Currenc Group Inc. 10-K

Item 7. 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. 70 Currenc is a leading operator of global money transfer services and airtime trading in Southeast Asia. Currenc’s mainstream business is its remittance business which facilitates users, in particular migrant workers, in different countries sending money from one country to another in a low cost and efficient manner. Another line of business is the airtime business which sells airtime to users in different countries worldwide, including retail users in Indonesia. Before merging with INFINT SPAC, 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 only 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 transfer hub in Southeast Asia. Tranglo 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 December 31, 2024, Tranglo had more than 5,000 bank partners, 35 eWallets, 130,000 cash pick-up points, and 140 corporate clients for remittances, with a remittance network covering more than 100 countries. As for the full year period ended December 31, 2024, Tranglo processed around 11.4 million transactions with a total processing value of $5.14 billion, which represents a growth in volume by 3.6% as compared to 11.0 million transactions, and a growth in total processing value by 13.2% as compared to the total processing value of $4.54 billion for the full year period ended December 31, 2023. As for the full year period ended December 31, 2024, the top four sending countries/regions 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 number of Tranglo unique users increased to 1,229,132 as of December 31, 2024 from 1,032,360 as of December 31, 2023. The number of average monthly unique sending accounts increased from 330,571 for the full year period ended December 31, 2023 to 355,997 for the full year period ended December 31, 2024. Tranglo is also a global airtime transfer hub, offering cross-border airtime wholesale and transfer services. This line of business also targets migrant workers who could buy and transfer airtime back to their family members in their homeland. However, global airtime transfer business has much lower gross margin as compared to the remittance business, and it also requires higher working capital as there are account receivables in the trade. Moreover, as most South East Asian countries have widely developed their internet network, especially in countries like Indonesia, more Wifi connections are available to citizens and therefore, the demand of airtime transfer has been declining in the South East Asian countries like Indonesia and Malaysia. At December 31, 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 full year period ended December 31, 2024, Tranglo processed 4.15 million airtime transfer transactions with a total value of $9.3 million, representing a decrease of 23.8% in both volume and value as compared to 5.3 million transactions with a total value of $12.2 million for the full year period ended December 31, 2023. For the full year period ended December 31, 2024, the airtime unique user accounts decreased to 619,075, representing a decline of 26.4% as compared to 841,374 for the full year period ended December 31, 2023. The monthly average unique sending accounts also decreased to 135,058 for the full year period ended December 31, 2024, representing a decline of 22.8% as compared to 174,943 for the full year period ended December 31, 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 128,000 customers as of December 31, 2024, distributing airtime with a total value of $14.5 million for the full year period ended December 31, 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. TNG Asia and GEA had been divested from Currenc since August 30, 2024 and July 30, 2024 respectively. 71 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”. 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 audited 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. PIPE Offering 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. Major Factors Affecting Currenc’s Results of Operations Currenc’s remittance services have benefited from continual growth in global migrant worker population, who have a strong demand for regular and small sizes of remittance to send money regularly to their homeland for their families’ livelihood. Given the average small size of remittance transactions, the transaction costs are of prime consideration to the users. Also, real-time remittance service is important to the users. With more usage of mobile devices and the increasing number of electronic wallets in Asia, the need for digital remittance has been increasing. 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. 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. As the South East Asian market is getting saturated, Currenc’s results of operations and financial condition are affected by its ability to expand its market reach to other geographical regions like Middel East or Africa. 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. 