As filed with the U.S. Securities and Exchange Commission on September 27, 2024
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CURRENC GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
| Cayman Islands | 6770 | 98-1602649 | ||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
410 North Bridge Road,
SPACES City Hall,
Singapore
Tel: +65 6407-7362
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
+1 800-221-0102
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies to:
Andrew M. Tucker
Nelson Mullins Riley & Scarborough LLP
101 Constitution Ave NW, Suite 900
Washington, DC 20001
Telephone: (202) 689-2800
Approximate date of commencement of proposed sale to public: From time to time after the effective date hereof.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the SEC, acting pursuant to Section 8(a) of the Securities Act, may determine.
The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION | DATED , 2024 |
Currenc Group Inc.
Secondary Offering of
Up to 40,930,554 Ordinary Shares
This prospectus relates to the offer and resale from time to time, upon the expiration of lock-up agreements, if applicable, of ordinary shares, par value $0.0001 per share (the “Ordinary Shares”), of Currenc Group Inc. (the “Company” or “Currenc”), by the selling shareholders named in this prospectus (including their permitted transferees, donees, pledgees and other successors-in-interest) (collectively, the “Selling Shareholders” or “Selling Securityholders”) of (i) up to an aggregate of 40,000,000 Ordinary Shares issued at $10.00 per share (the “Exchange Consideration Shares”) issued to the former shareholders of Seamless, pursuant to the terms of the Business Combination Agreement, dated August 3, 2022 (as amended by an amendment dated October 20, 2022, an amendment dated November 29, 2022 and an amendment dated February 20, 2023, the “Business Combination Agreement”) by and among INFINT Acquisition Corporation (“INFINT”), FINTECH Merger Sub Corp., a Cayman Islands exempted company and a wholly owned subsidiary of INFINT (“Merger Sub”), (ii) up to 194,444 Ordinary Shares (the “PIPE Note Shares”) issuable upon conversion of the convertible promissory note in an aggregate principal amount of $1,944,444, for a purchase price of approximately $1.75 million issued in connection with the PIPE Agreement (the “PIPE Note”), convertible at $10.00 per share, (iii) up to 136,110 Ordinary Shares issuable upon the exercise of 136,110 warrants, at an exercise price of $11.50 per share (the “PIPE Warrants”) issued in connection with the Convertible Note Purchase Agreement, dated August 31, 2024 (the “PIPE Agreement”), by and among the Company, Seamless Group Inc., a Cayman Islands exempted company (“Seamless”), and Pine Mountain Holdings Limited, a company organized under the laws of the British Virgin Islands, or its designated affiliate (the “PIPE Investor”), (iv) 400,000 Ordinary Shares (the “Commitment Shares”) issued to the PIPE Investor in consideration for the PIPE Investor’s subscription of the PIPE Note, (v) 100,000 Ordinary Shares issued to Roth Capital Partners, LLC for advisory services and (vi) 100,000 Ordinary Shares issued to KEMP Services Limited for legal advisory services.
On August 30, 2024, INFINT completed a series of transactions (the “Closing”) that resulted in the combination (the “Business Combination”) of INFINT with Seamless, following the approval of the Business Combination and the other transaction contemplated by the Business Combination Agreement at the extraordinary general meeting of the shareholders of INFINT held on August 6, 2024 (the “Meeting”). On August 30, 2024, pursuant to the Business Combination Agreement, and as described in greater detail in the Company’s final prospectus and definitive proxy statement, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 12, 2024 (the “Proxy Statement/Prospectus”), Merger Sub merged with and into Seamless, with Seamless surviving the merger as a wholly owned subsidiary of INFINT, and INFINT changed its name to Currenc Group Inc. (“Currenc”). As consideration for the Business Combination, Currenc issued to Seamless shareholders 40,000,000 Exchange Consideration Shares. In addition, Currenc issued an aggregate of 200,000 shares to vendors in connection with the Closing, issued promissory notes for approximately $5.7 million to EF Hutton LLC (“EF Hutton”), approximately $3.2 million to Greenberg Traurig LLP, and $603,623 to INFINT Capital LLC (the “Sponsor”).
Simultaneous with the closing of the Business Combination, Currenc also completed a series of private financings, issuing the PIPE Note for $1.94 million, for a purchase price of approximately $1.75 million, 400,000 Commitment Shares, and PIPE Warrants to purchase 136,110 Ordinary Shares in a private placement to the PIPE Investor (the “PIPE Offering”).
Pursuant to the PIPE Agreement, Currenc agreed to issue an aggregate principal amount of $1,944,444 (the “Principal Amount”) in convertible promissory note to the PIPE Investor at an issue price of $1,750,000, which represents a 10% discount to the Principal Amount (the “PIPE Note Issuance”). Except with the written consent of Currenc, the PIPE Investor shall not own more than 4.99% of the Ordinary Shares in issue from time to time. In addition, the PIPE Note will not be convertible to the extent that such issuance of shares, together with any issuance of shares upon the exercise of the PIPE Warrants, would require shareholder approval under Nasdaq rules, until and unless such shareholder approval is obtained.
In connection with the Note Issuance, and as consideration of the PIPE Investor’s subscription for the PIPE Note, following the Business Combination Closing, the PIPE Investor was also issued (i) 400,000 Ordinary Shares, credited as fully-paid, and (ii) the five-year warrant PIPE Warrant to purchase up to an aggregate of 136,110 Ordinary Shares at an exercise price of $11.50 (the “PIPE Warrant Shares”). The PIPE Warrants have anti-dilution protection on the price with respect to future equity offerings of Currenc priced at or above $2.00 per share and full anti-dilution protection on price and quantity with respect to future equity offerings of Currenc priced below $2.00 per share. In the event the PIPE Warrant Shares are not registered within 12 months, warrant holders have the option to cashless exercise each PIPE Warrant for 0.8 Ordinary Shares. In addition, the PIPE Warrants are not exercisable to the extent that such issuance of shares together with any issuance of shares upon the conversion of the Note, would require shareholder approval under Nasdaq rules, until and unless such shareholder approval is obtained.
As described herein, the Selling Securityholders named in this prospectus or their permitted transferees, may resell from time to time up to 40,930,554 Ordinary Shares. We are registering the offer and sale of these securities to satisfy certain registration rights we have granted. The Selling Securityholders may offer, sell or distribute all or a portion of the securities hereby registered publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from such sales of our Ordinary Shares, except with respect to amounts received by us upon the exercise of the PIPE Warrants. We will bear all costs, expenses and fees in connection with the registration of these securities, including with regard to compliance with state securities or “blue sky” laws. The Selling Securityholders will bear all commissions and discounts, if any, attributable to their sale of Ordinary Shares or PIPE Warrants. See section entitled “Plan of Distribution” beginning on page 170 of this prospectus.
We believe the likelihood that the warrant holder will exercise its PIPE Warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Ordinary Shares. If the market price for our Ordinary Shares is less than the exercise price of $11.50, subject to adjustment as described herein, we believe such holder will be unlikely to exercise its PIPE Warrants, as applicable, For additional information, see “Risks Related to an Investment in Our Securities.”
The Ordinary Shares being registered for resale in this prospectus represent a substantial percentage of our public float and of our outstanding Ordinary Shares. The number of shares being registered in this prospectus represents approximately 87.35% of the total Ordinary Shares outstanding as of the date of this prospectus (assuming exercise of all PIPE Warrants and conversion of the PIPE Note). The sale of the securities being registered in this prospectus, or the perception in the market that such sales may occur, could result in a significant decline in the public trading price of our Ordinary Shares.
In addition, some of the shares being registered for resale were acquired by the Selling Securityholders for nominal consideration or purchased for prices considerably below the Business Combination price and the current market price of the Ordinary Shares, and certain Selling Securityholders have an incentive to sell because they will still profit on sales due to the lower price at which they acquired their shares as compared to the public investors. In particular, the PIPE Investor may experience a positive rate of return on the securities it purchased due to the differences in the purchase prices described above, to the extent they acquired such securities for less than the relevant trading price, and the public securityholders may not experience a similar rate of return on the securities they purchased due to the differences in the purchase prices described above.
Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbols “CURR”. On September 17, 2024, the closing price of our Ordinary Shares was $2.32.
We are an “emerging growth company” as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements.
Investing in our Ordinary Shares and Warrants is highly speculative and involves a high degree of risk. See the section entitled “Risk Factors” beginning on page 6 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2024
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
The Selling Securityholders may sell up to 40,930,554 Ordinary Shares from time to time in one or more offerings as described in this prospectus, of which (i) 136,110 Ordinary Shares are issuable upon the exercise of the PIPE Warrants, and (ii) 194,444 Ordinary Shares are issuable upon conversion of the PIPE Note. We will not receive any proceeds from the sale of Ordinary Shares by the Selling Securityholders.
We may also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these offerings. The prospectus supplement or post-effective amendment, as the case may be, may add, update or change information contained in this prospectus with respect to such offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. Before purchasing any of the Ordinary Shares or Warrants, you should carefully read this prospectus and any prospectus supplement and/or post-effective amendment, as applicable, together with the additional information described under “Where You Can Find More Information.”
Neither we nor the Selling Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus and any prospectus supplement and/or post-effective amendment, as applicable, prepared by or on behalf of us or to which we have referred you. We and the Selling Securityholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the Selling Securityholders will not make an offer to sell the Ordinary Shares or PIPE Warrants in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and any prospectus supplement and/or post-effective amendment, as applicable, is accurate only as of the date on the respective cover. Our business, prospects, financial condition or results of operations may have changed since those dates. This prospectus contains, and any prospectus supplement or post-effective amendment may contain, market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not independently verified this information. In addition, the market and industry data and forecasts that may be included in this prospectus and any prospectus supplement and/or post-effective amendment, as applicable, may involve estimates, assumptions and other risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors” in this prospectus and any prospectus supplement and/or post-effective amendment, as applicable. Accordingly, investors should not place undue reliance on this information.
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FREQUENTLY USED TERMS
Unless otherwise stated in this prospectus, the terms “we,” “us,” “our” or “Currenc” refer to Currenc Group Inc., a Cayman Islands exempted company with limited liability, and its consolidated subsidiaries. In addition, in this prospectus:
“ancillary documents” means each agreement, instrument or document including the Registration Rights Agreement, the Lock-Up Agreement, the Shareholder Support Agreement, the Sponsor Support Agreement and the other agreements, certificates and instruments to be executed or delivered by any of the parties to the Business Combination Agreement in connection with or pursuant to the Business Combination Agreement;
“Articles” means the fifth amended and restated memorandum and articles of association of the Company, which will became the Company’s memorandum and articles of association immediately prior to the consummation of the Business Combination;
“Business Combination” means the transactions contemplated by the Business Combination Agreement, including the merger;
“Business Combination Agreement” means the Business Combination Agreement, dated as of August 3, 2022, among INFINT, Merger Sub and Seamless, amended by an amendment dated October 20, 2022, an amendment dated November 29, 2022 and an amendment dated February 20, 2023;
“Closing” means the closing of the Business Combination, which occurred on August 30, 2024;
“Code” means the Internal Revenue Code of 1986, as amended;
“Commitment Shares” means 400,000 Ordinary Shares issued to the PIPE Investor in consideration for the PIPE Investor’s subscription of the PIPE Note;
“Companies Act” means the Companies Act (As Revised) of the Cayman Islands, as amended, modified, re-enacted or replaced;
“Company” means INFINT prior to the Closing of the Business Combination and Currenc after the Closing of the Business Combination;
“Currenc” means Currenc Group Inc. (formerly named INFINT Acquisition Corporation) following the consummation of the Business Combination;
“Exchange Act” means the Securities Exchange Act of 1934, as amended;
“Founder Shares” means the 5,833,083 INFINT Class B ordinary shares that were issued to INFINT initial shareholders prior to the INFINT IPO as follows: 4,483,026 to Sponsor, 1,250,058 to Other Class B shareholders, and 99,999 to Underwriter (each a Founder Share);
“GAAP” means generally accepted accounting principles in the United States;
“Incentive Plan” means Currenc Group Inc. 2024 Equity Incentive Plan;
“INFINT Class A ordinary shares” means the Class A ordinary shares, par value $0.0001 per share, of INFINT;
“INFINT Class B ordinary shares” means the Class B ordinary shares, par value $0.0001 per share, of INFINT, which shares were converted automatically in connection with the merger into INFINT Class A ordinary shares and cease to be outstanding; such shares are also referred to and defined herein as the “Founder Shares”;
“INFINT initial shareholders” means the Sponsor and each of INFINT’s directors and officers and underwriters that hold Founder Shares;
“INFINT IPO” means INFINT’s initial public offering, consummated on November 23, 2021, through the sale of 19,999,880 units (including the 2,608,680 units sold pursuant to the underwriters’ partial exercise of their over-allotment option at $10.00 per unit);
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“INFINT ordinary shares” means the INFINT Class A ordinary shares and the INFINT Class B ordinary shares;
“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended;
“IRS” means the U.S. Internal Revenue Service;
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012;
“JonesTrading” means JonesTrading Institutional Services LLC.
“Letter Agreement” means the letter agreement by and among INFINT, the Sponsor and each of directors of INFINT, dated November 23, 2021;
“Lock-up Agreement” means the lock-up agreement to be entered into among INFINT and certain Seamless Shareholders at the Closing;
“Meeting” means the extraordinary general meeting of INFINT, held on August 6, 2024;
“merger” means the merger of Merger Sub with Seamless, with Seamless surviving such merger and Seamless becoming a wholly owned subsidiary of INFINT, pursuant to the Business Combination Agreement;
“Merger Sub” means FINTECH Merger Sub Corp., a Cayman Islands exempted company incorporated with limited liability;
“Nasdaq” means Nasdaq Capital Market.
“ordinary resolution” means an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a simple majority of the issued ordinary shares of the Company that are present in person or represented by proxy and entitled to vote thereon and who vote at the general meeting;
“Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Currenc;
“NYSE” means the New York Stock Exchange;
“PIPE Agreement” means the Convertible Note Purchase Agreement, dated August 31, 2024, by and among the Company, Seamless, and the PIPE Investor;
“PIPE Investor” means Pine Mountain Holdings Limited, a company organized under the laws of the British Virgin Islands;
“PIPE Note” means the convertible promissory note in an aggregate principal amount of $1,944,444, issued in connection with the PIPE Agreement;
“PIPE Note Shares” means 194,444 Ordinary Shares issuable upon conversion of the PIPE Note;
“PIPE Offering” means a series of private financings, issuing the PIPE Note, the Commitment Shares, and PIPE Warrants in a private placement to the PIPE Investor;
“PIPE Warrants” means warrants to purchase 136,110 Ordinary Shares at an exercise price of $11.50 per share;
“private warrants” are to the aggregate 7,796,842 warrants issued at a price of $1.00 per private warrant to the Sponsor in a private placement simultaneously with the closing of the INFINT IPO and the partial exercise of the underwriters’ over-allotment option to purchase additional units;
“public shareholders” means the holders of INFINT public shares, including the INFINT initial shareholders to the extent the INFINT initial shareholders purchased public shares; provided that the INFINT initial shareholders are considered a “public shareholder” only with respect to any public shares held by them;
“public shares” means INFINT Class A ordinary shares included in the units issued in the INFINT IPO;
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“public warrants” are to the aggregate 9,999,940 warrants included in the units issued in the INFINT IPO, each of which is exercisable for one INFINT Class A ordinary share, in accordance with its terms.
“Registration Rights Agreement” means the registration rights agreement, entered into among INFINT, certain Seamless Shareholders and certain INFINT shareholders at the Closing;
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002;
“Seamless” means Seamless Group Inc., a Cayman Islands exempted company incorporated with limited liability;
“Seamless Incentive Plan” means the Seamless Group Inc. 2022 Equity Incentive Plan;
“Seamless ordinary shares” means the ordinary shares, par value $0.001 per share, of Seamless;
“SEC” means the U.S. Securities and Exchange Commission;
“Securities Act” means the U.S. Securities Act of 1933, as amended;
“Shareholder Support Agreement” means the Shareholder Support Agreement, dated August 3, 2022, by and among INFINT, Seamless and certain Seamless shareholders;
“special resolution” means a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least a two-thirds majority of the issued ordinary shares of the company that are present in person or represented by proxy and entitled to vote thereon and who vote at the general meeting;
“Sponsor” means INFINT Capital LLC, a Delaware limited liability company;
“Sponsor Support Agreement” means the support agreement, dated as of August 3, 2022, among the Sponsor, INFINT and Seamless (a copy of which is attached hereto as Annex G);
“trust account” means the trust account that holds a portion of the proceeds of the INFINT IPO and the sale of the private warrants;
“Underwriters” means EF Hutton, division of Benchmark Investments, LLC, and JonesTrading, the underwriters for INFINT in the INFINT IPO.
“units” means one INFINT Class A ordinary share and one-half of one warrant, whereby each warrant entitles the holder thereto to purchase one INFINT Class A ordinary share at an exercise price of $11.50 per share, sold in the INFINT IPO;
“warrants” means the public warrants and the private warrants; and
Unless specified otherwise, “$,” “USD,” “US$” and “U.S. dollar” each refers to the United States dollar.
Defined terms in the financial statements contained in this proxy statement/prospectus have the meanings ascribed to them in the financial statements.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including statements about the anticipated benefits of the Business Combination, and the financial conditions, results of operations, earnings outlook and prospects of Currenc and other statements about the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this prospectus including, without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business of Currenc.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the management of Currenc and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated.
All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this prospectus and attributable to Currenc or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this prospectus. Except to the extent required by applicable law or regulation, Currenc undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.
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PROSPECTUS SUMMARY
This summary highlights certain information appearing elsewhere in this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our Securities and it is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus. Before you decide to invest in our Securities, you should read the entire prospectus carefully, including “Risk Factors” and the financial statements of Currenc and related notes thereto included elsewhere in this prospectus.
The Company
Currenc is one of the leading operators of global money transfer services in Southeast Asia. It operates a remittance business principally through Tranglo, which is a Malaysia-based leading platform and service provider of cross-border payment processing capabilities worldwide and also a leading international airtime transfer operator in Southeast Asia, and a retail airtime business in Indonesia through WalletKu.
Currenc’s business model is highly scalable and transferrable to other geographic markets. The knowledge it has gained from building its operations in Southeast Asia has helped it to understand the pain points faced by individuals and merchants in Asian markets, as well as to facilitate the development of its infrastructure, product and compliance processes, allowing it to rapidly replicate and build up its business across its core markets.
Tranglo’s global remittance business provides a single unified application programming interface for licensed banks and money service operators and acts as a one-stop settlement agent for cross-border money transfer, offering customers the ability to transfer money and process payments globally. Tranglo has built an extensive payout network across more than 70 countries covering more than 5,000 banks and 35 e-Wallet operators, while serving 124 corporate customers as of June 30, 2024, and it processed approximately 5.8 million transactions with a total value of $2.7 billion for the six-month period ended June 30, 2024.
Tranglo also operates an international airtime transfer business, acting as a switching platform provider for telecom airtime transfer and wholesale reseller of foreign airtime. Tranglo’s proprietary technology enables customers to request for a variety of recharge options, including support for both pin and pinless airtime transfers. It operates one of the biggest airtime transfer networks in the world, serving more than 500 telecommunication operators in 150 countries as of June 30, 2024.
WalletKu provides retail airtime purchases and internet data top-up to mobile telecommunication users in the Indonesian market. WalletKu also allows users to make bill payments and other cash top-up and money transfers, including through its proprietary WalletKu app. As of June 30, 2024, WalletKu had approximately 132,000 merchant and individual users, more than 600 active users for WalletKu Digital and 2,600 active users for WalletKu Indosat. WalletKu is an authorized distributor for the second largest Indonesia telecommunication provider, Indosat Ooredoo Hutchison, and manages two of the 100+ cluster areas designated by Indosat.
WalletKu provides E-Money services by co-branding with PT E2Pay Global Utama, a registered E-Money services provider in Indonesia, allowing WalletKu to provide financial services to the unbanked population in Indonesia and act as a remittance platform for users to send and receive money domestically and, leveraging Seamless’ platform, internationally.
The Background
On August 30, 2024, INFINT completed a series of transactions that resulted in the combination of INFINT with Seamless pursuant to the Business Combination Agreement, following the approval at the Meeting held on August 6, 2024. On August 30, 2024, pursuant to the Business Combination Agreement, and as described in greater detail in the Company’s final prospectus and definitive proxy statement, which was filed with the SEC on July 12, 2024, Merger Sub merged with and into Seamless, with Seamless surviving the merger as a wholly owned subsidiary of INFINT, and INFINT changed its name to Currenc Group Inc. As consideration for the Business Combination, Currenc issued to Seamless shareholders 40,000,000 Exchange Consideration Shares. In addition, Currenc issued an aggregate of 200,000 Ordinary Shares to vendors in connection with the Closing, issued promissory notes for approximately $5.7 million to EF Hutton, approximately $3.2 million to Greenberg Traurig LLP, and $603,623 to the Sponsor.
Simultaneous with the closing of the Business Combination, Currenc also completed a series of private financings, issuing the PIPE Note for $1.94 million (receiving net proceeds of $1.75 million), 400,000 Commitment Shares, and PIPE Warrants to purchase 136,110 Ordinary Shares in a private placement to the PIPE Investor.
Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbols “CURR”. On September 17, 2024, the closing price of our Ordinary Shares was $2.32.
There is no assurance that the holders of the PIPE Warrants will elect to exercise any or all of the PIPE Warrants, which could impact our liquidity position. To the extent that the PIPE Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the PIPE Warrants will decrease. We believe the likelihood that PIPE Warrant holders will exercise their PIPE Warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Ordinary Shares. If the market price for our Ordinary Shares is less than the applicable exercise price of $11.50, subject to adjustment as described herein, we believe such holders will be unlikely to exercise their PIPE Warrants. We believe, based on our current operating plan, that our existing cash and cash equivalents, together with the cash flows from operating activities, will be sufficient to meet our anticipated cash needs for working capital, financial liabilities, capital expenditures and business expansion for at least the next 12 months. To the extent the Company is able to raise additional financing, the Company will be in a position to expedite its business plan. To support its long-term business objectives, the Company expects to continue efforts to raise additional capital over at least the next three years. The Company does not believe this offering will have a significant impact on our ability to raise additional financing, although it may impact the per share price and shares issued in any capital raise.
The Ordinary Shares being registered for resale in this prospectus represent a substantial percentage of our public float and of our outstanding Ordinary Shares. The number of shares being registered in this prospectus represents approximately 87.35% of the total Ordinary Shares outstanding as of the date of this prospectus (assuming exercise of all PIPE Warrants and conversion of the PIPE Note). The sale of the securities being registered in this prospectus, or the perception in the market that such sales may occur, could result in a significant decline in the public trading price of our Ordinary Shares.
The rights of holders of our Ordinary Shares and PIPE Warrants are governed by our Articles and the Companies Act, and in the case of the PIPE Warrants, the PIPE Agreement. See the section entitled “Description of Capital Stock.”
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Implications of Being an Emerging Growth Company
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we may benefit from specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
| ● | presentation of only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations in this prospectus; |
| ● | reduced disclosure about our executive compensation arrangements; |
| ● | no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; |
| ● | exemption from any requirement of the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); and |
| ● | exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. |
We may benefit from these exemptions until December 31, 2025, or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of: (1) the last day of the fiscal year following the fifth anniversary of the consummation of the INFINT IPO; (2) the first fiscal year after our annual gross revenues are $1.235 billion or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (4) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We may choose to benefit from some but not all of these reduced disclosure obligations in future filings. If we do, the information that we provide shareholders may be different than you might get from other public companies in which you hold stock.
Summary Risk Factors
You should consider all the information contained in this prospectus before making a decision to invest in our Securities. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 6. Such risks include, but are not limited to, the following risks with respect to the Company subsequent to the Business Combination:
Risks Related to Currenc’s Business, Industry and Operations
| ● | We may fail to keep pace with rapid technological developments to provide new and innovative products and services or make substantial investments in unsuccessful new products and services; |
| ● | We face significant competition in the markets in which we operate, and we may fail to successfully compete against current or future competitors; |
| ● | Our operations are dependent on our proprietary and external technology platforms and comprehensive ecosystems, and any systems failures, interruptions, delays in service, catastrophic events, and resulting interruptions in the availability of our products or services could result in harm to our business and our brand, loss of users, customers and partners and subject us to substantial liability; |
| ● | Our services must integrate with a variety of operating systems, networks and devices; |
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| ● | We are experiencing ongoing rapid change and significant growth in our business and we may not succeed in managing or expanding our business across the expansive and diverse markets in which we operate; |
| ● | Our cross-border payment and money transfer services are exposed to foreign exchange risk; |
| ● | Failure to deal effectively with fraud, fictitious transactions, failed transactions or negative customer experiences would increase our loss rate and harm our business, and could severely diminish merchant, partner and user confidence in and use of our services; |
| ● | We have a limited operating history in new and evolving markets and our historical results may not be indicative of our future results; |
| ● | We require a significant amount of pre-funding in each market that we operate in order to facilitate our real-time foreign exchange services; insufficient pre-funding may result in an inability to complete real-time money transfer or exchange services on behalf of our customers; |
| ● | The funding process used by certain customers of Tranglo relies on XRP, a cryptocurrency, and certain services provided by Ripple Services, Inc. and two cryptocurrency exchanges; if they are not able to continue to provide services due to regulatory change, our business, financial condition and results of operations may be materially adversely effected; |
| ● | Increased adoption of the funding process Tranglo offers which relies on XRP may reduce our remittance revenue, and our business, financial condition and results of operations may be materially adversely effected; |
| ● | Recent volatility, security breaches, manipulative practices, business failure and fraud in the cryptocurrency industry may adversely impact adoption and use by customers of Tranglo’s ODL service, and as a result our business, financial condition and results of operations may be materially adversely effected; and |
| ● | We may not be able to protect our intellectual property rights; |
Risks Related to Investments Outside of the United States
| ● | Changes in the economic, political or social conditions, government policies or regulatory developments in Asia could have a material adverse effect on our business and operations; |
| ● | Our revenue and net income may be materially and adversely affected by any economic slowdown in any regions of Southeast Asia as well as globally; and |
| ● | You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are an exempted company under Cayman Islands law; |
Risks Related to the Government Regulation Regulatory Framework Applicable to Us
| ● | Our business is subject to extensive government regulation and oversight across various geographies and our status under these regulations may change; |
| ● | We may fail to obtain, maintain or renew requisite licenses and approvals; and |
| ● | We are subject to anti-money laundering laws and regulations. |
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Risks Related to Currenc’s Organization and Structure
| ● | We will be an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors; |
| ● | Our management team may not successfully or efficiently manage its transition to being a public company; |
| ● | We are an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors; and |
| ● | Currenc currently qualifies as a foreign private issuer, it will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. domestic public company, which may limit the information available to its shareholders; |
Risks Related to an Investment in Our Securities
| ● | An active market for Currenc’s securities may not develop, which would adversely affect the liquidity and price of Currenc’s securities.; |
| ● | Failure to meet Nasdaq’s continued listing requirements could result in a delisting of Currenc’s Ordinary Shares; |
| ● | The market price for our Ordinary Shares may decline following the Business Combination; |
| ● | The Ordinary Share price may fluctuate, and you could lose all or part of your investment as a result; |
| ● | Currenc shareholders may experience dilution in the future; and |
| ● | The future exercise of registration rights may adversely affect the market price of the Ordinary Shares. |
Corporate Information
Currenc’s principal executive offices are located at 410 North Bridge Road, SPACES City Hall, Singapore, and Currenc’s telephone number is +65 6407-7362.
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THE OFFERING
| Issuer | Currenc Group Inc. | |
| Ordinary Shares Offered by the Selling Securityholders | Up to 40,930,554 Ordinary Shares, of which (i) up to 136,110 Ordinary Shares are issuable upon the exercise of 136,110 PIPE Warrants, and (ii) up to 194,444 Ordinary Shares are issuable upon conversion of the PIPE Note. | |
| Exercise Price of PIPE Warrants | $11.50 per share, subject to adjustment as defined herein. | |
| Shares Outstanding Prior to Exercise of All Warrants and conversion of the PIPE Note | 46,527,999 shares. | |
| Shares Outstanding Assuming Exercise of All PIPE Warrants and conversion of the PIPE Note | 46,858,553 shares. | |
| Use of proceeds | We will not receive any proceeds from the sale of Ordinary Shares by the Selling Securityholders. We would receive up to an aggregate of approximately $1.6 million from the exercise of the warrants, assuming the exercise in full of all of such warrants for cash, however, it is not certain how many warrants would be exercised for cash or if at all. We expect to use the net proceeds from the exercise of any warrants for general corporate purposes. We believe the likelihood that the PIPE Warrant holder will exercise its PIPE Warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Ordinary Shares. If the market price for our Ordinary Shares is less than the exercise price of $11.50, we believe such holders will be unlikely to exercise their Warrants. See “Use of Proceeds.” | |
| Market for Ordinary Shares | Our Ordinary Shares are listed on the Nasdaq Global Market under the symbol “CURR.” | |
| Risk factors | Any investment in the securities offered hereby is speculative and involves a high degree of risk. You should carefully consider the information set forth under “Risk Factors” and elsewhere in this prospectus. |
In this prospectus, unless otherwise indicated, the number of Ordinary Shares outstanding as of the date of this prospectus and the other information based thereon:
| ● | Does not reflect 4,636,091 Ordinary Shares reserved for issuance under our Incentive Plan; |
| ● | Does not reflect the exercise of the public warrants or the private warrants to purchase up to an aggregate of 17,796,782 Ordinary Shares. |
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RISK FACTORS
You should carefully consider all the following risk factors, together with all of the other information included or incorporated by reference in this prospectus, including the consolidated financial statements and the accompanying notes and matters addressed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” in evaluating an investment in the Ordinary Shares. The following risk factors apply to the business and operations of Currenc and its consolidated subsidiaries. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize the anticipated benefits of the Business Combination and may have an adverse effect on the business, cash flows, financial condition and results of operations of Currenc following the consummation of the Business Combination. We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial, which may also impair our business, cash flows, financial condition and results of operations.
Unless the context otherwise requires, all references in this subsection to the “Company,” “Seamless,” “we,” “us” or “our” refer to the business of Seamless prior to the consummation of the Business Combination, which is the business of Currenc following the consummation of the Business Combination.
Risks Related to Our Business, Industry, and Operations
We may fail to keep pace with rapid technological developments to provide new and innovative products and services or make substantial investments in unsuccessful new products and services.
Rapid, significant and disruptive technological changes continue to impact the industries in which we operate, including developments in electronic and mobile wallets and payments, money transfer, payment card tokenization, social commerce (i.e., e-commerce through social networks), authentication, virtual currencies, blockchain technologies, machine learning and artificial intelligence. We cannot predict the effects of technological changes on our business. In addition to our own initiatives and innovations, we rely in part on third parties for the development of and access to new technologies. We expect that new services and technologies applicable to the industries in which we operate will continue to emerge and may be superior to, or render obsolete, the technologies we currently use in our products and services. Developing and incorporating new technologies into our products and services may require substantial expenditures, take considerable time, and ultimately may not be successful. In addition, our ability to adopt new services and develop new technologies may be inhibited by industry-wide standards, new laws and regulations, resistance to change from consumers or merchants, or third parties’ intellectual property rights. Our success will depend on our ability to develop new technologies and adapt to technological changes and evolving industry standards.
We face significant competition in the markets in which we operate, and we may fail to successfully compete against current or future competitors.
We compete in a large number of markets characterized by vigorous competition, changing technology, changing customer needs, evolving industry standards and frequent introductions of new products and services. Money transfer and electronic payment services compete in a concentrated industry, with a small number of large competitors and a large number of small, niche competitors. Our competitors include domestic and regional mobile wallets, money transfer (customer-to-customer and customer-to-business) specialists, providers of digital payment solutions, traditional financial institutions, other well-established companies (such as social media platforms or applications) that develop electronic payment services, third parties that host electronic payment services, billers offering their own electronic payment services and other financial institutions. See “Seamless’ Business—Competition Analysis” for further details on our competitors.
We expect competition to intensify in the future as existing and new competitors introduce new services or enhance existing services. We compete against many companies to attract customers. Some of these companies have a longer operating history, greater financial resources and substantially larger customer bases than we do. Some of these companies may also be tied to established banks and other financial institutions and may therefore offer greater liquidity and generate greater consumer confidence in the safety and reliability of their services than ours. Some of these companies link digital payment solutions to their other existing services, such as social media platforms or applications, and such synergies may help them develop their customer bases more effectively than us, especially where these existing services have been successful for a considerable period of time and have already gained customer confidence and reliance. All of the above competitors may devote greater resources than we do to the development, promotion and sale of products and services, and they may be more effective in introducing innovative products and services. Mergers and acquisitions by or among these companies may lead to even larger competitors with more resources. Failure to keep pace with our competitors would hinder our growth.
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We also expect new entrants to offer competitive products and services. For example, established banks and other financial institutions, existing social media platform and application service providers and other financial technology (“fintech”) startups that have yet to provide digital payment services could develop such technologies and enter the market. Companies already operating digital payment services in other Asian countries could also quickly enter into the region where we operate.
Certain merchants have longstanding preferential or near-exclusive relationships with our competitors to accept payment cards and/or other services that we offer. These exclusive or near-exclusive relationships may make it difficult or cost prohibitive for us to gain additional market share with respect to these merchants. If we are unable to differentiate ourselves from and successfully compete with our competitors, our business will suffer serious harm.
We may also face pricing pressures from competitors. If we fail to price our services appropriately relative to our competitors, consumers may not use our services, which could adversely affect our business and financial results. For example, the number of our transactions in certain key corridors where we face intense competition could be adversely affected by increasing pricing pressures between our money transfer services and those of some of our competitors, which could adversely affect our financial results. Our competitors have at times offered special foreign exchange rate promotions on their global money transfer services in order to attract business which has negatively impacted our business. On the other hand, if we reduce prices in order to more effectively compete in these corridors, this could also adversely affect our financial results.
Our operations are dependent on our proprietary and external technology platforms and comprehensive ecosystems, and any systems failures, interruptions, delays in service, catastrophic events, and resulting interruptions in the availability of our products or services could result in harm to our business and our brand, loss of users, customers and partners and subject us to substantial liability.
Our systems and those of our third-party service providers, including data center facilities, may experience hardware breakdown, service interruptions, computer viruses, denial-of-service and other cyberattacks, human error, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks and other geopolitical unrest, or other events.
Moreover, when too many customers connect to our platform within a short period of time, we have in the past and may in the future experience system interruptions that render our platforms temporarily unavailable and prevent us from efficiently completing payment transactions. Our systems are also subject to break-ins, sabotage, and acts of vandalism. While we have backup systems and contingency plans for certain aspects of our operations and business processes, our planning does not account for all possible scenarios and eventualities.
We have experienced and will likely continue to experience denial-of-service attacks, system failures, and other events or conditions that interrupt the availability or reduce the speed or functionality of our products and services. In addition, we may need to incur significant expenses to repair or replace damaged equipment and to remedy data loss or corruption as a result of these events. A prolonged interruption in the availability or reduction in the speed or other functionality of our products or services could also materially and permanently harm our reputation, business and revenue. Frequent or persistent interruptions in our products and services could cause merchants, partners and users to believe that our products and services are unreliable, leading them to switch to our competitors or to stop using our products and services. Moreover, to the extent that any system failure or similar event causes losses to our customers or their businesses, these customers could seek compensation from us and those claims, even if unsuccessful, together with potential regulatory investigations, would likely be time-consuming and costly for us to address, and could divert management’s attention from operating our business.
Some of our agreements with third-party service providers do not require those providers to indemnify us for losses resulting from any disruption in service. Our agreements with some of our partners require us to indemnify them for losses resulting from any disruption in our services. As a result, our financial results may be significantly harmed.
If we fail to recruit new remittance partners and users or retain our existing remittance partners and users, our business and revenue will be harmed.
We must continually recruit new partners, merchants and users and retain existing partners, merchants and users in order to grow our business. Our ability to do so depends in large part on the success of our marketing efforts, our ability to enhance our services and our overall operating performance, to keep pace with changes in technology and our competitors and to expand our marketing partnerships and disbursement network.
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We have invested in software and technology in the past, and we expect to continue to spend significant amounts to acquire new partners, merchants and users and to keep existing remittance partners, merchants and users loyal to our service. We cannot assure you that the revenue from each partner, merchant and user we acquire will ultimately exceed the marketing, technology and development and promotion costs associated with acquiring them. We may not be able to acquire new partners, merchants and users in sufficient numbers to continue to grow our business, or we may be required to incur significantly higher expenses in order to acquire new partners, merchants and users. If the level of usage by our existing partners, merchants and users declines or does not continue as expected, we may suffer a decline in revenue. A decrease in the level of usage would harm our business and revenue.
Our business depends on our strong and trusted brands, and any failure to maintain, protect and enhance our brands would harm our business.
The brands under which we operate our business, including Tranglo and WalletKu, are important to our business. Our brands are predicated on the idea that partners, merchants and users will trust us and find value in building and growing their businesses with our products and services. Maintaining, protecting and enhancing our brand are critical to expanding our base of partners, merchants and users, as well as increasing engagement with our products and services. This will depend largely on our ability to maintain trust, be a technology leader, and continue to provide high-quality and secure products and services. Any negative publicity about our industry, our company, our controlling shareholder, the quality and reliability of our products and services, our risk management processes, changes to our products and services, our ability to effectively manage and resolve partners’, merchants’ and users’ complaints, our privacy and security practices, litigation, regulatory activity, the experience of partners, merchants and users with our products or services, and changes in the public opinion of us, could harm our reputation and the confidence in and use of our products and services. Harm to our brand can arise from many sources, including failure by us or our partners to satisfy expectations of service and quality; technological delays or failures; inadequate protection of sensitive information; compliance failures and claims; litigation and other claims; employee misconduct; and misconduct by our partners, service providers or other counterparties. If we do not successfully maintain strong and trusted brands, our business could be materially and adversely affected.
Our services must integrate with a variety of operating systems, networks and devices.
We are dependent on the ability of our products and services to integrate with a variety of operating systems and networks. Any changes in these systems or networks that degrade the functionality of our products and services, impose additional costs or requirements on us, or give preferential treatment to competitive services, including their own services, could seriously harm the levels of usage of our products and services. We also rely on bank platforms to process some of our transactions. If there are any issues with or service interruptions in these bank platforms, users may be unable to have their transactions completed in a timely manner or at all, which would have a material adverse effect on our business and results of operations. In addition, our hardware interoperates with mobile networks offered by telecom operators and mobile devices developed by third parties. Changes in these networks or in the design of these mobile devices may limit the interoperability of our hardware or software with such networks and devices and require modifications to our hardware or software. If we are unable to ensure that our hardware or software continues to interoperate effectively with such networks and devices, or if doing so is costly, our business may be materially and adversely affected.
We are experiencing ongoing rapid change and significant growth in our business and we may not succeed in managing or expanding our business across the expansive and diverse markets in which we operate.
Our business has become increasingly complex as we have expanded the number of platforms that we operate, the jurisdictions in which we operate, the types of products and services we offer, and the overall scale of our operations. We have significantly expanded and expect to continue to expand our headcount, office facilities, technology infrastructure and corporate functions. Failure to continue to do so could negatively affect our business. Moreover, the jurisdictions in which we operate are diverse and fragmented, with varying levels of economic and infrastructure development, and often do not operate efficiently across borders as a single or common market. Managing our growing businesses across these emerging markets requires considerable management attention and resources. Should we choose to expand into additional markets, these complexities and challenges could further increase. Each market presents its own unique challenges, and the scalability of our business is dependent on our ability to tailor our content and services to this diversity. In addition, the pace of regulatory change in the various jurisdictions in which we operate has been, and is expected to continue to be, rapid, while the impact and consequences of such change on our operations and our level of risk may be difficult to anticipate.
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As a result of the pace of change in the types of products and services we offer and the number of jurisdictions in which we operate, we face the risk that our management and employees may not have the capacity to appropriately attend to all necessary aspects of our business. For example, our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks, or be fully effective to identify, monitor, manage and remediate key risks. Additionally, our risk detection systems may be subject to a “false positive” risk detection rate, potentially making it difficult to identify real risks in a timely manner.
Further, as our business has grown and our service offerings have evolved, certain of our processes and systems have continued to rely on manual inputs which are more prone to errors and faults than more automated processes. There is a risk that the pace of our automation and systemization of these manual processes will be insufficient to prevent significant operational, reporting and regulatory errors.
