Currenc Group Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of Currenc’ 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. Currenc’ 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 “Currenc,” “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 The Company is a limited liability company incorporated in the Cayman Islands on March 8, 2021. It is an investment holding company headquartered in Singapore. The Company was originally a publicly traded special purpose acquisition company named INFINT Acquisition Corporation (“INFINT”) formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities. The Company’s principal subsidiaries at September 30, 2024 are set out below: Percentage of ownership held by the Company Company Name Place of incorporation Principal activities Directly Indirectly Seamless Group Inc. Cayman Islands Investment holding 100 % Dynamic Investment Holdings Limited Cayman Islands Investment holding 100 % Bagus Fintech Pte. Ltd. Singapore Providing business center services — 100 % PT Tranglo Indonesia Indonesia Operating money remittance business — 60 % PT Tranglo Solusindo Indonesia Providing and sourcing airtime and other related services — 60 % Tranglo (MEA) Limited Hong Kong Providing and sourcing airtime and other related services — 60 % Tranglo Europe Ltd United Kingdom Operating money remittance business — 60 % Tranglo Pte. Ltd. Singapore Operating money remittance business — 60 % Tik FX Malaysia Sdn. Bhd. Malaysia Dormant — 60 % Treatsup Sdn. Bhd. Malaysia Research, development and commercialisation of Treatsup application and provision of implementation, technical services and maintenance related to the application — 60 % Dynamic Indonesia Holdings Limited Cayman Islands Investment holding — 100 % Dynamic Indonesia Pte. Ltd. Singapore Retail sales via the internet and development of other software and programming activities — 82.0 % PT Dynamic Wallet Indonesia Indonesia Business operations have not commenced — 82.2 % PT Walletku Indompet Indonesia Indonesia (i) Retail commerce through media, for textile commodities, clothing, footwear and personal needs, (ii) web portal and/or digital platforms for commercial purposes, and (iii) software publisher — 82.2 % 29 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. In the past, Currenc operated the two different business lines through four main subsidiaries: Tranglo, WalletKu, TNG Asia and GEA. On July 30, 2024, Currenc divested GEA and on August 30, 2024, Currenc also disposed TNG Asia. Since then, Currenc operates the global remittance business mainly through Tranglo, which is one of the leading money remittance platforms in Southeast Asia. Tranglo provides business-to-business (“B2B”) remittance services for financial institutions and is considered as a upstream player of the remittance industry. Currenc 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. Currenc also runs WalletKu, which is an Indonesian airtime operator facing end users directly. 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 September 30, 2024, Tranglo had more than 5,000 bank partners, 35 eWallets, 130,000 cash pick-up points, and 133 corporate clients for remittances, with a remittance network covering more than 80 countries. As for the nine-month period ended September 30, 2024, Tranglo processed around 8.56 million transactions with a total processing value of $3.92 billion, which represents a growth in volume by 5.5% as compared to 8.11 million transactions, and a growth in total processing value by 18.8% as compared to the total processing value of $3.3 billion for the nine-month period ended September 30, 2023. As for the nine-month period ended September 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 were divested by Currenc in August and July 2024 respectively. Based on the nine-month period ended September 30, 2024 operating results, post-Divestiture, the percentage of revenue generated in Hong Kong and the PRC represented approximately 6.0% of Currenc’s total revenue. The number of Tranglo unique users increased to 1,024,100 as of September 30, 2024 from 866,800 as of September 30, 2023, while the number of global money transfer transactions increased from 8.11 million for the nine-month period ended September 30, 2023 to 8.56 million for the nine-month period ended September 30, 2024. The number of average monthly unique sending accounts increased from 326,500 for the nine-month period ended September 30, 2023 to 358,900 for the nine-month period ended September 30, 2024. 