UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Quarterly Period Ended
or
For the transition period from ______ to ______
Commission
File Number
(Exact name of registrant issuer as specified in its charter)
| 7389 | ||||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Number) |
(IRS Employer Identification Number) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Smaller
reporting company | |
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
N/A
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name on each exchange on which registered | ||
| N/A | N/A | N/A |
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at May 19, 2023 | |
| Common Stock, $0.0001 par value |
TABLE OF CONTENTS
| -2- |
PART I — FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ASIAFIN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2023 AND DECEMBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares or otherwise stated)
| As of March 31, 2023 | As of December 31, 2022 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade receivables, net | ||||||||
| Prepayment, deposits and other receivables | ||||||||
| Tax assets | ||||||||
| Total current assets | $ | $ | ||||||
| Non-current Assets | ||||||||
| Right-of-use assets, net | $ | $ | ||||||
| Property, plant and equipment, net | ||||||||
| Deferred income tax assets | ||||||||
| Investment in associates | ||||||||
| Total non-current assets | $ | $ | ||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Other payables and accrued liabilities | $ | $ | ||||||
| Trade payable | ||||||||
| Income tax payable | ||||||||
| Amount due to director | ||||||||
| Amount due to related parties | ||||||||
| Hire purchase – current portion | ||||||||
| Lease liability – current portion | ||||||||
| Deferred tax liability | ||||||||
| Total current liabilities | $ | $ | ||||||
| Non-current liabilities | ||||||||
| Hire purchase – non-current portion | $ | $ | ||||||
| Lease liability – non-current portion | ||||||||
| Deferred tax liabilities | ||||||||
| Total non-current liabilities | $ | $ | ||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock | $ | $ | ||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-1 |
ASIAFIN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares or otherwise stated)
Three months ended March 31, 2023 | Three months ended March 31, 2022 | |||||||
| REVENUE | $ | |||||||
| COST OF REVENUE | ( | ) | ||||||
| GROSS PROFIT | $ | |||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | $ | ( | ) | |||
| LOSS BEFORE INCOME TAX | ( | ) | $ | ( | ) | |||
| INCOME TAX PROVISION | ( | ) | ||||||
| NET LOSS | ( | ) | $ | ( | ) | |||
| Other comprehensive income: | ||||||||
| - Foreign currency translation loss | ( | ) | ||||||
| TOTAL COMPREHENSIVE LOSS | ( | ) | $ | ( | ) | |||
| NET LOSS PER SHARE, BASIC AND DILUTED | ( | ) | ( | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED | $ | |||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-2 |
ASIAFIN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares or otherwise stated)
| COMMON STOCK | ||||||||||||||||||||||||
NUMBER OF SHARES | AMOUNT | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | ACCUMULATED COMPREHENSIVE LOSS | TOTAL STOCKHOLDERS’ EQUITY | |||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| COMMON STOCK | ||||||||||||||||||||||||
NUMBER OF SHARES | AMOUNT | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | ACCUMULATED COMPREHENSIVE LOSS | TOTAL STOCKHOLDERS’ EQUITY | |||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of share for acquisition of StarFIN Holdings Limited on February 23, 2023 | ||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| F-3 |
ASIAFIN HOLDINGS CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares or otherwise stated)
Three Months Ended March 31, 2023 | Three Months March 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net profit to net cash used in operating activities: | ||||||||
| Change in operating lease ROU assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Account payable | ( | ) | ||||||
| Account receivable | ||||||||
| Prepayment, deposits and other receivables | ||||||||
| Other payables and accrued liabilities | ( | ) | ||||||
| Deferred revenue | ||||||||
| Tax assets | ( | ) | ||||||
| Change in lease liability | ( | ) | ||||||
| Net cash provided by/(used in) operating activities | $ | $ | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash used in investing activities | $ | ( | ) | $ | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advance to director | ( | ) | ||||||
| Repayment of hire purchase | ( | ) | ||||||
| Advances to related companies | ( | ) | ||||||
| Dividend paid | ( | ) | ||||||
| Net cash used in financing activities | $ | ( | ) | $ | ||||
