Unaudited Q Consolidated Interim Financial Statements & MD&A for the twelve months ending December 31 st 2017.

Transcription

1 Unaudited Q Consolidated Interim Financial Statements & MD&A for the twelve months ending December 31 st April 13 th 2018 To Whom It May Concern: We the undersigned do certify that we have reviewed the attached Consolidated Interim Financial Statements & MD&A for the twelve months ending December 31 st We certify that the information is complete and presented fairly in all material respects to the best of our knowledge. Sincerely, Massimo Barone CEO of Smartcard Marketing Systems Inc. (SMKG:OTC) THE PAYMENT Page 1 of 13

2 Consolidated Interim FS for the twelve months ending December 31 st 2017 SmartCard Marketing Systems Inc. (OTC: SMKG) 2017 Fourth Quarter Management Discussion & Analysis About Smartcard Marketing Systems Inc. (OTC:SMKG) SmartCard Marketing Systems Inc. (SMKG: OTC) is a Fintech advisory Co & solutions provider to the payments industry, delivering cloud-based EMV Host Acquiring & Issuing solutions to banks, telecoms and enterprise customers. In addition, the company's in-house lab offers customers proprietary software solutions including Genorocity.com, a coupon and incentive platform for the Retail, Mtickets.events for the Event Management industry, Check21SAAS.com a Remote Deposit Check solution for X9 clearing and Genopay, a QR Code transaction payment ecosystem for alternative payment solutions & processing. For more information, go to Since the beginning of 2015 the company has focused on 2 distinct channels of business; 1) Development and commercialization of its two core platforms for the payment and incentive industry VelocityMwallet.com & Genorocity.com 2) Strategic partnerships to develop an EMV Remote HOST for Bank & Telecom Acquirers of Card Schemes (Credit & Debit) as an acceptance point for emulating transactions, processing & settlement. In 2017 management continued to develop its payment infrastructure and worked with key clients to commercialize its solutions strengthening its position in the financial services segment. We are transforming the company from a direct merchant services provider to enabling a channel of portfolio merchants for Banks & Telecoms. This transition has allowed SmartCard to position itself as a technology host & support provider capturing large pools of customers. The partnership entered into with Contact Innovation in North America for 2014 and early 2015 technology for the Check21 Act and Remote Deposit Capture (RDC) was commercially deployed in late May of 2015 with the first joint client ICICI Bank of India (its Canadian subsidiary). The platform solution as a cloud based host was branded and now the success of our deployment is allowing us to market to customers internationally. The company in the last quarter of 2017 started development of its new offering to further expand the solution for its Remote Deposit Scan for client enterprise and retail. This solution unlike Check21saas.com which is designed for a Bank or FI to launch as a white label turn-key solution allows the merchant to select their host bank from a pre-approved list and directly connect through our platform and deposit securely. Page 2 of 13

3 Management Discussions and Analysis Financial Highlights Investment of $358K into Proprietary Software Development. Net Loss for 2017 reduced from $570K in 2016 to $464K in Reduction of Shareholders Deficiency from $2,9M in 2016 to $985K in December Recent News Highlights SMKG now OTC Pink sheet compliant and working to be fully compliant in Q SmartCard showcasing in Barcelona for GSMA World Mobile and Seamless Singapore. The company announced its digital transformation showcase that will be showcased at the CES Tech show in Las Vegas, Nevada the 9 th to the 12 th of January The C Space at CES brings together the world's innovators, marketers and creatives in one venue. Financial Results, 2017 Compared to 2016 For 2017, the Revenues were $115,233, comparable to $72,671 for the same period in The Net Loss for the period ended December 31 th, 2017 totaled $464,073, a reduction of $106,001 from the 2016 Net Loss of $570,074. The increase in Revenues came from both Consulting and Transactions revenues. The implementation and launch of important contracts and projects will continue to grow in the next quarters. In 2017, the Company also invested an amount of $357,521 into Project Development. The Product Development achievements are described in the next section. Common Share Capitalization In February 2017, the Company executed a new long term agreement for $1,000,000 with Primeline HK Ltd. The funds financed the completion of the development of the company products line. As per this agreement, Primeline converted this loan for 25% of the outstanding Class A shares of the Company in June The total shares issued were 101,360,778. During June 2017, the Company also executed the following changes in its capital structure: Proceeded with an increase of its authorized Class A shares from 300,000,000 to 500,000,000. Convertible debentures totaling $175,000 redeemed for 8,166,666 Class A shares Converted loans from shareholders totaling $1,070,359 with issuance of 83,924,473 Class A shares. Converted Accounts payables totaling $214,338 with issuance of 8,415,022 Class A shares. The Primeline investment also includes Options to reinvest throughout the period of 2018 and 2019 with higher price per share parallel to the company s growth objectives. Page 3 of 13