72 All along, Currenc serves only financial institutions and is a B2B remittance hub. In other words, Currenc is considered as the upstream player of the digital remittance industry. Being an upstream player, Currenc is under tremendous pricing pressure. In order to expand its profit margin, Currenc needs to go downstream and directly face retail customers. In other words, Currenc needs to develop B2C markets, especially in the Middle East market. This development, if successfully launched, will generate much higher profitability. 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 Malaysia-Indonesia is currently the key global airtime corridor for Tranglo which contributed 52.4% of Tranglo’s global airtime revenue for the full year period ended December 31, 2024, Tranglo’s global airtime business has been 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’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. Therefore, most of the costs of Currenc are fixed costs which do not increase in tantum with the increase in business volume and digital remittance transactions processed. That means Currenc has a high operating leverage. As the business volume increases, the profitability of Currenc will increase even more. 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 Middle East, focusing on various fintech and airtime trading services. 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. Currenc’s new AI products and services Currenc is to launch new AI products and services for financial institutions. Currenc has created SEAMLESS AI Lab which is the complete AI solution provider for financial institutions. We customize using AI functions to create trading platform, operating apps, marketing center & enquiry center for financial institutions. Also, through AI for Hire, we provide human resources and recruitment services for customers. This includes AI Agent services to address common OTC challenges such as customer onboarding or “KYC,” real-time customer support, transaction inquiries, price volatility, liquidity management, and fraud detection. Currenc has secured a landmark contract with Coin Cove, an institution providing electronic banking services, to provide Coin Cove with comprehensive, AI-powered electronic banking solutions through SEAMLESS AI Lab, including a cutting-edge trading platform, trading and operating apps, customer inquiry and marketing centre, SEAMLESS AI Call Centre technology, training, compliance and risk management tools, website design and MasterCard issuance. Currenc has crafted a comprehensive spot and futures trading environment for Coin Cove, supporting over 150 digital assets and 600 trading pairs alongside multi-asset collateral and settlement. The platform also offers large-volume trading with locked-in rates to eliminate slippage, customizable wallet solutions integrating with various blockchain ecosystems, and seamless 24/7 operations through plug-and-play APIs. Over 15 fiat currencies are supported, providing flexibility for traders worldwide. 73 Currenc will also provide Coin Cove with an AI call centre and compliance solutions designed to address common electronic banking challenges such as customer onboarding or “KYC,” real-time customer support, transaction inquiries, price volatility, liquidity management, and fraud detection. SEAMLESS AI Lab’s “AI Staff for Hire” – Coin Cove will deploy Currenc’s pre-built, customizable AI Agents to perform staff training across customer service, operations, compliance, finance, and IT; assist human personnel, and deliver comprehensive reporting, monitoring and performance scoring. Currenc is also helping Coin Cove and other financial institutions to set up or improving their platforms or infrastructures for developing or expanding their digital remittance and global airtime businesses, with an aim to recruit them to make use of Currenc’s remittance and airtime corridors. We believe that the new AI services could recruit new clients for Tranglo and generate significant synergy for Tranglo’s remittance and airtime businesses. Currenc also plans to develop its AIDC (AI Data Center) business. Featuring a total planned capacity of 500MW, the 100-acre AIDC campus will be developed in phases. The campus will provide co-location and wholesale leasing solutions to hyperscalers, enterprise clients, and other data center users, catering to diverse needs and ensuring a robust tenant base. Currenc plans to form an AI-focused investment fund in collaboration with ARC Group, a leading global investment bank. As the first of a series of initiatives, the fund aims to raise up to $100 million and will invest in AI data center (AIDC), green energy, and computing power development, driving AI innovation and digital transformation globally. 