UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from to
Commission
File No.
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
| (Former name, former address and former fiscal year, if changed since last report) |
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark 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
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
As of November 13, 2023, there
were
AGBA GROUP HOLDING LIMITED
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
AGBA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| September 30,
2023 | December 31,
2022 | |||||||
| ASSETS | (Audited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, net, related parties | ||||||||
| Loans receivable, net | ||||||||
| Notes receivable, net | ||||||||
| Asset held for sale | ||||||||
| Income tax recoverable | ||||||||
| Deposits, prepayments, and others receivable, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Rental deposit, net | ||||||||
| Loans receivable, net | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use asset, net | ||||||||
| Long-term investments, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Escrow liabilities | ||||||||
| Borrowings | ||||||||
| Borrowing, related party | ||||||||
| Amounts due to the holding company | ||||||||
| Lease liabilities | ||||||||
| Forward share purchase liability | ||||||||
| Income tax payable and provision | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Lease liabilities | ||||||||
| Warrant liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 21) | ||||||||
| Shareholders’ (deficit) equity: | ||||||||
| Ordinary shares, $ | ||||||||
| Ordinary shares to be issued | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ (deficit) equity | ( | ) | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
F-1
AGBA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | $ | $ | $ | ||||||||||||
| Total interest income | ||||||||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | ||||||||||||||||
| Recurring service fees | ||||||||||||||||
| Total non-interest income | ||||||||||||||||
| Total revenues from others | ||||||||||||||||
| Non-interest income: | ||||||||||||||||
| Recurring service fees | ||||||||||||||||
| Total revenues from related parties | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating cost and expenses: | ||||||||||||||||
| Commission expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Sales and marketing expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Technology expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Personnel and benefit expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating cost and expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign exchange (loss) gain, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Investment (loss) income, net | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Change in fair value of forward share purchase liability | ( | ) | ||||||||||||||
| Loss on settlement of forward share purchase agreement | ( | ) | ||||||||||||||
| Rental income | ||||||||||||||||
| Sundry income | ||||||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| TOTAL COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
See accompanying notes to unaudited condensed consolidated financial statements.
F-2
AGBA GROUP HOLDING LIMITED
UNAUDITED CONDESED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Three and Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||
Ordinary shares | Ordinary
shares to be issued | Additional | Accumulated other | Total shareholders’ | ||||||||||||||||||||||||||||
| No.
of shares | Amount | No.
of shares | Amount | paid-in capital | comprehensive loss | Accumulated deficit | equity (deficit) | |||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of ordinary shares to settle finder fee | ||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Forgiveness of amounts due to the holding company | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of holdback shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Forgiveness of amounts due to the holding company | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Forgiveness of amounts due to the holding company | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Three and Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||
| Ordinary shares | Ordinary shares to be issued | Additional | Receivable | Accumulated other | Retained earnings | Total | ||||||||||||||||||||||||||||||
| No. of shares | Amount | No. of shares | Amount | paid-in capital | from the Shareholder | comprehensive loss | (accumulated deficit) | shareholders’ equity | ||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
| Special dividend to the holding company | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Advances to the holding company | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
F-3
AGBA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Share-based compensation expense | ||||||||
| Non-cash lease expense | ||||||||
| Depreciation on property and equipment | ||||||||
| Interest income on notes receivable | ( | ) | ||||||
| Foreign exchange (gain) loss, net | ( | ) | ||||||
| Investment (income) loss, net | ( | ) | ||||||
| Allowance for credit losses on financial instruments | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Change in fair value of forward share purchase liability | ||||||||
| Loss on settlement of forward share purchase agreement | ||||||||
| Reversal of annual bonus accrued in prior year | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Loans receivable | ||||||||
| Deposits, prepayments, and others receivable | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Escrow liabilities | ( | ) | ||||||
| Lease liabilities | ( | ) | ||||||
| Income tax payable | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of investments | ||||||||
| Purchase of notes receivable | ( | ) | ||||||
| Dividends received from long-term investments | ||||||||
| Addition in long-term investments | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Advances from the holding company | ||||||||
| Settlement of forward share purchase agreement | ( | ) | ||||||
| Proceeds from borrowings | ||||||||
| Dividend paid to the holding company | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect on exchange rate change on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Net change in cash, cash equivalent and restricted cash | ( | ) | ( | ) | ||||
| BEGINNING OF PERIOD | ||||||||
| END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash received from income tax recoverable | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Cash received from interest | $ | $ | ||||||
| Reconciliation to amounts on unaudited condensed consolidated balance sheets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES DISCLOSURE | ||||||||
| Issuance of ordinary shares to settle finder fee | $ | $ | ||||||
| Forgiveness of amounts due to the holding company | $ | $ | ||||||
| Initial recognition of operating lease liabilities related to right-of-use asset | $ | $ | ||||||
| Purchase of property and equipment, through earnest deposit | $ | $ | ||||||
| Special dividend to the holding company offset with amounts due from the holding company | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
F-4
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION
AGBA Group Holding Limited (“AGBA” or the “Company”) was incorporated on October 8, 2018 in British Virgin Islands.
