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Fintech Select Ltd. — Interim / Quarterly Report 2024
Nov 29, 2024
45418_rns_2024-11-29_0cf2878b-b5b2-4451-915e-25a954b977e6.pdf
Interim / Quarterly Report
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FINTECH SELECT LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Unaudited
September 30, 2024
FINTECH SELECT LTD.
September 30, 2024
CONTENTS
| Page | |
|---|---|
| NOTICE TO READER | 1 |
| CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |
| Condensed Consolidated Interim Statements of Financial Position | 2 |
| Condensed Consolidated Interim Statements of Operations and Comprehensive Income(Loss) | 3 |
| Condensed Consolidated Interim Statements of Cash Flows | 4 |
| Condensed Consolidated Interim Statements of Changes in Shareholders’ Deficit | 5 |
| Notes to Condensed Consolidated Interim Financial Statements | 6 – 17 |
NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying condensed unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.
The Company's independent auditor has not performed a review of these condensed financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditor.
Fintech Select Ltd.
Condensed Consolidated Interim Statements of Financial Position (Unaudited)
(Presented in Canadian Dollars)
As at September 30, 2024
| | Note | September 30
2024 | December 31
2023 |
| --- | --- | --- | --- |
| ASSETS | | | |
| CURRENT | | | |
| Cash | | $ 276,978 | $ 15,101 |
| Accounts receivable | | 159,517 | 146,867 |
| Intangibles – short term | 4 | 443,366 | 279,574 |
| Inventory | | 4,371 | -- |
| Prepaid and other assets | | 29,932 | 28,308 |
| | | 914,164 | 469,850 |
| LONG TERM | | | |
| Property and equipment | 3 | 66,309 | 74,728 |
| Intangibles – long term | 4 | 8,495 | 10,669 |
| | | 74,804 | 85,397 |
| | | $ 988,968 | $ 555,247 |
| LIABILITIES & SHAREHOLDER’S EQUITY | | | |
| CURRENT | | | |
| Accounts payable and accrued liabilities | | 996,092 | 1,211,882 |
| Deferred revenue | | 6,448 | 6,448 |
| Loan from a director | 10 | -- | 89,162 |
| Customer deposits | | 34,700 | 34,700 |
| | | 1,037,240 | 1,342,192 |
| SHAREHOLDERS’ EQUITY | | | |
| Share capital | 5 | 18,686,265 | 18,686,265 |
| Contributed and other surplus | | 6,734,115 | 6,734,115 |
| Surplus – options and warrant | 6 | 181,823 | 181,823 |
| Other comprehensive income (loss) | | 99,658 | (51,899) |
| Deficit | | (25,750,133) | (26,337,249) |
| | | (48,272) | (786,945) |
| | | $ 988,968 | $ 555,247 |
Nature of Operations and Going concern (Note 1)
Approved by the Board
Naveed Ul-Hassan
Director (Signed)
Mohammad Abuleil
Director (Signed)
The accompanying notes form an integral part of these consolidated financial statements.
Fintech Select Ltd.
Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Unaudited)
(Presented in Canadian Dollars)
For 3 and 9 months ended September 30, 2024
| 3 months ended September 30 | 9 months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| REVENUE | $ 780,669 | $ 752,893 | $ 3,376,272 | $ 3,169,078 |
| EXPENSES | ||||
| Goods and services purchased | 38,950 | 51,832 | 194,238 | 173,642 |
| Salaries and benefits | 787,008 | 795,721 | 2,334,133 | 2,271,897 |
| Other general and administrative | 56,452 | 43,248 | 258,012 | 149,328 |
| Foreign exchange loss (gain) | 12,947 | (10,200) | (10,731) | 15,851 |
| Depreciation and amortization | 4,312 | 13,572 | 13,504 | 74,170 |
| Interest expenses | -- | 88 | -- | 6,768 |
| 899,669 | 894,261 | 2,789,156 | 2,691,656 | |
| Net income | (119,000) | (141,368) | 587,116 | 477,422 |
| Exchange difference on translating foreign operation | 8,426 | (12,549) | (12,235) | 1,076 |
| Gain/(loss) on revaluation of intangibles | 26,455 | (18,918) | 163,792 | 70,534 |
| Comprehensive income | $ (84,119) | $ (172,834) | $ 738,673 | $ 549,032 |
| Income per share | ||||
| Basic and diluted | $ (0.001) | $ (0.002) | $ 0.007 | $ 0.006 |
| Weighted average number of shares outstanding | ||||
| Basic and diluted | 80,049,515 | 80,049,515 | 80,049,515 | 80,049,515 |
The accompanying notes form an integral part of these consolidated financial statements
Fintech Select Ltd.