| Effect of exchange rate changes on cash and cash equivalents | $ | ( | ) | $ | ||||
| Net increase in cash and cash equivalents | $ | $ | ( | ) | ||||
| Cash and cash equivalents, beginning of year | ||||||||
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest paid | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| F-4 |
ASIAFIN HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares or otherwise stated)
1. ORGANIZATION AND BUSINESS BACKGROUND
AsiaFIN Holdings Corp. (“the Company”) was incorporated under the jurisdiction of Nevada on June 14, 2019. The Company, through its wholly owned subsidiaries, provides information technology services. Details of the Company’s subsidiaries and associate:
| No. | Subsidiary Company Name | Domicile and Date of Incorporation | Particulars of Issued Capital | Principal Activities | ||||
| 1 | AsiaFIN Holdings Corp. | shares of common stock | ||||||
| 2 | AsiaFIN Holdings Limited | shares of common stock | ||||||
| 3 | StarFIN Holdings Limited | shares of common stock | ||||||
| 4 | StarFIN Asia Sdn Bhd | shares of common stock | ||||||
| 5 | OrangeFIN Academy Sdn Bhd | shares of common stock | ||||||
| ` | ||||||||
| 6 | Insite MY Systems Sdn Bhd | shares of common stock | ||||||
| 7 | Insite MY Innovations Sdn Bhd | shares of common stock | ||||||
| 8 | OrangeFIN Asia Sdn Bhd | shares of common stock |
| No. | Associate Company Name | Domicile and Date of Incorporation | Particulars of Issued Capital | Principal Activities | ||||
| 1 | Murni StarFIN Sdn Bhd | shares of common stock |
Mr. Wong Kai Cheong is the common director of all of aforementioned companies.
| F-5 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
The accompanying financial statements include the accounts of the Company and its subsidiaries and associates. Intercompany transactions and balances were eliminated in consolidation. The Company has adopted December 31 as its fiscal year end. Below is the organization chart of the Group.
Use of Estimates
In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
| F-6 |
Cash and Cash Equivalents
The Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
Our
deposit in Malaysia banks are secured by Perbadanan Insurans Deposit Malaysia, compensating up to a limit of Malaysia Ringgit MYR
Plant and Equipment
Plant and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following periods:
| Asset Categories | Depreciation Periods | |
| Renovation | ||
| Computer Systems | ||
| Furniture and Fittings | ||
| Electrical Fittings | ||
| Handphone | ||
| Office Equipment | ||
| Motor Vehicle |
Revenue recognition
The Company through subsidiaries generate multiple streams of revenues based on different business model adopted by each subsidiary through provisions of services and recognized upon customer obtained control of promised services and recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company applies the following five-step model in order to determine this amount:
(i) Identify contract with customer;
(ii) Identify distinct performance obligations in contract, including promises if any;
(iii) Measurement of the transaction price, including the constraint on variable consideration;
(iv) Allocation of the transaction price to the performance obligations; and
(v) Recognition of revenue when (or as) the Company satisfies each performance obligation.
Cost of revenue
Cost of revenue includes direct costs associated with provision of services such as development costs, purchases of third-party software, maintenance fees and consultation fees.
Income tax expense
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
| F-7 |
The Company conducts major businesses in Malaysia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations and comprehensive income (loss).
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s subsidiary maintains its books and record in Malaysia Ringgits (“MYR”), United States Dollars (“US$”) and Hong Kong Dollars (“HK$”), which is the respective functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective periods:
For the period three months ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Period-end MYR : US$1 exchange rate | ||||||||
| Period-average MYR : US$1 exchange rate | ||||||||
| Period-end HK$ : US$1 exchange rate | ||||||||
| Period-average HK$ : US$1 exchange rate | ||||||||
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Fair value of financial instruments
The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1 : Observable inputs such as quoted prices in active markets;
Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
| F-8 |
Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
As of March 31, 2023, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.
The Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
Lease
The Company offices for fixed periods pre-emptive extension options. The Company recognizes lease payments for its short-term lease on a straight-line basis over the lease term.
Lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.
In determining the present value of the unpaid lease payments, ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Company leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate for the lease. The Company incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.
Recently Adopted Accounting Standards
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. In November 2019, the FASB issued ASU 2019-10 highlighted the adoption timeline. For smaller reporting entities, Topic 326 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, of which is effective for the Company on January 1, 2023.
Credit loss rate is determined by historical collection based on aging schedule, adjusted for current conditions using reasonable and supportable forecasts. Based on the aging categorization and the adjusted loss rate per category, an allowance for credit losses is calculated by multiplying the adjusted loss rate with the amortized cost in the respective age category.
Recently Issued Accounting Standards
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.
| F-9 |
4. TRADE RECEIVABLE
As of March 31, 2023 | As of December 31, 2022 | |||||||
| Trade receivable, gross | $ | $ | ||||||
| Allowance for expected credit loss | ( | ) | ||||||
| Trade receivable, net | $ | $ | ||||||
5. PREPAID EXPENSES AND DEPOSITS
As of March 31, 2023 | As of December 31, 2022 | |||||||
| Rental deposits | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other receivables | ||||||||
| Other deposits | ||||||||
| Unbilled revenue | ||||||||
| Total | $ | $ | ||||||
The rental deposits represent the deposit of the tenancy agreements.
Prepaid expenses include website domain, third party software maintenance and subscription, rental, employee and motor vehicle insurance.
Other receivables include deposits payment made for utility purposes, car park for director and employees.
Other deposits primarily consist of deposit made for security deposit for renovation.
6. PLANT AND EQUIPMENT
As of March 31, 2023 | As of December 31, 2022 | |||||||
| Computer systems | $ | $ | ||||||
| Furniture and fittings | ||||||||
| Electrical fittings | ||||||||
| Handphone | ||||||||
| Office equipment | ||||||||
| Renovation | ||||||||
| Motor vehicle | ||||||||
| Investment property | ||||||||
| Total plant and equipment | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Total plant and equipment | $ | $ | ||||||
| For three months ended March 31, 2023 | For the year ended December 31, 2022 | |||||||
| Investment in computer systems | $ | $ | ||||||
| Investment in furniture and fittings | ||||||||
| Investment in handphone | ||||||||
| Investment in office equipment | ||||||||
| Investment in renovation | ||||||||
| Investment in investment property | ||||||||
| Total investment in property and plant | $ | $ | ||||||
| Depreciation for the period | $ | |||||||
For
the year ended December 31, 2022, the Company acquired an investment property amounted $
| F-10 |
7. ACCRUED EXPENSES AND OTHER PAYABLES
As of March 31, 2023 | As of December 31, 2022 | |||||||
| Accrued expenses | $ | $ | ||||||
| Other payable | ||||||||
| Receipt in advance | ||||||||
| Total | $ | $ | ||||||
Accrued expenses consist of outstanding audit fee, employee claims and salary, service tax and miscellaneous expenses.
Other payable includes primarily service tax payable.
Receipt in advance consist of monies received from customer but have yet to satisfied performance obligation.