The Company, through its subsidiaries, is operating a wealth and health platform, offering a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, lending, and real estate in overseas. AGBA is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing.
The accompanying unaudited condensed consolidated financial statements of the Company are presented in United State dollars (“US$” or “$”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2022 derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022.
The unaudited condensed consolidated financial statements as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
NOTE 2 － SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
| ● | Principal of Consolidation |
The accompanying unaudited condensed consolidated financial statements include the financial statements of AGBA and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between AGBA and its subsidiaries are eliminated upon consolidation.
| ● | Use of Estimates and Assumptions |
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for credit losses, notes receivable, share-based compensation, warrant liabilities, forward share purchase liability, provision for contingent liabilities, revenue recognition, income tax provision, deferred taxes and uncertain tax position, and allocation of expenses from holding company.
The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
F-5
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| ● | Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations and comprehensive loss.
The reporting currency of the Company is US$ and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited condensed consolidated statements of changes in shareholders’ (deficit) equity.
| September 30, 2023 | September 30,
2022 | |||||||
| Period-end HK$:US$ exchange rate | ||||||||
| Period average HK$:US$ exchange rate | ||||||||
| ● | Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Hong Kong.
| ● | Restricted Cash |
Restricted cash consist of funds held in escrow accounts reflecting (i) the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers and (ii) the full obligation to an investor in connection with the Meteora Backstop Agreement (see Note 4).
The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities.
| ● | Accounts Receivable, net |
Accounts receivable, net include trade accounts due from customers in insurance brokerage and asset management businesses.
Accounts receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate, and provides allowance when necessary.
F-6
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
The Company does not hold any collateral or other credit enhancements over its accounts receivable balances.
| ● | Loans Receivable, net |
Loans receivable, net are residential mortgage loans that carried at unpaid principal balances, less the allowance for credit losses on loans receivable and charge-offs.
Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months).
If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally, the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in Allowance for Credit Losses on Financial Instruments.
| ● | Allowance for Credit Losses on Financial Instruments |
In accordance with ASC Topic 326 “Credit Losses – Measurement of Credit Losses on Financial Instruments” (ASC Topic 326), the Company utilizes the current expected credit losses (“CECL”) model to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits, prepayments and others receivable which is recorded as a liability to offset the receivables. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts receivable, loans receivable, notes receivable, and deposits, prepayments, and others receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense.
| ● | Long-Term Investments, net |
The Company invests in equity securities with readily determinable fair values and equity securities that do not have readily determinable fair values.
Equity securities with readily determinable fair values are carried at fair value with any unrealized gains or losses reported in earnings.
Equity securities that do not have readily determinable fair values mainly consist of investments in privately-held companies. They are accounted for, at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
F-7
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| ● | Asset Held For Sale |
Assets to be disposed of by sale are reported at the lower of the carrying value or fair value less cost to sell when the Company has committed to a sale agreement and would be reported separately as asset held for sale in the unaudited condensed consolidated balance sheets.
| ● | Property and Equipment, net |
| Expected useful life | |
| Land and building | |
| Office improvement | |
| Furniture, fixtures and equipment | |
| Computer equipment | |
| Motor vehicle |
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
| ● | 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 property and equipment owned and held 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. impairment losses were recognized for the three and nine months ended September 30, 2023 and 2022.
| ● | Revenue Recognition |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”).