Our growing multi-market operations also require certain additional costs, including costs relating to staffing, logistics, intellectual property protection, tariffs and potential trade barriers. Moreover, we may become subject to risks associated with:
| ● | recruiting and retaining talented and capable management and employees in various markets; | |
| ● | challenges caused by distance, language and cultural differences; | |
| ● | providing products and services that appeal to the tastes and preferences of users in multiple markets; | |
| ● | implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market; | |
| ● | maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to U.S. GAAP upon consolidation; | |
| ● | currency exchange rate fluctuations; | |
| ● | protectionist laws and business practices; | |
| ● | complex local tax regimes; | |
| ● | potential political, economic and social instability; and | |
| ● | higher costs associated with doing business in multiple markets. |
Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
If we fail to successfully identify and manage any of the above or other significant changes facing the business, or to identify and manage the risks to which we are or may be exposed, or successfully respond to technological developments in the industry, we may experience a material adverse effect on our business, financial condition and results of operations.
Our cross-border payment and money transfer services are exposed to foreign exchange risk.
The ability of our subsidiaries to effect cross-border payments and money transfers may be restricted by the foreign exchange control policies in the countries where we operate.
For example, Malaysia’s foreign exchange policies support the monitoring of capital flows into and out of the country in order to preserve its financial and economic stability. The foreign exchange policies are administered by the Foreign Exchange Administration, an arm of the Central Bank of Malaysia (Bank Negara Malaysia) (“BNM”) via a set of foreign exchange administration rules (“FEA Rules”). The FEA Rules, which monitor and regulate both residents and non-residents currently provide that non-residents are free to repatriate any amount of funds from Malaysia in foreign currency other than the currency of Israel at any time, including capital, divestment proceeds, profits, dividends, rental, fees and interest arising from investment in Malaysia, subject to any withholding tax. In the event Malaysia or any other country where we operate introduces any foreign exchange restrictions in the future, we may be affected in our ability to repatriate dividends or other payments from our subsidiaries in Malaysia or in such other countries.
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The exchange control law in Indonesia provides that money transfer operators shall only make transfers to operators that are licensed in their respective jurisdictions. The arrangement between Indonesian money operators and their foreign counterparts is subject to approval if it exceeds a certain threshold (US $25,000) from Bank Indonesia, the central bank of Indonesia. Further, a party wishing to convert an amount of Indonesian Rupiah into foreign currency that exceeds certain thresholds is required to submit certain supporting documents to the bank handling the foreign exchange conversion, including the underlying transaction documents and a duly stamped statement confirming that the underlying transaction documents are valid and that the foreign currency will only be used to settle the relevant payment obligations. For conversions not exceeding the threshold, the person only needs to declare in a duly stamped letter that their aggregate foreign currency purchases have not exceeded the monthly threshold set forth in the Indonesian banking system.
We face risks in expanding into new geographic regions.
We plan to continue expanding into new geographic regions, and we currently face and will continue to face risks entering markets in which we have limited or no experience and in which we may not be well-known. Offering our services in new geographic regions often requires substantial expenditures and takes considerable time, and we may not be successful enough in these new geographies to recoup our investments in a timely manner or at all. We may be unable to attract a sufficient number of merchants, partners or users, fail to anticipate competitive conditions, or face difficulties in operating effectively in these new markets. The expansion of our products and services globally exposes us to risks relating to staffing and managing cross-border operations; increased costs and difficulty protecting intellectual property and sensitive data; tariffs and other trade barriers; differing and potentially adverse tax consequences; increased and conflicting regulatory compliance requirements, including with respect to data privacy and security; lack of acceptance of our products and services; challenges caused by distance, language, and cultural differences; exchange rate risk; and political instability. Accordingly, our efforts to expand our global operations may not be successful, which could limit our ability to grow our business.
Acquisitions, partnerships, joint ventures, entries into new businesses, and divestitures could disrupt our business, divert management attention and harm our financial conditions.
We have in the past engaged in acquisitions and partnerships. In the future, we may engage in similar ventures, including joint ventures, new businesses, mergers and other growth opportunities such as the purchase of assets and technologies, especially as we expand into new markets. Acquisitions, partnerships or joint ventures and the subsequent integration of new companies or businesses require significant attention from our management, in particular to ensure that the corporate action does not disrupt any existing collaborations, or affect our users’, partners’ and merchants’ opinions and perceptions of our services and customer support. Investments and acquisitions could result in the use of substantial amounts of cash, increased leverage, potentially dilutive issuances of equity securities, goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business, and the invested or acquired assets or businesses may not generate the financial results we expect. Moreover, the costs of identifying and consummating these transactions may be significant. In addition to receiving the necessary corporate governance approvals, we may also need to obtain approvals and licenses from relevant government authorities for the acquisitions to comply with applicable laws and regulations, which could result in increased costs and delays.
For example, in November 2018, we acquired Tranglo, a leading provider of cross-border payment processing services worldwide. In July 2018, we acquired WalletKu, based in Indonesia, which provides mobile payment and airtime top-up services in Indonesia. In March 2021, we disposed of a controlling interest in WalletKu. In June 2022, we reacquired sufficient interest in WalletKu to hold a controlling interest in it.
The acquisitions of Tranglo and WalletKu, and the subsequent integration of these and future acquired businesses into ours, have required and will require significant attention from our management, in particular to ensure that the acquisitions or partnerships do not disrupt any existing collaborations, or affect our users’, partners’ and merchants’ opinions and perceptions of our services and customer support. Whether we realize the anticipated benefits from these acquisitions or partnerships depends, to a significant extent, on the integration of the target businesses into our group, the performance and development of the underlying services or technologies, our correct assessment of assumed liabilities and the management of the relevant operations. We may not be able to successfully integrate these businesses or products and the integration may divert our management’s focus from our core business and result in disruption to our normal business operations. The diversion of our management’s attention and any difficulties encountered in the integration could have a material adverse effect on our ability to manage our business.
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Unauthorized disclosure of sensitive or confidential merchant, partner or user information or our failure or the perception that we failed to comply with privacy laws or properly address privacy concerns could harm our business and standing with merchants, partners and users.
We collect, store, process, and use large amounts of personal information and other sensitive data in our business. A significant risk associated with our industry is the secure transmission of confidential information over public networks. The perception of privacy concerns, whether or not valid, may harm our business and results of operations. We must ensure that all processing, collection, use, storage, dissemination, transfer and disposal of data for which we are responsible comply with relevant data protection and privacy laws, which differ from jurisdiction to jurisdiction. The protection of our merchant, partner, user and company data is critical to us. We rely on commercially available systems, software, tools and monitoring to provide secure processing, transmission and storage of confidential information, such as names, addresses, personal identification numbers, payment card numbers and expiration dates, bank account information, purchase histories and other data.
Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events, and our security measures may fail to prevent security breaches. Any security breach, or any perceived failure involving the misappropriation, loss or other unauthorized disclosure of confidential information, as well as any failure or perceived failure to comply with laws, policies, legal obligations or industry standards regarding data privacy and protection, whether by us or our merchants or partners, could damage our reputation, expose us to litigation risk and liability, require us to expend significant funds to remedy problems and implement measures to prevent further breaches, subject us to regulatory scrutiny and potential fines or other disciplinary actions, subject us to negative publicity, disrupt our operations and have a material adverse effect on our business and standing with merchants, partners and users.
Failure to deal effectively with fraud, fictitious transactions, failed transactions or negative customer experiences would increase our loss rate and harm our business, and could severely diminish merchant, partner and user confidence in and use of our services.
We have in the past experienced, and may in the future continue to experience instances of fraud, fictitious transactions, failed transactions and disputes between senders and recipients. We also incur losses for claims that the transaction was fraudulent, made from erroneous transmissions or from closed bank accounts or have insufficient funds in them to satisfy payments.
If losses incurred by us relating to fraud, fictitious transactions and failed transactions become excessive, they could potentially result in the termination of our relationships with merchants, partners or users. In such case, the number of transactions processed through our platforms could decrease substantially and our business could be harmed. We are similarly subject to the risk of fraudulent activity associated with merchants, partners and third parties handling our user information. We have taken measures to detect and reduce the risk of fraud, but these measures need to be continually improved and may not be effective against new and continually evolving forms of fraud or in connection with new product offerings. If these measures do not succeed, our business could be materially and adversely affected.
We have a limited operating history in new and evolving markets and our historical results may not be indicative of our future results.
We have a limited operating history upon which to evaluate the viability and sustainability of our businesses. Our history of operating each of our businesses together is relatively short: WalletKu was launched in November 2017 and was acquired by us in July 2018; we acquired Tranglo in November 2018. As these businesses are expanding rapidly, our historical results may not be indicative of our future performance and you should consider our future prospects in light of the risks and uncertainties of early stage companies operating in fast evolving high-tech industries in emerging markets. Some of these risks and uncertainties relate to our ability to:
| ● | retain existing partners, merchants and users, attract new partners, merchants and users, and increase their engagement and monetization; |
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| ● | maintain growth rates across our platforms in multiple markets; | |
| ● | maintain and expand our network of domestic, regional and global industry value chain partners; | |
| ● | upgrade our technology and infrastructure to support increased traffic and expanded offerings of products and services; | |
| ● | anticipate and adapt to changing partner, merchant and user preferences; | |
| ● | increase awareness of our brand; | |
| ● | adapt to competitive market conditions; | |
| ● | maintain adequate control of our expenses; and | |
| ● | attract and retain qualified personnel. |
If we are unsuccessful in addressing any of these risks and uncertainties, our business, financial condition and results of operations may be materially and adversely affected.
Our business model may change in the future and we may provide services that are not currently provided or planned for in our strategies.
We operate in a highly competitive and fast evolving industry which requires us to constantly make changes depending on industry dynamics, regulatory environment and our partners’, merchants’ and users’ needs. We may have to change our current business model for our business to cope with such changes and we cannot guarantee that our current business model will remain the same going forward. For example, our acquisition of Tranglo in November 2018 moved us into the upstream payment processing business where we can provide switching services and our July 2018 acquisition of WalletKu marked our entry into the mobile payment and airtime top-up businesses in Indonesia. Furthermore, we cannot assure you that our business model, as it currently exists or as it may evolve, will enable us to become profitable or to sustain operations.
Our risk management system may not be adequate or effective in all respects.
Management of our operational, legal and regulatory risks requires us to, among other things, develop and implement policies and procedures to properly record and verify a large amount of data. We collect and process certain personal data of our users, including, among others, identification information, email addresses, passwords, as well as billing information, such as credit card numbers, full names, billing addresses, and phone numbers. While we have taken steps to verify the source and authenticity of such data, our security and screening measures could be compromised and fail to detect false or wrongful information. We cannot guarantee that our measures to verify the authenticity of such information will be adequate. Failure or the ineffectiveness of these systems could subject us to penalties or sanctions by the relevant regulatory authority in the respective jurisdiction, such as under anti-money laundering and counter-terrorist financing laws and regulations, and have a material and adverse effect on our business, financial condition and results of operations.
We offer payments, money transfer and other products and services to a large number of users, and we are responsible for vetting and monitoring these customers and determining whether the transactions we process for them are legitimate. Despite measures we have taken and continue to take, our payment system remains susceptible to potentially illegal or improper uses. These may include the use of our payment services in connection with fraudulent sales of goods or services, software and other intellectual property piracy, money laundering, bank fraud and prohibited sales of restricted products. Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud.
When our products and services are used to process illegitimate transactions, and we settle those funds to merchants, partners and users and are unable to recover them, we suffer losses and liability. These types of illegitimate transactions can also expose us to governmental and regulatory sanctions. The highly automated nature of, and liquidity offered by, our payments and money transfer services make us a target for illegal or improper uses, including fraudulent or illegal sales of goods or services, money laundering, and terrorist financing. Identity thieves and those committing fraud using stolen or fabricated credit card or bank account numbers, or other deceptive or malicious practices, potentially can steal significant amounts of money from businesses like ours. In configuring our payments and money transfer services, we face an inherent trade-off between security and customer convenience. Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future. In addition, when we introduce new services, focus on new business types, or begin to operate in markets where we have a limited history of fraud prevention, we may be less able to forecast and reserve accurately for those losses. Furthermore, if our risk management policies and processes contain errors or are otherwise ineffective, we may suffer large financial losses, we may be subject to civil and criminal liability, and our business may be materially and adversely affected.
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We require a significant amount of pre-funding in each market that we operate in order to facilitate our real-time foreign exchange services; insufficient pre-funding may result in an inability to complete real-time money transfer or exchange services on behalf of our customers.
To facilitate our foreign exchange transfer and cash pick-up services, in each of the jurisdictions we operate, we are pre-funded in U.S. Dollars by our business-to-business (“B2B”) partners such as WISE and Singtel. The pre-funding amount that we request and its timeframe is determined from our business operations and estimates that are made based on past practices, and hence may not be accurate or sufficient to meet actual needs. If there is insufficient pre-funding, we typically will not complete the money transfer or exchange, and the transaction will therefore be delayed. If we are unable to correctly predict our estimates or take measures to cover pre-funding shortage, we may not be able to complete the money transfer or exchange for our customers and as a result, our operations, reputation and business could be adversely affected.
The funding process used by certain customers of Tranglo relies on XRP, a cryptocurrency, and certain services provided by Ripple Services, Inc. and two cryptocurrency exchanges; if they are not able to continue to provide services due to regulatory change, our business, financial condition and results of operations may be materially adversely effected.
The funding process used by certain customers of Tranglo relies on XRP, a cryptocurrency, and certain services provided by Ripple Services and two cryptocurrency exchanges. As of June 30, 2024, only six of Tranglo’s 90 active customers utilize this funding process, and these customers (Sentbe Pte Ltd, Eastern & Allied Pty Ltd, Xbaht AB, Pyypl Ltd, Digitel Co. Ltd and Ripple Markets De LLC) are each regulated financial institutions in their respective jurisdictions. For the six months ended June 30, 2024, all On-Demand Liquidity (“ODL”) customers accounted for 5.2% of the remittance revenue (or 3.5% of total revenue), 5.5% of the total remittance value and 4.0% of the total remittance transactions of Tranglo. The active customers and their partners may be subject to new or additional regulation in jurisdictions where they operate or in which they offer services to us or our other partners with respect to their use of and transactions involving cryptocurrency, and they may also be required to obtain relevant licenses in order to provide services to us, our customers or our other partners. While we are currently not required to obtain any cryptocurrency-specific approvals or licenses for our existing operations that involve cryptocurrency, and we have obtained the relevant non-cryptocurrency-specific approvals or licenses for those operations, the regulation of cryptocurrency in the jurisdictions where we operate may evolve or change or new licensing regimes may be introduced in the future to regulate such activities. In addition, while Tranglo does not offer services to U.S. persons and has adopted stringent know-your-customer processes and procedures which insure that its customers, which are businesses, are not U.S. persons, access of these partner services by U.S. persons could raise regulatory issues under U.S. law, including potential violations of U.S. securities, commodities, cryptocurrency custody, exchange and transfer, data governance, data protection, anti-corruption, cybersecurity and tax laws. While we are not aware of any pending regulatory changes which would prevent our partner from continuing to provide their services to our customers and believe it to have all relevant approvals or licenses therefor, we cannot provide any assurance in that regard or that our partner would be able to respond to any regulatory changes in a manner which did not impact our business. If our partner is not allowed to continue to provide their services due to regulatory changes or if the customers or our partner fail to obtain required licenses or comply with applicable regulations, and we are not able to migrate those customers to non-cryptocurrency based funding processes, our business, financial condition and results of operations may be materially adversely effected.
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Increased adoption of the funding process Tranglo offers which relies on XRP may reduce our remittance revenue, and our business, financial condition and results of operations may be materially adversely effected.
The pre-funding mechanism Tranglo offers that relies on XRP prefunding generates lower transaction fees and Forex gains for Tranglo. For the three months ended June 30, 2024, the average transaction fee take rate and the Forex gain take rate for remittance flows that used XRP prefunding, as measured in Ringgit (RM), were 0.22% and 0.12%, respectively, or a total of 0.34%, compared to 0.28% and 0.09%, respectively, or a total of 0.37%, for remittance flows that used fiat currency prefunding. Accordingly, for the same total processing value (“TPV”) processed, the average revenue generated from the XRP prefunded remittance transactions was around 8.1% lower than that from fiat currency prefunded transactions. As additional customers of Tranglo adopt the XRP funding mechanism to lower their costs, Tranglo will experience reduced revenue from transaction fees and Forex gains. We anticipate that these fee savings will help Tranglo capture more market share and increase the total number and transaction value of the transactions processed. However, there can be no assurance that the increase in the total number and transaction value of the transactions processed will generate enough revenue to offset the impact of the lower fees charged, and if they do not, our business, financial condition and results of operations may be materially adversely effected.
Recent volatility, security breaches, manipulative practices, business failure and fraud in the cryptocurrency industry may adversely impact adoption and use by customers of Tranglo’s ODL service, and as a result our business, financial condition and results of operations may be materially adversely effected.
The cryptocurrency industry has recently experience highly volatile prices, business failures and bankruptcy filings by cryptocurrency exchanges and other industry participants, alleged or apparent security breaches and claims of manipulative practices and fraud. Tranglo’s ODL funding service relies on the cryptocurrency XRP. To the extent these recent problems and concerns regarding the cryptocurrency industry cause Tranglo’s customers to limit their use of its ODL service, or decline to use it altogether, or Tranglo’s business reputation is otherwise materially adversely affected by these concerns, our business, financial condition and results of operations may be materially adversely effected. In addition, in the event that Ripple Labs Singapore Pte. Ltd is forbidden to conduct its XRP business in certain jurisdictions or Ripple Labs Singapore Pte. Ltd decides to withhold ODL funding services in certain jurisdictions, the ODL business of Seamless will need to stop in these countries, which would lead to a decline in the remittance volume Seamless processes unless customers elect to continue to use Seamless for remittance.
In addition, the regulation of the cryptocurrency industry is evolving, and jurisdictions continue to evaluate if, and how, it should be regulated in their jurisdictions. Currently, we are only required to comply with regulations in Singapore; however, there can be no assurance we will not be required to obtain additional licenses in multiple jurisdictions. Until we obtain such licenses, assuming we are able to conduct our ODL funding service in compliance with new regulations, we may be forced to suspend or cease operation in those jurisdictions which would have a material adverse effect on our business, financial condition and results of operations.
On March 10, 2023, Silicon Valley Bank failed. Soon afterwards, Signature Bank and Silvergate Bank also failed. As most of the crypto exchanges and crypto market traders maintained accounts with these three banks, their near simultaneous collapse resulted in illiquidity for the crypto markets worldwide. Tranglo maintained its crypto wallets in two crypto exchanges, namely Independent Reserve and Coins.ph, and used these two exchanges to instantaneously liquidate the XRP it receives from its ODL remittance partners (“ODL RPs”) under the instructions of RippleNet. During the illiquidity caused by the collapses, it became difficult for the two crypto exchanges to execute the timely liquidation of XRP. After considering the market conditions, Ripple Labs Singapore Pte. Ltd. decided, and Tranglo agreed, to reduce the ODL services for certain active ODL RPs in mid-March 2023, thus lowering the processing volume of ODL transactions and to ensure that instantaneous liquidation of XRP was still possible for those remaining ODL RPs. To enact partial reduction, Tranglo requested that its ODL RPs switch to using fiat currency for prefunding instead. Eventually, most of Tranglo’s ODL RPs adopted the fiat prefunding channel and continued their business via Tranglo, and as a result, Tranglo’s TPV for the month of March 2023 actually increased by 17% as compared to the month of February 2023.
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For the month of February 2023, Tranglo’s monthly TPV was RM1.35 billion, representing an average daily TPV of RM48 million, of which 26% was ODL flows. On March 15, 2023, due to the market illiquidity, the ODL services were suspended for nine out of 11 active ODL RPs. For the two-week period prior to the partial suspension, from March 1, 2023 to March 14, 2023, Tranglo processed $37.8 million ODL transactions, representing a daily average of $2.7 million. For the two-week period after the partial suspension, from March 15, 2023 to March 28, 2023, Tranglo processed only $2.5 million ODL transactions, which represented a daily average of $0.18 million. This post-suspension daily average ODL transactions was only 6.7% of that of the pre-suspension level. The ODL services were gradually resumed after a two-week suspension, in early April 2023.
For the month of February 2023, ODL flows represented 26% of Tranglo’s total remittance TPV. However, for the month of June 2024, ODL flows represented only 5.5% of total remittance TPV. As the ODL flows recovered very slowly two months after the resumption of ODL services, Seamless does not anticipate the ODL flows will return to pre-suspension levels in the near future. Seamless expects that the ODL flows may not reach pre-suspension levels until 2025 at the earliest. However, the reduction in ODL flows post-suspension did not result in an overall reduction in Tranglo’s TPV as the ODL RPs switched their remittance business to fiat currency. For the month of June 2024, Tranglo’s remittance TPV was RM1.94 billion, which compared to RM1.43 billion for the month of April 2023, an increase of 35.7%.
If a similar liquidity event were to occur in the future, our ODL services and the use thereof could similarly change, and further affect our business and results of operations.
Our strategic partner, Ripple Labs Singapore Pte. Ltd., owns 40% of Tranglo and pursuant to a certain Shareholders’ Agreement, has certain contractual rights that could temporarily disrupt Tranglo’s existing business or prevent our ability to expand it.
Ripple Labs Singapore Pte. Ltd. owns 40% interest in Tranglo. There is a Shareholders’ Agreement between Seamless and Ripple Labs Singapore Pte. Ltd. that governs the operations of Tranglo. Pursuant to the Shareholders’ Agreement, Ripple Labs Singapore Pte. Ltd. is entitled to appoint two members of the Tranglo board. On November 2, 2023, one of the directors (Investor Director) appointed by Ripple Labs Singapore Pte. Ltd. resigned from the board of Tranglo. The parties amended the Shareholders’ Agreement on November 7, 2023 to reflect the resignation of the Investor Director, and to waive the requirement for at least one (1) Investor Director to be included in the quorum of the meetings or adjourned meetings of the Board of such Group Company under Clause 4.4.2. While Seamless has a right to appoint a majority of the board of directors of Tranglo, certain matters require the cooperation, or in some cases, approval by Ripple Labs Singapore Pte. Ltd. Ripple Labs Singapore Pte. Ltd.’s interests may not be the same as, or may conflict with, the interests of us or our stockholders. Tranglo cannot undertake certain actions or transactions without the consent of Ripple Labs Singapore Pte. Ltd., including but not limited to:
| ● | an initial public offering; | |
| ● | any determinations with respect to merger or sale of the whole or a substantial part of the assets; | |
| ● | changes to the capital structure; | |
| ● | a change in the nature or scope of the business; | |
| ● | incurrence of certain amount of debt; | |
| ● | any declaration or payment of any dividends or other distribution of profits; | |
| ● | entering into any joint venture, partnership or profit sharing arrangement with any person and any amendment to the terms of such venture, partnership or arrangement; | |
| ● | variation of any rights attaching to any shares in the capital of Tranglo or making of any call upon monies unpaid in respect of any issued shares; | |
| ● | introduction or revision of any share option plan; | |
| ● | save for the issuance of shares or the grant of options in connection with or pursuant to any duly approved and established share option scheme or plan; | |
| ● | repurchase of shares other than pursuant to any duly approved and established share option scheme or plan(s); and | |
| ● | any related party transactions that exceed a certain amount of value. |
These limitations could result in disagreements between Seamless and Ripple Labs Singapore Pte. Ltd. In the event of an unresolved disagreement between the shareholders, the Shareholders’ Agreement provides for means through which a deadlocked topic will be resolved, including through arbitration.
As a result, our ability to take certain actions may temporarily be delayed or prevented, including actions that our other shareholders, including you, may consider favorable. We will not be able to terminate or amend the Shareholders’ Agreement, except in accordance with its terms, which would require the consent of Ripple Labs Singapore Pte. Ltd. See “Certain Relationships and Related Party Transactions—Seamless Related Party Transactions—Shareholders’ Agreement.”
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Our ODL business depends on Ripple Services Inc. depositing enough XRP for liquidation to yield an amount of fiat currency, such as U.S. dollars, equal to the amount purchased by our customer.
As part of any ODL funding transaction, our strategic partner, Ripple Labs Singapore Pte. Ltd provides our customers with an amount of XRP representing a specific amount of fiat currency, such as U.S. dollars for prefunding purposes. Our customers then deposit that amount of XRP into our account and we automatically direct the exchange to liquidate the XRP into the equal amount of fiat currency. Despite that these transactions occur nearly simultaneously, there is a possibility that the exchange rate could result in a deposit of a lesser amount of fiat currency. In that case, there is a collateral pool or slippage pool, that is available and is immediately drawn upon to fund the requisite amount of fiat currency. If that pool was unavailable or insufficiently funded, and we were unable to receive the requisite amount of fiat currency, we will suspend the liquidation process and credit only to our customer whatever amount of fiat currency we obtain from the liquidation process. The commitment or obligation to credit our customer with the full amount of the fiat currency rests with Ripple Services Inc. and Tranglo is not responsible for the shortfall if Ripple Services Inc. is not providing enough XRP in our Slippage Pool. Prior to the disruption in the cryptocurrency markets in spring 2023, the ODL business represented approximately 35% of our monthly transaction processing volume. Thus, any failure of Ripple to properly fund the slippage pool or any disruption in the cryptocurrency markets causing a reduction in the use of the ODL funding mechanism could have a material adverse effect on our results of operations.
We are subject to risks associated with our Deed of Guarantee and the terms of thereof may contractually limit our ability to incur additional indebtedness.
Seamless has entered into a Deed of Guarantee with Regal Planet Limited and Kong King Ong Alexander, as guarantors, and Ripple Labs Singapore Pte. Ltd., pursuant to which Seamless will be a guarantor of GEA Limited, its wholly-owned subsidiary, in connection with the Master XRP Commitment to Sell Agreement and each Line of Credit Addendum related thereto, between Ripple Labs Singapore Pte Ltd. and GEA Limited. The amount guaranteed under such Deed of Guarantee is $27 million as of June 30, 2024. The current amounts outstanding can be declared immediately due and payable by Ripple Labs Singapore Pte. Ltd. and Ripple Labs Singapore Pte. Ltd. may make additional advances to GEA Limited from time to time pursuant to the Master XRP Commitment to Sell Agreement, which additional advances will also be guaranteed pursuant to the Deed of Guarantee. Seamless’ obligation with respect to the guarantee will terminate six months after the consummation of the Business Combination.
The Deed of Guarantee requires us to comply with certain financial and operational covenants, including maintaining a ratio of current assets to current liabilities of 0.86; a ratio of cash to current assets of 0.58; and a ratio of cash to current liabilities of 0.68. In addition, until terminated, the Deed of Guarantee restricts us from conducting any business which would materially affect our guarantee. As a result, we may be restricted in incurring additional indebtedness and will be required to maintain cash levels in a way that could negatively affect our business and results of operations.
We rely upon the Internet infrastructure, data center providers and telecommunications networks in the markets where we operate.
Our business depends on the performance and reliability of the Internet infrastructure and contracted data center providers in the markets where we operate. We may not have access to alternative networks or data servers in the event of disruptions or failures of, or other problems with, the relevant Internet infrastructure. In addition, the Internet infrastructure, especially in the emerging markets where we operate, may not support the demands associated with continued growth in Internet usage.
We rely on third parties in many aspects of our business, including, among others:
| ● | networks, banks, payment processors and payment gateways that link us to bank clearing networks to process transactions; |
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| ● | third parties that provide certain outsourced customer support and product development functions, which are critical to our operations; and | |
| ● | third parties that provide facilities, infrastructure, components and services, including data center facilities and cloud computing. |
We use third-party data center providers for the storing of data related to our business. We do not control the operation of these facilities and rely on contracted agreements to govern their performance. The owners of the data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, or if one of our data center providers is acquired by another party, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible lengthy service interruptions in connection with doing so. Any changes in third-party service levels at our data centers or any errors, defects, disruptions, or other performance problems with our business could adversely affect our reputation and adversely affect the user experience. Interruptions in our services might reduce our revenue, subject us to potential liability, and materially and adversely affect our business.
We also rely on major telecommunication operators in the markets where we operate to provide us with data communications capacity primarily through local telecommunications lines and data centers to host our servers. We and our users may not have access to alternative services in the event of disruptions or failures of, or other problems with, the fixed telecommunications networks of these telecommunications operators, or if such operators otherwise fail to provide such services. Any unscheduled service interruption could disrupt our operations, damage our reputation and result in a decrease in our revenue. Furthermore, we have no control over the costs of the services provided by the telecommunications operators to us and our users. If the prices that we pay for telecommunications and Internet services rise significantly, our gross margins could be significantly reduced. In addition, if Internet access fees or other charges to Internet users increase, our user traffic may decrease, which in turn may cause our revenue to decline.
The third parties that we rely on to process transactions may fail or refuse to process transactions adequately. Any of the third parties we use may breach their agreements with us, refuse to renew these agreements on commercially reasonable terms, take actions that degrade the functionality of our services, impose additional costs or requirements on us, or give preferential treatment to competing services. Financial or regulatory issues, labor issues, or other problems that prevent these third parties from providing services to us or our customers could harm our business. If our service providers do not perform satisfactorily, our operations could be disrupted, which could result in customer dissatisfaction, damage our reputation, and harm our business.
The digital wallet market in Asia is developing, and the expansion of our business depends on the continued growth of digital wallets, as well as increased availability, quality and usage of mobile devices and the Internet in Asia.
Our future revenues depend substantially on users’ widespread acceptance and use of mobile devices and the Internet as a way to transmit money and conduct commerce. Rapid growth in the use of mobile devices and the Internet (particularly as a way to transfer funds, provide and purchase products and services) is a relatively recent phenomenon in some of the jurisdictions in which we operate and we cannot assure you that the current level of acceptance and usage will continue or increase. Furthermore, if the penetration of mobile devices and Internet access in the less developed countries in which we operate do not increase quickly, it may limit our potential growth, particularly in regions with low levels of Internet quality and access and/or low levels of income.
Mobile devices penetration and Internet penetration in less developed countries in which we operate may never reach the levels seen in more developed countries due to factors that are beyond our control, including the lack of necessary network infrastructure, economic and political development, access to affordable mobile devices or delayed development of enabling technologies, performance improvements and security measures. The infrastructure for the Internet in such countries may not be able to support continued growth in the number of users, their frequency of use or their bandwidth requirements. Delays in telecommunication and infrastructure development or other technology shortfalls may impede improvements in Internet reliability in such countries. If telecommunications services are not sufficiently available to support the growth of the Internet in such countries, user response times could be slower, which would reduce Internet usage and potentially decrease our user base. We also cannot predict whether users in these developing countries will have easy access to affordable mobile devices, and the lack thereof may decrease mobile penetration which would limit the growth of our user base. In addition, even if mobile devices and the Internet penetration in such countries increase, this may not lead to growth in e-wallet transactions due to a number of factors, including lack of confidence from users in online security.
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Furthermore, the rising price of Internet access and Internet-connected devices, such as personal computers, tablets, mobile phones and other portable devices, may limit our growth, particularly in countries or regions with low levels of income. Income levels in many countries in Southeast Asia are significantly lower than in the United States and other more developed countries, while prices of both portable devices and Internet access in certain countries in Southeast Asia are higher than those in more developed countries. Income levels in Southeast Asia may decline and device and access prices may increase in the future. Any of these factors could materially and adversely affect our ability to generate future revenues.
A significant change, material slowdown or complete disruption in international migration patterns could adversely affect our business, financial condition and results of operations.
Our money transfer business relies in part on international migration patterns, as individuals move from their native countries to countries with greater economic opportunities or a more stable political environment. A significant portion of money transfer transactions are initiated by immigrants sending money back to their native countries. Changes in immigration laws that discourage international migration and political or other events (such as war, terrorism or epidemics) that make it more difficult for individuals to migrate or work abroad could adversely affect the need for money transfer transactions and growth rate. Sustained weakness in global economic conditions could reduce economic opportunities for migrant workers and result in reduced or disrupted international migration patterns. Reduced or disrupted international migration patterns are likely to reduce the number of our money transfer transactions and therefore have an adverse effect on our results of operations.
We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees.
Our future success is significantly dependent upon the continued service of our executives and other key employees. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement and we may incur additional expenses to recruit and train a replacement, which could severely disrupt our business and growth.
To maintain and grow our business, we will need to identify, hire, develop, motivate and retain highly skilled employees. Identifying, recruiting, training, integrating and retaining qualified individuals requires significant time, expense and attention. In addition, from time to time, there may be changes in our management team that may be disruptive to our business. We may also be subject to local hiring restrictions in certain markets, particularly in connection with the hiring of foreign employees, which may affect the flexibility of our management team. If our management team, including any new hires that we make, fails to work together effectively and execute our plans and strategies, or if we are not able to recruit and retain employees effectively, our ability to achieve our strategic objectives will be adversely affected and our business and growth prospects will be harmed.
Competition for highly skilled personnel is intense, particularly in Southeast Asia where most of our business operations are located. We may need to invest significant amounts of cash and equity to attract and retain new employees and we may not be able to realize returns on these investments.
An increase in the use of credit cards or bank transfers, or an increase in the use of digital currencies, as a means of payment in the markets in which we operate, may result in lower growth or a decline in the use of our services.
Many of our users do not readily have access to credit card or bank transfer services, or may be unwilling to use credit cards for electronic transactions over the Internet, and require alternative methods for payment for online products and services. A significant increase in the availability, acceptance and use of credit cards, bank transfer services or digital currencies for online payments by consumers in the markets in which we operate could adversely affect the growth of our business, our financial condition and results of operations.
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Customer complaints or negative publicity about our customer service could reduce usage of our products and services.
Customer complaints or negative publicity about our customer service could severely diminish consumer confidence in and use of our products and services. Breaches of our customers’ privacy and our security measures could have the same effect. Measures we sometimes take to combat risks of fraud and breaches of privacy and security, such as freezing customer funds, can damage relations with our customers. These measures heighten the need for prompt and accurate customer service to resolve irregularities. Effective customer service requires significant expenses, which, if not managed properly, could impact our profitability significantly. Any inability by us to manage or train our customer service representatives properly could compromise our ability to handle customer complaints effectively. If we do not handle customer complaints effectively, our reputation may suffer and we may lose our customers’ confidence.
We may not be able to protect our intellectual property rights.
We believe the protection of our intellectual property, including our trademarks, patents, copyrights, domain names, trade dress, and trade secrets, is critical to our success. We seek to protect our intellectual property rights by relying on applicable laws and regulations, as well as a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary rights when offering or procuring products and services, including confidentiality agreements with parties with whom we conduct business.
However, contractual arrangements and other steps we have taken to protect our intellectual property may not prevent third parties from infringing or misappropriating our intellectual property or deter independent development of equivalent or superior intellectual property rights by others. Trademark, copyright, patent, domain name, trade dress and trade secret protection are expensive to maintain and may require litigation. Protecting our intellectual property rights and other proprietary rights is expensive and time-consuming and may not be successful in every jurisdiction. Also, we may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. We have licensed certain of our proprietary rights, such as trademarks or copyrighted material, to others in the past, and expect to do so in the future. These licensees may take actions that diminish the value of our proprietary rights or harm our reputation. Any failure to protect or enforce our intellectual property rights adequately, or significant costs incurred in doing so, could materially harm our business. In addition, the laws of some jurisdictions in which we operate may only provide us with a limited or variable extent of protection in relation to software and intellectual property rights.
As the number of products in the software industry increases and the functionalities of these products further overlap, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to infringement claims, including patent, copyright, and trademark infringement claims. We may be required to enter into litigation to determine the validity and scope of the patents or other intellectual property rights of others. The ultimate outcome of any allegation is uncertain and, regardless of the outcome, any such claim, with or without merit, may be time-consuming, result in costly litigation, divert management’s time and attention from our business, require us to redesign our products, or require us to pay substantial amounts to satisfy judgments or settle claims or lawsuits or to pay substantial royalty or licensing fees, or to satisfy indemnification obligations that we have with some of our customers. Our failure to obtain necessary licenses or other rights, or litigation or claims arising out of intellectual property matters, may materially and adversely affect our business.
Our quarterly results of operations and operating metrics fluctuate significantly and are unpredictable and subject to seasonality, which could result in the trading price of our Ordinary Shares being unpredictable or declining.
Our quarterly results of operations may vary significantly and are not necessarily an indication of future performance. These fluctuations may be due to a variety of factors, some of which are outside our control and may not fully reflect the underlying performance of our business. Our limited operating history combined with the rapidly evolving markets also contribute to these fluctuations. Fluctuations in quarterly results may materially and adversely affect the predictability of our business and the price of our Ordinary Shares.
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Factors that may cause fluctuations in our quarterly financial results include our ability to attract and retain new partners, merchants and users; the timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure, as well as the success of those expansions and upgrades; the outcomes of legal proceedings and claims; our ability to maintain or increase revenue, gross margins, and operating margins; our ability to continue introducing new services and to continue convincing customers to adopt additional offerings; increases in and timing of expenses that we may incur to grow and expand our operations and to remain competitive; period-to-period volatility related to fraud and risk losses; system failures resulting in the inaccessibility of our products and services; changes in the regulatory environment, including with respect to security, privacy, or enforcement of laws and regulations by regulators, including fines, orders, or consent decrees; changes in global business or macroeconomic conditions; unusual weather conditions; and the other risks described in this prospectus.
We may need additional capital but may not be able to obtain it on favorable terms or at all.
We may require additional cash capital resources in order to fund future growth and the development of our businesses, including expansion of our money transfer, airtime business and mobile payment businesses and any investments or acquisitions we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity of international capital and lending markets, governmental regulations over foreign investment and the money transfer and digital financial services industries. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. Moreover, any issuance of equity or equity linked securities could result in significant dilution to our existing shareholders.
We have limited business insurance coverage.
Insurance products currently available in Asia are not as extensive as those offered in more developed regions. Consistent with customary industry practice in Asia, our business insurance is limited and we do not carry business interruption insurance to cover our operations. We have determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured damage to our platforms, technology infrastructures or disruption of our business operations could require us to incur substantial costs and divert our resources, which could have an adverse effect on our business, financial condition and results of operations.
We are subject to risks related to litigation, including intellectual property claims, consumer protection actions and regulatory disputes. Legal proceedings against us could harm our reputation and have a material adverse effect on our business, results of operations, financial condition and prospects.
We may be, and in some instances have been, subject to claims, lawsuits (including class actions and individual lawsuits), government investigations, and other proceedings involving intellectual property, consumer protection, privacy, labor and employment, immigration, import and export practices, competition, accessibility, securities, tax, marketing and communications practices, commercial disputes, and other matters.
We expect that the number and significance of our legal disputes and inquiries will increase as we grow larger, as our business expands in scope and geographic reach, and as our products and services increase in complexity.
Becoming a public company will raise our public profile, which may result in increased litigation. In addition, some of the laws and regulations affecting the Internet, mobile commerce, payment processing, business financing, and employment did not anticipate businesses like ours, and many of the laws and regulations affecting us have been enacted relatively recently. As a result, there is substantial uncertainty regarding the scope and application of many of the laws and regulations to which we are subject, which increases the risk that we will be subject to claims alleging violations of those laws and regulations. In the future, we may also be accused of having, or be found to have, infringed or violated third-party intellectual property rights.
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Regardless of the outcome, legal proceedings can have a material and adverse impact on us due to their costs, diversion of our resources, and other factors. Claimants may seek, and we may become subject to, preliminary or provisional rulings in the course of litigation, including preliminary injunctions requiring us to cease some or all of our operations. We may decide to settle legal disputes on terms that are unfavorable to us. Furthermore, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that we may not choose to appeal or that may not be reversed upon appeal. We may have to seek a license to continue practices found to be in violation of a third party’s rights. If we are required, or choose to enter into, royalty or licensing arrangements, such arrangements may not be available on reasonable terms or at all and may significantly increase our operating costs and expenses. As a result, we may also be required to develop or procure alternative non-infringing technology or discontinue use of infringing technology, and doing so could require significant effort and expense or may not be feasible. In addition, the terms of any settlement or judgment in connection with any legal claims, lawsuits, or proceedings may require us to cease some or all of our operations or pay substantial amounts to the other party and could materially and adversely affect our business.