8. AMOUNT DUE TO DIRECTOR
| StarFIN Holdings Limited – Advances from director – Mr. Wong Kai Cheong | $ | |||
| Amount due to director, as of December 31, 2021 | ||||
| Insite MY Systems Sdn Bhd – Loan from director –– Mr. Wong Kai Cheong | ||||
| Insite MY Systems Sdn Bhd – Repayment to director –– Mr. Wong Kai Cheong | ( | ) | ||
| Insite MY Systems Sdn Bhd – Claims from director –– Mr. Wong Kai Cheong | ( | ) | ||
| OrangeFIN Academy Sdn Bhd – Claims from director – Mr. Wong Kai Cheong | ||||
| Insite MY Innovations Sdn Bhd – Advances to director – Mr. Hoo Swee Ping | ( | ) | ||
| Insite MY Innovations Sdn Bhd - Advances from director – Mr. Hoo Swee Ping | ||||
| StarFIN Holdings Limtied – Advances from director – Mr. Wong Kai Cheong | ||||
| StarFIN Holdings Limtied – Advances from director – Mr. Hoo Swee Ping | ||||
| Amount due to director, as of December 31, 2022 | ||||
| Insite MY Systems Sdn Bhd – Repayment to director – Mr. Wong Kai Cheong | ( | ) | ||
| Foreign currency translation | ( | ) | ||
| Amount due to director, as of March 31, 2023 |
Aforementioned amount is unsecured, non-interest bearing and payable on demand.
| F-11 |
9. AMOUNT DUE TO A RELATED PARTIES
As of March 31, 2023 and December 31, 2022, the Company has an outstanding amount due to a number of related companies with common director and shareholder pertaining to miscellaneous expenses made by these related parties on behalf in aggregate amounted $ and $, respectively.
Aforementioned amount is unsecured, non-interest bearing and payable on demand.
For
the three months ended March 31, 2023, the Company has paid $
10. HIRE PURCHASE
The outstanding balance of hire purchase loan as of December 31, 2022 and March 31, 2023 can be summarized as follow:
| As of December 31, 2020 | $ | |||
| Acquisition of new motor vehicle | ||||
| Repayment of hire purchase loan for the year ended December 31, 2021 | ( | ) | ||
| As of December 31, 2021 | $ | |||
| Repayment of hire purchase loan for the year ended December 31, 2022 | ( | ) | ||
| Foreign currency translation difference | ( | ) | ||
| As of December 31, 2022 | $ | |||
| Repayment of hire purchase loan for the three months ended March 31, 2023 | ( | ) | ||
| Foreign currency translation difference | ( | ) | ||
| As of March 31, 2023 | $ | ( | ) |
On
April 30, 2021, the Company acquired a motor vehicle amounted $
Maturities of the loan for each of the two years and thereafter are as follows:
| Year ending December 31 | ||||
| 2023 | $ | |||
| 2024 | $ | |||
| Total | $ |
11. LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES
| Right-Of-Use Assets | ||||
| Balance as of December 31, 2020 | $ | |||
| Amortization for the year ended December 31, 2021 | ( | ) | ||
| Balance as of December 31, 2021 | $ | |||
| Recognition of new lease | ||||
| Amortization for the year ended December 31, 2022 | ( | ) | ||
| Adjustment for foreign currency translation difference | ( | ) | ||
| Balance as of December 31, 2022 | $ | |||
| Amortization for the three months ended March 31, 2023 | ( | ) | ||
| Adjustment for foreign currency translation difference | ( | ) | ||
| Balance as of March 31, 2023 | $ | |||
| Lease Liability | ||||
| Balance as of December 31, 2020 | $ | |||
| Imputed interest for the year ended December 31, 2021 | ||||
| Gross repayment for the year ended December 31, 2021 | ( | ) | ||
| Balance as of December 31, 2021 | $ | |||
| Recognition of new lease | ||||
| Imputed interest for the year ended December 31, 2022 | ||||
| Gross repayment for the year ended December 31, 2022 | ( | ) | ||
| Adjustment for foreign currency translation difference | ( | ) | ||
| Balance as of December 31, 2022 | $ | |||
| Imputed interest for three months ended March 31, 2023 | ||||
| Gross repayment for three months ended March 31, 2023 | ( | ) | ||
| Adjustment for foreign currency translation difference | ( | ) | ||
| Balance as of March 31, 2023 | ||||
| Lease liability current portion | ||||