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. Full-year period Ended December 31, 2024 Compared to three-month period Ended December 31, 2023 For the full-year period ended December 31, 2024 2023 $ $ (dollars in thousands) Revenue 46,435 53,755 Cost of revenue (31,843 ) (35,899 ) Gross profit 14,592 17,356 Operating expenses General and administrative and selling expenses (41,968 ) (24,002 ) Total operating expenses (41,968 ) (24,002 ) Finance income (costs) (8,515 ) (8,003 ) Other income/(loss), net (2,194 ) 840 Other expenses (164 ) (86 ) Loss before income tax expense (38,249 ) (13,895 ) Income tax expenses (578 ) (523 ) Net loss (38,827 ) (14,418 ) Non-GAAP Financial Figures: EBITDA (26,454 ) (2,075 ) (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.” 74 Revenue Analysis For the full-year period ended December 31, 2024, Currenc’ revenue decreased by 12.9% to $46.4 million as compared to $53.3 million for the full-year period ended December 31, 2023. However, during the period, Currenc’s mainstream digital remittance contributed by Tranglo actually increased by 6.4%, from $17.1 million for the full-year period of 2023, to $18.2 million for the full-year period ended December 31, 2023. On the other hand, the remittance revenues contributed by TNG Asia and GEA declined sharply by 55.2%, from $9.6 million for the full-year period ended December 31, 2023, to $4.3 million for the full-year period ended December 31, 2024. Both TNG Asia and GEA had been divested in August 2024, and therefore, going forward, Currenc relies only Tranglo’s digital remittance business as its sole contributor of Currenc’s remittance revenue. As Currenc divested TNG Asia and GEA in August 2024, for the full-year period ended December 31, 2024, the total revenue of Currenc after excluding the contribution of TNG Asia and GEA was $42.0 million. This represented a decline of 3.4% as compared to the same full year period of 2023, assuming that the contribution of TNG Asia and GEA was excluded as well. As can be seen, the decline was solely caused by the 23.8% decline in global airtime business. Full-year period Ended December 31, 2024 Compared to full-year period Ended December 31, 2023 For the full-year period ended December 31, 2024 2023 $ $ (dollars in thousands) Remittance revenue excluding TNG Asia & GEA 18,174 17,116 Global Airtime Revenue 9,336 12,188 Indonesian Airtime Revenue 14,505 14,211 Total Revenue excluding TNG Asia & GEA 42,015 43,515 Currenc’s international remittance hub’s business, i.e. Tranglo’s remittance business, has been continuously growing in the past few years. For the full-year period ended December 31, 2024, Tranglo processed 11.4 million remittance transactions with a total value of $5.14 billion, which compares to 11.0 million transactions and a total value of $4.54 billion for the full-year period ended December 31, 2023. However, Tranglo’s overall take rate decreased to 0.37% during the year 2024, of which 0.27% was the average transaction fee take rate, whereas 0.1% was the average forex spread take rate. For the full year of 2024, ODL remittance flows represented 4.5% of the TPV of Tranglo. This compared to the average total take rate of 0.43% for the year of 2023, of which 0.32% was the average transaction fee take rate and 0.11% was the average forex spread take rate. For the year of 2023, ODL remittance flows represented 10.5% of the TPV of Tranglo. The global remittance market is evolving rapidly and market competition has been keen. This is especially the case for the upstream players who act as the remittance hub serving mainly financial institutions. Besides providing quality and reliable services, Tranglo needs to offer price competitive services in order to capture more market share and to secure the client relationship. With a bigger market share and higher TPV, Tranglo would then be able to expand its global coverage and establish new remittance corridors. Tranglo has been adopting an aggressive pricing strategy so as to become one of the most price competitive players in the market and succeeded in gaining continual strong growth in remittance volume, in form of TPV, as well as establishing a growing remittance network globally in the past years. However, this also led to a long-term declining trend on its average total take rates. This was especially the case after Tranglo launched the ODL services in 2021. Going forward, the management expects that Tranglo should focus on driving its remittance revenue instead of just aiming at higher TPV and business volume. The management expects that the downward trend in average take rates should slow down or come to a halt in the coming future. The decline in revenue was also due to a drastic decline of 23.8% in global airtime revenue, from $12.2 million for the full year of 2023 to $9.3 million for the full year of 2024. 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 year of 2024. Currenc does not expect a turn around on its global airtime business in the near future. 