In addition, the laws and regulations in many jurisdictions in Southeast Asia, including Indonesia, place restrictions on foreign investment in and ownership of entities engaged in a number of business activities. For example, in Indonesia, direct and indirect foreign investment in e-money businesses is capped at 49%. If WalletKu wishes to continue growing its business with a floating fund exceeding IDR1,000,000,000 (approximately US $68,205), it may be required to restructure its ownership structure prior to submitting the application for an e-money license to Bank Indonesia in the future. The restructuring of WalletKu, if required, may impact our ability to consolidate our operations in Indonesia, and we may face uncertainties with our future Indonesian partner, who could potentially have a majority share in WalletKu and effectively control the business. Further, under Indonesian laws and regulations, any agreements containing statements by Indonesian shareholders that they hold shares in an Indonesian company for the benefit of a foreign beneficiary may be rendered void. Currently WalletKu relies on a business partner, PT E2Pay Global Utama, to provide e-money services in Indonesia, and has no plans to submit an application for an e-money license there. If we are unable to successfully manage our expansion into the Indonesian e-money business, WalletKu’s future growth and business development in Indonesia may be materially and adversely effected.
After giving effect to the divestiture of equity interests in certain entities at Closing (the “Divestitures”), Mr. Kong will continue to own a majority of the outstanding shares of Currenc and (i) TNG Asia, (ii) FNTI and (iii) GEA (“the Divested Entities”). As a result of these ownership interests, Currenc and the divested entities could be considered to be affiliates and creditors of the Divested Entities could seek to enforce liabilities of the Divested Entities against Currenc. There can be no assurance that a creditor of the Divested Entities would not successfully be able to hold Currenc liable for actions or debts of the Divested Entities, which could have a negative impact on our operations and financial condition.
An occurrence of a natural disaster, widespread health epidemic or other outbreaks could seriously harm our business, financial condition and results of operations.
Natural disasters, such as fires or floods, the outbreak of a widespread health epidemic, or other events, such as wars, acts of terrorism, political events, environmental accidents, power shortages or communication interruptions could seriously harm our business. The occurrence of a disaster or similar event could materially disrupt our business and operations. These events could also cause us to close our operating facilities temporarily, which would severely disrupt our operations and have a material adverse effect on our business, financial condition and results of operations. In addition, our revenue could be significantly reduced to the extent that a natural disaster, health epidemic or other major event harms the economies of Southeast Asia or any other jurisdictions where we may operate. Our operations could also be severely disrupted if our consumers, merchants or other participants were affected by natural disasters, health epidemics or other major events.
Changes in tax laws, tax incentives, benefits or differing interpretations of tax laws may harm our results of operations.
Changes in tax laws, regulations, related interpretations and tax accounting standards in Southeast Asia or the Cayman Islands may result in a higher tax rate on our earnings, which may significantly reduce our profits and cash flows from operations. In addition, our results of operations and financial condition may decline if certain tax incentives are not retained or renewed. Tax rules in jurisdictions we operate, particularly at the local level, can change without notice. We may not always be aware of all such changes that affect our business and we may therefore fail to pay the applicable taxes or otherwise comply with tax regulations, which may result in additional tax assessments and penalties for our company.
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We are a holding company and do not have any material assets other than the shares of our subsidiaries and any change in our ability to repatriate dividends or other payments from our subsidiaries could materially adversely affect us.
We are a Cayman Islands exempted company with limited liability. Our material assets are our direct and indirect equity interests in our subsidiaries, particularly Tranglo and WalletKu. We are, therefore, dependent upon payments, dividends and distributions from our subsidiaries for funds to pay our operating and other expenses and to pay future cash dividends or distributions, if any, to holders of our Ordinary Shares, and we may have tax costs in connection with any dividend or distribution. Furthermore, exchange rate fluctuations will affect the U.S. Dollar value of any distributions our subsidiaries make with respect to our equity interests in those subsidiaries. See “—Risks Related to Investments Outside of the United States—Fluctuations in foreign currency exchange rates will affect our financial results, which we report in U.S. Dollars.” In addition, since we rely principally on dividends and other payments from our subsidiaries for our cash requirements, any restrictions on such dividends or other payments in the jurisdictions we operate could materially and adversely affect our liquidity, financial condition and results of operations.
We may cease to benefit from assets and licenses held by our subsidiaries that are critical to the operations of our business if our subsidiaries were to declare bankruptcy or become subject to dissolution or liquidation proceedings.
Our future success is significantly dependent upon the continued service of our executives and we do not have priority pledges and liens against the assets of our subsidiaries. If our subsidiaries undergo involuntary liquidation proceedings, third-party creditors may claim rights to some or all of their assets and we may not have priority against such third-party creditors on the assets and licenses of our subsidiaries. If our subsidiaries liquidate, we may take part in the liquidation procedures as a general creditor under the relevant statute or legal framework and recover any outstanding liabilities owed by our subsidiaries.
Developments and the perceptions of risks in other countries, including other emerging markets, the United States and Europe, may harm economies in Southeast Asia and the price of securities of companies operating in Southeast Asia, including the price of our Ordinary Shares.
The market for securities issued by us is influenced by economic and market conditions in Southeast Asia and, to varying degrees, market conditions in other emerging markets, as well as the United States, Europe and other countries. To the extent the conditions of the global markets or economy deteriorate, our business in such markets may be harmed. The weakness in the global economy has been marked by, among other adverse factors, lower levels of consumer and corporate confidence, decreased business investment and consumer spending, increased unemployment, reduced income and asset values in many areas, reduction of global growth rates, currency volatility and limited availability of credit and access to capital. Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to fintech companies.
Crises and political instability in other emerging market countries, the United States, Europe or other countries could decrease investor demand for our Ordinary Shares. The United Kingdom’s exit from the European Union, political developments there, on the European continent and in the United States, hostilities in Ukraine and elsewhere, including the Middle East, as well as potential crises and forms of political instability arising therefrom or any other unforeseen development, may harm our business and the price of our Ordinary Shares.
We conduct money transfer transactions through agents in some regions that are politically volatile or, in a limited number of cases, that are subject to certain OFAC restrictions.
We conduct money transfer transactions through agents in some regions that are politically volatile or, in a limited number of cases, are subject to certain OFAC restrictions. While we are not aware of any such circumstances, it is possible that our money transfer services or other services could be used to facilitate violations of U.S. law or regulations. Such circumstances could result in increased compliance costs, regulatory inquiries, suspension or revocation of required licenses or registrations, seizure or forfeiture of assets and the imposition of civil and criminal fees and penalties on our part. In addition to monetary fines or penalties that we could incur, we could be subject to reputational harm that could have a material adverse effect on our business, financial condition and results of operations.
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Our user metrics and other estimates are subject to inherent challenges in measuring our operating performance.
We regularly review metrics, including the number of our merchants, partners and users and number of transactions, to evaluate growth trends, measure our performance, and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our platforms are used across large populations throughout Southeast Asia. For example, we believe that we cannot distinguish individual users who have multiple accounts. Our user metrics are also affected by technology on certain mobile devices that automatically runs in the background of our applications when another phone function is used, and this activity can cause our system to miscount the user metrics associated with such accounts.
Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of our users were to occur, we may expend resources to implement business measures based on flawed metric or data, or fail to take proper actions to remedy an unfavorable trend. If partners or investors do not perceive our user, geographic, or other operating metrics to accurately represent our user base, or if we discover material inaccuracies in our user, geographic, or other operating metrics, our reputation may be seriously harmed.
Risks Related to Investments Outside of the United States
Changes in the economic, political or social conditions, government policies or regulatory developments in Asia could have a material adverse effect on our business and operations.
Some of our assets and operations are located in, and we derive substantially all of our revenue from Southeast Asia and are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. Accordingly, our business, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in Southeast Asia generally. The Southeast Asian and global economy, markets and levels of consumer spending are influenced by many factors beyond our control, including consumer perception of current and future economic conditions, political uncertainty, employment levels, inflation or deflation, disposable income, interest rates, taxation and currency exchange rates. Furthermore, the Southeast Asia economy differs from most developed markets in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, government policy on public order and allocation of resources. In some of the Southeast Asia markets, governments continue to play a significant role in regulating industry development by imposing industrial policies. Moreover, some local governments also exercise significant control over the economic growth and public order in their respective jurisdictions through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policies, and providing preferential treatment to particular industries or companies.
While the Southeast Asia economy, as a whole, has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in Southeast Asia, or in the policies of the governments or of the laws and regulations in each respective market could have a material adverse effect on the overall economic growth of Southeast Asia. Such developments could adversely affect our business and operating results, lead to reduction in demand for our products and services and adversely affect our competitive position. Many of the governments in Southeast Asia have implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over foreign capital investments or changes in tax regulations. Some Southeast Asia markets have historically experienced low growth in their GDP, significant inflation and/or shortages of foreign exchange. We are exposed to the risk of rental and other cost increases due to potential inflation in the markets in which we operate. While Seamless has been able to absorb these costs as recent global inflationary pressure increased sharply and then moderated slightly, because staff costs represent a significant portion of Seamless’ general expenses and are expected to continue to do so as Seamless expands its operations, higher labor rates may likely reduce Seamless’ profitability and impair its ability to capture market share through aggressive pricing. In the past, some of the governments in Southeast Asia have implemented certain measures, including interest rate adjustments, currency trading band adjustments and exchange rate controls, to control the pace of economic growth. These measures may lead to a decrease in economic activity in Southeast Asia, which may adversely affect our business, financial condition and results of operations.
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In addition, some Southeast Asia markets have experienced, and may in the future experience, political and economic instabilities, which include but are not limited to strikes, demonstrations, protests, marches, coups d’état, guerilla activity, risks of war, terrorism, nationalism or other types of civil disorder, and regulatory changes such as nullification of contract, changes in interest rates or imposition of capital controls. These instabilities and any adverse changes in the socio-political or regulatory environment could increase our costs, increase our exposure to legal and business risks, disrupt our office operations or affect our ability to expand our user base.
Our revenue and net income may be materially and adversely affected by any economic slowdown in any regions of Southeast Asia as well as globally.
We derive substantially all of our revenue from Southeast Asia and are exposed to general economic conditions that affect consumer confidence, consumer spending, consumer discretionary income or changes in consumer purchasing habits. As a result, our revenue and net income could be impacted to a significant extent by economic conditions in Southeast Asia and globally. The Southeast Asia and global economy and markets are influenced by many factors beyond our control, including consumer perception of current and future economic conditions, political uncertainty, employment levels, inflation or deflation, real disposable income, interest rates, taxation and currency exchange rates.
Economic growth Southeast Asia has experienced a mild moderation in recent years, partially due to the slowdown of the Chinese economy since 2012, as well as the global COVID-19 pandemic, global volatility of energy and consumer prices, U.S. monetary policies and other markets, and other factors. Productivity growth in Southeast Asia has also slowed following the 2008 global financial crisis. Southeast Asia will have to cope with potential external and domestic risks to sustain its economic growth. An economic downturn, whether actual or perceived, a further decrease in economic growth rates or an otherwise uncertain economic outlook in Southeast Asia or any other market in which we may operate could have a material adverse effect on our business, financial condition and results of operations.
Uncertainties with respect to the legal system in certain markets in Southeast Asia could adversely affect us.
The legal systems in Southeast Asia vary significantly from jurisdiction to jurisdiction. Some jurisdictions have a civil law system based on written statutes and others are based on common law. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.
Many of the markets in Southeast Asia have not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in such markets. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since local administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy in many of the localities that we operate in. Moreover, local courts may have broad discretion to reject enforcement of foreign awards. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.
Each jurisdiction in Southeast Asia has enacted, and may enact or amend from time to time, laws and regulations governing mobile payment, money transfer, messages, applications, electronic documents and other content through the Internet. The relevant government authorities may prohibit the distribution of information through the Internet that they deem to be objectionable on various grounds, such as public interest or public security, or to otherwise be in violation of local laws and regulations. If any of the information disseminated through our platforms were deemed by any relevant government authorities to violate content restrictions, we would not be able to continue to display such content and could be subject to penalties, including confiscation of the property used in the non-compliant acts, removal of the infringing content, temporary or permanent blocks, administrative fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.
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Furthermore, many of the legal systems in Southeast Asia are based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. There are other circumstances where key regulatory definitions are unclear, imprecise or missing, or where interpretations that are adopted by regulators are inconsistent with interpretations adopted by a court in analogous cases. As a result, we may not be aware of our violation of certain policies and rules until sometime after the violation. In addition, any administrative and court proceedings in Southeast Asia may be protracted, resulting in substantial costs and diversion of resources and management attention.
It is possible that a number of laws and regulations may be adopted or construed to apply to us in Southeast Asia and elsewhere that could restrict our industries. Scrutiny and regulation of the industries in which we operate may further increase, and we may be required to devote additional legal and other resources to address this regulation. For example, existing laws or new laws regarding the regulation of currency, money transfer, mobile payment, money laundering, banking institutions, unclaimed property, e-commerce, consumer and data protection and intermediary payments may be interpreted to adversely affect our business model as well as products and services. Changes in current laws or regulations or the imposition of new laws and regulations in Southeast Asia or elsewhere regarding our industries may slow the growth of our industries and adversely affect our financial position and results of operations.
It will be difficult to acquire jurisdiction and enforce liabilities against our assets based in some Southeast Asian jurisdictions.
Some of our assets are located in Southeast Asia and all of our executive officers and present directors reside outside the United States. As a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors or executive officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and executive officers under federal securities laws. After the completion of the Business Combination, the Chairman and CEO of Currenc will still be residing in Hong Kong. There is uncertainty as to whether the courts of the Hong Kong or the People’s Republic of China (“PRC”), respectively, would recognize or enforce judgments of U.S. courts against us or such directors predicated upon the civil liability provisions of the securities laws of the United States or any state. In addition, it is uncertain whether such Hong Kong or PRC courts would entertain original actions brought in the courts of the Hong Kong or the PRC, against us or such persons predicated upon the securities laws of the United States or any state. Other senior staff like the CFO of Currenc and the whole management team of Tranglo and WalletKu reside outside the United States. Management has been advised that Indonesia, Malaysia and many of the other jurisdictions where we operate do not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Further, it is unclear if extradition treaties now in effect between the United States and some Southeast Asian jurisdictions, such as Indonesia, the Philippines and Malaysia, would permit effective enforcement of criminal penalties under the federal securities laws.
Because TNG Asia’s operations and GEA’s operations are in Hong Kong, a special administrative region of PRC, we might face a risk that the government of the PRC could intervene in or influence their operations at any time, which could result in a material change in TNG Asia’s operations and GEA’s operations and limit their ability to do business with Currenc which would reduce our revenues and could reduce the value of the Ordinary Shares.
Currently, the operation of TNG Asia is regulated by Hong Kong Monetary Authority, whereas the operation of GEA is regulated by Hong Kong Custom and Excises Department. Seamless is required to obtain the approval of the Hong Kong Monetary Authority for the divestiture of TNG Asia (which Seamless has previously obtained); however, none of Seamless, TNG Asia and GEA, or any of Seamless’ subsidiaries, are required to obtain any other permissions or approvals from any PRC authorities or regulators to operate their business. The PRC government, however, holds sovereign authority over Hong Kong and could choose in the future to: (1) exercise significant oversight and discretion over the conduct of TNG Asia’s and GEA’s business; and/or (2) intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals. In the event that the Company inadvertently concluded that relevant permissions or approvals were not required or that the Company did not receive or maintain relevant permissions or approvals required, any action taken by the PRC government could significantly limit or completely hinder the operations of TNG Asia and GEA in Hong Kong and could cause the value of such businesses to significantly decline or be worthless. Should the PRC government choose to exercise additional influence or control over Hong Kong businesses like TNG Asia and GEA through the promulgation of new laws or regulations applicable to Hong Kong, the Company could be required to obtain more licenses, permits, approvals or certificates, and the Company’s business, financial condition and results of operations could be adversely affected. In addition, TNG Asia and GEA businesses in aggregate constitute 7.2% TPV, or 7.4% of remittance revenue to Tranglo’s remittance business for the six months ended June 30, 2024, which imply 4.9% total revenue, or 7.0% of gross profit for the six months ended June 30, 2024. Post-Divestiture, based on the six months ended June 30, 2024 operating results, Seamless expects that the percentage of revenue generated in Hong Kong and the PRC would continue to represent approximately 7.6% of Seamless Group’s total revenue as TNG Asia and GEA are expected to remain customers after the Divestitures, and action by the PRC could reduce those revenues and materially affect our business and results of operations.
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Further, Currenc does not consider itself a PRC operating entity or a China-based issuer, in particular, as specified in the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines promulgated by the CSRC on February 17, 2023, which became effective on March 31, 2023. According to the Trial Measures, an issuer is a “domestic [Chinese] company” if the issuer meets both of the following conditions and thus, subject to the requirements for domestic [Chinese] companies seeking to offer or list securities overseas, both directly and indirectly, thereunder: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; and (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China. Seamless’ only operations in Hong Kong are through TNG Asia and GEA, and it has no operations in mainland China. Following the divestiture of TNG Asia and GEA, which will occur prior to the consummation of the Business Combination, Currenc will not own or control any equity interest in any PRC company or operate any business in China, and Seamless did not, and Currenc will not, have 50% or more of its total assets, net assets, revenues or profits located or generated in China. As such, Seamless believes that the Trial Measures do not apply to the Business Combination.
However, applicable laws, regulations, or interpretations of PRC may change, and the relevant PRC government agencies could reach a different conclusion. If prior approval was required while Seamless inadvertently concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require Currenc to obtain the approval in the future, it may face regulatory actions or other sanctions from relevant Chinese regulatory authorities. These authorities may take actions that could have a material adverse effect upon its business, financial condition, results of operations, reputation and prospects, as well as the trading price of its securities. In addition, any changes in PRC law, regulations, or interpretations may severely affect its operations. Further, if Currenc is required by the Trial Measures to file with the CSRC, it cannot assure you that it will be able to complete such filings in a timely manner, or even at all.
Fluctuations in foreign currency exchange rates will affect our financial results, which we report in U.S. Dollars.
We operate in multiple jurisdictions, which exposes us to the effects of fluctuations in currency exchange rates. We earn revenue denominated in Indonesian Rupiah, Singapore Dollars, Malaysian Ringgit and U.S. Dollars, among other currencies. Fluctuations in the exchange rates between the various currencies that we use could result in expenses being higher and revenue being lower than would be the case if exchange rates were stable. We cannot assure you that movements in foreign currency exchange rates will not have a material adverse effect on our results of operations in future periods. We do not generally enter into hedging contracts to limit our exposure to fluctuations in the value of the currencies that our businesses use. We cannot assure you that central banks of the jurisdictions in which we operate will, or would be able to, intervene in the foreign exchange market in the future to achieve stabilization or other objectives, or that such intervention would be effective in achieving the intended objectives. Furthermore, the substantial majority of our revenue is denominated in emerging markets currencies. Because fluctuations in the value of emerging markets currencies are not necessarily correlated, there can be no assurance that our results of operations will not be adversely affected by such volatility.
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Restrictions on currency exchange in certain countries may limit our ability to receive and use our revenue effectively.
A large majority of our revenue and expenses are denominated in Singapore Dollars, Malaysian Ringgit, United States Dollars and Indonesian Rupiah. If revenue denominated in Singapore Dollars, Malaysian Ringgit, United States Dollars and Indonesian Rupiah increase or expenses denominated in such currencies decrease in the future, we may need to convert a portion of our revenue into other currencies to meet our foreign currency obligations, including, among others, payment of dividends declared, if any, in respect of our Ordinary Shares. In Malaysia, residents are allowed to buy or sell Ringgit against foreign currency with, amongst others, a licensed onshore bank (other than a licensed international Islamic bank) on a spot basis. In Indonesia, a party wishing to convert Indonesian Rupiah to foreign currency exceeding certain thresholds is required to submit certain supporting documents to the bank handling the foreign exchange conversion, including the underlying transaction documents and a duly stamped statement confirming that the underlying transaction documents are valid and that the foreign currency will only be used to settle the relevant payment obligations. For conversions not exceeding the threshold, the person only needs to declare in a duly stamped letter that its aggregate foreign currency purchases have not exceeded the monthly threshold set forth in the Indonesian banking system. We cannot guarantee that we will be able to convert such local currencies into U.S. Dollars or other foreign currencies to pay dividends or for other purposes on a timely basis or at all.
The ability of our subsidiaries in certain countries to distribute dividends to us may be subject to restrictions under their respective laws.
We are a holding company, and our subsidiaries are located throughout Southeast Asia, including Malaysia, Indonesia and Singapore. Part of our primary internal sources of funds to meet our cash needs is our share of the dividends, if any, paid by our subsidiaries. The distribution of dividends to us from our Indonesian subsidiary, WalletKu, is subject to a requirement to maintain a general reserve of at least 20% of the paid up capital of the subsidiary. Although there are currently no foreign exchange control or other regulations which restrict the ability of our subsidiaries in Malaysia, Indonesia and Singapore to distribute dividends to us, the relevant regulations may change and the ability of these subsidiaries to distribute dividends to us may be restricted in the future.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are an exempted company under Cayman Islands law.
We are an exempted company registered by way of continuation under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Island companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the registers of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies. Our directors have discretion under our post-offering memorandum and articles of association that will become effective immediately prior to completion of this offering to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
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As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Currenc Securities” and “Comparison of Corporate Governance and Shareholder Rights.”
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and substantially all of our assets are located outside the United States. Substantially all of our current operations are conducted in Singapore, Malaysia and Indonesia. In addition, most of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, Singapore, Malaysia and Indonesia may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
As an exempted company registered by way of continuation in the Cayman Islands, we may be permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.
As a Cayman Islands exempted company listed on the Nasdaq, we are subject to Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. After June 30, 2025, we qualify as a foreign private issuer. Currently, we do not plan to rely on home country practice with respect to our corporate governance after we complete this offering. To the extent we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would enjoy under Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.
Risks Related to the Government Regulation Regulatory Framework Applicable to Us
Our business is subject to extensive government regulation and oversight across various geographies and our status under these regulations may change.
We operate in a highly regulated industry that is rapidly evolving, which requires us to follow regulatory updates and act on a timely basis. We currently principally operate in Singapore, Malaysia and Indonesia, where our business and operations are subject to numerous governmental and industry regulators. Because the industries we operate in are relatively new in our markets, especially the money transfer, payment solutions and e-wallet services industries, the relevant laws and regulations, as well as their interpretations, are often unclear and evolving. Compliance with present or future regulation could be costly, and breaches or violations could expose us to substantial liability, force us to change our business practices or force us to cease offering our current services. Furthermore, regulators may require specific business continuity and disaster recovery plans and may conduct rigorous testing of such plans. Responding to such increased scrutiny may be costly and time-consuming and may divert our resources from other business priorities. The implementation of new regulations or guidelines could require us to change the way we conduct our money service operator or other payment system operator services or the licenses that we require, incur new expenses or retain legal counsel or additional staff to ensure compliance with such regulations. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. See “Seamless’ Business—Regulation” for further details on applicable regulations.
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We may fail to obtain, maintain or renew requisite licenses and approvals.
While we believe that we currently have all material licenses and approvals necessary to conduct our business, we may not be able to obtain all the licenses and approvals that may be deemed necessary to provide the products and services we plan to offer. Because the industries we operate in are relatively new in our markets, especially the money transfer services businesses, the relevant laws and regulations, as well as their interpretations, are often unclear and evolving. This can make it difficult to know which licenses and approvals are necessary, or the processes for obtaining them. For these same reasons, we also cannot be certain that we will be able to maintain the licenses and approvals that we have previously obtained, or that once they expire we will be able to renew them. We also believe that some of our business operations fall outside the scope of licensing requirements, or benefit from certain exemptions, making it not necessary to obtain certain licenses or approvals. We cannot be sure that our interpretations of the rules and their exemptions have always been or will be consistent with those of the local regulators.
As we expand our businesses, in particular our money service business, we may be required to obtain new licenses and will be subject to additional laws and regulations in the markets we plan to operate in.
If we fail to obtain, maintain or renew any required licenses or approvals or make any necessary filings or are found to require licenses or approvals that we believed were not necessary or we were exempted from obtaining, we may be subject to various penalties, such as confiscation of the revenue or assets that were generated through the unlicensed business activities, imposition of fines, suspension or cancelation of the applicable license, written reprimands, termination of third-party arrangements, suspension of business activities, criminal prosecution and the discontinuation or restriction of our operations. Any such penalties may disrupt our business operations and materially and adversely affect our business, financial condition and results of operations.
We are subject to anti-money laundering laws and regulations.
We are subject to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal activities. We have programs designed to comply with new and existing legal and regulatory requirements. However, any errors, failures, or delays in complying with federal, state or foreign anti-money laundering or counter-terrorist financing laws and regulations by us or our partners could result in significant criminal and civil lawsuits, penalties, forfeiture of significant assets, or other enforcement actions, as well as reputational harm.
Regulators around the world have increased their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor international and domestic transactions. Regulators regularly re-examine thresholds of the number of transactions at which we must obtain and keep applicable records or verify identities of customers and any change in such thresholds could result in greater costs for compliance. Costs associated with fines or enforcement actions, changes in compliance requirements, or limitations on our ability to grow our business could harm our business and any new requirements or changes to existing requirements could impose significant costs, result in delays to planned product and service improvements, make it more difficult for new customers to join our network and reduce the attractiveness of our products and services.
A former director of one of our subsidiaries was required to resign his position by a local regulator.
A former director and officer of a subsidiary was required by a regulator to resign his position as director and officer in that subsidiary for reasons relating to whether he was fit and proper to serve as director. While we do not anticipate the regulator’s actions having any direct effect on us or our operations as our subsidiary has not been subject to any warning or sanctions in relation to this incident, this incident and negative perceptions regarding it could negatively affect the brand names of our businesses and our reputation in our industry, could cause customers to switch to other service providers, and could cause potential and existing funding sources, customers, service providers and investors to decide to not enter into transactions, or associate, with us, which could have a negative impact on our business and results of operations.
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Risks Related to Our Organization and Structure
Our management team may not successfully or efficiently manage its transition to being a public company.
As a public company, we have incurred new obligations relating to our reporting, procedures, and internal controls. These new obligations and attendant scrutiny will require investments of significant time and energy from our executives and could divert their attention away from the day-to-day management of our business, which in turn could adversely affect our financial condition or operating results.
The members of our management team have extensive experience leading complex organizations. However, they have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that specifically govern public companies.
We are an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination, (b) in which we has total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of Holdco Shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, such as an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares less attractive because we intend to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find our shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for our shares and the market price and trading volume of our shares may be more volatile and decline significantly.
We will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.
As a result of the consummation of the Business Combination, we face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, Public Company Accounting Oversight Board (the “PCAOB”) and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements have and will require us to carry out activities we have not done previously. For example, we have created new board committees and will adopt new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified, we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of us. It may also be more expensive to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on the Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
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Currenc will incur significantly increased costs and devote substantial management time as a result of operating as a public company, particularly after it is no longer an “emerging growth company.”
After consummation of the Business Combination, Currenc will incur significant legal, accounting and other expenses that Seamless did not incur as a private company and INFINT did not incur as a blank check company. For example, it will be required to comply with certain of the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Currenc expects that compliance with these requirements with respect to Seamless’ business and operations will increase its legal and financial compliance costs and will make some activities more time consuming and costly. In addition, Currenc expects that its management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. In particular, it expects to incur significant expenses and devote substantial management effort towards ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. Seamless is still in the process of compiling the system and processing documentation needed to comply with such requirements. Currenc may not be able to complete its evaluation, testing and any required remediation in a timely fashion. In that regard, Currenc anticipates that it will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
However, for as long as Currenc remains an “emerging growth company” as defined in the JOBS Act, it intends to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Under the JOBS Act, “emerging growth companies” can delay adopting new or revised accounting standards until such time as those standards apply to private companies. Currenc expects to continue INFINT’s election to accept this exemption from new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”
After Currenc is no longer an “emerging growth company,” it expects to incur additional management time and cost to comply with the more stringent reporting requirements, including complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.
Currenc cannot predict or estimate the amount of additional costs it may incur as a result of becoming a public company or the timing of such costs.
We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect our billing and reporting.
To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect our manufacturing operations, customer billing and reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our customers, cause harm to our reputation and brand and could also result in errors in our financial and other reporting. We expect that complying with these rules and regulations will substantially increase our legal and financial compliance costs and will make some activities more time-consuming and costly. These increased costs will increase our net loss and we cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.
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Our management has limited experience in operating a U.S.-listed public company.
Our management has limited experience in the management of a U.S.-listed public company. Our management team may not successfully or effectively manage our transition to a U.S.-listed public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the combined company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of U.S.-listed public companies. The development and implementation of the standards and controls necessary for the combined company to achieve the level of accounting standards required of a public company listed on a public exchange in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.
Currenc’s corporate actions will be substantially controlled by its chairman of the board, who will have the ability to exert significant influence over important corporate matters that require approval of shareholders, which may deprive you of an opportunity to receive a premium for your Ordinary Shares and materially reduce the value of your investment.
Alexander Kong, Currenc’s chairman of the board, beneficially owns approximately 58.89% of the issued and outstanding Ordinary Shares. As a result, he has substantial influence over our business, including significant corporate actions such as mergers, consolidations, sales of all or substantially all of its assets, election of directors and other significant corporate actions. He may take actions that are not in the best interest of Currenc’s other shareholders.
Following the completion of the Business Combination, after June 30, 2025, Currenc qualifies as a foreign private issuer within the meaning of the rules under the Exchange Act, and as such Currenc will be exempt from certain provisions applicable to United States domestic public companies.
Currenc qualifies as a foreign private issuer under the Exchange Act following the consummation of the Business Combination after June 30, 2025, because Mr. Kong, the Chairman holds 58% of the outstanding Ordinary Shares, as such less than 50% of Currenc’s outstanding voting securities are held by U.S. residents. After June 30, 2025, Currenc is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: (1) the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC; (2) the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (3) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (4) the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
As a foreign private issuer, Currenc will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, Currenc intends to publish its results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of NASDAQ. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information Currenc is required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. Accordingly, after the Business Combination, if you continue to hold Ordinary Shares and warrants (collectively, “Currenc securities”), you may receive less or different information about Currenc than you currently receive about INFINT or that you would receive about a U.S. domestic public company.
Even though Currenc qualifies as a foreign private issuer, Currenc could lose its status as a foreign private issuer under current SEC rules and regulations if more than 50% of the outstanding Ordinary Shares become directly or indirectly held of record by U.S. holders and any one of the following is true: (1) the majority of Currenc’s directors or officers are U.S. citizens or residents; (2) more than 50% of Currenc’s assets are located in the United States; or (3) Currenc’s business is administered principally in the United States. If Currenc loses its status as a foreign private issuer in the future, it will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if it were a company incorporated in the United States. If this were to happen, Currenc would likely incur substantial costs in fulfilling these additional regulatory requirements and members of Currenc’s management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.
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Currenc may be a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. investors who own Ordinary Shares following the completion of the Business Combination.
If Currenc is or becomes a PFIC, for U.S. federal income tax purposes for any taxable year during which a U.S. Holder (a beneficial owner of Ordinary Shares or warrants, who or that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person) holds Ordinary Shares or warrants, certain adverse U.S. federal income tax consequences may apply to such U.S. Holder. The annual PFIC income and asset tests in respect of Currenc will be applied based on the assets and activities of the combined business. Whether Currenc is a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of its income and assets, and the market value of its and its subsidiaries’ assets. Further, whether Currenc is treated as a PFIC for U.S. federal income tax purposes is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to uncertainty. Accordingly, there can be no assurance that Currenc will not be treated as a PFIC for any taxable year.
If Currenc were treated as a PFIC, a U.S. Holder of Ordinary Shares or warrants may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions, interest charges on certain taxes treated as deferred, and additional reporting requirements. Certain elections (including a “qualified electing fund” or a mark-to-market election) may be available to U.S. Holders of Ordinary Shares to mitigate some of the adverse tax consequences resulting from PFIC treatment, but U.S. Holders will not be able to make similar elections with respect to Currenc warrants.
The transfer of our Ordinary Shares may be subject to U.S. estate and generation-skipping transfer tax.
Because our Ordinary Shares will be treated as shares of a U.S. domestic corporation for U.S. federal income tax purposes, the U.S. estate and generation-skipping transfer tax rules generally may apply to a non-U.S. holder’s ownership and transfer of our Ordinary Shares.
Risks Related an Investment in of Our Securities
An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly due to factors specific to us as well as to general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
Our warrants are not currently listed on a national securities exchange.
On November 28, 2023, NYSE notified INFINT and publicly announced that NYSE determined to commence proceedings to delist INFINT’s public warrants from NYSE and that trading in the INFINT’s warrants would be suspended immediately due to “abnormally low” trading price pursuant to Section 802.01D of the NYSE Listed Company Manual. Trading in the INFINT’s warrants was suspended immediately. Following the notice of delisting and suspension of trading of public warrants by the NYSE, the public warrants were delisted from the NYSE effective December 13, 2023. As a result, the public warrants may only be available for quotation on over-the-counter market, which may result in a limited ability to engage in transactions in the public warrants providing warrant holders with limited or no liquidity. The public warrant holders may be unable to sell their securities, unless a market can be fully developed and sustained.
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Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our shares.
If we fail to satisfy Nasdaq’s continued listing requirements, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our shares. Such a delisting would likely have a negative effect on the price of our shares and would impair your ability to sell or purchase our shares when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our shares to become listed again, stabilize the market price or improve the liquidity of our shares, prevent our shares from dropping below Nasdaq’s minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; | |
| ● | a determination that our Ordinary Shares are “penny stock” which will require brokers trading in the Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The Ordinary Shares being registered in this prospectus represent a substantial percentage of our public float and of our outstanding Ordinary Shares, and the sale of such shares could cause the market price of Ordinary Shares to decline significantly.
This prospectus relates to the offer and resale from time to time, upon the expiration of lock-up agreements, if applicable, by the Selling Securityholders of (a) up to an aggregate of 40,930,554 Ordinary Shares, consisting of (i) up to an aggregate of 40,000,000 Ordinary Shares issued at $10.00 per share to the former shareholders of Seamless, pursuant to the terms of the Business Combination Agreement, (ii) 400,000 Ordinary Shares issued to the PIPE Investor in consideration for the PIPE Investor’s subscription of the PIPE Note, (iii) up to 194,444 PIPE Note Shares issuable upon conversion of the PIPE Note, (iv) 136,110 Ordinary Shares issuable upon the exercise of the PIPE Warrants at an exercise price of $11.50 per share, (v) 100,000 Ordinary Shares to Roth Capital Partners, LLC for advisory services and (vi) 100,000 Ordinary Shares to KEMP Services Limited for legal advisory services.
The Ordinary Shares being registered for resale in this prospectus represent a substantial percentage of our public float and of our outstanding Ordinary Shares. The number of shares being registered in this prospectus represents approximately 87.35% of the total Ordinary Shares outstanding as of as of the date of this prospectus (assuming exercise of all PIPE Warrants and conversion of the PIPE Note). The sale of the securities being registered in this prospectus, or the perception in the market that such sales may occur, could result in a significant decline in the public trading price of our Ordinary Shares.
In addition, some of the shares being registered for resale were acquired by the Selling Securityholders for nominal consideration or purchased for prices considerably below the current market price of the Ordinary Shares. Even though the current market price is significantly below the price at the time of the INFINT IPO, certain Selling Securityholders have an incentive to sell because they will still profit on sales due to the lower price at which they acquired their shares as compared to the public investors. In particular, the PIPE Investor may experience a positive rate of return on the securities they purchased due to the differences in the purchase prices described above, to the extent it acquired such securities for less than the relevant trading price, and the public securityholders may not experience a similar rate of return on the securities they purchased due to the differences in the purchase prices described above.
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The market price of our Ordinary Shares may decline following the Business Combination.
The market price of our Ordinary Shares may decline following the Business Combination for a number of reasons including if:
| ● | investors react negatively to the prospects of our business; |
| ● | the effect of the Business Combination on our business and prospects is not consistent with the expectations of financial or industry analysts; or |
| ● | we do not achieve the perceived benefits of the Business Combination as rapidly or to the extent anticipated by financial or industry analysts. |
If securities or industry analysts do not publish research or reports about our business, if they change their recommendations regarding our Ordinary Shares or if our operating results do not meet their expectations, our Ordinary Shares price and trading volume could decline.
The trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our businesses. If no securities or industry analysts commence coverage of us, the trading price for our Ordinary Shares could be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish unfavorable research about its businesses, or if our operating results do not meet analyst expectations, the trading price of our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Ordinary Shares could decrease, which might cause our Ordinary Share price and trading volume to decline.
Our Ordinary Share price may decline and you could lose all or part of your investment as a result.
The trading price of our Ordinary Shares is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your Ordinary Shares at an attractive price due to a number of factors such as those listed in “Risks Related to Our Business, Industry, and Operations” and the following:
| ● | results of operations that vary from the expectations of securities analysts and investors; |
| ● | results of operations that vary from our competitors; |
| ● | changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors; |
| ● | declines in the market prices of stocks generally; |
| ● | strategic actions by us or our competitors; |
| ● | announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; |
| ● | announcements of estimates by third parties of actual or anticipated changes in the size of our customer base or the level of customer engagement; |
| ● | any significant change in our management; |
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| ● | changes in general economic or market conditions or trends in our industry or markets; |
| ● | changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
| ● | additional securities being sold or issued into the market by us or any of the existing shareholders or the anticipation of such sales, including if we issue shares to satisfy restricted stock unit related tax obligations or if existing shareholders sell shares into the market when applicable “lock-up” periods end; |
| ● | investor perceptions of the investment opportunity associated with our Ordinary Shares relative to other investment alternatives; |
| ● | the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; |
| ● | litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; |
| ● | guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; |
| ● | the development and sustainability of an active trading market for our Ordinary Shares; |
| ● | actions by institutional or activist shareholders; |
| ● | developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; |
| ● | changes in accounting standards, policies, guidelines, interpretations or principles; and |
| ● | other events or factors, including those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events. |
These broad market and industry fluctuations may adversely affect the market price of our Ordinary Shares, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Ordinary Shares is low. In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we are involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
Because there are no current plans to pay cash dividends on our Ordinary Shares for the foreseeable future, you may not receive any return on investment unless you sell your Ordinary Shares at a price greater than what you paid for it.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment, and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on our Ordinary Shares will be at the sole discretion of our Board. Our Board may consider general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications of the payment of dividends by us to our shareholders or by our subsidiaries to us and such other factors as our Board may deem relevant. As a result, you may not receive any return on an investment in our Ordinary Shares unless you sell your Ordinary Shares for a price greater than that which you paid for it.
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Our shareholders may experience dilution in the future.
The percentage of our Ordinary Shares owned by current shareholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may grant to our directors, officers and employees, exercise of our warrants. Such issuances may have a dilutive effect on our earnings per share, which could adversely affect the market price of our Ordinary Shares.
Future sales, or the perception of future sales, by us or our shareholders in the public market could cause the market price for our Ordinary Shares to decline.
The sale of our Ordinary Shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of our Ordinary Shares. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
In connection with the Business Combination, INFINT shareholders and Seamless shareholders, who own 64.01% of Currenc Ordinary Shares following the Business Combination, have agreed with us, subject to certain exceptions, not to lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase an option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the shares issued in connection with the Business Combination (the “Lock-up Shares”), enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such shares, or publicly disclose the intention to do any of the foregoing, whether any of these transactions are to be settled by delivery of any such shares or other securities, in cash, or otherwise, subject to limited exceptions, for a period beginning at the closing of the Business Combination and ending on the earlier of: (i) six months after the Closing and (ii) the date after the Closing on which Currenc consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Currenc’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property. In connection with the Closing, INFINT and Seamless waived lockup restrictions on 2,100,000 shares held by the Sponsor.
In addition, the Ordinary Shares reserved for future issuance under Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to any applicable vesting requirements, lockup agreements and other restrictions imposed by law. A total number of shares equal to 4,636,091 have been reserved for future issuance under the Incentive Plan. We expect to file one or more registration statements on Form S-8 under the Securities Act to register Ordinary Shares or securities convertible into or exchangeable for Ordinary Shares issued pursuant to the Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market.
In the future, we may also issue its securities in connection with investments or acquisitions. The amount of Ordinary Shares issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding Ordinary Shares. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our shareholders.
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Sales of our Ordinary Shares, or the perception of such sales, pursuant to the registration statement of which this prospectus forms a part may have negative pressure on the public trading price of our Ordinary Shares.