30 Tranglo is also a global airtime transfer hub, offering cross-border airtime wholesale and transfer services. At September 30, 2024, Tranglo has partnered with more than 500 mobile operators that cover 150 countries and served more than 40 airtime corporate customers. As for the nine-month period ended September 30, 2024, Tranglo processed 3.23 million airtime transfer transactions with a total value of $7.3 million, representing a decrease of 21.4% in volume and 22.3% in value as compared to 4.11 million transactions with a total value of $9.4 million for the nine-month period ended September 30, 2023. For the nine-month period ended September 30, 2024, the airtime unique user accounts decreased to 531,000, representing a decline of 25.9% as compared to 716,500 for the nine-month period ended September 30, 2023. The monthly average unique sending accounts also decreased to 140,200 for the nine-month period ended September 30, 2024, representing a decline of 22.1% as compared to 180,000 for the nine-month period ended September 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 130,502 customers as of September 30, 2024, distributing airtime with a total value of $9.7 million for the nine-month period ended September 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. TNG Asia generates 80-95% of its revenue by offering the money remittance services to these overseas workers. 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. Business Combination On August 30, 2024 (the “Closing Date”), INFINT, INFINT Fintech Merger Sub Corp., a Cayman Islands exempted company and wholly owned subsidiary of INFINT (“Merger Sub”), and Seamless Group Inc., a limited liability company under the laws of the Cayman Islands (along with its wholly owned subsidiaries, “Seamless”), consummated a business combination pursuant to the business combination agreement, dated as of August 3, 2022, as amended (the “Business Combination Agreement”). On the Closing Date, INFINT completed a series of transactions (the “Closing”) that resulted in the combination (the “Business Combination”) of INFINT with Seamless. On August 30, 2024, pursuant to the Business Combination Agreement, the 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”). The Company’s ordinary shares are listed on the Nasdaq Capital Market under the symbol “CURR”. As consideration for the Business Combination, Currenc issued to Seamless shareholders an aggregate of 40,000,000 ordinary shares (the “Exchange Consideration”). In addition, Currenc issued 400,000 commitment shares to the PIPE investor (as described below) and 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 (“Greenberg Traurig”), and $603,623 to INFINT Capital LLC (the “Sponsor”), and entered into a $1.75 million PIPE Offering, as set forth below. Simultaneous with the closing of the Business Combination, Currenc also completed a series of private financings, issuing a Convertible Note 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. Pursuant to ASC 805-40, Reverse Acquisitions , for financial accounting and reporting purposes, Seamless was deemed the accounting acquirer with INFINT being treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization (the “Reverse Recapitalization”). Accordingly, the unaudited condensed consolidated financial statements of the Company represent a continuation of the financial statements of Seamless, with the Business Combination being treated as the equivalent of Seamless issuing stock for the net assets of INFINT, accompanied by a recapitalization. The net liabilities of INFINT were stated at historical cost, with no goodwill or other intangible assets recorded, and were consolidated with Seamless’ financial statements on the Closing Date. The number of Seamless common shares for all periods prior to the Closing Date have been retrospectively adjusted using the exchange ratio that was established in accordance with the Business Combination Agreement, after adjusting for the share repurchase. See Note 3 to the consolidated financial statements, Reverse Recapitalization and Related Transactions , for additional information. 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 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. 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. 31 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. 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. 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 51.6% of Tranglo’s global airtime revenue for the nine-month period ended September 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. 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. 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. As Currenc is to explore and develop the B2C markets in Southeast Asia and Middle East, Currenc’ 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. 32 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. 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, 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. 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. 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. Results of Operations This section includes tables that set forth a summary of Currenc’ consolidated results of operations for the periods indicated, as well as accompanying narratives explaining material changes. 