• Emerging Growth Company

We are an "emerging growth company" under the JOBS Act. For as long as we are an "emerging growth company," we are not required to: (i) comply with any new or revised financial accounting standards that have different effective dates for public and private companies until those standards would otherwise apply to private companies, (ii) provide an auditor's attestation report on management's assessment of the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (iii) comply with any new requirements adopted by the Public Company Accounting Oversight Board ("PCAOB") or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer or (iv) comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise. However, we have elected to "opt out" of the extended transition period discussed in (i) and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

Basis of consolidation

• Basis of consolidation

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.

Noncontrolling interest

• Noncontrolling interest

The Company accounts for noncontrolling interests in accordance with ASC Topic 810, which requires the Company to present noncontrolling interests as a separate component of total shareholders' equity on the consolidated balance sheets and the consolidated net loss attributable to its noncontrolling interest be clearly identified and presented on the face of the consolidated statements of operations and comprehensive loss.

Cash and cash equivalents

• Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. As of September 30, 2022 and December 31, 2021, the cash and cash equivalents amounted to $22,986,380 and $23,264,777, respectively.

The Company currently has bank deposits with financial institutions in the U.S. which exceed FDIC insurance limits. FDIC insurance provides protection for bank deposits up to $250,000, so there were uninsured balance of $10,431,681 and $13,699,082 as of September 30, 2022 and December 31, 2021, respectively. In addition, the Company has uninsured bank deposits of $12,032,534 and $9,315,695 with a financial institution outside the U.S as of September 30, 2022 and December 31, 2021, respectively. All uninsured bank deposits are held at high quality credit institutions.

Accounts receivable

• Accounts receivable

Accounts receivables are recorded at the amounts that are invoiced to customers, do not bear interest, and are due within contractual payment terms, generally 30 to 90-days from completion of service or the delivery of a product. Credit is extended based on an evaluation of a customer's financial condition, the customer's creditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Quarterly, the Company specifically evaluates individual customer's financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company records bad debt expense and records an allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For receivables that are past due or not being paid according to payment terms, appropriate actions are taken to pursue all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. Currently, the Company does not have any off-balance-sheet credit exposure related to its customers, and as of both September 30, 2022, and December 31, 2021, there was no need for allowance for doubtful accounts.

Prepaid Expenses

• Prepaid Expenses

Prepaid expenses represent payments made in advance for products or services to be received in the future and are amortized to expense on a ratable basis over the future period to be benefitted by that expense. Since the Company has prepaid expenses categorized as both current and non-current assets, the benefits associated with the products or services are considered current assets if they are expected to be used during the next twelve months and are considered non-current assets if they are expected to be used over a period greater than one year.

Impairment of long-lived assets

• Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, "Impairment or Disposal of Long-Lived Assets", all long-lived assets such as plant and equipment and intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the periods presented.

Software development costs

• Software development costs

In accordance with the relevant FASB accounting guidance regarding the development of software to be sold, leased, or marketed, the Company expenses such costs as they are incurred until technological feasibility has been established, at and after which time these costs are capitalized until the product is available for general release to customers. Once the technological feasibility is established per ASC Topic 985, Software, the Company capitalizes costs associated with the acquisition or development of major software for internal and external use in the balance sheet. These capitalized software costs are ratably amortized over the period of the software's estimated useful life. Costs incurred to enhance the Company's software products, after general market release of the services using the products, is expensed in the period they are incurred. The Company only capitalizes subsequent additions, modifications or upgrades to internally developed software to the extent that such changes allow the software to perform a task it previously did not perform. The Company also expenses website costs as incurred.

Research and development expenditures arising from the development of the Company's own software are charged to operations as incurred. For the nine months ended September 30, 2022, and 2021, software development costs were $56,627 and $76,698, respectively. For the three months ended September 30, 2022, and 2021, software development costs were $19,759 and $9,709, respectively. Based on the software development process, technological feasibility is established upon completion of a working model, which also requires certification and extensive testing. Costs incurred by the Company between completion of the working model and the point at which the product is ready for general release have, to date, been immaterial and have been expensed as incurred.

