U.S.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the year ended December 31, 2019

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016transition period from __________________________ to __________________________

Commission File Number: 0-55081file number 000-55081

KinerjaPay Corp.
KINERJAPAY CORP.

(Exact name of small business issuerregistrant as specified in its charter)

JI Multatuli, No. 8A Clyde Road, Medan, Indonesia, 20151

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: +62-819-6016-168

Securities registered pursuant to Section 12(b) of the Act: None

Registrant's Telephone Number, Including Area Code: +62-819-6016-168

Securities Registered Pursuantregistered pursuant to Section 12(g) of Thethe Act:

Common Stock, $0.0001, par value $0.0001

Title of Class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨[  ] No x

[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x[X] No ¨

[  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Check this box to indicate whether the companyregistrant has submitted electronically and posted on its corporate website every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the companyregistrant was required to submit and post such files).Yes x[X] No ¨

On June 30, 2016, the aggregate market value of the 4,487,036 shares of common stock held by non-affiliates of the Registrant was approximately $3,455,018 based on the last trade of the Registrants common stock at $0.77 on June 30, 2016. On April 28, 2017, the Registrant had 8,627,013 shares of common stock outstanding.

[  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, (as defineda smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act) or a smaller reporting company.Act.

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨[  ] No [X]

The aggregate market value of the 33,841,425 shares of common stock held by non-affiliates of the registrant as of June 28, 2019 (the last trading day in June 2019) was $8,333,236, as computed by reference to the closing price     of $0.2462 of the registrant’s common stock on such date. For purposes of the above statement only, all directors, executive officers and 10% shareholders are assumed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for any other purpose.

The number of shares outstanding of the registrant’s common stock as of October 7, 2020 was 1,513,872,948x.

. 

KINERJAPAY CORP.

2019 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Annual Report on Form 10-K. Certain statements made in this discussion are “forward-looking statements” within the meaning of 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Unless otherwise indicated or the context requires otherwise, the words “we,” “us,” “our,” the “Company” or “our Company” or “KinerjaPay Corp” refer to KinerjaPay Corp., a Delaware corporation, and its wholly-owned subsidiaries, P.T. Kinerja Pay Indonesia (“PT Kinerja Pay”) and P.T. Kinerja Indonesia (“PT Kinerja”). Both subsidiaries of KinerjaPay Corp. are organized under the law of Indonesia. P.T. Kinerja Sukses Gemilang (“PT Kinerja SG”), organized under the laws of Indonesia, and Kinerja Pay Ltd., organized in the State of Nevada, are wholly-owned subsidiaries of PT Kinerja.

Forward-looking statements made in this annual report on Form 10-K include statements about:

PART I

Item 1. Business.Back to Table of Contents

As usedThese statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” set forth in this Annual Report on Form 10-K (this "Report"), referencesfor the year ended December 31, 2019, any of which may cause our Company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the "Company,"expectations reflected in the "Registrant," "we," "our," "us"forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or "KinerjaPay Corp", unlessperformance. Moreover, neither we nor any other person assumes responsibility for the context otherwise indicates.

Forward-Looking Statements

This Report containsaccuracy and completeness of these forward-looking statements. For this purpose,The Company is under no duty to update any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts," "potential," or "continue" orafter the negativedate of this report to conform these similar terms.statements to actual results.

PART I

ITEM 1. BUSINESS

Corporate Developments Since InceptionOverview and History

Our business aim is to build a secure and convenient e-commerce ecosystem for use by our customers and merchants by providing services and products including: (i) electronic payment service; and (ii) virtual marketplace for the sale of a wide variety of products and services, both of which are available on the portal, KinerjaPay.com, (the “Portal”). In addition to access to the Portal, our Android and iPhone based mobile application includes additional in-app services to mobile phone users such as social engagement and digital entertainment (the “Mobile App”). A virtual marketplace, powered by our proprietary electronic payment service and gamified with in-app entertainment features, creates a one-stop-shop e-commerce platform for users to BUY, PAY and PLAY. We brand our virtual marketplace under the name of KMALL, our electronic payment solution under the name of KPAY, and our gamification features under the name of KGAMES.

The Company was incorporated in Delaware on February 12, 2010 under the name Solarflex Corp. for the purpose of developing, manufacturing and selling a solar photovoltaic element a device that converts(“Equipment”), designed to convert light into electrical flow (also known as a photovoltaic cell) based on certain proprietary technology to enable an increase in solar energy conversion efficiency and provide energy at a lower cost. Since inception through December 31, 2016,The Company entered into an Asset Purchase Agreement with International Executive Consulting SPRL, organized under the laws of Belgium (“IEC”) on May 14, 2013 (the “IEC Agreement”) pursuant to which the Company did not generate any revenues.

Ourissued IEC 2,000,000 million shares of the Company’s common stock, par value $0.0001 (“Common Stock”). The business plan was to use the Equipment to: (i) develop a working prototype of ourits photovoltaic cell for testing and evaluation; (ii) enter into manufacturing arrangements with third parties for a manufacturing process to produce the photovoltaic elements for saleand sell to solar panel producers; and (iii) enter into distribution agreements for the commercial sale of our products.

From However, from the date of the Asset PurchaseIEC Agreement through mid 2015,mid-2015, the EquipmentCompany was not inunable to successfully develop a working order,prototype, nor was therethe Company able to predict with any estimatedcertainty a timeline for ourits ability to useput the Equipmentworking prototype into production and be able to manufacture of photovoltaic cells exploiting our solar panel technology. commercially exploit the Equipment.

As a result, we determined that it was not in the best interestsinterest of the Company or its shareholders to continue to devote resources towardsdiscontinue efforts to commercially exploit our photovoltaic cellcommercialize the technology through the use ofusing the Equipment or otherwise.

We did not generate any revenues from the sale of any solar photovoltaic element, nor did we successfully manufacturer or construct a working prototype.

Onand on November 10, 2015, the Company entered into an Asset Purchase Rescission Agreement with IEC (the "Rescission Agreement"“Rescission Agreement”) pursuant to which: (i) we transferred and assigned all right, title and interest in the Equipment back to IEC;IEC all rights to the Equipment; (ii) IEC returned to the Company 333,333 shares of the 2,000,000 Shares backshares of Common Stock initially issued to the Company;IEC; and (iii) IEC transferred and assigned theits remaining 1,666,667 Sharesshares of Common Stock to Mr. Edwin Witarsa Ng, a resident of Indonesia, who was appointed as Chairman of our Board of Directors, in consideration for a cash payment by Mr. Ng of $20,000 to IEC. The rationale for the Rescission Agreement was based upon the Registrant's determination not to pursue the use and commercial exploitation of the Equipment in furtherance of its former solar energy business plan.

Recent Developments as KinerjaPay Corp.

On December 1, 2015, the Company entered into a license agreement (the "License Agreement"“License Agreement”) with PT Kinerja Indonesia, an entity organized under the laws of Indonesia and controlled by Mr. Ng ("(“PT Kinerja"Kinerja”), for an exclusive, world-wide license to use and commercially exploit certain technology and intellectual property owned by PT Kinerja (the "KinerjaPay IP"“KinerjaPay IP”) and its website, KinerjaPay.com. Pursuant toKinerjaPay.com (the “Portal”). The Portal, and the License Agreement, the Company was granted the exclusive, world-wide rights to thetechnology behind it, KinerjaPay IP, create an e-commerce platform that provides users with the convenience of e-wallet serviceelectronic payment solutions to customers and merchants for bill payment, money transfer and online shopping having advanced functionality features, among others, andshopping. KinerjaPay.com is among the first portals tothat allow users the convenience to top-upconveniently top up mobile phone credit in consideration for the payment of royalties.Indonesia.

In furtherance of our business plan, we agreed in the License Agreement to: (i) change the name of the Company to KinerjaPay Corp.; (ii) implement a reverse split of the Company's shares of common stock on a one-for-thirty (1:30) basis; and (iii) raise equity capital in the minimum offering amount of $500,000 and the maximum offering amount of $2,500,000 through the offering of units at a price of $0.50, each Unit, each consisting of 1 share of common stock and 1 class A warrant exercisable for a period of 24 months to purchase 1 additional share of common stock at $1.00. The Unit Offering is only being made to "accredited investors" who are not U.S. Persons pursuant to Regulation S promulgated by the SEC under the Securities Act of 1933, as amended (the "Act"). On January 20, 2016, the Company closed the Minimum Offering after it received subscription proceeds in excess of $500,000. To date, the Company has raised $1,105,000 pursuant to the Unit Offering, which is continuing.

On March 10, 2016, following the Company'sapproval of FINRA, the Company’s name changechanged to KinerjaPay Corp., and its one-for-thirty (1:30) reverse stock split became effective.

On August 31,April 6, 2016, the Registrant and its wholly-owned Indonesian subsidiary, PT.P.T. Kinerja Pay Indonesia entered into an(“PT Kinerja Pay”), a Cooperation and Service Agreement with Black Grace Investment Ltd, organized under the lawswholly-owned subsidiary of the British Virgin Island ("Black Grace") and its affiliate, PT. Pay Secure Online Indonesia, organized under the laws of Indonesia. Pursuant to this Agreement, PT/ PaySec granted PT. Kinerja Pay the right to use the PT. PaySec's payment services ("Payment Services") under a revenue sharing arrangement. As consideration for the use of the Payment Services, the Registrant agreed to issue 200,000 restricted shares to Black Grace or its designee. As further consideration for the use of the Payment Services, the Parties agreed that to share the net revenues generated from the use of the Payment Services and e-wallet and payment gateway technology on a 50/50 basis.

On September 8, 2016, PT. Kinerja Pay entered into a second Cooperation and Service Agreement with PT. Indonesia Enam Dua,Company, was organized under the laws of Indonesia, ("PT.IED"for the purpose of developing and managing the Company’s e-commerce business ranging from electronic payment solutions, virtual marketplace, and any other strategies within the e-commerce ecosystem in Indonesia.

On August 31, 2018, the Company completed the acquisition of its licensor P.T. Kinerja Indonesia (PT Kinerja”), which owns 62hall.co.id, an integrated wholesellerbecame a wholly-owned subsidiary of the Company. PT Kinerja Indonesia continues to provide the technology solutions needed by the Company to support its e-commerce business and online shop that sells onlinemay expand into cloud computing services and other IT service-related businesses.

On September 13, 2018, P.T. Kinerja Simpan Pinjam (“PT Kinerja SP”), a wide range of products and services, an online search engine and extensive customer services. Pursuant to this Agreement, the parties agreed to share resources in connection with the developmentwholly-owned subsidiary of PT Kinerja, Pay's new e-commerce portal, KinerjaMall.com. In considerationwas organized under the laws of Indonesia for PT.IED's services, the parties agreedpurpose of developing and managing a peer-to-peer (“P2P”) lending platform focusing on micro-lending activities. PT Kinerja SP was renamed to allocatePT Kinerja SG on August 30, 2019 to comply with the profits, definednaming convention permitted by Financial Service Authority (Otoritas Jasa Keuangan – “OJK”) of Indonesia.

On February 28, 2019, Kinerja Pay Ltd. was organized in Nevada as an item's selling price on KinerjaMall.com minus the cost pricea wholly-owned subsidiary of the item sold, 90%Company (“KPAY Ltd”), which entity had no employees or operations and whose purpose was to PT. Kinerja Payestablish and 10%maintain a U.S. bank account to PT.IED. Thereceive cash proceeds from security purchase agreements and convertible debentures, which proceeds were: (i) transferred to its parent company; or (ii) used to pay expenses of the Company has not generated revenues as a resultor the wholly owned subsidiaries of this Corporation and Service Agreement.KinerjaPay Corp.

Our E-Commerce Portal KinerjaPay.com

Indonesia is the fourth largest country in the world in terms of population size with a GDP that surpassed $1 trillion in 2019, with more than 50% of its population under the age of 30, and yet with its citizens largely underserved by the banking industry and less than 10% of the population have credit cards. Our principalbusiness aim is to build a secure and convenient e-commerce ecosystem to customers and merchants through our introduction of services and products and services are:including: (i) our electronic payment service (the "EPS");service; and (ii) our virtual marketplace (the "Marketplace") both of which are available on ourthe portal, under the domain name KinerjaPay.com, (the "Portal"“Portal”). Our Android-based mobile app not only serves as an extension of desktop or laptopIn addition to access to the Portal, our website, but hasAndroid and iPhone  based mobile application includes additional in-app services that cater to mobile phone users such as social engagement and digital entertainment (the "Mobile App"“Mobile App”). A virtual marketplace, powered by our proprietary electronic payment service and gamified with in-app entertainment features, creates a one-stop-shop e-commerce platform for users to BUY, PAY and PLAY. We believe that in combining our EPS function ("PAY") with the ability to buy and sell products viabrand our virtual marketplace ("Buy") enhanced by aunder the name of KMALL, our electronic payment solution under the name of KPAY, and our gamification component ("Play") our customers and merchants are enticed to return more often and increase their loyalty to our services.

Fromfeatures under the name of KGAMES. Since the Company acquired licensing rights from PT Kinerja on December 1, 2015 the dateand established its wholly-owned subsidiary PT Kinerja Pay on April 6, 2016, we acquired the exclusive license, until April 11, 2016, the date that our Indonesian subsidiary was formed and we opened a bank account to conduct our operations in Indonesia, we were engaged inhave raised capital raising activities to fund our e-commerce business development and operations through: (i) private placements of equity securities offered in reliance on the exemptions under Regulation D (“Reg D”) and generated no revenues. WhileRegulation S (“Reg S”) promulgated by the RegistrantSecurities and Exchange Commission (“SEC”) under the Securities Act; and (ii) convertible debt financing from accredited investors in reliance upon Section 4(2) of the Securities Act and Reg D. The Company began operating activitiesgenerating sales revenue from the Portal in May 2016, it did not have in place the infrastructure to conduct billing and collections. We expect to generate revenues from sales of our Portal services during the second quarter of 2017.

On August 22, 2016, the Registrant's wholly-owned Indonesian subsidiary, PT Kinerja Pay Indonesia, entered into an addendum (the "Addendum"), effective as of July 1, 2016, between the Registrant and its subsidiary, on the one hand, and PT. Kinerja Indonesia. Pursuant to the Addendum, the Registrant's subsidiary agreed to utilize certain payment services of PT. Kinerja Indonesia as described below. The reason for entering into the Addendum was due to the fact that the PT. Kinerja Indonesia has already successfully established the requisite infrastructure for billing, collections, payments and related payment services (the "Payment Services") in the furtherance of its various businesses, including its e-Wallet and Web Portal business that were the subject of the License Agreement between the Registrant and PT Kinerja Indonesia dated December 1, 2015, in lieu of PT. Kinerja Pay devoting the time, efforts and resources to develop its own Payment Services, which the Registrant recently determined would not only delay its ability to timely commence billing and collections as well as be unnecessarily duplicative of the Payment Service infrastructure in place at PT Kinerja, but would also require incurring costs in hiring and maintaining additional personnel.

Pursuant to the terms of the Addendum, in consideration for the payment of an administrative fee of $200 per month, PT Kinerja Indonesia, our licensor, shall: (i) collect payments from the users of the licensed web portal, Kinerjapay.com, including cash deposits, bank transfers, debit cards payments, credit cards payments, and other forms of payment for transactions related to purchases or payments made for the use of PT. Kinerja Pay's licensed web portal; and (ii) distribute the appropriate payments to vendors, less the commissions chargeable for all transactions generated by the users while using the licensed web portal, kinerjappay.com, following receipt of payments made by the vendors, which commissions shall then be paid to our subsidiary, PT. Kinerja Pay Indonesia. As a result of the Addendum, our business model will enable us to generate revenues from the commission stream that should commence during the 2nd quarter of 2017.

Our Electronic Payment Service (PAY)

Through our

We provide electronic payment service to consumers and merchants using the technology licensed from PT Kinerja on the Portal and Mobile App, operated byApp. We completed the acquisition of our licensor and former parent company, PT Kinerja, Indonesia,we will provide EPS to consumersin August 2018 and, merchants. Our EPSas a result, P.T. Kinerja became our subsidiary and the licensing agreement was terminated. The electronic payment service is also known as KPAY, which provides an affordable, secure and reliableconvenient method to consumersfor money transfer, bill payment and merchants, as well as friendsonline transactions. Friends and family to pay andmay transfer money using electronic devices (e.g., mobile, tabletsanywhere and personal computers). In addition,anytime; consumers merchants and businesses of all sizes can accept payments from merchant websites and mobile devices. Our EPS service enables consumers to convenientlymay pay utility bills, phone bills, credit card paymentsbills and addtop up mobile phone credit to their cellmobile phone accounts. Weaccounts; merchants of all sizes may accept payments channelled through KPAY on their merchant websites. Our Company also developed a proprietary digital wallet software (“e-wallet”) that provides an easy, safe and secure way for individuals and businesses to make and receive payments on the Internet. Our e-wallet software, which provides usersan escrow payment service that reduces transaction risk for online consumers; shoppers can verify whether they are happy with the abilityproducts received before releasing funds to the seller.