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. Three-month period Ended September 30, 2024 Compared to three-month period Ended September 30, 2023 For the three-month period ended September 30, 2024 2023 $ $ (dollars in thousands) Revenue 11,260 12,736 Cost of revenue (8,125 ) (8,597 ) Gross profit 3,135 4,139 Operating expenses General and administrative and selling expenses (19,064 ) (6,454 ) Total operating expenses Finance income (costs) (3,855 ) (1,497 ) Other income, net 15,009 241 Other expenses (160 ) (18 ) Loss before income tax expense (4,935 ) (3,589 ) Income tax expenses (86 ) (226 ) Net loss (5,021 ) (3,815 ) Non-GAAP Financial Figures: EBITDA (191 ) (1,197 ) (1) To see how Currenc defines and calculates EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” 33 Revenue Analysis For the three-month period ended September 30, 2024, Currenc’ revenue decreased by 11.0% to $11.3 million as compared to $12.7 million for the three-month period ended September 30, 2023. The decrease was mainly due to a drastic decline of 22.1% in global airtime revenue. The remittance revenue decreased as well due to a decline in TNG Asia’s remittance business. For the three-month period ended September 30, 2024, Tranglo processed 2.71 million remittance transactions with a total value of $1.21 billion, which compares to 2.72 million transactions and a total value of $1.14 billion for the three-month period ended September 30, 2023. However, as the overall take rate decreased by 7.5% during the period, Tranglo generated remittance revenues of $4.5 million for the three-month period ended September 30, 2024, which was at relatively the same level of $4.6 million as the three-month period ended September 30, 2023. Due to COVID and the Malaysian border being closed, Currenc’ 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 three-month period ended September 30, 2024, Currenc’ global airtime revenue continued to decline by 22% to $2.3 million as compared to $2.95 million for the three-month period ended September 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. Currenc does not expect a turn around on its global airtime business in the near future. For the three-month period ended September 30, 2024, the airtime unique user accounts decreased to 531,000, representing a decline of 25.9% as compared to 716,500 for the three-month period ended September 30, 2023. The monthly average unique sending accounts also decreased to 140,200 for the three-month period ended September 30, 2024, representing a decline of 22.1% as compared to 180,000 for the three-month period ended September 30, 2023. Currenc’ Indonesian airtime revenue was $4 million for the three-month period ended September 30, 2024, which was at slightly higher as compared to $3.4 million for the three-month period ended September 30, 2023. For the three-month period ended September 30, 2024, Currenc recorded a gain of $0.1 million as “Other income”, which was immaterial. For the three-month period ended September 30, 2023, Currenc also recorded a gain of $0.2 million as “Other income”. 34 Cost of Revenue For the three-month period ended September 30, 2024, Currenc cost of revenue was $8.1 million which was a decrease of 5.8% as compared to that of $8.6 million for the three-month period ended September 30, 2023. Due to Currenc’ efforts at continually lowering the direct costs for remittance, the direct costs for remittance revenue was $2.2 million for the three-month period ended September 30, 2024, which represented a decrease of 18.5% as compared to $2.7 million for the three-month period ended September 30. Also, the direct costs for global airtime revenue decreased substantially by 23.1% from $2.6 million to $2 million, which was in line with the 22.1% decline in global airtime revenue. The direct costs for Indonesian airtime revenue increased by 18.8% from $3.2 million to $3.8 million during the periods, which is also consistent to the 17.6% increase in Indonesian airtime revenue. The amortization expense of Currenc was $0.2 million for the three-month period ended September 30, 2024, as compared to $0.3 million for the three-month period ended September 30, 2023. Again, the amortization expenses were related only to the amortization expense of TNG Asia. Operating Expenses Currenc’ operating expenses increased sharply from $6.5 million for the three-month period ended September 30, 2023, to $19.1 million for the three-month period ended September 30, 2024. The substantial increase was mainly due to an expense of $13.1 million in recognition of the incentive shares granted to the employee upon the completion of merging with INFINT SPAC, and also an expense of $1 million in recognition of shares granted to Roth for their services as the Capital Market Advisor. 