Fintech Select Ltd.

==> picture [138 x 38] intentionally omitted <==

----- Start of picture text -----

M
----- End of picture text -----

April 29, 2022

MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the year ended December 31, 2021 and 2020

The following discussion and analysis are management’s assessment of the results and financial condition of Fintech Select Ltd. and should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2021 and 2020 together with the related notes contained therein. These statements have been prepared in conformity with International Financial Reporting Standards (“IFRS”) and require management to make estimates and assumptions that affect amounts reported and disclosed in such financial statements and related notes. The Company’s most recent filings are available on the SEDAR website.

Management's Responsibility for Financial Reporting

The consolidated financial statements and Management's Discussion and Analysis (MD&A) have been prepared by Management, who—when necessary—have made informed judgments and estimates of the outcome of events and transactions, with due consideration given to materiality. Management acknowledges its responsibility for the fairness, integrity and objectivity of all information provided in the consolidated financial statements and in MD&A thereof. As a means of fulfilling its responsibility, Management relies on the Company's system of internal controls. This system has been established to ensure, within reasonable limits, that assets are safeguarded, transactions are properly recorded and executed with Management's authorization, and that the accounting records provide a solid foundation from which to prepare the consolidated financial statements and the MD&A. The Board of Directors carries out its responsibility for the consolidated financial statements by reviewing the financial statements with management and auditors of the Company. All dollar amounts included in the MD&A are in Canadian dollars, except when stated otherwise.

Forward-looking Statements

The MD&A contains forward-looking statements, which reflect the Company’s current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan, “estimate”, “expect”, “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting product approvals, acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forwardlooking statements. Many risks are inherent in the industry, while others are more specific to the

Company. Investors should consult the “Risk Factors” section of this MD&A, as well as the Company’s ongoing quarterly filings for additional information on risks and uncertainties relating to these forwardlooking statements. Investors should not place undue reliance on any forward-looking statements. Management assumes no obligation to update or alter any forward-looking statements, as a result of new information, further events, or otherwise.

Corporate Overview

Fintech Select Ltd. TSX-V: FTEC (corporate website: www.fintechselect.com) is a leader in financial payment services and is a provider of robust and disruptive payment solutions, including prepaid card programs, Crypto-currency POS, and recently acquired e-wallet and online payment solutions. The company’s vision is to enable those core assets to work together in a harmoniously aligned environment to create a new landscape for consumers and businesses alike. Fintech Select also operates a 24/7/365 multi-lingual call center that provides customer service support to third party customers in Canada and USA and to the Company’s customers across the platforms mentioned.

Our mission is to provide customers with choice, convenience and cost-effective ways to facilitate financial transactions, and to excel in our provided services at the call center.

Throughout 2020 and 2021, Fintech Select has focused on many initiatives, including e-wallets, the cryptocurrency platform, and its call center reporting system. The Company has completed re-building of its Crypto-currency POS platform based on the latest POS software technology, specifically using Android POS instead of the old Verifone VX POS terminal. Fintech Select is testing the platform, while also searching for a reputable exchange to back up the exchange transactions. The Company has made a good progress on the e-wallet and online payment solutions; however, there have been some challenges caused by the sheer size of the platform coupled with a shortage of IT resources for the Company. The platform includes E-commerce processing, corporate disbursement, and remittances. It allows individuals and businesses to perform many functionalities, including but not limited to, registering and creating their own e-wallets, requesting and sending money, mobile payments, shopping cart integration, mass pay, and loading and unloading different currencies (including cryptocurrencies) through bank transfers, open or closed loop cards, bank wires, or direct debit. The company is registered as a Canadian Money Service Business (MSB) with FINTRAC.

Additionally, the Company is adding more features and automated reports to its customer service platform to facilitate the reporting section for its customer care business and clients. The Company is also automating some internal processes that allow staff to do their jobs more efficiently. This has been an on-going process, so the Company’s revenue and profit can be potentially increased. The Company has been working towards a clean balance sheet by eliminating the debts it has. The Company will also be exploring partnerships with other companies and service providers to expand its products and services on a consumer and global level.

During the past few years, the Company has developed a Prepaid closed-loop card solution to its Libyan partner, Raseed, that can be used by Raseed’s Libyan clients and regional banks. The Solution allows banks and other clients to load funds on their cards, which can then be used within the POS closed network.

The Company also filed a patent application for its propriety POS (Point-Of-Sale) Cryptocurrency platform and has been waiting for a reply or comment by the patent office.

Selected Consolidated Financial Information

The following selected consolidated financial information has been derived from our consolidated financial statements for the three months and year ended December 31, 2021 and 2020 and our financial positions as of December 31, 2021 and 2020.