The Selling Securityholders will determine the timing, pricing and rate at which they sell the shares being registered for resale on the registration statement of which this prospectus forms a part into the public market. Significant sales of Ordinary Shares pursuant to the registration statement of which this prospectus forms a part may have negative pressure on the public trading price of our Ordinary Shares. The shares being registered for resale currently represent approximately 87.35% of the total number of shares outstanding, based on the number of Ordinary Shares outstanding as of the date of this prospectus (assuming exercise of all PIPE Warrants and conversion of the PIPE Note). Also, even though the current trading price is significantly below the Company’s initial public offering price, based on the closing price of our Ordinary Shares on , 2024, certain private investors may have an incentive to sell their shares, because they will still profit on sales due to the lower prices at which they purchased their shares as compared to the public investors.
While certain Selling Securityholders may experience a positive rate of return based on the current trading price of our Ordinary Shares, public securityholders may not experience a similar rate of return on the securities they purchased due to differences in the purchase prices and the current trading price of our Ordinary Shares. Based on the closing price of the Ordinary Shares on September 17, 2024, which was $2.32 per share, and assuming the resale by the Selling Securityholders of all 40,930,554 Ordinary Shares being registered on the registration statement of which this prospectus forms a part, the Selling Securityholders could earn approximately $94.96 million in aggregate proceeds from the resale of such shares. The 40,000,000 Exchange Consideration Shares were issued at $10.00 per share and the 400,000 Commitment Shares were issued to the PIPE Investor in consideration for the PIPE Investor’s subscription of the PIPE Note. The 136,110 Ordinary Shares issuable upon exercise of the PIPE Warrants will be issued at a price of $11.50 per share, the 194,444 Ordinary Shares issuable upon conversion of the PIPE Note are convertible at $10.00 per share, and, therefore, based on the closing price of the Ordinary Shares on September 17, 2024, such holders would not earn any profit from the resale of such shares.
The unaudited pro forma financial information included herein is not indicative of what our actual financial position or results of operations would have been.
The unaudited pro forma financial information included herein is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated.
There is no guarantee that the public warrants or private warrants will ever be in the money; they may expire worthless or the terms of warrants may be amended.
The exercise price for the public warrants and private warrants is $11.50 per ordinary share. There is no guarantee that the public warrants or private warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.
In addition, our public warrants and private warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and INFINT. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any other change. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares and their respective affiliates and associates have of Ordinary Shares purchasable upon exercise of a warrant.
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Our Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
Our Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against Currenc arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that we find favorable for disputes with Currenc, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board.
We may redeem the unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Ordinary Shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise its redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Additionally, ninety (90) days after the warrants become exercisable, we may redeem all (but not less than all) of the outstanding warrants at $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption (during which time the holders may exercise their warrants prior to redemption for the number of shares set forth in the table under the section captioned “Description of Securities — Warrants — Redemption of Warrants — Redemption of Warrants for Ordinary Shares”) if the following conditions are satisfied: (i) the last reported sale prices of the Ordinary Shares equals or exceeds $18.00 per share (as may be adjusted for stock splits, stock dividends, reorganizations, recapitalizations or the like) on the trading day prior to the date of the notice; and (ii) there is an effective registration statement covering the issuance of Ordinary Shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given. In either case, redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
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The future exercise of registration rights may adversely affect the market price of our Ordinary Shares.
Prior to Closing, we entered into a registration rights agreement that obligate us to register the Ordinary Shares received by certain significant former INFINT and Seamless shareholders as part of the Business Combination. The holders will have certain “piggy-back” registration rights with respect to registration statements filed following the Business Combination, subject to certain requirements and customary conditions. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Ordinary Shares.
We have filed and intend to maintain this registration statement to which this prospectus forms a part in order to facilitate registration of those sales. The registration of these securities will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our securities.
There may be sales of a substantial amount of our Ordinary Shares after the Business Combination by current shareholders, and these sales could cause the price of our Ordinary Shares to fall.
Future sales of Currenc’s Ordinary Shares may cause the market price of its securities to drop significantly, even if its business is doing well.
Upon the effectiveness of this registration statements we are filing pursuant to the registration rights agreement, these parties may sell large amounts of our Ordinary Shares in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in our Ordinary share price or putting significant downward pressure on the price of our Ordinary Shares.
Sales of substantial amounts of our Ordinary Shares in the public market after the Business Combination, or the perception that such sales will occur, could adversely affect the market price of our Ordinary Shares and make it difficult for us to raise funds through securities offerings in the future.
Future resales of our Ordinary Shares may cause the market price of our securities to drop significantly, even if our business is doing well.
In connection with the Business Combination, INFINT shareholders and Seamless shareholders, and certain of our officer and directors entered into a lock-up agreement pursuant to which they agreed, subject to certain exceptions, not to lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase an option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the shares issued in connection with the Business Combination (the “Lock-up Shares”), enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such shares, or publicly disclose the intention to do any of the foregoing, whether any of these transactions are to be settled by delivery of any such shares or other securities, in cash, or otherwise, subject to limited exceptions. Such restrictions began at Closing and end the earliest of: (a) six months from the Closing, (b) the date we consummate a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of our shareholders having the right to exchange their Ordinary Shares for cash, securities or other property.
The Sponsor is subject to a lock-up pursuant to a letter agreement, entered into at the time of the INFINT IPO, among INFINT, the Sponsor and the other parties thereto, pursuant to which the Sponsor is subject to a lock-up beginning on the Closing and end the earliest of: (a) nine months from the Closing, (b) the date we consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of our shareholders having the right to exchange their Ordinary Shares for cash, securities or other property and (c) the date on which the closing sale price of our Ordinary Shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations and the like) for any twenty (20) trading days within any thirty (30) trading day period commencing after the Closing. In connection with the Closing, INFINT and Seamless waived lockup restrictions on 2,100,000 shares held by the Sponsor.
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However, following the expiration of such lock-ups, the Sponsor and the holders of Lock-Up Shares will not be restricted from selling our Ordinary Shares held by them, other than by applicable securities laws. As such, sales of a substantial number of Ordinary Shares in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Ordinary Shares. In connection with the Closing, in order to meet Nasdaq unrestricted public float requirements, the parties agreed to waive lock-up restrictions on 2,100,000 shares held by the Sponsor.
The shares held by Sponsor and the Lock-Up Shareholders may be sold after the expiration of their applicable lock-up periods. As restrictions on resale end and registration statements (filed after the Closing to provide for the resale of such shares from time to time) are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in our Ordinary share price or the market price of our Ordinary Shares could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
Our Warrants may not be exercised at all or may be exercised on a cashless basis and we may not receive any cash proceeds from the exercise of the Warrants.
The exercise price of the PIPE Warrants and other warrants may be higher than the prevailing market price of the underlying Ordinary Shares. The exercise price of the PIPE Warrants and other warrants is subject to market conditions and may not be advantageous if the prevailing market price of the underlying Ordinary Shares is lower than the exercise price. The cash proceeds associated with the exercise of PIPE Warrants and other warrants to purchase our Ordinary Shares are contingent upon our stock price. The value of our Ordinary Shares will fluctuate and may not align with the exercise price of the warrants at any given time. If the PIPE Warrants or other warrants are “out of the money,” meaning the exercise price is higher than the market price of our common stock, there is a high likelihood that the PIPE Warrant or other warrant holder may choose not to exercise its warrants. As a result, we may not receive any proceeds from the exercise of the PIPE Warrants and other warrants.
Furthermore, with regard to the PIPE Warrants and other warrants, it is possible that we may not receive cash upon their exercise since the PIPE Warrants and other warrants may be exercised on a cashless basis. A cashless exercise allows warrant holders to convert the warrants into shares of our Ordinary Shares without the need for a cash payment. Instead of paying cash upon exercise, the PIPE Warrant or other warrant holder would receive a reduced number of shares based on a predetermined formula. As a result, the number of shares issued through a cashless exercise will be lower than if the PIPE Warrants or other warrants were exercised on a cash basis, which could impact the cash proceeds we receive from the exercise of such warrants.
The Warrants may only be exercised for cash provided there is then an effective registration statement registering the Ordinary Shares issuable upon the exercise of such Warrants. In the event the Ordinary Shares underlying the PIPE Warrants are not registered within 12 months of the issuance of the PIPE Warrants, the holder has the option to cashless exercise each warrant for 0.8 Ordinary Shares, pursuant to an available exemption from registration under the Securities Act.
We may from time to time need additional financing to fund operations and to expand our business, including to pursue acquisitions and other strategic opportunities.
As a result of the Business Combination, we had a net cash outflow of approximately $2.4 million, consisting of approximately $0.8 million in net proceeds from the trust account (net of redemptions) and $1.75 million in net proceeds from the PIPE Offering, net of transaction costs related to the Business Combination and other costs paid at Closing of approximately $4.9 million.
We intend to fund our current working capital needs in the ordinary course of business and to continue to expand our business with our existing cash and cash equivalents, and cash flows from operating activities. However, we may from time to time need additional financing to fund operations and to expand our business. We may, from time to time, explore additional financing sources to lower our cost of capital, which could include equity, equity-linked and debt financing. In addition, from time to time, we may evaluate acquisitions and other strategic opportunities. If we elect to pursue any such investments, we may fund them with internally generated funds, bank financing, the issuance of other debt or equity or a combination thereof. There is no assurance that any such financing or funding would be available to us on acceptable terms or at all. Sales of securities registered under the registration statement to which this prospectus forms a part could lower the market price of our Ordinary Shares and warrants. We do not believe this would harm our chances of raising capital, but could affect the sale price and number of securities we need to issue.
There is no assurance that the holders of the PIPE Warrants will elect to exercise any or all of the warrants, which could impact our liquidity position. To the extent that the PIPE Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the warrants will decrease. We believe the likelihood that a PIPE Warrant holder will exercise its warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Ordinary Shares. If the market price for our Ordinary Shares is less than the applicable exercise price of $11.50, subject to adjustment as described herein, we believe such holder will be unlikely to exercise its PIPE Warrants.
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USE OF PROCEEDS
All of the Ordinary Shares offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. The Company will not receive any of the proceeds from these sales.
The Company will receive up to an aggregate of approximately $1.6 million from the exercise of the PIPE Warrants, assuming the exercise in full of all of the PIPE Warrants for cash. The Company expects to use the net proceeds from the exercise such warrants for other general corporate purposes. There is no assurance that the holders of the PIPE Warrants will elect to exercise any or all of such warrants. To the extent that warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of such warrants will decrease. See “Description of Capital Stock” for additional information regarding the warrants.
There is no assurance that the holders of the PIPE Warrants will elect to exercise any or all of the Warrants, which could impact our liquidity position. To the extent that the Warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the PIPE Warrants will decrease. We believe the likelihood that PIPE Warrant holder will exercise its PIPE Warrants, and therefore the amount of cash proceeds that we would receive is, among other things, dependent upon the market price of our Ordinary Shares. If the market price for our Ordinary Shares is less than the applicable exercise price of $11.50, subject to adjustment as described herein, we believe such holders will be unlikely to exercise their PIPE Warrants.
The Selling Securityholders will pay any underwriting fees, discounts and selling commissions incurred by such Selling Securityholders in disposing of their Ordinary Shares. Pursuant to the Registration Rights Agreement, the Company will bear all other costs, fees and expenses incurred in effecting the registration of the Ordinary Shares covered by this prospectus, including, without limitation, all registration and filing fees, Nasdaq listing fees and fees and expenses of counsel and independent registered public accountants.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. For each of the periods presented, the unaudited pro forma condensed combined financial information reflects the combination of historical financial information of Seamless and INFINT, including (1) certain transactions required under the Business Combination Agreement; specifically (a) the Divestitures by Seamless of all of the equity interests that it owns in (i) TNG Asia, (ii) FNTI and (iii) GEA (“the Divested Entities”), (b) acquisition of an additional ownership share in Dynamic Indonesia, parent company of the WalletKu operating group, such that Seamless holds financial control of 79% of WalletKu, (c) exercise by the holder of a conversion right under the Convertible Bond Instrument to convert it into Seamless shares, and (2) the Business Combination, the payment of transaction costs associated therewith and the cash settlement of certain obligations in accordance with INFINT IPO (for purposes of this unaudited pro forma condensed combined financial information, collectively, the “Transactions”). For purposes of this unaudited pro forma condensed combined financial information, Seamless and INFINT are collectively referred to as the “Companies,” and the Companies, subsequent to the Business Combination, are referred to herein as the “Combined Company.”
The unaudited pro forma condensed combined financial information has been presented to provide relevant information necessary for an understanding of the Combined Company subsequent to completion of the Transactions. The unaudited pro forma condensed combined balance sheet, which has been presented for the Combined Company as of June 30, 2024, gives effect to the Transactions as if they were consummated on June 30, 2024. The unaudited pro forma condensed combined statements of operations, which have been presented for the six months ended June 30, 2024 and for the year ended December 31, 2023, give pro forma effect to the Transactions as if they had occurred on January 1, 2023. The unaudited pro forma condensed combined balance sheet does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the Combined Company would have been had the Transactions taken place on June 30, 2024, nor is it indicative of the financial condition of the Combined Company as of any future date. The unaudited pro forma condensed combined statements of operations do not purport to represent, and are not necessarily indicative of, what the actual results of operations of the Combined Company would have been had the Transactions taken place on January 1, 2023, nor is it necessarily indicative of the results of operations of the Combined Company for any future period.
The unaudited pro forma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and notes thereto, which are included elsewhere in this Form S-1:
| ● | The historical unaudited consolidated financial statements of Seamless as of and for the six months ended June 30, 2024 and the historical audited consolidated financial statements of Seamless as of and for the year ended December 31, 2023, and | |
| ● | The historical unaudited financial statements of INFINT as of and for the three and six months ended June 30, 2024 and the historical audited financial statements of INFINT as of and for the year ended December 31, 2023. |
This unaudited pro forma condensed combined financial information should be read together with the sections of this Form S-1 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein.
Description of the Transactions
INFINT was a blank check company incorporated as a Cayman Islands exempted company and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. INFINT consummated its IPO of 17,391,200 units at an offering price of $10.00 per unit on November 23, 2021. Simultaneously with the closing of the INFINT IPO, INFINT completed the Private Placement of 7,032,580 warrants issued to the Sponsor, generating total proceeds of $7,032,580. On November 23, 2021, the underwriters exercised their over-allotment option in full, according to which the Company consummated the sale of an additional 2,608,680 Units, at $10.00 per Unit, and the sale of an additional 764,262 Private Warrants, at $1.00 per Private Warrant. Following the closing of the over-allotment option, the Company generated total gross proceeds of $207,795,642 from the INFINT IPO and the Private Placement, of which the Company raised $199,998,800 in the INFINT IPO, $7,796,842 in the Private Placement and of which $202,998,782 was placed in the Company’s trust account established in connection with the INFINT IPO.
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On February 14, 2023, INFINT shareholders approved an amendment to INFINT’s memorandum and articles of association, to extend the date by which it has to consummate a Business Combination from February 23, 2023 to August 23, 2023 (or such earlier date as determined by the INFINT Board). Under Cayman Islands law, the amendment to the memorandum and articles of association took effect upon approval of the proposal to amend the memorandum and articles of association. In connection with the votes to approve the proposal to amend the memorandum and articles of association, the holders of 10,415,452 Class A ordinary shares of INFINT properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.49 per share, for an aggregate redemption amount of approximately $109.31 million, leaving approximately $100.59 million in INFINT’s trust account as of February 14, 2023.
On August 18, 2023, INFINT shareholders approved an amendment to INFINT’s memorandum and articles of association, to extend the date by which it has to consummate a Business Combination from August 23, 2023 to February 23, 2024, or such earlier date as determined by the Company’s board of directors (the “Second Extended Date”). Under Cayman Islands law, the amendment to the memorandum and articles of association took effect upon approval of the proposal to amend the memorandum and articles of association. In connection with the votes to approve the Second Extension Proposal, the holders of 2,176,003 Class A ordinary shares of INFINT properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.94 per share, for an aggregate redemption amount of approximately $23.8 million, leaving approximately $81.1 million in INFINT’s trust account as of August 18, 2023.
On February 16, 2024, INFINT shareholders approved an amendment to INFINT’s memorandum and articles of association, to extend the date by which it has to consummate a Business Combination from February 23, 2024 to November 23, 2024, or such earlier date as determined by the Board (the “Third Extended Date”). Under Cayman Islands law, the amendment to the memorandum and articles of association took effect upon approval of the proposal to amend the memorandum and articles of association. In connection with the votes to approve the Third Extension Proposal, the holders of 2,661,404 Class A ordinary shares of INFINT properly exercised their right to redeem their shares for cash at a redemption price of approximately $11.36 per share, for an aggregate redemption amount of approximately $30.26 million, leaving approximately $53.97 million in INFINT’s trust account as of February 16, 2024. After the February 2024 Redemption, INFINT had 4,747,021 Class A shares outstanding and potentially redeemable in the future.
In accordance with the Business Combination Agreement, as amended, additional funds in the amount of $80,000 were deposited by Seamless to the trust account on February 20, 2024, and the required contributions continued to be deposited on or before the 23rd day of each subsequent calendar month into the trust account until the Third Extended Date or the date an initial business combination was completed.
On August 30, 2024, INFINT and Seamless consummated the Business Combination (the “Closing”) contemplated by the Business Combination Agreement between the parties dated August 3, 2022. INFINT is the legal acquirer of Seamless, in that all Seamless shares issued and outstanding immediately prior to the merger were canceled and converted into the right to receive INFINT ordinary shares. However, for financial reporting purposes, Seamless is deemed the accounting acquirer and INFINT the acquired company.
The following activities are reflected in the unaudited pro forma condensed combined financial statements below:
| ● | Prior to the Closing, related to certain matters that were required to take place per the Business Combination Agreement: |
| ○ | The Divestiture by Seamless of all of the equity interests that it owns in (a) TNG Asia, (b) FNTI and (c) GEA such that, upon consummation of these Divestitures, the Divested Entities are no longer Affiliates of Seamless or included in the consolidated financial statements of Seamless. | |
| ○ | The acquisition of an additional ownership share in Dynamic Indonesia, the parent company of the WalletKu operating group, such that Seamless holds financial control of 79% of WalletKu. | |
| ○ | The exercise by the holder of a conversion right under the Convertible Bond Instrument to convert that instrument into Seamless shares. |
| ● | In connection with the Closing: |
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| ○ | The payment of transaction costs incurred by both Seamless and INFINT. | |
| ○ | The conversion of INFINT’s Class B shares to Class A ordinary shares on a one-for-one basis. | |
| ○ | INFINT’s contribution of all of its assets to Seamless, including but not limited to, the proceeds from the trust account (net of proceeds used to fund the redemption of the Class A ordinary shares held by eligible shareholders who properly elect to have their shares redeemed as of the Closing). | |
| ○ | The issuance of an aggregate of 200,000 shares to vendors in connection with the Closing. | |
| ○ | The issuance of promissory notes for approximately $5.7 million to EF Hutton LLC, approximately $3.2 million to Greenberg Traurig LLP, and $603,623 to INFINT Capital LLC. | |
| ○ | Simultaneous with the Closing, Currenc also completed a series of private financings, issuing a Convertible Note (convertible into 194,444 Ordinary Shares) for $1.94 million, 400,000 commitment shares, and warrants to purchase 136,110 Ordinary Shares in a private placement to a PIPE investor (the “PIPE Offering”), which raised $1.75 million in net proceeds. |
Accounting for the Business Combination
Notwithstanding the legal form of the Business Combination pursuant to the Business Combination Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, INFINT is treated as the acquired company for financial reporting purposes, and Seamless is treated as the accounting acquirer. In accordance with this accounting method, the Business Combination is treated as the equivalent of Seamless issuing stock for the net assets of INFINT, accompanied by a recapitalization. The net assets of INFINT are stated at historical cost, with no goodwill recorded, and operations prior to the Business Combination are those of Seamless. Seamless is deemed the accounting acquirer for purposes of the Business Combination based on an evaluation of the following facts and circumstances:
| ● | Seamless’ existing equity holders hold a majority voting interest in the Combined Company; | |
| ● | Seamless’ existing equity holders have the ability to nominate and elect the majority of the Combined Company’s Board of Directors; | |
| ● | Seamless’ existing senior management team comprise the senior management of the Combined Company; and | |
| ● | Seamless’ operations comprise the ongoing operations of the Combined Company. |
Basis of Pro Forma Presentation
In accordance with Article 11 of Regulation S-X, pro forma transaction adjustments to the historical combined financial information of Seamless and INFINT only give effect to events that are both factually supportable and directly attributable to the Transactions. The unaudited pro forma condensed combined financial information does not give effect to any synergies, operating efficiencies, or other benefits that may result from consummation of the Transactions. Seamless and INFINT have not had any historical relationship prior to the Business Combination. Therefore, preparation of the accompanying pro forma financial information did not require any adjustments related to such historical transactions other than an adjustment for the settlement of the balance on the promissory note owed by INFINT to Seamless (see Note 2, adjustment P).
Pursuant to INFINT’s current memorandum and articles of association, INFINT’s public shareholders were offered the opportunity to request that INFINT redeem their Class A ordinary shares for cash upon consummation of the Business Combination, irrespective of whether they vote for or against the Business Combination. If a public shareholder properly exercised its right to redemption of its shares, INFINT redeemed each share for cash equal to the public shareholder’s pro rata portion of the trust account.
| 45 |
The unaudited pro forma condensed combined financial information has been prepared to reflect the redemption of 4,652,105 Class A ordinary shares outstanding for $54,846,559.
There are no pro forma adjustments related to the outstanding public warrants and private placement warrants issued in connection with the IPO that are classified as equity in INFINT’s historical balance sheet, as such securities continue to be classified as equity after the Closing.
The following table provides a pro forma summary of the number and percentage of Ordinary Shares of Currenc that would have been outstanding if the Transactions had occurred on June 30, 2024:
| Pro Forma Ownership(1) | Currenc Ordinary Shares | % of Outstanding shares | ||||||
| Public shareholders(2) | 94,916 | 0.20 | ||||||
| Sponsor | 4,483,026 | 9.63 | ||||||
| Other converted Class B shareholders | 1,250,058 | 2.69 | ||||||
| Underwriters | 99,999 | 0.22 | ||||||
| Vendors | 200,000 | 0.43 | ||||||
| PIPE investor | 400,000 | 0.86 | ||||||
| Existing Seamless shareholders | 40,000,000 | 85.97 | ||||||
(1) Excludes potential dilution from the exercise of warrants.
(2) Reflects the redemption of public shares (4,652,105 shares at a redemption price of $11.79 per share) upon the Business Combination.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only. The pro forma adjustments represent estimates based on information available as of the date of the unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available. The accounting for certain instruments, including those issued in the PIPE Offering, is subject to change as additional information becomes available and additional analyses are performed, and such changes could be material once the final accounting positions and valuations are determined by the Company. Assumptions and estimates underlying the pro forma adjustments set forth in the unaudited pro forma condensed combined financial information are described in the accompanying notes. The actual financial position and results of operations of the Combined Company subsequent to consummation of the Transactions may differ significantly from the pro forma amounts reflected herein.
| 46 |
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2024
(UNAUDITED)
Historical Seamless (A) | Pro Forma Adjustments for Pre-Closing Transactions (B) | Historical Seamless Adjusted for Pre-Closing Transactions (F) | Historical INFINT | Pro Forma Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 48,615,329 | $ | (1,366,454 | ) | $ | 47,248,875 | $ | 8,780 | $ | 55,617,522 | (G) | ||||||||||||
| 1,750,000 | (Q) | |||||||||||||||||||||||
| (300,000 | )(H) | |||||||||||||||||||||||
| (2,798,407 | )(I) | |||||||||||||||||||||||
| (528,750 | )(J) | |||||||||||||||||||||||
| (1,150,005 | )(K) | |||||||||||||||||||||||
| (160,000 | )(L) | |||||||||||||||||||||||
| (54,846,559 | )(N) | $ | 44,841,456 | |||||||||||||||||||||
| Restricted cash | 4,782,536 | (4,744,198 | ) | 38,338 | - | - | 38,338 | |||||||||||||||||
| Short-term investments | 300,023 | (300,023 | ) | - | - | - | - | |||||||||||||||||
| Accounts receivable, net | 2,315,187 | - | 2,315,187 | - | - | 2,315,187 | ||||||||||||||||||
| Escrow money receivable | 3,547,629 | (3,547,629 | ) | - | - | - | - | |||||||||||||||||
| Prepayments, receivables and other assets | 22,960,400 | (2,040,813 | ) | 20,919,587 | - | 528,750 | (J) | 21,448,337 | ||||||||||||||||
| Amounts due from related parties | 5,714,588 | (950,339 | ) | 4,764,249 | - | (316,297 | )(P) | 4,447,952 | ||||||||||||||||
| Total current assets | 88,235,692 | (12,949,456 | ) | 75,286,236 | 8,780 | (2,203,746 | ) | 73,091,270 | ||||||||||||||||
| Investment in an equity security | 100,000 | - | 100,000 | - | 100,000 | |||||||||||||||||||
Equipment and software, net | 928,301 | (27,987 | ) | 900,314 | - | - | 900,314 | |||||||||||||||||
| Right-of-use assets, net | 56,241 | - | 56,241 | - | - | 56,241 | ||||||||||||||||||
| Intangible assets, net | 8,665,543 | (4,509,147 | ) | 4,156,396 | - | - | 4,156,396 | |||||||||||||||||
| Goodwill | 26,999,726 | - | 26,999,726 | - | - | 26,999,726 | ||||||||||||||||||
| Investments held in trust | - | - | - | 55,457,522 | 160,000 | (L) | ||||||||||||||||||
| (55,617,522 | )(G) | - | ||||||||||||||||||||||
| Deferred tax assets | 621,796 | - | 621,796 | - | - | 621,796 | ||||||||||||||||||
| Total assets | $ | 125,607,299 | $ | (17,486,590 | ) | $ | 108,120,709 | $ | 55,466,302 | $ | (57,661,268 | ) | $ | 105,925,743 | ||||||||||
| Liabilities | ||||||||||||||||||||||||
| Borrowings | $ | 18,025,806 | $ | (6,862,104 | ) | $ | 11,163,702 | $ | - | - | 11,163,702 | |||||||||||||
| Client money payable | 4,482,818 | (4,482,818 | ) | - | - | - | - | |||||||||||||||||
| Accruals and other payables | 40,998,979 | (3,569,212 | ) | 37,429,767 | 4,451,195 | (1,150,005 | )(K) | |||||||||||||||||
| (3,200,000 | )(S) | 37,530,957 | ||||||||||||||||||||||
| Lease liabilities | 60,829 | - | 60,829 | - | - | 60,829 | ||||||||||||||||||
| Receivables factoring | 327,822 | - | 327,822 | - | - | 327,822 | ||||||||||||||||||
| Convertible bonds | 10,000,768 | (10,000,768 | )(D) | - | - | - | - | |||||||||||||||||
| Promissory note from underwriter | - | - | - | - | 5,700,000 | (H) | 5,700,000 | |||||||||||||||||
| Promissory note from attorney | - | - | - | - | 3,200,000 | (S) | 3,200,000 | |||||||||||||||||
| Amounts due to related parties | 90,403,958 | (14,826,262 | ) | 75,577,696 | 969,704 | (316,297 | )(P) | 76,231,103 | ||||||||||||||||
| Total current liabilities | $ | 164,300,980 | $ | (39,741,164 | ) | $ | 124,559,816 | $ | 5,420,899 | $ | 4,233,698 | $ | 134,214,413 | |||||||||||
| Other non-current liabilities | 53,009 | - | 53,009 | - | - | 53,009 | ||||||||||||||||||
| Deferred tax liabilities | 1,061,893 | - | 1,061,893 | - | - | 1,061,893 | ||||||||||||||||||
| Long-term borrowings | 2,706,152 | (2,702,337 | )(C) | 3,815 | - | - | 3,815 | |||||||||||||||||
| Convertible note | - | - | - | - | 1,500,000 | (Q) | 1,500,000 | |||||||||||||||||
| Deferred underwriting fee payable | - | - | - | 5,999,964 | (5,999,964 | )(H) | - | |||||||||||||||||
| Total liabilities | $ | 168,122,034 | $ | (42,443,501 | ) | $ | 125,678,533 | $ | 11,420,863 | $ | (266,266 | ) | $ | 136,833,130 | ||||||||||
| Class A common shares subject to possible redemption | - | - | - | 55,457,522 | 160,000 | (M) | ||||||||||||||||||
| (55,617,522 | )(M) | - | ||||||||||||||||||||||
| Noncontrolling interest subject to possible redemption | 2,957,948 | (2,957,948 | )(C) | - | - | - | - | |||||||||||||||||
| Shareholders’ (Deficit) Equity: | ||||||||||||||||||||||||
| Class A common shares (O) | 58,030 | 2,270 | (C)(D) | 60,300 | - | (55,182 | )(M) | |||||||||||||||||
| (465 | )(N) | 4,653 | ||||||||||||||||||||||
| Class B common shares (O) | - | - | - | 583 | (583 | )(M) | - | |||||||||||||||||
| Preferred shares (O) | - | - | - | - | - | - | ||||||||||||||||||
| Additional paid-in capital | 29,172,373 | 14,993,574 | (C)(D) | 44,165,947 | - | 85,445,653 | (M) | |||||||||||||||||
| (12,267,073 | )(M) | |||||||||||||||||||||||
| (1,944,000 | )(I) | |||||||||||||||||||||||
| (54,846,094 | )(N) | 60,554,433 | ||||||||||||||||||||||
| Accumulated deficit | (98,896,742 | ) | 12,919,015 | (E) | (85,977,727 | ) | (11,412,666 | ) | 12,267,073 | (M) | ||||||||||||||
| (27,522,366 | )(M) | |||||||||||||||||||||||
| (854,407 | )(I) | |||||||||||||||||||||||
| (36 | )(H) | |||||||||||||||||||||||
| (2,000,000 | )(R) | |||||||||||||||||||||||
| (160,000 | )(M) | (115,660,129 | ) | |||||||||||||||||||||
| Accumulated other comprehensive income | (44,402 | ) | - | (44,402 | ) | - | - | (44,402 | ) | |||||||||||||||
| Noncontrolling interests | 24,238,058 | - | 24,238,058 | - | - | 24,238,058 | ||||||||||||||||||
| Total Shareholders’ (Deficit) Equity | (45,472,683 | ) | 27,914,859 | (17,557,824 | ) | (11,412,083 | ) | (1,937,480 | ) | (30,907,387 | ) | |||||||||||||
| Total Liabilities, Redeemable Securities and Shareholders’ (Deficit) Equity | $ | 125,607,299 | $ | (17,486,590 | ) | $ | 108,120,709 | $ | 55,466,302 | $ | (57,661,268 | ) | $ | 105,925,743 | ||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 47 |
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2024
(UNAUDITED)
Historical Seamless | Pro Forma Adjustments for Pre-Closing Transactions (aa) | Historical Seamless Adjusted for Pre-Closing Transactions | Historical INFINT | Pro Forma Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||
| Revenue | $ | 24,110,787 | $ | (3,062,945 | )(bb) | $ | 21,047,842 | $ | - | $ | - | $ | 21,047,842 | |||||||||||
| Cost of revenue | 15,906,252 | (2,129,693 | )(cc) | 13,776,559 | - | - | 13,776,559 | |||||||||||||||||
| Gross profit (loss) | 8,204,535 | (933,252 | ) | 7,271,283 | - | - | 7,271,283 | |||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Selling expenses | 9,759 | (9,759 | )(dd) | - | - | - | - | |||||||||||||||||
| General and administrative | 10,965,337 | (2,942,980 | )(dd) | 8,022,357 | 824,072 | 52,875 | (ff) | |||||||||||||||||
| - | 5,268,301 | (gg) | 14,167,605 | |||||||||||||||||||||
| Administrative expenses from Related Party | - | - | - | 72,000 | - | 72,000 | ||||||||||||||||||
| 10,975,096 | (2,952,739 | ) | 8,022,357 | 896,072 | 5,321,176 | 14,239,605 | ||||||||||||||||||
| Operating income (loss) | (2,770,561 | ) | 2,019,487 | (751,074 | ) | (896,072 | ) | (5,321,176 | ) | (6,968,322 | ) | |||||||||||||
| Other expense (income) | ||||||||||||||||||||||||
| Interest earned on marketable securities held in Trust Account | - | - | - | (1,660,225 | ) | 1,660,225 | (hh) | - | ||||||||||||||||
| Other expense (income), net | (498,446 | ) | 83,540 | (dd) | (414,906 | ) | - | - | (414,906 | ) | ||||||||||||||
| Interest expense, net | 3,826,722 | (2,681,928 | )(dd), (ee) | 1,144,794 | - | - | 1,144,794 | |||||||||||||||||
| Total other expense (income), net | 3,328,276 | (2,598,388 | ) | 729,888 | (1,660,225 | ) | 1,660,225 | 729,888 | ||||||||||||||||
| Loss before income taxes | (6,098,837 | ) | 4,617,875 | (1,480,962 | ) | 764,153 | (6,981,401 | ) | (7,698,210 | ) | ||||||||||||||
| Income tax expense | 140,429 | - | 140,429 | - | - | 140,429 | ||||||||||||||||||
| Net loss | $ | (6,239,266 | ) | $ | 4,617,875 | $ | (1,621,391 | ) | $ | 764,153 | $ | (6,981,401 | ) | $ | (7,838,639 | ) | ||||||||
| Net income attributable to noncontrolling interests | (609,895 | ) | - | (609,895 | ) | - | - | (609,895 | ) | |||||||||||||||
| Net loss attributable to controlling interests | $ | (6,849,161 | ) | $ | 4,617,875 | $ | (2,231,286 | ) | $ | 764,153 | $ | (6,981,401 | ) | $ | (8,448,534 | ) | ||||||||
| Pro forma net loss per share information: | ||||||||||||||||||||||||
| Weighted average shares outstanding | 58,030,000 | 11,252,767 | 46,527,999 | (ss) | ||||||||||||||||||||
| Basic and diluted net loss per share attributable to controlling interests | $ | (0.12 | ) | $ | 0.07 | $ (0.18 | )(ss) | |||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 48 |
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
(UNAUDITED)
Historical Seamless | Pro Forma Adjustments for Pre-Closing Transactions (ii) | Historical Seamless Adjusted for Pre-Closing Transactions | Historical INFINT | Pro Forma Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||
| Revenue | $ | 53,255,361 | $ | (7,447,535 | )(jj) | $ | 45,807,826 | $ | - | $ | - | $ | 45,807,826 | |||||||||||
| Cost of revenue | 35,899,057 | (4,207,395 | )(kk) | 31,691,662 | - | - | 31,691,662 | |||||||||||||||||
| Gross profit (loss) | 17,356,304 | (3,240,140 | ) | 14,116,164 | - | - | 14,116,164 | |||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Selling expenses | 25,880 | (25,880 | )(ll) | - | - | - | - | |||||||||||||||||
| General and administrative | 23,976,209 | (5,584,455 | )(ll) | 18,391,754 | 1,819,312 | 105,750 | (nn) | |||||||||||||||||
| - | 22,254,065 | (oo) | 42,570,881 | |||||||||||||||||||||
| Administrative expenses from Related Party | - | - | - | 208,395 | - | 208,395 | ||||||||||||||||||
| 24,002,089 | (5,610,335 | ) | 18,391,754 | 2,027,707 | 22,359,815 | 42,779,276 | ||||||||||||||||||
| Operating income (loss) | (6,645,785 | ) | 2,370,195 | (4,275,590 | ) | (2,027,707 | ) | (22,359,815 | ) | (28,663,112 | ) | |||||||||||||
| Other expense (income) | ||||||||||||||||||||||||
| Interest earned on marketable securities held in Trust Account | - | - | - | (5,175,207 | ) | 5,175,207 | (pp) | - | ||||||||||||||||
| Transaction costs | - | - | - | - | 3,014,407 | (qq), (rr) | 3,014,407 | |||||||||||||||||
| Other expense (income), net | (754,032 | ) | (118,697 | )(ll) | (872,729 | ) | - | - | (872,729 | ) | ||||||||||||||
| Interest expense, net | 8,002,552 | (5,688,163 | )(ll), (mm) | 2,314,389 | - | - | 2,314,389 | |||||||||||||||||
| Total other expense (income), net | 7,248,520 | (5,806,860 | ) | 1,441,660 | (5,175,207 | ) | 8,189,614 | 4,456,067 | ||||||||||||||||
| Loss before income taxes | (13,894,305 | ) | 8,177,055 | (5,717,250 | ) | 3,147,500 | (30,549,429 | ) | (33,119,179 | ) | ||||||||||||||
| Income tax expense | 523,481 | - | 523,481 | - | - | 523,481 | ||||||||||||||||||
| Net loss | $ | (14,417,786 | ) | $ | 8,177,055 | $ | (6,240,731 | ) | $ | 3,147,500 | $ | (30,549,429 | ) | $ | (33,642,660 | ) | ||||||||
| Net income attributable to noncontrolling interests | (888,764 | ) | - | (888,764 | ) | - | - | (888,764 | ) | |||||||||||||||
| Net loss attributable to controlling interests | $ | (15,306,550 | ) | $ | 8,177,055 | $ | (7,129,495 | ) | $ | 3,147,500 | $ | (30,549,429 | ) | $ | (34,531,424 | ) | ||||||||
| Pro forma net loss per share information: | ||||||||||||||||||||||||
| Weighted average shares outstanding | 58,030,000 | 15,857,599 | 46,527,999 | (ss) | ||||||||||||||||||||
| Basic and diluted net loss per share attributable to controlling interests | $ | (0.26 | ) | $ | 0.20 | $ (0.74 ) | (ss) | |||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information.
| 49 |
Notes to Unaudited Pro Forma Condensed Combined Financial Information
NOTE 1 – BASIS OF PRO FORMA PRESENTATION
The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, INFINT is treated as the acquired company for financial reporting purposes, and Seamless is treated as the accounting acquirer. The Business Combination is treated as the equivalent of Seamless issuing stock for the net assets of INFINT, accompanied by a recapitalization. The net assets of INFINT are stated at historical cost, with no goodwill recorded. Operations prior to the Business Combination are those of Seamless.
The unaudited pro forma condensed combined balance sheet as of June 30, 2024 assumes that the Transactions were completed on June 30, 2024. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2024 and for the year ended December 31, 2023 give pro forma effect to the Transactions as if they had occurred on January 1, 2023.
The unaudited pro forma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and notes thereto, which are included elsewhere in this Form S-1:
| ● | The historical unaudited consolidated financial statements of Seamless as of and for the six months ended June 30, 2024 and the historical audited consolidated financial statements of Seamless as of and for the year ended December 31, 2023; and | |
| ● | The historical unaudited financial statements of INFINT as of and for the three and six months ended June 30, 2024 and the historical audited financial statements of INFINT as of and for the year ended December 31, 2023. |
Management has made significant estimates and assumptions in its determination of the pro forma adjustments. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the differences may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Transactions based on information available to management as of the date of the unaudited pro forma condensed combined financial statements, and the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements.
NOTE 2 – ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 2024
The unaudited pro forma condensed combined balance sheet as of June 30, 2024 includes the following adjustments:
A – This column represents the historical consolidated balance sheet of Seamless as of June 30, 2024 prior to the divestiture of the Divested Entities, and with Seamless holding a 57.5% controlling financial interest in Dynamic Indonesia, the parent company of the WalletKu operating group, among other subsidiaries.