The Company offers a service that enables users to process payments or transfer money directly using their bank, debit and credit card accounts on our Portal and marketplace. We also offer merchants an end-to-end payment solution that provides authorization and settlement capabilities, of which merchants can connect with their customers and manage collection risk. We have also introduced an application-generated token to confirm outgoing payments to enhance transaction security.

Virtual Marketplace (BUY)

We launched our virtual marketplace (“KMALL”) (during 2017 as a free platform for buyers to explore products and sellers to establish a low-cost online presence for their products from the local Indonesian market. Buyers and sellers can access KMALL from their electronic devices anytime and anywhere. KMALL features a “Max-3-Steps” concept aiming to streamline the shopping experience of buyers. Buyers complete EPS transactions safelya purchase transaction within three steps, by choosing an item, checking out and conveniently. Themaking a payment using their e-wallet actsunder KPAY.

In addition to the typical categories of consumer products offered similarly by other virtual marketplaces, KMALL differentiates itself from the competitors by offering computer-related goods and mobile phone prepaid vouchers. A large selection of computer-related goods serves to attract the younger generation which tends to be heavy users of electronic devices. Approximately 98% of Indonesian mobile-phone users use prepaid vouchers to top up phone credit and the size of the prepaid voucher market in Indonesia is estimated to be $4 billion according to a research conducted by AdPlus, a leading digital media network in Indonesia. By offering mobile phone prepaid vouchers on our virtual marketplace, we believe that KMALL can generate a substantial number of return customers to shop online with us.

Market Opportunity in Indonesia

Indonesia, the world’s fourth most-populous country, having a population of approximately 274 million as of its 2020 census, is rapidly becoming the major economic power in Southeast Asia. Over 50% of its population is below the age of 30 and the young Indonesian generation is highly adaptive to new technology. A combination of positive factors including the rapidly growing pool of internet users, the increase in discretionary spending among the middle class, and the increasing popularity of inexpensive smartphones and tablets, have pushed the Indonesian e-commerce market towards scalability and profitability. Indonesia’s e-commerce market is projected to reach $130 billion by 2020 only surpassed by China and India. According to a joint report released by idEA, Google Indonesia, and Taylor Nelson Sofres (TNS), the e-commerce market in Indonesia, where our business operates and where our principal marketing efforts are focused, is also the fastest growing in Southeast Asia. With an estimated annual growth rate of 50% in e-commerce business and strong mobile-first initiatives, Indonesia presents a unique opportunity for merchants and businesses to establish their online presence in the country with a service provider like us.

We believe that the current Indonesian e-commerce market resembles the early-stage Chinese e-commerce market, which is characterized by a large pool of entrepreneurial merchants offering a wide variety of consumer goods to buyers, and buyers rely heavily on social media recommendations to make their purchase decisions. In addition, Indonesian customers and merchants welcome the concept of electronic payment services and are anxious to adopt the technology which has been widely available in other sophisticated e-commerce markets such as the United States. We believe that our Company is well positioned, as an escrow account as paymentse-commerce business solution provider, to connect buyers and sellers seamlessly on KMALL, and provide an electronic payment solution KPAY to facilitate secure and convenient online transactions.

Competitive Advantages and Growth Opportunities

The KinerjaPay Core Pillars represents the competitive advantage of our Company. We believe that the successful integration of PAY, BUY and PLAY, will only be releasedenable our business to the seller once the buyer has received the product. As discussed elsewhere and throughout this annual report, our revenues will only be generated from the commissions we receivebecome an indispensable player in Indonesia’s e-commerce market. Our electronic payment service (“KPAY”), backed by strong proprietary technology from PT Kinerja Indonesia after payments are madeand connected with many third party business partners, acts as a secure and convenient payment channel for users to fulfil their day-to-day payment needs, ranging from the gross revenues receivedbill payment, money transfer, and online shopping; our virtual marketplace (“KMALL”), curates a unique baskets of goods and offers a free platform to connect buyers and sellers, armed with its “Max-3-Steps” check-out process and escrow services backed by PT Kinerja Indonesia.

Merchants will be paid transaction fees as follows: (i) 3.9% + $0.30 when senders fund payment transactions using PayPal; (ii) no fees when customers fund payment transactionsKPAY. To enhance user engagement, we complete KinerjaPay Core Pillars by electronic transfer of funds from a bank accounts;introducing gamification features (“KGAMES”), which allows users to entertain and (iii) fees of $0.25 to $0.50 per transaction if customers fund payment transactions by using a third-party payment gateway. Our fees, 5%, 95% and 0%, respectively, will be represented by transactions (i), (ii) and (iii), respectively. Our ability to successfully implementget rewards in our business plan and receive significant commissions from PT Kinerja Indonesiais dependent upon a preponderance of transactions being conducted by electronic transfer of funds from bank account but, as discussed below, a significant percentage of Indonesians do not maintain bank account.

Based upon published information, we believe that at present, approximately 35% of the Indonesian population has no bank account and these persons represent a significant target market of potential users for our EPS.e-commerce ecosystem.

Based on data from Alex.com,Alexa.com, a website analytics provider, customers for our PortalspendKinerjaPay.com users spend an average of 30 minutes on our Portal, which we believe is partly due to our unique gamification features. We believe this opens potentially significantBy further gamifying the e-commerce experience for our Portal users, we foresee monetizing opportunities for additional monetizationdirectly and enhanced revenues, which we will receive in the form of commissions.indirectly from our KGAMES features. We plan to expand our Portal functionality to offer advertising packagespartner with third-party game developers and develop proprietary games that curate to our merchantsuser experience on the Portal and partners.virtual marketplace. Users may transfer rewards from games and redeem in KMALL.

In building an e-commerce ecosystem from our KinerjaPay Core Pillars, we plan to continue strengthening our areas of excellence and exploring growth opportunities:

Since the formation of PT Kinerja SG, we began active planning of the new P2P micro-financing platform and, to date, we have received the requisite regulatory approvals and are implementing the launch of the P2P platform under the brand name of KFUND. We intentexpect KFUND to engage mobile publishersbe fully-operational during the fourth quarter of 2020 or the first quarter of 2021, the timing of which will depend on our cash flow from operations during such periods. KFUND will provide financing solutions to individuals, and small to medium-size enterprises in Indonesia, who currently lack access to financing from banks and other financial institutions which typically favor collateralized and/or larger projects with lower credit risk than the market we intend to serve. KFUND will connect individual and business borrowers and lenders via our proprietary online platform which the Company believes is in the final stages of development, following which we plan to: (1) build a credit rating process utilizing a proprietary credit rating methodology currently in development and partnering with a certified credit rating agency; (2) create a borrower acquisition strategy that reaches audience via online social media and offline sales effort in local communities. Potential lenders will have the opportunity to select a desired loan or a combination of several loans to invest in based on their risk appetite and preferred investment duration. KFUND will collect an average of 9% administration fees from each loan transaction. We understand the importance of compliance in the microlending space, and we are currently in the process of applying for required licenses, including ISO 27001, Information Security Management System certification. We believe that with the launch of KFUND business, we will reach another milestone in building our online ecosystem.

Company Subsidiaries and Collaboration Agreements

We carry out our business through the Company and three wholly-owned subsidiaries. This corporate structure allows us to simplify the accounting treatment, minimize taxation and optimize local grant support. The subsidiaries related to this business are as follows:

We have embarked on a strategy of collaborative arrangements and partnerships with strategically situated third parties around the world. We believe that these parties have the expertise, experience and strategic location to advance our e-commerce business.

Partnerships with businesses

At the end of March 2017, we started, in cooperation with third parties, providing monthly billing services to PLN customers which could serve potentially 10 million accounts nation-wide. PLN is an Indonesian government-owned corporation that has a monopoly on electricity generation and distribution in the country. During April 2017, we expanded our payment channel by cooperation with large state-owned companies in Indonesia such as GooglePT Pos Indonesia and Facebook to use our Portal as channel for advertising.

We provide our customers, through PT Kinerja Indonesia, with the option of using their account at our Portal to both purchase and be paid for goods,Pegadaian, as well as transferleading multi finance companies including Columbia Cash & Credit, Mega Auto Finance and withdraw funds. Our business plan isWOM Finance. In addition, beginning May 2017, we extended our payment channel to provide our customers with the capability of funding a purchase using a bank account, a credit or debit card account. We also plan to offer merchants an end-to-end payments solution that provides authorizationinclude minimart chains such as Indomaret and settlement capabilities. Our services provide merchants with the ability to connect with their customers and manage and hopefully minimize their collection risk. As discussed elsewhere in this annual report, the Company did not generate any revenues through its year-ended December 31, 2016 and there can be no assurance when it will begin to generate revenues. Notwithstanding the foregoing, we reasonably expect to begin to generate revenues during the 2nd quarter of 2017

Our Virtual Marketplace

We intend to launch our virtual marketplace during the first half of 2017Alfamart, as a free platform for buyers to explore and discover products and sellers to establish a low-cost online presence for their product. We link buyers and sellers of various products in our local Indonesian market. We organized and designed our Marketplace using our proprietary software to enable sellers to offer their products for sale and buyers to find and buy it virtually at great value anytime. Our Marketplace includes a "Max 3-Steps" concept to streamline the shopping experience. Users just choose an item, check out and make payment using an e-wallet function aimed accelerating the check out procedure and making the shopping experience more convenient.

well as PT 24 Jam Online. We believe that by expanding our Marketplacenetwork of payment channels with well-organized notable businesses, we will provide ourbe able to generate a significant number of new users for KinerjaPay.com to use KPAY, and serve the unbanked Indonesian customers and businesses, helping them to shop and pay bills quicker, safer, and more conveniently. In October 2017, we entered into a partnership with a safe and convenient wayglobal smartphone-enabled ‘Ride Hailing’ service, Uber Technologies, Inc.(“Uber”). Our partnership with Uber was intended to purchase whatever they are lookingbring promotional deals for in their local vicinity or nationwide.

Users may access our Marketplace anytime, anywhere through traditional devices such as desktop and laptop computers or from devices such as Smartphones and tablets using our Mobile App or our mobile-optimized website.

In additionKinerjaPay users to a typical online marketplace that offers a broad range of products, we try to differentiate ourselves by focusing on computer related products as well as mobile phone prepaid vouchers utilized by approximately 98% of Indonesia mobile users representing a prepaid voucher market size of approximately US$4B according to research conducted by AdPlus, a leading digital media network in Indonesia.

Our EPSuse Uber service and Marketplace combine enhanced functionality and gamification, which incorporates game-design elements and game principles in non-game contextsuse our payment solutions for ride payment processing. Due to the purposeacquisition of keeping our users more often and longer engaged with our services.

We plan to expand our Marketplace to include more items and more creative ways to attract customers in spending and exchanging their goods. More proprietary games will be offered with more attractive bonuses that can later be used to redeem in our Marketplace. We believe that our gamification component will entice consumers to return and increase their loyalty to our Portal and Marketplace.

PT Kinerja Indonesia, our licensor, will (i) collect payments from the users of the licensed web portal, Kinerjapay.com, including cash deposits, bank transfers, debit cards payments, credit cards payments, and other forms of payment for transactions related to purchases or payments made for the use of PT. Kinerja Pay's licensed web portal; and (ii) distribute the appropriate payments to vendors, less the commissions chargeable for all transactions generated by the users while using the licensed web portal, kinerjappay.com, following receipt of payments made by the vendors, which commissions shall then be paid to our subsidiary, PT. Kinerja Pay Indonesia.

Our Market Opportunity in Indonesia

Indonesia, the world's fourth most-populous country, having a population estimated to be 255 million people, is rapidly becoming the major economic power in theUber Southeast Asia region. Over 50% of its population is below the age of 30 and as a result, we believe that the young Indonesian population is highly adaptive to new technology. Indonesia's e-commerce growth rate has built-in factors such as fast increaseby GrabTaxi Holdings Pte. Ltd. (“Grab”) in year-to-year internet users and rapidly growing discretionary spending among the middle class. In addition, the rise of cheap Smartphones and tablets that sell for less than US$100 is rapidly broadening internet access and pushing the nascent Indonesian e-commerce market toward a critical point in terms of scale and profitability, in spite of significant challenges due to poor infrastructure and payment systems.March 2018, our partnership with Uber was not extended.

We believe that due to the aforementioned factors, among others, Indonesia will experience significant growth in e-commerce transactions. The number of internet users is excepted to double to 125 million by 2017 and Smartphone ownership is to rise from approximately 20 to 50% in the same period, the highest percentage compared to other Southeast Asian countries, according to Redwing, an advisory group located in Singapore.

The e-commerce market in Indonesia, where our business operates and where our initial marketing efforts will be focused, is reported to be the fastest growing in the Southeast Asian region. According to a joint report released by idEA, Google Indonesia, and Taylor Nelson Sofres (TNS), e-commerce market in Indonesia was expected to surpass US$25 billion in 2016.

Sales and Marketing

Our primary sales and marketing focus will be to emphasizeeffort emphasizes our key differentiator which we believe is combining our EPS option PAYfrom competitors – KinerjaPay Core Pillars, an e-commerce ecosystem that integrates electronic payment service with the ability to buy and sell products via our Marketplace BUYa virtual marketplace enhanced by gamification components. The emphasis of such will deliver a gamification componentmessage to potential users that they can PAY, BUY and PLAY which entices consumersat one place and thus achieve the marketing objective to returnattract new users and increase their loyalty to our Portal and Marketplace.enhance user engagement.

We expect to commence acommenced nationwide marketing campaigncampaigns to promote the Kinerjapay.com Portal and MarketplaceKinerjaPay.com to Indonesian consumers and merchants during the second quarter ofin 2017. We intend to use marketingMarketing techniques including advertisingused include online advertisement on Facebook®, YouTube®, Twitter®, AdWords®, AdChoices® and Instagram®. Early January 2017, the holiday campaigns held by KinerjaPay were able to help in securing a milestone of reaching 100,000 users. We also contemplate using otherlocalized our online and offline marketing programs sucheffort to target specific communities to attract new customers and merchants. Our user basis is currently approaching 200,000 users. 

Our services and products are marketed under the brand names as sale promotions, special deals, daily bonus, SMS and email promotion, events at malls and other creative sales and marketing techniques.follows:

We developed a referral program called MGM - Member Get Member, which is aimed at incentivizing current members to refer our platform to friends and family. In addition, we used venues such as online business workshops, promotional stands in shopping malls to acquire new merchants.

However, there can be no assurance that our marketing practices will continue to be successful notwithstanding any market awareness we have achieved to date, nor can there be any assurance whether our marketing efforts will produce significant revenues within the 2017 fiscal year.

However, there can be no assurance that our marketing campaign will continue to be successful notwithstanding any market awareness we have achieved to date, nor can there be any assurance whether our marketing efforts will produce significant revenues within the 2017 fiscal year. To the extent that our marketing campaign is successful and significant revenues are generated, revenues to our Indonesian subsidiary, PT Kinerja Pay Indonesia, will be derived from commissions we receive from PT Kinerja Indonesia, which has the requisite licenses to collect monies from transactions using our Portal.

Proprietary Technology, Domain Name and Licenses

We entered into a License Agreement with PT Kinerja Indonesia, a company incorporated under the laws of Indonesia and controlled by Mr. Ng, our CEO and controlling shareholder.

Pursuant to the License Agreement, we have been granted the license on an exclusive, world-wide basis to commercially exploit the KinerjaPay IP and its e-commerce payment portal website, www.KinerjaPay.com which containsare backed by proprietary technology including the application codes, infrastructure architecture, infrastructure design, and processes/sub-processes. Specifically, our proprietary technologies and intellectual property includes:sub-processes, integrated proprietary payment solutions, built-in marketplace and gamification concepts and modules. The License is in perpetuity but may be terminated by either the Company or PT Kinerja Indonesia if there is a material breach of any representation, warranty, covenant or agreement and the other party is not in material breach.

The success of our business is depended on the effectiveness of this License Agreement. We are a licensee and expect to be a licensee in the future.

We will endeavor to protect our propriety technology, domain name, customer base and trade secrets to the extent reasonably and commercially practicable because such protection may be considered asis critical to our success. To that end, weWe will rely principally on the laws in Indonesia and, to a lesser extent on available international protection, if any.

We plan to registerhave registered our domain name both domesticallynames, Kinerja Pay, Kmall and internationally, but have not yet done so, nor can there be any assurance that we will be ableKfund to do so or that such registration will be adequate.Ministry of Communication and Informatics of the Republic of Indonesia. As we expand our markets, we may seek to further protect our proprietary rights, to the extent that they may exist, a process that can be both expensive and time consuming and may not be successful. If we are unable to register or protect our domain name, we could be adversely affected in any jurisdiction in which our trademarks and/or domain names are not registered or protected.