4 Directors and Officers Massimo Barone Director Founder, CEO and Chairman Paolo Contninelli Director Founder, President Operation Michele Tasillo Director Finance Manager Chris Payne Director Primeline HK Steve Gaynor Advisory Attorney and Invest. Banker Legal As of December 31st, 2017, all legal matter were resolved or inexistent. The company is awaiting final clearance from the parties associated to these legal matters to conclude registrations and releases. Proprietary Technology Assets The company from 2014 has been in pursuit of developing and establishing a strong and intuitive technology footprint for the growing Fintech Industry. Management of the company has over 45 years of combined payment industry experience in the alternative payment and merchant underwriting industry with a specialization in Retail & Enterprise applications. Our strategy has been to develop a seamless portfolio of various industry payment technologies for both E-commerce and mpos semi-integrated payment systems. The result is a robust performing lineup of middleware s that integrate easily with various Issuers, Acquirers & processors creating a powerful gateway host for Banks, Telecom & Global Enterprises with an existing merchant portfolio ready for best of breadth and trending technologies that also incorporate social-media advantages for consumers. Also important is the introduction by the company of integrating AI & Blockchain algorithm s end encryption to further enhance business processes and intelligence analytics. We are focused on delivering these parameters by 2 nd Quarter of Page 4 of 13

5 Proprietary Technology Portfolio Check21SaaS Genorocity & Genopay Mtickets.events Articul8te Mytravel.menu Ijobs.shop Emphasispay Remote Deposit Capture technology cloud based with multi-scanner options seamless integrated working remotely from branch or client locations. Also with processing functionality and x9 clearing files for settlement. A digital Retail platform with a suite of features for Mall, Hotel & Entertainment Property, Theme Parks, Enterprises, Franchisers and more; Coupons, Cards, Loyalty points, Social-media, Offer Showcase, Promoted offers, Proximity, Beacon Tech for both Web & Mobile Applications with payment gateway & Paypal. A digital Events & Mticketing management solution for Event Co s, Planners, Retailers and Networking groups. A full digital suite of features includes; Creating of Events, Conferences, Exhibitors, Collaborators, Partner Suppliers, Ticketing and registrations both Web & Mobile Applications with payment gateway & Paypal. Our more recent release for Sales, Content & Task management application both Web & Mobile. A suite of features includes; Private or Public mode with Group set-up, To-do-Lists, Social-media & Articles publishing, Creating Tasks and Invites, with tracking and calendar functionality. Designed to capture the Consumer & Business preorder food market & onboard or inflight menu sales. The application allows transport operators to easily integrate and import menu options. A digital job seeker solution for both merchant and job seeker. This innovative solution is QR Code based and allows the job seeker to simply upload their CV and Profile within seconds. An alternative payment platform with a full CMS solution & Virtual terminal for today s KYC & AML requirements. A full suite of features includes an API that connects to FX processors, both Bank Issuers & Acquirers, independent Processors & 3 rd parties to query KYC verifications. Page 5 of 13

6 Development of Software The company continues to use two outsourcing companies in India to develop its modules and perform technical support with its customers. The engagement with customers has been excellent to date and this method has allowed us to allocate necessary resources in a timely manner and manage projects resourcefully at all times of the day respectfully adhering to client schedules globally in all time-zones. Fintech Accelerator Offering Program The company s management established a Fintech Accelerator offering during the 1 st of Quarter of 2017 to develop a unique payment sales opportunity through ISV Partners. The ISV or Independent Software Vendor today has strategically become an important channel of growth both in the Banking & Telecom sector. The company focused on marketing its offering at critical industry tradeshows to enter the market and introduce the technology line up. Management believes strongly that onsite shows creates the largest market penetration for both the company s offering and its ISV partners. Our Gateway Network; The company works with both Payment processors, Issuers & Acquirers to continuously expand on its seamless payment & gift card suite for Ecommerce, EMV MPOS & Virtual terminal products capabilities. Page 6 of 13

7 Executive Summary The Board of directors believe that the company has come through a very important cycle in its development and deployment of intuitive Payment Industry Applications designed for the Banking, Telecom, Tour Operators, Retail & Restaurant Hospitality Industries. In the past year key partnerships and integrations have been completed which are being delivered throughout With various technology partners we now have material clients being deployed which will significantly affect revenues from ongoing transactions and licensing which will substantially improve cash flow and minimize the operating risk moving forward. Page 7 of 13

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13 20C Trolley Square Wilmington DE THE-PAYMENT April 13 th 2017 To Whom It May Concern: We the undersigned do certify that we have reviewed the attached Unaudited Consolidated Interim Financial Statements for the twelve months ending December 31 st 2017 along with MD & A statements with notations. We also certify that the information is complete and presented fairly in all material respects to the best of our knowledge. Sincerely, Massimo Barone CEO Smartcard Marketing Systems Inc. Michele (Mike) Tasillo Finance Manager Smartcard Marketing Systems Inc. Page 13 of 13