UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
FORM10-Q
(Mark One)
For the quarterly period ended March 31, 2023
For the transition period from _______ to _______
Commission File Number: 000-55685
FINTECH SCION LIMITED(Exact name of registrant as specified in its charter)
Portman House, 2 Portman Street
London, W1H 6DU
United Kingdom
N/A
+44203 982 5041
(Registrant’s telephone number, including area code)
HWGC HOLDINGS LIMITED
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 22, 2023, there were 198,742,643 shares of the issuer’s common stock issued and outstanding.
FINTECH SCION LIMITED
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED March 31, 2023
TABLE OF CONTENTS
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
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(Formerly known as HWGC Holdings Limited)CONDENSED CONSOLIDATED BALANCE SHEETS(In U.S. dollars)
2023
(Unaudited)
2022
(Audited)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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(Formerly known as HWGC Holdings Limited)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(Unaudited)(In U.S. dollars)
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(Formerly known as HWGC Holdings Limited)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In U.S. dollars)
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(Formerly known as HWGC Holdings Limited)NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)(In U.S. dollars)
Fintech Scion Limited (“the Company”) formerly known as HWGC Holdings Limited, incorporated in Nevada.
The Company holds the following equity interests in its subsidiaries:
Country of
incorporation
%
The Company is previously engaged in direct selling industry and online shopping platform primarily through its operating entities in Malaysia. During the financial year ended December 31, 2022, the Company restructured after the consummation of two share exchange agreements and the disposal of VSB and VOM. The Company upon the restructuring, offers digital banking services by providing the tools, skills, and solutions to facilitate payment services to merchants, offering a variety of secured, online and fully managed transactions and settlements.
Restructuring Transactions
The following restructuring transactions has occurred during the year ended December 31, 2022:
Information of the restructuring transactions were disclosed in the notes to the consolidated financial statement for the year ended December 31, 2022, included in the Company’s Form 10-K filed with the Security and Exchange Commission (“SEC”) by the Company on April 17, 2023.
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The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information under Article 8 of Regulation S-X. They do not include all information and foot notes required by U.S. GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statement for the year ended December 31, 2022, included in the Company’s Form 10-K filed with the SEC. The interim unaudited consolidated financial statements should be read in conjunction with those audited consolidated financial statements included in Form 10-K.
In the opinion of management, the Company has made all adjustments necessary to present a fair statement of the financial position as of March 31, 2023, results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. All significant intercompany transactions and balances are eliminated on consolidation. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations for the entire fiscal year.
Recently issued accounting pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.
Accounts receivable represent balances from:
(i) transactions fees receivable generated from financial payment and settlement services;
(ii) non-interest-bearing credit tokens issue to authorized agents.
Services billed are generally settled upon financial services have been rendered. Only limited clients are extended with credits.
As of March 31, 2023, accounts receivable balances of $1,141,427 mainly derived from commissions receivables of $955,183 and non-interest-bearing credit tokens issued to authorized agents of $186,244. As of December 31, 2022, accounts receivable balances of $1,792,195 mainly derived from commissions receivables of $597,986 and non-interest-bearing credit tokens issued to authorized agents of $1,194,209.
The company considers accounts receivable to be fully collectible, therefore no impairment is necessary as at March 31, 2023 and December 31, 2022.
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Other receivables, prepayments and other current assets consist of the following:
Schedule of other receivables and other assets
The table below set forth the carrying amount of goodwill for March 31, 2023 and December 31, 2022.
The management performs goodwill impairment test annually. On November 30, 2022, the reverse acquisition by Fintech/the Company was completed. As the acquisition date and financial period end is of a relatively short period, the management has not identified any indicators that relate to the impairment of goodwill. As such no impairment of goodwill has been made. In the event that after year end if any events occur that may have a negative impact on the carrying amount of goodwill and will have significant effect on the results of the Company, it may raise significant doubts for the Company’s ability to continue as a going concern.
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Property and equipment, net consist of the following:
Schedule of property, plant and equipment, net
As of
March 31, 2023
Depreciation expenses charged to the statements of operations and comprehensive loss for the periods ended March 31, 2023 and 2022 were $3,344 and $2,867 respectively.
Accrued expense and other payables consist of the following:
Schedule of accruals and other payables
The Company derives its revenue mainly from transaction fees earned through financial payment and settlement services. For these transaction fee revenues, the Company view itself as the agent in these transactions and as a result, records revenue on a net basis. The Company considers its performance obligation satisfied and recognizes revenue at the point in time the transaction is processed.