ASC Topic 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers. The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
F-8
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
Certain portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC Topic 606, as follows:
Commissions
The Company earns commissions from the sale of investment products to customers. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the one-time commission price. Therefore, commissions are recorded at point in time when the investment product is purchased.
The Company also facilitates the arrangement between insurance providers and individuals or businesses by providing insurance placement services to the insureds, and is compensated in the form of one-time commissions from the respective insurance providers. The Company primarily facilitates the placement of life, general and MPF insurance products. The Company determines that insurance providers are the customers.
The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy).
In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed.
F-9
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Recurring service fees
The Company provides asset management services to investment funds or investment product providers in exchange for recurring service fees. Recurring service fees are determined based on the types of investment products the Company distributes and are calculated as a fixed percentage of the fair value of the total investment of the investment products, calculated daily. These customer contracts require the Company to provide investment management services, which represents a performance obligation that the Company satisfies over time. After the contract is established, there are no significant judgments made when determining the transaction price. As the Company provides these services throughout the contract term, for the method of calculating recurring service fees, revenue is calculated on a daily basis over the contract term, quarterly billed and recognized. Recurring service agreements do not include rights of return, credits or discounts, rebates, price protection, performance component or other similar privileges and the circumstances under which the fixed percentage fees, before determined, could be not subject to clawback. Payment of recurring service fees are normally on a regular basis (typically monthly or quarterly).
Interest income
The Company offers money lending services from loan origination in form of mortgage and personal loans. Interest income is recognized monthly in accordance with their contractual terms and recorded as interest income in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company does not charge prepayment penalties from its customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of interest income on mortgage and personal loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 180 days delinquent.
Disaggregation of Revenue
The Company has disaggregated its revenue from contracts with customers
into categories based on the nature of the revenue.
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real
estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring service fees | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real
estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring service fees | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
F-10
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real
estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring service fees | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real
estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring service fees | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| ● | Rental Income |
Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement.
| ● | Comprehensive Loss |
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive loss, as presented in the accompanying statements of shareholders’ (deficit) equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive loss is not included in the computation of income tax expense or benefit.
F-11
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| ● | Employee Benefits |
Full time employees of the Hong Kong subsidiaries participate in a
defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance.
Contributions are made by both the employer and the employee at the rate of
| ● | Income Taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC
Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such
tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than
For the three and nine months ended September 30, 2023 and 2022, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
| ● | Share-Based Compensation |
The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, Stock Compensation. The Company grants share awards, including ordinary shares and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the ordinary shares on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award.
| ● | Net Loss Per Share |
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC Topic 260”). ASC Topic 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. During the three and nine months ended September 30, 2023 and 2022, there were no dilution impact.
| ● | Segment Reporting |
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.
F-12
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
The
Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization
and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources
and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions
about allocating resources and assessing performance of the Company.
| Segments | Scope of Service | Business Activities | ||
| Distribution Business | Business |
|||
| Platform Business | - Providing access to financial products and services to licensed brokers. - Providing operational support for the submission and processing of product applications. - Providing supporting tools for commission calculations, customer engagement, sales team management, customer conversion, etc. - Providing training resources and materials. - Facilitating the placement of investment products for the fund and/or product provider, in exchange for the fund management services. | |||
| Fintech Business | ||||
| Healthcare Business |
All of the Company’s revenues were generated in Hong Kong.
| ● | Leases |
The Company follows ASC Topic 842, Leases (“ASC Topic 842”), utilizing the modified retrospective transition method with no adjustments to comparative periods presented. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (ASC Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC Topic 842 requires that lessees recognize right-of-use asset and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC Topic 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the unaudited condensed consolidated statements of operations and comprehensive loss and statements of cash flows. ASC Topic 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases.
F-13
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs.
The accounting update also requires that for operating leases, a lessee recognize interest expense on the lease liability and the amortization of the right-of-use asset as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
| ● | Related Parties |
The Company follows the ASC Topic 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| ● | Commitments And Contingencies |
The Company follows the ASC Topic 450-20, Commitments to report accounting 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, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted 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 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.