75 The Indonesian retail business recorded a slight increase of 2.1% to $14.5 million for the year 2024, as compared to $14.2 million for the year of 2023. For the full-year period ended December 31, 2024, Currenc recorded a loss of $7.3 million as “Other income/(loss)”, of which $20.5 million was a recognized gain upon the divestiture of GEA, while at the same time, there were an impairment loss of $5.4 million for the goodwill of WalletKu, impairment loss of $9.5 million for the goodwill of Tranglo, impairment of Intangible assets of $5.6 million, and also an impairment loss of $3.2 million for the impairment of intercompany balance. For the full-year period ended December 31, 2023, Currenc recorded a gain of $0.84 million as “Other income”, of which Tranglo recorded a gain of $0.96 million as “Other gain” whereas TNG Asia recorded a loss of $0.12 million. Cost of Revenue For the full-year period ended December 31, 2024, Currenc cost of revenue was $31.8 million which was a decrease of 11.4% as compared to that of $35.9 million for the full-year period ended December 31, 2023. The direct costs for remittance revenue was $9.5 million for the year of 2024, which represented a decrease of 16.7% as compared to $11.4 million for the year of 2023. The decline was mainly due to a decline in the cost of revenue contributed by TNG Asia and GEA as the remittance business of these two entities declined substantially during the year. Both TNG Asia and GEA were divested in August 2024 and therefore, going forward, the direct costs for remittance revenue would only reflect the contribution of Tranglo alone. As Currenc divested TNG Asia and GEA in August 2024, for the full-year period ended December 31, 2024, if excluding the direct costs contributed by TNG Asia and GEA, Currecnc total direct remittance costs was $6.9 million. This represented a decline of 4.2% as compared to the same full year period of 2023, assuming that the contribution of TNG Asia and GEA was excluded as well. For the full-year period ended December 31, 2024, the total direct costs of revenue after excluding the contributions of TNG Asia and GEA was $28.9 million. This compared to $31.4 million for the same full year period of 2023, represented a decline of 8%. Full-year period Ended December 31, 2024 Compared to full-year period Ended December 31, 2023 For the full-year period ended December 31, 2024 2023 $ $ (dollars in thousands) Remittance direct cost excluding TNG Asia & GEA 6,878 7,168 Global Airtime direct cost 8,089 10,744 Indonesian Airtime direct cost 13,910 13,463 Total direct cost excluding TNG Asia & GEA 28,877 31,375 Despite that the TPV for Tranglo increased by 13.2%, from $4.53 billion for the year of 2023 to $5.14 billion for the year of 2024, the direct costs of remittance revenue for Tranglo was $6.9 million for the full year of 2024, which represented a direct payout rate of 0.12%. This compared to the direct costs of $7.2 million for the full year of 2023, with a direct payout rate of 0.15%. As the global digital remittance business is under keen competition and price pressure, Tranglo needs to continue its efforts in controlling the costs in order to preserve its profitability. The direct costs for global airtime revenue decreased substantially by 24.3% from $10.7 million to $8.1 million, which was in line with the 23.8% decline in global airtime revenue. The direct costs for Indonesian airtime revenue was $13.9 million, which was at relatively the same level as that of $13.5 million for the year 2023. The amortization expense of Currenc was $0.96 million for the full year period ended December 31, 2024, as compared to $1.6 million for the full year period ended December 31, 2023. All the amortization expenses were related only to the amortization expense of TNG Asia. 76 Operating Expenses Currenc’ operating expenses increased sharply from $24.0 million for the full-year period ended December 31, 2023, to $42.0 million for the full-year period ended December, 2024. The substantial increase was mainly due to an expense of $20.9 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. As Currenc divested TNG Asia and GEA in August 2024, going forward its operating costs mainly reflects the operating costs of Tranglo, WalletKu and the headquarters only. For Tranglo, the operating cost for the year of 2024 was $12.9 million, representing an increase of 4.9% as compared to $12.3 million for the year 2023. This was in line with the increase in remittance volume processed by Tranglo during the year. As for WalletKu, the operating costs was $1.2 million for the year 2024, as compared to $1.5 million for the year of 2023. This was the result of stringent cost control of WalletKu’s business. Currenc’ legal and professional costs decreased to $1.7 million for the full-year period ended December 31, 2024, from $4.7 million for the full-year period ended December 31, 2023. This was mainly due to the completion of merging with INFINT SPAC in August 2024, and therefore there was no need to continue to pay fees for the extension of INFINT SPAC and de-SPAC related legal and professional expenses. Other income, net For the full-year period ended December 31, 2024, Currenc recorded a loss of $2.2 million as “Other income/(loss)”, of which $20.5 million was a recognized gain upon the divestiture of GEA, while at the same time, there were an impairment loss of $5.4 million for the goodwill of WalletKu, impairment loss of $9.5 million for the goodwill of Tranglo, impairment of Intangible assets of $5.6 million, and also an impairment loss of $3.2 million for the impairment of intercompany balance. Other expenses Other expenses were immaterial for the full year of 2024. Finance costs, net Finance costs for the year ended December 31, 2024 were mainly represented by PIPE issuance cost of $2.5 million, convertible bond and loan interest of $3.2 million and interest to Ripple of $1.1 million for ODL prefunding purposes. 