| Lease liability non-current portion | $ |
| F-12 |
Other information:
| Three months ended March 31, 2023 | Three months ended March 31, 2022 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flow to operating lease | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
| Remaining lease term for operating lease (years) | - | |||||||
| Weighted average discount rate for operating lease | % | % | ||||||
12. CONCENTRATION OF RISK
| (a) | Major Customers |
For
the three months ended March 31, 2023, the Company generated total revenue of $
| For the three months ended March 31 | ||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Revenue | Percentage of Revenue | Accounts receivable, gross | ||||||||||||||||||||||
| Customer A | $ | $ | - | % | - | % | $ | - | $ | - | ||||||||||||||
| Customer B | - | % | - | % | - | |||||||||||||||||||
| Customer C | - | % | - | % | - | - | ||||||||||||||||||
| Customer D | - | % | - | % | - | |||||||||||||||||||
| Others | - | % | - | % | - | |||||||||||||||||||
| Total | $ | $ | - | % | - | % | $ | $ | - | |||||||||||||||
| (b) | Major Suppliers |
For
the three months ended March 31, 2023, the Company incurred cost of revenue of $
| For the three months ended March 31 | ||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Cost of revenue | Percentage of Cost of revenue | Accounts payable, trade | ||||||||||||||||||||||
| Supplier A | $ | $ | - | % | - | % | $ | $ | - | |||||||||||||||
| Supplier B | - | % | - | % | - | |||||||||||||||||||
| Supplier C | - | % | - | % | - | - | ||||||||||||||||||
| Supplier D | - | % | - | % | - | - | ||||||||||||||||||
| Others | - | % | - | % | - | |||||||||||||||||||
| Total | $ | $ | - | % | - | % | $ | $ | - | |||||||||||||||
Our Chief Executive Officer, Mr. Wong Kai Cheong is a majority shareholder of Supplier A.
13. INCOME TAXES
The loss before income taxes of the Company for the three months ended March 31, 2023 and 2022 were comprised of the following:
| For the three months ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Tax jurisdictions from: | ||||||||
| - Local | $ | ( | ) | $ | ( | ) | ||
| - Foreign, representing: | ||||||||
| Hong Kong | ( | ) | ( | ) | ||||
| British Virginia Island (non-taxable jurisdiction) | ( | ) | ||||||
| Labuan, Malaysia (non-taxable jurisdiction) | ||||||||
| Malaysia | ( | ) | ||||||
| Income before income taxes | $ | ( | ) | $ | ( | ) | ||
Provision for income taxes consisted of the following:
| For the three months ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Current: | ||||||||
| - Local | $ | $ | ||||||
| - Foreign | $ | $ | ||||||
| Deferred tax assets: | ||||||||
| - Local | $ | $ | ||||||
| - Foreign | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| - Local | $ | $ | ||||||
| - Foreign | $ | $ | ||||||
| Income tax payable: | ||||||||
| - Local | $ | $ | ||||||
| - Foreign | $ | $ | ||||||
| F-13 |
All
Malaysia companies are subject to the Malaysia Corporate Tax Laws at a two-tier corporate income tax rate based on amount of paid-up
capital. The 2022 tax rate for company with paid-up capital of MYR
14. DIVIDEND
For
the year ended December 31, 2022, Insite MY Innovations Sdn Bhd and Insite MY Systems Sdn Bhd, passed a board resolution for declaration
of dividend amounted MYR
No dividend was declared for the three months ended March 31, 2023.
15. FOREIGN CURRENCY EXCHANGE RATE
The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate post higher or lower income depending on exchange rate converted into US$ at the end of the financial year. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
16. SEGMENT REPORTING
ASC 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about services categories, business segments and major customers in financial statements. The Company has single reportable segment based on business unit, information technology business and two reportable segments based on country, Malaysia and Non-Malaysia.