Shipping and handling costs

• Shipping and handling costs

No shipping and handling costs are associated with the distribution of the products to the customers since those costs are borne by the Company's suppliers or distributors for our merchant POS business.

The shipping and handling costs for all segments other than our e-commerce segment are recorded net in sales. For shipping costs related to our e-commerce business, those shipping costs are recorded in cost of sales.

Product warranties

• Product warranties

The Company's provision for estimated future warranty costs is based upon the historical relationship of warranty claims to sales. Based upon historical sales trends and warranties provided by the Company's suppliers, the Company has concluded that no warranty liability is required as of September 30, 2022, and December 31, 2021. To date, product allowance and returns have been minimal and, based on its experience, the Company believes that returns of its products will continue to be minimal, although it looks at this issue every quarter to continue to support its assertion.

Foreign currencies translation and transactions

• Foreign currencies translation and transactions

The reporting currency of the Company is the United States Dollar ("US$") and the accompanying consolidated financial statements have been expressed in US$s. In addition, the Company's subsidiary is operating in the Republic of Vietnam, Singapore, India and Philippines and maintains its books and record in its local currency, Vietnam Dong ("VND"), Singapore Dollar ("SGD"), Indian Rupee ("INR"), Philippines Pesos ("PHP"), Malaysian Ringgit ("MYR), Thailand Baht ("THB") and Indonesian Rupiah ("IDR"), respectively, which are the functional currencies in which the subsidiary's operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$s, in accordance with ASC Topic 830, "Translation of Financial Statement" ("ASC 830") using the applicable exchange rates on the balance sheet date. Shareholders' equity is translated using historical rates. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the statements of changes in shareholder's equity.

Translation of amounts from SGD into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

Schedule of Foreign currencies translation and transactions


	September 30, 2022		September 30, 2021
Period-end SGD:US$ exchange rate	$	0.72692	$	0.73534
Period average SGD:US$ exchange rate	$	0.69708	$	0.74658

Translation of amounts from VND into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

	September 30, 2022		September 30, 2021
Period-end VND:US$ exchange rate	$	0.000042	$	0.000044
Period average VND:US$ exchange rate	$	0.000043	$	0.000043

Translation of amounts from INR into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

	September 30, 2022		September 30, 2021
Period-end INR:US$ exchange rate	$	0.012268	$	0.013463
Period average INR:US$ exchange rate	$	0.012928	$	0.013576

Translation of amounts from PHP into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

	September 30, 2022		September 30, 2021
Period-end PHP:US$ exchange rate	$	0.017022	$	N/A
Period average PHP:US$ exchange rate	$	0.018682	$	N/A

Translation of amounts from THB into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

September 30, 2022

September 30,

2021

Period-end THB:US$ exchange rate

$

0.026390

$

N/A

Period average THB:US$ exchange rate

$

0.028899

$

N/A

Translation of amounts from MYR into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

September 30, 2022

September 30,

2021

Period-end MYR:US$ exchange rate

$

0.215560

$

N/A

Period average MYR:US$ exchange rate

$

0.230418

$

N/A

Translation of amounts from IDR into US$ has been made at the following exchange rates for the nine months ended September 30, 2022 and 2021:

September 30, 2022

September 30,

2021

Period-end IDR:US$ exchange rate

$

0.000066

$

N/A

Period average IDR:US$ exchange rate

$

0.000069

$

N/A

Translation gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.

Earning per share

• Earning per share

Basic per share amounts are calculated using the weighted average shares outstanding during the year, excluding unvested restricted stock units. The Company uses the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments. Under the treasury stock method, only "in the money" dilutive instruments impact the diluted calculations in computing diluted earnings per share. Diluted calculations reflect the weighted average incremental common shares that would be issued upon exercise of dilutive options assuming the proceeds would be used to repurchase shares at average market prices for the years.