F-14
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
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 at this time 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.
| ● | Fair Value Measurement |
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; |
| ● | Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and |
| ● | Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, deposits, prepayments and others receivable, accounts payable and accrued liabilities, escrow liabilities and amounts due to the holding company approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of loans receivable, notes receivable and borrowings approximate their carrying amounts. They are accounted at amortized cost, subject to impairment testing.
| September 30, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| Description | 2023 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable equity securities | $ | $ | $ | $ | ||||||||||||
| Non-marketable equity securities | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
F-15
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| Description | 2022 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable equity securities | $ | $ | $ | $ | ||||||||||||
| Non-marketable equity securities | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Forward share purchase liability | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
| ● | Recently Issued Accounting Pronouncements |
Besides, there were no new standards or updates during the nine months ended September 30, 2023 that had a material impact on the unaudited condensed consolidated financial statements.
NOTE 3 — LIQUIDITY AND GOING CONCERN
The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. They do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
For
the nine months ended September 30, 2023, the Company reported $
The Company has determined that the prevailing conditions and ongoing liquidity risks encountered by the Company raise substantial doubt about the ability to continue as a going concern for at least one year following the date these unaudited condensed consolidated financial statements are issued. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement its current operating plan and fund-raising exercises. The Company believes that it will be able to grow its revenue base and control expenditures. In parallel, the Company will monitor its capital structure and operating plans and search for potential funding alternatives in order to finance the development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity or debt markets. However, the Company cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable to its shareholders. Any failure to obtain financing when required will have a material adverse impact on the Company’s business, operation and financial result.
Certain potential funding alternatives have been carried by the Company, as follows:
| 1. | On September 7, 2023, the Company entered into an equity purchase agreement
with an independent third party to agree to invest up to $ |
| 2. | Subsequent to the period end, on November 7, 2023, the Company signed
private placement binding term sheets with an institutional investor, the Company’s Chief Executive Officer, Mr. Ng Wing Fai, and
the Company’s management team pursuant to which the Company will receive gross proceeds of approximately $ |
With these funding initiatives, the Company believes that it would be able to strengthen its financial position, improve its liquidity, and enhance its ability to navigate the challenging market conditions.
NOTE 4 — RESTRICTED CASH
Pursuant to the Meteora Backstop Agreement dated November 9, 2022, the fund held in the escrow account for the forward share purchase is restricted to the Company for the nine months following the consummation of the Business Combination in November 2022, unless the investors (“Meteora”) sell the shares in the market or redeems the shares. Notwithstanding the sale of shares by Meteora, the restricted cash will be used to settle any of the Company’s repurchase obligations.
F-16
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
On June 29, 2023, the Company and Meteora entered into an agreement
to early terminate the Meteora Backstop Agreement. Prior to the termination, Meteora sold
Pursuant to the early termination clauses of Meteora Backstop Agreement,
the Company released $
Pursuant to the termination agreement, the Company is not obligated
to purchase the remaining
With the early termination and sale of shares by Meteora, the forward
share purchase liability (“FSP liability”) was fully settled and a loss on settlement of and $
NOTE 5 — ACCOUNTS RECEIVABLE, NET
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| Accounts receivable | $ | $ | ||||||
| Accounts receivable – related parties | ||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The accounts receivable due from related parties represented the management service rendered to the portfolio assets of related companies, which are controlled by the holding company, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. The amount is unsecured, interest-free and with a credit term mutually agreed.
The Company generally conducts its business with creditworthy third parties. The Company determines, on a quarterly basis, the probable losses and an allowance for credit losses determined in accordance with the CECL model, based on historical losses, current economic conditions, forecasted future economic and market considerations, and in some cases, evaluating specific customer accounts for risk of loss. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
For
the three and nine months ended September 30, 2023, the Company has assessed the probable loss and made an allowance for credit
losses of $
For the three and nine months ended September 30, 2022, there was expected credit losses to accounts receivable.
F-17
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 6 — LOANS RECEIVABLE, NET
| As of | ||||||||
| September 30, 2023 |
December 31, 2022 |
|||||||
| Residential mortgage loans | $ | $ | ||||||
| Less: allowance for credit losses | ( |
) | ||||||
| Loans receivable, net | $ | $ | ||||||
| Classifying as: | ||||||||
| Current portion | $ | $ | ||||||
| Non-current portion | ||||||||
| Loans receivable, net | $ | $ | ||||||
The
interest rates on loans issued ranged between
Mortgage
loans are made to either business or individual customers in Hong Kong for a period of
Estimated allowance for credit losses is determined on quarterly basis, in accordance with the CECL model, for general credit risk of the overall portfolio, which is relied on an assessment of specific evidence indicating doubtful collection, historical loss experience, loan balance aging and prevailing economic conditions. If there is an unexpected deterioration of a customer’s financial condition or an unexpected change in economic conditions, including macroeconomic events, the Company will assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.