Condensed Consolidated Interim Statements of Cash Flow
(Presented in Canadian Dollars)
For 3 and 9 months ended September 30, 2024
| Three months ended September 30 | Nine months ended September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Cash provided by (used in) | ||||
| Operations | ||||
| Net income | $ (119,000) | (141,368) | $ 587,116 | $ 477,422 |
| Items not affecting cash | ||||
| Amortization | 4,312 | 13,573 | 13,504 | 74,170 |
| Interest expenses | -- | 88 | -- | 6,768 |
| Unrealized foreign exchange loss/(gain) | 8,426 | (12,762) | (12,234) | 1,094 |
| (106,262) | (140,469) | 588,386 | 559,454 | |
| Net change in non-cash working capital | ||||
| Accounts receivable | 114,372 | 93,115 | (12,651) | (30,007) |
| Inventory | (969) | 1,132 | (4,372) | 2,729 |
| Prepaid and other assets | (14,180) | (16,184) | (1,623) | (20,472) |
| Accounts payable and accrued liabilities | (53,005) | 23,610 | (215,790) | (86,546) |
| (60,044) | (38,796) | 353,950 | 425,158 | |
| Investing | ||||
| Additions of intangibles and equipment | -- | (201) | (2,911) | (2,190) |
| -- | (201) | (2,911) | (2,190) | |
| Financing | ||||
| Lease payment | -- | (9,664) | -- | (67,120) |
| Repayment of demand loan | -- | -- | -- | (9,841) |
| Repayment of director loan | -- | 40,000 | (89,162) | (371,449) |
| -- | 30,336 | (89,162) | (448,410) | |
| Net change in cash | (60,044) | (8,661) | 261,877 | (25,442) |
| Effect of exchange rate changes on cash | -- | 213 | -- | (17) |
| Cash, beginning of the period | 337,022 | 18,547 | 15,101 | 35,558 |
| Cash, end of the period | $ 276,978 | 10,099 | $ 276,978 | $ 10,099 |
The accompanying notes form an integral part of these consolidated financial statements
Fintech Select Ltd.
Condensed Consolidated Interim Statement of Changes in Shareholders' Deficit
(Presented in Canadian Dollars)
For the 9 months ended September 30, 2024
| Share Capital Shares | Amount | Contributed Surplus | Options and Warrant Capital | Accumulated Other Comprehensive Income (Loss) | Deficit | Total | |
|---|---|---|---|---|---|---|---|
| Balance, December 31, 2023 | 80,049,515 | 18,686,265 | 6,734,115 | 181,823 | (51,899) | (26,337,249) | (786,945) |
| Options and warrants expired | -- | -- | -- | -- | -- | -- | -- |
| Issuance of shares | -- | -- | -- | -- | -- | -- | -- |
| Other comprehensive income from translation of foreign entity | -- | -- | -- | -- | (12,235) | -- | (12,235) |
| Loss on revaluation of intangibles | -- | -- | -- | -- | 163,792 | -- | 163,792 |
| Net income | -- | -- | -- | -- | -- | 587,116 | 587,116 |
| As at September 30, 2024 | 80,049,515 | 18,686,265 | 6,734,115 | 181,823 | 99,658 | (25,750,133) | (48,272) |
| Balance, December 31, 2022 | 80,049,515 | 18,686,265 | 6,696,166 | 108,004 | (233,454) | (26,666,461) | (1,409,480) |
| Options and warrants expired | -- | -- | 36,877 | (36,877) | -- | -- | -- |
| Issuance of shares | -- | -- | -- | -- | -- | -- | -- |
| Other comprehensive income from translation of foreign entity | -- | -- | -- | -- | 1,076 | -- | 1,076 |
| Loss on revaluation of intangibles | -- | -- | -- | -- | 70,534 | -- | 70,534 |
| Net income | -- | -- | -- | -- | -- | 477,422 | 477,422 |
| As at September 30, 2023 | 80,049,515 | 18,686,265 | 6,733,043 | 71,127 | (161,844) | (26,189,039) | (860,448) |
The accompanying notes form an integral part of these consolidated financial statements
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
1. NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY
Fintech Select Ltd. (the "Company") leads the way in financial payment services, offering cutting-edge solutions such as prepaid card programs, POS Cryptocurrency, and e-wallet and online payment solutions. The Company's registered office address is 100 King St W, Unit T201a, Chatham, ON, N7M 6A9, and its shares are listed on the TSX Venture Exchange under symbol FTEC.