From time to time, third parties may claim that we have infringed their intellectual property rights. The listing or sale by our users of items that allegedly infringe the intellectual property rights of rights owners, including pirated or counterfeit items, may harm its business.

Sources and availability of required equipment and bandwidth

The Company's wholly-owned subsidiary PT Kinerja Pay Indonesia has engaged PT Kinerja Indonesia, our Licensor, to provide all necessary R&D, technical support, servers, procurement/logistic and IT operational services, equipment bandwidth and other technology support.

Dependence on one or a few major customers

Our e-commerce portal is primarily used by individual customers. The company is not dependency on any dominant customers.

Research and Development

In 2015,

Because the industries in which the Company competes are characterized by rapid technological advances, the Company’s ability to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace. The Company continues to develop new technologies to enhance existing products and services, and to expand the range of its offerings through PT Kinerja Indonesia,R&D, licensing of intellectual property and acquisition of third-party businesses and technology.

Competition

We compete with various companies in each of our Licensor, we began developing a proprietary Beta version utilizing software programmersbusiness segments directly and indirectly.

Our electronic payment service (“KPAY”) competes directly with other electronic payment solution services and alternative payment gateways provided by banks or telecommunication companies. These are typical stand-alone payment service providers that depend on third-party e-commerce marketplaces to generate transaction flows.

We believe that our KPAY service differs from our competition in Indonesia. three major aspects:

Our researchvirtual marketplace (“KMALL”) competes directly with online B2B and development resulted in our launchingB2C shopping platforms and other offline channels including but not limited to, retailers, catalogs and classifieds. Direct competitive shopping platforms include Tokopedia, Bukalapak, Shopee, Lazada, and Blibli, etc. We mainly compete based on price, product selection and services.

Some of the beta versionprincipal competitive factors include:

We believe that our KinerjaPay website,KMALL differs from our competition in addition to an android-based mobile version. We continue to improve the functionality of our KinerjaPay website and expect to incur costs related to expanding our servers' capacity, network infrastructure, data center, and other security products.three major aspects:

Competition

We expect that our P2P lending business, KFUND, will face intense competition from established players in Indonesia. Some notable competitors include KoinWorks, Investree, Modalku, Danamas, Akseleran and Taralite. Top players have achieved annual revenue between two to three million US Dollars, with over one million active user accounts and annual loan disbursement of over $110 million. We expect our business from numerous venues. customer base will overlap significantly with top players in the market. Therefore, successful product differentiation and sophisticated technological interface will strengthen our competitive advantage in the industry. Our strategic focus will include the following:

We will needplan to continue to invest significant resources in technology and marketing to compete effectively. These expansions will require substantial expenditures, which may reduce our margins and may have a material adverse effect on our business, financial position, operating results and cash flows and reduce the market price of our common stock. Some competitors may have other alternative revenue sources and may therefore be able to allocate more resources to marketing, adopt more competitive fees and devote more resources to website, mobile platforms and applications and systems development than we can. Our competitors may be able to innovate faster and more efficiently, and new technologies may increase the competitive pressures if competitors offer more efficient or lower-cost services.

We believe that we have a better understanding of the local culture and commerce in Indonesia than foreign competitors.enhance user experience. We also believe that one of our unique competitive advantage is to better be able to operate under local regulatory authorities.

Customers can use competing online, mobile and offline channels including but not limited to, retailers, catalog and classifieds. Online shopping comparison websites (e. g. Shopping.com, Rakuten, Nextag.com, Pricegrabber.com, Shopzilla,) allow consumers to search the Internet for specified products. We plan to userefine search enginesengine optimization and use paid search advertising to help potential customers findincrease visibility of our website, but those sites may also send users to other shopping destinations.

We mainly compete on the basis of price, product selectionproducts and services. In addition,By deepening existing collaborative relationships with our partners and seeking for new partnerships, we face the following principal competitive factors:aim to reach more end users efficiently.

Ÿ ability to attract, retain and engage buyers and sellers;
Ÿ volume of transactions and price and selection of goods;
Ÿ trust in our electronic payment service;
Ÿ customer service;
Ÿ website, Mobile App and application ease-of-use and accessibility;
Ÿ reliability and security of our technology and system;
Ÿ reliability of payment; and
Ÿ level of service fees.

The e-commerce market in Indonesia has become very active only during the past several years with a few major companies that were funded by big institutional investors. To a lesser extent, there are local and a few regional companies that have entered the e-commerce market. The products being offered in the marketplace have typically been physical items across few different categories such as electronics and gadgetry, fashion items and household goods. These e-commerce entities typically are charging transaction fees of from 2% to 5% per transaction.

There has been a recent surge in competitors that focus on specific items or industries such as travel, fashion or consumable goods. At present, there are relatively few competitors operating in the market segments we operate, especially in mobile phone prepaid top up vouchers, a segment in which we may be one of the first and hope to be able to maintain our market dominate. We believe to be our fee structure to be very completive.

The also face intense competition for our electronic payment solution service from alternative payment gateways and comparable payment solution services that are provided by banks or telecommunication companies. These are typically stand-alone providers and depend on other marketplace platform to generate their payment or transaction service. We believe to differentiate ourselves by offering online transaction services with e-wallet features and our own Marketplace.

We may be unable to compete successfully against current and future competitors. Some current and potential competitors have longer operating histories, larger customer bases and greater brand recognition in other business and Internet sectors than we do.

Government Regulation

There are currently few laws or regulations in Indonesia that are specifically related to the sale of goods and services on the Internet.We currently are subject to Indonesian regulations in our role as a money transfer agent and are, therefore, subject to Indonesian electronic fund transfer and money laundering regulations. We received the requisite GeoTrust Certificate in March 2014 in which entire user transactions have been protected by 256-bit encryption. This is understood to provide a safe platform for online transaction. We believe to be in compliance with all existing Indonesian governmental regulations applicable to e-commerce operator that facilitate online transactions between sellers and buyers.

Any application of existing laws and regulations related to banking, currency exchange, online gaming, electronic contracting, consumer protection and privacy is at present unclear. Our potential liability in case our customers are in violation of any applicable laws on pricing, taxation, impermissible content, intellectual property infringement, unfair or deceptive practices or quality of services is also unclear. In addition, we may become subject to new laws and regulations directly applicable to the Internet or our specific e-commerce activities. Any existing or potential new legislation applicable to specific e-commerce activities could expose us to substantial liability, including significant expenses necessary to comply with these laws and regulations, and reduce and/or limit the use of the Internet on which we depend.

An increase in the taxation of e-commerce transactions may make the Internet less attractive for consumers and businesses, which could have a material adverse effect on our business, results of operations and financial condition.

To date, we have not incurred any compliance-related expenses related to us being in compliance with any governmental laws in Indonesia pertaining to the use of our e-commerce portal as a payment option for online shopping and other transactions.

Employees

As of December 31, 2019, we had an aggregate of 60 employees working at our Company and three operating subsidiaries. Mr. Edwin Witarsa Ng, has served as our CEO and Chairman since inception and Meigisonnata Widjaja,Windy Johan, had served as CFO of the Company and its subsidiaries from December 2017 until his resignation on April 27, 2020, at which date the Company appointed Mrs. Butet Evans as CFO. As of December 31, 2019, our CFO, constituteexecutive officers consisted on Mr. Edwin Ng and Mr. Windy Johan and constituted our management team, together withMr. Deny Rahardjo,with Mr. Deddy Oktomeo (“Mr. Oktomeo”), CEO of our wholly-owned Indonesian subsidiary.subsidiary, PT Kinerja Pay Indonesia, Mr. Christopher Danil, CEO of PT Kinerja Indonesia, Mr. Henful Pang, Commissioner of PT Kinerja Indonesia, and Mr. Anoki Kiyosyi, CEO of PT Kinerja SG. They are not obligated to contribute any specific number of hours per week to our operations and intentintend to devote only as much time as they deem necessary to the Company'sCompany’s affairs until such time that we generate significant revenues.our business scales and new business initiatives require to do so. We have not entered into employment agreements with Messrs. Ng,Widjaja or Rahardjo.

PT Kinerja Indonesia, our Licensor and controlled by Mr. Ng, provides all necessary R&D, technical support, procurement/logisticMr. Johan, Mr. Oktomeo, Mr. Danil, Mr. Pang and IT operational services and other technology support needed to operate our Portal. PT Kinerja Indonesia currently has 40 employees and plans to increase its staff to up to 80 people by end 2017 to manage our increasing transaction volume. In addition, PT KinerjaPay, our Indonesian subsidiary, is expected to hire approximately 5 employees, principally dedicated to our sales, marketing and billing and collection activities. The Company believes, based upon the availability of highly-skilled technical and sales people in Indonesia, that its Licensor will encounter no difficulties to hire and retain the personnel required to fulfill these positions.Mr. Kiyoshi. 

Our employees and the

The employees of our contractorPT Kinerja IndonesiaCompany and our subsidiaries are not subject to any collective bargaining agreement. We believe that we have good relations with our employees.

Transfer Agent

Our stock transfer agent is Transfer Online, Inc., with offices located at 512 SE Salmon Street, Portland, OR 97214. Their telephone number is (503) 227 2950, their fax number is (503) 227 6874, and their website is transferonline.com.www.transferonline.com.

Item 1A. Risk Factors.

Back to Table of ContentsCorporate and Available Information

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge though our website (https://www.kinerjapay.co/) as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). Except as otherwise stated in these documents, the information contained on our website or available by hyperlink from our website is not incorporated by reference into this report or any other documents we file, with or furnish to, the SEC.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider carefully the following risks described below, together with all of theand uncertainties in addition to other information in this Form 10-K,report in evaluating our company and its business before making a decision to invest inpurchasing shares of our company’s common stock. IfOur business, operating results and financial condition could be seriously harmed due to any of the following risks actually occurs, our business, financial condition and results of operationsrisks. You could suffer. In this case, the trading price of our common stock could decline and you may lose all or part of your investment in our common stock.due to any of these risks.

Risks Associated WithRelated to Our Business and Industry

Our Independent Registered Public Accounting Firm has expressed substantial doubt as

Although our financial statements have been prepared on a going concern basis, we must raise additional capital to fund our abilityoperations in order to continue as a going concern.

The audited financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern. We believe that in order to continue as a going concern, including the costs of being a public company, we will need approximately $30,000 per year simply to cover the administrative, legalcontinue to increase sales and accounting fees. We planrevenue to fund thesebusiness expenses, primarilyand support business expansion through cash flow, the sale of restricted shares of our Common Stock, and the issuance of convertible notes.

Based on our financial statements for

During the yearsyear ended December 31, 2016 and 2015, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. To date we have not generated any revenue.

During 2016,2019, we raised $1,105,000approximately $146,000 from the private sale of equity securities and raisedreceived net proceeds of approximately $585,000 to date during 2017. We expect to raise an additional $1.6 million during the next twelve months.$4,344,000 from issuance of convertible notes. There can be no assurance that we will continue to be successful in raising equity capital and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our plan of operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.

Our limited operating history does not afford investors a sufficient history on which to base an investment decision.

On December 1, 2015, we

Our existing electronic payment service and virtual marketplace businesses were granted an exclusive, world-wide licensefirst launched and operated by PT Kinerja Indonesia, our licensor, to KinerjaPay IP and its website, KinerjaPay.com, an e-commerce Portalthat provides users with the convenience of EPS for bill transfer and our Marketplace. The Portal was first launched by PT Kinerja Indonesia in February 2015 and only has a limited operating history. See the disclosure under "Description of Business"The Company initially utilized KinerjaPay IP and operated KinerjaPay.com through License Agreement entered into with PT Kinerja in the additional disclosure under "Risk Factors" below.December 2015 before acquiring PT Kinerja as a wholly-owned subsidiary in August 2018. As a result of its limited operating history of the Portalbusiness, and the Company’s short period of control over the subsidiary, the business may not generate revenues for usbreak-even or become profitable in the near future, if at all. If we are unable to reach profitability, our stock price would decline and our ability to continue to raise capital, either equity or debt, may be adversely effected.affected. The long-term revenuee-commerce market in Indonesia is emerging and income prospectsevolving; we may need an extended period of time to prove our business model in the local market and the market for electronic online payments have not been proven. Wereach long-term profitability and scalability, during which we will encounter risks and difficulties commonly faced by any early-stage companies in new and rapidly evolving markets.

We planwill need to make significant investment using our recently raised equityraise capital in order to realize our wholly-owned Indonesian subsidiary, PT Kinerja Pay Indonesia,business plan, the failure of which entitycould adversely impact our operations.

We are currently not profitable. For the fiscal year ended December 31, 2019 and as of the date of this report, we assessed our financial condition and concluded that our belief that in order to continue as a going concern, including the costs of being a public company, we will conduct allneed to continue to increase sales and revenue to fund business expenses, and support business expansion through the sale of restricted shares of our business activities relatedCommon Stock, and the issuance of convertible notes and otherwise need to out Portal. Notwithstanding our ability to having raised equityraise additional capital to date and our expectation to be able to raise up to an additional $1.6 million during the next twelve months, we may not be able to achieve profitability in the foreseeable future, if at all. Our ability to achieve profitability will depend on, among other things, market acceptance of our Portal and our ability to generate revenues and compete effectively with other e-commerce businesses operating in Indonesia and potentially in the wider Southeast Asian market. We cannot assure you that the relatively new marketfund business operations for our EPS and our Marketplace will remain viable in Indonesia. We expect to make substantial investments during the next 12 months to:

Ÿ Drive consumerfrom the date of this annual report. We had a net loss of approximately $19,948,000 for the year ended December 31, 2019. During the same period, cash used in operations was approximately $3,301,000, the working capital deficit and merchant awarenessaccumulated deficit as of December 31, 2019 were approximately $6,259,000 and $38,093,000, respectively. Management is unable to our EPSpredict if and Marketplace;
Ÿ Persuade consumers and merchants to sign up for and use our EPS product and use our Marketplace;
Ÿ Improve our system infrastructure to handle seamless processing of transactions;
Ÿ Continue to develop our Portal; and
Ÿ Broaden our customer base.

We may fail to implement successfully these objectives. This would adversely impact our ability to generate revenues. There can be no assurance at this time thatwhen we will be able to generate significant revenuespositive cash flow or achieve profitability. Without adequate funding or a significant increase in revenue, we may not be able to resume operations in the normal course of business or expand business development efforts in other strategic initiatives; we may not be able to invest in research and operate profitablydevelopment needed to upgrade technological infrastructure of our electronic payment service, virtual marketplace and gamification features; we may not be able to acquire additional businesses or form more collaborative relationships with third parties to gain market share in the e-commerce market. As of December 31, 2019, we had available cash resources of $95,972.

Overall, we have funded our cash needs: (i) primarily from the issuance of convertible debt instruments; (ii) to a lesser extent, through the private placement of equity securities to accredited investors in reliance upon the exemptions under Reg D and Reg S; and (iii) lastly through cash flow from our revenue-generating operations.

We expect to continue to finance our operations, acquisitions and develop strategic relationships, primarily by issuing equity or convertible debt securities, which could significantly reduce the percentage ownership of our existing stockholders. Furthermore, any newly issued securities could have rights, preferences and privileges senior to those of our existing common stock. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on existing stockholders’ ownership interest, which could cause the market price of our common stock to decline. We may also issue securities in our subsidiaries, and these securities may have rights or privileges senior to those of our common stock.

We may have difficulty obtaining additional funds as and when needed, and we may have to accept terms that would adversely affect our stockholders. In addition, any adverse conditions in the credit and equity markets may adversely affect our ability to raise funds when needed. Any failure to achieve adequate funding will delay our business plan executions and could lead to abandonment of one or more of our initiatives, as well as prevent us from responding to competitive pressures or take advantage of unanticipated acquisition opportunities. Any additional equity financing will likely be dilutive to stockholders, and certain types of equity financing, if available, may involve restrictive covenants or other provisions that would limit how we conduct our business or finance our operations.

We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

As of December 31, 2019, we had 62 employees, including our 2 executive officers and 60 persons working at our 3 Indonesian subsidiaries. As our marketing plans and business strategies develop, we may need to recruit additional managerial, operational, sales and marketing, financial, IT and other personnel. Future growth will impose significant added responsibilities on members of management, including:

Our future financial performance and our ability to scale our e-commerce business will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities. This lack of long-term experience working together may adversely impact our senior management team’s ability to effectively manage our business and growth.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services. There can be no assurance that the services of these independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we will have adequate working capitalcan find qualified replacements. In addition, if we are unable to meeteffectively manage our obligations as they become due. As discussed elsewhere in this annual report,outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our marketing plans to promote e-commerce business may be delayed, or terminated; our technological integrity of the IT system backing up KPAY, KMALL and KGAMES may be compromised, and we havemay not generated any recognizable revenues throughbe able to ensure the security of our year-ended December 31, 2016 and thereelectronic payment service or prevent system malfunction of the virtual marketplace. There can be no assurance that we will generate any significant revenues until the second half of fiscal 2017,be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, if at all. Investors must considerIf we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the riskstasks necessary to achieve our marketing, research, development, and difficulties frequently encounteredexpansion goals, and we may face loss and liability in connection with any deficiency in service caused by early stage companies, particularly in rapidly evolving markets. Such risks include the following:lack of capable personnel or errors made by third party contractors.