For the three and nine months ended September 30, 2023, the Company
has evaluated the probable losses and made an allowance for credit losses of $
For the three and nine months ended September 30, 2022, the Company has evaluated the probable losses and no expected credit losses is determined.
NOTE 7 — ASSET HELD FOR SALE
On
June 28, 2023, the Company entered into a provisional purchase and sale agreement with an independent third party to sell one of its
office premises for a consideration of $
On
July 20, 2023, a formal purchase and sale agreement was signed. As of September 30, 2023, the Company received deposits of $
Subsequently on October 17, 2023, the transaction has been completed and remaining consideration has been settled in cash.
NOTE 8 — NOTES RECEIVABLE, NET
On February 24, 2023, the Company entered into a subscription agreement
and a convertible loan note instrument (collectively the “Agreements”) with Investment A. Pursuant to the Agreements, the
Company agrees to subscribe an aggregate amount of $
F-18
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
As
of September 30, 2023, the carrying amount of the notes receivable was $
In accordance with ASC Topic 326, the Company accounts for its allowance for credit losses on notes receivable using the CECL model. Periodic changes to the allowance for credit losses are recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. For the three and nine months ended September 30, 2023, the Company has evaluated the probable losses on the notes receivable and no expected credit losses was determined.
NOTE 9 — LONG-TERM INVESTMENTS, NET
| As of | ||||||||||||||||
| Ownership interest | September 30,
2023 | Ownership interest | December 31,
2022 | |||||||||||||
| Marketable equity securities | ||||||||||||||||
| Investment C | %* | $ | % | $ | ||||||||||||
| Non-marketable equity securities: | ||||||||||||||||
| Investment A | % | % | ||||||||||||||
| Investment B | % | % | ||||||||||||||
| Investment D | %# | % | ||||||||||||||
| Investment E | % | % | ||||||||||||||
| Investment F | % | % | ||||||||||||||
| Total | ||||||||||||||||
| Net carrying value | $ | $ | ||||||||||||||
| * | |
| # |
Investments in Marketable Equity Securities
Investments in marketable securities are accounted for at their current market value with the changes in fair value recognized in net loss. Investment C was listed and publicly traded on Nasdaq Stock Exchange.
During
the nine months ended September 30, 2023, the Company sold
As
of September 30, 2023 and December 31, 2022, Investment C was recorded at fair value of $
Investments in Non-Marketable Equity Securities
Investments in non-marketable equity securities consist of investments in limited liability companies in which the Company’s interests are deemed minor and long-term, strategic investments in companies that are in various stages of development, and investments in a close-ended partnership funds which concentrated in the healthcare sector. These investments do not have readily determinable fair values and, therefore, are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
F-19
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Management assesses each of these investments on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and cash usage. The Company is not required to determine the fair value of these investments unless impairment indicators existed. When an impairment exists, the investment will be written down to its fair value by recording the corresponding charge as a component of other income (expense), net. Fair value is estimated using the best information available, which may include cash flow projections or other available market data.