B – This column represents the combined impact of certain transactions required under the Business Combination Agreement that took place after the balance sheet date and prior to the Closing. Specifically, these transactions include: (1) the divestiture by Seamless of all of the equity interests that it owned in the Divested Entities such that the assets and liabilities of the Divested Entities are no longer included in the consolidated financial statements of Seamless, (2) the acquisition of an additional ownership share in Dynamic Indonesia, such that Seamless holds financial control of 79% of WalletKu, and (3) the exercise by the holder of a conversion right under the Convertible Bond Instrument to convert that instrument into Seamless shares (collectively, the “pre-Closing transactions”).
| 50 |
The transactions included in adjustments column B of the pro forma condensed combined balance sheet include:
| Pro Forma Balance Sheet Line Item | Divestitures | Acquisition of Additional Ownership Shares of Dynamic Indonesia, Parent of Walletku | Conversion of Convertible Bonds into Seamless Shares | Total Adjustments | ||||||||||||
| (1) | (2) | (3) | (B) | |||||||||||||
| Assets | ||||||||||||||||
| Cash and cash equivalents | $ | (1,366,454 | ) | $ | - | $ | - | $ | (1,366,454 | ) | ||||||
| Restricted cash | (4,744,198 | ) | - | - | (4,744,198 | ) | ||||||||||
| Short-term investments | (300,023 | ) | - | - | (300,023 | ) | ||||||||||
| Accounts receivable, net | - | - | - | - | ||||||||||||
| Escrow money receivable | (3,547,629 | ) | - | - | (3,547,629 | ) | ||||||||||
| Prepayments, receivables and other assets | (2,040,813 | ) | - | - | (2,040,813 | ) | ||||||||||
| Amounts due from related parties | (950,339 | ) | - | - | (950,339 | ) | ||||||||||
| Total current assets | (12,949,456 | ) | - | - | (12,949,456 | ) | ||||||||||
| Investment in an equity security | - | - | - | - | ||||||||||||
| Equipment and software, net | (27,987 | ) | - | - | (27,987 | ) | ||||||||||
| Right-of-use assets, net | - | - | - | - | ||||||||||||
| Intangible assets, net | (4,509,147 | ) | - | - | (4,509,147 | ) | ||||||||||
| Goodwill | - | - | - | - | ||||||||||||
| Investments held in trust | - | - | - | - | ||||||||||||
| Deferred tax assets | - | - | - | - | ||||||||||||
| Total assets | $ | (17,486,590 | ) | $ | - | $ | - | $ | (17,486,590 | ) | ||||||
| Liabilities | ||||||||||||||||
| Borrowings | $ | (6,862,104 | ) | $ | - | $ | - | $ | (6,862,104 | ) | ||||||
| - | ||||||||||||||||
| Client money payable | (4,482,818 | ) | - | - | (4,482,818 | ) | ||||||||||
| Accruals and other payables | (3,569,212 | ) | - | - | (3,569,212 | ) | ||||||||||
| Lease liabilities | - | - | - | - | ||||||||||||
| Receivables factoring | - | - | - | - | ||||||||||||
| Convertible bonds | - | - | (10,000,768 | )(D) | (10,000,768 | ) | ||||||||||
| Amounts due to related parties | (14,826,262 | ) | - | - | (14,826,262 | ) | ||||||||||
| Total current liabilities | $ | (29,740,396 | ) | $ | - | $ | (10,000,768 | ) | $ | (39,741,164 | ) | |||||
| Other non-current liabilities | - | - | - | - | ||||||||||||
| Deferred tax liabilities | - | - | - | - | ||||||||||||
| Long-term borrowings | (665,209 | ) | (2,037,128 | )(C) | - | (2,702,337 | ) | |||||||||
| Convertible bonds | - | - | - | - | ||||||||||||
| Deferred underwriting fee payable | - | - | - | - | ||||||||||||
| Total liabilities | $ | (30,405,605 | ) | $ | (2,037,128 | ) | $ | (10,000,768 | ) | $ | (42,443,501 | ) | ||||
| Class A common shares subject to possible redemption | - | - | - | - | ||||||||||||
| Noncontrolling interest subject to possible redemption | - | (2,957,948 | )(C) | - | (2,957,948 | ) | ||||||||||
| Shareholders’ (Deficit) Equity: | ||||||||||||||||
| Class A common shares | - | 660 | (C) | 1,610 | (D) | 2,270 | ||||||||||
| Class B common shares | - | - | - | - | ||||||||||||
| - | ||||||||||||||||
| Preferred shares | - | - | - | - | ||||||||||||
| Additional paid-in capital | - | 4,994,416 | (C) | 9,999,158 | (D) | 14,993,574 | ||||||||||
| Accumulated deficit | 12,919,015 | (E) | - | - | 12,919,015 | |||||||||||
| Accumulated other comprehensive income | - | - | - | - | ||||||||||||
| Noncontrolling interests | - | - | - | - | ||||||||||||
| Total Shareholders’(Deficit) Equity | 12,919,015 | 4,995,076 | 10,000,768 | 27,914,859 | ||||||||||||
| Total Liabilities, Redeemable Securities and Shareholders’ (Deficit) Equity | $ | (17,486,590 | ) | $ | - | $ | - | $ | (17,486,590 | ) | ||||||
| 51 |
C – As of June 30, 2024, Seamless owns 59.2% of Dynamic Indonesia, which owns 79% of the WalletKu operating group. The remaining 40.8% ownership in Dynamic Indonesia is reflected on the June 30, 2024 historical balance sheet as Noncontrolling interest subject to redemption because the remaining 40.8% ownership in Dynamic Indonesia is redeemable by the holder pursuant to a put option agreement. The holder exercised the put option prior to the Closing of the Business Combination, enabling Seamless to acquire the remaining shares of Dynamic Indonesia. Seamless then owned 100% of Dynamic Indonesia and thereby obtained 79% control over the WalletKu operating group. The put option agreement allowed Seamless to pay for the purchase price of the 40.8% interest in Dynamic Indonesia as well as to repay a loan with a principal amount of $2.04 million outstanding to the same party, by transferring Currenc shares for the total. The pro forma adjustment C noted in the table above reflects the following:
| Seamless shares issued: | ||||
| Increase to common shares | $ | 660 | ||
| Increase to additional paid-in capital | 4,994,416 | |||
| Consideration to acquire remaining shares of Dynamic Indonesia | $ | 4,995,076 | ||
| Repayment of loan payable and reacquisition of noncontrolling interest: | ||||
| Remove loan payable repaid with Seamless shares | $ | (2,037,128 | ) | |
| Remove noncontrolling interest reacquired with Seamless shares | (2,957,948 | ) | ||
| $ | (4,995,076 | ) |
D – Represents the elimination of Seamless’ convertible bonds of $10,000,768 resulting from the bondholder’s election to convert such bond instruments into ordinary shares of Seamless prior to the Closing of the Business Combination. The convertible bonds are convertible into shares of Seamless in accordance with an amended and restated convertible bond instrument dated September 14, 2021 and are not directly convertible into shares of INFINT. Once converted into shares of Seamless, the bondholders will have the right to receive, in accordance with the terms of the Business Combination Agreement and the Payment Spreadsheet (as defined in the Business Combination Agreement), the number of Currenc ordinary shares set forth in the Payment Spreadsheet. Thus, the shares held by the bondholders convert into INFINT shares in a proportion consistent with those of the other equity-holders of Seamless who will receive shares of INFINT upon the Closing of the Business Combination.
E – Represents a gain resulting from the Divestitures recorded in accumulated deficit.
F – This column in the pro forma condensed combined balance sheet represents Seamless on a pro forma basis after the transactions described in notes B through E above and prior to the Closing of the Business Combination.
G – Represents cash equivalents released from the trust account and relieved of restrictions regarding use upon the Closing of the Business Combination and, accordingly, were available for redemptions and general use by the Combined Company. Such amount represents a reclassification from the investments held in trust line of the pro forma balance sheet to the cash and cash equivalents line.
H – Represents the settlement of the underwriting fees incurred by INFINT in connection with the INFINT IPO, for which payment was deferred until consummation of the Business Combination. Of the $5,999,964 deferred underwriting fee payable that had been included on the historical balance sheet of INFINT, $300,000 was settled in cash and $5,700,000 was settled via a promissory note to the underwriter, with the $36 difference written off to retained earnings.
I – Represents cash used to pay transaction costs and advisory fees incurred in connection with the Business Combination, net of $3,281,895 previously paid and expensed. Certain additional transaction fees that are expected to be charged to expense on the statement of operations are presented as an increase to the accumulated deficit, and the impact of the transaction fees related to the issuance of shares are presented as a reduction of additional paid-in capital of the Combined Company.
J - Represents the recording of a $528,750 premium paid at the Closing for a Directors’ and Officers’ Liability insurance policy. The policy premium is being deferred on the balance sheet in prepayments, receivables and other assets and then expensed over the term of the related insurance policy.
K – Represents the payment of transaction costs that had been included in accrued expenses on the historical balance sheets of either Seamless or INFINT.
L – Represents the payment of extension fees by Seamless from its cash account to INFINT’s trust account in the amount of $80,000 per month for each of the months from July 1, 2024 through the Business Combination date of August 30, 2024 pursuant to the Business Combination Agreement, in order to extend the date by which the Business Combination must be consummated from August 23, 2023 to November 23, 2024 (the “Extension fees”).
| 52 |
M - Represents the net impact of the following pro forma adjustments related to the Transactions on the capital accounts of the Combined Company:
| Par Value(1) | ||||||||||||||||||||||||||||||||||||
Class A Ordinary Shares | Founder Shares - Class B | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Non- controlling Interests | Total Shareholders’ (Deficit) Equity | Class A shares subject to possible redemption | Noncontrolling Interest subject to redemption | ||||||||||||||||||||||||||||
| Historical Seamless | $ | 58,030 | $ | — | $ | 29,172,373 | $ | (98,896,742 | ) | $ | (44,402 | ) | $ | 24,238,058 | $ | (45,472,683 | ) | $ | — | $ | 2,957,948 | |||||||||||||||
| Adjustment for transactions prior to consummation of Business Combination: | ||||||||||||||||||||||||||||||||||||
| Seamless’ divestiture of GEA, TNG and FNTI, increase in share holdings in parent company of Walletku, and conversion of convertible bonds into ordinary shares of Seamless(2) | 2,270 | — | 14,993,574 | 12,919,015 | — | — | 27,914,859 | — | (2,957,948 | ) | ||||||||||||||||||||||||||
| Historical Seamless equity after giving effect to certain pre-Closing transactions | 60,300 | — | 44,165,947 | (85,977,727 | ) | (44,402 | ) | 24,238,058 | (17,557,824 | ) | — | — | ||||||||||||||||||||||||
| Historical INFINT equity | — | 583 | — | (11,412,666 | ) | — | — | (11,412,083 | ) | 55,457,522 | — | |||||||||||||||||||||||||
| Extension payment expense for Seamless(3) | — | — | — | (160,000 | ) | — | — | (160,000 | ) | — | — | |||||||||||||||||||||||||
| Extension payment income for INFINT(3) | — | — | — | 160,000 | — | — | 160,000 | — | — | |||||||||||||||||||||||||||
| Accretion in redemption value of INFINT’s Class A shares subject to possible redemption(4) | — | — | — | (160,000 | ) | — | — | (160,000 | ) | 160,000 | — | |||||||||||||||||||||||||
| Seamless incentive compensation expense(5) | 477 | — | 27,521,889 | (27,522,366 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
| Seamless rollover equity | (60,777 | ) | — | 60,777 | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Class A shares issued for Seamless rollover equity | 4,000 | — | (4,000 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Conversion of INFINT’s founder shares to Class A common shares(6) | 573 | (573 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Conversion of Underwriters’ shares to Class A common shares(6) | 10 | (10 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Exchange of Class A common stock subject to possible redemption(7) | 475 | — | 55,617,047 | — | — | — | 55,617,522 | (55,617,522 | ) | — | ||||||||||||||||||||||||||
| Transaction costs(8) | — | — | (1,944,000 | )(I) | (854,407 | )(I) | — | — | (2,798,407 | )(I) | — | — | ||||||||||||||||||||||||
| Reclassification of INFINT’s accumulated deficit to additional paid-in capital(9) | — | — | (12,267,073 | ) | 12,267,073 | — | — | — | — | — | ||||||||||||||||||||||||||
| Deferred underwriting fees(10) | — | — | — | (36 | ) | — | — | (36 | ) | — | ||||||||||||||||||||||||||
| Vendor shares(11) | 20 | — | 1,999,980 | (2,000,000 | ) | — | — | — | — | |||||||||||||||||||||||||||
| PIPE shares(12) | 40 | — | 249,960 | — | — | — | 250,000 | — | ||||||||||||||||||||||||||||
| Redemption of Class A common stock(13) | (465 | ) | — | (54,846,094 | ) | — | — | — | (54,846,559 | ) | — | — | ||||||||||||||||||||||||
| Total pro forma adjustments to equity | (55,647 | ) | (583 | ) | 16,388,486 | (18,269,736 | ) | — | — | (1,937,480 | ) | (55,457,522 | ) | — | ||||||||||||||||||||||
| Total pro forma balance | $ | 4,653 | $ | — | $ | 60,554,433 | $ | (115,660,129 | ) | $ | (44,402 | ) | $ | 24,238,058 | $ | (30,907,387 | ) | $ | — | $ | — | |||||||||||||||
| (1) | These columns represent the par value of the ordinary shares. |
| 53 |
| (2) | Represents the combined effect of certain transactions that are expected to be completed prior to the Closing of the Business Combination. Specifically, the effects of these transactions on the capital accounts include: |
| Effect of Pre-Closing Transactions | Class A Ordinary Shares | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders’ (Deficit) Equity | Noncontrolling Interest Subject to Redemption | |||||||||||||||||
| (a) | Recognition of an income statement gain and a reduction of accumulated deficit resulting from the divestiture by Seamless of all of the equity interests that it owns in (i) TNG Asia, (ii) FNTI and (iii) GEA | $ | — | $ | — | $ | 12,919,015 | $ | 12,919,015 | $ | — | |||||||||||
| (b) | Reduction of noncontrolling interests and an increase in ordinary shares and additional paid-in capital from issuing additional shares of Seamless in exchange for an additional ownership share in Dynamic Indonesia, the parent company of the WalletKu operating group | 660 | 4,994,416 | — | 4,995,076 | (2,957,948 | ) | |||||||||||||||
| (c) | An increase in ordinary shares and additional paid in capital and a reduction in Convertible bonds payable resulting from the exercise by the holder of a conversion right under the Convertible Bond Instrument to convert that instrument into Seamless shares | 1,610 | 9,999,158 | — | 10,000,768 | — | ||||||||||||||||
| $ | 2,270 | $ | 14,993,574 | $ | 12,919,015 | $ | 27,914,859 | $ | (2,957,948 | ) | ||||||||||||
| (3) | Represents an expense for Seamless and an increase in its accumulated deficit due to the Extension fees payable to INFINT’s Sponsor from July 1, 2023 through the Business Combination date of August 30, 2024 in order to extend the date by which the Business Combination must be consummated. | |
| (4) | Represents INFINT’s recording of the Extension fees paid into the trust account as capital contributions from its Sponsor. The addition of funds to the trust account increases the value of INFINT’s Class A shares subject to possible redemption to match the amount of funds available in the trust account. | |
| (5) | Represents employee compensation expense under Seamless’ 2022 Incentive Plan resulting from employee restricted stock units that vest upon the occurrence of the Business Combination and in the months thereafter. There is a resulting increase in Seamless’ accumulated deficit arising from the expense and an increase in common stock and additional paid-in capital from the issuance of the stock. | |
| (6) | Represents the conversion of INFINT’s issued and outstanding Class B founder shares and Underwriter’s shares into Class A ordinary shares on a one-for-one basis immediately prior to consummation of the Business Combination; thus, it represents a reclassification within equity. | |
| (7) | Represents the exchange of INFINT’s redeemable Class A ordinary shares issued to public holders in the INFINT IPO for shares that will no longer be subject to redemption. | |
| (8) | Represents the impact of certain transaction costs that are expected to be charged to expense on the statement of operations as an increase to accumulated deficit, and the impact of other transaction costs that are attributable to issuing equity and the offering of securities as a reduction of additional paid-in capital of the Combined Company. | |
| (9) | Represents the reclassification of INFINT’s historical accumulated deficit against the additional paid-in capital of the Combined Company. Seamless’ accumulated deficit will carry forward to the Combined Company since Seamless is deemed the acquirer for accounting purposes. | |
| (10) | Represents the write-off of the remaining difference upon settlement of the deferred underwriting fees. | |
| (11) | Represents $2,000,000 of expenses paid to vendors via the issuance of 200,000 shares at the Closing. | |
| (12) | Represents the allocation of proceeds from the PIPE Offering to 400,000 shares and warrants to purchase 136,110 shares. | |
| (13) | Represents the impact on the equity accounts of the public shareholders exercising their right for the redemption of 4,652,105 outstanding Class A ordinary shares in exchange for cash held in the trust account. |
| 54 |
N – Represents the amount of cash used by INFINT for share redemptions, and the impact on the equity accounts, resulting from the public holders of INFINT’s Class A ordinary shares exercising their right for the redemption of 4,652,105 outstanding Class A shares, or 98.0% of the total public shares subject to redemption, in exchange for cash held in the trust account.
O – Issued and outstanding shares for each class of ordinary shares and preferred shares as of June 30, 2024 on a historical basis and on a pro forma basis are as follows:
| Historical as of June 30, 2024 | ||||||||||||||||
| Issued and Outstanding | Pro Forma | |||||||||||||||
| Seamless | INFINT | Issued | Outstanding | |||||||||||||
| Preferred Shares | — | — | — | — | ||||||||||||
| Common Shares | ||||||||||||||||
| INFINT’s Class A public shareholders(1) | — | 4,747,021 | 94,916 | 94,916 | ||||||||||||
| Existing Seamless shareholders | 58,030,000 | — | 40,000,000 | (2) | 40,000,000 | (2) | ||||||||||
| INFINT’s converted founder shares(3) | — | 4,483,026 | 4,483,026 | 4,483,026 | ||||||||||||
| Other converted Class B shares(3) | — | 1,250,058 | 1,250,058 | 1,250,058 | ||||||||||||
| Underwriters’ converted Class B shares(3) | — | 99,999 | 99,999 | 99,999 | ||||||||||||
| Vendors(4) | — | — | 200,000 | 200,000 | ||||||||||||
| PIPE investor(5) | — | — | 400,000 | 400,000 | ||||||||||||
| Total Common Shares | 58,030,000 | 10,580,104 | 46,527,999 | 46,527,999 | ||||||||||||
| (1) | Represents the shares held by INFINT’s public shareholders after giving effect to the redemption of the Class A ordinary shares upon consummation of the Business Combination. | |
| (2) | Represents the Class A ordinary shares granted as merger consideration in exchange for the ordinary shares held by Seamless’ existing shareholders. The number of shares of Currenc was determined by dividing Seamless’ Company Value (as defined in the Business Combination Agreement) of $400,000,000 by INFINT’s share price of approximately $10.00 per share, resulting in 40,000,000 shares. | |
| (3) | Represents the Class A ordinary shares held by the initial sponsors of INFINT, other shareholders and the Underwriters upon the one-for-one conversion of the Class B shares into Class A ordinary shares immediately prior to the consummation of the Business Combination. | |
| (4) | Represents the Class A ordinary shares granted to vendors as payment for their services at the Closing. | |
| (5) | Represents the Class A ordinary shares issued in the PIPE Offering that occurred simultaneous with the Closing. |
P – Represents the settlement of the balance on promissory note owed by INFINT to Seamless upon the consummation of the Business Combination.
Q – Represents the $1.75 million in net proceeds received upon completion of the PIPE Offering that occurred simultaneous with the closing of the Business Combination, of which $1.5 million was allocated to a convertible note and $0.25 million was allocated to equity (see Note M). Such classifications are preliminary and subject to change as additional information becomes available and additional analyses are performed, and such changes could be material once the final accounting positions and valuations are determined by the Company.
R – Represents $2,000,000 of expenses paid to vendors via the issuance of 200,000 shares at the Closing.
S – Represents $3,200,000 of accruals owed to an attorney settled via the issuance of a promissory note.
| 55 |
NOTE 3 – ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND FOR THE YEAR ENDED DECEMBER 31, 2023
Six Months Ended June 30, 2024
The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2024 includes the following adjustments:
aa – The adjustments in this column reflect the effect of certain transactions that were completed prior to the Closing of the Business Combination as if the transactions had taken place on January 1, 2023, and which have an impact on the historical statement of operations of Seamless for the six months ended June 30, 2024. Specifically, these transactions include: (1) the divestiture by Seamless of all of the equity interests that it owned in the Divested Entities such that the Divested Entities are no longer Affiliates of Seamless or included in the consolidated financial statements of Seamless; and (2) the exercise by the holder of a conversion right under the Convertible Bond Instrument to convert that instrument into Seamless shares. The transactions included in adjustments column “aa” include:
| Pro Forma Statement of Operations Line Item | Divestitures | Remove Interest on Convertible | Total Adjustments | |||||||||
| (1) | (2) | (aa) | ||||||||||
| Revenue | $ (3,062,945 | )(bb) | $ | - | $ | (3,062,945 | ) | |||||
| Cost of revenue | (2,129,693 | )(cc) | - | (2,129,693 | ) | |||||||
| Gross profit (loss) | (933,252 | ) | - | (933,252 | ) | |||||||
| Expenses | ||||||||||||
| Selling expenses | (9,759 | )(dd) | - | (9,759 | ) | |||||||
| General and administrative | (2,942,980 | )(dd) | - | (2,942,980 | ) | |||||||
| (2,952,739 | ) | - | (2,952,739 | ) | ||||||||
| Operating income (loss) | 2,019,487 | - | 2,019,487 | |||||||||
| Other expense (income) | ||||||||||||
| Other expense (income), net | 83,540 | (dd) | - | 83,540 | ||||||||
| Interest expense, net | (1,686,456 | )(dd) | (995,472 | )(ee) | (2,681,928 | ) | ||||||
| Total other expense (income), net | (1,602,916 | ) | (995,472 | ) | (2,598,388 | ) | ||||||
| Loss before income taxes | 3,622,403 | 995,472 | 4,617,875 | |||||||||
| Income tax expense | - | - | - | |||||||||
| Net loss | $ | 3,622,403 | $ | 995,472 | $ | 4,617,875 | ||||||
| Net income attributable to noncontrolling interests | - | - | - | |||||||||
| Net loss attributable to controlling interests | $ | 3,622,403 | $ | 995,472 | $ | 4,617,875 | ||||||
| Pro forma net loss per share information: | ||||||||||||
| Weighted average shares outstanding | 58,030,000 | 58,030,000 | 58,030,000 | |||||||||
| Basic and diluted net loss per share attributable to controlling interests | $ | 0.06 | $ | 0.02 | $ | 0.08 | ||||||
Adjustments related to these pre-Closing transactions are as follows:
bb – Reflects the elimination of revenue of the Divested Entities.
cc – Reflects the elimination of the cost of revenue of the Divested Entities.
dd – Reflects the elimination of expenses of the Divested Entities.
ee – Reflects the removal of historical interest expense on the convertible bonds, as if the convertible bonds had been converted to ordinary shares on January 1, 2023.
Transaction accounting adjustments:
ff – Represents insurance expense for the Combined Company’s Directors’ and Officers’ liability insurance premium.
gg – Represents employee compensation expense under Seamless’ 2022 Incentive Plan from the vesting of restricted stock units.
hh – Represents the elimination of interest on the marketable securities held in INFINT’s trust account.
| 56 |
Year Ended December 31, 2023
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 includes the following adjustments:
ii – The adjustments in this column reflect the effect of certain transactions that were completed prior to the Closing of the Business Combination as if the transactions had taken place on January 1, 2023, and which would have an impact on the historical statement of operations of Seamless for the year ended December 31, 2023. Specifically, these transactions include: (1) the divestiture by Seamless of all of the equity interests that it owns in the Divested Entities such that the Divested Entities are no longer Affiliates of Seamless or included in the consolidated financial statements of Seamless; and (2) the exercise by the holder of a conversion right under the Convertible Bond Instrument to convert that instrument into Seamless shares. The transactions included in adjustments column “ii” include:
| Pro Forma Statement of Operations Line Item | Divestitures | Remove Interest on Convertible Bonds Payable | Total Adjustments | |||||||||
| (1) | (2) | (ii) | ||||||||||
| Revenue | $ (7,447,535 | )(jj) | $ | - | $ | (7,447,535 | ) | |||||
| Cost of revenue | (4,207,395 | )(kk) | - | (4,207,395 | ) | |||||||
| Gross profit (loss) | (3,240,140 | ) | - | (3,240,140 | ) | |||||||
| Expenses | ||||||||||||
| Selling expenses | (25,880 | )(ll) | - | (25,880 | ) | |||||||
| General and administrative | (5,584,455 | )(ll) | - | (5,584,455 | ) | |||||||
| (5,610,335 | ) | - | (5,610,335 | ) | ||||||||
| Operating income (loss) | 2,370,195 | - | 2,370,195 | |||||||||
| Other expense (income) | ||||||||||||
| Other expense (income), net | (118,697 | )(ll) | - | (118,697 | ) | |||||||
| Interest expense, net | (3,056,895 | )(ll) | (2,631,268 ) | (mm) | (5,688,163 | ) | ||||||
| Total other expense (income), net | (3,175,592 | ) | (2,631,268 | ) | (5,806,860 | ) | ||||||
| Loss before income taxes | 5,545,787 | 2,631,268 | 8,177,055 | |||||||||
| Income tax expense | - | - | - | |||||||||
| Net loss | $ | 5,545,787 | $ | 2,631,268 | $ | 8,177,055 | ||||||
| Net income attributable to noncontrolling interests | - | - | - | |||||||||
| Net loss attributable to controlling interests | $ | 5,545,787 | $ | 2,631,268 | $ | 8,177,055 | ||||||
| Pro forma net loss per share information: | ||||||||||||
| Weighted average shares outstanding | 58,030,000 | 58,030,000 | 58,030,000 | |||||||||
| Basic and diluted net loss per share attributable to controlling interests | $ | 0.10 | $ | 0.05 | $ | 0.14 | ||||||
Adjustments related to these pre-Closing transactions are as follows:
jj – Reflects the elimination of revenue of the Divested Entities.
kk – Reflects the elimination of the cost of revenue of the Divested Entities.
ll – Reflects the elimination of expenses of the Divested Entities.
mm – Reflects the removal of historical interest expense on the convertible bonds, as if the convertible bonds had been converted to ordinary shares on January 1, 2023.
Transaction accounting adjustments:
nn – Represents insurance expense for the Combined Company’s Directors’ and Officers’ liability insurance premium.
| 57 |
oo – Represents employee compensation expense under Seamless’ 2022 Incentive Plan from the vesting of restricted stock units upon the occurrence of the Business Combination and during the first twelve months thereafter.
pp – Represents the elimination of interest on the marketable securities held in INFINT’s trust account.
qq – Includes $2,854,407 of transaction costs principally related to professional fees associated with the Transactions that are expected to be expensed at or around the time of the Closing, including $2.0 million paid to vendors via the issuance of shares. These costs are incremental to the transaction costs that are included in General and administrative expenses in the historical statements of operations of Seamless and INFINT for the six months ended June 30, 2024 and for the year ended December 31, 2023 (see Note 4). Such transaction costs are not expected to recur in the income of the Combined Company beyond 12 months after the Business Combination.
rr – Also included in the adjustment to transaction costs are the Extension fees totaling $160,000 that were paid by Seamless from July 1, 2024 through the Business Combination date of August 30, 2024 pursuant to the Business Combination Agreement, in order to extend the date by which the Business Combination must be consummated from August 23, 2023 to November 23, 2024. The expense for Extension fees is not expected to recur in the income of the Combined Company beyond 12 months after the Business Combination.
Net Loss per Share
ss – Represents the pro forma weighted average number of ordinary shares outstanding and pro forma net loss per share attributable to the controlling interest, calculated after giving effect to the Transactions, as follows:
For the Six Months ended June 30, 2024 | For the Year ended December 31, 2023 | |||||||
| Numerator | ||||||||
| Pro forma net loss attributable to controlling interest | $ | (8,448,534 | ) | $ | (34,531,424 | ) | ||
| Denominator | ||||||||
| INFINT’s Class A public shareholders(1) | 94,916 | 94,916 | ||||||
| Existing Seamless equity holders(2) | 40,000,000 | 40,000,000 | ||||||
| INFINT’s converted founder shares(3) | 4,483,026 | 4,483,026 | ||||||
| Other converted Class B shares(3) | 1,250,058 | 1,250,058 | ||||||
| Underwriters’ converted Class B shares(3) | 99,999 | 99,999 | ||||||
| Vendors(4) | 200,000 | 200,000 | ||||||
| PIPE investor(5) | 400,000 | 400,000 | ||||||
| Basic and diluted weighted average shares outstanding | 46,527,999 | 46,527,999 | ||||||
| Net loss per common share attributable to controlling interest | ||||||||
| Basic and diluted(6) | $ | (0.18 | ) | $ | (0.74 | ) | ||
(1) Represents the shares held by INFINT’s public shareholders after giving effect to the redemption of the Class A ordinary shares upon consummation of the Business Combination.
(2) Represents the Class A ordinary shares granted as merger consideration in exchange for the ordinary shares held by Seamless’ existing shareholders.
(3) Represents the Class A ordinary shares held by the initial sponsors of INFINT, other shareholders and the Underwriters upon the one-for-one conversion of the Class B shares into Class A ordinary shares immediately prior to the consummation of the Business Combination.
(4) Represents the Class A ordinary shares granted to vendors as payment for their services at the Closing.
(5) Represents the Class A ordinary shares issued in the PIPE Offering that occurred simultaneous with the Closing.
(6) The calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the Transactions occurred as of January 1, 2023. Thus, consistent with this assumption, the weighted average shares outstanding reflect the ordinary shares as outstanding for the entire six months ended June 30, 2024 and year ended December 31, 2023.
Potentially dilutive shares have been deemed to be anti-dilutive due to the net loss position and, accordingly, have been excluded from the calculation of diluted loss per share. Potentially dilutive shares that have been excluded from the determination of diluted loss per share include 17,796,782 outstanding warrants issued in connection with the INFINT IPO and Private Placement, and 194,444 shares subject to conversion and warrants to purchase 136,110 shares issued pursuant to the PIPE Offering.
NOTE 4 – NONRECURRING ITEMS
The historical statements of operations of Seamless and INFINT for the six months ended June 30, 2024 and for the year ended December 31, 2023 include, in general and administrative expenses, a combined total of $1,200,952 and $2,341,690 of transaction costs, respectively.
The historical statements of operations of Seamless for the six months ended June 30, 2024 and for the year ended December 31, 2023 include, in general and administrative expenses, $560,000 and $2,540,000 of Extension fees, respectively.
Such transaction costs and Extension fees are not expected to recur in the income of the Combined Company beyond 12 months after the Business Combination.
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MARKET INFORMATION FOR ORDINARY SHARES AND DIVIDEND POLICY
Market Information
Our Ordinary Shares are listed on the Nasdaq Capital Market under the symbol “CURR.”. As of September 17, 2024, there were 27 holders of record of our Ordinary Shares.
Dividend Policy
We have not paid any cash dividends on our Ordinary Shares to date. The payment of cash dividends by us in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our Board.
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Management’s Discussion and ANALYSIS of financial condition and results of operations
You should read the following discussion and analysis of Seamless’ financial condition and results of operations in conjunction with the consolidated financial statements and the related notes included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties. Seamless’ actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this proxy statement and prospectus.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Seamless,” “it,” or “their,” generally refer to Seamless Group Inc. prior to the Business Combination and to Currenc Group Inc. after giving effect to the Business Combination.
Overview
Through our two major lines of business, remittance and airtime, Currenc is a leading operator of global money transfer services and airtime trading in Southeast Asia. The remittance business facilitates users in different countries sending money from one country to another in a low cost and efficient manner. The airtime business sells airtime to users in different countries worldwide, including retail users in Indonesia. Seamless operates the two different business lines through four main subsidiaries: Tranglo, WalletKu, TNG Asia and GEA. Seamless operates the global remittance business mainly through Tranglo, which is one of the leading money remittance platforms in Southeast Asia. TNG Asia and GEA are also in the remittance business which target retail customers and generated the majority of revenues by providing remittance services to retail users. TNG Asia and GEA place their remittance orders to Tranglo, and therefore are considered upstream operators of the remittance business, whereas Tranglo, which provides business-to-business (“B2B”) remittance services for financial institutions such as TNG Asia and GEA, is considered a downstream player of the remittance industry. Seamless also provides cross-border international airtime transfer services through Tranglo, acting as a switching platform provider for telecom airtime transfer and a wholesale reseller of foreign airtime. Seamless also runs WalletKu, which is an Indonesian airtime operator facing end users directly. Seamless will divest its ownership of TNG Asia and GEA prior to the closing of the Business Combination.
Tranglo is a leading global money and airtime transfer hub in Southeast Asia. For Tranglo’s money remittance business, it provides a single unified application programming interface for licensed banks and money service operators and acts as a one-stop settlement agent for cross-border money transfer, offering customers the ability to process payments globally. At June 30, 2024, Tranglo had more than 5,000 bank partners, 35 eWallets, 130,000 cash pick-up points, and 124 corporate clients for remittances, with a remittance network covering more than 70 countries. It managed over 11.2 million transactions with a total value of $3.55 billion for the year ended December 31, 2022. As for the year ended December 31, 2023, Tranglo processed around 11.0 million transactions with a total value of $4.54 billion, which represents a minor decrease in volume by 1.8% as compared to 11.2 million transactions, and a growth in value by approximately 28% as compared to the total processing value of $3.55 billion for the year ended December 31, 2022. As for the six-month period ended June 30, 2024, Tranglo processed around 5.8 million transactions with a total processing value of $2.7 billion, which represents a growth in volume by 7.4% as compared to 5.4 million transactions, and a growth in total processing value by 22.7% as compared to the total processing value of $2.2 billion for the six-month period ended June 30, 2023. As for the six-month period ended June 30, 2024, the top four sending countries for Tranglo’s remittance business were UK, Hong Kong, Singapore and Korea, whereas the top four receiving countries were Philippines, Indonesia, Thailand and Vietnam. The predominant portion of Tranglo’s Hong Kong related revenue is derived from two customers, TNG Asia and GEA, which have been divested by Seamless prior to Business Combination, are expected to remain customers after the Divestiture. Based on the six-month period ended June 30, 2024 operating results, post-Divestiture, Seamless expects that the percentage of revenue generated in Hong Kong and the PRC would continue to represent approximately 7.6% of Seamless Group’s total revenue.
The number of Tranglo unique users increased from 949,000 users as of December 31, 2022 to 1,032,000 as of December 31, 2023, and the number of global money transfer transactions decreased mildly from 11.2 million in the year ended December 31, 2022 to 11.0 million in the year ended December 31, 2023. The number of average monthly unique sending accounts has also increased from 267,201 in 2022 to 330,571 in 2023. The number of unique users increased to 820,000 as of June 30, 2024 from 705,000 as of June 30, 2023, while the number of global money transfer transactions increased from 5.4 million for the six-month period ended June 30, 2023 to 5.8 million for the six-month period ended June 30, 2024. The number of average monthly unique sending accounts increased from 325,000 for the six-month period ended June 30, 2023 to 367,000 for the six-month period ended June 30, 2024.
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Tranglo is also a global airtime transfer hub, offering cross-border airtime wholesale and transfer services. At June 30, 2024, Tranglo has partnered with more than 500 mobile operators that cover 150 countries and served more than 40 airtime corporate customers. Tranglo managed over 5.3 million transactions with a total value of $12.2 million for the year ended December 31, 2023, which compared to 7.7 million transactions with a total value of $18.4 million for the year ended December 31, 2022. As for the six-month period ended June 30, 2024, Tranglo processed 2.2 million airtime transfer transactions with a total value of $5.0 million, representing a decrease of 21.8% in volume and 23.1% in value as compared to 2.8 million transactions with a total value of $6.5 million for the six-month ended June 30, 2023. For the six-month period ended June 30, 2023, the airtime unique user accounts decreased to 426,000, representing a decline of 24.4% as compared to 564,000 for the six-month period ended June 30, 2023. The monthly average unique sending accounts also decreased to 145,000 for the six-month period ended June 30, 2024, representing a decline of 21.1% as compared to 184,000 for the six-month period ended June 30, 2023.
WalletKu is an independent electronic platform in Indonesia directly facing end users, and allows its customers to purchase airtime and conduct internet data top-up. WalletKu platform also allows users to conduct cash top-up, transfers, and utility or bill payments. WalletKu is also a participant in the Indosat Cluster Partnership for managing the marketing work of Indosat telecommunication and airtime products in two cluster areas in Indonesia. WalletKu served approximately 132,000 customers as of June 30, 2024, distributing airtime with a total value of $6.2 million for the six-month period ended June 30, 2024.
TNG Asia operates an eWallet operation in Hong Kong, targeting the niche market of overseas workers, i.e., Philippine and Indonesian overseas domestic workers living in Hong Kong. There are currently over 350,000 overseas domestic workers in Hong Kong. TNG Asia strives to provide financial services to these overseas workers who are often denied normal banking services, sometimes referred to as “unbankable.” Also, these overseas workers have a strong demand for remitting money back to their homelands on a regular basis. Unlike traditional eWallet payment companies which generate most of their revenue through merchant purchases or payments, TNG Asia generates 80-95% of its revenue by offering the money remittance services to these overseas workers. As at June 30, 2024, TNG eWallet has more than 926,000 members or end users. TNG Asia processed around 0.85 million remittance transactions with a total processing value of around $197 million for the six-month period ended June 30, 2024, which compared to 1.15 million transactions with a total processing value of around $264 million for the six-month period ended June 30, 2023.
GEA is a remittance agent which mainly serves TNG Asia in remitting money to overseas countries. GEA provides a prefunding facility for TNG Asia and conducts foreign exchange (“Forex”) conversion for TNG Asia’s customers. GEA also provides currency conversion and remittance services for other clients and earns revenue via Forex spread markups.
Tranglo, TNG Asia and GEA are all involved in the global money remittance business. Tranglo serves mostly banks and financial institutions and thus is a B2B remittance platform. On the other hand, TNG Asia operates an eWallet in Hong Kong, which serves as the business-to-customer (“B2C”) retail remittance operator. TNG Asia has been placing most, if not all, of its remittance orders to GEA for processing and is the most important client of GEA. GEA’s income from clients other than TNG Asia has been insignificant as compared to that from TNG Asia. In turn, GEA places most of its orders to Tranglo for processing. Therefore, TNG Asia and GEA are customers of Tranglo and are expected to continue to be so following the divestitures. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for additional information regarding the financial effects of the divestitures. Although immediately following the divestitures, Seamless will not provide remittance services directly to individuals, it may develop those services in the future.
Currenc’s business model is highly scalable and transferrable to other geographic markets. Through its connection with RippleNet, Tranglo’s global money remittance network could be expanded rapidly and extended to cover more regions and countries globally. Moreover, the knowledge and experience it has gained through its Indonesian and eWallet operations has helped it to understand the pain points faced by individuals and merchants in Asian markets, and facilitate its development on infrastructure, product and compliance processes of its future B2C services which cover payment, remittance, airtime trading or other fintech operations. This will allow it to rapidly replicate and build up its business across its core markets in Southeast Asian and Middle East countries, e.g., the Philippines, Indonesia, Vietnam, Cambodia, and Abu Dhabi.
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Historically, Seamless has derived its revenue from operations centered in Malaysia, Indonesia and Hong Kong, but servicing transactions and customers located throughout Southeast Asia and globally. Following the divestitures, Currenc’s operations are based in Malaysia and Indonesia but, as discussed above, generate significant revenue from cross-border transactions throughout Southeast Asia and globally.
In connection with a capital raise for WalletKu in 2021 to fund an expansion of WalletKu’s business by participating in the Indosat Partnership program, Seamless disposed of a controlling stake of WalletKu on March 9, 2021, resulting in WalletKu no longer be accounted for as a subsidiary of Seamless beginning in March 2021. In connection with a further capital for WalletKu in 2022 to address WalletKu’s working capital requirements in which the controlling shareholder did not participate, Seamless reacquired a controlling interest in WalletKu in June 2022, resulting in WalletKu being accounted for as a subsidiary of Seamless beginning in June 2022. These transactions had the effect of causing WalletKu’s contribution to the consolidated assets, revenue and other statement of operations items to fluctuate as WalletKu was deconsolidated and then reconsolidated.
Seamless’ revenue was $53.3 million for the year ended December 31, 2023, which decreased by 4% as compared to $55.5 million for the year ended December 31, 2022. This is mainly due to a decline of more than 34% in Tranglo’s airtime business, from $18.4 million for the year ended December 31, 2022, to $12.2 million for the year ended December 31, 2023. The overall remittance revenues were $26.7 million for the year ended December 31, 2023, which was at roughly the same level of the year ended December 31, 2022. On the other hand, the revenue generated by the Indonesian airtime business, WalletKu, increased from $10.1 million for the year ended December 31, 2022 to $14.2 million for the year ended December 31, 2023. This was mainly due to Seamless’ consolidation of approximately 7 months of operating results of WalletKu since reacquiring the control over WalletKu in June 2022, whereas in the year ended December 31, 2023, Seamless included the full year operating results of WalletKu.