Ÿ We depend on key personnel who would be difficult to replace, and our business plans will likely be harmed if we lose their services or cannot hire additional qualified personnel.competition;
Ÿ need for acceptance

Our success depends substantially on the efforts and abilities of our Portal;
Ÿ ability to develop a brand identity;
Ÿ ability to anticipatesenior management, including Mr. Ng, our CEO and adapt to a competitive market;
Ÿ ability to effectively manage rapidly expanding operations;
Ÿ amountcontrolling shareholder, and timing of operating costscertain key personnel. The competition for qualified management and capital expenditures relating to expansion of our business, operations, and infrastructure; and
Ÿ dependence upon key personnel to market our product and theis intense. The loss of services of one or more of our key managers may adversely affectemployees, or the marketinginability to hire, train, and retain key personnel, could delay the development and sale of our product.services and products, disrupt our business, and interfere with our ability to execute our intended business plan.

We cannotplan to grant stock options or other forms of equity awards in the future as a method of attracting and retaining employees, motivating performance and aligning the interests of employees with those of our stockholders. There are currently no options and/or equity awards outstanding. If we are unable to adopt, implement and maintain equity compensation arrangements that provide sufficient incentives, we may be certain thatunable to retain our business strategy will be successful or thatexisting employees and attract additional qualified personnel. If we will successfully address these risks. In the event that we do not successfully address these risks,are unable to retain our existing employees, including qualified technical personnel, and attract additional qualified candidates, our business prospects, financial condition, and results of operations could be materially and adversely effected.affected.

Our revenuesrevenue will be dependent upon acceptance of our Portale-commerce services and products by the Indonesian Consumers. The failure of such acceptance will cause us to curtail or cease operations.

Uncertainty exists as to

We are uncertain whether our Portale-commerce services and products including KPAY, KMALL and KGAMES will be accepted by the Indonesian consumer.consumers and become commercial success. A number of factors may limit the market acceptance of our Portal, including services and products, including:

We may not be able to realize substantial streams of revenue from our offering of services and products if we lose market share in currently dominant market such as the mobile phone credit voucher business, or fail to increase market share in electronic payment portalsservice and the feesvirtual marketplace. We may incur significant amount of capital expenditure on research and development to exploit and commercialize KinerjaPay IP but never succeed despite of management’s effort.

Service interruption in PT Kinerja may harm our business operations.

We rely on our wholly-owned subsidiary PT Kinerja to provide substantially all technology support required for our services relative to alternative electronic payment servicesservice and otherpayment processing on our virtual marketplaces. There is a risk that potential customers and merchants will be encouragedmarketplace. If the operations of PT Kinerja are limited, restricted, curtailed or degraded in any way or become unavailable to continue to use other portals and/or electronic payment services instead.

Our revenues are expected to come from the sale of our Portal services. As a result, we will continue to incur operating losses until such time asusers for any reason, our revenues reach a mature level and we are able to generate sufficient cash flow to meet our operating expenses. There can be no assurance that the market will adopt our Portal. In the event that we are not able to successfully market and significantly increase the number of Portal users, or if we are unable to charge the necessary fees, our financial condition and results ofbusiness operations willmay be materially and adversely affected.

Software failures, breakdowns in the operations of the servers and communications systems upon which we must rely or glitches or malfunctions in our Portal technology could hurt our reputation, revenues and profitability.

Our success depends on the efficient and uninterrupted operation of the servers and communications systems owned and operated by PT Kinerja Indonesia, an entity controlled by our controlling shareholder and CEO, Mr. Ng. We have entered into an agreement with PT Kinerja Indonesia to operateoperates all of the servers, as well as providemanages the 1,500 square-feet data center located in North Sumatra, Indonesia, and provides hosting and maintenance services and theto all infrastructure systems upon which we rely. A failurerely on.

PT Kinerja’s operation is subject to a number of these systemsrisks that could materially and adversely impact its ability to provide payment processing and escrow services could impede our business by delays in processing of data, delivery of databasesto KPAY and services, client data and day-to-day management of our business. KMALL, including:

While all of our operations will have disaster recovery plans in place they might not adequately protect us.and we plan to carry property and business interruption insurance, preventive measures and insurance coverage may be inadequate. Despite any precautions we take and PT Kinerja Indonesia already has in place,undertake, damage from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, break-insnatural disasters, outbreak of war, escalation of hostilities, acts of terrorism, and similar events at theirPT Kinerja’s computer facilities could result in interruptions in the flow of data to our customers.users. In addition, any failure by the computer environment to provide our required data communications capacity could result in interruptions in our service. In the event of a server failure, we could be required to transfer our client/customeruser data operations to an alternative provider of server hosting services. Such a transfer could result in delays in our ability to deliver our services to our customers.customers and increased operating costs.

To

If glitches and errors interrupt user experience with our services, our Company may attract negative publicity and incur further cost to remedy the extent that glitches or errors cause our Portal to malfunction and our customers' use of our Portal is interrupted, our reputation could suffer and our potential revenues could decline or be delayed until such glitches or errors are remedied, which will not be within our control.situation. We may also be subject to liability forif the glitches and malfunctions.malfunctions cause breach of the security of user proprietary information. There can beis no assurance that despite the expertise of PT Kinerja Indonesia, glitches and/or errors in our service or new releases or upgradestechnical difficulties will not occur resulting in lossthe normal course of future revenues or delaybusiness of PT Kinerja. Resulting business consequences may include decrease in market acceptance of our services and products, loss of trust from our existing customers, diversion of development resources and management attention, damage to our reputation, potential litigation, orand increased service costs, any of which would have a material adverse effect upon our business, operating results and financial condition.

Long-term disruptions

Change in the Portal infrastructure provided by PT Kinerja Indonesia caused by events such as natural disasters, the outbreak of war, the escalation of hostilities and acts of terrorism, particularly involving locations in Indonesia for which we will have no control, could adversely effectCredit card associations rules may harm our e-commerce business. Although, we plan to carry property and business interruption insurance for our business operations, our coverage might not be adequate to compensate us for all losses that may occur.

We face risks related to the storage of customers' confidential and proprietary information.

Our Portal, which is maintained by PT Kinerja Indonesia, is designed to maintain the confidentiality and security of our customers' confidential and proprietary data that are stored on their server systems, which may include sensitive personal data. However, any accidental or willful security breaches or other unauthorized access to these data could expose us to liability for the loss of such information, time-consuming and expensive litigation and other possible liabilities as well as negative publicity which may be expected to adversely effect our business and operations. Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are difficult to recognize and react to. We rely on PT Kinerja Indonesia, which may be unable to anticipate these techniques or implement adequate preventative or reactionary measures.

We might incur substantial expense to further develop and commercially exploit our Portal which may never become sufficiently successful.

Our growth strategy requires the successful expansions of our e-commerce business. Although management will take every precaution to ensure that our Portal will, with a high degree of likelihood, achieve market acceptance and therefore commercial success, there can be no assurance that this will be the case. The causes for commercial failure can be numerous, including:

Ÿ market demand for our EPS and Marketplace proves to be smaller than we expect;
Ÿ competitive e-commerce providers, either presently operating in the Indonesian market or who are to join our market may have superior features, more competitive prices and/or fees, better performance and, as a result, greater market acceptance;
Ÿ further Portal development turns out to be more costly than anticipated or takes longer;
Ÿ our Portal requires significant adjustment to changing market conditions, rendering the Portal uneconomic or extending considerably the likely investment return period;
Ÿ additional regulatory requirements are imposed which increase the overall costs of running our Portal;
Ÿ Customers may be unwilling to adopt and/or use our Portal.

Card associationCredit card associations rules may change or certain practices could negatively affect our electronic payment service business and, if we do not complyincompliance with these rules couldmay result in our inability to accept credit cards.cards from our customers. If we are unable to accept credit cards, our competitive position would be critically damaged.

We are not a bank and as a result we are barred from belonging to andor directly access theany credit card associations or the bank payment network.networks. We must therefore rely on banks, credit card companies, and their respective service providers to process our transactions. We must comply with the operating rules of the credit card associations and bank payment networks as they apply to merchants.all merchants dealing on our Portal. The associations'association’s member banks set these rules, and the associations interpretassociation interprets the rules. Some of those member banks compete with us.us in providing electronic payment services to customers and businesses. Credit card associationsCard Association could adoptissue new operating rules or change interpretations of existing rules which we may find difficult or even impossible to comply with, in which case we could lose our ability to giveprovide customers with the option of using credit cards to support their payments. If we were unable to accept credit cardsprocess payments and thus lose our competitive position would be critically damaged.

We face considerable risks of loss due to fraudfinancial institutions and/or disputes between senders and recipients. If we are unable to deal effectively with losses from fraudulent transactions, our losses from fraud would increase, and our business would be materially adversely effected.

We face significant risks of loss due to fraud and disputes between senders and recipients, including:

Ÿ unauthorized use of credit cards and bank account information and identity theft;
Ÿ merchant fraud and other disputes;
Ÿ system security breaches;
Ÿ fraud by employees; and
Ÿ use of our system for illegal purposes.

When a sender pays a merchant for goods or services through our Portal using a credit card and the cardholder is defrauded or otherwise disputes the charge, the full amount of the disputed transaction gets charged back to us and our credit card processor levies additional fees against us, unless we can successfully challenge the chargeback. Chargebacks may arise from the unauthorized use of a cardholder's card number or from a cardholder's claim that a merchant failed to perform. If our chargeback rate becomes excessive, credit card associations also can require us to pay fines and could terminate our ability to accept their cards for payments. We cannot assure you that chargebacks will not arise in the future.

We have taken measures to detect and reduce the risk of fraud, but we cannot assure you of these measures' effectiveness. If these measures do not succeed, our business will be adversely effected.

We may incur chargebacks and other losses from merchant fraud, payment disputes and insufficient funds, and our liability from these items could have a material adverse effect on our business and result in our losing the right to accept credit cards for payment as a result of which our ability to compete could be impaired, and our business would suffer.

We may incur losses from merchant fraud, including claims from customers that merchants have not performed, that their goods or services do not match the merchant's description or that the customer did not authorize the purchase. Our liability for such items could have a material adverse effect on our business, and if they become excessive, could result in our losing the right to accept credit cards for payment.

Unauthorized use of credit cards and bank accounts could expose us to substantial losses. If we are unable to detect and prevent unauthorized use of cards and bank accounts, our business would suffer.

The highly automated nature of our Portal makes us an attractive target for fraud. In configuring our Portal technology, we face an inherent trade-off between customer convenience and security. We believe that several of our current and former competitors in the electronic payments business have gone out of business or significantly restricted their businesses largely due to losses from this type of fraud. We expect that technically knowledgeable criminals will continue to attempt to circumvent our anti-fraud systems. There can be no assurance that we will not incur chargebacks in the future.

Security and privacy breaches in our Portal may expose us to additional liability and result in the loss of customers, either of which events could harm our business and cause our stock price to decline.

Our inability, or the inability of PT Kinerja Indonesia, as the case may be, to protect the security and privacy of our electronic transactions could have a material adverse effect on our profitability. A security or privacy breach could:

Ÿ expose us to additional liability;
Ÿ increase our expenses relating to resolution of these breaches; and
Ÿ discourage customers from using our product.

The type and scale of electronic payments that we handle for our customers makes us vulnerable to employee fraud or other internal security breaches and, as a result, our business would suffer. We cannot assure you that our internal security systems will prevent material losses from employee fraud and that our system applications designed for data security will effectively counter evolving security risks or address the security and privacy concerns of existing and potential customers. Any failures in our security and privacy measures could have a material adverse effect on our business, financial condition and results of operations.

Our Portal might be used for illegal or improper purposes, which could expose us to additional liability and harm our business.

Despite measures we have taken to detect and prevent identify theft, unauthorized uses of credit cards and similar misconduct, our electronic online payment portal remains susceptible to potentially illegal or improper uses. These may include illegal online gaming, fraudulent sales of goods or services, illicit sales of prescription medications or controlled substances, software and other intellectual property piracy, money laundering, bank fraud, child pornography trafficking, prohibited sales of alcoholic beverages and tobacco products and online securities fraud. Despite measures we have taken to detect and lessen the risk of this kind of conduct, we cannot assure you that these measures will succeed. Our business could suffer if customers use our system for illegal or improper purposes.

In addition, we classify merchants who historically have experienced significant chargeback rates as higher risk. The legal status of many of these higher risk accounts is uncertain, and if these merchants are prohibited or restricted from operating in the future, our revenue from fees generated from these accounts would decline. Proposed legislation has been introduced in Indonesia that operation of an Internet gaming business, sales of alcoholic beverages and other activities violates Indonesian law, and to prohibit payment processors such as us from processing payments for those activities. If merchants accept these illegal activities, we could be subject to civil and criminal lawsuits, administrative action and prosecution for, among other things, money laundering or for aiding and abetting violations of law. We would lose the revenues associated with these accounts and could be subject to material penalties and fines, both of which would seriously harm our business.

We face substantial and increasing competition in the Indonesian e-commerce market.

The market in which we operate is intensely competitive. We currently and potentially compete with a wide variety of electronic payment providers and online and offline companies marketplaces providing goods and services to consumers and merchants . The Internet and mobile networks provide new, rapidly evolving and intensely competitive channels for electronic payment services and marketplaces to sell all types of goods and services. We compete in two-sided markets, and must attract both buyers and sellers to use our Marketplace. Consumers who purchase or sell goods through our Marketplace have more and more alternatives, and merchants have more channels to reach consumers. We expect competition to continue to intensify. Online and offline businesses increasingly are competing with each other and our competitors include a number of online and offline retailers with significant resources, large user communities and well-established brands. Moreover, the barriers to entry into these channels can be low, and businesses easily can launch online sites or mobile platforms and applications at nominal cost by using commercially available software or partnering with any of a number of successful e-commerce companies. As we respond to changes in the competitive environment, we may, from time to time, make pricing, service or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among users, which could reduce activity on our Portal and harm our profitability.

Some of our competitors are well known, more established and better capitalized than we are and we may be unable to establish market share. As such, they may have at their disposal greater marketing strength and economies of scale and, as they may have additional products and/or services at more competitive price. They may also have more resources to expend to create more innovative payment processing products in competition with ours. Accordingly, we may not be successful in competing effectively for market share.

The market we operate in emerging, intensely competitive and characterized by rapid technological change. We compete with existing electronic payment services and virtual marketplaces, including, among others:solution providers.

Ÿ Tokopedia
Ÿ Bukalapak
Ÿ Lazada
Ÿ Zalora
Ÿ OLX
Ÿ Blibli
Ÿ Payment processors such as Doku and Veritrans

Our competitors may respond to new technologies and changes in customer requirements faster and more effectively than we can. These competitors have offered, and may continue to offer, their services for free in order to gain market share and we may be forced to lower our prices in response.

Our status under certain Indonesian and international financial services regulation is unclear. Violation of or compliance with present or future regulation could be costly, expose us to substantial liability, force us to change our business practices or force us to cease offering our current product.

We operate in an industry subject to government regulation. We currently are subject to Indonesian regulations in our role as money transfer agent and are therefore subject to Indonesian electronic fund transfer and money laundering regulations. In the future, we might be subjected to:

Ÿ banking regulations;
Ÿ additional money transmitter regulations and money laundering regulations;
Ÿ international banking or financial services regulations or laws governing other regulated industries; or
Ÿ U.S. and international regulation of Internet transactions.

If we are found to be in violation of any current or future regulations, we could be:
Ÿ exposed to financial liability, including substantial fines which could be imposed on a per transaction basis and disgorgement of our profits;
Ÿ forced to change our business practices; or
Ÿ forced to cease doing business altogether or with the residents of one or more states or countries.

However, we cannot assure you that the steps we have taken to address any regulatory concerns will be effective. If we are found to be engaged in an unauthorized banking business, we might be subject to monetary penalties and might be required to cease doing business. Even if the steps we have taken to resolve any concerns are deemed sufficient by the regulatory authorities, we could be subject to fines and penalties for our prior activities. The need to comply with laws prohibiting unauthorized banking activities could also limit our ability to enhance our services in the future.

Our financial success will remain highly sensitive to changes in the rate at which our customers fund payments using credit cards rather than bank account transfers. Our profitability could be harmed if the rate at which customers fund using credit cards goes up.