The disaggregation of revenue of the Company by geographical region for the period ended March 31, 2023 and 2022 is as follows:
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Schedule of related party transaction
The related party balances are unsecured, interest-free and repayable on demand.
During the year ended December 31, 2022, Vitaxel Sdn Bhd (“VSB”) and Vitaxel Online Mall Sdn Bhd (“VOM”), which are dormant, have been disposed as part of the restructuring transactions as disclosed in Note 1: Organization and Business.
Both VSB and VOM are disposed to Mr Leong Yee Ming, a previous director and CEO of the Company, which also includes certain intercompany debt assignment. Upon completion of the disposal, related party balances that are outstanding relating to advances made by Grande Legacy Inc. (“GL”) and Vitaxel Sdn Bhd are $266,610 and $23,933 respectively for the year ended December 31, 2022.
As at March 31, 2023, the amount due to GL and VSB are $269,580 and $23,933 respectively.
Mr Lim Chun Hoo, is also a director in Ho Wah Genting Group Sdn Bhd (“HWGGSB”), HWG Fintech International Ltd (“HWGFI”) and a previous director of HWG Digital Investment Bank (Malaysia) PLC (“HDIB”). HDIB is previously known as Ho Wah Genting Investment Bank (Labuan) P.L.C.
The amount due from HWGGSB and HWGFI as at March 31, 2023 and December 31, 2022, were advances made by the Company to HWGGSB and HWGFI. Whilst amount due to HDIB were advances made by HDIB to the Company.
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Total payment made in the form of compensation, which includes salary, bonus, stock awards and all other compensation have been made to the following officer of the Company that are individually in excess of $100,000 annually:
Schedule of officers
Capital Commitments
As of March 31, 2023, and December 31, 2022, Company has no capital commitments.
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Statement Regarding Forward-Looking Information
The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
The following discussion highlights the Company’s results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.
As used in this Quarterly Report, the terms “we,”“us,”“Company,” and “our” mean Fintech Scion Limited and its subsidiaries on a consolidated basis, unless otherwise indicated or the context requires otherwise.
Overview
Fintech Scion Limited (“Fintech Scion”, the “Company”, “we”, “our”, or “us”) offers digital banking services by providing the tools, skills and solutions to facilitate payment services to merchants, offering a variety of secured, online and fully managed transactions and settlements.
We provide a financial layered ecosystem built on a broad technology infrastructure that enables financial institutions to offer a consolidated experience. We support different verticals serving the business-to-business, business-to-consumer and consumer-to-business landscape.
Our payments platform hosts a full suite of integrated payment products and services that can be used across multiple channels (in-store, online, mobile and tablet-based) and industry verticals, including:
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We integrate e-money remittance services working in the global marketplace, ranging from open banking and credit card processing, to wire solutions enabling customers to coordinate payments across a multitude of payment methods.
Our solution is delivered as a Software as a Service, or SaaS, to clients, enabling them to focus their time and energies on their operations and sales. We give clients and merchants the ability to streamline their onboarding procedures and increase customer retention, which thereby creates additional revenue.
We aim to build our market share and become a recognized leader in the payments and banking space on a global scale. Our team comprises of experienced and knowledgeable personnel in the areas of operations, sales, tech, onboarding, support, legal and compliance.
Our vision is to minimize and automate the hassle to send and receive funds globally, while ensuring security. We aim to provide merchants with a true merchant payment ecosystem or MPE where they can combine all payment needs under one system. Our technology platform uses an innovative Gateway Cashier Technology to provide our services.
Our merchants include small and medium enterprises, or SMEs, and large enterprises across numerous verticals including hospitality, e-gaming, consulting, retail, marketing and eCommerce.
Although we provide a SaaS, we believe that technology should be free and accessible to everyone. We therefore generate our revenue from our extra value-added services. We derive the majority of our revenue from fees paid by our merchants, which principally include processing fees charged as a percentage of end-to-end payment volumes. In cases where merchants subscribe only to our gateway, we generate revenue from transaction fees charged in the form of a fixed fee per transaction and a monthly fee.
Our revenue is continuous, as merchants only pay for the specific amount of service or usage they consume, rather than a flat fee for access to the service. Because of our different layers as described below, merchants sign up for different services which increases revenue for the company. We believe we can maintain long-term relationships with our clients due our customer relationship team as well as the high barriers of entry of the payment market including high switching costs resulting from set-up fees, onboarding costs and integration costs with various other providers. We also benefit from a high degree of operating leverage given the combination of our highly scalable payments platform and strong customer unit.
