10-K: BlueOne Card Inc. Reports Fiscal Year 2024 Results, Navigates Transition to New Program Manager

BlueOne Card Inc. reports its fiscal year 2024 results, highlighting a transition to a new program manager and ongoing development of its prepaid card business.

Summary

• BlueOne Card Inc., a Nevada corporation, is a reseller of prepaid branded cards, targeting unbanked and underbanked customers with international needs.
• The company transitioned to a new program manager, Expanse Financial Technologies, Inc., after its previous partner's bank terminated services.
• BlueOne aims to generate revenue through transaction and monthly fees, reloading fees, ATM withdrawal fees, and card-to-card money transfer fees.
• For the fiscal year ended March 31, 2024, the company reported a net loss of $1,613,140, compared to a net loss of $1,118,799 in the previous year.
• The company's operating expenses increased to $1,553,729, primarily due to increased marketing, rent, and regulatory fees.
• The company's revenue was $4,000 from prepaid card sales, with a cost of sales of $1,600 and a reserve for inventory of $72,900, resulting in a gross loss of $70,500.
• The company's cash used in operations was $1,146,710, and it had a working capital deficit of $624,037 as of March 31, 2024.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern due to its losses and cash flow issues.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including substantial losses, a working capital deficit, and a going concern warning from auditors. While there are some positive aspects, such as the new program manager, the overall sentiment is negative due to the company's financial instability and operational risks.

Positives

• The company has secured a new program manager, Expanse Financial Technologies, Inc., which has a well-established platform.
• The company is targeting a large market of unbanked and underbanked individuals.
• The company's new program manager offers a unique platform with cross-border card-to-card transfers.
• The company has a five-year reseller agreement with the new program manager, with potential for renewal.
• The company has identified liquor stores as a key distribution channel, which they believe will increase traffic and sales.

Negatives

• The company has generated minimal revenue from its planned business.
• The company incurred a significant net loss of $1,613,140 for fiscal year 2024.
• The company's operating expenses have increased substantially.
• The company has a working capital deficit of $624,037.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• The company is dependent on a single reseller agreement with Expanse Financial Technologies, Inc.
• The company's previous program manager terminated services due to its bank's actions.
• The company's stock is thinly traded and volatile.

Risks

• The company's business is dependent on its relationship with Expanse Financial Technologies, Inc., and termination of the agreement would likely cause the business to fail.
• The company's operating results may fluctuate, which could cause the stock price to decline.
• The company may be unable to find and retain distributors for its prepaid cards.
• The company faces intense competition in the prepaid card market.
• The company's business is dependent on the efficient operation of its program manager's computer network systems and data centers.
• The company is exposed to risks related to fraud and illegal activity involving its products.
• The company operates in a highly regulated environment, and failure to comply with regulations could have an adverse effect on its business.
• The company may be unable to adequately protect its brand and intellectual property.
• The company is exposed to losses from customer accounts and disputed transactions.
• The company is highly dependent on its key executive, James Koh.
• The company may require additional capital to support its business in the future, which may not be available on acceptable terms.
• The company has a limited operational history and may not achieve profitability.
• The company has a material weakness in its internal control over financial reporting.

Future Outlook

The company anticipates deriving revenues from processing and other fees once the new program manager's platform is customized. The company plans to target liquor stores for distribution and expand its offerings to the Latino market. The company intends to overcome its going concern issues through a combination of revenue generation and additional financing.

Management Comments

• The company is aiming to provide innovative payout solutions and prepaid cards to consumers.
• The company specifically aims to target those customers who are unbanked, or non-bankable, and who have needs crossing international borders.
• The company believes the Program Manager will provide a unique platform different from other competitors.
• The company believes the Program Managers prepaid, branded cards will be safer than cash, more convenient than checks, and very easy to obtain.
• The company feels that the product and its features will be successful based on analytics of the database of over 5,000 consumer cards.

Industry Context

The company operates in the competitive prepaid card and financial technology industries, facing competition from larger, more established companies. The company's focus on the unbanked and underbanked market segment aligns with a growing trend in financial inclusion. The company's transition to a new program manager reflects the challenges and volatility in the fintech space.

Comparison to Industry Standards

• The company's financial results are significantly below industry standards for established fintech companies, particularly in terms of revenue generation and profitability.
• Companies like Green Dot Corporation, a major player in the prepaid card market, have significantly higher revenue and market capitalization.
• The company's reliance on a single program manager and a limited distribution channel is a deviation from industry best practices, where diversification is key.
• The company's high operating expenses and net losses are not sustainable and require significant improvement to meet industry benchmarks.
• The company's lack of a robust internal control system is a concern compared to industry standards for public companies.

Corporate Governance

Legal Proceedings

• The company anticipates that it will from time to time become subject to claims and legal proceedings arising in the ordinary course of business.
• As of the filing of this Annual Report, the company is not a party to any pending legal proceedings, nor is it aware of any civil proceeding or government authority contemplating any legal proceeding.

Related Party Transactions

• The company's CEO has provided advances to the company for working capital needs, with a payable of $20,595 and $25,765 at March 31, 2024 and 2023, respectively.
• The company has an employment agreement with its CEO, with deferred salary compensation of $571,325 and $380,750 as of March 31, 2024 and 2023, respectively.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern issues.
• Employees may be concerned about the company's ability to continue operations and pay salaries.
• Customers may be affected by potential disruptions in service due to the company's financial challenges.
• Suppliers and creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company needs to complete the customization of the new program manager's platform.
• The company needs to establish distribution agreements with liquor store owners.
• The company needs to focus on marketing and sales efforts to increase revenue.
• The company needs to secure additional financing to support its operations.
• The company needs to improve its internal control over financial reporting.

Key Dates

Keywords

prepaid cards, unbanked, underbanked, financial technology, reseller agreement, program manager, cross-border payments, liquor stores, debit cards, mobile application