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| Balance at beginning of period/year | $ | $ | ||||||
| Additions | ||||||||
| Adjustments: | ||||||||
| Downward adjustments | ( | ) | ( | ) | ||||
| Upward adjustments | ||||||||
| Foreign exchange adjustment | ( | ) | ||||||
| Balance at end of period/year | $ | $ | ||||||
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| Downward adjustments (including impairment) | $ | ( | ) | $ | ( | ) | ||
| Upward adjustments | $ | $ | ||||||
| For the three months September 30, | ||||||||
| 2023 | 2022 | |||||||
| Marketable equity securities: | ||||||||
| Unrealized (loss) gain from the changes in fair value – Investment C | $ | ( | ) | $ | ||||
| Non-marketable equity securities: | ||||||||
| Unrealized loss – Investment F | ( | ) | ||||||
| Dividend income | ||||||||
| Investment (loss) income, net | $ | ( | ) | $ | ||||
| For
the nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Marketable equity securities: | ||||||||
| Unrealized gain (loss) from the changes in fair value – Investment C | $ | $ | ( | ) | ||||
| Realized gain from sale of Investment C | ||||||||
| Non-marketable equity securities: | ||||||||
| Unrealized losses – Investment F | ( | ) | ||||||
| Dividend income | ||||||||
| Investment income (loss), net | $ | $ | ( | ) | ||||
F-20
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 10 — PROPERTY AND EQUIPMENT, NET
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| As cost: | ||||||||
| Land and building | $ | $ | ||||||
| Furniture, fixtures and equipment | ||||||||
| Computer equipment | ||||||||
| Motor vehicles | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended September 30, 2023 and 2022 were $
Depreciation
expense for the nine months ended September 30, 2023 and 2022 were $
On
June 28, 2023, the carrying amount of an office premises of $
NOTE 11 — BORROWINGS
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| Mortgage borrowings | $ | $ | ||||||
| Short-term borrowings | ||||||||
| Total | $ | $ | ||||||
Mortgage Borrowings
In September 2022, the Company obtained a mortgage loan from a finance
company in Hong Kong, which bears interest at a fixed rate of
In
February 2023, the Company obtained another mortgage loan from another finance company in Hong Kong, which bears an average interest
rate at
F-21
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Short-term Borrowings
In September 2023, the Company obtained a short-term borrowing of $
In September 2023, the Company obtained another short-term borrowing
of $
NOTE 12 — FORWARD SHARE PURCHASE LIABILITY
During the nine months ended September 30,
2023, subject to the sale of shares by investors and early termination of the Meteora Backshop Agreement (see Note 4), FSP liability
was fully settled with a loss of $
The
FSP liability as of December 31, 2022 under the Meteora Backstop Agreement is valued by an independent valuer using a Black-Scholes model,
which is considered to be Level 3 fair value measurement.
| Input | December 31,
2022 | |||
| Share price | $ | |||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Exercise price | $ | |||
| Term | ||||
For the three and nine months ended September 30, 2023, the change
in fair value of FSP liability was and $
NOTE 13 — LEASE
Operating lease right-of-use (“ROU”) asset and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
During the nine months ended September 30, 2023, the Company has entered into a commercial operating lease with an independent third party for the use of an office in Hong Kong. The lease has an original term exceeding 1 year, but not more than 3 years with an option to renew a further term of 3 years. At lease inception, after consideration, the Company was certain that the renewal option would be exercised, after the original term. The operating lease is included in “Right-of-use asset, net” on the unaudited condensed consolidated balance sheets and represents the Company’s right to use the underlying asset during the lease term. The Company’s obligation to make lease payments are included in “Lease liabilities” on the unaudited condensed consolidated balance sheets.
F-22
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| As of | ||||
| September 30,
2023 | ||||
| Operating lease: | ||||
| Right-of-use asset, net | $ | |||
| Lease liabilities: | ||||
| Current lease liabilities | ||||
| Non-current lease liabilities | ||||
| Total lease liabilities | $ | |||
Operating
lease expense for the three and nine months ended September 30, 2023 was $
| Weighted average discount rate | % | |||
| Weighted average remaining lease term (years) |
| For the year ending September 30, | Operating lease | ||||
| 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total minimum lease payments | |||||
| Less: imputed interest | ( | ) | |||
Total operating lease liabilities | $ | ||||
NOTE 14 — WARRANT LIABILITIES
The
private warrants are accounted for as liabilities in accordance with ASC 480 and are presented as liabilities on the unaudited condensed
consolidated balance sheets. As of September 30, 2023 and December 31, 2022, there were
The fair value of the private warrants is valued by an independent valuer using a Binominal pricing model. The warrants were classified as Level 3 due to the use of unobservable inputs.