We pay significant transaction fees when senders fund payment transactions using credit cards, nominal fees when customers fund payment transactions by electronic transfer of funds from bank accounts and no fees when customers fund payment transactions from an existing account balance with us. Senders may resist funding payments by electronic transfer from bank accounts because of the greater protection offered by credit cards, including the ability to dispute and reverse merchant charges, because of frequent flier miles or other incentives offered by credit cards or because of generalized fears regarding privacy or loss of control in surrendering bank account information to a third party.

We rely on financial institutions to process oura single bank for payment transactions. Should any of these institutions decide to stop processing our payment transactions, our business could suffer.processing.

Not being a bank, we cannot belong to and directly access the credit card associations or the bank payment network. As a result, we must rely on banks or their independent service operators to process our transactions.

Bank Central Asia ("BCA"(“BCA”) currently processes our bank transactions and our credit card transactions. BCA also provides payment processing services to some of our competitorcompetitors and offers credit card processing services directly to online merchants. If our cooperative relationship with BCA become unsustainable, we couldmay not obtain processing services onbe able to find alternative bank, credit card companies and other service providers quickly at acceptable terms to prevent any disruption in our service.

Increase in transactions processed by credit card may increase our transaction cost.

We pay significant amount of transaction fees depending on issuing banks’ policies, which ranges from 0% to 3% when payers fund payment transactions using credit cards, nominal fees when payers fund payment transactions by electronic transfer of funds from bank accounts, and no fees when payers fund payment transactions from an existing e-wallet account with us. Users may prefer funding payments by credit card because of certain protection and benefits offered by credit cards, including the ability to dispute and reverse merchant charges, offering cash reward and incentive programs. Our transaction fees may increase significantly which in turn squeeze our profit margin in electronic payment service if we could notincreasing number of users switch to another processor quickly and smoothly, our business could suffer materially.

Increases inusing credit card processing fees could increase our costs, affect our profitability, or otherwise limit our operations.as their preferred method of payment.

From time to time, creditCredit card associations increase the interchange fees that they charge for each transaction using their cards. Our credit card processors have the right to pass any increases in interchange fees on to us. Any such increased fees could increase our operating costs and reduce our profit margins.margin. Furthermore, our credit card processors require us to pledge cash as collateral with respect to our acceptance of certain credit cards and the amount of cash that we are required to pledge could be increasedincrease at any time.

We may incur liabilities and losses related to our electronic payment processing business; insurance coverage is expensive and difficult to obtain, we may be exposed to lawsuits and monetary penalties that will harm our business.

Our business exposes us to potential liability risks which are inherent in the e-commerce market. As we will take preventive measures we deem to be appropriate to avoid potential liability claims against us, there can be no assurance that we can avoid exposure to significant liability claims. Liability insurance for electronic payment processing industry is generally expensive. We also plan to obtain liability professional indemnity insurance coverage for our Portal services. There can be no assurance that we will be able to obtain such coverage on acceptable terms, or that any insurance policy will provide adequate protection against potential claims. A successful liability claim brought against us may exceed any insurance coverage secured by us and could have a material adverse effect on our results or ability to continue our business.

The loss of market share in the mobile phone credit top-up business or a change in mobile phone bill payment method could harm our business.

We believe that we can continue to remain one of the few participants in Indonesia providing mobile phone credit top-up service to our electronic payment service users. The business contributes a significant amount of revenue to our Company. During the year ended December 31, 2019, revenue generated from mobile phone credit top-up service amounted to $216,136. There can be no assurance that customers will continue to favor our service if other competitors offer more affordable and convenient payment options. If mobile service providers offer payment options using credit cards or bank accounts directly, our service may be obsolete and cause material adverse effect on our business, operating results and financial condition.

We may be unable to compete successfully against current and future competitors.

The e-commerce market in Indonesia has become very active only during the past several years with a few major companies that were funded by big institutional investors. Some current and potential competitors have longer operating histories, larger customer bases and greater brand recognition in other business and Internet sectors than we do. To a lesser extent, there are local and a few regional companies that have entered the e-commerce market. The products being offered in the marketplace have typically been physical items across few different categories such as electronics and gadgetry, fashion items and household goods. These e-commerce entities typically are charging transaction fees of from 2% to 5% per transaction.

Customer complaints or negative publicity about our product and customer service could affect use ofharm our product adversely and, as a result, our business could suffer.business.

Customer complaints or negative publicity about our Portalproducts and services could diminish consumer confidence intarnish our EPSreputation and Marketplace. Breachesdecrease customer confidence. Customer complaints may stem from system malfunction, server shutdown, breach of our customers' privacy, fraud, disputes around online transactions, and our security measures could have the same effect.inadequate customer service towards issues and disputes. Measures we sometimes take to combat risks of fraud and breaches of privacy and security, such as freezing customer funds, can damage relations with our customers. These measures heighten the need for prompt and accurate customer service to resolve irregularities and disputes. We may receive negative media coverage, as well as public criticism regarding customer disputes. Effective customer service requires significant personnel expense, and if not managed properly, could adversely impact our profitability significantly. The number ofbusiness. We expect to employ more customer service and sales representatives thatat PT Kinerja Indonesia employees is expected to increase from currently 5 throughout 2016.Kinerja. Any inability to manage or train our customer service representatives properly could compromise our ability to handle customer complaints effectively. If we do not handle customer complaints effectively, our reputation may suffer and we may lose our customers' confidence.customers’ confidence in our business.

We have limited experience in managing and accounting accurately for large amounts of customer funds. Our failure to manage these funds properly would harm our business.

Our ability to manage customer funds requires a high level of internal controls. We have neither an established operating history nor proven management experience in maintaining, over a long term, these internal controls. As our business continues to grow,With limited experience, we must strengthen our internal controls accordingly. Our success requires customer's confidencemay mishandle a single large transaction or encounter technical difficulty in our ability to handle large and growing transaction volumes and amountssurging volume of customer funds.transactions. Any failure to maintain controls over large amount of customer funds can hurt consumer confidence and drive away large merchants.

We face considerable risks of loss due to fraud and/or disputes between senders and recipients. If we are unable to deal effectively with losses from fraudulent transactions and user disputes, our losses would increase, and our business would be materially adversely affected.

We face significant risks of losses and liabilities to fraud and disputes between senders and recipients, including:

Illegitimate transactions can expose us to governmental and regulatory sanctions as well as potentially prevent us from satisfying our contractual obligations to our third party partners, which may cause us to be in breach of our obligations. The highly automated nature of our payments services may make us a target for illegal or improper uses, including fraudulent or illegal sales of goods or services such as alcoholic beverages, tobacco products, prescription medications, controlled substances, pirated software and intellectual properties, illegal online games, illegal activities such as money laundering, bank fraud, child pornography trafficking, online securities fraud, and terrorist financing.

In the event that a billing dispute between a buyer and a seller is not resolved in favor of the seller, including in situations where the seller engaged in fraud, the transaction is typically “charged back” to the seller and the purchase price is credited or otherwise refunded to the buyer. If we are unable to collect chargebacks or refunds from the seller’s account, or if the seller refuses to or is unable to reimburse us for chargebacks or refunds due to closure, bankruptcy, or other reasons, we may bear the loss for the amounts paid to the buyer. If our chargeback rate becomes excessive, credit card associations may require us to pay fines and could terminate our ability to accept their cards for payments.

In configuring our payments services, we face an inherent trade-off between security and customer convenience. We believe that several of our current and former competitors in the electronic payments business have gone out of business or significantly restricted their businesses largely due to fraudulent transactions. We expect that technically knowledgeable criminals will continue to attempt to circumvent our anti-fraud systems. Our current business and anticipated growth will continue to place significant demands on our risk management and compliance efforts, and we will need to continue developing and improving our risk management infrastructure, techniques, and processes. If our risk management policies and processes contain errors or are otherwise ineffective, we may suffer large financial losses, we may be subject to civil and criminal liability, and our business may be materially and adversely affected.

We have entered into collaborations and may form or seek collaborations or strategic alliances or enter into additional licensing arrangements in the future, and we may not realize the benefits of such alliances or licensing arrangements.

We may form or seek strategic alliances, create joint ventures or collaborations, or enter into additional licensing arrangements with third parties that we believe will complement or augment our development efforts with respect to our e-commerce business and any future products or services that we may develop. Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders, or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners for which the negotiation process is time-consuming and complex. Moreover, we may not be successful in our efforts to establish a strategic partnership because our e-commerce business may be deemed to be too early stage for collaborative effort and third parties may not view our business model as having the requisite potential to demonstrate security and scalability. Further, collaborations involving our services and products, are subject to numerous risks, which may include the following:

As a result, if we enter into collaboration agreements and strategic partnerships or license our products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership agreements or any unexpected termination of the existing relationships could cause loss of revenue streams and user base in the short term, and would harm our business prospects, financial condition, and results of operations.

We have established current business model by acquisitions of requisite technology infrastructure and intellectual properties; future acquisitions may not be successful or may not realize the long-term performance we expect from business integration.

Corporate and product acquisition is an important part of our growth strategy. We may not be able to identify suitable targets given the relatively narrow scope of our business. We may not be able to close an acquisition or lose to other competitors due to inadequate capital funding. If we make strategic acquisitions to expand our existing business lines or develop new business services or products, the target may be loss-making; we may incur significant operating expenses and capital expenditure which will adversely impact our financial results. The acquired business may compete directly or indirectly with one or more of our existing strategic partners or collaborators, thus negatively impacting other existing revenue streams. There is no assurance that we will be able to realize the expected benefits of synergies and growth opportunities in connection with these acquisitions. Acquisition could be dilutive to earnings, or in the event of acquisitions made through the issuance of commons stocks, may be dilutive to our existing shareholders.

New lines of business or new products and services may subject us to additional risks.

From time to time, we may implement new lines of business or offer new services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.

In forming PT Kinerja SG as a new wholly-owned subsidiary to develop our KFUND brand and enter the potentially highly profitable peer-to-peer micro-lending market, we estimate that the cost of becoming fully-operational in P2P lending with a significant presence, we will require a significant amount of capital. There can be no assurance that the we will be able to raise this amount at terms and conditions satisfactory to the Company, if at all, or that the P2P business if adequately funded will be successful in the near future, if at all. Failure to successfully launch the KFUND business, integrate it into our existing operations and manage risks related to the new business could have a material adverse effect on our business, results of operations and financial condition.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.

Our proprietary technology, domain name and licenses and other intellectual property rights are critical to our success. We rely on, and expect to continue to rely on, existing KinerjaPay IP backed by PT Kinerja, any proprietary technology developed internally and other intellectual property rights acquired through various third party collaborative relationships to build our continuing business and brand. However, various events outside of our control may pose a threat to our intellectual property rights, as well as to our products and services. Effective protection of our proprietary technology, domain names, and licenses is expensive and difficult to maintain, both in terms of application and maintenance costs, as well as the costs of defending and enforcing those rights. Our intellectual property rights may be infringed, misappropriated, or challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Our agreements with employees and third parties that place restrictions on the use and disclosure of any intellectual property rights may be insufficient or may be breached, or we may not enter into sufficient agreements with such individuals in the first instance, in either case potentially resulting in the unauthorized use or disclosure of our proprietary technology and other intellectual property, including to our competitors, which could cause us to lose any competitive advantage resulting from this intellectual property.

Cyber-attacks or other security breaches could have a material adverse effect on our business.

In the normal course of business, we collect, process and store certain personal and other sensitive information from users of our electronic payment service and virtual marketplace, which makes it an attractive target and potentially vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. While we have taken steps to protect the confidential information that we have access to, our security measures could be breached. Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to manageimplement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our platform could cause confidential borrower and lender information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with borrowers and lenders could be severely damages, we could incur significant liability and our business and operations could be adversely affected.

We face increasing competition in the Indonesian e-commerce market.

We compete in the Indonesian market, which is characterized by vigorous competition, changing technology, changing customer needs, evolving industry standards, and frequent introductions of new products and services. We expect competition to intensify in the future as existing and new competitors introduce new services or enhance existing services. We compete against many companies to attract customers, and some of these companies have greater financial resources and substantially larger bases of customers than we do, which may provide them with significant competitive advantages. These companies may devote greater resources to the development, promotion, and sale of products and services, and they may offer lower prices or more effectively introduce their own innovative products and services that adversely impact our growth. Mergers and acquisitions by these companies may lead to even larger competitors with more resources. We also expect new entrants to offer competitive products and services. Certain merchants have long-standing exclusive, or nearly exclusive, relationships with our competitors to accept payment cards and other services that we offer. These relationships may make it difficult or cost-prohibitive for us to conduct material amounts of business with them. Competing services tied to established brands may engender greater confidence in the safety and efficacy of their services. If we are unable to differentiate ourselves from and successfully compete with our competitors, our business will be materially and adversely affected. We may, from time to time, make adjustments to pricing, service scope or marketing strategies that are unwelcomed by our users as we respond to changing competitive landscape in the market, which could reduce activity on our Portal and harm our business.

Our notable competitors in the electronic payment services sector include payment processors such as Doku and Veritrans. Our notable competitors in the virtual marketplace sector include Tokopedia, Bukalapak, Shopee, Lazada, Zalora, OLX, and Blibli.

We have limited or no experience competing in certain international markets, where we hope to compete, beyond Indonesia.

We intend to expand our business in selected international markets, initially in the Southeast Asian region. We may face challenges in expanding our international and cross-border businesses and operations which may expose us to greater political, intellectual property, regulatory, exchange rate fluctuation and other risks. We will face risks associated with expanding into markets in which we have limited or no experience, in which we may be less well-known or have fewer available local resources and in which we may need to localize our business practices, culture and operations. We may be unable to attract a sufficient number of customers and other participants, fail to anticipate competitive conditions or face difficulties in operating effectively in these new markets. We may also face protectionist policies that could, among other things, hinder our ability to execute our business strategies and put us at a competitive disadvantage relative to domestic companies in other jurisdictions. The expansion of our international and cross-border businesses will also expose us to risks inherent in operating businesses globally, including:

Our business is subject to extensive regulation and oversight in a variety of areas, all of which are subject to change and uncertain interpretation.

We are currently subject to Indonesian electronic fund transfer and money laundering regulations in our capacity as a money transfer agent. As we seek to build a trusted and secure platform for e-commerce, and as we expand our network of users and facilitate their transactions and interactions with one another or otherwise evolve our products and services, we will increasingly be subject to laws and regulations relating to the payment processing, collection, use, retention, privacy, security, and transfer of information, including the personally identifiable information of our employees and users. In the future, we may be further subject to:

If we are found to be engaged in any unauthorized banking business, we may be subject to monetary penalties and be required to cease business. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business. In addition, if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including changes in laws, regulations, and industry standards or new interpretations or applications of existing laws, regulations, and standards, we may become subject to audits, inquiries, adverse media coverage, investigations, or criminal or civil sanctions, all of which may have an adverse effect on our reputation, business, results of operations, and financial condition.

It may be difficult to enforce a U.S. judgment against us, our officers and directors and the foreign persons named in this Annual Report on Form 10-K in the United States or in foreign countries, or to assert U.S. securities laws claims in foreign countries or serve process on our officers and directors and these experts.

While we are incorporated in the State of Delaware, currently a majority of our directors and executive officers are not residents of the United States, and the foreign persons named in this Annual Report on Form 10-K are located in Indonesia. Other than our cash assets held in our U.S. bank accounts, all of our operating assets are located outside the United States. Therefore, it may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions of the U.S. federal securities laws against us or any of these persons in a U.S. or foreign court, or to effect service of process upon these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities law claims in original actions instituted in foreign countries in which we operate. Foreign courts may refuse to hear a claim based on a violation of U.S. securities laws on the grounds that foreign countries are not necessary the most appropriate forum in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that foreign law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by foreign countries law. There is little binding case law in foreign countries addressing the matters described above.

Our reported financial statements and results may be materially and adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial statements and results and could materially and adversely affect the transactions completed before the announcement of a change. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes, and controls. Changes in any new standards may result in materially different financial statements and results and may require that we change how we process, analyze, and report financial information and that we change financial reporting controls.

Servicing our Notes may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to repay the Notes at maturity.

In consideration of the acquisition of PT Kinerja Indonesia in August 2018, the Company issued a Promissory Note of $1,200,000 with interest of 6.00% per annum. The note is due twenty-four months from August 31, 2018. Our ability to repay full principal with interest upon note maturity will depend on our ability to generate sufficient cash flow from operations and equity financing to fulfill debt repayment. Our inability to repay the note in full at maturity will lead to default and we may be responsible for additional cost related to collection and attorney fee. The Company currently runs working capital deficit as of December 31, 2019, we may not have sufficient funds to repay the indebtedness at maturity.

The conversion of some or all of our currently outstanding convertible notes in shares of our common stock will dilute the ownership interests of existing stockholders.