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. Currenc’ legal and professional costs decreased to $0.2 million for the three-month period ended September 30, 2024, from $1.2 million for the three-month period ended September 30, 2023. This was mainly due to lower extension fees paid for the extension of INFINT SPAC and majority of the de-SPAC related legal and professional fee has been paid in prior periods. Other income, net Other income for the three-month period ended September 30, 2024 was mainly contributed by $14.7 million gain on divestiture of TNGA and GEA. Other expenses Other expenses were immaterial for the three-month periods ended September 30, 2024 and 2023. Finance costs, net Finance costs for the three-month period ended September 30, 2024 were mainly represented by PIPE issuance cost of $2.5 million, convertible bond interest of $0.4 million and interest on loan converted from convertible bond of $0.3 million. Finance costs for the three-month period ended September 30, 2024 were mainly represented by convertible bond interest of $0.4 million and interest on loan converted from convertible bond of $0.5 million and amortization for the debt discount on convertible bond of $0.2 million. 35 Income tax expenses The effective tax rate of Tranglo for the three-month period ended September 30, 2024 and 2023 was consistent with the statutory tax rate. Nine-month period ended September 30, 2024 Compared to nine-month period ended September 30, 2023 For the nine-month period ended September 30, 2024 2023 $ $ (dollars in thousands) Revenue 35,371 39,903 Cost of revenue (24,031 ) (26,692 ) Gross profit 11,340 13,211 Operating expenses General and administrative and selling expenses (30,039 ) (18,846 ) Total operating expenses (30,039 ) (18,846 ) Finance income (costs) (7,682 ) (4,652 ) Other income, net 15,546 363 Other expenses (200 ) (65 ) Loss before income tax expense (11,035 ) (9,989 ) Income tax expenses (226 ) (456 ) Net loss (11,261 ) (10,445 ) Non-GAAP Financial Figures: EBITDA (616 ) (2,447 ) (1) To see how Currenc defines and calculates EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” Revenue Analysis For the nine-month period ended September 30, 2024, Currenc’ revenue decreased by 11.3% to $35.4 million as compared to $39.9 million for the nine-month period ended September 30, 2023. The decrease was mainly due to a drastic decline of 22.3% in global airtime revenue. The remittance revenue decreased as well due to a decline in TNG Asia’s remittance business. For the nine-month period ended September 30, 2024, Tranglo processed 8.56 million remittance transactions with a total value of $3.92 billion, which compares to 8.11 million transactions and a total value of $3.3 billion for the nine-month period ended September 30, 2023. However, as the overall take rate decreased by 15.9% during the period, Tranglo generated remittance revenues of $14.3 million for the nine-month period ended September 30, 2024, which was at relatively the same level as the nine-month period ended September 30, 2023. Tranglo’s global money transfer network has been expanding. For the nine-month period ended September 30, 2024, it has increased the number of global money transfer corridors it serves to more than 80 corridors. The number of unique users increased to 1,024,100 as of September 30, 2024 from 866,800 as of September 30, 2023, and the number of global money transfer transactions increased from 8.11 million for the nine-month period ended September 30, 2023 to 8.56 million for the nine-month period ended September 30, 2024. The number of average monthly unique sending accounts increased from 326,500 for the nine-month period ended September 30, 2023 to 358,900 for the nine-month period ended September 30, 2024. Due to COVID and the Malaysian border being closed, Currenc’ 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 nine-month period ended September 30, 2024, Currenc’ global airtime revenue continued to decline by 22.3% to $7.3 million as compared to $9.4 million for the nine-month period ended September 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. Currencdoes not expect a turn around on its global airtime business in the near future. 36 For the nine-month period ended September 30, 2024, the airtime unique user accounts decreased to 531,000, representing a decline of 25.9% as compared to 716,500 for the nine-month period ended September 30, 2023. The monthly average unique sending accounts also decreased to 140,200 for the nine-month period ended September 30, 2024, representing a decline of 22.1% as compared to 180,000 for the nine-month period ended September 30, 2023. Seamless’ Indonesian airtime revenue was $10.2 million for the nine-month period ended September 30, 2024, which was a slight decrease of 2.9% as compared to $10.5 million for the nine-month period ended September 30, 2023. For the nine-month period ended September 30, 2024, Currenc recorded a gain of $0.7 million as “Other income”, of which Tranglo contributed a Forex gain of $0.6 million. For the nine-month period ended September 30, 2023, Currenc recorded a gain of $0.4 million as “Other income”, of which Tranglo contributed a Forex gain of $0.8 million whereas TNG Asia contributed a Forex loss of $0.1 million as TNG Asia launched a negative Forex spreads rate of –0.07%. Cost of Revenue For the nine-month period ended September 30, 2024, Currenc cost of revenue was $24.0 million which was a decrease of 10.1% as compared to that of $26.7 million for the nine-month period ended September 30, 2023. Due