REVENUE EXPENSES Goods and services purchased Salaries and benefits Other general and administrative Stock based compensation Foreign exchange loss (gain) Amortization Interest expenses Net loss from operations Gain on disposal of intangibles Gain on revaluation of intangibles Write off stale-dated accounts payable and accrued liabilities		Three months ended December 31, Year ended December 31, 2021 2020 2021 2020
		$ 631,915 $ 558,513 $ 2,771,261 $ 2,884,668 54,371 88,392 243,275 350,912 585,387 301,611 2,210,626 1,637,557 45,656 78,842 186,856 300,448 71,127 -- 71,127 69,572 14,746 28,788 17,186 18,256 31,236 32,841 127,189 156,031 6,290 8,785 27,799 39,933
		(176,898) 19,254 (112,797) 311,959 -- 15,214 -- 26,949 -- 10,110 -- 39,246 -- 26,994 -- 26,994
Net income (loss)		(176,898) 71,572 (112,797) 405,148
Exchange difference on translating foreign operation Gain on revaluation of intangibles		(4,968) 27,167 2,419 11,458 14,936 102,697 108,072 102,697
Comprehensive income(loss)		$ (166,930) $201,436 ($2,306) $519,303
Income(Loss) per share
Basic Diluted		$ (0.002) $ 0.001 $ (0.002) $ 0.006 $ (0.002) $ 0.001 $ (0.002) $ 0.006
Weighted average number of shares outstanding
Basic 72,624,515 70,908,676 72,391,443 70,883,102 Diluted 72,624,515 72,445,184 72,391,443 72,419,610

Summary of annual results for the past three years

				2019

Revenue	$ 2,771,261	$ 2,884,668	$	3,275,404

Net income (loss)	(112,797)	405,148		(253,513)

Total assets	1,223,070	1,259,227		1,187,990

Earning (loss) per share
- Basic	$ (0.002)	$0.006	$ (0.003)
- Diluted	$ (0.002)	$0.006	$ (0.003)

Summary of the Quarterly Results for the past 8 Quarters

		Revenue $	Net income(loss) $	Net income(loss) $	Net income(loss) $



2021	4thqtr.	631,915	(176,898)
	3rdqtr.	746,488		(18,262)
	2ndqtr.	616,811			28,364
	1stqtr.	776,047			53,998

2020	4thqtr.	558,512			71,572
	3rdqtr.	628,160		101,278
	2ndqtr.	711,453			24,340
	1stqtr.	986,543		207,958

Financial position
	December 31, 2021	December 31, 2020
Current assets	$ 558,898	$ 470,229
Total assets	1,223,070	1,259,227
Current liabilities	3,850,140	3,925,302
Total liabilities	3,906,723	4,079,558
Total shareholders’ deficit	$ (2,683,653)	$ (2,820,331)

Fourth Quarter Results of Operations

Revenues for the fourth quarter of 2021 were $631,915, compared to $558,513 for the fourth quarter of 2020. Gross profit (Operating Revenue less cost of goods and services purchased) for the fourth quarter in 2021 was $577,544, compared to $470,121 in the same quarter in 2020. The increase of revenue and gross margin was due to new implemented programs at our call center. The Company is continuing to pursue growth opportunities for new revenue, and to focus on its profitable lines of business.

Salary and Benefit expenses were $585,387 for the fourth quarter of 2021, compared to $301,611 for the same quarter of 2020. Higher salary and benefits was because of the terminated COVID-19 subsidy as the government changed policies. Other General and Administrative expenses were $45,656 for the fourth quarter of 2021, compared to $78,842 for the same quarter of 2020. The lower general and administrative expenses was mainly due to reduced rent negotiated with landlord.

The Company recorded $14,746 foreign exchange loss for the fourth quarter of 2021, compared to $28,788 foreign exchange loss in the same quarter of 2020.

Depreciation and amortization were $31,236 for the fourth quarter of 2021, compared to $32,841 for the same quarter of 2020. The decrease was due to lower capital assets balances.

The Company had net loss of $(176,898) (or $0.002 per share) for the three months ended December 31, 2021, compared to a net gain of $71,572 (or $0.001 per share) for the three months ended December 31, 2020. The exchange difference on the translation of the Company’s US foreign operations for the fourth quarter of 2021 generated a loss of $4,968, compared to a gain of $27,167 for the fourth quarter of 2020. The Company also had a gain on revaluation of intangibles of $14,936 in other comprehensive income in the fourth quarter 2021 compared to a gain of $102,697 in the same quarter 2020.

Year to date

Revenue for year 2021 was $2,771,261 compared to $2,884,668 for year 2020. Gross profit (Operating Revenue less cost of goods and services purchased) for year 2021 was $2,527,986 compared to $2,533,756 in 2020. The slight decreases in revenue and gross margins are mainly due to the impact of Covid 19 and depreciation of US dollar.