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Results of Operations
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
The following discussion should be read in conjunction with our unaudited consolidated financial statements in Item 1, Financial Statements, for the three months ended March 31, 2023 and 2022 and the related notes thereto.
Revenue
We recognized $847,194 and $17 revenues for the periods ended March 31, 2023 and 2022, respectively. The significant increase in revenue primarily resulted from the restructuring transactions that occurred during financial year ended December 31, 2022. Revenue recognized during the period are mainly from transaction fees earned through financial payment and settlement services provided by Fintech and Fintech Asia (formerly known as HWGG Capital P.L.C).
Cost of Sales
Cost of sales for the period ended March 31, 2023 was $35 compared to $11 for the period ended March 31, 2022.
Gross Profit
Gross profit for the period ended March 31, 2023 was $847,159 compared to $6 for the period ended March 31, 2022. The increase resulted primarily from the restructuring transactions that led to additional sources of revenue from Fintech and Fintech Asia (formerly known as HWGG Capital P.L.C).
Operating Expenses
For the period ended March 31, 2023, we incurred total operating expenses in the amount of $871,366, composed of selling expenses of $nil and general and administrative expenses totalling $871,366. Whilst, for the period ended March 31, 2023, we incurred total operating expenses in the amount of $127,055, composed of selling expenses of $nil and general and administrative expenses totalling $127,055. The increase of $744,311 or 586% for the administrative expenses represent the total increase in operating expenses. The increase as compared to prior year was resulted from the restructuring that has occurred towards prior year end, which were disclosed in the Note 1 of the financial statements.
Liquidity and Capital Resources
As of March 31, 2023, we had a cash balance of $3,892,882. During the period ended March 31, 2023, net cash generated from operating activities totalled $933,677. Net cash used in investing activities totalled $6,500. Net cash used in financing activities during the period totalled $839,697. The resulting change in cash for the period was an increase of $101,504, which was primarily due to cash generated from operating activities.
As of March 31, 2022, we had current liabilities of $4,322,551, which was composed of amount due to related parties of $2,157,906, accounts payable of $1,932,735, and accruals and other payable of $231,910.
We had net assets of $58,899,387 and $58,881,794 as of March 31, 2023 and December 31, 2022, respectively.
We have recognized goodwill of $55,794,524 as a result from the acquisition of Fintech during the year ended December 31, 2022. We believe no impairment is required during the period ended March 31, 2023. However, due to the significant carrying amount of goodwill recognized, any indication of impairment that causes losses and give rise to substantial doubt about our ability to continue as going concern.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financing, or other relationships with unconsolidated entities or other persons.
Critical Accounting Policies and Estimates
There are no material changes from the critical accounting policies set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Please refer to Note 2 Summary of Significant Accounting Policies of the Financial Statements on Form 10-K filed with the SEC on April 17, 2023, for disclosures regarding the critical accounting policies related to our business.
Recently Issued Accounting Standards
The recently issued accounting pronouncements are included in Note 2 Unaudited Interim Financial Statements for disclosures on accounting policies related to our business.
Not applicable.
Evaluation of Disclosure Controls and Procedures
We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive and principal financial officers concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by us in reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of Shalom Dodoun, our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of March 31, 2022. Based upon the participation in that evaluation, it has been concluded that the disclosure controls and procedures were effective as of March 31, 2023.
Changes in Internal Controls
During the fiscal quarter ended March 31, 2023, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
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PART II - OTHER INFORMATION
As of the date of this Quarterly Report, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
Smaller reporting companies are not required to provide the information required by this item.
None.
On May 16, 2023, the Company filed the Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of Nevada, which changed the Company’s name from “HWGC Holdings Limited” to “Fintech Scion Limited” (the “Name Change”).
In connection with the Name Change, the Company submitted to the Financial Industry Regulatory Authority, Inc. (“FINRA”) a voluntary request for a change of the Company’s trading symbol. The Name Change will become effective for trading purposes when approval of said corporate actions is approved by FINRA. The Company will file a Current Report on Form 8-K to disclose the effective date of the Name Change and trading symbol change upon receipt of the notification from FINRA.
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The following exhibits are included as part of this report:
* Filed herewith
** Furnished herewith
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Shalom Dodoun
Chief Executive Officer (Principal Executive Officer)
Lim Chun Hoo
Chief Financial Officer (Principal Financial and Accounting Officer)
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