to Currenc’ efforts at continually lowering the direct costs for remittance, the direct costs for remittance revenue was $7.7 million for the nine-month period ended September 30, 2024, which represented a decrease of 9.4% as compared to $8.5 million for the nine-month period ended September 30, 2023, despite a substantial increase of TPV by 18.8% during the two periods. Also, the direct costs for global airtime revenue decreased substantially by 24.1% from $8.3 million to $6.3 million, which was in line with the 22.3% decline in global airtime revenue. The direct costs for Indonesian airtime revenue has increased slightly from $9.6 million to $9.7 million during the periods. The amortization expense of Currenc was $1.0 million for the nine-month period ended September 30, 2024, as compared to $1.1 million for the nine-month period ended September 30, 2023. Again, the amortization expenses were related only to the amortization expense of TNG Asia. Operating Expenses Currenc’ operating expenses increased sharply from $18.8 million for the nine-month period ended September 30, 2023, to $30.0 million for the nine-month period ended September 30, 2024. The substantial increase was mainly due to an expense of $13.1 million in recognition of the incentive shares granted to the employee upon the completion of merging with INFINT SPAC, and also an expense of $1 million in recognition of shares granted to Roth for their services as the Capital Market Advisor. 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. Currenc’ legal and professional costs decreased to $1.5 million for the nine-month period ended September 30, 2024, from $3.5 million for the nine-month period ended September 30, 2023. This was mainly due to lower extension fees paid for the extension of INFINT SPAC. Other income, net Other income, net for the nine- month period ended September 30, 2024 was mainly contributed by $14.7 million gain on divestiture of TNGA and GEA. Other expenses Other expenses were immaterial for the nine-month periods ended September 30, 2024 and 2023. Finance costs, net Finance costs for the three-month period ended September 30, 2024 were mainly represented by PIPE issuance cost of $2.5 million, convertible bond interest of $1.3 million and interest on loan converted from convertible bond of $1.4 million and interest paid to Ripple of $0.6 million for ODL prefunding purposes. Finance costs for the nine months’ period ended September 30, 2023, finance costs were mainly represented by convertible bond interest. of $1.3 million, interest on loan converted from convertible bond of $1.4 million amortization for the debt discount on convertible bond of $0.8 million and interest paid to Ripple of $0.6 million for ODL prefunding purposes. 37 Income tax expenses The effective tax rate of Tranglo for the nine-month period ended September 30, 2024 and 2023 was consistent with the statutory tax rate. Non-GAAP Financial Measures To supplement Currenc’ 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. Currenc 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 Currenc does not consider indicative of the performance of its business. While Currenc 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 three-month period ended September 30, 2024 2023 $ $ (dollars in thousands) Net loss (5,021 ) (3,815 ) Add: Income tax expenses 86 226 Interest expenses, net 3,856 1,497 EBIT (1,079 ) (2,092 ) Depreciation and amortization 888 895 EBITDA (191 ) (1,197 ) For the nine-month period ended September 30, 2024 2023 $ $ (dollars in thousands) Net loss (11,261 ) (10,447 ) Add: Income tax expenses 226 456 Interest expenses, net 7,682 4,652 EBIT (3,353 ) (5,339 ) Depreciation and amortization 2,737 2,890 EBITDA (616 ) (2,449) The use of EBITDA has material limitations as an analytical tool, as EBITDA does not include all items that impact Currenc’ net loss for the period. 38 EBITDA analysis For the three-month period ended September 30, 2024 Tranglo WalletKu TNG Asia and GEA Headquarters and adjustments Group Total (dollars in thousands) Net income (loss) (131 ) (39 ) (826 ) (4,025 ) (5,021 ) Add: Income tax expenses 179 - - (93 ) 86 Interest expense, net - 76 3,780 3,856 EBIT 48 (39 ) (750 ) (338 ) (1,079 ) Depreciation and amortization - - - - 888 EBITDA 48 (39 ) (750 ) (338 ) (191 ) For the three-month period ended September 30, 2023 Tranglo WalletKu TNG Asia and GEA Headquarters and adjustments Group Total (dollars in thousands) Net income (loss) 129 (176 ) (665 ) (3,103 ) (3,815 ) Add: Income tax expenses 319 - - (93 ) 226 Interest expense, net - 266 1,231 1,497 EBIT 448 (176 ) (399 ) (1,965 ) (2,092 ) Depreciation and amortization - - - - 895 EBITDA 448 (176 ) (399 ) (1,965 ) (1,197 ) For the three-month period ended September 30, 2023, Currenc had an EBIT loss of $2.1 million and an EBITDA loss of $1.2 million. For the three-month period ended September 30, 2024, the EBIT loss decreased to $1.1 million and the EBITDA loss was $0.2 million for the three-month period ended September 30, 2024. The slight decrease in EBIT and