Salary and benefit expenses were $2,210,626 for year 2021 compared to $1,637,557 in 2020. Higher salary and benefit expenses was due to a decrease in the Canadian Emergency Wage Subsidy (“CEWS”) received in the current year as the government reduced support as the pandemic eased. Other general and administrative expenses were $186,856 in 2021 compared to $300,448 in 2020. The lower other general and administrative was due to reduced rent negotiated with landlord and management’s effort to control costs.

Interest expense was $27,799 in 2021, compared to $39,933 in 2020.

The Company had net loss of $112,797 for the year 2021 compared to a net income of $405,148 for 2020. The bulk of the change was due to the decrease in the CEWS subsidy program in 2021.

Financial Condition

Assets and liabilities

As of December 31, 2021, the Company had total assets of $1.2 million and total liabilities of $3.9 million, compared to $1.3 million and $4.1 million as of December 31, 2020. The decrease of liabilities was mainly due to paying off of liabilities.

Liquidity and Capital Resources

We intend to use our funds to meet funding requirements for business development and new customer deployments based on anticipated market demand. Our actual funding requirements will vary depending on a variety of factors, such as our success in executing our business plan, the progress of

our product and business development efforts, and our sales and ability to manage our working capital requirements. We also intend to monitor the continued development of COVID-19 in relation to our operations and to assess what, if any, impact the pandemic will have should economic shutdown and resulting consequences continue.

We believe that in addition to our existing cash balances and cash generated from operations, cash proceeds from new debt and equity financing will be required to meet our anticipated cash needs for working capital, growth capital, and capital expenditures for the foreseeable future. The Company will need to raise additional capital to retire all of its existing obligations, to address the Company’s working capital needs, and to fund new contracts in the financial services sector. The Company does not have any prearranged facilities but will continue to evaluate the appropriate timing and type of capital raise. There are no guarantees that the Company will be successful in completing any equity financing, arranging for additional debt with its current lender, or obtaining a new debt facility.

Share Capital

The fully diluted share capital of the Company is as follows:

Description	December 31, 2021	December 31, 2020
Common shares issued	72,624,515	71,267,372
Options	4,260,000	4,582,143
TOTAL:	76,884,515	75,849,515

As of April 29, 2022, 80,049,515 common shares and 4,260,000 options are outstanding.

Events subsequent to year end

The following events occurred subsequent to year end:

i) Shares for Debt

In January 2022, the Company issued 7,425,000 to three of its directors to settle $297,000 owed directors’ fees and management compensations for all previous years.

ii) Settlement of lawsuit

In March 2022, the Company has reached a settlement with a service provider regarding the Statement of Claim filed in the Ontario Superior Court of Justice (the " Claim ") and a third party claim brought by the Company against the service provider in the Alberta Court of Queen’s Bench. As part of the settlement, the two parties have agreed to exchange the dismissal of the two claims on a without costs basis, and have also exchanged full and final releases in respect of the subject matter of these actions. As a result, recorded liabilities in the amount of $2,157,450 will be removed from the Company’s balance sheet at the end of March 2022.

Control and Procedures

The Chief Financial Officer and Senior Management have evaluated the effectiveness of our disclosure controls and procedures for the year ended December 31, 2021, and have concluded that our disclosure controls and procedures were effective to ensure that material information relating to the

Company was recorded, processed, summarized and reported in a timely manner as required to enable the Company to satisfy its continuous disclosure obligations. Our Chief Financial Officer and Senior Management are also responsible for the design of internal controls over financial reporting within the Company in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS (International Financial Reporting Standards). There were no changes in the Company's internal controls over financial reporting during the Company's most recent period that have materially affected—or are reasonably likely to materially affect—the Company's internal control over financial reporting.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Nature of Operations and Going Concern Uncertainty

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 Company has historically had continued losses, excluding the gains from settlement of debts, cash outflows from operations, and has significant negative working capital at year-end, which raises a question as to the ability of the Company to continue as a going concern without additional equity or long-term debt financing.

The ability of the Company to sustain its ongoing operations is dependent upon its ability to obtain a sustainable level of profitability from operations or to raise sufficient financing enabling it to rectify its working capital deficiency.

These 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.

The Company has a working capital deficiency of $3,291,242 (December 31, 2020 - deficit $3,455,073). The Company expects to have sufficient liquidity to finance its operations for no more than twelve months. The working capital deficiency limits the Company’s ability to fund capital expenditures and operations. The Company is not in breach of any minimum working capital and earnings covenants as of the date of these financial statements.