| Input | September 30,
2023 | December 31,
2022 | ||||||
| Share price | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| Exercise price | $ | $ | ||||||
| Term | ||||||||
As
of September 30, 2023 and December 31, 2022, the aggregate value of the private warrants was $
F-23
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 15 — SHAREHOLDERS’ (DEFICIT) EQUITY
Ordinary shares
As
of September 30, 2023 and December 31, 2022, the Company has authorized share of
On
March 21, 2023, the Company issued
On
May 22, 2023, the Company issued
On
June 6, 2023, the holdback shares of
During
the nine months ended September 30, 2023, pursuant to the Scheme, the Company issued in aggregate of
As
of September 30, 2023 and December 31, 2022, there were
Public Warrants
Each
public warrant entitles the holder thereof to purchase one-half (1/2) of
Once the warrants become exercisable, the Company may call the outstanding warrants (including any outstanding warrants issued upon exercise of the unit purchase option issued to Maxim Group LLC) for redemption:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last sales price of the ordinary shares equals or exceeds $ |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire |
If the Company calls the warrants for redemption as described above, the management of the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption, the Company’s cash needs at such time and concerns regarding dilutive share issuances.
F-24
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Private Warrants
The private warrants are identical to the public warrants, except that the private warrants and the ordinary shares issuable upon the exercise of the private warrants were not transferable, assignable or salable until after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.
The private warrants are accounted as liabilities, remeasured to fair value on a recurring basis, with changes in fair value recorded to the unaudited condensed consolidated statements of operations and comprehensive loss (see Note 14).
As
of September 30, 2023 and December 31, 2022, there were
Share Award Scheme
On
February 24, 2023, pursuant to the Scheme, the Company registered
The fair value of the ordinary shares granted under the scheme is measured based on the closing price of the Company’s ordinary shares as reported by Nasdaq Exchange on the date of grant.
For those ordinary shares vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
For
the restricted share units (“RSUs”), the fair value is recognized over the period based on the derived service period (usually
the vesting period), on a straight-line basis. The valuations assume no dividends will be paid. The Company has assumed
During the three and nine months ended September 30, 2023, the Company
recorded $
As
of September 30, 2023, total unrecognized compensation remaining to be recognized in future periods for RSUs totaled $
| As of | ||||||||||||||||
| September 30, 2023 | December 31, 2022 | |||||||||||||||
| Number
of RSUs | Weighted Average Grant Price | Number
of RSUs | Weighted Average Grant Price | |||||||||||||
| Outstanding, beginning of period/year | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Outstanding, end of period/year | $ | $ | ||||||||||||||
Forgiveness of Amounts Due to the Holding Company
During
the three and nine months ended September 30, 2023, TAG agreed to forgive the Company $
F-25
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 16 — OPERATING COST AND EXPENSES
Commission Expense
Pursuant to the terms of respective contracts, commission expense represents certain premiums from insurance or investment products paid to agents. Commission rates vary by market due to local practice, competition, and regulations. The Company charged commission expense on a systematic basis that is consistent with the revenue recognition.
During
the three months ended September 30, 2023 and 2022, the Company recorded $
During
the nine months ended September 30, 2023 and 2022, the Company recorded $
Personnel and Benefit Expense
Personnel
and benefit expense mainly consisted of salaries and bonus paid and payable to the employees of the Company. During the nine months ended
September 30, 2023, the Company reversed the annual bonus of $
During
the three months ended September 30, 2023 and 2022, the Company recorded $
During
the nine months ended September 30, 2023 and 2022, the Company recorded $
Other General and Administrative Expenses
The Company incurred different types of expenditures under other general and administrative expenses. They primarily consist of depreciation of property and equipment, legal and professional fees, and management fee expenses which are allocated for certain corporate office expenses.
During
the three months ended September 30, 2023 and 2022, the Company recorded $
During
the nine months ended September 30, 2023 and 2022, the Company recorded $
NOTE 17 — INCOME TAXES
| Three
months ended September 30, | Nine
months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Current tax | $ | $ | $ | $ | ||||||||||||
F-26
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
The Company’s subsidiaries that are subject to taxes in the jurisdictions in which they operate, as follows:
British Virgin Islands
The Company is incorporated in the British Virgin Islands and is not subject to taxation. In addition, upon payments of dividends by these entities to their shareholder, no British Virgin Islands withholding tax will be imposed.