These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue its operations in the foreseeable future and that it will be able to realize its assets and discharge its liabilities in the normal course of operations. The facts and circumstances noted below cast significant doubt on the company's ability to continue as going concern.
During the quarter, the company incurred a net loss of $119,000 (third quarter of 2023- Net loss $141,368) and experienced a net outflow of cash from operations of $60,045 (third quarter of 2023 - outflow $38,796). Despite this, the Company faces a working capital deficiency of $123,076 (December 31, 2023 deficit $872,342) limiting its capacity to fund capital expenditures and operations.
The continuation of the Company as a going concern hinges on raising adequate working capital, reducing operating expenses, and bolstering revenues and profits. To this end, the Company is actively exploring additional financing options. However, there is no assurance that these efforts will succeed in the near term, and without sufficient financing, the Company may be compelled to cease operations.
These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the going concern assumption not be appropriate. These adjustments could be material.
The consolidated financial statements were authorized for issuance by the Board of Directors on November 29, 2024.
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
2. BASIS OF PRESENTATION
Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting (IAS 34") using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee (IFRIC"). The accounting policies and methods of computation applied by the Company in these condensed consolidated interim financial statements are the same as those applied in the Company's annual financial statements as at and for the year ended December 31, 2023, excepted as outlined below. These condensed consolidated interim financial statements should be read in conjunction with the 2023 annual financial statements.
Basis of presentation
These consolidated financial statements are prepared on the historical cost basis except for intangibles - short term which are measured at the fair value, with changes being recognized in other comprehensive income and financial assets classified as "fair value through profit and loss", if any, which are measured at fair value.
Principles of consolidation
The condensed consolidated interim financial statements include the accounts of the Company and its wholly owned subsidiaries, 1382285 Ontario Limited ("SelectComm"), 2143436 Ontario Limited ("SelectCore Comm"), Local Fone Service, Inc. ("LFS"), SelectCore USA, LLC ("SelectCore US") and 2314606 Ontario Limited ("SelectCore Financial Services").
Subsidiaries are all entities over which the Company has the power, is exposed, or has rights, to variable returns from its involvement and has the ability to use its power to affect its returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Company.
The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
Inter-Company transactions, balances and unrealized gains or losses between subsidiaries are eliminated in preparing the consolidated financial statements. The financial statements of the subsidiaries are prepared for the same reporting period as the reporting company using consistent accounting policies.
Functional and presentational currency
Unless otherwise noted, all amounts in the accompanying consolidated financial statements and these notes are presented in Canadian funds, which is the functional currency of the Company.
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
3. PROPERTY AND EQUIPMENT
Activity during the period ended September 30, 2024 is as follows:
| Cost | Terminals | Electronic Equipment | Office Furniture & Fixtures | Totals |
|---|---|---|---|---|
| Balance January 1, 2024 | 954,633 | 687,611 | 184,527 | 1,826,771 |
| Additions | - | 2,911 | 2,911 | |
| Balance September 30, 2024 | 954,633 | 687,611 | 187,438 | 1,829,682 |
| Accumulated Depreciation | ||||
| Balance January 1, 2024 | 944,822 | 637,091 | 170,128 | 1,752,041 |
| Depreciation | 1,999 | 7,093 | 2,240 | 11,332 |
| Balance September 30, 2024 | 946,821 | 644,184 | 172,368 | 1,763,373 |
| Net Book Value | 7,812 | 43,427 | 15,070 | 66,309 |
Activity during the period ended September 30, 2023 is as follows:
| Cost | Terminals | Electronic Equipment | Office Furniture & Fixtures | Totals |
|---|---|---|---|---|
| Balance January 1, 2023 | 954,633 | 685,622 | 184,327 | 1,824,582 |
| Additions | - | 1,989 | 200 | 2,189 |
| Balance September 30, 2023 | 954,633 | 687,611 | 184,527 | 1,826,771 |
| Accumulated Depreciation | ||||
| Balance January 1, 2023 | 941,339 | 625,873 | 166,939 | 1,734,151 |
| Depreciation | 2,709 | 8,607 | 2,444 | 13,760 |
| Balance September 30, 2023 | 944,048 | 634,480 | 169,383 | 1,747,911 |
| Net Book Value | 10,585 | 53,131 | 15,144 | 78,860 |
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
4. INTANGIBLES
Intangibles – short term represents bitcoins held for sale. As of September 30, 2024, the Company has 5 bitcoins (December 31, 2023: 5 bitcoins). Cryptocurrency was revalued quarterly based on open market quoted price.