As a result of the aforementioned cash flow deficiencies, there is significant doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent on raising short-term financing, raising sufficient working capital to maintain operations, reducing operating expenses, and increasing revenues. Management continues to review and implement cost cutting measures, including but not limited to, streamlining operations, reduction of research and development costs, and a reduction in capital expenditures. In 2017, the Company shut down its money-losing landline phone business while still providing telecommunication services to a large customer through a third party to generate gross profit. The Company continues to reduce its liabilities by negotiating with creditors and developing new business, and expanding current call center businesses.

Critical Accounting Estimates

The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes. While management believes that these estimates and assumptions, based on

management’s best knowledge of current events and actions that the Company may undertake in the future, are reasonable, actual results could differ from these estimates.

Significant estimates and assumptions include those related to determining the value in use for impairment tests, valuation of investments, valuation of share-based payments, the useful lives of property and equipment for amortization purposes, allowance for doubtful accounts, valuation of rightof-use assets, lease obligations and the fair values of financial assets.

These estimates have been applied in a manner consistent with that in prior periods, and there are no known trends, commitments, events or uncertainties that we believe will materially affect the assumptions utilized in these consolidated interim financial statements. The estimates are impacted by many factors, some of which are highly uncertain.

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, including any director (whether executive or otherwise) of the Company. Company's key management personnel include the board of directors, Chief Executive Officer & President, Chief Financial Officer and Director of Business Operations.

Remuneration of key management of Company was as follows:

	2021	2020
Salaries and Benefits	$ 437,262	$ 356,423
Share-based Compensation	71,127	69,572
	$508,389	$425,995

General Risk Factors

An investment in our common shares is speculative and subject to a number of risks. Before investing, prospective purchasers of common shares should carefully consider the following risk factors set out in this AIF, as well as other risk factors addressed in our other continuous disclosure filings made with Canadian securities regulators via SEDAR. The following is only a summary of certain risks relating to Fintech Select’s business, and should be read in conjunction with detailed information appearing elsewhere in this document. The risks and uncertainties described below are not the only risks and uncertainties Fintech Select faces. Additional risks and uncertainties not currently known to Fintech Select, or that Fintech Select currently deems immaterial, also may impair Fintech Select’s business operations. If any of the following risks actually occur, Fintech Select’s business, results of operations, and financial condition, could suffer. In that event, the trading price of Fintech Select’s Shares could decline, and holders of Fintech Select Shares could lose all or part of their investment in Fintech Select Shares.

COVID-19

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact that COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected

countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

Liquidity

We are subject to a working capital deficit, which means that our current assets on December 31, 2021 did not equal our current liabilities and, therefore, should we be unable to increase our current assets to current liability ratio; our operations could be at risk. A substantial portion of our cash flow from operations is dedicated to the payment on our indebtedness and on software development of our new platforms. Our ability to service our debt and other financial obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control, including but not limited to, fluctuations in interest rates, the economic impact of COVID-19, market liquidity conditions, increased operating costs, and trends in our industry. If our cash flow and capital resources are insufficient to meet our debt service obligations, we may be forced to reduce the scope of, or delay, capital expenditures, growth initiatives, product and service launches and future business opportunities, and sell assets, seek additional capital or restructure or refinance our indebtedness. Furthermore, our credit facility contains certain restrictive covenants that, subject to exceptions, limit the ability to, among other things: incur, assume, or permit to exist additional indebtedness, guarantees or liens, engage in mergers, acquisitions, asset sales, declare dividends, make payments on, or redeem or repurchase equity interests, alter the nature of the business, engage in certain transactions with affiliates, enter into agreements limiting subsidiary distributions, and prepay, redeem or repurchase certain indebtedness. The credit facility also requires us to comply with certain financial covenants that may prevent us from pursuing certain business opportunities and taking certain actions that may be in the best interest of our business, which could materially adversely affect our business and financial results.

Legacy Business Revenues

Our legacy prepaid telecommunications business is the sale of prepaid mobile and long-distance airtime. Revenues have declined considerably as the Company remains focused on new, more profitable business opportunities in the financial services space and customer care services. The industry has also seen a shift to electronic forms of payment for prepaid mobile airtime sales. Our sales agreements with our retailers and distributors do not obligate them to make minimum purchases of any of our products. There is no assurance that retailers or distributors will continue to purchase our products, or that the Company will be able to secure new retail clients, or that end-user demand for our products or services will sustain or increase. Accordingly, there is no assurance that we will be able to maintain or increase our revenues. Our inability to maintain or increase our revenues may result in us incurring losses or reduced profitability thus resulting in a significant impact to the Company’s financial position.

