Hall of Shame

Information Technology

Peak Fintech Group Inc (PKK CN)

Year: 2021


Peak Fintech Group Inc. is a Canada-based financial technology company. The company's subsidiaries use technology, analytics and artificial intelligence to create an ecosystem of lenders, borrowers and other participants in commercial lending space. It manages lenders, brokers and borrowers.

Java Capital Inc. listed on the Canadian Securities Exchange (CSE) in December 2008, raising C$500k in its IPO. Nine additional share offerings between 2011 and 2021 raised a total of C$61.72m; (i) 8-Feb-11: C$1.42m, (ii) 13-Dec-11: C$918k, (iii) 18-Jul-13: C$85k, (iv) 29-Aug-14: C$251k, (v) 5-Dec-14: C$500k, (vi) 5-Nov-15: C$851k, (vii) 5-Feb-20: C$576k, (viii) 22-Jul-20: C$4520k, (ix) 7-Jul-21: C$5.26m.

In April 2011, the company changed its name to Peak Positioning Technologies Inc.

On 18 November 2020, the company changed its name to Peak Fintech Group Inc.

In February 2021, the company announced that it had filed an application to have its shares listed on the NASDAQ.

On 9 September 2021, the company's shares started trading on the NASDAG under the ticker "TNT".

On 21 September 2021, Peak Fintech announced that it has been advised that the U.S. SEC was still in the process of reviewing the company's registration statement. As the review process was taking longer than originally expected, trading of Peak's common shares was temporarily halted until the SEC completes its review.

On 29 September 2021, the company announced it had withdrawn its registration statement filed with the SEC while it worked to comply with a recent disclosure guidance provided by the SEC for companies either based in China or with the majority of their operations in China.

On 4 October 2021, Grizzly Research released a report "Peak Fintech Group Inc (NASDAQ: TNT; CSE: PKK): Strong Delisting Candidate on Millions Misappropriated".  Grizzly believed that Peak Fintech was a quintessential “China Hustle”. The issues that Grizzly had uncovered in its research report were:

  • Peak Fintech had announced it has acquired Huayan Kun Tai Technology Company Ltd, for its 'Heartbeat" insurance platform. It paid $31m. However, Huayan Kun Tai Technology Company Ltd did not own "Heartbeat". It was owned by Beijing Huike. Looking at what may have motivated the Peak Fintech to pay $31m to an entity that does not own the asset it said it purchased, Grizzly determined this was likely to channel the funds to a group of insiders behind Huayan.
  • Grizzly noted the company's disclosure that the Heartbeat platform significantly increased the number of insurance brokerage companies on the platform within 2021, from 8 at the end of 2020 to 420 by the end of August 2021. However Grizzly found 
    • Beijing Huike had generated no revenues in both 2019 and 2020.  As of 2020, Beijing Huike’s total assets were only $296, with a negative $59 shareholder equity
    • Going through the internet archives, Grizzly noted that the first time the Heartbeat web-site was available was the same day as the acquisition announcement.
  • In December 2019, Peak Fintech had announced it acquired 70% of a loan brokerage and commission paying platform, Jinxiaoer, from Jinxiaoer Technology Ltd. The company stated that Jinxiaoer generated loan requests totalling RMB15b in 2018. Grizzly noted that SAIC financial data show zero revenue for Jinxiaoer in both 2018 and 2019. Grizzly also doubted that a company with RMB 121k registered capital could generate a total of RMB15b in loan requests.
  • Grizzly's research led it to believe that two years later, PKK and its subsidiaries still did not own any equity in Jinxiaoer Technology Ltd. It also noted that Jinxiaoer was an inactive platform and inaccessible website.
  • Grizzly reviewed Peak Fintech's corporate structure and found that the company did not own one of its subsidiaries, Asia Synergy Financial Capital Ltd (ASFC).  According to SAIC information, the company did not own any equity interest in ASFC. This is directly contradicting PKK’s SEC disclosure where it claims to own 51% of ASFC for years. 
  • According to Peak Fintech’s 2018 annual report, it injected capital worth C$10.4m to launch ASFC as a 51% shareholder. Since the company never owned any equity interest in ASFC, Grizzly was curious where the C$10.4m went.
  • Looking at H1 2021 financials Grizzly was highly sceptical about the credibility of the reported financials. It said that three companies were the main revenue contributing entities in 2019 and 2020. Grizzly obtained the SAIC files for these three companies for 2019 and 2020, and it turns out that PKK may have drastically overstated its topline in the past few years; by 112% in 2019.
  • Grizzly questions the trustworthiness on management.  It noted that Liang (Golden) Qiu, the CEO of Peak Group China. Grizzly believed that he was co-founder of a company that had been listed as “severely breaking laws”, “abnormal operations” on several government black lists in China.
  • Grizzly believed the company had little strategic direction, was constantly switching focus (and failing), and reeked of self-dealing.

Grizzly concluded that for years, Peak Fintech, a perpetual pivoter, had gotten away without owning a purported, major subsidiary. That the company conducted at least two major acquisitions where it never acquired any actual equity interest in the entities it said it bought. Meanwhile, this all occurred as it’s stock price soared to NASDAQ uplisting. It believed that this warranted an immediate delisting of the company’s shares from US and Canadian stock exchanges.

On 4 October 2021, Peak Fintech responded briefly to say that the report was baseless and irresponsible and its claims were are nothing more than lies and fabrications. On the following day it published a Q&A to address the allegations made about the company in the Grizzly report. The main reply to the acquisition allegations was that it did not acquire the companies but it acquired the assets, IP, clients, management and employees.


Grizzly Research: Peak Fintech - Strong Delisting Candidate on Millions Misappropriated, 4 Oct 021
Peak Fintech Group: Q & A to Address Grizzly Research Report, 5 Oct 2021
Peak Fintech Group: Annual Report - Financials, YE Dec. 2020
Peak Fintech Group: Annual Report - Company Info, YE Dec. 2020
Peak Fintech Group: Annual Report - Financials, YE Dec. 2019
Peak Fintech Group: Annual Report - Company Info, YE Dec. 2019
Peak Fintech Group: Annual Report - Financials, YE Dec. 2018
CSE (SEDAR): Peak Fintech Group Filings
US SEC: Peak Fintech Group Filings
PR Newswire: Peak Fintech News


 


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