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. Income tax expenses The effective tax rate of Tranglo for the year ended December 31, 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. 77 The table below presents a reconciliation of EBITDA to net loss, the most directly comparable GAAP financial measure, for the periods indicated. For the full-year period ended December 31, 2024 2023 $ $ (dollars in thousands) Net loss (38,827 ) (14,418 ) Add: Income tax expenses 578 523 Interest expenses, net 8,515 8,003 EBIT (29,734 ) (5,892 ) Depreciation and amortization 3,280 3,817 EBITDA (26,454 ) (2,075 ) 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. EBITDA analysis For the full-year period ended December 31, 2024 Tranglo WalletKu TNG Asia and GEA Headquarters and adjustments Group Total (dollars in thousands) Net income (loss) 2,215 (1,137 ) (3,740 ) (36,165 ) (38,827 ) Add: Income tax expenses 535 413 - (370 ) 578 Interest expense, net 27 1,762 6,726 8,515 EBIT 2,750 (697 ) (1,978 ) (29,809 ) (29,734 ) Depreciation and amortization - - - - 3,280 EBITDA 2,750 (697 ) (1,978 ) (29,809 ) (26,454 ) For the full-year period 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 period ended December 31, 2023, Currenc had an EBIT loss of $5.9 million and an EBITDA loss of $2.1 million. For the full-year period ended December 31, 2024, the EBIT loss increased substantially to $29.7 million and the EBITDA loss was $26.5 million for the full-year period ended December 31, 2024. The sharp increase in EBIT and EBITDA losses in the year of 2024 was mainly due to the substantial increase in loss incurred by the headquarters. On the subsidiary level, Tranglo’s EBITDA profit was $2.75 million, which represented a decline of 21.4% as compared to $3.50 million for the year of 2023. For WalletKu, the EBITDA loss was $0.7 million for the year of 2024 which was 12.5% lower than $0.8 million for the year of 2023. For the two subsidiaries combined, i.e. Tranglo and WalletKu, the combined EBITDA profit was $2.05 million for the year 2024, which compared to $2.7 million EBITDA profit for the year of 2023 represented a decline of 24%. The decline was mainly attributable to the continual decline in revenue and profit for the global airtime transfer business of Tranglo. 78 As Currenc divested TNG Asia and GEA in August 2024, going forward, its operating results will largely reflect the combined operating results of Tranglo and WalletKu. For the year of 2024, there was a substantial EBITDA loss of $29.8 million for the headquarters. This was contributed by 1.) The recognition of a non-cash item of $20.9 million expenses as the ESOS share incentive scheme for staff, which was effective upon the listing of Currenc; 2.) The recognition of a non-cash item of $1 million as shares granted to Roth for their services as the Capital Market Advisor; 3.) An impairment loss of $5.4 and $9.5 million on WalletKu and Tranglo goodwill; 4.) impairment loss on Intangible assets of $5.6 million; An impairment loss of intercompany balance of $3.2 million; 5.) The headquarters’ expenses were partially alleviated by a non-cash gain item of $20.5 million recognized as “Other Gain” due to the divestiture of GEA and TNG Asia. As there is no business operation at the headquarters’ level, all expenses were mostly related to legal and professional fees, besides finance and interest expenses. In the past, most of the legal and professional fees were incurred due to the merging exercise with INFINT SPAC before August 2024. This included also the extension fees paid for the extension of INFINT SPAC before the completion of merging. As a result, for the year 2023, the legal and professional fees were $4.7 million. As the merging completed in August 2024, the legal and professional fees declined substantially to $1.7 million for the year 2024. Going forward, there will be no more legal and professional expenses in relation to the business combination and the management expects that the headquarters’ expenses would be lowered substantially and remain stable. 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. 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 accompanying audited 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. 