| Cryptocurrency | ||||
|---|---|---|---|---|
| 30-Sep-24 | 31-Dec-23 | |||
| Balance January 1, | $ | 279,574 | $ | 112,270 |
| Additions | ||||
| Disposal | - | - | ||
| Revaluation | 163,792 | 167,304 | ||
| Balance period end | $ | 443,366 | $ | 279,574 |
Intangibles – long term represents computer software and leasehold improvement.
| Cost | Computer Software | Leasehold Improvement | Totals |
|---|---|---|---|
| Balance January 1, 2024 | 1,209,013 | 6,522 | 1,215,535 |
| Additions | - | - | - |
| Balance September 30, 2024 | 1,209,013 | 6,522 | 1,215,535 |
| Accumulated Depreciation | |||
| Balance January 1, 2024 | 1,198,344 | 6,522 | 1,204,866 |
| Depreciation | 2,174 | - | 2,174 |
| Balance September 30, 2024 | 1,200,518 | 6,522 | 1,207,040 |
| Net Book Value | 8,495 | - | 8,495 |
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
| Computer Software | Right-of-use Assets | Leasehold Improvement | Totals | |
|---|---|---|---|---|
| Balance January 1, 2023 | 1,310,226 | 499,966 | 6,522 | 1,816,714 |
| Additions | - | - | - | - |
| Impairment provision | - | - | - | - |
| Balance September 30, 2023 | 1,310,226 | 499,966 | 6,522 | 1,816,714 |
| Accumulated Depreciation | ||||
| Balance January 1, 2023 | 1,295,769 | 443,392 | 5,632 | 1,744,793 |
| Depreciation | 2,946 | 56,575 | 890 | 60,411 |
| Balance September 30, 2023 | 1,298,715 | 499,967 | 6,522 | 1,805,204 |
| Net Book Value | 11,511 | - 1 | - | 11,510 |
5. SHARE CAPITAL
Authorized: Unlimited common shares
Issued and fully paid:
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Number | Amount | Number | Amount | |
| Common Shares | 80,049,515 | $ 18,686,265 | 80,049,515 | $ 18,686,265 |
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
6. STOCK OPTIONS
In December 2022, the shareholders approved a Performance and Restricted Share Unit Plan ("PRSU Plan") for officers, directors, employees and consultants of the Company. This plan allows the Board of Directors to grant restricted share units and/or performance share units at their discretion. As of September 30, 2024, the Company has not issued any shares under the PRSU Plan.
Additionally, the Board of Directors adopted a stock option plan (the "Options Plan") for the Company. Under this plan, the Board of Directors may allocate non-transferable options to purchase shares to directors, officers and technical consultants.
Both the PRSU Plan and the Options Plan stipulate that the aggregate number of shares issued upon the exercise of options, along with other equity incentive plans, cannot exceed 10% of outstanding shares. Moreover, the total shares issued upon exercise of options, together with performance and restricted shares issued to any participant, should not surpass 5% of issued and outstanding shares. The number of shares reserved for issuance to any technical consultant is limited to 2% of issued and outstanding shares. Furthermore, the aggregate number of restricted share units and/or performance share units granted to insiders within a one-year period cannot exceed 5% of issued and outstanding common shares.
Options granted under the Options Plan must expire no later than five years from the date of grant. They may be exercised no later than ninety days following cessation of the optionee's position with the Company. If cessation is due to death, the option may be exercised within one year after such event, subject to the option's expiry date.
The exercise price of options issued under the Options Plan must not be lower than the applicable discount permitted by the stock exchange on which the shares are traded. The options vest based on provisions determined by the Board at the time of grant.
On December 28, 2021, the Company granted 2,160,000 incentive stock options to certain directors and officers. These options allow the holder to acquire one common share each. Among them, 1,600,000 options are exercisable at $0.05 per option and 560,000 options at $0.075 per option. All options are exercisable for three years from the grant date and vest immediately. None of these options were exercised as of September 30, 2024.