Cash Flows and Profitability

We have not consistently earned enough profits to date, and there is no assurance that we will earn profits in the future, or that profitability, as achieved, will be sustained. A significant portion of our financial resources have been, and will continue to be, directed toward the development of our new financial product and service offerings and marketing activities. Our success will ultimately depend upon our ability to generate revenues, such that business development and marketing activities may be financed by revenues from operations, instead of external financing. There is no assurance that future revenues will be sufficient in generating the required funds to continue the business development and marketing initiatives. Our current and future expense levels are based largely on our investment

plans and estimates of future revenues and are, to a large extent, fixed. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate adverse effect on our business, results of operations, cash flow, and/or financial condition. Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service, or marketing decisions that could have a material adverse effect on our business, results of operations, financial condition, and/or prospects.

Customer Relationships and Loss of Major Customers

Our failure to maintain our customer relationships or to develop similar relationships with other customers could result in decreased support for our products or services, which could materially adversely affect our business, financial condition, and/or results of operations. The loss of one or more of our major customers, the failure to attract new customers in a timely manner or a reduction in sales and revenues associated with our existing customers would materially harm our business, financial condition, liquidity, operating results and/or prospects. One customer represents 90% of the Company's revenue in the current year (2019: one customer represented 83%). The loss of a contract with this customer could have a significant negative impact on our sales and profitability.

Retail Distribution Channel and Reliance on Distributors and Sales Agents

Our current sales and future growth rely heavily on our distributors and sales agents and the ability to maintain and expand our network of retail locations/merchants and the willingness of such distributors, sales agents, and merchants to purchase and make available for sale both our current and new product offerings to their customers. We also rely on our ability to properly support our merchant channel and product and service offerings with adequate merchandising, point-of-purchase collateral and ancillary advertising, all of which requires a capital investment to be made by us. Our failure to maintain current product sales or realize new product sales through our retail distribution channel would adversely affect our results of operations and financial condition, and also materially affect our ability to execute on our growth strategy.

Lack of Operating History with New Business Segments

Our new business segments, namely, e-wallet and online payment solution, and Cryptocurrency POS have a limited history of operations, are in the early stage of development, and should be considered as a development stage business. As such, we are subject to many risks common to such businesses, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources, and the lack of revenues and profitability. We might also need to be able to effectively train existing employees and employ new specialized personnel for this area of our business.

Risks Associated with Evolving Business Models and New Product Launches

Our business model continues to evolve. We seek to develop, launch and promote new or complimentary products, services, technology and opportunities that management believes are strategic. We publicly announce new product launch and development initiatives on a regular basis to update shareholders and the investment community. Readers are cautioned that while we make such announcements, there can be no assurance that we will be able to launch such product offerings in a cost-effective manner, or in the time frame estimated by management, or that any such efforts will generate revenues, profits, or garner market acceptance. Furthermore, any new business or product launched by us that is not favourably received by customers could damage our reputation and diminish the value of our brands. Expansion of our operations in this manner would also require significant additional expenses and development, operations, and other resources, and would strain our

management, financial, and operational resources. The lack of market acceptance of such services or our inability to generate satisfactory revenues from such expanded services or product launches to offset their costs could have a material adverse effect on our business, results of operations, cash flow, financial condition, and/or prospects.

Uncertain Demand

Demand for our products and services are dependent on a number of social, political, and economic factors that are beyond our control. While we believe that demand for our products and services will continue to grow, there is no assurance that such demand will exist, or that our products or services will be purchased to satisfy such demand.

Effective Growth Management

If we fail to manage our growth effectively, our business and operating results could be adversely affected, which could cause the market price of the Common Shares to fall. We expect to continue to grow our operations domestically and internationally. The growth in our operations and staff has placed, and will continue to place, a strain on existing management systems and resources. If we fail to manage the company's future anticipated growth, the business may experience higher operating expenses, and consequently, it may be unable to meet the expectations of shareholders, securities analysts or prospective investors with respect to future operating results.

Competition

We operate in a highly competitive marketplace with various competitors. Increased competition may result in reduced gross margins, and/or loss of market share, either of which would seriously harm our business and results of operations. Management cannot be certain that we will be able to compete successfully against current or future competitors, or that competitive pressure will not seriously harm our business. Some of the competitors may be able to respond more rapidly to new or emerging products and changes in customer requirements, or devote greater resources to the development, promotion and sale of their products than we can. Furthermore, some of these competitors may make strategic acquisitions or establish cooperative relationships among themselves, or with third parties in the industry to increase their ability to rapidly gain market share. It is important to note that some of our competitors are also both customers and suppliers of Fintech Select, and therefore it is important for us to maintain amicable relationships with such competitors and co-exist in the marketplace.