For the six-month period ended June 30, 2024, Seamless’ revenue decreased by 11.4% to $24.1 million as compared to $27.2 million for the six month period ended June 30, 2023. Remittance revenue decreased by 5.9% from $13.6 million to $12.8 million due to a decline in the remittance revenue of TNG Asia in the first six months of 2024. Also, the global airtime transfer business continued its decline by 23.1% from $6.5 million to $5.0 million for the six-month period ended June 30, 2024 as compared to the six-month period ended June 30, 2023. Seamless’ Indonesian airtime revenue decreased slightly by 11.4% to $6.2million for the six-month period ended June 30, 2024, which compared to $7.0 million for the six-month period ended June 30, 2023.
For its money transfer business, Seamless generates two main streams of remittance revenue, namely the transaction fees which are charged on every cross-border money transfer transaction, and currency conversion fees, i.e., Forex Gains, which are charged through add-on currency spreads on the conversion of currencies for its customers. Both TNG Asia and Tranglo generate remittance revenues by charging users the transaction fees and Forex spreads. Seamless’ remittance revenue has been contributed mostly by Tranglo’s remittance business, and Seamless’ remittance revenue was $26.7 million for the year ended December 31, 2023, which was at roughly the same level as the year ended December 31, 2022.
For the six-month period ended June 30, 2024, Seamless’ remittance revenue decreased by 5.9% to $12.8 million as compared to $13.6 million for the six-month period ended June 30, 2023. The decrease was mainly due to a decline in remittance revenue contributed by TNG Asia during the period.
Previously, Tranglo offered only the Fiat prefunding remittance services for its clients. In late 2021, Tranglo started to offer a new line of remittance services – the ODL prefunding remittance services – for its customers. As Tranglo charges lower transaction fees and currency conversion fees for its ODL remittance flows, and as the keen market competition has exerted pressure on Tranglo’s pricings, there has been a continual decline in Tranglo’s overall take rates for its remittance services in the past two years. As a result, the remittance revenue contributed by Tranglo for the year ended December 31, 2023 declined slightly by 3% to $19.4 million as compared to $20.0 million for the year ended December 31, 2022, despite that the TPV increased by 28% to $4.54 billion for the year 2023, as compared to $3.55 billion for the year 2022. On the other hand, the remittance revenue contributed by TNG Asia and GEA increased by 14% to $9.6 million for the year ended December 31, 2023 as compared to $8.4 million for the year ended December 31, 2022.
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For the six-month period ended June 30, 2023, due to its pricing competitiveness, Tranglo succeeded in capturing higher market share and expanding its market reach and as a result, Tranglo’s TPV increased by 33.3% as measured in RM. However, when converted to the USD, the TPV increased by only 22.7%, from $2.2 billion to $2.7 billion. As a result of the declining in take rates by 21.7%, Tranglo’s remittance revenue remained unchanged at $9.8 million for the six-month period ended June 30, 2024, as compared to the six-month period ended June 30, 2023. On the other hand, the remittance revenue contributed by TNG Asia and GEA decreased by 24.5% to $3.7 million for the six-month period ended June 30, 2024 as compared to $4.9 million for the six-month period ended June 30, 2023.
There was a temporary suspension of ODL services for most of Tranglo’s active ODL partners in mid of March 2023 due to market turmoil and illiquidity of the crypto market, and that the recovery of ODL flows had been slow thereafter. The market turmoil appeared after the collapse of Silicon Valley Bank, Silvergate Bank and Signature Bank around March 2023. As most of the crypto exchanges and market makers maintain their operating accounts with Silvergate and Signature Banks, the collapse of these banks led to illiquidity of the crypto market, and the inability of crypto exchanges to liquidate XRP for supporting ODL transactions. As such, both Ripple and Tranglo agreed to suspend most of the ODL services temporarily. Despite Ripple and Tranglo resuming most of the ODL services after two weeks of temporary suspension, many ODL partners relied more on the fiat prefunding means for their remittance flows via Tranglo’s platform, and thus were slow in resuming their ODL flows. As a result, Tranglo’s ODL flows still represented only 9.9% of the total processing value of Tranglo in December 2023, which compared to 26% of the total processing value in February 2023. For the year ended December 31, 2023, Tranglo’s ODL flows represented 10.5% of its total processing value, which compared to that of 20.3% for the year ended December 31, 2022. For the six-month period ended June 30, 2024, the ODL flows represented 5.5% of its total processing value, as compared to 13.8% for the six-month period ended June 30, 2023.
Tranglo Remittance Business Analysis
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| (Ringgit in Thousands) | ||||||||||||||||
| Total Processing Value (TPV) | 12,797,336 | 9,588,926 | 20,685,853 | 15,648,773 | ||||||||||||
| ●Fiat Flows (%) | 94.5 | % | 86.2 | % | 89.5 | % | 79.7 | % | ||||||||
| ●ODL Flows (%) | 5.5 | % | 13.8 | % | 10.5 | % | 20.3 | % | ||||||||
| Numbers of Transactions Processed | 5,849,240 | 5,393,860 | 10,998,284 | 11,165,913 | ||||||||||||
| ●Fiat Flows (%) | 96 | % | 84.2 | % | 89 | % | 78 | % | ||||||||
| ●ODL Flows (%) | 4 | % | 15.8 | % | 11 | % | 22 | % | ||||||||
| Average Transaction Size | 2.188 | 1.778 | 1.881 | 1.401 | ||||||||||||
| Overall Transaction Fees Take Rate % | 0.27 | % | 0.35 | % | 0.32 | % | 0.45 | % | ||||||||
| Overall Forex Gains take rate % | 0.09 | % | 0.11 | % | 0.11 | % | 0.12 | % | ||||||||
| Total Remittance Revenue | 46,504 | 43,811 | 88,427 | 88,428 | ||||||||||||
| Payout Agency Rate % | -0.11 | % | -0.16 | % | -0.15 | % | -0.23 | % | ||||||||
| Payout Processing Costs | (14,650 | ) | (15,186 | ) | (30,504 | ) | (35,892 | ) | ||||||||
| Gross Profit Gain Rate % | 0.25 | % | 0.30 | % | 0.28 | % | 0.34 | % | ||||||||
| Gross Profit | 31,854 | 28,625 | 57,923 | 52,536 | ||||||||||||
Total processing value (“TPV”) is the total cross-border remittance funds processed and sent by Tranglo during the relevant period. The overall total transaction fees take rate is calculated by dividing the total transaction fees charged for the remittance transactions processed by the corresponding TPV for those transactions. The overall Forex gains take rate is calculated by dividing the total foreign exchange gains obtained on the remittance transactions processed by the TPV for those transactions. The payout agency rate is calculated by dividing the direct costs paid by Tranglo to payout agents for processing the remittance money payouts for the remittance transactions by the TPV for those transactions. The gross profit gain rate is measured by dividing the gross profit generated by Tranglo’s remittance business by the TPV for the remittance transactions processed.
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Tranglo monitors these metrics to better understand the performance of its business, to compare the impact of different fees and cost structures internally and with competitor of different scales, and to develop pricing strategies and gauge price competitiveness and profitability of different remittance operators. The fees and Forex Gain take rates are also important parameters for Tranglo to assess if the fees and prices being offered are competitive in the market, and the payout rate is monitored by Tranglo with a view toward cost control and reinforcing profitability. Similarly, investors can use these metrics to understand the performance of Tranglo’s business, the relationship between growth in TPV, growth in revenue and changes in the gross profit gain rate.
For the year ended December 31, 2022, Tranglo processed 11.2 million remittance transactions, with the average transaction size being RM1,401 or $318. As a result, the total processing value was $3.55 billion for the year ended December 31, 2022. For the year ended December 31, 2023, Tranglo processed 11.0 million transactions which represented a slight decrease of 2% as compared to the 11.2 million transactions for the year ended December 31, 2022. However, as the average transaction size increased to RM1,881, or $413, the total procession value increased by approximately 28% from $3.55 billion to $4.54 billion for the year ended December 31, 2023.
As measured in RM, the total processing value for the year ended December 31, 2023 increased by 32.7% to RM20.7 billion as compared to RM15.6 billion for the year ended December 31, 2022. When converted to USD, Tranglo’s total processing value increased by 28% from $3.55 billion for the year ended December 31, 2022, to $4.54 billion for the year ended December 31, 2023.
For the six-month period ended June 30, 2024, Tranglo processed 5.8 million remittance transactions, with an average transaction size of RM2,188. This represents an increase of 7.4% in remittance volume and a growth of 23.1% in the average transaction size, as compared to 5.4 million transactions and an average transaction size of RM1,778 for the six-month period ended June 30, 2023. As a result, as measured in RM, the total processing value for the six-month period ended June 30, 2024 increased by 33.3% to RM12.8 billion as compared to RM9.6 billion for the six-month period ended June 30, 2023. When converted to USD, Tranglo’s total processing value increased by 22.7% from $2.2 billion for the six-month period ended June 30, 2023, to $2.7 billion for the six-month period ended June 30, 2024.
Tranglo’s average transaction fee take rate and the currency conversion take rate (Forex gain rate) as measured in RM for the year ended December 31, 2022 were 0.45% and 0.12%, respectively, making the average total take rate for the year 2022 0.57%. When converted into USD, the total average take rate was 0.56% for the year 2022. As a result, Tranglo’s remittance revenue was $20.0 million for the year ended December 31, 2022. Tranglo’s average transaction fee take rate and currency conversion take rate as measured in RM declined to 0.32% and 0.11%, respectively, for the year ended December 31, 2023, making the total average take rate of 0.43% for the year 2023. This represented a decline of 25% as compared to 0.57% for the year 2022. When converted into USD, the total average take rate was 0.43% which generated $19.4 million remittance revenue for Tranglo for the year 2023.
Tranglo’s average transaction fee take rate and the currency conversion take rate (Forex gain rate) as measured in RM for the six-month period ended June 30, 2023 were 0.35% and 0.11%, respectively, making the average total take rate of 0.46%. When converted into USD, the total average take rate was the same 0.46% for the same period in 2023. As a result, Tranglo’s remittance revenue was $9.8 million for the six-month period ended June 30, 2023. Tranglo’s average transaction fee take rate and currency conversion take rate as measured in RM declined to 0.27% and 0.09%, respectively, making the total average take rate of 0.36% for the six-month period ended June 30, 2024. This represented a decline of 21.7% as compared to 0.46% for the six-month period ended June 30, 2023. When converted into USD, the total average take rate was also the same 0.36% which generated $9.8 million remittance revenue for Tranglo for the six-month period ended June 30, 2024.
Previously, Tranglo offered only the Fiat prefunding remittance services for its clients, i.e. the Fiat Remittance Partners (“Fiat RPs”). In late 2021, Tranglo started to offer a new line of remittance services – the ODL prefunding remittance services – for its ODL Remittance Partners (“ODL RPs”). Many of Tranglo’s ODL RPs are also Fiat RPs and thus can make use of either Tranglo’s Fiat prefunding services or ODL prefunding services.
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In addition to intense market competition and the downward pricing pressure, Tranglo’s integration with RippleNet and On-Demand Liquidity facility of Ripple and the commencement of its ODL prefunding remittance services in August 2021 has further pushed down its overall fees offered to the market. As part of the RippleNet and ODL arrangement, Tranglo has offered lower transaction fees and lower currency conversion fees for those clients who submit their orders using ODL prefunding facilities. Moreover, the ODL system allows clients to directly convert their sending currencies into the recipient currencies, like from USD to Philippine Peso, thus bypassing the need for Tranglo to conduct currency conversion. In that case, Tranglo would not be able to charge currency conversion fees for certain ODL remittance flows. Since Tranglo integrated with RippleNet in August 2021, and started offering the ODL remittance services, the ODL remittance flows increased significantly in the year 2022. For the year end December 31, 2022, the ODL flows increased substantially to represent 20.3% of the total processing value.
For the year ended December 31, 2022, Tranglo’s average transaction fee take rate and the average Forex gain take rate as measured in RM were 0.45% and 0.12%, respectively, making the total average take rate of 0.57%. As for the year ended December 31, 2023, the average transaction fee take rate and the average Forex gain take rate as measured in RM declined to 0.32% and 0.11%, respectively, making the total average take rate of 0.43% which represented a decline of 25% in the average total take rate. Both the take rates of Fiat remittances and ODL remittances declined during the periods. When converted into USD, the total average take rate decreased to 0.43% for the year ended December 31, 2023, which represented a decline of 23% as compared to 0.56% for the year ended December 31, 2022. On the other hand, due to lower fees in both Tranglo’s Fiat and ODL remittance services, Tranglo succeeded in capturing higher market share and expanding its market reach and as a result, Tranglo’s TPV increased by 33.5% as measured in RM. However, when converted to the USD, the TPV increased by only 28%, from $3.55 billion to $4.54 billion. As a result of the decline in take rates by 23%, Tranglo’s remittance revenue decreased by 3% to $19.4 million for the year ended December 31, 2023, as compared to $20.0 million for the year ended December 31, 2022.
For the six-month period ended June 30, 2023, Tranglo’s average transaction fee take rate and the average Forex gain take rate as measured in RM were 0.35% and 0.11%, respectively, making the total average take rate of 0.46%. As for the six-month period ended June 30, 2024, the average transaction fee take rate and the average Forex gain take rate as measured in RM declined to 0.27% and 0.09%, respectively, making the total average take rate of 0.36% which represented a decline of 21.7% in the average total take rate. The overall take rate of Fiat remittances declined, while that of ODL remittances remained relatively stable during the periods. When converted into USD, the total average take rate was also 0.36% for the six-month period ended June 30, 2024, which represented a decline of 21.7% as compared to 0.46% for the same period in the year of 2023.
On the other hand, due to its pricing competitiveness, Tranglo succeeded in capturing higher market share and expanding its market reach and as a result, Tranglo’s TPV increased by 33.3% as measured in RM. However, when converted to the USD, the TPV increased by only 22.7%, from $2.2 billion to $2.7 billion. As a result of the declining in take rates by 21.7%, Tranglo’s remittance revenue remained unchanged as $9.8 million for the six-month period ended June 30, 2024, as compared to the same period of the year 2023.
The market competition and downward pricing pressure affects both the upstream and downstream players of the global remittance industry. In order to maintain its competitiveness, Tranglo has to offer very competitive fees for the market while also striving to control its direct costs. Tranglo has been working to lower its direct remittance payout costs. The average payout rate of Tranglo was 0.23% for the year ended December 31, 2022, which declined by 35% to 0.15% for the year ended December 31, 2023. For the six-month period ended June 30, 2024, the average payout rate of Tranglo further declined to 0.11%, representing a decline of 31% as compared to 0.16% for the six-month period ended June 30, 2023.
Currenc believes that as the global remittance industry grows rapidly and more competitors have been entering into the market, the downward pressure on pricing is inevitable. In the end, only those who could provide the most cost effective, efficient and reliable services could survive and thrive in the market. Although a decline in transaction fees and Forex take rates would lead to a lower gross profit margin and lower revenue growth in the short term, Currenc believes that by staying competitive in terms of pricing and maintaining low costs on operation, it could eventually capture more market share and expand its business scope and scale in the long run. Tranglo’s integration with RippleNet and ODL is also pivotal to its future development as Tranglo can now offer to its customers ample prefunding liquidity through the use of ODL’s prefunding facility, which many of Tranglo’s competitors could not. Also, Tranglo may make use of the ODL facility itself, and obtain extra liquidity which allows Tranglo to better manage its liquidity and cash position. This is especially important when Tranglo is expanding its remittance business and airtime business scope which requires a larger working capital.
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By December 31, 2022, Tranglo had 87 active business partners who adopted the traditional fiat prefunding means. By December 31, 2023, the number of Tranglo’s active partners adopting the fiat prefunding means decreased slightly to 85, while Tranglo still managed to grow its total processing value by 32.7% as measured in RM, and 27.6% as measured in USD, during the year ended December 31, 2023 as compared to the year 2022. By June 30, 2024, Tranglo’s active remittance partners adopting the Fiat prefunding means slightly declined to 84 while Tranglo managed to grow its remittance TPV by 33.3% as measured in RM, and 22.7% as measured in USD. On the other hand, the number of active ODL partners decreased to 8 by December 31, 2023, and further declined to 6 by June 30, 2024. This was due to a temporary suspension of ODL services in mid-March 2023 when Ripple and Tranglo suspended its ODL services for 9 out of 11 active ODL users as a result of market turmoil and illiquidity in crypto market. The market turmoil appeared after the collapse of Silicon Valley Bank, Silvergate Bank and Signature Bank around March 2023. As most of the crypto exchanges and market makers maintain their operating accounts with Silvergate and Signature Banks, the collapse of these banks led to illiquidity of the crypto market, and the inability of crypto exchanges to liquidate XRP for supporting ODL transactions. As such, both Ripple and Tranglo agreed to suspend most of the ODL services temporarily. Despite Ripple and Tranglo resuming most of the ODL services after two weeks of temporary suspension, many ODL partners relied more on making use of Fiat remittance services of Tranglo, and also, Ripple has tightened its ODL services and increased the fees for ODL remittance partners since then. As a result, many of Tranglo’s remittance partners were slow in resuming their use of Tranglo’s ODL services. As a result, Tranglo’s ODL flows represented only 13.6% of the total processing value of Tranglo in March 2023, which compared to 26% of the total processing value in February 2023. For the six-month period ended June 30, 2024, Tranglo’s ODL flows represented only 5.5% of the TPV, whereas the Fiat prefunding remittance flows represented 94.5% of the TPV. This compared to 21.7% from ODL flows for the three-month period ended March 31, 2023. Despite Tranglo’s ODL remittance services lack of recovery, due to an increase in Fiat remittance business, Tranglo still managed to grow its total TPV to RM2.1 billion for the month of December 2023, which represented a significant increase as compared to the TPV of RM1.35 billion for the month of February 2023 and the TPV of RM1.58 billion for the month of March 2023. For the six-month period ended June 30, 2024, Tranglo’s remittance TPV further increased by 33.3% to RM12.8 billion, as compared to RM9.6 billion for the six-month period ended June 30, 2023.
TNG Asia also generates transaction fee revenue and forex gain revenues for its remittance business. The transaction fees charged are recorded as Net Revenue, whereas the Forex Gain of TNG Asia is recorded under “Other Income” as “Forex Gain”.
In early 2022, the Hong Kong government removed the border restrictions and inflow of overseas migrant workers started to increase. Also, as GEA had integrated with ODL in September 2021, GEA was able to offer TNG Asia low cost and highly competitive remittance services in the market, in addition to ample prefunding liquidity. As such, TNG Asia took the initiative and initiated an aggressive marketing campaign to recapture and expand its market share. As a result, for the year ended December 31, 2022, TNG Asia processed 2.1 million remittance transactions, with a total processing value of $505 million. TNG Asia’s remittance revenue was $8.34 million for the year ended December 31, 2022. For the year ended December 31, 2023, TNG Asia processed 2.3 million remittance transactions with a processing value of $531 million, representing 9.5% and 5.1% increases, respectively, when compared to 2.1 million transactions with a total processing value of $505 million for the year ended December 31, 2022. The average total take rate of TNG Asia was 1.36% which generated $8.3 million remittance revenue for the year ended December 31, 2022.
For the year ended December 31, 2023, TNG Asia’s average total take rate was 1.5% which generated a remittance revenue of $9.6 million. Besides an increase in take rate, the increase in TNG Asia’s remittance revenue during the period was also contributed by an increase in TPV by 5%, from $505 million for the year ended December 31, 2022 to $531 million for the year ended December 31, 2023.
As the market competition intensified, TNG Asia’s remittance business suffered a setback during 2024. For the six-month period ended June 30, 2024, TNG Asia processed around 850,000 remittance transactions with a processing value of $197 million, representing declines of 26% and 25%, respectively, when compared to 1.15 million transactions with a total processing value of $264 million for the six-month period ended June 30, 2023. The average total take rate of TNG Asia was 1.5% which generated $3.7 million remittance revenue for the six-month period ended June 30, 2024, which was similar to the average total take rate of 1.5% that generated $4.8 million for the six-month period ended June 30, 2023.
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GEA’s remittance revenue was $2.7 million for the year ended December 31, 2022. As for the year ended December 31, 2023, GEA’s revenue was $2.6 million, which remained roughly the same level as compared to the year 2022. For the six-month period ended June 30, 2024, GEA’s remittance revenue was $1.0 million, representing a decline of 23% as compared to the $1.3 million remittance revenue for the six-month period ended June 30, 2023.
As TNG Asia has submitted almost all of its remittance transactions to GEA, which in turn has placed the remittance orders to Tranglo for processing, most of TNG Asia’s and GEA’s remittance revenue is also accounted for as remittance revenue of Tranglo. This overlapping in remittance revenues for TNG Asia, GEA and Tranglo, which were $4.3 million and $4.9 million for the year 2022 and 2023, respectively, are eliminated in the preparation of the consolidated financial statements for Seamless. After this elimination, the total remittance revenue for Seamless was $26.7 million for the year ended December 31, 2022, and it remained relatively unchanged for the year ended December 31, 2023.
For the six-month period ended June 30, 2024, the overlapping in remittance revenues was $1.7 million, which compared to $2.5 million for the six-month period ended June 30, 2023. After the elimination, the total remittance revenue for Seamless was $12.8 million, representing a slight decrease of 5.9% as compared to $13.6 million for the six-month period ended June 30, 2023.
The other major business segment of Seamless is its international airtime transfer business. Seamless operates the international airtime transfer business under Tranglo, acting as a switching platform provider for telecom airtime transfer and wholesale reseller of foreign airtime. Its proprietary technology supports both pin and pin-less airtime transfers. Currently, Tranglo operates one of the biggest airtime transfer networks in the world, providing access to over 500 mobile operators across 150 countries. For the six-month period ended June 30, 2024, Seamless’ top three airtime corridors were Malaysia-Indonesia (50.9% of total global airtime revenue), Malaysia-Bangladesh (10.4% of total global airtime revenue) and UAE-Indonesia (3.9% of total global airtime revenue), which collectively accounted for 65.2% of its total airtime transfers in that period. For the six-month period ended June 30, 2024, the top four sending countries for Tranglo’s global airtime business were Malaysia, Saudi Arabia, UAE and Ireland, whereas the top four receiving countries were Indonesia, Bangladesh, Philippines and Nepal. These countries all have large underserved populations. The revenue for Seamless’ international airtime transfer business was $18.4 million for the year ended December 31, 2022. In early 2022 when COVID pandemic seriously affected Malaysia and the government started to impose border closures, many migrant or overseas workers in Malaysia left the country in the midst of the border restriction. The shrinkage of overseas workers in Malaysia was further exacerbated by a government imposed freeze on the hiring of foreign workers. The border restriction was not eased until the second half of 2022, albeit slowly. As a result, Seamless’ global airtime business was adversely affected since early 2022 and the impact continued and became worse in the year 2023. Moreover, more and more free Wi-Fi is now made available to the people in many Southeast Asian countries, especially in Malaysia and Indonesia. This has led to significant change in consumers’ behavior in these two countries, and that the needs for buying and transferring airtime for the migrant workers there have been declining. For the year ended December 31, 2023, Malaysia-Indonesia was the key global airtime corridor for Tranglo which contributed 46.1% of Tranglo’s global airtime revenue. As such, Tranglo’s global airtime business was adversely affected and its airtime revenue declined by 34% to $12.2 million for the year ended December 31, 2023 when compared to $18.4 million for the year ended December 31, 2022. For the six-month period ended June 30, 2024, Tranglo’s global airtime revenue was $5.0 million, which represented a decline of 23.1% as compared to $6.5 million for the six-month period ended June 30, 2023. In view of the over-concentration of Tranglo’s global airtime time business in Malaysia and Indonesia, Currenc needs to broaden its network and diversify its user base to other Asian countries like Pakistan, Middle East countries like UAE, Saudi Arabia, and African countries like Egypt, in order to expand its global airtime business in the future.
In February 2022, there was a short-term mishap which had a one-off adverse impact on Tranglo’s airtime business. Tranglo had been purchasing Indonesia’s XL Axiata telecom credit (XL Airtime) from PT Satria Abadi Terpadu (PT Satria). On February 22, 2022, there were multiple duplicated failed call transactions returned from the PT Satria system, which led to Tranglo paying refunds to the senders automatically. Tranglo later discovered that the spike of failed transactions was due to an invalid number for XL Airtime purchases and thus suspended the XL Airtime purchase immediately. After investigation, an erroneous refund of RM2 million ($453,961) was discovered. Tranglo has initiated a recovery process to get back the money, and by December 2022, it had recovered RM0.5 million ($113,000) and recorded the provision of RM1.56 million ($354,000) in the year ended December 31, 2022. In the year ended December 31, 2023, no further recovery was successfully made from the sender and a total of RM1.56 million ($354,000) was written off.
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Seamless disposed its controlling stake of WalletKu on March 9, 2021 to a third party and regained the controlling stake of WalletKu in June, 2022. As a result, Seamless has consolidated approximately seven month’s results of WalletKu for the year ended December 31, 2022, and the revenue of Indonesian airtime was $10.1 million for the year ended December 31, 2022.
For the year ended December 31, 2023, Seamless’ Indonesian airtime revenue was $14.2 million. The increase was mainly due to that Seamless recorded full year results of WalletKu for the year 2023.
For the six-month period ended June 30, 2024, Seamless’ Indonesian airtime revenue was $6.2 million while it was $7.0 million for the six-month period ended June 30, 2023.
Seamless recorded a net loss of $15.7 million and $14.4 million for the years ended December 31, 2022 and 2023, respectively, mainly due to the interest expenses and a significant increase in expenses in relation to the merger exercise with INFINT SPAC. The Convertible Bond holders have committed that they will convert their bonds into shares upon the completion of the Business Combination. For the six-month period ended June 30, 2024, Seamless recorded a net loss of $6.2 million as compared to a net loss of $6.6 million for the six-month period ended June 30, 2023.
Seamless recorded an EBITDA loss of $3.2 million for the year ended December 31, 2022, and an EBITDA loss of $2.1 million for the year ended December 31, 2023. The EBITDA losses were mainly due to the expenses in relation to the merger exercise with INFINT SPAC which started in June of 2022. For the six-month period ended June 30, 2024, Seamless recorded an EBITDA loss of $0.4 million which compared to an EBITDA loss of $1.3 million for the six-month period ended June 30, 2023. Again, the EBITDA losses in the first six months of 2024 and 2023 were mainly due to a significant increase in expenses in relation to the merger exercise with INFINT SPAC.
Major Factors Affecting Currenc’s Results of Operations
Currenc operates in the cross-border money remittance and international airtime transfer markets in Southeast Asia, and its results of operations and financial condition are significantly affected by general factors driving this market. It has benefited from rapid technological change, increased low cost and real time cross-border money transfer needs, as well as increased availability, quality and usage of mobile devices. It has also benefited significantly from the increasing Internet penetration, particularly mobile Internet penetration, in Asia, and also the increasing adoption of electronic wallets or storage vehicles. On the other hand, its international airtime transfer business may be adversely affected by the increasing adoption and thus wider availability of free Wi-Fi in public places and buildings in many Southeast Asian countries as well as other emerging countries. Currenc’s results of operations and financial condition are affected by the general factors driving the currency transfer, digital financial services, e-commerce and other industries in Southeast Asia. On the other hand, as the global digital remittance market has thrived and grown rapidly, more and more competitors have entered into the market and as a result, the market competition is intensifying. This has direct impact on the pricing power of Currenc, and thus its profitability.
Currenc’s results of operations are also directly affected by certain factors specific to it, including the following:
Currenc’s ability to maintain and increase the size of its user base
Currenc’s revenue is largely driven by the number of users and the number of transactions on its remittance platforms, as well as the users on the airtime trading platforms. The larger the number of users on Currenc’s platforms and the larger the number of partners, including banks, e-Wallets and corporations that will join its network, the greater will be the number of transactions that drive its revenue. However, as the market competition is getting more intense, Currenc has to offer more price-competitive and highly efficient services in order to maintain and increase its user base.
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Also, the larger the number of merchants and telecommunication companies using the platforms of airtime supplied by Tranglo’s airtime business and WalletKu, the higher the growth in business, and revenue of Currenc will be higher.
Currenc will strive to develop B2C markets in Southeast Asia and Middle East, so as to capture the retail remittance and airtime market. This development, if successfully launched, will generate significant clientele and synergy for Tranglo’s remittance and airtime businesses.
User engagement and monetization
Currently, Currenc’s global money transfer and airtime services are the foundation of its relationship with its users globally. It generates revenue on cross border money transfers and airtime transfer services. In particular, Currenc’s in-house cross-border payment processing B2B platform generates fees on money transfer orders it settles for banks and other money service operators around the world. On the other hand, TNG Asia operates in the B2C eWallet market in Hong Kong which attracts unbankable migrant workers to make use of TNG eWallet platform for remitting money back to their homelands. Currenc will continue to drive adoption of its retail end users and financial institutions in using Currenc’s platform for money transfer, mass payout and collection services and payment processing business, as well as introduce new B2C financial services and airtime distribution services, in Southeast Asia and Middle East. Currenc believes it can leverage its expertise and knowhow to develop retail markets in Southeast Asia and Middle East, offering payment, remittances, airtime and other fintech services.
A significant determining factor in whether Currenc’s users use its services is based on the handling fee and Forex spread it charges on every remittance transaction, and pricing pressure it faces from competitors. For example, Tranglo’s average transaction fees take rate as measured in RM declined from 0.45% for the year 2022 to 0.32% for the year 2023, representing a decline of 29%. For the six-month period ended June 30, 2024, the average take rate was 0.27% which compared to 0.35% for the six-month period ended June 30, 2023. As for the average currency conversion take rate, i.e., Forex gain take rate as measured in RM, it was 0.12% for the year of 2022, which declined to 0.11% for the year ended December 31, 2023. For the six-month period ended June 30, 2024, the average Forex gain rate was 0.09% which compared to 0.11% for the six-month period ended June 30, 2023. This declining trend is mainly to match the prices of competitors, especially for new joiners who often adopt aggressive pricing strategies when introducing new businesses or services. If Currenc fails to price its services appropriately relative to its competitors, consumers may not use its services, which could adversely affect its business and financial results.
Tranglo’s average payout agency fees take rate as measured in RM was 0.23% for the year ended December 31, 2022. As a result, Tranglo’s average gross profit margin take rates as measured in RM was 0.34% for the year ended December 31, 2022. Currenc strives to retain its profitability margin by seeking to lower its direct costs.
For the year ended December 31, 2023, the payout rate decreased to 0.15%. As a result, Tranglo’s average gross profit margin rate decreased to 0.28% for the year ended December 31, 2023. For the six-month period ended June 30, 2024, the payout rate decreased to 0.11%, which compared to 0.16% for the six-month period ended June 30, 2023. As a result, Tranglo’s average gross profit margin rate decreased to 0.25% for the six-month period ended June 30, 2024, from 0.3% for the six-month period ended June 30, 2023.
As for airtime business, Currenc will strive to expand its global airtime transfer coverage and telco partner network. The global airtime transfer business mainly serves migrant workers worldwide. As free Wi-Fi becomes more and more available to many Southeast Asian countries, the needs for migrant workers from these countries to send airtime back to their homelands diminish over time. Also, as Malaysia-Indonesia is currently the key global airtime corridor for Tranglo which contributed 50.9% of Tranglo’s global airtime revenue for the six-month period ended June 30, 2024, Tranglo’s global airtime business could be adversely affected by the changes. Currenc needs to broaden its network and diversify its user base to other Asian countries like Pakistan, Middle East countries like UAE, Saudi Arabia, and African countries like Egypt, in order to expand its global airtime business in the future. Currenc will also seek to expand the network and coverage of WalletKu and offer a wider range of products and services for retail customers in Indonesia. Currenc believes the insights on its users generated by its existing services will enable it to develop new products and services for the existing markets, and also to explore and develop new markets for the services, and thereby generate more revenue for it.
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Launch of new products and services and cross-selling to Currenc’s users
Currenc strives to stay on the cutting edge of the financial technology by developing and launching new products and services to offer to both new and existing users and intends to continue investing in product development to build new products and services and to bring them to market. While Currenc expects its total expenses to increase in the short term as it plans for growth, it expects its expenses as a percentage of its total revenue to decline over the long term when its business and thus income continues to grow as these investments drive its business growth.
Currenc’s existing users represent a sizable opportunity to cross-sell products and services with relatively low incremental marketing and advertising expenses. Currenc believes that there exists a significant synergy between its B2C eWallet and retail airtime business and its B2B cross border remittance business and global airtime transfer business. As such, it plans to continually invest in the product development of its existing platforms, and to also to explore and develop eWallet markets in various Southeast Asian and Middle East countries so as to expand its B2C business scope and create more synergy between its B2C and B2B businesses. To the extent that Currenc is able to create significant synergy between its operations, and to cross-sell products and services between different clienteles and countries, it expects its revenue and financial income to continue to grow and its margins to increase.
Currenc’s ability to operate in a cost-effective manner
Currenc’s ability to control costs and expenses relating to its operations affects its profitability. The global remittance market is evolving rapidly and new entrants to the market have driven market competition. This has a long term downward trend on the gross profit margin for the whole industry. In order to generate growing operating profits, players have to expand their market scope and scale, while on the other hand, control their operating costs. General and administrative expenses have historically represented the largest portion of Currenc’s total operating expenses. In particular, Currenc has invested significantly in hiring, training and retaining personnel and expects to continue to make significant investments in personnel as it grows its business and enters new geographies and offers new services. With the expansion of its business, Currenc expects its operating costs and expenses to continue to increase, including employee compensation and benefits, marketing and branding and other costs and expenses. The salary level in the fintech industry in and around Southeast Asia has generally increased in recent years, and Currenc believes it offers competitive wages and other benefits to recruit and retain quality professionals. For the year ended December 31, 2023, the General and administrative expenses decreased slightly to $24.0 million, as compared to $25.5 million for the year ended December 31, 2022. As for the six-month period ended June 30, 2024, the General and administrative expenses decreased to $11.0 million, as compared to $12.4 million for the six-month period ended June 30, 2023. Currenc believes that the marginal costs for the business expansion should decrease because the growth of Currenc’s revenue will outpace the increase in operating costs and expenses. Currenc expects that its total revenue will continue to grow, so that the overall fixed costs as a percentage of revenue will decrease in the long run. And as Currenc is to explore and develop the B2C markets in Southeast Asia and Middle East, Seamless’ operating model allows it to centralize a number of functions, including technology development, operating system infrastructure building as well as certain general and administrative services. This will allow Currenc to increase efficiencies across each of its businesses and further increase its overall operating leverage.
Currenc’s partner network
Currenc’s results of operations are affected by its ability to continue to maintain and build its collaborative network with partners. The Ripple entities are important strategic partners of Currenc, and Tranglo has been integrated with RippleNet since September 2021 and started offering its ODL remittance services. Following this integration, the remittance flows through RippleNet have increased substantially, growing to represent $721 million, or 20.3%, of the total remittance value of $3.55 billion, and 2.4 million, or 21.8%, of the total number of transactions processed during the year ended December 31, 2022. As of December 31, 2022, ten of Tranglo’s 97 active remittance customers use the Ripple XRP prefunding facility. By June 30, 2024, the number of active ODL partners decreased to six out of the 90 active remittance customers. This was due to a temporary suspension of ODL services in mid-March 2023 when Tranglo suspended its ODL services for nine out of 11 active ODL users as a result of market turmoil and illiquidity in crypto market. The market turmoil appeared after the collapse of Silicon Valley Bank, Silvergate Bank and Signature Bank around March 2023. As most of the crypto exchanges and market makers maintain their operating accounts with Silvergate and Signature Banks, the collapse of these banks led to illiquidity of the crypto market, and the inability of crypto exchanges to liquidate XRP for supporting ODL transactions. As such, both Ripple and Tranglo agreed to suspend most of the ODL services temporarily. Despite Ripple and Tranglo resuming most of the ODL services after two weeks of temporary suspension, many ODL partners relied more on the fiat prefunding means for their remittance flows via Tranglo’s platform, and thus were slow in resuming their ODL flows. Also, Ripple has tightened the usage of ODL services for remittance partners since then. As a result, Tranglo’s ODL flows represented only 9.9% of the total processing value of Tranglo for the month of December 2023, which compared to 26% of the total processing value in February 2023. For the year ended December 31, 2023, ODL flows represented 10.5% of the total remittance value of $4.54 billion, and 1.2 million, or 11.2% of the total number of transactions processed. For the six-month period ended June 30, 2024, ODL flows further declined to represent only 5.5% of Tranglo’s TPV of $2.7 billion, or 4% of the total 5.8 million transactions processed. However, despite the usage of ODL services not recovering, Tranglo still managed to grow its TPV to RM2.1 billion for the month of December 2023, which represented significant increases as compared to the TPV of RM1.35 billion for the month of February 2023, and the TPV of RM1.58 billion for the month of March 2023. For the six-month period ended June 30, 2024, Tranglo also managed to grow its TPV to RM12.8 billion, which represented a significant growth of 33.3% as compared to RM9.6 billion TPV for the six-month period ended June 30, 2023.
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Still, the availability of ODL services to Currenc’s potential customers is considered as an important competitive edge for Currenc to expand its remittance business in new markets in Middle East or Africa. This is especially so for recruiting those small financial institutions that do not have sufficient working capital for prefunding and thus could benefit from the provision of prefunding liquidity by Ripple through the use of ODL services.
Ripple Labs Singapore Pte. Ltd seconded the Ripple Executive Officer to Tranglo, with an aim to facilitate Tranglo’s further integration with Ripple network to help ensure that Tranglo’s ODL service functions efficiently and meets the demands of Tranglo’s customers, and for Tranglo to leverage the marketing network and business resources of the Ripple entities. Later, the secondment agreement was terminated with effect from January 1, 2024. Although Tranglo currently has some network coverage in the Middle East, Tranglo believes it can tap the more robust business network and connections that the Ripple entities have in the Middle East, South America and Europe to expand its market reach in these new markets. Expanding its business reach in these geographies over the next three years is a strategic goal of Tranglo.
Tranglo does not provide services to customers who are licensed to operate in the United States and never offers ODL services to individuals or end users. As part of the stringent onboarding process for a customer which opts to use Tranglo’s ODL service, Tranglo confirms that the customer is not a licensee in the United States. All onboarding information is compiled and verified by Tranglo’s compliance team and presented to its senior management for approval. The onboarding process is also reviewed regularly by Tranglo’s risk management team and board of directors. While customers onboarded for use of the ODL service may have end users who are U.S. persons, all end users of any nationality must fund their remittances with fiat currency under applicable licensing requirements and AML rules, insuring that ODL services are not accessed by any U.S. person.
Tranglo’s business has a large portfolio of blue-chip customers across both its payment and airtime transfer segments, including WISE, SingTel, Remitly, SBI Japan, Mastercard, GEA, WeChat Pay HK, Maxis, Etisalat and Ding. By continuing to develop Tranglo’s technological infrastructure, Currenc will be able to handle larger volumes of money transfer and settlement and open new business opportunities, both in money transfer and airtime businesses, which in turn will allow it to attract more customers. The ability of Currenc to maintain and develop new partners will have the direct impact on its business scope and scale.
WalletKu has joined the Indosat Cluster Partnership programs and became the Authorized Distributor of Indosat Ooredoo Hutchison in 2021. The programs have proven to be a high growth and profitable business for WalletKu. Currenc will strive to maintain its partnership relationship with Indosat with an aim to acquiring more operation rights under the Cluster Partnership programs.
As Currenc is to develop new B2C markets in Southeast Asia and Middle East, it could bring in new partners for Tranglo and WalletKu so as to create significant business synergy and cross selling between different business segments of Currenc.
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Expansion into new markets and acquisitions
As part of Currenc’s strategy of expansion, it has in the past acquired, and may, from time to time, acquire businesses or interests in businesses, including non-controlling interests, form joint ventures or create strategic alliances. In the future, Currenc will strive to develop its B2C businesses in Southeast Asia and Middle East, focusing on various fintech and airtime trading services. It expects to replicate and further develop the existing B2C eWallet, payment, remittance, airtime trading business model in Southeast Asian and Middle East countries, in particular the Philippines, Indonesia, Cambodia, Vietnam, Abu Dhabi and Saudi Arabia. Currenc will continually evaluate potential strategic acquisitions of businesses or products with the aim of expanding its user and revenue base, widening its geographic coverage and increasing its product range. In addition, Currenc’s ability to leverage its existing distribution network to expand its product offering across its current markets and replicate its success in Southeast Asian and Middle East countries where it operates will affect its growth and results of operations. It expects that its growth prospects will continue to be significantly affected by its ability to expand its business in new and existing markets.