On November 28, 2023, the Company granted 3,600,000 incentive stock options, each giving the holder the right to acquire one common shares to certain of its directors, officers and consultants. The options are exercisable at $0.05 per option. All these options are exercisable for a period of three year from the date of grant, vesting immediately. None of these options were exercised as at September 30, 2024.
The Company had following options outstanding and exercisable at September 30, 2024:
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
| Period ended September 30, 2024 | Year ended December 31, 2023 | |||
|---|---|---|---|---|
| In number of units, except for exercise price | Number of options | Weighted average exercise price | Number of options | Weighted average exercise price |
| Outstanding, beginning of year | 5,760,000 | 0.05 | 4,210,000 | 0.05 |
| Granted | -- | -- | 3,600,000 | 0.05 |
| Expired | -- | -- | (2,050,000) | 0.05 |
| Outstanding, end of year | 5,760,000 | 0.05 | 5,760,000 | 0.05 |
| Exercisable, end of year | 5,760,000 | 0.05 | 5,760,000 | 0.05 |
Below is a summary of exercise prices, and weighted average remaining life as at September 30, 2024 for each grant of options.
| Number of options | Weighted average exercise price | Remaining life (Years) | |
|---|---|---|---|
| Granted in December 2021 | 2,160,000 | 0.06 | 0.3 |
| Granted in November 2023 | 3,600,000 | 0.05 | 2.3 |
| Balance, September 30, 2024 | 5,760,000 | $0.05 | 1.5 |
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
The following are the valuations of each grant of options and the major assumptions used to value these options.
| Date of Expiry | Number of Options | Exercise Price | Grant Date Fair Value of options |
|---|---|---|---|
| 29-Nov-26 | 3,600,000 | $0.05 | $ 111,768 |
The options granted were valued using the Black-Scholes option pricing model with the following assumptions.
| 2023 | |
|---|---|
| Expected dividend yield | 0.00% |
| Expected volatility | 189% |
| Risk free interest rate | 4.78% |
| Expected life | 3 |
| Date of Expiry | Number of Options |
| --- | --- |
| 27-Dec-24 | 1,600,000 |
The options granted were valued using the Black-Scholes option pricing model with the following assumptions.
| 2021 | |
|---|---|
| Expected dividend yield | 0.00% |
| Expected volatility | 167% |
| Risk free interest rate | 0.25% |
| Expected life | 3 |
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
| Date of Expiry | Number of Options | Exercise Price | Grant Date Fair Value of options |
|---|---|---|---|
| 27-Dec-24 | 560,000 | $0.075 | $ 17,941 |
The options granted were valued using the Black-Scholes option pricing model with the following assumptions.
| 2021 | |
|---|---|
| Expected dividend yield | 0.00% |
| Expected volatility | 167% |
| Risk free interest rate | 0.25% |
| Expected life | 3 |
7. COMMITMENTS
The Company has no lease commitments as at September 30, 2024.
8. CAPITAL MANAGEMENT
The Company's capital management objective is to sustain its capacity to operate as a going concern, thereby facilitating returns for shareholders and benefits for other stakeholders. Capital, as defined by the Company, encompasses equity, including issued common shares, warrant reserve, contributed surplus, and accumulated other comprehensive income.
The primary aim of the Company's capital management is to ensure it maintains adequate cash resources to support growth initiatives and sustain ongoing operations. To secure additional capital required for these endeavors, the Company may explore avenues such as issuing equity or pursuing debt financing (refer to note 1).
During the periods ended September 30, 2024, and 2023, the Company's overarching capital management strategy involved raising share capital, reaching settlements with creditors, discontinuing unprofitable ventures, and expanding its profitable call center business.
9. FINANCIAL RISK MANAGEMENT
The Company is exposed to a variety of financial risks by virtue of its activities: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance.
Risk management is carried out by the accounting and finance department under policies approved by the Board of Directors. This department identifies and evaluates financial risks in close cooperation with management. The finance department is charged with the responsibility of establishing controls and procedures to ensure that financial risks are mitigated in accordance with the approved policies.
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
(a) Market Risk
(i) Currency Risk
The Company operates primarily in Canada and has a subsidiary in USA that had ceased operation. The Company has exposure to foreign exchange risk. Foreign exchange risk arises from purchase and sales transactions, as well as recognized financial assets and liabilities denominated in foreign currencies.