The conversion of some or all of our currently outstanding convertible notes in shares of our common stock will dilute the ownership interests of existing stockholders. As of December 31, 2019, we had $1,674,994 outstanding notes convertible into up to our common stock based on then applicable conversion prices, which are subject to adjustment based upon applicable discounts based upon the closing market price of our common stock on the respective dates of conversion. Each holder of the notes has agreed to a 4.99% beneficial ownership conversion limitation (subject to certain noteholders’ ability to increase such limitation to 9.99% upon 60 days’ notice to us), and each note may not be converted during the first six-month period from the date of issuance. Any sales in the public market of the common stock issuable upon such conversion or any anticipated conversion of our convertible notes into shares of our common stock could diminish customeradversely affect prevailing market prices of our common stock.

The outbreak of the coronavirus disease (COVID-19), and the resulting government-imposed quarantines, office closings and travel restrictions, may have a material adverse effect on our business, financial condition and results of operations. Many of these effects are not even completely known at this time.

On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.” As many United States jurisdictions have mandated quarantines and or “lockdowns” of businesses and organizations, this has resulted in an economic as a result of this unprecedented health crisis. The significant outbreak of COVID-19 has resulted in a widespread health crisis that are proving to adversely affect the economies and financial markets worldwide, and could adversely affect our business, results of operations and financial condition, including extended closures of offices in both the United States and Indonesia, and the inability to expand our business model and continue to raise capital, due to financial market instability, social distancing and concern over contracting COVID-19. The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations are yet unascertainable and cannot be predicted, including new information that may emerge concerning the severity of the COVID-19 pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of COVID-19 could therefore materially and adversely affect our business, financial condition and results of operations.

Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as “will,” “believes,” “expects,” “endeavor” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company’s periodic reports that are filed with the SEC and available on the SEC’s website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

Risks Related to Our Common Stock

If we issue additional shares in the future, it will result in the dilution of our Portal severely.existing stockholders.

Our articles of incorporation authorize the issuance of up to 35,000,000,000 shares of our common stock with a par value of $0.0001 per share. As of October 7, 2020, we have approximately 1,513,872,948 shares of Common Stock available for issuance. Our Board of Directors may choose to issue some or all of such shares for business acquisition and for funding of operations without stockholder approval. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current stockholders. Further, such issuance may result in a change of control of our company.

Our articles of incorporation authorize the issuance of up to 10,000,000 shares of our preferred stock with a par value of $0.0001 per share. Our Board of Directors is authorized to provide for the issuance of these unissued shares of preferred stock in one or more series, and to fix the number of shares and to determine the rights, preferences and privileges thereof. Accordingly, our Board of Directors may issue preferred stock which may convert into large numbers of shares of Common Stock and consequently lead to further dilution of other shareholders. As of October 7,  2020, 500,000 shares of Series B Preferred Shares, 200,000 of Series D Preferred Stock and 200,000 of Series E Preferred Stock were issued and outstanding.

We are subject to compliance with securities law, which exposes us to potential liabilities, including potential rescission rights.

We have offered and sold our Common Stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933 (the “Securities Act”), as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead, we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.

If any prior offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state statutes. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant fines and penalties imposed by the SEC and state securities agencies.

Mr. Ng, our Controlling Shareholder and Chairman controls approximately 51.1% of our common stock and may be able to influence the outcome of stockholder votes and their interests may differ from other stockholders.

As of October 7, 2020, Mr. Ng, our controlling stockholder, executive officer and director has voting control of 51.1% of our voting capital stock, consisting of 1,266,667 shares of our Common Stock (of which 400,000 shares of Common Stock pledged to secure loan to Mr. Ng) and 500,000 shares of Series B Preferred Stock entitled to a number of votes equal to 51% of all matters subject to vote by the holders of Common Stock. Subject to any fiduciary duties owed to our other stockholders under Delaware law, the stockholder may be able to exercise significant influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have some control over our management and policies. Some of these persons may have interests that are different from others. For example, these stockholders may support proposals and actions with which others may disagree. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price of our stock. In addition, these stockholders could use their voting influence to maintain our existing management and directors in office, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions. Reference is made to the disclosure under “Description of Our Capital Stock - Series B Preferred Stock” below.

We have never paid cash dividends and do not intend to pay dividends on any investments in the shares of stock of our Company in the foreseeable future.

We have never paid any cash dividends, and currently do not intend to pay any dividends for the foreseeable future. The Board of Directors has not directed the payment of any dividends and does not anticipate paying dividends on the shares for the foreseeable future and intends to retain any future earnings to the extent necessary to develop and expand our business. Payment of cash dividends, if any, will depend, among other factors, on our earnings, capital requirements, and the general operating and financial condition, and will be subject to legal limitations on the payment of dividends out of paid-in capital. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen, and investors may lose all of their investment in our company.

Our Common Stock is subject to the “Penny Stock” rules of the SEC and the trading market in our stock is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment.

The Securities and Exchange Commission (the “SEC”) has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempted, the rules require:

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Financial Industry Regulatory Authority, Inc. (“FINRA”) sales practice requirements may limit a shareholder’s ability to trade our Common Stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for some customers. FINRA requirements make it more difficult for broker-dealers to make a market, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our Shares.

Our stock is thinly traded, sale of your holding may take a considerable amount of time.

The shares of our Common Stock are traded on the OTCQB Market, meaning that the number of persons interested in purchasing our Common Stock at or near bid prices may be relatively small or non-existent. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. There can be no assurance that a broader or more active public trading market for our Common Stock will develop or be sustained. Due to these conditions, we can give you no assurance that you will be able to sell your shares at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.

Our share price could be volatile and our trading volume may fluctuate substantially.

The price of our Common Shares has been and may in the future continue to be extremely volatile. Many factors could impact future price of our common shares, including:

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Any substantial sales of our Common Stock pursuant to Rule 144 may have a material adverse effect on the market price of our Common Stock.

Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses.

In recent years, there have been several changes in laws, rules, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"“Dodd-Frank Act”), the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"(“Sarbanes-Oxley”) and various other new regulations promulgated by the SEC and rules promulgated by the national securities exchanges. The Dodd-Frank Act, enacted in July 2010, expands federal regulation of corporate governance matters and imposes requirements on publicly-held companies, including us, to, among other things, provide stockholders with a periodic advisory vote on executive compensation and also adds compensation committee reforms and enhanced pay-for-performance disclosures. While some provisions of the Dodd-Frank Act were effective upon enactment, others will be implemented upon the SEC'sSEC’s adoption of related rules and regulations. The scope and timing of the adoption of such rules and regulations is uncertain and accordingly, the cost of compliance with the Dodd-Frank Act is also uncertain.

In addition, Sarbanes-Oxley specifically requires, among other things, that we maintain effective internal control over financial reporting and disclosure of controls and procedures.

These and other new or changed laws, rules, regulations and standards are, or will be, subject to varying interpretations in many cases due to their lack of specificity. As a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Our efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. Further, compliance with new and existing laws, rules, regulations and standards may make it more difficult and expensive for us to maintain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. Members of our board of directors and our principal executive officer and principal financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business. We continually evaluate and monitor regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result.

Online payment processing liability is inherent in the industry and insurance is expensive and difficult to obtain, we may be exposed to large lawsuits.

Our business exposes us to potential liability risks, which are inherent in the e-commerce business. While we will take precautions we deem to be appropriate to avoid potential liability suits against us, there can be no assurance that we will be able to avoid significant liability exposure. Liability insurance for electronic payment processing industry is generally expensive. We plan to obtain liability professional indemnity insurance coverage for our Portal services. There can be no assurance that we will be able to obtain such coverage on acceptable terms, or that any insurance policy will provide adequate protection against potential claims. A successful liability claim brought against us may exceed any insurance coverage secured by us and could have a material adverse effect on our results or ability to continue our Portal.

We may need to raise additional capital to fund continuing operations and an inability to raise the necessary capital or to do so on acceptable terms could threaten the success of our business.

We currently anticipate that our available capital resources will not be sufficient to meet our expected working capital and capital expenditure requirements for the year ended December 31, 2017. We anticipate that we may require an additional funding during the remainder of 2017. However, such resources may not be sufficient to fund the long-term growth of our business.

Any additional equity financing may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our Shares. Debt or equity financing may subject us to restrictive covenants and significant interest costs. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product or marketing territories. If we are unable to obtain financing necessary to support our operations, we may be required to defer, reduce or eliminate certain planned expenditures or significantly curtail our operations.

We may need to increase the size of our organization, and may experience difficulties in managing growth.

At present, we are a small company. We expect to experience a period of expansion in headcount, infrastructure and overhead and anticipate that further expansion will be required to address potential growth and market opportunities. Future growth will impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate new managers. Our future financial performance and its ability to compete effectively will depend, in part, on its ability to manage any future growth effectively.

The loss of key personnel could adversely affect our business. We may not be able to hire and retain qualified personnel to support our growth.

Our success depends to a significant extent upon Mr. Edwin Ng, our CEO and controlling shareholder, and other key personnel that we expect to join us during the remainder of 2017. The loss of the services of such personnel and the inability to hire and retain of such personnel could adversely affect our business and our ability to implement our growth plan. We cannot assure you that the services of the members of our management team will continue to be available to us, or that we will be able to find a suitable replacements. We do not have key man insurance on any members of our management team. If any member of our management team were to die and we are unable to replace them for a prolonged period of time, we may be unable to carry out our long term business plan and our future prospect for growth, and our business, may be harmed. Our success is dependent upon our ability to attract, train, manage and retain qualified personnel. There is substantial competition for qualified personnel, and an inability to recruit or retain qualified personnel may impact our ability to implement our strategy to grow our business.

We plan to grant stock options or other forms of equity awards in the future as a method of attracting and retaining employees, motivating performance and aligning the interests of employees with those of our stockholders. There are currently no options and/or equity awards outstanding. If we are unable to adopt, implement and maintain equity compensation arrangements that provide sufficient incentives, we may be unable to retain our existing employees and attract additional qualified candidates. If we are unable to retain our existing employees, including qualified technical personnel, and attract additional qualified candidates, our business and results of operations could be adversely effected.

We may not be able to successfully expand our business through acquisitions.

We review corporate and product acquisitions as a part of our growth strategy. If we decided to undertake an acquisition, we may not be able to successfully integrate it in order to realize the full benefit of such acquisition. Factors which may affect our ability to grow successfully through acquisitions include:

Ÿ inability to identify suitable targets given the relatively narrow scope of our business;
Ÿ inability to obtain acquisition or additional working capital financing due to our financial condition;
Ÿ difficulties and expenses in connection with integrating the acquired companies and achieving the expected benefits;
Ÿ diversion of management's attention from current operations;
Ÿ the possibility that we may be adversely affected by risk factors facing the acquired companies;
Ÿ acquisitions could be dilutive to earnings, or in the event of acquisitions made through the issuance of our common shares to the shareholders of the acquired company, dilutive to our existing shareholders;
Ÿ potential losses resulting from undiscovered liabilities of acquired companies not covered by the indemnification we may obtain from the seller; and
Ÿ loss of key employees of the acquired companies.

We have limited experience competing in international markets, where we hope to compete, beyond Indonesia. Our international expansion plans will expose us to greater political, intellectual property, regulatory, exchange rate fluctuation and other risks, which could harm our business.

We intend to expand use of our EPS and Marketplace in selected international markets, initially in the Southeast Asian region. If we are unable to execute our expansion into international markets, our business could suffer. Accordingly, we anticipate devoting significant resources and management attention to expanding international opportunities. Expanding internationally subjects us to a number of risks, including:

Ÿ greater difficulty in managing foreign operations;
Ÿ expenses associated with localizing our products, including offering customers the ability to transact business in major currencies in addition to the Indonesian Rupiah;
Ÿ laws and business practices that favor local competitors;
Ÿ multiple and changing laws, tax regimes and government regulations;
Ÿ foreign currency restrictions and exchange rate fluctuations;
Ÿ changes in a specific country's or region's political or economic conditions; and
Ÿ differing intellectual property laws.

Risks Related to Our Common Stock

We are subject to compliance with securities law, which exposes us to potential liabilities, including potential rescission rights.

We have offered and sold our Common Stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act of 1933, as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We have not received a legal opinion to the effect that any of our prior offerings were exempt from registration under any federal or state law. Instead, we have relied upon the operative facts as the basis for such exemptions, including information provided by investors themselves.

If any prior offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption from the registration or qualification provisions of such state statutes. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which it has relied, we may become subject to significant fines and penalties imposed by the SEC and state securities agencies.

Edwin Ng, our Control Shareholder and Chairman owns approximately 37% of our common stock and may be able to influence the outcome of stockholder votes and their interests may differ from other stockholders.

As of April 28, 2017, our control shareholder, executive officer and director beneficially owns 3,000,000 shares of our Common Stock representing approximately 35% of our outstanding Shares, excluding Shares underlying options and warrants. Subject to any fiduciary duties owed to our other stockholders under Delaware law, these stockholders may be able to exercise significant influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have some control over our management and policies. Some of these persons may have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price of our stock. In addition, these stockholders could use their voting influence to maintain our existing management and directors in office, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions.

The availability of a large number of authorized but unissued shares of Common Stock may lead to dilution of existing stockholders.

We are authorized to issue 500,000,000 shares of Common Stock, $0.0001 par value per share. As of April 28, 2017, we have approximately 491,372,964 shares of Common Stock available for issuance. Additional shares may be issued by our board of directors without further stockholder approval. The issuance of large numbers of shares, possibly at below market prices, is likely to result in substantial dilution to the interests of other stockholders. In addition, issuances of large numbers of shares may adversely affect the market price of our Common Stock.

Our Certificate of Incorporation, as amended, authorizes 10,000,000 shares of preferred stock, $0.0001 par value per share none of which are issued and outstanding to date. The board of directors is authorized to provide for the issuance of these unissued shares of preferred stock in one or more series, and to fix the number of shares and to determine the rights, preferences and privileges thereof. Accordingly, the board of directors may issue preferred stock which may convert into large numbers of shares of Common Stock and consequently lead to further dilution of other shareholders.

We have never paid cash dividends and do not anticipate doing so in the foreseeable future.

We have never declared or paid cash dividends on our common shares. We currently plan to retain any earnings to finance the growth of our business rather than to pay cash dividends. Payments of any cash dividends in the future will depend on our financial condition, results of operations and capital requirements, as well as other factors deemed relevant by our board of directors.

Our Common Stock is subject to the "Penny Stock" rules of the SEC and the trading market in our stock is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

Ÿ That a broker or dealer approve a person's account for transactions in penny stocks; and
Ÿ The broker or dealer receives a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

Ÿ Obtain financial information and investment experience objectives of the person; and
Ÿ Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

Ÿ Sets forth the basis on which the broker or dealer made the suitability determination; and
Ÿ That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Financial Industry Regulatory Authority, Inc. ("FINRA") sales practice requirements may limit a shareholder's ability to trade our Common Stock.

In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for some customers. FINRA requirements make it more difficult for broker-dealers to make a market, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our Shares.

Our stock is thinly traded, sale of your holding may take a considerable amount of time.

The shares of our Common Stock are thinly-traded on the OTCQB Market, meaning that the number of persons interested in purchasing our Common Stock at or near bid prices may be relatively small or non-existent. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. There can be no assurance that a broader or more active public trading market for our Common Stock will develop or be sustained. Due to these conditions, we can give you no assurance that you will be able to sell your shares at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of Common Stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Any substantial sales of our Common Stock pursuant to Rule 144 may have a material adverse effect on the market price of our Common Stock.

If we fail to maintain effective internal controls over financial reporting, the price of our Common Stock may be adversely affected.

Our internal control over financial reporting may have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our Common Stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, financial condition or results of operations. In addition, management'smanagement’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses that need to be addressed in our internal control over financial reporting or disclosure of management'smanagement’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely manner, our business could be harmed and our stock price could decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require an annual assessment of internal controls over financial reporting, and for certain issuers an attestation of this assessment by the issuer's independent registered public accounting firm. The standards that must be met for management to assess the internal controls over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards.

We expect to incur expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In addition, although attestation requirements by our independent registered public accounting firm are not presently applicable to us, we could become subject to these requirements in the future and we may encounter problems or delays in completing the implementation of any resulting changes to internal controls over financial reporting. In the event that our Chief Executive Officer or Chief Financial Officer determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how the market prices of our shares will be affected; however, we believe that there is a risk that investor confidence and share value may be negatively affected.

Our share price could be volatile and our trading volume may fluctuate substantially.

The price of our Common Shares has been and may in the future continue to be extremely volatile, with the sale price fluctuating from a low of $0.02 to a high of $1.20 since 2013. Many factors could have a significant impact on the future price of our common shares, including:

Ÿ our inability to raise additional capital to fund our operations;
Ÿ our failure to successfully implement our business objectives and strategic growth plans;
Ÿ compliance with ongoing regulatory requirements;
Ÿ market acceptance of our product;
Ÿ changes in government regulations; and
Ÿ actual or anticipated fluctuations in our quarterly financial and operating results; and the degree of trading liquidity in our common shares.

Our annual and quarterly results may fluctuate, which may cause substantial fluctuations in our common stock price.