Financing Requirements and Availability of Capital

We expect our capital requirements to increase due to growth of the new e-wallet and online payment business opportunity that the Company is exploring, the proposed expansion of our marketing and business development activities, and the required inventory of top-up products if the Company decides to increase the revenue of this area of the business. The exact amount of our future capital requirements could be adversely affected by numerous factors, including, but not limited to, slower growth and adverse changes in our business environment, delays in growth of our customer base, government regulations, failure or delays in executing marketing programs and growth that is more rapid than anticipated or competitive pressures. We may also need to raise additional funds sooner than anticipated in order to acquire businesses, technologies or products, or fund investments and other relationships we believe to be strategic. Accordingly, our actual capital requirements may vary from currently anticipated needs, and such variations could be material. There is no assurance that additional financing will be available on commercially reasonable terms, if at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund our expansion, take advantage of strategic acquisitions, investments, or other opportunities, or respond to competitive

pressures. Such inability to obtain financing when needed could have a material adverse effect on our business, results of operations, cash flow, financial condition, and/or prospects. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders will be reduced, shareholders may experience additional dilution and such securities may have rights, preferences and privileges senior to those of the Common Shares.

Share Price and Volume Volatility

Our Common Shares may be affected by limited or sporadic trading volumes, which may affect our shareholders' ability to sell our Common Shares. Our share price may be volatile and could be subject to wide fluctuations due to a number of factors, including the risk factors described in this Annual Information Form. In addition, broad fluctuations in the financial markets, as well as economic conditions, may adversely affect the market price of our Common Shares.

Fluctuation in Operating Results

We may experience fluctuations in future quarterly operating results that may be caused by many factors, including but not limited to: (i) variability of sales to new and existing customers; (ii) changes in the level of marketing and other operating expenses; (iii) competitive factors; and (iv) the timing of delivery. Consequently, we believe that period-to-period comparisons of our operating results will not necessarily be meaningful, and should not be relied upon as an indication of future performance. It is likely that our future quarterly operating results from time to time will not meet the expectations of security analysts or investors, which may have a material adverse effect on the market price of the Common Shares. Until the point where we are able to generate and predict continued positive cash flows from recurring revenue, we face risk in utilizing our existing cash resources and potentially requiring further cash infusions from investors to maintain our operations.

Reliance on Key Personnel

To date, we have been dependent on a relatively small number of key officers and employees. Our senior executives have experience in our industry and with our business, products and customers. The loss of knowledge of our operations, management expertise, and technical proficiency due to the loss of one or more members of our core management team, could result in a diversion of management resources or a temporary executive gap, or negatively affect our ability to develop and pursue other business strategies, which could adversely affect our business and/or financial results. Furthermore, due to the technical nature of the business, we are dependent upon our ability to continue to attract and retain qualified management, marketing, information technology, and technical personnel. There is competition for qualified personnel in our line of business and geographic regions, and there can be no assurance that we will be able to continue to attract and retain qualified personnel necessary for the development of the diverse business in which we compete. If we are not able to retain qualified personnel for our financial service business, our product development and implementation initiatives will be impaired and/or delayed, thereby adversely affecting our cash flow, financial condition and/or results of operations.

Credit Risk and Bad Debts

We regularly evaluate the risk of collections from sales to new and existing customers, based on the size, payment history, and type of customer. There is always a risk that some customers may not honor their accounts with us, resulting in our being unable to collect outstanding amounts, which in turn results in a charge for bad debts being incurred during a specific period. Any significant bad debt or inability to collect on amounts due from customers could materially adversely affect our cash flow, financial condition and/or results of operations.

Regulatory Regime

From time-to-time, governments and regulatory bodies may review the legislation and regulations applied to the industries in which we operate. Such reviews could result in the enactment of new laws and/or the adoption of new regulations in Canada or the United States of America or abroad, which might adversely impact businesses in Canada and the USA, or other countries in general, and consequently, may threaten our growth prospects. More specifically, we are expanding into the financial services industry, which is strictly regulated. Regulation is extensive and designed to protect consumers and the public, while providing standard guidelines for business operations. In the offering of our financial products, we, or our partners, are subject to certain federal and provincial laws and regulations relating to our financial product offerings, including laws and regulations governing such things as Know-Your-Customer (KYC), Anti-Money Laundering (AML), Anti-Terrorist Financing (ATF) and safeguarding the privacy of customers’ personal information. Legislation has been passed in most provinces with respect to prepaid gift or stored-value cards. The Canadian government recently released its consultation paper Strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime , which contains proposals to strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act . Several of the proposals relate to emerging payment technologies and could have a significant impact on the payments and cards industry in Canada. We believe that, at this time, we are in compliance with all laws and regulations, although many of the rules that apply to us have only recently been implemented, are complex and sometimes ambiguous and, accordingly, we cannot assure that we are in 100% compliance with all applicable laws, much less that all courts, arbitrators and regulators would agree that we are in 100% compliance. Failure to comply with, or changes to, existing or future laws and regulations could result in significant unforeseen costs and limitations, and could have an adverse impact on our business, results of operations and/or financial condition.