For the three and nine months ended September 30, 2022 and 2021, diluted weighted-average common shares outstanding is equal to basic weighted-average common shares, due to the Company's net loss position. Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive.

Schedule of computation of diluted net loss per share:


	Three months ended September 30,
	2022			2021
Net loss attributable to Society Pass Incorporated	$	(9,959,793	)	$	(8,429,267	)
Weighted average common shares outstanding – Basic and diluted		25,302,206			7,823,818
Net loss per share – Basic and diluted	$	(0.39	)	$	(1.00	)


	Nine months ended September 30,
	2022			2021
Net loss attributable to Society Pass Incorporated	$	(24,012,495	)	$	(15,528,998	)
Weighted average common shares outstanding – Basic and diluted		23,856,503			7,551,842
Net loss per share – Basic and diluted	$	(1.01	)	$	(2.00	)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

Schedule of Common stock issued:

Schedule of Common stock issued
	Nine months ended September 30,		Nine months ended September 30,
	2022		2021
Series A Convertible Preferred Stock (a)		—		8,000
Series B Convertible Preferred Stock		—		764,400
Series B-1 Convertible Preferred Stock		—		48,000
Series C Convertible Preferred Stock		—		465,600
Series C-1 Convertible Preferred Stock		—		4,195,200
Options to purchase common stock (b)		1,945,270		—
Warrants granted to underwriter		3,793,929		—
Warrants granted with Series C-1 Convertible Preferred Stock (c)		—		1,178,700
Total of common stock equivalents		5,739,199		6,659,900

(a)	The Series A conversion formula is the aggregate Stated Value of the shares of Series A to be converted divided by the IPO price (Stated Value for each Series A Preferred Stock is $1,000). These are 8,000 shares of Series A Preferred Stock issued and outstanding (10,000 shares are designated Series A). The conversion formula would be $8 million (the aggregate stated value) divided by IPO price.
(b)	The Board of Directors have approved a 10 year stock option at an exercise price of $6.49 per share that will be exercisable at any time.
(c)	The expiry date of warrants granted with Series C-1 was extended to June 30, 2022.

Retirement plan costs

• Retirement plan costs

Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying consolidated statements of operation as the related employee service is provided.

Warrants

• Warrants

In connection with certain financing, consulting and collaboration arrangements, the Company has issued warrants to purchase shares of its preferred and common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using a Black-Scholes Option Pricing Model as of the measurement date. The Company uses a Black-Scholes option pricing model to estimate the grant date fair value of the warrants. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital (the accounting treatment for common stock issuance costs). All other warrants are recorded at the grant date fair value as an expense over the requisite service period, or at the date of issuance if the warrants vest immediately.

Commitments and contingencies

• Commitments and contingencies

The Company follows the ASC 450, Commitments, to account for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, which assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available, that these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows if the current level of facts and circumstances changes in the future.

Recent accounting pronouncements

• Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board ("FASB") or other standard setting bodies and adopted by the Company as of the specified effective date. Please refer to the Company's Annual Report on Form 10-K, filed on March 30, 2022, for our discussion of recently issued FASB accounting standard updates that were issued but not yet effective.

In June 2022, the FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03). This ASU was issued to resolve differences in practice regarding how to record the issuance of common stock with sale restrictions that pertain to the receiving party. The FASB concluded in ASU 2022-03 that these types of restrictions were not attributes of the stock issued but related to the parties to whom the stock was issued. As a result, the ASU 2022-03 requires companies to record the issuance of this type of restricted stock at its face value (i.e., not discount the stock because the receiving party can't immediately sell the stock). From time-to-time, the Company may acquire another company in a transaction in which Company restricted stock is issued. The Company has reviewed ASU 2022-03 and does not expect that it will affect the Company.

All other recently issued, but not yet effective, 2022 Accounting Standards Updates are not expected to have an effect on the Company.