Our annual and quarterly operating results fluctuate and may not predict our future performance accurately. Variability in our future performance could cause our stock price to fluctuate and decline.

We expect our annual and quarterly results will fluctuate in the future fluctuate significantly depending on factors including the volumeas a result of electronic transactions, new Portal updates by us and other competitors, gain or loss of significant customers, pricing of our Portal fees, the timing of expenditures and economic conditions. Revenues related to our electronic payment processing are required to be recognized upon satisfaction of all applicable revenue recognition criteria. The recognition of revenues from our Portal fees is dependent on a numbervariety of factors, including, but not limited to, the termsmany of any license agreement and the timingwhich are beyond our control. These factors include:

As a result, period-to-period comparisons of Portal transactions by our customers.

Any unfavorable change in these or other factors could have a material adverse effect on our operating results for a particular quarter or year, which may cause downward pressurenot be meaningful, and you should not rely on them as an indication of our common stock price. We expect quarterly and annual fluctuations to continue for the foreseeable future.future performance.

Delaware law contains provisions that could discourage, delay or prevent a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our stock.

Provisions in our certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders may consider favorable. For example, our certificate of incorporation authorizes our board of directors to issue up to ten million shares of "blank check"“blank check” preferred stock without further stockholder approval. The board of directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire us.

We are also subject to the anti-takeover provisions of the DGCL.Delaware General Corporation Law (“DGCL”). Under these provisions, if anyone becomes an "interested“interested stockholder,"” we may not enter into a "business combination"“business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change in control of us. An "interested stockholder"“interested stockholder” is, generally, a stockholder who owns 15% or more of our outstanding voting stock or an affiliate of ours who has owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in the DGCL.

Our quarterly operating results fluctuate and may not predict our future performance accurately. Variability in our future performance could cause our stock price to fluctuate and decline.

We expect our quarterly results will fluctuate in the future as a result of a variety of factors, many of which are beyond our control. These factors include:

Ÿ changes in our costs, including interchange and transaction fees charged by credit card associations, and our transaction losses;
Ÿ changes in our pricing policies or those of our competitors;
Ÿ relative rates of acquisition of new customers;
Ÿ seasonal patterns, including increases during the holiday season;
Ÿ delays in the introduction of new or enhanced services, software and related products by us or our competitors or market acceptance of these products and services; and
Ÿ other changes in operating expenses, personnel and general economic conditions.

As a result, period-to-period comparisons of our operating results may not be meaningful, and you should not rely on them as an indication of our future performance.

ItemITEM 1B. Unresolved Staff Comments.Back to Table of ContentsUNRESOLVED STAFF COMMENTS

None.

ItemITEM 2. Properties.Back to Table of ContentsPROPERTIES

Our

From December 2015 through March 2020, our principal office is located at J1. Multatuli, No. 8A, Medan, Indonesia 20151. Our telephone number is +62-819-6016-168. Our20151 and our offices consistconsisted of approximately 4,000 square feet of executive offices and sales and marketing space. The land and building space areof our principal office were owned by P.T. Kinerja and provided to usthe Company on a rent-free basis by PT Kinerjauntil the property was sold to an unrelated third party in March 2020 for net proceeds of $803,571. Subsequent to the year-ended December 31, 2019, following the sale of the property, we moved our offices to leased offices located at Green Park Blok Olive A No. 48, Jl. Suka Cerdas, Medan Johor, Indonesia, and weconsisting of 4,000 square feet, which are leased from an unrelated third party at an annual rental of $5,000. We believe that these facilities will be sufficient for the next twelve months.

We believe that our facilities are generally in good condition and suitable to carry on our business. We also believe that, if required, suitable alternative or additional space will be available to us on commercially reasonable terms.

Reference is made to Note 12 - Subsequent Events, with respect to the use of the net proceeds from the sale of the property.

ItemITEM 3. Legal Proceedings.Back to Table of ContentsLEGAL PROCEEDINGS

There

We are nonot involved in any pending legal proceedings that we anticipate would result in a material adverse effect on our business or operations.  

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The common stock of KinerjaPay Corp. trades on the OTCQB under the symbol “KPAY”. On October 6, 2020, the closing price of our common stock reported by the OTC Markets was $0.0009 per share.

Holders of record

As of October 7, 2020, there were approximately 137 beneficial holders of record of our common stock. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial holders represented by these record holders. 

Dividends

Payment of dividends and the amount of dividends depend on matters deemed relevant by our Board, such as our results of operations, financial condition, cash requirements, future prospects and any limitations imposed by law, credit agreements and debt securities. To date, we have not paid any cash dividends or stock dividends on our common stock. We currently anticipate that we will not pay any cash dividends in the foreseeable future. Furthermore, the terms of any financing arrangements that we may enter into may restrict our ability to pay any dividends.

Securities Authorized for Issuance under Equity Compensation Plans

Not applicable.

Unregistered Sales of Equity Securities

During the fiscal year ended December 31, 2019, our financing activities consisted of the following:

Issuance of Shares of Preferred Stock

On January 15, 2019, the Company issued 200,000 shares of Series D Preferred Shares to the shareholders of FRS Lending, Inc., a Delaware corporation (“FRS”) in consideration for the acquisition by the Company of 100% of the capital stock of FRS, which shall operate on behalf of and provide the Company with services related to the Company’s lending and micro-lending activities and related lending services in the U.S., Indonesia and internationally, which is a newly developing division that the Corporation is planning to devote resources to grow its operations. The fair value of the consideration was calculated at $2,372,945, based on 10% of the fully diluted common shares of the Company as of the date of issuance. The agreement also includes an employment agreement with a three-year term. The consideration issued in the acquisition has been recognized as consideration related to the employment agreement and is being amortized over the three-year term of the employment agreement, with the unamortized balance recognized as prepaid expense.

On January 15, 2019, the Company issued 200,000 shares Series E Preferred Shares to the Company’s CEO and Chairman, Edwin Ng as compensation for services related to the negotiation with PT. Investa Wahana Group for the commitment agreement for the subscription of preferred stock. The fair value of the compensation was calculated at $3,559,417, based on 15% of the fully diluted common shares of the Company as of the date of issuance.

Issuance of Shares of Common Stock and Warrants for Cash

On March 19, 2019, the Company received $70,000 through a placement of 140,000 common stock units to an investor for an offering price of $0.50 per unit. Each unit consists of one share of common stock and one warrant to purchase common stock. The 140,000 warrants are exercisable at $1.00 and expire two years from the date of issuance. The common stock related to the units were not issued upon the unit purchase and were recognized as stock payable.

During the second quarter of 2019, the Company received $76,374 for the sale of 59,000 shares of common stock. The common stock was not issued upon purchase and was recognized as stock payable.

On November 7, 2019, effective as of May 7, 2019, the Company issued the 199,000 shares of common stock that had been previously been recognized as stock payable.

Issuance of Shares upon Warrant Exercise

During the year ended December 31, 2019, on three occasions, there was a total of 7,243,132 shares of common stock issued under cashless exercises of warrants that had been issued in connection with convertible debentures (see discussion of convertible note agreements below).

Issuance of Shares upon Conversion

During the year ended December 31, 2019, the Company issued 63,395,488 shares of common stock upon conversion of $3,332,970 of principal and accrued interest on their convertible debentures (see discussion of convertible note agreements below).

Issuance of Shares of Common Stock for Services

On January 10, 2019, the Company issued a total of 3,200,000 restricted shares to various third parties for consulting services valued at $883,200 based upon the market price of the shares of $0.28 on the date of issuance.

On January 15, 2019, the Company issued 250,000 restricted shares to a third party for consulting services already provided, valued at $155,000 based upon the market price of the shares of $0.62 on the date of issuance.

On March 10, 2019, the Company entered into a consulting agreement to issue 400,000 restricted shares to a third party for consulting services to be provided over the year term of the consulting agreement, valued at $200,000 based upon the market price of the shares of $0.50 on the date of the agreement.

On April 2, 2019, the Company issued a total of 300,000 restricted shares to a third party for consulting services already provided, valued at $180,000 based upon the market price of the shares of $0.60 on the date of issuance.

On May 23, 2019, the Company issued 150,000 fully vested common shares to a third party for consulting services in accordance with the terms of a consulting agreement dated April 17, 2019. The shares were valued at $63,000 based upon the market price of the shares of $0.42 on the date of issuance. An additional 100,000 shares were issued on June 7, 2019, valued at $24,000, based upon the market price of the shares of $0.24 on the date of issuance.

On June 6, 2019, the Company entered into a consulting agreement to issue 500,000 restricted shares to two parties, for consulting services to be provided over the year term of the consulting agreement, valued at $115,000 based upon the market price of the shares of $0.23 on the date of the agreement. The fair value of the shares was recognized in Prepaid assets and the expense will be recognized over the term of the agreement.

On July 2, 2019, the Company issued 450,000 shares to consultants for services, with a fair value of $211,500, based on the fair value of the Company’s common stock on the date of the consulting agreements.

On October 1, 2019, the Company entered into consulting agreements to issue 300,000 restricted shares each to two parties for a total of 600,000 restricted shares, for consulting services to be provided over the fifteen month term of the consulting agreements, valued at $66,000 based upon the market price of the shares of $0.11 on the date of the agreement. The fair value of the shares will be recognized in prepaid assets and the expense will be recognized over the term of the agreement.

On October 2, 2019, the Company issued an additional 800,000 restricted shares to a third party for consulting services already provided pursuant to a consulting agreement dated November 14, 2017, valued at $88,000 based upon the market price of the shares of $0.11 on the date of issuance.

On October 15, 2019, the Company issued an additional 1,750,000 restricted shares to three separate third parties for consulting services under amendments to previously issued consulting agreements, valued at $157,500 based upon the market price of the shares of $0.09 on the date of issuance.

Treasury stock

During the year ended December 31, 2019, the Company bought back 616,000 shares of their common stock for $86,340.

Convertible Note Agreements

On January 2, 2019, the Company executed an 12% convertible promissory note payable to an accredited investor in the principal amount of $43,000, which is due on October 30, 2019. In an event of default as set forth in the note, the interest rate increases to a default amount of 22%, and the default sum due becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. The note is convertible during first 180 days after issuance at a fixed conversion price of $1.75. After the initial conversion period, the conversion price shall equal the lesser of: (i) the fixed price; and (ii) 61% multiplied by the market price (as defined in the note). Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. The conversion feature does not meet the definition of a party or in which any Director, officer or affiliatederivative during the first 180 days but will meet the definition of a derivative when the conversion price becomes variable and would at that time require bifurcation and to be accounted for as a derivative liability. On July 2, 2019, the Company exercised its option to redeem the January 2, 2019 debenture, for a redemption price at $85,000.

On January 18, 2019, the Company entered into a convertible note with an accredited investor for the principal amount of $165,000, with an OID of $15,000, convertible into shares of common stock of the Company, any ownerwhich matures on January 18, 2020. The note bears interest at 10%, which increases to 20% upon an event of record or beneficiallydefault. In an event of more thandefault as set forth in the note, the outstanding principal balance increases by 40%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $66,000. As a result, the outstanding balance of the note as of June 30, 2019, was $231,000. On August 6, 2019, the Tangiers note was purchased from Tangiers by three other noteholders for a purchase price of $254,000, which included the default penalty and accrued interest. The note is convertible at 65% multiplied by the lowest closing price during the 15 days prior to the conversion. The discount increases by 5% discount if there is a DTC “chill” in effect., and an additional 5% if the Company is not DWAC eligible. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of any classshares that is actually issuable upon full conversion of voting securitiesthe note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 120% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from the date of issuance of the debenture. During the second half of 2019 the note and related accrued interest was fully converted into 5,127,240, at conversion prices ranging from $0.03 to $0.05.

On January 25, 2019, the Company entered into a convertible note with an accredited investor for the principal amount of $38,500 for a purchase price of $35,000, convertible into shares of common stock of the Company, which matures on October 25, 2019. The note bears interest at 8%, which increases to 24% upon an event of default. In an event of default as set forth in the note, the default sum becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or security holder is a party adversefails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $19,250. As a result the outstanding balance of the note as of June 30, 2019, was $57,750. The note is convertible at 65% multiplied by the lowest closing price during the 20 days prior to the conversion. Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from the date of issuance of the debenture. The note was fully converted on August 1, 2019, into 1,087,685 shares of the Company’s common stock at a conversion price of $0.06In connection with the note, the Company issued 115,500 warrants, exercisable at $0.49, with a five year term. The warrants were exercised on December 2, 2019, in a cashless exercise, resulting in the issuance of 710,080 shares of the Company’s common stock.

On January 25, 2019, the Company entered into a second convertible note with another accredited investor for the principal amount of $38,500 for a purchase price of $35,000, convertible into shares of common stock of the Company, which matures on October 25, 2019. The note bears interest at 8%, which increases to 24% upon an event of default. In an event of default as set forth in the note, the default sum becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $19,250. As a result the outstanding balance of the note as of June 30, 2019, was $57,750. The note is convertible at 65% multiplied by the lowest closing price during the 20 days prior to the conversion. Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from the date of issuance of the debenture. In connection with the note, the Company issued 115,500 warrants, exercisable at $0.49, with a five year term. On various dates in August and September 2019, the note was fully converted into 2,015,812 shares of the Company’s common stock at conversion prices ranging from of $0.04 to $0.06.

On January 25, 2019, the Company entered into a third convertible note with another accredited investor. for the principal amount of $38,500 for a purchase price of $35,000, convertible into shares of common stock of the Company, which matures on October 25, 2019. The note bears interest at 8%, which increases to 24% upon an event of default. In an event of default as set forth in the note, the default sum becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $19,250. As a result the outstanding balance of the note as of June 30, 2019, was $57,750. The note is convertible at 65% multiplied by the lowest closing price during the 20 days prior to the conversion. Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from the date of issuance of the debenture. In connection with the note, the Company issued 115,500 warrants, exercisable at $0.49, with a five year term. The note was fully converted on August 1, 2019, into 1,107,685 shares of the Company’s common stock at a conversion price of $0.06.

On January 28, 2019, the Company executed an 12% convertible promissory note payable to an accredited investor in the principal amount of $48,000, which is due on November 30, 2019. In an event of default as set forth in the note, the interest rate increases to a default amount of 22%, and the default sum due becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $24,000. As a result the outstanding balance of the note as of June 30, 2019, was $72,000. The note is convertible during first 180 days after issuance at a fixed conversion price of $1.75. After the initial conversion period, the conversion price shall equal the lesser of: (i) the fixed price; and (ii) 61% multiplied by the market price (as defined in the note). Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. On several dates in August 2019, $45,000 of the note was converted into 702,028 shares of the Company’s common stock at a conversion price of $0.06. The remaining balance and accrued interest was paid off by the Company.

On February 28, 2019, the Company executed an 10% fixed convertible promissory note payable to an accredited investor in the principal amount of $115,000 with a $10,000 OID, which is due on November 28, 2019. In the case of a sale event, as defined in the agreement, the principal amount of the note increases to 150%. The note is convertible into shares of Common Stock at a conversion price of the lower of (i) $1.00 per share or (ii) 65% of the lowest trading price for the 20 prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent. The discount increases 10% if there is a DTC “chill” in effect. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. The variable conversion price has been adjusted to 45% of the market price, based on the conversion price of a new note on May 9, 2019. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 125% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the note. On September 6, 2019, the note was fully converted into 2,219,872 shares of the Company’s common stock at a conversion price of $0.05.

On March 4, 2019, the Company executed an 8% fixed convertible promissory note payable to an accredited investor in the principal amount of $55,000 with a $5,000 OID, for a purchase price of $50,000, which is due on March 5, 2020. In the case of a sale event, as defined in the agreement, the principal amount of the note increases to 150%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $27,500. As a result the outstanding balance of the note as of June 30, 2019, was $82,500. The note is convertible into shares of Common Stock at a conversion price of 65% of the market price, as defined in the note. The discount increases 15% if there is an event of default, and 10% if the shares are not deliverable via DWAC. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. Per the agreement, the Company is required at all times to have authorized and reserved eight times the number of shares that is actually issuable upon full conversion of the note. On September 6, 2019, the note was fully converted into 1,786,022 shares of the Company’s common stock at a conversion price of $0.05.

On March 5, 2019, the Company executed an 12% convertible promissory note payable to an accredited investor in the principal amount of $53,000, which is due on January 15, 2020. In an event of default as set forth in the note, the interest rate increases to a default amount of 22%, and the default sum due becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $26,500. As a result the outstanding balance of the note as of June 30, 2019, was $79,500. The note is convertible during first 180 days after issuance at a fixed conversion price of $1.75. After the initial conversion period, the conversion price shall equal the lesser of: (i) the fixed price; and (ii) 61% multiplied by the market price (as defined in the note). Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. The conversion feature does not meet the definition of a derivative during the first 180 days but will meet the definition of a derivative when the conversion price becomes variable and would at that time require bifurcation and to be accounted for as a derivative liability. On September 7, 2019, the Company exercised its option to redeem the March 5, 2019 debenture, for a redemption price at $84,286.