Seamless Selected Income Statement Items
Total Revenue
Seamless derives its net revenue primarily from remittance business and airtime businesses. For remittance business, the revenue sources are mainly from Tranglo, TNG Asia and GEA. For airtime businesses, the revenue is generated by the international airtime transfer business operated by Tranglo and the retail airtime business operated in Indonesia by WalletKu. Other income is of minor contribution and importance only.
The following table sets forth the breakdown of Seamless’ total net revenue, both in absolute amounts, for the periods indicated.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Remittance Services | 12,843 | 13,551 | 26,695 | 26,714 | ||||||||||||
| Global Airtime | 4,962 | 6,486 | 12,188 | 18,390 | ||||||||||||
| Indonesian Airtime | 6,217 | 7,044 | 14,211 | 10,111 | ||||||||||||
| Other services | 89 | 84 | 161 | 286 | ||||||||||||
| Total net revenue | 24,111 | 27,165 | 53,255 | 55,501 | ||||||||||||
For the year ended December 31, 2023, Seamless’ revenue was $53.3 million, representing a decrease of 4% as compared to the year ended December 31, 2022 of $55.5 million. The remittance revenue remained unchanged at $26.7 million. While the remittance revenue of Tranglo slightly decreased, the decline was mitigated by an increase in TNG Asia’s remittance revenue. However, Seamless’ global airtime revenue decreased substantially by 34%, from $18.4 million for the year ended December 31, 2022 to $12.2 million for the year ended December 31, 2023. As more and more free Wi-Fi is now made available to the people in many Southeast Asian countries, especially in Malaysia and Indonesia, the demand for Malaysia-Indonesia airtime transfers has been declining. As Malaysia-Indonesia is the key global airtime corridor for Tranglo which contributed 46.1% of Tranglo’s global airtime revenue, Tranglo’s global airtime business was adversely affected. As Seamless acquired the control of WalletKu in June 2022, it recorded only seven months’ results of WalletKu for the year ended December 31, 2022, and Seamless’ Indonesian airtime revenue was $10.1 million for the year, 2022. Seamless’ Indonesian airtime revenue was $14.2 million for the year ended December 31, 2023 as Seamless recorded full year’s results of WalletKu in 2023.
For the six-month period ended June 30, 2024, Seamless’ revenue was $24.1 million, representing a decrease of 11.4% as compared to $27.2 million for the six-month period ended June 30, 2023. The remittance revenue declined by 5.9% mainly due to a decline in TNG Asia’s remittance revenue. Also, Seamless’ global airtime revenue decreased substantially by 23.1%, from $6.5 million for the six-month period ended June 30, 2023 to $5.0 million for the six-month period ended June 30, 2024.
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Remittance Revenue
Tranglo, TNG Asia and GEA are all involved in the remittance business. Tranglo is the leading remittance hub in Southeast Asia serving mostly banks and financial institutions whereas TNG Asia operates an eWallet which targets the retail remittance market – targeting mainly the overseas workers in Hong Kong who could not access to banking services easily. TNG Asia generates 80-95% of its revenue through processing the remittance flows of its targeted customers. TNG Asia has placed most of its remittance orders to GEA for processing and is the most important client of GEA which in turn, places orders to Tranglo for processing. As such, TNG Asia and GEA are the customers of Tranglo.
There are two main streams of remittance revenue for Seamless – the transaction fees, which are charged on a per transaction basis, and also the currency conversion fees, i.e., Forex Gain take rate.
Seamless’ remittance revenue remained relatively unchanged at $26.7 million for each of the years ended December 31, 2023 and 2022. Seamless’ remittance revenue which was contributed by Tranglo declined by 3% from $20.0 million for the year of 2022 to $19.4 million for the year ended December 31, 2023, despite an increase in remittance volume by 28% in the year of 2023. The decline in Tranglo’s revenue was mitigated by the increase in TNG Asia’s remittance revenue by 15.6%, from $8.3 million for the year 2022 to $9.6 million for the year ended December 31, 2023.
Tranglo processed 11.0 million remittance transactions for the year ended December 31, 2023, which represents a slight decline of 2% as compared to 11.2 million remittance transactions processed by Tranglo for the year ended December 31, 2022. On the other hand, the total processing value increased by 28% from $3.55 billion to $4.54 billion for the year ended December 31, 2023 as compared to the year 2022. This, coupled with a decline of 23% in the average take rates as measured in USD, resulted in a decline of 3% in Tranglo’s remittance revenue for the year 2023. As for the six-month period ended June 30, 2024, Tranglo processed over 5.8 million transactions with a total value of $2.7 billion, which represents a growth in volume by 7.4% as compared to 5.4 million transactions, and a growth in value by 22.7% as compared to the total processing value of $2.2 billion for the six-month period ended June 30, 2023.
On the other hand, the total processing value of TNG Asia increased significantly by 5% from $505 million for the year ended December 31, 2022, to $531 million remittance flows for the year ended December 31, 2023. There was also an increase in take rate from 1.36% in the year of 2022 to 1.5% in the year of 2023. As a result, TNG Asia’s remittance revenue managed to increase from $8.3 million for the year 2022 to $9.6 million for the year ended December 31, 2023. As for the six-month period ended June 30, 2024, the total processing value of TNG Asia decreased by 25.4% to $197 million from $264 million for the six-month period ended June 30, 2023. The average total take rate of TNG Asia was 1.5% which generated $3.7 million remittance revenue for the six-month period ended June 30, 2024, which was similar to the average total take rate of 1.5% which generated $4.8 million for the six-month period ended June 30, 2023.
GEA’s remittance revenue decreased slightly from $2.7 million for the year ended December 31, 2022 to $2.6 million for the year ended December 31, 2023. For the six-month period ended June 30, 2024, GEA’s remittance revenue was $1.0 million, representing a decline as compared to the $1.3 million remittance revenue for the six-month period ended June 30, 2023.
The following table is the breakdown of Seamless’ total remittance revenue. Because TNG Asia submitted almost all its remittance transactions to GEA, which in turn placed orders to Tranglo for processing, most of TNG Asia’s and GEA’s remittance revenue is also accounted for as remittance revenue of Tranglo. This overlapping in remittance revenue for TNG Asia, GEA and Tranglo, which was $4.3 million and $4.9 million for the years ended December 31, 2022 and 2023, respectively, is eliminated in the preparation of the consolidated financial statements for Seamless. For the six-month period ended June 30, 2024, the elimination was $1.7 million as compared to $2.5 million for the six-month period ended June 30, 2023.
| Remittance service by company | For the six-month period ended June 30, | For the year ended December 31, | ||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (in thousands) | ||||||||||||||||
| Tranglo | 9,841 | 9,826 | 19,395 | 20,040 | ||||||||||||
| GEA | 1,005 | 1,332 | 2,636 | 2,669 | ||||||||||||
| TNGA | 3,730 | 4,849 | 9,574 | 8,344 | ||||||||||||
| Elimination | (1,733 | ) | (2,456 | ) | (4,910 | ) | (4,339 | ) | ||||||||
| Total Revenue | 12,843 | 13,551 | 26,695 | 26,714 | ||||||||||||
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Global Airtime Transfer Revenue
Currently, Tranglo operates one of the biggest airtime transfer networks in the world, providing access to over 500 mobile operators across 150 countries. For the six-month period ended June 30, 2024, Seamless’ top three airtime corridors were Malaysia-Indonesia (50.9% of total global airtime revenue), Malaysia-Bangladesh (10.4% of total global airtime revenue) and UAE-Indonesia (3.9% of total global airtime revenue), which collectively accounted for 65.2% of its total airtime transfers in that period. For the six-month period ended June 30, 2024, the top four sending countries for Tranglo’s global airtime business were Malaysia, Saudi Arabia, UAE and Ireland, whereas the top four receiving countries were Indonesia, Bangladesh, Philippines and Nepal. Management believes that the top four receiving countries have large underserved populations. On the other hand, Tranglo’s global airtime business relies heavily on the Malaysia – Indonesia corridor (50.9% of revenue) and is therefore vulnerable to changes in consumers’ behavior in these countries.
Seamless recorded global airtime revenue of $18.4 million for the year ended December 31, 2022. For the year ended December 31, 2023, the global airtime revenue decreased to $12.2 million which represented a decline of 34% as compared to the year 2022. For the year ended December 31, 2023, the Malaysia – Indonesia airtime corridor represented 46.1% of the total global airtime business. The decline in airtime business in the year 2022 and 2023 was mainly due to the COVID pandemic which affected Malaysia in early 2022. In 2022, the Malaysian government started to impose border closures in response to the COVID pandemic. As such, many migrant or overseas workers in Malaysia left the country in the midst of the border restriction. The shrinkage of overseas workers in Malaysia was further exacerbated by a government imposed freeze on the hiring of foreign workers. The border restriction was not eased until the second half of 2022, albeit slowly. As a result, Tranglo’s global airtime business declined significantly since early 2022. Moreover, as more and more free Wi-Fi is now made available to the people in many Southeast Asian countries, especially in Malaysia and Indonesia, the demand for Malaysia-Indonesia airtime transfers has been declining. This led to a continual decline in Tranglo’s global airtime business in the year 2023.
Moreover, on February 22, 2022, there were multiple duplicated failed call transactions returned from the PT Satria system, which led to Tranglo paying refunds to the senders automatically. Tranglo later discovered that the spike of failed transactions was due to an invalid number for XL Airtime purchases and thus suspended the XL Airtime purchase immediately. After investigation, an erroneous refund of RM2 million was discovered, and Tranglo has initiated a recovery process to get back the money, and by December 2022, it had recovered RM0.5 million ($113,000) and recorded the provision of RM1.56 million ($354,000) in the year ended December 31, 2022. In the year ended December 31, 2023, no further recovery was successfully made from the sender and a total of RM1.56 million ($354,000) was written off.
For the six-month period ended June 30, 2024, the Malaysia – Indonesia airtime corridor represented 50.9% of the total global airtime revenue. Tranglo’s global airtime revenue declined by 23.1% to $5.0 million for the six-month period ended June 30, 2024 when compared to $6.5 million for the six-month period ended June 30, 2023.
Indonesian Airtime Revenue
Seamless operates an airtime services business in Indonesia, directly targeting the retail consumer sector. In Indonesia, Seamless has an active airtime user base of more than 3,000 merchants which relies on Seamless’ platform for selling airtime products. Seamless is also operating under the Indosat Cluster Partnership scheme for selling of airtime products in two cluster areas in Indonesia.
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Seamless disposed of a controlling stake of WalletKu on March 9, 2021 to a third party, and regained the controlling stake of WalletKu in June, 2022. As such, Seamless has consolidated approximately seven month’s results of WalletKu into its consolidated revenue for the year ended December 31, 2022. As a result, the revenue of Indonesian airtime business increased from $10.1 million for the year ended December 31, 2022 to $14.2 million as of the year ended December 31, 2023, as only seven months’ results of WalletKu were consolidated in the year of 2022. For the six-month period ended June 30, 2024, Seamless’ Indonesian airtime revenue decreased to $6.2 million, as compared to $7.0 million for the six-month period ended June 30, 2023.
Other Income - Forex Gain Revenue & Other Items
TNG Asia recorded the Forex Gain on its remittance business under “Other income”. This Forex Gain is the currency conversion spread markup by TNG Asia offered to its users, based on the Forex spreads provided by Tranglo or GEA. For the year ended December 31, 2022, Seamless recorded other income of $3.4 million, of which $0.1 million was Forex loss recorded by TNG Asia, due to TNG Asia’s aggressive marketing strategy in offering negative Forex spreads in the form of – 0.04% forex take rate in order to attract more users.
For the year ended December 31, 2022 Seamless recorded a gain of $2.1 million due to the fair value gain after Seamless reacquired the controlling stake of WalletKu in June 2022.
For the year ended December 31, 2023, Seamless recorded a gain of $0.8 million as “Other income”, of which, TNG Asia contributed a Forex loss of $0.1 million as it continued its aggressive marketing campaign in the form of -0.03% negative spreads take rate in order to secure and maintain its market position and remittance volume.
For the six-month period ended June 30, 2024, Seamless recorded a gain of $538,000 as “Other income”, of which, Tranglo contributed a Forex gain of $455,000 million. For the six months’ period ended June 30, 2023, Seamless recorded a loss of $122,000 as “Other income”, of which, TNG Asia contributed a Forex loss of $92,000 as it continued its aggressive marketing campaign in the form of -0.04% negative spreads take rate in order to secure and maintain its market position and remittance volume.
Cost of Revenue
Global Money Transfer Business
Seamless’ cost of revenue for its money transfer business is the direct costs paid to the remittance processing agents, which are primarily the payout agents and banks. These payout agents help execute money transfer transactions and pay money in the recipient countries. For TNG Asia, most of the handling fees were paid to its remittance agents, i.e., GEA. For GEA, the majority of its handling fees were paid to Tranglo. For the year ended December 31, 2022, the direct costs for its remittance were $11.3 million. For the year ended December 31, 2023, Seamless’ direct costs for its remittance business declined to $9.8 million as compared to the year of 2022, despite an increase in the total processing value. This was largely due to a lower payout cost rate paid to the payout agents.
Handling fees paid to the payout agents are fixed charges per transaction, and the fees charged will depend on the location of the receivers and the pay-out channels. For the year ended December 31, 2022 the direct cost rate of Tranglo was 0.23%, and Tranglo paid $8.3 million for handling fees despite an increase in total processing value to $3.55 billion. For the year ended December 31, 2023, Tranglo’s average direct remittance cost declined to $7.2 million, despite an increase of total processing value to $4.54 billion. This represented an average payout cost rate of 0.16%, representing a decrease of 30% as compared to the year of 2022. For the six-month period ended June 30, 2024, the direct payout rate decreased to 0.11%, which represented a decrease of 31.3% as compared to 0.16% for the six-month period ended June 30, 2023. As a result, despite TPV increasing by 22.7% during the periods, Seamless’ handling fees paid to the payout agents decreased to $3.5 million for the six-month period ended June 30, 2024 as compared to $3.7 million for the six-month period ended June 30, 2023. Tranglo’s ability to control its direct costs is a key factor in its ability to offer more attractive pricing to maintain its competitiveness in the market.
For direct remittance cost, TNG Asia paid Tranglo, GEA, and third parties like Faspay, top-up agencies, and banks for processing remittance flows. TNG Asia also recorded the amortization costs as its direct remittance costs. For the year ended December 31, 2022 TNG Asia recorded only $6.7 million as its direct remittance costs, of which $1.98 million was amortization costs, while $2.0 million was paid to GEA. For the year end December 31, 2023, TNG Asia recorded $6.5 million as its direct remittance costs, of which $1.6 million was amortization costs, and $2.6 million was paid to GEA as its payout agency costs, representing an increase of 30% as compared to 2022. This increase in TNG Asia’s direct payout agencies costs was in line with the increase of 5% in the total processing value, and also that GEA had diverted its remittance flows to Fiat channel of Tranglo since March 2023. For the year 2022 and 2023, no order was placed by TNG Asia or GEA to Faspay or other payout agents. For the six-month period ended June 30, 2024, TNG Asia recorded $2.9 million as its direct remittance costs, of which $0.7 million was amortization costs, and $1.0 million was paid to GEA as its payout agency costs. This compared to TNG Asia’s direct remittance cost of $3.2 million for the six-month period ended June 30, 2023, of which $0.8 million was amortization costs, and $1.1 million was paid to GEA as its payout agency costs. For the first six months of 2024, no order was placed by TNG Asia or GEA to Faspay or other payout agents.
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For the year ended December 31, 2022, GEA paid $1.7 million to Tranglo as its direct costs. For the year ended December 2023, GEA paid $2.4 million to Tranglo as its payout agency cost. No payment was made to Faspay or other third parties in the years of 2022 and 2023. The increase in GEA’s direct costs was the result of an increase in remittance volume handled by GEA in the year of 2023, and also that GEA stopped using the ODL services of Tranglo since March 2023 and diverted its remittance flows to Fiat channel since then, which carries higher transaction fees. For the six-month period ended June 30, 2024, GEA paid $0.7 million as direct costs to Tranglo which served as the only payout agent for GEA during the period. This compared to $1.1 million direct costs for the six-month period ended June 30, 2023, also all paid to Tranglo as its only payout agent. No other payments to other parties were made in either of the periods.
Because Tranglo, TNG Asia and GEA are all subsidiaries of Seamless conducting remittance business, in the consolidated financial statements of Seamless the direct costs paid to GEA and Tranglo have been eliminated. For the years ended December 31, 2022 and 2023, intercompany cost of goods sold of $3.7 million and $5.0 million, respectively, were eliminated. After adjustments on the intercompany cost of goods sold, the direct costs for Seamless for its remittance business were $13.3 million and $11.3 million for the years ended December 31, 2022 and 2023, respectively. For the six-month period ended June 30, 2024, the intercompany elimination was $1.7 million, which was a decline as compared to $2.2 million for the six-month period ended June 30, 2023. As a result, after adjustments on the intercompany cost of goods sold, the direct costs for Seamless for its remittance business was decreased to $5.5 million for the six-month period ended June 30, 2024 from $5.8 million for the six-month period ended June 30, 2023.
Amortization of Software
Amortization of software is primarily related to Seamless’ computer software and systems. From a financial reporting perspective, because Tranglo, TNG Asia and GEA conduct their remittance business using their apps and IT platforms for customers to log in and process the remittance orders, the amortization of intangible assets is considered a direct cost of the revenue generated.
For the year ended December 31, 2022, Seamless’ direct costs for amortization of intangible assets were $1.99 million, which was soley contributed by TNG Asia. The direct cost for amortization of the intangible assets of Tranglo and WalletKu was not material to the total. For the year ended December 31, 2023, Seamless’ direct cost for amortization of intangible assets was $1.59 million which was also contributed solely by TNG Asia. Again, the direct cost for amortization of the intangible assets of Tranglo and WalletKu was not material to the total for the year 2023. For the six-month period ended June 30, 2024, Seamless’ direct cost for amortization of intangible assets was $0.7 million, which compared to $0.8 million for the six-month period ended June 30, 2023. All the amortization costs were contributed solely by TNG Asia in both periods, and the direct costs for amortization of the intangible assets of GEA, Tranglo and WalletKu were not material in both periods.
The following table is the breakdown analysis of Seamless’ cost of revenue for remittance business. Because TNG Asia submitted almost all of its remittance transactions to GEA, which in turn placed orders to Tranglo for processing, part of TNG Asia’s and GEA’s remittance direct costs are also accounted for as remittance cost of Tranglo. The overlapping remittance costs for TNG Asia, GEA and Tranglo, which were $3.7 million and $5.0 million for the years 2022 and 2023, respectively, are eliminated in the compilation of the consolidated accounts for Seamless. The overlapping remittance costs were $1.7 million and $2.2 million for the six-month periods ended June 30, 2024 and June 30, 2023, respectively.
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Cost of Revenue – Remittance, analysis by Companies
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Tranglo | 3,485 | 3,668 | 7,168 | 8,344 | ||||||||||||
| TNG Asia and GEA | 3,050 | 3,559 | 7,611 | 6,660 | ||||||||||||
| Elimination | (1,734 | ) | (2,237 | ) | (4,991 | ) | (3,721 | ) | ||||||||
| Total Remittance COGS | 4,801 | 4,990 | 9,788 | 11,283 | ||||||||||||
| Intangible assets amortization | 731 | 818 | 1,588 | 1,985 | ||||||||||||
| Total Cost of Revenue | 5,532 | 5,808 | 11,376 | 13,268 | ||||||||||||
Global Airtime Transfer Business
Seamless’ cost of airtime transfer business consists of costs it acquires from telecom suppliers. Seamless’ direct costs for its international airtime transfer business were $17.0 million for the year ended December 31, 2022. As for the year ended December 31, 2023, the direct costs for Seamless’ international airtime business decreased to $10.7 million, which is 37% below the direct costs for the year ended December 31, 2022. This decrease is in line with the decrease in international airtime revenue for the same period. Also, in February 2022, there was a short-term mishap which had a one-off adverse impact on Tranglo’s airtime business, resulting in an erroneous refund of RM2 million to the customers. As such, the direct costs for global airtime business in the year of 2022 was exceptionally high due to the extra costs recorded.
For the six-month period ended June 30, 2024, the direct cost for Seamless’ international airtime business was $4.3 million, which was lower than the direct costs of $5.7 million for the six-month period ended June 30, 2023. The decline in direct costs is also in line with the 23.1% decrease in global airtime business and revenue during the periods.
Indonesian Airtime Business
The cost of Seamless’ Indonesian airtime business is mainly the costs for Seamless to build up its airtime inventory in WalletKu and Indosat for selling out directly to merchants or outlets.
As Seamless reacquired the controlling stake of WalletKu in early June 2022, it recorded in its full year 2022 consolidated financial statements the direct cost of WalletKu for the seven months from June 2022 through December 2022. Therefore, the direct cost for Indonesian airtime for the year ended December 31, 2022 was only $9.4 million. For the year ended December 31, 2023, Seamless’ direct cost for its Indonesian airtime business was $13.5 million as Seamless recorded full year results of WalletKu in the year of 2023. For the six-month period ended June 30, 2024, Seamless’ direct cost for its Indonesian airtime business was $5.9 million, which compared to $6.4 million for the six-month period ended June 30, 2023, as WalletKu was in both periods.
The following table sets forth the breakdown of Seamless’ total cost of revenue, for the periods indicated.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Total Cost of Revenue | ||||||||||||||||
| Remittance Services | (4,801 | ) | (4,990 | ) | (9,788 | ) | (11,283 | ) | ||||||||
| Global Airtime Transfer | (4,312 | ) | (5,692 | ) | (10,744 | ) | (16,958 | ) | ||||||||
| Indonesian Airtime | (5,888 | ) | (6,447 | ) | (13,462 | ) | (9,413 | ) | ||||||||
| Other services | (174 | ) | (148 | ) | (317 | ) | (242 | ) | ||||||||
| Intangible assets Amortization | (731 | ) | (818 | ) | (1,588 | ) | (1,985 | ) | ||||||||
| Total Cost of revenue | (15,906 | ) | (18,095 | ) | (35,899 | ) | (39,881 | ) | ||||||||
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Operating Expenses
General and Administrative Expenses
Seamless’ general and administrative expenses consist primarily of (i) salaries, employee benefits and other headcount-related expenses associated with the administration of its business, (ii) IT expenses, (iii) legal and professional service fees, (iv) office rental and facilities maintenance expenses, (v) depreciation expenses associated with the office space used in its general and administrative activities and (vi) traveling and communication expenses associated with office and administrative functions. Seamless expects that its general and administrative expenses will continue to increase in the near term as it recruits additional personnel and incurs additional costs in connection with the expansion of its business, new office premises and transitioning to a public company, including costs to enhance its internal controls.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (in thousands) | ||||||||||||||||
| Cost by Companies | ||||||||||||||||
| Tranglo | (6,146 | ) | (6,488 | ) | (12,277 | ) | (11,685 | ) | ||||||||
| WalletKu | (583 | ) | (785 | ) | (1,538 | ) | (1,242 | ) | ||||||||
| TNGA | (1,651 | ) | (1,643 | ) | (3,260 | ) | (3,521 | ) | ||||||||
| GEA | (605 | ) | (679 | ) | (1,384 | ) | (3,095 | ) | ||||||||
| Others (cost center) | (1,980 | ) | (2,779 | ) | (5,517 | ) | (5,996 | ) | ||||||||
| Group Total | (10,965 | ) | (12,374 | ) | (23,976 | ) | (25,539 | ) | ||||||||
The general expenses of Seamless was $25.5 million for the year ended December 31, 2022, which decreased to $24.0 million for the year ended December 31, 2023. Of the expense items, Tranglo’s general expenses increased by 5.1% from $11.7 million for the year end December 31, 2022 to $12.3 million as for the year ended December 31, 2023. This increase was mainly due to an increase in manpower to prepare for business growth in the future. The headquarters expenses remained at high level of $5.5 million for the year 2023, which was at relatively the same level of $6.0 million for the year 2022 due to substantial increase in the headquarters general expenses in relation to the merger exercise with INFINT SPAC. For the six-month period ended June 30, 2024, Seamless’ general and administrative expenses were $11.0 million, representing a decrease of 11.3% as compared to $12.4 million as for the six-month period ended June 30, 2023. The decrease was mainly due to a better cost control for Tranglo’s operation as Tranglo had completed its manpower expansion plan. However, the headquarters’ costs remained high due to the ongoing expenses in relation to the merger exercise with INFINT SPAC.
For TNG Asia, its general expenses decreased slightly from $3.5 million for the year ended December 31, 2022 to $3.3 million for the year ended December 31, 2023 due to cost control measures. For the six-month period ended June 30, 2024, TNG Asia’s general expenses remained relatively unchanged as $1.65 million, as compared to $1.64 million for the six-month period ended June 30, 2023.
As Seamless reacquired control and thus consolidated the results of WalletKu in June 2022, the consolidated WalletKu general and administrative costs in the year of 2022 was $1.24 million. WalletKu’s general expenses increased to $1.54 million for the year ended December 31, 2023. The increase was mainly due to that Seamless recorded full year’s results of WalletKu in the year 2023. WalletKu’s general expenses declined to $0.6 million for the six-month period ended June 30, 2024, as compared to $0.8 million for the six-month period ended June 30, 2023.
The customary general and administrative expenses of GEA totaled $1.4 million for the year ended December 31, 2022. Together with a one-off prepayment write-off of $1.7 million, GEA’s total general and administrative expenses increased to $3.1 million for the year ended December 31, 2022. For the year ended December 31, 2023, GEA’s customary general expenses remained unchanged at $1.4 million, due to stringent cost control on GEA’s operations. For the six-month period ended June 30, 2024, GEA’s general expenses decreased to $0.6 million, as compared to $0.7 million for the six-month period ended June 30, 2023. This was also the result of continual cost control on GEA’s operations.
Seamless incurred substantial legal and auditing fees in 2022 in connection with the proposed merger with INFINT SPAC, including an expense of $3 million in November 2022 in connection with the extension of the deadline for INFINT to consummate its initial business combination. As a result, the headquarters administrative costs increased substantially to $6.0 million for the year ended December 31, 2022. For the same reason, the headquarters administrative costs remained at high level of $5.5 million for the year ended December 31, 2023, due to costs in connection with the merger exercise with INFINT SPAC and its extension. For the same reason, the headquarters administrative costs remained high at $2.0 million and $2.8 million for the six-month periods ended June 30 of 2024 and 2023 respectively, due to costs in connection with the merger exercise with INFINT SPAC and its extension.
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| Expenses by Major Expense Type | For the six-month period ended June 30, | For the year ended December 31, | ||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (in thousands) | ||||||||||||||||
| Trademark Amortization | 770 | 770 | 1,541 | 1,541 | ||||||||||||
| PPE Depreciation | 348 | 408 | 688 | 701 | ||||||||||||
| Computer Expenses | 242 | 232 | 478 | 494 | ||||||||||||
| Staff Cost | 5,957 | 6,079 | 11,436 | 10,146 | ||||||||||||
| HK office Rental Expense | 517 | 591 | 1,241 | 1,187 | ||||||||||||
| Legal and Professional | 1,359 | 2,295 | 4,706 | 5,665 | ||||||||||||
In order to pave the way for new business growth, Seamless managed to recruit more employees in 2023. This resulted in an increase in staff cost for Tranglo in the year 2023, increasing to $7.5 million for the year ended December 31, 2023, as compared to $6.7 million for the year ended December 31, 2022. As Tranglo had completed its expansion plan on manpower, Tranglo’s staff cost remained at the same level of $4.1 million for the six-month periods ended June 30, 2024 and 2023.
The staff cost for TNG Asia was $2.1 million for the year ended December 31, 2022. For the year ended December 31, 2023, the staff cost of TNG Asia further increased to $2.4 million, representing a growth of 14% as compared to the year of 2022. For the six-month period ended June 30, 2024, TNG Asia’s staff costs increased slightly to $1.25 million, as compared to $1.17 million for the six-month period ended June 30, 2023. For GEA, the staff cost remained unchanged at $0.8 million for the years ended December 31, 2022 and 2023. For the six-month period ended June 30, 2024, GEA’s staff costs decreased to $0.32 million, as compared to $0.44 million for the six-month period ended June 30, 2023, due to continual cost control for GEA’s operation.
As Seamless had reacquired WalletKu in June 2022 and recorded approximately seven month’s staff cost of WalletKu, the total staff cost of Seamless was $10.1 million for the year ended December 31, 2022. For the year ended December 31, 2023, the total staff cost of Seamless was $11.4 million, representing a significant increase by 13% as compared to the year of 2022. For the six-month period ended June 30, 2024, the total staff cost of Seamless remained unchanged as $6.0 million, as compared to $6.1 million for the six-month period ended June 30, 2023.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Staff Cost Breakdown | (in thousands) | |||||||||||||||
| Tranglo | 4,100 | 4,057 | 7,524 | 6,707 | ||||||||||||
| WalletKu | 276 | 398 | 699 | 472 | ||||||||||||
| TNGA | 1,247 | 1,168 | 2,372 | 2,143 | ||||||||||||
| GEA | 320 | 443 | 816 | 800 | ||||||||||||
| Hong Kong Office | 14 | 13 | 24 | 24 | ||||||||||||
| 5,957 | 6,079 | 11,435 | 10,146 | |||||||||||||
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The property, plant and equipment (“PPE”) depreciation costs, computer expenses, and rental expenses remained unchanged at $0.7 million for the years ended December 31 of 2022 and 2023. For the six-month period ended June 30, 2024, the PPE depreciation costs were $0.3 million, which is slightly lower than $0.4 million for the six-month period ended June 30, 2023.
For the year ended December 31, 2022, the legal and professional fees was $5.7 million, principally due to the proposed acquisition of Seamless by INFINT Acquisition Corporation beginning in mid-2022. In particular, Seamless incurred an expense of $3 million in November 2022 in connection with the extension of the deadline for INFINT to consummate its initial business combination. For the year ended December 31, 2023, Seamless’ legal and professional fees decreased slightly to $4.7 million. Again, the high legal and professional costs were due to costs in connection with the proposed merging with INFINT SPAC, which included also the fees paid for the extension of INFINT SPAC. For the six-month period ended June 30, 2024, Seamless’ legal and professional fees decreased to $1.4 million, as compared to $2.3 million for the six-month period ended June 30, 2023. The high costs were also mainly contributed by substantial expenses in relation to the merging with INFINT SPAC.
As part of the corporate restructuring after Ripple Labs Singapore Pte. Ltd acquired 40% of Tranglo, Tranglo entered into an advisory contract with the prior minority shareholder so as to retain his services and as consideration for non-competition covenants. For the year ended December 31, 2022, Tranglo incurred professional expenses of $1.3 million, of which $0.5 million was due to the expenses in relation to the advisory contract with the prior minority shareholder. This advisory contract expired by the end of March 2023 and the board decided not to renew this advisory contract. Also, for the year 2022, Tranglo incurred a professional expense of $0.4 million to pay for the secondment of the Ripple Executive Officer by Ripple Labs Singapore Pte. Ltd. The Ripple Executive Officer is responsible for ensuring a smooth integration of Tranglo with RippleNet, and for enabling Tranglo to make use of Ripple’s network and resources to expand and develop its markets. The secondment agreement was terminated effective January 1, 2024. For the year ended December 31, 2023, Tranglo incurred $0.7 million in legal and professional costs. For the six-month period ended June 30, 2024, the total legal and professional fees for Tranglo decreased to $80,000, as compared to $0.3 million for the six-month period ended June 30, 2023, mainly due to the aforementioned advisory contract.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Legal and Professional | (in thousands) | |||||||||||||||
| Seamless Group Inc. | 1,179 | 1,940 | 3,699 | 3,938 | ||||||||||||
| Tranglo | 82 | 296 | 720 | 1,292 | ||||||||||||
| TNGA | 98 | 59 | 230 | 383 | ||||||||||||
| Walletku | - | - | 57 | 52 | ||||||||||||
| 1,359 | 2,295 | 4,706 | 5,665 | |||||||||||||
Sales and Marketing Expenses
Seamless’ sales and marketing expenses had been quite minimal in the past, and were incurred mostly by TNG Asia, principally for promotion campaigns and rebates or subsidizations for its TNG eWallet’s users. Sales and marketing expenses decreased from $95,000 for the year end December 31, 2022 to $26,000 for the year end December 31, 2023. Seamless relies on positive user experiences and its reputation in the market to attract new clients. Both Tranglo and TNG Asia have dedicated, down to earth, marketing teams to reach out to their existing and potential clients and partners. Seamless believes that it can expand its business by offering highly price competitive services, and providing efficient and reliable platforms for users. Seamless does not anticipate a substantial increase in marketing costs in the future. Sales and marketing expenses decreased from $19,000 for the six-month period ended June 30, 2023 to $10,000 for the six-month period ended June 30, 2024.
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Income tax expenses
Income tax expense was primarily generated by Tranglo. The effective tax rate of Tranglo for the year of 2023 and 2022 was consistent with the statutory tax rate. The effective tax rate of Tranglo for six-month period ended June 30, 2024 and 2023 was consistent with the statutory tax rate.
Tranglo Selected Income Statement Items
Revenue
Tranglo derives its net revenue primarily from: (i) airtime revenue, which consists of fees charged to telecommunication companies and distributors for the airtime values transferred and reloaded by their subscribers, (ii) handling fee revenue for remittance, which consists of fees charged to customers on cross-border remittance transactions, (iii) Forex spread and (iv) other revenue, including fees earned for the marketing and selling of other digital services distributed through Tranglo’s platform and expired airtime PINs that have not been activated or used by distributors.
Cost of Revenue
Tranglo’s cost of revenue primarily consists of (i) airtime costs associated with its airtime transfer business, (ii) handling fees which consist of handling fees paid to payout or cash pick up agents, and (iii) amortization of software. There is no cost of revenue for money transfer payments made by Tranglo as those payments are recognized on a net basis.
Operating Expenses
Tranglo’s operating expenses primarily consist of general and administrative expenses which consist primarily of (i) salaries, employee benefits and other headcount-related expenses associated with the administration of the Tranglo business, (ii) legal and professional fees, (iii) rental expenses, (iv) traveling and transportation expenses and (v) depreciation expenses.
WalletKu Selected Income Statement Items
Revenue
WalletKu derives its net revenue primarily from:
| ● | WalletKu Digital, which contributes revenue from digital services including bill payments, digital airtime top-up and sales of tickets. | |
| ● | Indosat Cluster Partnership, which contributes revenue from sales of Indosat’s airtime products and mobile SIM cards in two designated areas. |
Cost of Revenue
WalletKu’s cost of revenue primarily consists of the cost of sales of inventories of its top-up services and the hardware it receives from distributors.
Operating Expenses
WalletKu’s operating expenses primarily consist of (i) salaries, employee benefits and other headcount-related expenses associated with the administration of the WalletKu business, (ii) general and administrative expenses and office rental and facilities maintenance expenses, including transportation expenses and utilities, (iii) office expenses and (iv) advertising and marketing expenses.
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Non-GAAP Financial Measures
To supplement Seamless’ consolidated financial statements, which are prepared and presented in accordance with GAAP, it uses EBITDA, a non-GAAP financial measure as described below, to understand and evaluate its core operating performance. These non-GAAP financial measures, which may differ from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of its financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
EBITDA is defined as net loss before interest, taxes, depreciation and amortization. Seamless believes that EBITDA provides useful information to investors and others in understanding and evaluating its operating results. These non-GAAP financial measures eliminate the impact of items that Seamless does not consider indicative of the performance of its business. While Seamless believes that these non-GAAP financial measures are useful in evaluating its business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with GAAP.
The table below presents a reconciliation of EBITDA to net loss, the most directly comparable GAAP financial measure, for the periods indicated.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Net loss | (6,239 | ) | (6,632 | ) | (14,418 | ) | (15,726 | ) | ||||||||
| Add: | ||||||||||||||||
| Income tax expenses | 140 | 229 | 523 | 114 | ||||||||||||
| Interest expenses, net | 3,827 | 3,155 | 8,003 | 8,200 | ||||||||||||
| EBIT | (2,272 | ) | (3,248 | ) | (5,892 | ) | (7,412 | ) | ||||||||
| Depreciation and amortization | 1,849 | 1,996 | 3,817 | 4,227 | ||||||||||||
| EBITDA | (423 | ) | (1,252 | ) | (2,075 | ) | (3,185 | ) | ||||||||
The use of EBITDA has material limitations as an analytical tool, as EBITDA does not include all items that impact Seamless’ net loss for the period.
Taxation
Cayman Islands
Seamless is an exempted company registered by way of continuation in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty.
There are no other taxes likely to be material to Seamless levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or brought within the jurisdiction of, the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on dividend payments.
Malaysia
Seamless’ subsidiaries incorporated in Malaysia are subject to Malaysian profits tax at a rate of 24.0% on the estimated assessable profit for the years ended December 31, 2022 and 2023. Payment of dividends to the shareholders of Seamless’ subsidiaries in Malaysia are not subject to withholding tax in Malaysia. No Malaysian profit tax has been levied as Seamless did not have assessable profit that was earned in or derived from the Malaysian subsidiary during the periods presented.
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Indonesia
Seamless’ subsidiaries incorporated in Indonesia are subject to Indonesian profits tax at a rate of 22.0% on the taxable profit for the years ended December 31, 2022 and 2023. Dividends paid by its subsidiaries in Indonesia will be subject to a withholding tax rate ranging from 0% (subject to certain requirements) to 20%. Dividends paid or payable to foreign taxpayers are subjected to a tax rate of 20% of cash payment (if in the form of cash dividends) or 20% of par value (if in the form of share dividends). Taxpayers who are residents of a country that have a written agreement for double tax avoidance with Indonesia will be charged at a lower rate if they give their original residence certificates issued by the department of taxation of the origin country. No Indonesian profit tax has been levied as Seamless did not have assessable profit that was earned in or derived from the Indonesian subsidiary during the periods presented.
Internal Control Over Financial Reporting
Seamless has been a private company with limited accounting personnel and other resources with which to address its internal control and procedures over financial reporting. As a company with less than $1.07 billion in revenue for its last fiscal year, Seamless qualifies as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.
Critical Accounting Policies and Estimates
Seamless prepares its consolidated financial statements in accordance with U.S. GAAP. In doing so, it has to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. To the extent that there are material differences between these estimates and actual results, Seamless’ financial condition or operating results and margins would be affected. Seamless bases its estimates on past experience and other assumptions that it believes are reasonable under the circumstances, and it evaluates these estimates on an ongoing basis. The following is a discussion of the accounting policies we apply that are considered to involve a higher degree of judgment in their application.
Revenue Recognition
The Company complies with ASC 606, Revenue from Contracts with Customers.
Revenue from contracts with customers is measured based on the consideration specified in a contract with a customer in exchange for transferring goods or services to a customer net of sales and service tax, returns, rebates and discounts. The Company recognizes revenue when (or as) it transfers control over a product or service to its customer. An asset is transferred when (or as) the customer obtains control of the asset. Depending on the substance of the contract, revenue is recognized when the performance obligation is satisfied, which may be at a point in time or over time.
Contract assets represent the Company’s right to consideration for performance obligations that have been fulfilled but for which the customer has not been billed as of the balance sheet date.
Remittance services revenue
Revenue from contracts with customers on service charges and gain/loss on foreign exchange arising from remittance activities are recognized upon the processing and execution of the international money transfer transactions. Remittance services are further divided into Fiat Currency Prefunded Remittance Service and XRP Prefunded Remittance Service. Management has considered these two services to be two product lines.
The customers of the remittance services are financial institutions (referred to as “Remittance Partners”). Remittance Partners who use the fiat currency prefunding option for their remittance business with the Company are referred to as Fiat Currency Prefunded Remittance Partners, whereas customers who choose the XRP Prefunding mode are referred to as XRP Prefunded Remittance Partners.
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Fiat Currency Prefunded Remittance Service
The Company earns revenue by charging their customers a Fiat Currency Prefunded Remittance Fee when they use the Company’s platform to transfer money to a beneficiary in another country. These Fiat Currency Prefunded Remittance Fees are fixed and specific for every country’s currency and are charged at the point-in-time of executing this performance obligation. Prior to delivering cash to the customer’s beneficiary, the customer must directly provide the Company with prefunding (i.e., the cash to be remitted to the beneficiary). This is the traditional prefunding process, which the Company describes as Fiat Currency Prefunded Remittance Service.