The Company's main objective in managing its foreign exchange is to maintain Canadian cash on hand to support Canadian forecasted cash flows over a 12-month horizon. To achieve this objective, the Company monitors forecasted cash flows in foreign currencies and attempts to mitigate the risk by modifying the currency of cash held.
Balances denominated in USD at September 30, 2024 and 2023 are as follows:
| 2024 | 2023 | |
|---|---|---|
| Cash | 290,138 | -- |
| Accounts receivable and other receivables | 149,122 | 153,471 |
| Accounts payable and accrued liabilities | (27,155) | (115,694) |
| Total net asset (liability) | $ 412,105 | $ 37,777 |
Fluctuations in the Canadian dollar exchange rate have an impact on the Company's results from operations.
Fluctuation of the U.S. dollar relative to the Canadian dollar of 5% would impact net income by approximately $20,605 as of September 30, 2024 (2023 impact net income - $1,889).
(ii) Interest rate risk:
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk.
The Company is not exposed to interest rate risk.
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
FINANCIAL RISK MANAGEMENT (Cont'd)
(b) Credit Risk
Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation. The maximum exposure to credit risk of the Company at period-end is the carrying value of its cash and accounts receivables.
The Company manages credit risk by maintaining bank accounts with Schedule 1 banks in Canada.
The Company does not require collateral or other security for accounts receivable or amounts due from related parties. The Company estimates its provision for uncollectable amounts based on analysis of the specific amount and debtor's payment history and prospects. Accounts receivable are stated net of an allowance for doubtful accounts of $6,529 (2023 $20,744).
Top three customers represent 97% of accounts receivable as of September 30, 2024 (December 31, 2023 - three customers represented 87%). As of November 27, 2024, 92% of the accounts receivable balance was collected. As of September 30, 2024, approximately $11,836 (December 31, 2023 - $8,844) of the Company's receivable were 60 days past due of which approximately $6,529 (December 31, 2023 - $20,744) have been allowed for as doubtful debts.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due.
The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. Senior management is also actively involved in the review and approval of planned expenditures.
As at September 30, 2024, the Company has accounts payable and accrued liabilities and loan from a director of $996,092 due within 12 months (December 31, 2023 - $1,301,044), cash of $276,978 (December 31, 2023 - $15,101), receivables of $159,517 (December 31, 2023 - $146,867) and intangibles-short term of $443,366 (December 31, 2023 - $279,574) to meet its current obligations. As a result, the Company has liquidity risk.
(d) Economic Dependence
One customer, which constitutes more than 10% of total revenues, accounted for 97% of the Company's revenue in the current quarter (2023 - 92%). Although a single customer contributes a significant portion of its revenue and maintains a longstanding relationship spanning over 20 years, the Company serves numerous clients and operates various programs under this customer.
(e) Fair value
The estimated fair values of accounts receivable, accounts payable, accrued liabilities and demand loans approximate their carrying values due to the relatively short-term nature of the instruments. The fair value of investments is based on open market prices.
16
FINTECH SELECT LTD.
Notes to condensed consolidated interim financial statements (Unaudited)
September 30, 2024
(Presented in Canadian Dollars)
10. RELATED PARTY TRANSACTIONS AND BALANCES
The following summarizes the Company's outstanding balances with related parties:
| Sep 30, 2024 | Sep 30, 2023 | |
|---|---|---|
| Accounts payable (*) | $ 96,114 | 171,936 |
| Loan from a director (**) | -- | 53,713 |
- The balances are non-secured and without interest or payment terms. They mainly represent compensations due to directors for services provided.
** It represents a one-year loan from a director. The principal amount might increase up to $500,000. The loan is interest free until May 31, 2023, after which an interest rate equal to the prime commercial rate of interest charged by the Toronto Dominion Bank may apply. The Company also granted a registrable general security to the lender on terms deemed customary and appropriate by the Board of Directors and the advice of independent counsel.
11. KEY MANAGEMENT COMPENSATION
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Company's key management personnel include the board of directors, Chief Executive Officer & President, Chief Financial Officer and Director of Business Operations.
Remuneration of Directors and key management of Company was as follows:
Three months ended September 30
| 2024 | 2023 | |
|---|---|---|
| Salaries and Benefits | $ 122,250 | $ 119,131 |
| Total | $ 122,250 | $ 119,131 |