outstanding shares of Series A Preferred Stocks were automatically converted into 888,889 shares of the Company’s common stock valued at $8,000,000, equal to approximately $9 per share.

 

As of March 31, 2024 and December 31, 2023, there were no shares of Series A Preferred Stocks issued and outstanding, respectively.

 

Series B Preferred Stocks

 

No Series B Preferred Stocks were issued during the three months ended March 31, 2024 and 2023.

 

Upon the IPO Closing, all outstanding shares of Series B Preferred Stock were automatically converted into 764,400 shares of the Company’s common stock valued at $3,412,503, equal to approximately $4.46 per share.

 

As of March 31, 2024 and December 31, 2023, there were no shares of Series B Preferred Stocks issued and outstanding, respectively.

 

Series B-1 Preferred Shares

 

No Series B-1 Preferred Stocks issued during the three months ended March 31, 2024 and 2023.

 

Upon the IPO Closing, all outstanding shares of Series B-1 Preferred Stocks were automatically converted into 48,000 shares of the Company’s common stock valued at $466,720, equal to approximately $9.72 per share.

 

As of March 31, 2024 and December 31, 2023, no shares of Series B-1 Preferred Stocks issued and outstanding, respectively.

 

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Series C Preferred Shares

 

No Series C Preferred Stocks were issued during the three months ended March 31, 2024 and 2023.

 

Upon the IPO Closing, all outstanding shares of Series C Preferred Stocks were automatically converted into 465,600 shares of the Company’s common stock valued at $8,353,373, equal to approximately $17.9 per share.

 

As of March 31, 2024 and December 31, 2023, there were no shares of Series C Preferred Stocks issued and outstanding, respectively.

 

Series C-1 Preferred Shares

 

No Series C-1 Preferred Stocks were issued during the three months ended March 31, 2024 and 2023.

 

The Company accounts for warrants issued in accordance with the guidance on “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” in Topic 480. These warrants did not meet the criteria to be classified as a liability award and therefore were treated as an equity award and classified the Series C-1 Preferred Stocks within mezzanine equity in the consolidated balance sheet.

 

Upon the IPO Closing, all outstanding shares of Series C-1 Preferred Stocks were automatically converted into 4,195,200 shares of the Company’s common stock valued at $5,536,832, equal to approximately $1.21 per share.

 

As of March 31, 2024 and December 31, 2023, there were no shares of Series C-1 Preferred Stocks issued and outstanding, respectively.

 

Series X Super Voting Preferred Shares

 

No Series X Preferred Stocks were issued during the three months ended March 31, 2024 and 2023.

 

In August 2021, the Company created a new series of preferred stock titled “Series X Super Voting Preferred Stock”, at par value, consisting of 2,000 shares. The Series X Super Voting Preferred Stock carries certain rights and privileges including but not limited to the right to 4,000 votes per share) to vote on all matters that may come before the stockholders of the Corporation, voting together with the common stock as a single class on all matters to be voted or consented upon by the stockholders but is not entitled to any dividends, liquidation preference or conversion or redemption rights. The Series X Super Voting Preferred Stock is accounted for as an equity classification.

 

As of March 31, 2024 and December 31, 2023, there were 3,500 and 3,500 shares of Series X Super Voting Preferred Stocks issued and outstanding, respectively.

 

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NOTE16 TREASURY STOCK

 

On January 25, 2023, the Board of Directors (“Board”) authorized a $2,000,000 share repurchase program. The following table presents information with respect to repurchases of common stock during the three months ended and March 31, 2024 and 2023:

 

   Three months ended
March 31,
 
   2024   2023 
         
Aggregate common stock repurchased   966,583    1,111,605 
Weighted average price paid per share  $0.1932   $0.7067 
Total amount paid  $186,782   $785,525 

 

As of March 31, 2024 and December 31, 2023, we had up to $1,813,218 and $1,214,475 of the share repurchase program available, respectively. Under the share repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The timing and amount of any shares of our common stock that are repurchased under the share repurchase program will be determined by our management based on market conditions and other factors.  The share repurchase program does not obligate us to acquire any particular amount of common stock, and may be modified, suspended or discontinued at any time or from time to time at our discretion.