On March 14, 2019, the Company entered into a 12% convertible note for the principal amount of $118,000 with an accredited investor, which matures on March 14, 2020, and has a material$5,000 OID. The holder will also deduct $13,000 from the purchase price for legal and due diligence fees. The note is convertible commencing 180 days after issuance of the note (or upon an event of Default), with a variable conversion rate at 60% of market price (as defined in the note). The conversion rate adjusts if there are common stock equivalents issued and in which the aggregate per share price is below the original conversion price, in which case the adjusted conversion price is the lower of the original conversion price or 25% of the aggregate price. The discount increases to a 55% discount if there is a DTC “chill” in effect and an additional 5% if the Company is not DWAC or DTC eligible, as well as an additional 5% discount for each event of default. The debenture also includes various liquidated damages for various events, as set forth in the agreement, such as the Company’s inability or delay in the timely issuance of the shares upon receipt of a conversion request. In an event of default, as defined in the note, the “default amount” shall be calculated at the product of (A) the then outstanding principal amount of the note, plus accrued interest, adversedivided by (B) the conversion price as determined on the issuance date, multiplied by (C)the highest price at which the common stock traded at any time between the issuance date and the date of the event of default. Per the agreement, the Company is required at all times to have authorized and reserved eight times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 135% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture, and at 150% after 180 days. On September 18, 2019, $60,000 of the March 14, 2019 note was converted into 813,008 shares of the Company’s common stock at a conversion price of $0.07 and on October 2, 2019, the remaining $58,000 of the note was converted into 954,059 shares of the Company’s common stock at a conversion price of $0.07.

On March 25, 2019, the Company executed an 8% convertible promissory note payable to an accredited investor in the principal amount of $137,500, for a purchase price of $125,000, which is due on March 24, 2020. In an event of default as set forth in the note, the interest rate increases to a default amount of 18%, and the default sum due becomes 130% of the principal outstanding and accrued interest (the “default redemption amount”). Alternatively, at the election of the holder, the Holder may require the Company to redeem all or part of the default redemption amount through the issuance of such number of shares of common stock equal to (x) the default redemption amount, divided by (y) or 55% of the lowest traded price in the 20 trading days prior to the conversion date. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $41,250. The note is convertible into shares of common stock at a conversion price of the lower of (i) $1.00 per share or (ii) 61% of the lowest trading price for the 20 prior trading days prior to the conversion date. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. The Company may redeem the note at any time the note is outstanding and there is not an event of default, at amounts ranging in the first 90 days from the date of issuance from 115% to 135% of the principal and accrued interest balance, based on the redemption date’s passage of time. The note also includes a “most favored nation” clause, whereby when the Company enters into any future financing transactions with a third-party investor, the Company must provide the holder notification of the terms of the new financing transaction, and if the holder determines that the terms of the subsequent investment are preferable to the original terms of the March 25, 2019 convertible promissory note, the original terms of the note will be amended and restated, which may include the conversion terms. On September 24, 2019, the Company exercised its option to redeem the debenture, for a redemption price at $192,582.

On April 1, 2019, the Company executed a 12% fixed convertible promissory note payable to an accredited investor in the principal amount of $43,000, and s due on February 15, 2020. In an event of default as set forth in the note, the interest rate increases to a default amount of 22%, and the default sum due becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On April 15, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $21,500. As a result the outstanding balance of the note as of June 30, 2019, was $64,500. The note is convertible for 180 days from inception into shares of Common Stock at a conversion price of $1.75 per share, subject to adjustment based upon the terms of the note. After the 180 days the conversion price shall equal the lesser of: (i) $1.75; and (ii) 61% multiplied by the market price, as defined in the agreement. Per the agreement, the Company is required at all times to have authorized and reserved six times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 115% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. On October 1, 2019, the Company exercised its option to redeem the debenture, for a redemption price at $70,261.

On April 25, 2019, the Company executed an 8% fixed convertible promissory note payable to an accredited investor in the principal amount of $110,000, and is due on May 17, 2020. The convertible note had a OID of $10,000, for a purchase price of $100,000. In an event of default as set forth in the note, the interest rate increases to a default amount of 18%, and the default sum due becomes 150% of the principal outstanding and accrued interest, and if the Company cannot deliver conversion shares or fails to reserve sufficient authorized shares, then the default sum increases to 200%. On May 20, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $55,000. As a result the outstanding balance of the note as of June 30, 2019, was $165,000. On September 17, 2019, the outstanding note was acquired from the holder by a third-party accredited investor. The note is convertible into shares of Common Stock at 65% of the lowest trading price of the common stock as reported on the National Quotations Bureau OTC market on which the Company’s shares are traded, for the twenty (20) prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent. The conversion price is adjusted if any 3rd party has the right to convert monies at a discount to market greater than the conversion price in effect at that time then the holder, may utilize such greater discount percentage. The variable conversion price has been adjusted to 45% of the market price, based on the conversion price of a new note on May 9, 2019. Additionally, upon an event of default the conversion rate increases to 55% of the lowest trading price during the 20 days prior to conversion. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. The Company may redeem the note at amounts ranging from 110% to 150% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. On November and December 2019, the note was fully converted into 5,000,396 shares of the Company’s common stock at a conversion prices of $0.04 to $0.02.

On May 9, 2019, the Company entered into a 12% convertible promissory note with an accredited investor for $282,000, which matures on November 6, 2019. The interest rate increases to a default rate of 24% for events as set forth in the agreement, including if the market capitalization is below $5 million, or there are any dilutive issuances. There is a right of prepayment in the first 180 days, but there is no right to repay after 180 days. Per the agreement, the Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note. There is also a cross default provision to all other notes. In the event of default, the outstanding principal balance increases to 150%, and if the Company fails to maintain the required authorized share reserve, the outstanding principal increases to 200%. On May 20, 2019, the note was in default due to the Company being delinquent in their filings under the Exchange Act with the SEC, and therefore the note principal balance was increased by $141,000. As a result the outstanding balance of the note as of June 30, 2019, was $423,000. On September 18, 2019, the outstanding note was acquired from the holder by a third-party accredited investor, consisting of $232,000 of principal, $141,000 of default penalties and $22,752 of accrued interest. Additionally, If the Company enters into a 3(a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. The Company must also obtain the noteholder’s written consent before issuing any new debt. Additionally, if the note is not repaid by the maturity date the principal balance increases by $15,000. In connection with the convertible debenture, the Company issued 313,263 of their common shares as a commitment fee to the noteholder, with a fair value of approximately $169,000, based on the market value of the common stock on the date of issuance of $0.54, included in the debt discount. Upon the acquisition of the note by the new investor, the original holder returned the commitment fee shares to the Company. The Company's propertynote is convertible into shares of the Company’s common stock at a variable conversion rate that is equal to the lesser of the lowest trading price for the last 20 days prior to the issuance of the note or 45% of the lowest market price over the 20 days prior to conversion. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. There are additional 12% adjustments to the conversion price for events set forth in the agreement, including if the conversion price is less than $0.01, if the Company is not DTC eligible, the subjectCompany is no longer a reporting company, or the note cannot be converted into free trading shares on or after six months from issue date. The holder has the option to increase the principal by $5,000 per each default occurrence instead of any pending legal proceedings.

Item 4. Mine Safety Disclosure.Backapplying further discounts to Tablethe conversion price. However, under no circumstances shall the principal amount exceed an additional $25,000 nor can the conversion price be less than 30% multiplied by the market price due to the cumulative effect. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of Contents

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchasesshares that is actually issuable upon full conversion of Equity Securities.Back to Tablethe note. On September 5, 2019, $50,000 of Contents

Market Information

Ourthe note was converted into 1,000,100 shares of the Company’s common stock at a conversion price of $0.05, and in November and December 2019, another $168,830 of the note was converted into 5,900,000 shares of the Company’s common stock at a conversion prices of $0.04 to $0.02.

On May 17, 2019, the Company executed a 10% fixed convertible promissory note payable to an accredited investor in the principal amount of $82,500, and is quoteddue on May 17, 2020. The convertible note had an OID of $7,500, for a purchase price of $75,000. In an event of default as set forth in the note, the interest rate increases to a default amount of 24%. The note is convertible into shares of Common Stock at a conversion price the lower of (i) the fixed price of $1.00 or (ii) 61% of the average of the two (2) lowest trading prices of the Common Stock as reported on the MarketNational Quotations Bureau OTC market on which the Company’s shares are traded, for the twenty (20) prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent. The discount will be increased by 10% if the Company’s common shares are not DTC deliverable. Additionally, if the Company fails to comply with the reporting requirements of the Exchange Act (including but not limited to becoming late or delinquent in its filings, even if the Company subsequently cures such delinquency), the discount shall be increased an additional 15%. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 120% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. In December 2019, $55,980 of the note was converted into 2,450,000 shares of the Company’s common stock at a conversion prices of $0.04 to $0.02.

On May 15, 2019, the Company entered into a convertible note with an accredited investor for the principal amount of $200,000, convertible into shares of common stock of the Company, which matures on February 15, 2020. In an event of default as set forth in the note, the interest rate increases to a default amount of 24%. In the event of default, the outstanding principal balance increases to 150%, and if the Company fails to maintain the required authorized share reserve, the outstanding principal increases to 200%. If certain events of default, relating to the reporting requirements or listing of the Company’s common stock, occur or continue after six months from the date of issuance of the note, the principal increases by $15,000. On May 20, 2019, the note was in default due to the Company being delinquent in their filings under the symbol KPAY, an inter-dealer automated quotation system for equity securities not included on The Nasdaq Stock Market. QuotationExchange Act with the SEC, and therefore the note principal balance was increased by $100,000. As a result the outstanding balance of the Company's securities onnote as of June 30, 2019, was $300,000. The note is convertible into shares of Common Stock at a conversion price the OTCQB Market limitslower of (i) the liquidity andlowest closing price (as defined) during the previous twenty trading days prior to the date of the note or (ii) 60% of the lowest trading price of the Company'sCommon Stock as reported on the National Quotations Bureau OTC market on which the Company’s shares are traded, for the 20 prior trading days including the day upon which a notice of conversion is received by the Company or its transfer agent. The discount will be increased by 10% if the Company’s common shares are not DTC deliverable, and increased by 15% if there is a DTC “chill”. Furthermore, if the Company fails to maintain its status as “DTC Eligible” for any reason, or, if the conversion price is less than $0.01 at any time after the issue date, the principal amount of the note shall increase by $15,000. In addition, the variable conversion price shall be redefined to mean 40% multiplied by the market price. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. The conversion price shall be adjusted upon subsequent sales of securities at a price lower than the original conversion price. If the Company enters into a 3(a)(9) or 3(a)(10) issuance of shares there are liquidation damages of 25% of principal, not to be below $15,000. Per the agreement, the Company is required at all times to have authorized and reserved ten times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 135% to 150% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture. In December 2019, $90,713 of the note was converted into 5,000,000 shares of the Company’s common stock more thanat a conversion prices of $0.04 to $0.02.

On May 29, 2019, the Company executed a 10% fixed convertible promissory note payable to an accredited investor for the principal amount of $115,000, which matures on May 29, 2020. The convertible note had an OID of $5,000, plus $5,000 was deducted from the purchase price for legal and due diligence fees for a purchase price of $100,000. In an event of default as set forth in the note, the interest rate increases to a default amount of 22% and the principal balance increases by 15%. The note is convertible into shares of Common Stock at a conversion price equal to 60% multiplied by the lowest closing trade price during the 20 trading days immediately preceding the applicable conversion. Per the agreement, the Company is required at all times to have 1,800,000 common shares reserved. The Company may prepay the note at 125% of the principal and accrued interest balance. On December 11, 2019, the Company exercised its option to redeem the debenture, for a redemption price of $151,363.

On June 3, 2019, the Company entered into a convertible note with an accredited investor for the principal amount of $192,500, convertible into shares of common stock of the Company, which matures on June 3, 2020. The convertible note had an OID of $17,500, for a purchase price of $175,000. The note bears interest at 10%, which increases to 24% upon an event of default. In an event of default as set forth in the note, including if the Company'sCompany does not pay the note at maturity, or the common stock of the Company is delisted or loses its bid price, the default sum becomes 110% to 150% of the principal outstanding and accrued interest. The note is convertible beginning on the six month anniversary of the note, at the lesser of: (i) $1.00; or (ii) 60% multiplied by lowest end of day VWAP during the previous 20 days before the Issue date of the note. The discount shall increase to 50% if the Company experiences a DTC “chill”. If the Company is not current in their filings with the SEC after the six month anniversary of the note, the holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion. Per the agreement, the Company is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 120% to 140% of the principal and accrued interest balance, based on the redemption date’s passage of time ranging from the date of issuance of the debenture. On two dates in October and December 2019, the note was fully converted into 5,584,032 shares of the Company’s common stock at a conversion price of $0.04.

On June 28, 2019, the Company entered into a convertible note with an accredited investor which was funded on July 2, 2019, for the principal amount of $118,000, convertible into shares of common stock of the Company, which matures on July 11, 2019. The convertible note had an OID of $5,000, for a purchase price of $113,000. The note bears interest at 12%, which increases to 18% upon an event of default. The note is convertible commencing 180 days after issuance of the note (or upon an event of Default), with a variable conversion rate at a 40% discount to the lowest closing price during the previous twenty days to the conversion date. The conversion rate adjusts if there are common stock equivalents issued and in which the aggregate per share price is below the original conversion price, in which case the adjusted conversion price is the lower of the original conversion price or 25% of the aggregate price. The discount increases to a 55% discount if there is a DTC “chill” in effect and an additional 5% if the Company is not DWAC or DTC eligible, as well as an additional 5% discount for each event of default. The debenture also includes various liquidated damages for various events, as set forth in the agreement, such as the Company’s inability or delay in the timely issuance of the shares upon receipt of a conversion request. In an event of default, as defined in the note, the “default amount” shall be calculated at the product of (A) the then outstanding principal amount of the note, plus accrued interest, divided by (B) the conversion price as determined on the issuance date, multiplied by (C)the highest price at which the common stock traded at any time between the issuance date and the date of the event of default. Per the agreement, the Company is required at all times to have authorized and reserved eight times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 135% to 145% of the principal and accrued interest balance, based on the redemption date’s passage of time from the date of issuance of the debenture, and at 150% after 180 days.

On July 8, 2019, the Company entered into a 12% convertible promissory note in the principal amount of $150,000 with an accredited investor, which matures on April 8, 2020. The holder may extend the maturity date up to one year, by written notice at least five days before the original maturity date. The convertible note had an OID of $9,000, for a purchase price of $141,000. In an event of default as set forth in the note, the interest rate increases to a default amount of 24%, and the default sum due becomes 200% of the principal outstanding and accrued interest. The outstanding amount due under the note as of May 29, 2020, is in default as of the date of this filing as the Company is delinquent in its periodic reporting under the Securities Act of 1934. Additionally, if the market price of the Company’s common stock falls below $0.01, the principal shall increase by $25,000. The note is convertible at a variable conversion rate of 60% of the lowest closing price during 20 days on which at least 100 shares of common stock were listedtraded prior to and including the conversion date, to be adjusted if in default. The discount increases by 15% discount if there is a DTC “chill” in effect, the closing price falls below $0.095, the Company ceases to be a reporting company pursuant to the 1934 Act, or the note cannot be converted into free trading shares after 181 days from the issuance date. The discount also increases by 10% if the Company’s common shares are not deliverable via DWAC system. Additionally, if the Company enters into a Section 3(a)(9) or 3(a)(10) transaction, there shall be liquidation damages of 25% of the outstanding principal balance of the debt, but not to be less than $15,000. Per the agreement, the Company is required at all times to have authorized and reserved ten times the number of shares that is actually issuable upon full conversion of the note. During the first 180 days the convertible redeemable note is in effect, the Company may redeem the note at amounts ranging from 135% to 150% of the principal and accrued interest balance, based on The Nasdaq Stock Market orthe redemption date’s passage of time from the date of issuance of the debenture.

On July 31, 2019, the Company entered into a national exchange. Forconvertible note with an accredited investor for the periods indicated, the following table sets forth the high and low bid prices per shareprincipal amount of $200,000, convertible into shares of common stock. The below prices represent inter-dealer quotations without retail markup, markdown,stock of the Company, which matures on April 30, 2020. In an event of default as set forth in the note, the interest rate increases to a default amount of 24%. In the event of default, the outstanding principal balance increases to 150%, and if the Company fails to maintain the required authorized share reserve, the outstanding principal increases to 200%. If certain events of default, relating to the reporting requirements or commission and may not necessarily represent actual transactions.The prices below are adjusted forlisting of the Company's one-for-thirty (1:30) reverse stock split that became effective March 10, 2016.