In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.
| For the Three Months Ended and As of March 31, 2023 | ||||||||
| By Business Unit | Information Technology Business | Total | ||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | $ | $ | ||||||
| Selling, general and administrative expenses and other income | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Total assets | $ | $ | ||||||
| Capital expenditure | $ | $ | ||||||
| F-14 |
| For the Three Months Ended and As of March 31, 2023 | ||||||||||||
| By Country | Malaysia | Non-Malaysia | Total | |||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ( | ) | ( | ) | ||||||||
| Gross profit | $ | $ | $ | |||||||||
| Selling, general and administrative expenses and other income | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Total assets | $ | $ | $ | |||||||||
| Capital expenditure | $ | $ | $ | |||||||||
| For the Three Months Ended and As of March 31, 2022 | ||||||||
| By Business Unit | Information Technology Business | Total | ||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | $ | $ | ||||||
| General and administrative expenses and other income | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Total assets | $ | $ | ||||||
| Capital expenditure | $ | $ | ||||||
| For the Three Months Ended and As of March 31, 2022 | ||||||||||||
| By Country | Malaysia | Non-Malaysia | Total | |||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Gross profit | $ | $ | $ | |||||||||
| General and administrative expenses and other income | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||
| Total assets | $ | $ | $ | |||||||||
| Capital expenditure | $ | $ | $ | |||||||||
17. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after March 31, 2023 up through the date the Company presented these unaudited financial statements.
| F-15 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K dated February 16, 2023, for the year ended December 31, 2022 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarter report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1/A registration statement, filed on March 19, 2021, in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarter report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
Our Company offer range of system solutions in Payment Processing, Robotic Process Automation (RPA), and Regulatory Technology (RegTech) to financial institutions, regulatory agencies, professional service providers and private enterprises from various industries, with existing client in the Asia region with over 60 key bank customers on payment processing and our Robotic Process Automation solution company has more than 100 customers in Asia. Our solutions includes:
Payment Processing
We have our own web-based payment processing system for check clearing used in central banks, financial institutions and payment system providers. This image-based check truncation system (CTS) is similar to the one used in the United States of America, under the CHECK21 standards. Our CTS systems are sold in Malaysia, Singapore, Indonesia, Philippines, Myanmar, Thailand, Pakistan and Bangladesh.
We also have a ISO20022 compliant payment gateway solutions for central bank and financial institutions that is capable of supporting the Straight Through Processing (STP) of all types of payment transactions (including SWIFT, Real-Time Gross Settlement (RTGS), GIRO (NACHA standards) and FAST payment and extendable to interface with various types of payment gateways. Our STP payment gateway are sold in Malaysia, Myanmar and Indonesia.
RegTech
We have a regulatory and financial reporting (RegTech) system which conform to XBRL reporting standards and other compliance reporting required by Regulatory agencies such as Central Bank, Securities Commission, Tax Authority Department and Companies Registry. Our reporting platform covers financial statistic reporting, credit risk exposure and analysis, risk management reports, FATCA & CRS reporting, external sector reporting, Goods and Services Tax (GST) reporting for reporting entities. We have more than 20 financial institutions using our platform.
Robotic Process Automation
We have our own Artificial Intelligent (AI) based, Robotic Process Automation Software (RPA) solutions for financial institutions, large corporations and small medium enterprises. RPA utilises software Robots for the automation of mundane, labour intensive, manual computer operations. Robots are utilized for the processes where it helps to reduce operational costs and also costs arising from human error. Our system automate the capturing of customer information from identity cards, passports and other identification peripherals. Our solution automatically extract data from customers’ identity card, passport, etc. and immediately fill-in the forms, eliminating the friction and errors caused by manual input, through Intelligent Character Recognition technology and other AI based technologies. Information extracted from an official identification document will then be checked against existing financial institutions database for regulatory screening in Internal Blacklist Check, Anti Money Laundering, Credit Scoring Check, FATCA, Common Reporting Standard (CRS) and ESG reporting, etc.
| -3- |
Results of operations
Three months ended March 31, 2023 and 2022
Revenues
For the three months ended March 31, 2023, the Company generated revenue in the amount of $474,802. The revenue was generated as a result of the Company having provided services related to information technology business to the customers.