Economic Risk

A major change in any of the market segments that are serviced by us could potentially impact our ability to sell products and services within those segments, and would have a negative effect on our business. The general economic environment impact us and our subsidiaries in many ways, including customer spending, capital availability, and funds available for marketing and advertising. An economic slowdown could also cause the demand for our products or services to decline. Growth in our customers’ businesses is affected by the economic environment, and could therefore have an impact on the Company’s operating results. We can neither predict the impact current economic conditions will have on our future results, nor predict when the economy will show meaningful improvement. Our current and potential customers might reduce or delay purchases or projects, or defer contracts currently underway. This situation could also lead to greater delays and defaults in payments or debt collection, competition increases and prices might be reduced by certain competitors to maintain or expand their market share. Our pricing and profitability could be adversely affected as a result of such factors.

Liabilities from Acquisitions

A portion of the growth strategy of our business includes the pursuit of acquisition opportunities in synergistic markets. While our acquisition process typically includes extensive due diligence on the business or assets to be acquired, and acquisition agreements typically include detailed representations and warranties respecting the business or assets being acquired, there can be no assurance that we would not become subject to certain undisclosed liabilities associated with the acquired assets that we failed or were unable to discover during the due diligence process prior to the closing of the acquisition. The discovery of any unrecoverable material liabilities could have a material

adverse effect on our business, financial condition and/or future prospects. An asset purchase or acquisition financed using cash and/or Common Shares in the capital of the Company may also be considered dilutive to shareholders and/or impact the Company’s cash position.

Changes in Technology

If we are unable to respond to the rapid changes in technology and services that characterize our industry, our business and financial condition could be negatively affected. Our business may be impacted by changes in the industry. All of these industries are subject to technological change, new product and service introductions, and evolving industry trends. These factors could affect the market for our products, accelerate the obsolescence of our offerings, and necessitate changes to our product and service lines. We believe that our future success will depend largely on our ability to anticipate or adapt to such changes, to offer on a timely basis, services and products that meet these evolving trends and demands of our customers, retailers and distributors. We also believe that our future success will depend upon how successfully our partners and suppliers are able to respond to changing technologies and products. New technology may reduce demand for the products and services we are currently able to offer through these partners and suppliers. We cannot offer any assurance that we will be able to respond successfully to these, or other technological changes, or to new products and services offered by our current and future competitors, and cannot predict whether we will encounter delays or problems in these areas, which could have a material adverse effect on our business, financial condition and/or results of operations.

Network and Internal Fraud

If a fraud occurs on any of the networks or on our network, this could result in a cost to the company if it is determined that the breach is a result of our negligence or failure to follow network rules or regulations (or where the fault is not ours but the perpetrator of the fraud cannot be located or cannot be collected from). As new methods of intrusion and fraud emerge in the industry, we may have to incur significant additional costs to implement additional security precautions (which may be undertaken by us voluntarily or as a result of network rule changes). Furthermore, the occurrence of frauds can result in a loss of consumer confidence, which may result in declining transaction volumes with financial products. Any of these circumstances could lead to our cash flow being adversely impacted.

We employ a number of employees and contractors that have access to our systems and infrastructure, and if one or more of these individuals in key control positions were to perpetrate fraud (for example, relating to settlement of transactions, altering account deposit details, changing customer charging details or creating fake accounts), it could have a negative impact on our cash flow. We implement internal controls and maintain insurance for network and internal fraud as described under the Insurance section in this Annual Information Form. See “Narrative Description of the Business – Insurance”.

Infrastructure Stability

Our product and service offerings depend on the stability, functionality and scalability of our network infrastructure and technology platforms, and that of our third-party suppliers, that if not stable, could negatively impact the effectiveness of our products or services, resulting in harm to our reputation and business. If weaknesses in such infrastructure exist, we may not be able to correct or compensate for such weaknesses. If we are unable to address weaknesses resulting from problems in such infrastructure such that our products do not meet customer needs or expectations, our reputation, and consequently, our business may be significantly harmed.

Disaster Recovery

Our business and operations are highly automated and a disruption or failure of our systems may delay our ability to complete sales and to provide services. A major disaster or other catastrophic event that results in the destruction or disruption of any of our critical business or information technology systems could severely affect our ability to conduct normal business operations. This possible disruption may materially and adversely impact our future operating results.

