Banxa Audit Update

February 21, 2023 at 09:00 AM EST

TORONTO, ON / ACCESSWIRE / February 21, 2023 / Banxa Holdings Inc. (TSXV:BNXA)(OTCQX:BNXAF)(FSE:AC00) ("Banxa" or the "Company") announces that it is in the process of completing its audited annual financial statements for the fiscal year ended June 30, 2022 and related management's discussion and analysis (the "Annual Filings"), with the help of its auditors.

The Company is dedicated to resolving the remaining audit items and submitting the necessary filings as soon as possible. Once completed, a news release will be issued to announce the submission of the Annual Filings and interim financial statements for the periods ended September 30, 2022 & December 31, 2022. Despite the challenges posed by current market conditions and the evolving regulatory landscape, Banxa's operations remain positive and stable.

The delay in the Annual Filings and the prolonged audit is due to several factors, including:

Banxa has conducted a comprehensive review and analysis of its transactions resulting in adjustments to its revenue recording methods for FY2022. This adjustment was made to ensure that revenue is being appropriately presented based on how a specific cryptocurrency interacts with a Banxa wallet which has an impact if revenue is treated as "Agency" or "Principal" revenue. As a result of this review, the Company will report approximately AUD$71m (USD$49m) in revenue for the fiscal year ended June 30, 2022, an increase of 53% from AUD$46m (USD$31m) the year prior. The revenue recording methods do not have any impact on the gross profit (Net Take Rate) or bottom line (NPBT) of the company but rather reflects a change in business process that ensures accurate reporting and compliance with regulatory requirements around accounting standards.
Liquidity Providers: As part of its operations, Banxa sources liquidity from numerous global cryptocurrency exchanges known as Liquidity Providers. These exchanges are generally considered "un-regulated" from a regulatory perspective and are usually not SOC compliant (a form of ISO accreditation) which has required further audit procedures needed to be implemented to validate the accounting treatment of these digital assets held on these exchanges. The Company is pleased to report that it is close to completing this review and does not anticipate any impact on its financial statements.
Reclassification of 'Deposits at Exchanges' to 'Receivables at Exchanges': Given the current state of the cryptocurrency markets and the risks associated with holding coins on third-party cryptocurrency exchanges, Banxa has had to reclassify its digital assets held on third-party exchanges from a 'Deposit' to a 'Receivable'. Both remain Current Assets and will not impact the Current Assets on the balance sheet.
Significant growth: Banxa has achieved significant transaction volume of circa AUD$1.6 billion (USD$1.1billion) in FY2022 financial year and the Company remains in a growth stage as it continues to expand its operations and offerings. As part of this growth, management recognizes the need for continuing to improve internal processes and better support financial reporting requirements. The Company has now appointed its COO Sean Moynihan as interim-CFO while the search for a full time CFO continues.

"We understand the frustration and concern that the slow pace of the audit and current cease trade order (CTO) may have caused among our shareholders," said Founder & Chairman Domenic Carosa. "We are committed to providing timely and accurate financial reporting to our shareholders. I want to emphasize that we are working hard to complete and file our audited financial statements as soon as possible, despite the challenges posed by the rapidly changing industry standards and regulations surrounding third-party deposits and the cryptocurrency industry. Our financial performance remains strong, with transaction volume of AUD$1.6 billion in the fiscal year 2022. We want to assure shareholders that this delay is not related to any undisclosed events or issues, and we remain committed to upholding the highest standards of transparency and disclosure."

Banxa confirms that there is no material information regarding the Company's affairs that has not been disclosed and believes that, upon the filing of its Annual Filings and first and second quarter ended September 30^th 2022 (Q1) and December 31^st 2022 (Q2) financial statements, it will have satisfied the conditions of the BCSC and have the CTO lifted, allowing trading in its securities to resume.

The Company will provide another update in the coming 10-12 business days.

CONTACTS:

Media:

Wachsman
Ethan Lyle
banxa@wachsman.com

ON BEHALF OF THE BOARD OF DIRECTORS

Per: "DOMENIC CAROSA"https://twitter.com/DomCarosa
Domenic Carosa = Chairman (1-888-218-6863)

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release

Forward-looking Information and Statements

This news release includes certain statements and information that may constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future events or future performance and reflect the expectations or beliefs of management of the Company regarding future events. Generally, forward-looking statements and information can be identified by the use of forward-looking terminology such as "intends", "expects" or "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would" or will "potentially" or "likely" occur. This information and these statements, referred to herein as "forward‐looking statements", are not historical facts, are made as of the date of this news release and include without limitation, statements regarding the completion of the audit by the Company's auditor, timing for the filing of the Annual Filings and interim financial statements by the Company; expected revenue; completion of the Company's review of audit procedures needed to validate the accounting treatment of digital assets; and that the Company will satisfy the conditions of the BCSC to have the CTO lifted.

These forward‐looking statements involve numerous risks and uncertainties and actual results might differ materially from results suggested in any forward-looking statements. These risks and uncertainties include, among other things, risks related to the completion of the audit by the Company's auditor within the timeframe expected by management, and risks relating to the filing of the Annual Filings and interim financial statements within the timeframe expected by management, risks relating to the BCSC's removal of the CTO, and risks related to changes in general economic, business and political conditions, including changes in the financial markets, changes in applicable laws, and compliance with extensive government regulation, as well as those risk factors discussed or referred to in the Company's disclosure documents filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com.

In making the forward-looking statements in this news release, the Company has applied several material assumptions, including without limitation, assumptions regarding the completion of the audit by its auditor in a timely manner and the filing of the Annual Filings and interim financial statements by the Company in a timely manner; assumptions that the Company will satisfy the conditions of the BCSC to lift the CTO; revenue numbers will be reported as stated herein and that the Company will complete the review of audit procedures needed to validate the accounting treatment of digital assets.

Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statement, forward-looking information or financial out-look that are incorporated by reference herein, except in accordance with applicable securities laws. We seek safe harbor.

SOURCE: Banxa Holdings

View source version on accesswire.com:
https://www.accesswire.com/740093/Banxa-Audit-Update

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