For the three months ended March 31, 2022, the Company does not generate any revenue.
Selling, General and Administrative Expenses
For the three months ended March 31, 2023, the Company had selling, general and administrative expenses in the amount of $755,160. These were primarily comprised of salary expenses, audit fees, insurance and other professional fees.
For the three months ended March 31, 2022, the Company had general and administrative expenses in the amount of $6,123. These were primarily comprised of audit fees and other professional fees.
The significant increase of the general and administrative expenses was the result of the significant increase in salary expenses as the Company hired more employees to expand their business.
Net Loss
For the three months ended March 31, 2023, the Company has incurred a net loss of $334,020.
For the three months ended March 31, 2022, the Company has incurred a net loss of $6,364.
Liquidity and Capital Resources
Three months ended March 31, 2023 and 2022
Cash Used In Operating Activities
For the three months ended March 31, 2023, the Company has received $490,483 provided by operating activity, of which primarily consist of increase in account payable, decrease in account receivable, decrease in prepayment, deposits and other receivables, increase in other payables and accrued liabilities, increase in deferred revenue contra by net loss, decrease in tax assets and reduction in lease liability.
For the three months ended March 31, 2022, the Company has used $16,764 in operating activity, of which primarily consist of net loss, decrease in account payable and decrease in other payables and accrued liabilities.
Cash Used In Investing Activities
For the three months ended March 31, 2023 and 2022, the Company has invested $11,395 and $0 in investing activities, respectively for the acquisition of computer systems and office equipment.
Cash Provided by Financing Activities
For the three months ended March 31, 2023, the Company has used $407,196 in financing activity, primarily consist of advances to director and dividend paid.
For the three months ended March 31, 2022, the Company did not receive nor used any cash in financing activity.
| -4- |
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of March 31, 2023.
Contractual Obligations
As a smaller reporting company, we are not required to provide the aforementioned information.
Critical Accounting Policies
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements.
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4 Controls and Procedures.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our chief executive officer concluded that our disclosure controls and procedures were not effective. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties and effective risk assessment; (iii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and (iv) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed. The aforementioned material weaknesses were identified by our chief executive officer in connection with the review of our financial statements as of March 31, 2023.
| -5- |
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The internal controls for the Company are provided by executive management’s review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:
| 1. | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; | |
| 2. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and | |
| 3. | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.
As of March 31, 2023, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 2013 and SEC guidance on conducting such assessments. Based on such evaluation, the Company’s management concluded that, during the period covered by this Report, our internal control over financial reporting were not effective due to the presence of material weaknesses.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the three months ending March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| -6- |
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
We are not subjected to nor engaged in any litigation, arbitration or claim of material importance, and no litigation, arbitration or claim of material importance is known to us to be pending or threatened by or against our Company that would have a material adverse effect on our Company’s results of operations or financial condition. Further, there are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to our Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
ITEM 6. Exhibits
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer | |
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer and principal accounting officer | |
| 32.1 | Section 1350 Certification of principal executive officer | |
| 32.2 | Section 1350 Certification of principal financial officer and principal accounting officer | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| -7- |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AsiaFIN Holdings Corp. | ||
| (Name of Registrant) | ||
| Date: May 19, 2023 | By: | /s/ Wong Kai Cheong |
| Title: | Chief Executive Officer, President, Director, Secretary and Treasurer | |
| (Principal Executive Officer) | ||
| Date: May 19, 2023 | By: | /s/ Cham Hui Yin |
| Title: | Finance Manager | |
| (Principal Financial Officer and Principal Accounting Officer) | ||
| -8- |