EBITDA losses in the first three months of 2024 was mainly due to $14.7 million gain on divestiture of TNGA and GEA, offset by an expense of $13.1 million in recognition of the incentive shares granted to employees upon the completion of merging with INFINT SPAC, as well as an expense of $1 million in recognition of shares granted to Roth for their services as the Capital Market Advisor after the merging with INFINT SPAC. For the three-month period ended September 30, 2024, Tranglo recorded an EBIT profit of $0.05 million, which represented a decrease as compared to $0.4 million for the three-month period ended September 30, 2023. This was due to an 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 34% decline in Tranglo’s global airtime revenue, Tranglo managed to maintain a positive EBIT. For the three-month period ended September 30, 2024, the EBIT loss of TNG Asia and GEA combined was $0.8 million, as compared to $0.4 million for the three-month period ended September 30, 2023. WalletKu recorded an EBIT loss of $0.04 million for the three-month period ended September 30, 2024 which compared to an EBIT loss of $0.2 million for the three-month period ended September 30, 2023. 39 For the nine-month period ended September 30, 2024 Tranglo WalletKu TNG Asia and GEA Headquarters and adjustments Group Total (dollars in thousands) Net income (loss) 1,525 (293 ) (3,740 ) (8,753 ) (11,261 ) Add: Income tax expenses 504 - - (278 ) 226 Interest expense, net - - 1,762 5,920 7,682 EBIT 2,029 (293 ) (1,978 ) (3,111 ) (3,353 ) Depreciation and amortization - - - - 2,737 EBITDA 2,029 (293 ) (1,978 ) (3,111 ) (616 ) For the nine-month period ended September 30, 2023 Tranglo WalletKu TNG Asia and GEA Headquarters and adjustments Group Total (dollars in thousands) Net income (loss) 1,347 (363 ) (2,435 ) (8,996 ) (10,447 ) Add: Income tax expenses 733 - - (277 ) 456 Interest expense, net - - 816 3,836 4,652 EBIT 2,080 (363 ) (1,619 ) (5,437 ) (5,339 ) Depreciation and amortization - - - - 2,890 EBITDA 2,080 (363 ) (1,619 ) (5,437 ) (2,449 ) For the nine-month period ended September 30, 2023, Currenc had an EBIT loss of $5.3 million and an EBITDA loss of $2.4 million. The EBIT loss decreased to $3.4 million and the EBITDA loss was $0.6 million for the nine-month period ended September 30, 2024. The decrease in EBIT and EBITDA losses in the first nine months of 2024 was mainly due to $14.7 million gain on divestiture of TNGA and GEA, offset by an expense of $13.1 million in recognition of the incentive shares granted to employees upon the completion of merging with INFINT SPAC, as well as an expense of $1 million in recognition of shares granted to Roth for their services as the Capital Market Advisor after the merging with INFINT SPAC. For the nine-month period ended September 30, 2024, Tranglo recorded an EBIT profit of $2.0 million, which represented a slight decrease as compared to $2.1 million for the nine-month period ended September 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 22.3% decline in Tranglo’s global airtime revenue, Tranglo managed to maintain its EBIT profit. For the nine-month period ended September 30, 2024, the EBIT loss of TNG Asia and GEA combined was $2.0 million, as compared to $1.6 million for the nine-month period ended September 30, 2023. WalletKu recorded an EBIT loss of $0.3 million for the nine-month period ended September 30, 2024 which compared to an EBIT loss of $0.4 million for the nine-month period ended September 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 .” Taxation Cayman Islands Currenc 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 Currenc 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. 40 Malaysia Currenc’ subsidiaries incorporated in Malaysia are subject to Malaysian profits tax at a rate of 24.0% on the estimated assessable profit. Payment of dividends to the shareholders of Currenc’ subsidiaries in Malaysia are not subject to withholding tax in Malaysia. No Malaysian profit tax has been levied as Currenc did not have assessable profit that was earned in or derived from the Malaysian subsidiary during the periods presented. Indonesia Currenc’ subsidiaries incorporated in Indonesia are subject to Indonesian profits tax at a rate of 22.0% on the taxable profit. 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 Currenc did not have assessable profit that was earned in or derived from the Indonesian subsidiary during the periods presented. Going Concern The Company’s unaudited consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2024, the Company had cash balances of $49.1 million, a working capital deficit of $54.1 million and net capital deficit $22.7 million. For the nine months ended September 30, 2024, the Company had a net loss of $11.3 million and net cash used in operating activities of $11.7 million. Net cash used in investing activities was $0.4 million. Net cash generated from financing activities was $2.2 million, resulting principally from proceeds of borrowings. While the Company believes that it will be able