79 As of December 31, 2024, the Company had cash balances of $63.8 million, a working capital deficit of $57.9 million and net capital deficit $41.8 million. For the year ended December 31, 2024, the Company had a net loss of $38.8 million and net cash provided by operating activities of $3.5 million. Net cash used in investing activities was $0.6 million. These conditions cast substantial doubt about the Company’s ability to continue as a going concern. While the Company believes that it will be able 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. In addition, on February 10, 2025, the Company entered into the ELOC Purchase Agreement with a third party. Under the ELOC scheme, the company will have the capacity to issue additional shares and dispose in the market for extra liquidity. Liquidity and Capital Resources Cash Flows and Working Capital Currenc’ principal sources of liquidity have been cash generated from operating activities. As of December 31, 2024 and December 31, 2023, it had $63.9 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, 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 year ended December 31, 2024 2023 $ $ (dollars in thousands) Net cash used in by operating activities 3,450 (15,286 ) Net cash used in by investing activities (609 ) 1,445 Net cash provided by/(used in) financing activities 2,017 (1,198 ) Net decrease in cash and cash equivalents 4,858 (15,039 ) Cash and cash equivalents, restricted cash and escrow money receivable at beginning of the period/year 59,004 74,000 Cash and cash equivalents, restricted cash and escrow money receivable at end of the period/year 63,862 58,960 Operating Activities Currenc had net cash provided by/(used in) operating activities of $3.5 million for the year ended December 31, 2024, mainly comprised of a net loss of $29.3 million, net-off by Non-cash impairment on Goodwill and receivables from related parties of $14.9 million and $3.2 million respectively, and cash inflow from net change in working capital of $18.9 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. Investing Activities Net cash used in investing activities amounted to $0.6 million in the year ended December 31, 2024. Net cash provided by investing activities amounted to $1.4 million in the year ended December 31, 2023. 80 Financing Activities Net cash provided by financing activities amounted to $2 million in the year ended December 31, 2024, mainly comprised of proceeds from issuance of convertible bond of $1.75 million. 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. Capital Expenditures Currenc’ capital expenditures are incurred primarily in connection with computer hardware and software. Its capital expenditures were $0.6 million and $0.3 million for the year ended December 31, 2024 and 2023, respectively. Contractual Obligations The following table sets forth Currenc’ contractual obligations as of December 31, 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) 357 195 162 - - Convertible note 1,944 1,944 - - - Convertible bonds 8,900 8,900 - - - Borrowings 11,250 11,250 - - - Total contractual obligations 22,451 22,289 162 - - Total interest payments (2) 1,542 1,504 38 - - Total contractual cash obligations 23,993 23,793 200 - - (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 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. 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. Rescission of SAB 121 and Adoption of SAB 122 81 On January 23, 2025, the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 122, which rescinds SAB No. 121. Under SAB 121, entities that safeguard crypto-assets for platform users were required to recognize a corresponding liability and asset for those obligations. SAB 122 eliminates this requirement and must be applied retrospectively for all periods presented. The guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted in any interim or annual financial statement period filed with the SEC on or after January 30, 2025. The Company has elected not to early adopt the guidance. 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. 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. 82 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. 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. During the year ended December 31, 2024, the Company performed the annual assessment, determined that the goodwill associated with the Indonesian airtime and Tranglo remittance business was impaired, and recorded impairment charges of $14.9 million. 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. 83 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. Ordinary Shares Subject to Possible Redemption The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance enumerated in ASC 480 “ Distinguishing Liabilities from Equity ”. Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s Ordinary Shares feature certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2023, the Ordinary Shares subject to possible redemption in the amount of $83,523,112 are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheets, respectively. Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act, for this reporting period and are not required to provide the information required under this item.