 

NOTE17 INCOME TAXES

 

For the three months ended March 31, 2024 and 2023, the local (“Nevada”) and foreign components of loss before income taxes were comprised of the following:

 

   Three Months ended
March 31,
 
   2024   2023 
Tax jurisdiction from:        
- Local  $987,269   $3,092,769 
- Foreign   1,850,845    1,486,830 
 Loss before income taxes  $2,838,114   $5,389,599 

 

The provision for income taxes consisted of the following:

 

   Three months ended
March 31,
 
   2024   2023 
Current:        
- United States  $
   $
 
- Singapore   
    
 
- Vietnam   465    
 
- India   645    614 
- Philippine   
    
 
- Thailand   
    
 
- Malaysia   
    
 
           
Deferred:          
- United States   
    
 
- Singapore   
    
 
- Vietnam   
    
 
- India   
    
 
- Philippine   
    
 
- Thailand   
    
 
- Malaysia   
    
 
Income tax expense  $1,110   $614 

 

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The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates in various countries that are subject to taxes in the jurisdictions in which they operate, as follows:

 

United States

 

The Company is registered in the Nevada and is subject to the tax laws of United States.++

 

As of March 31, 2024, the operation in the United States incurred $34,558,206 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards has no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $7,257,223 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Singapore

 

The Company’s subsidiary is registered in the Republic of Singapore and is subject to the tax laws of Singapore.

 

As of March 31, 2024, the operation in the Singapore incurred $11,499,213 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards has no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $1,954,866 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Vietnam

 

The Company’s subsidiary operating in Vietnam is subject to the Vietnam Income Tax at a standard income tax rate of 20% during its tax year.

 

As of March 31, 2024, the operation in the Vietnam incurred $5,277,875 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2026, if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $1,055,575 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

India

 

The Company’s subsidiary operating in India is subject to the India Income Tax at a standard income tax rate of 25% during its tax year.

 

As of March 31, 2024, the operation in the India incurred $2,564 of net operating gain. The Company has provided for a full tax effect allowance against the current and deferred tax expenses of $641.

 

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Indonesia

 

The Company’s subsidiary is registered in Indonesia and is subject to the tax laws of Indonesia.

 

As of March 31, 2024, the Company’s subsidiary operations in Indonesia incurred $423,101 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards have no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $93,082 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Philippines

 

The Company’s subsidiary is registered in the Philippines and is subject to the tax laws of the Philippines.

 

As of March 31, 2024, the Company’s subsidiary operations in Philippines incurred $1,063,144 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards have no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $265,786 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Thailand

 

The Company’s subsidiary is registered in Thailand and is subject to the tax laws of Thailand.

 

As of March 31, 2024, the Company’s subsidiary operations in Thailand incurred $411,246 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards have no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $82,249 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Malaysia

 

The Company’s subsidiary is registered in Malaysia and is subject to the tax laws of Malaysia.

 

As of March 31, 2024, the operation in the Malaysia incurred $20,199 of net operating gain. The Company has provided for a full tax effect allowance against the current and deferred tax expenses of $4,848.

 

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Deferred tax assets and liabilities are recognized for future tax consequences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the tax year in which the differences are expected to reverse. Significant deferred tax assets and liabilities of the Company as of March 31, 2024 and December 31, 2023 consist of the following:

 

Schedule of Deferred Tax Assets and Liabilities

 

   March 31,
2024
   December 31,
2023
 
Deferred tax assets:        
Software intangibles (U.S)  $150,465   $150,465 
Deferred Stock Compensation (U.S.)   5,864,670    5,864,670 
Net operating loss carryforwards          
-  United States   7,257,223    7,119,197 
-  Singapore   1,954,866    1,714,014 
-  Vietnam   1,055,575    976,328 
-  India   
    
 
-  Philippines   265,786    245,617 
-  Indonesia   93,082    63,013 
-  Thailand   82,249    118,848 
-  Malaysia   
    
 
    16,723,916    16,252,152 
Less: valuation allowance   (