XRP Prefunded Remittance Service
Unlike the Fiat Currency Prefunded Remittance Service, the customer obtains prefunding through Ripple Solution offered by Ripple Lab Inc. (see Note 8 in the Company’s consolidated financial statements) with the XRP Prefunded Remittance Service. Ripple supplies the customer with the XRP equivalent of the requested prefunding. The Company subsequently liquidates this XRP on Ripple’s behalf, and the fiat currency obtained as a result of the liquidation process is transferred to the customer’s beneficiary. Customers who prefund their remittance service with XRP must enter into an agreement with Ripple and undergo stringent credit checks in order to get XRP prefunding and use Ripple’s platform. The Company charges their customers an XRP Prefunded Remittance Service Fee when the money is transferred to the customer’s beneficiary.
For both the XRP Prefunded and Fiat Currency Prefunded Remittance Services, the Company has no obligations to the customer in terms of guarantees, warranties or other similar obligations. There are also no significant payment terms involved as the Company obtains their fees shortly after charging their customers.
Sales WalletKu Modern Channel
Revenue from the sale of goods is recognized at the point in time when the Company satisfies its performance obligation, which is upon delivery of the goods to customer. The credit terms are typically 3-7 days.
Sales of airtime
Revenue from airtime sold is recognized when the relevant international airtime transfer or reload request is processed and executed.
Other services
Revenue from contracts with customers on other services is recognized as and when services are rendered.
Goodwill Impairment
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in a business combination. The Company performs goodwill impairment testing on annual basis and more frequently upon the occurrence of certain events as defined by ASC 350. Goodwill is impaired when the carrying value of the reporting units exceeds its fair value.
The Company estimates the fair value of the reporting unit using a discounted cash flow approach. Significant management judgment and estimation are involved in forecasting the amount and timing of expected future cash flows and the underlying assumptions used in the discounted cash flow approach to determine the fair value of the reporting unit. These assumptions include the anticipated percentage growth or contraction of revenues, expenses and capital purchases, and factors such the risk free interest rate, equity risk premium, effective tax rate and pretax required rate on debt to estimate the discount rate on the expected cash flows.
In accordance with ASC 350, the Company has performed a qualitative analysis to determine if any events or conditions have been identified that indicate there might be an impairment. In testing for goodwill impairment in accordance with ASC 350, the Company first does a qualitative analysis to determine if any events or conditions have been identified which indicate that impairment may exist. For 2023 and 2022, goodwill is associated with our Tranglo and WalletKu subsidiaries. Tranglo was profitable in 2023 and 2022, and is expected to continue to be so going forward; therefore, the second step in goodwill impairment, a quantitative test, was not considered necessary. Goodwill associated with WalletKu arose upon the acquisition of a controlling interest in that subsidiary’s parent in June 2022. Given the recent nature of the acquisition and the fact that no events or conditions have been identified since then to suggest that impairment may exist, the quantitative test was considered unnecessary for this portion of our goodwill.
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Results of Operations
The following table sets forth a summary of Seamless’ consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of total net revenue. This information should be read together with its consolidated financial statements and related notes included elsewhere in this proxy statement and prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Revenue | 24,111 | 27,165 | 53,255 | 55,501 | ||||||||||||
| Cost of revenue | (15,906 | ) | (18,095 | ) | (35,899 | ) | (39,881 | ) | ||||||||
| Gross profit | 8,205 | 9,070 | 17,356 | 15,620 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative and selling expenses | (10,975 | ) | (12,393 | ) | (24,002 | ) | (25,634 | ) | ||||||||
| Total operating expenses | (10,975 | ) | (12,393 | ) | (24,002 | ) | (25,634 | ) | ||||||||
| Finance income (costs) | (3,827 | ) | (3,155 | ) | (8,003 | ) | (8,200 | ) | ||||||||
| Other loss, net | 538 | 122 | 840 | 3,405 | ||||||||||||
| Other expenses | (40 | ) | (47 | ) | (86 | ) | (803 | ) | ||||||||
| Loss before income tax expense | (6,099 | ) | (6,403 | ) | (13,895 | ) | (15,612 | ) | ||||||||
| Income tax expenses | (140 | ) | (229 | ) | (523 | ) | (114 | ) | ||||||||
| Net loss | (6,239 | ) | (6,632 | ) | (14,418 | ) | (15,726 | ) | ||||||||
| Non-GAAP Financial Figures: | ||||||||||||||||
| EBITDA | (423 | ) | (1,252 | ) | (2,075 | ) | (3,185 | ) | ||||||||
| (1) | To see how Seamless defines and calculates EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” |
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022, Six-month period ended June 31, 2024 Compared to Six-month period ended June 30, 2023
Revenue Analysis
For the year ended December 31, 2023, Seamless’ revenue decreased to $53.3 million from $55.5 million for the year ended December 31, 2022. The decrease was mainly due to a significant drop in the global airtime revenue. The global airtime business decreased by 34% to $12.2 million for the year ended December 31, 2023, when compared to the year of 2022. The remittance revenue remained unchanged at $26.7 million in the years of 2022 and 2023. The decline in revenue was mitigated by an increase in the local retail airtime business, which increased from $10.1 million for the year ended December 31, 2022 to $14.2 million for the year ended December 31, 2023. This was due to the reacquisition of WalletKu control in June 2022, and the inclusion of its revenue into Seamless’ consolidated revenue after that date. For the six-month period ended June 30, 2024, Seamless’ revenue decreased by 11.4% to $24.1 million as compared to $27.2 million for the six-month period ended June 30, 2023. The decrease was mainly due to a drastic decline of 23% in global airtime revenue. The remittance revenue decreased as well due to a decline in TNG Asia’s remittance business.
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Tranglo’s remittance hub processed $3.55 billion in remittance orders in 2022, and generated revenue of $20.0 million for the year ended December 31, 2022. For the year ended December 31, 2022, Tranglo processed a total of 11.2 million transactions and a total of $3.55 billion processing value. For the year ended December 31, 2023, Tranglo processed 11.0 million remittance transactions with a total value of $4.54 billion. However, as the overall take rate decreased significantly during the period, Tranglo generated the remittance revenues of $19.4 million for the year ended December 31, 2023, which represented a 3% decline as compared to $20.0 million for the year ended December 31, 2022. For the six-month period ended June 30, 2024, Tranglo processed 5.8 million remittance transactions with a total value of $2.7 billion, which compares to 5.4 million transactions and a total value of $2.2 billion for the six-month period ended June 30, 2023. However, as the overall take rate decreased by 21.7% during the period, Tranglo generated remittance revenues of $9.8 million for the six-month period ended June 30, 2024, which was at relatively the same level as the six-month period ended June 30, 2023.
Tranglo’s global money transfer network has been expanding. For the six-month period ended June 30, 2024, it has increased the number of global money transfer corridors it serves to more than 70 corridors. For the year ended December 31, 2023, Tranglo processed 11.0 million remittance transactions, which was roughly at the same level as compared to 11.2 million transactions for the year ended December 31, 2022. The number of unique users increased to 1,032,360 for the year ended December 31, 2023, representing a growth of 8.8% as compared to 949,023 for the year ended December 31, 2022. The number of average monthly unique sending accounts also increased from 267,201 in 2022 to 330,571 in 2023. The number of unique users increased to 820,000 as of June 30, 2024 from 705,000 as of June 30, 2023, and the number of global money transfer transactions increased from 5.4 million for the six-month period ended June 30, 2023 to 5.8 million for the six-month period ended June 30, 2024. The number of average monthly unique sending accounts increased from 325,000 for the six-month period ended June 30, 2023 to 367,000 for the six-month period ended June 30, 2024.
Tranglo’ Forex Gain revenue was $4.2 million for the year ended December 31, 2022. For the year ended December 31, 2023, the Forex Gain of Tranglo increased to $4.8 million due to an increase in the total processing value to $3.54 billion. This is due to a slight decline in Forex spreads offered by Tranglo so as to aggressively compete in the market and capture more market share. Also, for the ODL services, Tranglo offers lower transaction fees and lower Forex spreads, which further adversely affect the Forex take rate of Tranglo for the year 2022. For the six-month period ended June 30, 2024, Tranglo continued its aggressive marketing campaign in the form of lower Forex spreads, and thus the Forex spreads Gain revenue was $2.5 million, which is slightly higher than $2.3 million for the six-month period ended June 30, 2023, despite a 22.7% increase in TPV during the periods.
Similarly, the transaction fee revenue of Tranglo decreased from $15.7 million for the year ended December 31, 2022 to $14.6 million for the year ended December 31, 2023 despite an increase in total processing value. This is due to Tranglo proposing lower transaction fees for the market to capture more market share, and also that Tranglo needs to offer a discount on transaction fees for users using the ODL facilities. As a result, Tranglo’s remittance revenue declined slightly despite that the TPV increased by 28% during the period. However, the decline in remittance revenue contributed by Tranglo was partly mitigated by an increase in remittance revenue contributed by TNG Asia in the year of 2023. For the six-month period ended June 30, 2024, Tranglo’s transaction fee revenue was $7.3 million, which was also at relatively the same level as that of $7.5 million for the six-month period ended June 30, 2023, despite an increase of 22.7% in TPV during the periods.
Due to COVID and the Malaysian border being closed, Seamless’ global airtime business dropped by 34%, from $18.4 million for the year ended December 31, 2022 to $12.2 million for the year ended December 31, 2023. For the six-month period ended June 30, 2024, Seamless’ global airtime revenue continued to decline by 23.1% to $5.0 million as compared to $6.5 million for the six-month period ended June 30, 2023. As more and more free Wi-Fi is now made available to the people in many Southeast Asian countries, especially in Malaysia and Indonesia, there was a change in consumers’ behavior. In particular, the demand for Malaysia-Indonesia airtime transfers has been declining which led to a continual decline in Tranglo’s global airtime business in the years 2023 and 2024. Seamless does not expect a turn around on its global airtime business in the near future.
For the six-month period ended June 30, 2024, the airtime unique user accounts decreased to 426,000, representing a decline of 24.4% as compared to 564,000 for the six-month period ended June 30, 2023. The monthly average unique sending accounts also decreased to 145,000 for the six-month period ended June 30, 2024, representing a decline of 21.1% as compared to 184,000 for the six-month period ended June 30, 2023.
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Seamless’ Indonesian airtime revenue was $10.1 million for the year ended December 31, 2022 due to the reacquisition of control of WalletKu in June 2022 and thus the inclusion of its revenue into Seamless’ consolidated revenue after that date. Seamless’ Indonesian airtime revenue was $14.2 million for the year ended December 31, 2023. Seamless’ Indonesian airtime revenue was $6.2 million for the six-month period ended June 30, 2024, which was a decrease of 11.4% as compared to $7.0 million for the six-month period ended June 30, 2023.
For the year ended December 31, 2022, Seamless’ other income was $3.4 million, which included a fair value gain of $2.1 million on the pre-existing interest in WalletKu due to the acquisition of WalletKu’s control in June 2022. Tranglo also reported an other income gain of $1.2 million due to the revaluation gain of foreign currency bank balances and settlement of receivables and payables balances in the year of 2022. These increases were offset partially by the Forex spreads gain of TNG Asia turning into a loss of $0.12 million due to the aggressive marketing campaign in the form of negative Forex spreads offered by TNG Asia to capture more market share. For the year ended December 31, 2023, Seamless recorded a gain in “other income” of $840,000. Tranglo reported an other income gain of $0.96 million due to the revaluation gain of foreign currency bank balances which was offset by a Forex spread loss of $124,000 of TNG Asia as TNG Asia launched an aggressive marketing campaign in the form of negative Forex spread rate of -0.03% in order to capture market share. For the six-month period ended June 30, 2024, Seamless recorded a gain of $538,000 as “Other income”, of which Tranglo contributed a Forex gain of $455,000. For the six-month period ended June 30, 2023, Seamless recorded a gain of $122,000 as “Other income”, of which Tranglo contributed a Forex gain of $586,000 whereas TNG Asia contributed a Forex loss of $116,000 as TNG Asia launched a negative Forex spreads rate of -0.07%.
Cost of Revenue
Seamless cost of revenue was $39.9 million for the year ended December 31, 2022. The cost of revenue decreased to $35.9 million for the year ended December 31, 2023. The costs of revenue for airtime business and remittance business both decreased during the year which were in line with the decline in global airtime revenue and remittance revenue. Due to Seamless’ efforts at continually lowering the direct costs for remittance, the direct costs for remittance revenue was $9.8 million for the year ended December 31, 2023, which represented a decrease of 13.3% as compared to $11.3 million for the year ended December 31, 2022, despite an increase of remittance flows and TPV by 28% during the two periods. This was the result of stringent control on Seamless’ payout costs. On the other hand, the direct costs for global airtime revenue decreased substantially from $17.0 million to $10.7 million, which was in line with the 34% decline in global airtime revenue. As Seamless only recorded seven months’ results of WalletKu for the year of 2022 whereas it recorded all full year’s results of WalletKu for 2023, the direct costs for Indonesian airtime revenue increased substantially from $9.4 million to $13.5 million during the periods. For the six-month period ended June 30, 2024, Seamless cost of revenue was $15.9 million which was a decrease of 12.2% as compared to that of $18.1 million for the six-month period ended June 30, 2023. Due to Seamless’ efforts at continually lowering the direct costs for remittance, the direct costs for remittance revenue was $4.8 million for the six-month period ended June 30, 2024, which represented a mild decrease of 4% as compared to $5.0 million for the six-month period ended June 30, 2023, despite a substantial increase of TPV by 22.7% during the two periods. Also, the direct costs for global airtime revenue decreased substantially by 24.6% from $5.7 million to $4.3 million, which was in line with the 23.1% decline in global airtime revenue. The direct costs for Indonesian airtime revenue decreased by 7.8% from $6.4 million to $5.9 million during the periods.
Amortization of intangible assets, which is classified as a direct cost of Seamless was $2 million for the year ended December 31, 2022, primarily due to the amortization expense of TNG Asia. The amortization expense decreased to $1.6 million for the year ended December 31, 2023, which was also related only to TNG Asia. For the years of 2022 and 2023, there was no amortization expense reported for GEA. The amortization expense of Seamless was $0.7 million for the six-month period ended June 30, 2024, as compared to $0.8 million for the six-month period ended June 30, 2023. Again, the amortization expenses were related only to the amortization expense of TNG Asia.
Operating Expenses
Seamless’ operating expenses were $25.5 million for the year ended December 31, 2022, which decreased to $24.0 million for the year ended December 31, 2023. The high operating expenses were mainly due to increases in employment benefit expenses and legal and professional fees, and mildly offset by decreases in rental expenses and property, plant and equipment depreciation and computer expenses. Employment benefit expenses increased from $10.1 million for the year ended December 31, 2022 to $11.4 million for the year ended December 31, 2023, primarily driven by increased headcount of Tranglo which was in line with its business expansion strategy. Seamless’ operating expenses decreased slightly from $12.4 million for the six-month period ended June 30, 2023, to $11.0 million for the six-month period ended June 30, 2024. The staff costs remained relatively stable as Tranglo had completed its manpower expansion plan, whereas the legal and professional costs declined slightly during the periods.
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The legal and professional fees were $5.7 million for the year ended December 31, 2022 due to the costs incurred in connection with the proposed merger with INFINT, including payment of a $3 million fee in connection with the extension of the deadline for INFINT to consummate its initial business combination. For the same reason, Seamless’ legal and professional costs remained at a high level of $4.7 million for the year ended December 31, 2023. Seamless’ legal and professional costs decreased to $1.4 million for the six-month period ended June 30, 2024, from $2.3 million for the six-month period ended June 30, 2023. This was mainly due to lower extension fees paid for the extension of INFINT SPAC.
Rental expenses remained relatively the same level of $1.2 million for the years ended December 31, 2022 and 2023. PPE depreciation and computer expenses also remained at relatively the same level of $1.2 million for the years ended December 31, 2022 and 2023. Rental expenses were $0.5 million for the six-month period ended June 30, 2024 which compared to $0.6 million for the six-month period ended June 30, 2023.
Other expenses
Other expenses were mainly generated from the realized exchange loss of $700,000 in 2022, whereas other expenses were immaterial for disclosure for the year ended December 31, 2023. Other expenses were also immaterial for the three-month periods ended June 30, 2024 and 2023.
Finance costs, net
Finance costs in 2022 were mainly represented by convertible bond interest of $3.4 million, amortization for the debt discount on convertible bond of $3.4 million and interest paid to Ripple of $0.2 million.
Finance costs in 2023 were mainly represented by convertible bond interest of $1.8 million, interest on loan converted from convertible bond of $1.8 million, amortization for the debt discount on convertible bond of $0.8 million and interest to Ripple of $2.6 million for ODL prefunding purposes.
Finance costs for the six-month period ended June 30, 2024 were mainly represented by convertible bond interest of $1 million and interest on loan converted from convertible bond of $0.9 million.
Finance costs for the six months’ period ended June 30, 2023 were mainly represented by convertible bond interest. of $0.9 million, amortization for the debt discount on convertible bond of $0.6 million and interest paid to Ripple of $0.4 million for ODL prefunding purposes.
Income tax expenses
Income tax expense was mainly generated by Tranglo. The effective tax rate of Tranglo for the year of 2023 and 2022 was consistent with the statutory tax rate. The effective tax rate of Tranglo for the six-month period ended June 30, 2024 and 2023 was consistent with the statutory tax rate.
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EBITDA analysis
For the six-month period ended June 30, 2024 | Tranglo | WalletKu | TNG Asia and GEA | Headquarters and adjustments | Group Total | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Net income (loss) | 1,656 | (254 | ) | (2,914 | ) | (4,727 | ) | (6,239 | ) | |||||||||||
| Add: | ||||||||||||||||||||
| Income tax expenses | 325 | - | - | (185 | ) | 140 | ||||||||||||||
| Interest expense, net | - | - | 1,686 | 2,141 | 3,827 | |||||||||||||||
| EBIT | 1,981 | (254 | ) | (1,228 | ) | (2,771 | ) | (2,272 | ) | |||||||||||
| Depreciation and amortization | - | - | - | - | 1,849 | |||||||||||||||
| EBITDA | 1,981 | (254 | ) | (1,228 | ) | (2,771 | ) | (423 | ) | |||||||||||
For the six-month period ended June 30, 2023 | Tranglo | WalletKu | TNG Asia and GEA | Headquarters and adjustments | Group Total | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Net income (loss) | 1,218 | (187 | ) | (1,770 | ) | (5,893 | ) | (6,632 | ) | |||||||||||
| Add: | ||||||||||||||||||||
| Income tax expenses | 414 | - | - | (185 | ) | 229 | ||||||||||||||
| Interest expense, net | - | - | 550 | 2,605 | 3,155 | |||||||||||||||
| EBIT | 1,632 | (187 | ) | (1,220 | ) | (3,473 | ) | (3,248 | ) | |||||||||||
| Depreciation and amortization | 1,996 | |||||||||||||||||||
| EBITDA | 1,632 | (187 | ) | (1,220 | ) | (3,473 | ) | (1,252 | ) | |||||||||||
For the full year ended December 31, 2023 | Tranglo | WalletKu | TNG Asia and GEA | Headquarters and adjustments | Group Total | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Net income (loss) | 2,659 | (837 | ) | (4,835 | ) | (11,405 | ) | (14,418 | ) | |||||||||||
| Add: | ||||||||||||||||||||
| Income tax expenses | 843 | 50 | - | (370 | ) | 523 | ||||||||||||||
| Interest expense, net | - | - | 3,057 | 4,946 | 8,003 | |||||||||||||||
| EBIT | 3,502 | (787 | ) | (1,778 | ) | (6,829 | ) | (5,892 | ) | |||||||||||
| Depreciation and amortization | - | - | - | - | 3,817 | |||||||||||||||
| EBITDA | 3,502 | (787 | ) | (1,778 | ) | (6,829 | ) | (2,075 | ) | |||||||||||
For the full year ended December 31, 2022 | Tranglo | WalletKu | TNG Asia and GEA | Headquarters and adjustments | Group Total | |||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Net income (loss) | 2,642 | 1,632 | (5,576 | ) | (14,424 | ) | (15,726 | ) | ||||||||||||
| Add: | ||||||||||||||||||||
| Income tax expenses | 508 | (24 | ) | - | (370 | ) | 114 | |||||||||||||
| Interest expense, net | - | - | 741 | 7,459 | 8,200 | |||||||||||||||
| EBIT | 3,150 | 1,608 | (4,835 | ) | (7,335 | ) | (7,412 | ) | ||||||||||||
| Depreciation and amortization | - | - | - | - | 4,227 | |||||||||||||||
| EBITDA | 3,150 | 1,608 | (4,835 | ) | (7,335 | ) | (3,185 | ) | ||||||||||||
For the year ended December 31, 2022, Seamless had a combined EBIT loss of $7.4 million and EBITDA loss of $3.2 million. During the year, Tranglo recorded an EBIT profit of $3.15 million. During the same period, the combined EBIT loss of TNG Asia and GEA was $4.8 million, principally due to the COVID pandemic and the imposition by the Hong Kong government of restrictions on the inflow of overseas workers, which shrunk the customer pool of TNG Asia. WalletKu recorded an EBIT gain of $1.6 million, principally due to a fair value gain as Seamless regained control of WalletKu in June 2022. The contribution to Seamless’ EBIT loss from its headquarters and other adjustments was $7.3 million, mainly due to the material legal and professional fees incurred on de SPAC exercise.
For the year ended December 31, 2022, Seamless recorded a total cost of $4.2 million for depreciation and amortization. After adjusting for the depreciation and amortization costs, Seamless recorded an EBITDA loss of $3.2 million for the year ended December 31, 2022.
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For the year ended December 31, 2023, Seamless had an EBIT loss of $5.9 million and EBITDA loss of $2.1 million. During the year, Tranglo recorded an EBIT of $3.5 million, representing an improvement as compared to the year ended December 31, 2022.
For the year ended December 31, 2023, the combined EBIT loss of TNG Asia and GEA decreased from $4.8 million to $1.8 million. TNG Asia adopted an aggressive marketing campaign by offering lower transaction fees and Forex spreads which successfully captured its market share. WalletKu’s EBIT was a loss of $0.8 million, which compared to a gain of $1.6 million in the year 2022 due to a fair value gain on acquisition of controlling stake in June 2022.
The contribution to Seamless’ EBIT loss from its headquarters and other adjustments decreased from $7.3 million for the year ended December 31, 2022 to $6.8 million for the year ended December 31, 2023. The loss was mainly due to expenses in relation to the legal and professional costs in preparation for the merger with INFINT.
For the year ended December 31, 2023, Seamless recorded a total cost of $3.8 million for depreciation and amortization. After adjusting for the depreciation and amortization costs, Seamless recorded an EBITDA loss of $2.1 million for the year ended December 31, 2023.
For the six-month period ended June 30, 2023, Seamless had an EBIT loss of $3.2 million and an EBITDA loss of $1.3 million. This compared to the EBIT loss of $2.3 million and the EBITDA loss of $0.4 million for the six-month period ended June 30, 2024. The EBIT and EBITDA losses in the first six months of 2023 and 2024 were mainly due to high Seamless headquarters’ costs, which were related to the substantial increase in legal and professional expenses in connection with the merger exercise with INFINT SPAC.
For the six-month period ended June 30, 2024, Tranglo recorded an EBIT profit of $2.0 million, which represented an increase of 25% compared to $1.6 million for the six-month period ended June 30, 2023. This was due to a substantial improvement in Tranglo’s gross profit margin in its remittance business as Tranglo succeeded in containing its direct remittance payout costs. Despite that there was a 23.1% decline in Tranglo’s global airtime revenue, Tranglo managed to generate healthy growth in its EBIT profit. For the six-month period ended June 30, 2024, the EBIT loss of TNG Asia and GEA combined remained unchanged as $1.2 million, as compared to the six-month period ended June 30, 2023. WalletKu recorded an EBIT loss of $0.25 million for the six-month period ended June 30, 2024 which compared to an EBIT loss of $0.19 million for the six-month period ended June 30, 2023.
For a discussion of the limitations associated with using EBITDA rather than GAAP measures and a reconciliation to net loss, see “—Non-GAAP Financial Measures.”
Liquidity and Capital Resources
Cash Flows and Working Capital
Seamless’ principal sources of liquidity have been cash generated from operating activities. As of December 31, 2022 and 2023, it had $74.0 million and $59.0 million, respectively, in Cash and cash equivalents, Restricted cash and Escrow money receivable. Cash and cash equivalents, Restricted cash and Escrow money receivable include cash on hand and cash placed with banks or other financial institutions. As of December 31, 2022 and 2023, Seamless had $6.8 million and $5.4 million, respectively, in restricted cash. Restricted cash includes the balance in its e-wallet mobile application held by it on behalf of the individual e-wallet users.
As of June 30, 2024, it had $56.9 million, in Cash and cash equivalents, Restricted cash and Escrow money receivable. Cash and cash equivalents, Restricted cash and Escrow money receivable include cash on hand and cash placed with banks or other financial institutions. As of June 30, 2024, Seamless had $4.8 million, in restricted cash.
Seamless believes that its current cash and cash equivalents, proceeds from additional equity and debt financing and its anticipated cash flows from operations will be sufficient to meet its anticipated cash needs, including its cash needs for working capital and capital expenditures, for at least the next 12 months.
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The following table sets forth a summary of Seamless’ cash flows for the periods indicated:
| For the six-month period ended June 30, | For the year ended December 31, | |||||||||||||||
| 2024 | 2023 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Net cash (used in)/provided by operating activities | (2,054 | ) | (5,177 | ) | (15,287 | ) | 8,682 | |||||||||
| Net cash (used in)/provided by investing activities | (199 | ) | (97 | ) | 1,445 | (732 | ) | |||||||||
| Net cash provided by/(used) in financing activities | 238 | (347 | ) | (1,198 | ) | (5,767 | ) | |||||||||
| Net (decrease)/increase in cash and cash equivalents | (2,015 | ) | (5,621 | ) | (15,040 | ) | 2,183 | |||||||||
| Cash and cash equivalents, restricted cash and escrow money receivable at beginning of the period/year | 58,960 | 74,000 | 74,000 | 71,817 | ||||||||||||
| Cash and cash equivalents, restricted cash and escrow money receivable at end of the period/year | 56,945 | 68,379 | 58,960 | 74,000 | ||||||||||||
Operating Activities
Seamless had net cash used in operating activities of $2.1 million in the six-month period ended June 30, 2024, mainly comprised of a net loss of $6.2 million, decrease in accounts payable, accruals and other payables of $15.4 million and, offset by decreases in prepayments, receivables and other assets of $11.2 million, increase in amounts due to related companies of $4.7 million, decrease in interest payable on convertible bonds of $1.9 million and depreciation of $0.3 million, amortization of $1.6 million.
Seamless had net cash used in operating activities of $15.3 million in the year ended December 31, 2023, mainly comprised of a net loss of $14.4 million, increase in amount due from related companies of $5.3 million, decrease in accounts payable, accruals and other payables of $4.8 million and client money payable of $1.6 million, offset by decreases in prepayments, receivables and other assets of $2.5 million, increase in amounts due to related companies of $3.1 million, depreciation of $0.8 million, amortization of $3.1 million, amortization of bond discount of $0.8 million.
Seamless had net cash provided by operating activities of $8.7 million in the year ended December 31, 2022, mainly comprised of a net loss of $15.7 million, decreases in prepayments, receivables and other assets of $8.4 million, accounts payable, accruals and other payables of $9.6 million, and amounts due to related parties of $3.4 million, a non-cash gain on the step acquisition of a subsidiary of $2.1 million, offset by depreciation of $0.9 million, amortization of $3.5 million, amortization of bond discount of $3.4 million, an increase in due to related parties of $38.8 million, a noncash foreign exchange loss of $0.5 million and an increase in client money payable of $0.5 million.
Investing Activities
Net cash used in investing activities amounted to $0.2 million for the six-month period ended June 30, 2024.
Net cash provided by investing activities amounted to $1.4 million in the year ended December 31, 2023.
Net cash used in investing activities amounted to $0.7 million in the year ended December 31, 2022.
Financing Activities
Net cash provided by financing activities amounted to $0.2 million in the six-month period ended June 30, 2024.
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Net cash used by financing activities amounted to $1.2 million in the year ended December 31, 2023, primarily attributable to net repayment of borrowings of $1 million.
Net cash used by financing activities amounted to $5.8 million in the year ended December 31, 2022, primarily attributable to (i) repayment of convertible bonds of $3.5 million, and (ii) dividend paid of $1.9 million.
Capital Expenditures
Seamless’ capital expenditures are incurred primarily in connection with computer hardware and software. Its capital expenditures were $0.5 million and $0.3 million in the years ended December 31, 2022 and 2023, respectively. Its capital expenditures were $0.2 million and $0.1 million for the six-month period ended June 30, 2024 and 2023, respectively.
Contractual Obligations
The following table sets forth Seamless’ contractual obligations as of June 30, 2024:
| Payment Due by Period | ||||||||||||||||||||
| Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Operating lease commitments(1) | 235 | 235 | - | - | - | |||||||||||||||
| Convertible bonds | 10,000 | 10,000 | - | - | - | |||||||||||||||
| Borrowings | 20,732 | 18,026 | 2,706 | - | - | |||||||||||||||
| Total contractual obligations | 30,967 | 28,261 | 2,706 | - | - | |||||||||||||||
| Total interest payments(2) | 1,493 | 1,366 | 126 | - | - | |||||||||||||||
| Total contractual cash obligations | 32,460 | 29,627 | 2,832 | - | - | |||||||||||||||
| (1) | Seamless leased certain office and shop premises and computer peripherals under non-cancellable operating leases expiring in 2024. Payments under operating leases are expensed on a straight-line basis over the periods of the respective leases. |
| (2) | Interest payments are based on the existing borrowings and convertible bonds held by the consolidated subsidiaries. It is assumed that no further refinancing of existing loans takes place. |
Off-Balance Sheet Commitments and Arrangements
Seamless was not a party to any financial guarantees or other commitments to guarantee the payment obligations of any third parties during 2022 and 2023, and the six months period ended 30 June 2024. It has not entered into any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its consolidated financial statements. Furthermore, it does not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Seamless does not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or product development services with it.
Quantitative and Qualitative Disclosure about Market Risk
Foreign Exchange Risk
Assets and liabilities of non-U.S. Dollar functional currency entities are translated into U.S. Dollars using the applicable exchange rates at the balance sheet date. Items in the statements of operations and comprehensive loss are translated into U.S. Dollars using the average exchange rate during the period. Equity accounts were translated at their historical exchange rates. The resulting translation adjustments are accumulated as a component of accumulated other comprehensive income on the consolidated statements of shareholders’ equity.
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Interest Rate Risk
Seamless’ exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. It has not used any derivative financial instruments to manage its interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. Seamless has not been exposed, nor does it anticipate being exposed, to material risks due to changes in interest rates. However, its future interest income may be lower than expected due to changes in market interest rates.
Credit Risk
For the years ended December 31, 2022 and 2023, and the six months period ended 30 June, 2024, substantially all of Seamless’ cash and cash equivalents were placed with financial institutions in Hong Kong, Malaysia and Indonesia. Seamless’ management chooses these institutions because of their reputations and track records for stability, and their known large cash reserves, and its management periodically reviews these institutions’ reputations, track records, and reported reserves. Seamless’ management expects that any additional institutions that its use for its cash and bank deposits will be chosen with similar criteria for soundness. It did not experience any losses on its deposits of cash and cash equivalents during the years ended December 31, 2022 and 2023, and the six months period ended 30 June, 2024. Seamless did not experience any loss during the years ended December 31, 2022 and 2023, and the six months period ended 30 June, 2024 with respect to receivables. These funds are not insured, however, as its business continues to grow and it expands into additional geographies and business lines, it may face greater credit risk.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The update will be effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is assessing the effect of this update on the consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is assessing the effect of this update on the consolidated financial statement disclosures.
In March 2024, the FASB issued ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which adds an illustrative example aimed at clarifying the scope application of a profit interest award in accordance with Topic 718. The update will be effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Upon adoption, the new standard is not expected to have an impact on the Company’s financial position or results of operations.
In March 2022, the SEC released SAB 121, which provides guidance for an entity to consider when it has obligations to safeguard customers’ crypto assets, whether directly or through an agent or another third party acting on its behalf. The interpretive guidance requires a reporting entity to record a liability to reflect its obligation to safeguard the crypto assets held for its platform users with a corresponding safeguarding asset. The crypto asset safeguarding liability and the corresponding safeguarding asset will be measured at the fair value of the crypto assets held for the platform users with the measurement of the safeguarding asset taking into account any potential loss events. SAB 121 also requires disclosures related to the entity’s safeguarding obligations for crypto assets held for its platform users. SAB 121 was effective in the first interim or annual financial statements ending after June 15, 2022 with retrospective application as of the beginning of the fiscal year. We adopted this guidance for the year ended December 31, 2022 with retrospective application as of January 1, 2021. As of December 31, 2023 and 2022, we recorded $2.0 million and $5.8 million, respectively, for both the crypto asset safeguarding liability and corresponding safeguarding asset, which were classified as accounts payable, accruals and other payables and prepayments, receivables and other assets, respectively, on our consolidated balance sheets.
In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”). The amendments in this ASU eliminate the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments are effective for the Company beginning after December 15, 2022. As of the year ended December 31, 2023, the Company does not consider the changes prescribed in ASU 2022-02 to have a material impact on its consolidated financial position, results of operations or cash flows.
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In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2022, and are applied prospectively to business combinations that occur after the effective date. As of the year ended December 31, 2023, the Company does not consider these amendments to have a material impact to the financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. Further, ASU 2020-06 enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance, i.e., aligning the diluted EPS calculation for convertible instruments by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in the diluted EPS calculation when an instrument may be settled in cash or shares, adding information about events or conditions that occur during the reporting period that cause conversion contingencies to be met or conversion terms to be significantly changed. The Company meets the classification as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies. For private companies, it’s effective for fiscal years beginning after December 15, 2023. The Company has chosen not to early adopt the new standard before the effective date.
DESCRIPTION OF CURRENC’S Business
Unless otherwise indicated or the context otherwise requires, references in this section to “Seamless,” “it,” or “their,” generally refer to Seamless Group Inc. prior to the Business Combination and to Currenc Group Inc. after giving effect to the Business Combination.
Industry Overview
Money Transfer Business
Digital remittances are cross-border money transfers conducted over the internet mostly by the migrant population using digital transfer networks like e-Wallets, easy-to-use mobile applications and others. People living in Asian countries are increasingly engaging with counterparts abroad for medical, business, education, entertainment, leisure and other activities. In addition, there is a rapidly growing need for remittance services for migrant workers sending money back to their homelands on a regular basis.
Remittances in general include fund transfers between residents and non-residents and earnings transfer from short-term workers from other countries to their country of origin. Remittances are often made on a regular or periodic basis and most users do not switch their fund transfer provider frequently. Digital remittances refer to those funds sent to other countries using digital transfer platforms other than bank SWIFT systems. Funds that are transferred domestically are usually not included in the digital remittances segment.
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In the past, traditionally, sending money across borders has been done through the bank SWIFT system.
Traditional bank SWIFT remittance systems enjoy the advantages of reliability and security, which is an important consideration for people and especially corporations for sending large sums of money to other countries, and the wide coverage of the global network of SWIFT which covers almost all countries. However, there are many pain points in the bank SWIFT system. First, the processing costs and expenses are high. This is particularly so for those remittance flows which involve small amounts of money, which are often done on a regular and frequent basis. The relatively high fixed transaction fees charged by banks may constitute a larger proportion of the remittance money if the remittance amount involved is small. Second, the process is tedious and usually takes a few days for processing. That may lead to frustration and anxiety for the senders and receivers, especially when the recipient needs the money urgently. Third, to receive funds through the SWIFT system a recipient must have access to a bank account, which poses a serious problem for many residents of Southeast Asian countries that have no bank accounts and have no access to banking services.
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World’s Most Unbanked Countries
| Country | Total Population (Millions) | Unbanked Population (%) | Cash Transactions (%) | Card Transactions (%) | # of ATMs per 100,000 Adults | Internet Penetration (%) | ||||||||||||||||||
| Morocco | 36.9 | 71 | 41 | 27 | 28.6 | 62 | ||||||||||||||||||
| Vietnam | 97.3 | 69 | 26 | 35 | 25.9 | 66 | ||||||||||||||||||
| Egypt | 102.3 | 67 | 55 | 27 | 20.1 | 45 | ||||||||||||||||||
| Philippines | 109.6 | 66 | 37 | 22 | 29.0 | 60 | ||||||||||||||||||
| Mexico | 128.9 | 63 | 21 | 44 | 61.5 | 66 | ||||||||||||||||||
| Nigeria | 206.1 | 60 | 24 | 27 | 16.9 | 70 | ||||||||||||||||||
| Peru | 33.0 | 57 | 22 | 62 | 126.7 | 49 | ||||||||||||||||||
| Colombia | 50.9 | 54 | 15 | 55 | 41.3 | 62 | ||||||||||||||||||
| Indonesia | 273.5 | 51 | 13 | 34 | 53.3 | 55 | ||||||||||||||||||
| Argentina | 45.2 | 51 | 18 | 45 | 60.9 | 76 | ||||||||||||||||||
| Kenya | 53.8 | 44 | 40 | 25 | 7.7 | 83 | ||||||||||||||||||
| Romania | 19.2 | 42 | 78 | 19 | 64.4 | 64 | ||||||||||||||||||
| Kazakhstan | 18.8 | 41 | 60 | 20 | 85.9 | 76 | ||||||||||||||||||
| Ukraine | 43.7 | 37 | 60 | 28 | 96.3 | 57 | ||||||||||||||||||
| Uruguay | 3.5 | 36 | 26 | 53 | 120.1 | 68 | ||||||||||||||||||
| South Africa | 59.3 | 31 | 11 | 43 | 65.3 | 56 | ||||||||||||||||||
| Turkey | 84.3 | 31 | 8 | 71 | 84.0 | 65 | ||||||||||||||||||
| Brazil | 212.6 | 30 | 18 | 62 | 101.7 | 67 | ||||||||||||||||||
| Bulgaria | 7.0 | 28 | 63 | 26 | 94.3 | 63 | ||||||||||||||||||
| Saudi Arabia | 34.8 | 28 | 34 | 35 | 73.3 | 82 | ||||||||||||||||||
| Chile | 19.1 | 26 | 11 | 70 | 50.0 | 82 | ||||||||||||||||||
| Hungary | 9.7 | 25 | 45 | 44 | 61.0 | 77 | ||||||||||||||||||
| Russia | 145.9 | 24 | 17 | 37 | 165.5 | 76 | ||||||||||||||||||
| India | 1,380 | 20 | 17 | 32 | 21.0 | 34 | ||||||||||||||||||
| China | 1,439.3 | 20 | 6 | 22 | 95.6 | 54 | ||||||||||||||||||
| Czech Republic | 10.7 | 19 | 44 | 22 | 58.0 | 88 | ||||||||||||||||||
| Thailand | 69.8 | 18 | 16 | 26 | 115.1 | 53 | ||||||||||||||||||
| Lithuania | 2.7 | 17 | 12 | 24 | 38.6 | 78 | ||||||||||||||||||
| Slovakia | 5.5 | 16 | 41 | 17 | 61.8 | 82 | ||||||||||||||||||
| Greece | 10.4 | 15 | 29 | 54 | 63.4 | 70 | ||||||||||||||||||
| Malaysia | 32.4 | 15 | 11 | 32 | 44.7 | 80 | ||||||||||||||||||
| Poland | 37.9 | 13 | 12 | 25 | 70.6 | 76 | ||||||||||||||||||
| Latvia | 1.9 | 7 | 12 | 49 | 58.3 | 81 | ||||||||||||||||||
| Israel | 8.7 | 7 | 1 | 76 | 133.2 | 82 | ||||||||||||||||||
| USA | 331 | 7 | 4 | 59 | N/A | 89 | ||||||||||||||||||
| Spain | 46.8 | 6 | 11 | 49 | 106.3 | 85 | ||||||||||||||||||
| France | 65.3 | 6 | 5 | 55 | 98.3 | 90 | ||||||||||||||||||
| Italy | 60.5 | |||||||||||||||||||||||