Software Viruses and Network Intrusion

We maintain many different networks and management information systems (some of which are interconnected and some of which are connected to the internet or to other external networks). We may be susceptible to viruses and network intrusions by third parties. Any intrusion or virus could impact the performance of the transaction processing capabilities of the Company and, in a worst-case scenario, could require temporary shutdown of the affected systems and compromised customer information, users and employees. Systems that are accessed through the internet are also subject to "denial of service" attacks (these attacks do not involve an intrusion into the system, but can effectively make the systems unavailable to Company customers/employees). We maintain security policies and procedures to manage these risks, some of which include intrusion detection software, virus monitoring software, IP blocking, IP tracking software, complex encryption for transactions, network monitoring and reporting solutions, as well as application and data base level restrictions and controls through network design and implementation.

Improper Disclosure of Personal Data

We store and process large amounts of personally identifiable information that consists primarily of customer information and transactions. It is possible that our security controls over personal data, training of employees and other practices we follow may not prevent the improper disclosure of personally identifiable information. Such disclosure could harm our reputation and subject us to liability under laws that protect personal data, which could have a material adverse effect on our business and/or financial condition.

Proprietary Information

We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures, contractual provisions, and other measures to protect our proprietary information. All of these measures afford only limited protection. These measures may be invalidated, circumvented or challenged. Despite our efforts to protect proprietary rights, unauthorized parties may attempt to obtain or use information that the Company regards as proprietary. If the Company were not granted approval on pending or future patent or trademark applications, our intellectual property would not be protected against infringement of other parties.

Conflicts of Interest

As certain of the Company’s directors and officers may be directors, officers or shareholders of other companies, there are potential conflicts of interest to which our directors or officers may be subject to from time to time, in connection with our operations.

Litigation and Judgement

The Company may get involved from time to time in litigation, as plaintiff and defendant, which arises in the normal course of business. The company currently has one unsolved claim as follows:

a) In April 2017, the Company was served by a service provider with a Statement of Claim filed in the Ontario Superior Court of Justice for the amount of $4,000,000 (the “Claim”). The Claim relates to the shortfall of a secured cash pledge ("Secured Deposit"), as per the Special Account Agreement executed between the Company and the service provider. This claim has been discharged in March 2022 without condition.
b) In July 2019, one of the Company’s subsidiary has been served with a Statement of Claim by Her Majesty the Queen in Right of Alberta (“Alberta”) in the amount of $633,284 (the “Alberta Claim”). The Claim relates to the balance of funds on expired cards pursuant to a Card Management Agreement between the subsidiary and Alberta. The claimed amount was included in a Claim served on the Company by its service provider. The Company has recorded such payables in its financial statements. The Company intends to vigorously defend the Claim, as all of the funds claimed by Alberta were deposited in the Company’s service provider’s bank account and not that of the subsidiary.

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.

(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 December 31, 2021 and 2020 are as follows:

		2021 2020
Cash	$	6,753$ 31,659
Accounts receivable and other receivables		140,344118,008
Accounts payable and accrued liabilities		(101,821) (94,969)
Total net asset(liability)	$	45,276$54,698

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 $ 2,264 as of December 31, 2021 (2020 impact net income - $2,735).

(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's demand loan has fixed interest rates and is not exposed to interest rate risk.

(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.

Capital Risk Management

The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Company includes equity, comprised of issued common shares, warrant reserve, contributed surplus accumulated, and other comprehensive income in the definition of capital.

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its growth activities, and to maintain its ongoing operations. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and or debt financing.

The Company’s overall capital management strategy during the year ended December 31, 2021 and 2020 has been to raise share capital, reach settlement with creditors, shut down money-losing businesses, and expand profitable lines of business.

Commitments

a) The Company has no lease commitment as at December 31, 2021.

b) Right of use assets

The Company had the following future commitments associated with its lease obligations:

Balance at December 31, 2020 Interest expense Lease payments Balance at December 31, 2021 Current portion	$ 269,166 17,237 (114,910) $ 171,493 114,910

56,583 $ 171,493

Long term portion

In relation to the leases recognized, the Company has recognized during the year ended December 31, 2021, $96,981 of depreciation charges, $114,910 of lease payments and $17,237 of interest expense from these leases.

As at December 31, 2021, the Company has recorded a $153,564 right-of-use asset (included in "Intangibles – Long term") and a $171,493 lease obligation (the non-current portion of $56,583 recorded in "Lease obligations" and the current $114,910 portion recorded in "Current portion of lease obligations").

Additional Information

Additional information relating to the Company can be found on SEDAR at www.sedar.com.

AI assistant

Fintech Select Ltd. — Management Reports 2022

45418_rns_2022-04-29_e7814c03-a525-4c3d-9331-da95dc52d926.pdf