to continue to grow the Company’s revenue base and control expenditures, there is no assurance that it will be able to achieve these goals. As a result, the Company continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed to finance the Company’s business development activities, general and administrative expenses and growth strategy. Liquidity and Capital Resources Cash Flows and Working Capital Currenc’ principal sources of liquidity have been cash generated from operating activities. As of September 30, 2024 and December 31, 2023, it had $49.1 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 September 30, 2024 and December 31, 2023, Currenc had $0.04 million and $5.4 million, respectively, in restricted cash. Currenc 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. The following table sets forth a summary of Currenc’ cash flows for the periods indicated: For the nine-month period ended September 30, 2024 2023 $ $ (dollars in thousands) Net cash used in by operating activities (11,671 ) (10,845 ) Net cash used in by investing activities (365 ) (174 ) Net cash provided by/(used in) financing activities 2,179 (148 ) Net decrease in cash and cash equivalents (9,857 ) (11,167 ) Cash and cash equivalents, restricted cash and escrow money receivable at beginning of the period/year 58,960 74,000 Cash and cash equivalents, restricted cash and escrow money receivable at end of the period/year 49,103 62,833 Operating Activities Currenc had net cash used in operating activities of $11.7 million in the nine-month period ended September 30, 2024, mainly comprised of a net loss of $11.3 million. 41 Seamless had net cash used in operating activities of $10.8 million in the period ended September 30, 2023, primarily attributable to the net loss of $10.4 million. Investing Activities Net cash used in investing activities amounted to $365,000 for the nine-month period ended September 30, 2024. Net cash used in investing activities amounted to $174,000 for the period ended September 30, 2023. Financing Activities Net cash provided by financing activities amounted to $2.2 million in the nine-month period ended September 30, 2024, mainly comprised of proceeds from issuance of convertible bond of $1.75 million. Net cash used by financing activities amounted to $148,000 in the period ended September 30, 2023. Capital Expenditures Currenc’ capital expenditures are incurred primarily in connection with computer hardware and software. Its capital expenditures were $1.8 million and $0.2 million for the nine-month period ended September 30, 2024 and 2023, respectively. Contractual Obligations The following table sets forth Currenc’ contractual obligations as of September 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) 62 62 - - - Convertible note 1,944 1,944 - - - Convertible bonds 8,900 8,900 - - - Borrowings 11,238 11,238 - - - Total contractual obligations 22,144 22,144 - - - Total interest payments (2) 2,076 1,979 97 - - Total contractual cash obligations 24,220 24,123 97 - - (1) Currenc 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 Currenc was not a party to any financial guarantees or other commitments to guarantee the payment obligations of any third parties during 2023, and the nine months ended September 30, 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. Currenc 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. 42 Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective are not expected to have a material impact on the Company’s financial position or results of operations upon adoption. In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of this guidance to have a material impact on our financial statements. Internal Control Over Financial Reporting Prior to the Business Combination, Seamless was 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 $1.235 billion in revenue for its last fiscal year, Currenc 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 Currenc 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, Currenc’ financial condition or operating results and margins would be affected. Currenc 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. 43 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. 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 9 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. 44 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 test 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 first assesses qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Based on the qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the quantitative impairment test is performed. 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. As the fair values of the reporting units is not less than carrying amount, no impairment was recorded for the period ended September 30, 2024 and year ended December 31, 2023. Emerging Growth Company and Smaller Reporting Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may 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. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.