Hong Kong
The
Company’s subsidiaries operating in Hong Kong is subject to the Hong Kong Profits Tax at the income tax rates ranging from
| September 30, 2023 | December 31, 2022 | |||||||
| Deferred tax liabilities: | ||||||||
| Accelerated depreciation | $ | $ | ||||||
| Deferred tax assets, net: | ||||||||
| Net operating loss carryforwards | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
As
of September 30, 2023 and December 31, 2022, the operations incurred $
Uncertain tax positions
The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the nine months ended September 30, 2023 and 2022 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from September 30, 2023.
F-27
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 18 — SEGMENT INFORMATION
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.
| Segments | Scope of Business Activities | |
- Providing access to financial products and services to licensed brokers.
- Providing operational support for the submission and processing of product applications.
- Providing supporting tools for commission calculations, customer engagement, sales team management, customer conversion, etc.
- Providing training resources and materials.
- Facilitating the placement of investment products for the fund and/or product provider, in exchange for the fund management services. | ||
The four business segments were determined based primarily on how the chief operating decision maker views and evaluates the operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services are considered in determining the formation of these operating segments.
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation on property and equipment | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment loss, net | ( | ) | ( | ) | ||||||||||||||||
| Total assets as of September 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
F-28
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Less: inter-segment | ( | ) | ( | ) | ||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation on property and equipment | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment income, net | ||||||||||||||||||||
| Total assets as of September 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation on property and equipment | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment income, net | ||||||||||||||||||||
| Total assets as of September 30, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Distribution
Business | Platform
Business | Fintech
Business | Healthcare
Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Less: inter-segment | ( | ) | ( | ) | ||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation on property and equipment | ||||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Investment loss, net | ( | ) | ( | ) | ||||||||||||||||
| Total assets as of September 30, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
All of the Company’s customers, operations and assets are based in Hong Kong.
NOTE 19 — RELATED PARTY BALANCES AND TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by the holding company. Amounts represent advances or amounts paid in satisfaction of liabilities.
F-29
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| As of | ||||||||||||
| September 30,
2023 | December 31,
2022 | |||||||||||
| Accounts receivable | (a) | $ | $ | |||||||||
| Borrowing | (b) | $ | ||||||||||
| Amounts due to the holding company | (c) | $ | $ | |||||||||
| (a) |
| (b) |
| (c) |
In
the ordinary course of business, during the three and nine months ended September 30, 2023 and 2022, the Company involved with transactions,
either at cost or current market prices and on the normal commercial terms among related parties.
| Three
months ended September 30, | Nine
months ended September 30, | |||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||
| Asset management service income | (d) | $ | $ | $ | $ | |||||||||||||||
| Commission expenses | (e) | |||||||||||||||||||
| Office rental and operating fees | (f) | |||||||||||||||||||
| General and administrative expense allocated | (g) | |||||||||||||||||||
| Purchase of investment from the holding company | (h) | |||||||||||||||||||
| Purchase of office building from the holding company | (i) | |||||||||||||||||||
| Declaration of special dividends to the holding company | (j) | $ | $ | $ | $ | |||||||||||||||
| (d) |
| (e) |
| (f) |
F-30
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
| (g) |
| (h) |
| (i) |
| (j) |
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
NOTE 20 — CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
| (a) | Major customers |
Three months ended September
30, | Nine
months ended September 30, 2023 | September 30,
2023 | ||||||||||||||||||
| Customer | Revenues | Percentage of revenues | Revenues | Percentage of revenues | Accounts receivable | |||||||||||||||
| Customer A | $ | $ | $ | |||||||||||||||||
| Customer B | * | $ | $ | |||||||||||||||||
| Customer C | $ | $ | $ | |||||||||||||||||
| Customer D | $ | $ | $ | |||||||||||||||||
| * |
For
the three and nine months ended September 30, 2022, there was no single customer who accounted for
All of the Company’s major customers are located in Hong Kong.
| (b) | Credit risk |
Financial
instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, accounts receivable,
loans receivable and notes receivable. Cash equivalents are maintained with high credit quality institutions, the composition and maturities
of which are regularly monitored by management. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$
F-31
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
For accounts receivable, loans receivable and notes receivable, the Company determines, on a continuing basis, the probable losses and sets up an allowance for credit losses and loan losses based on the estimated realizable value. Credit of money lending business is controlled by the application of credit approvals, limits and monitoring procedures.
The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. To minimize credit risk, the Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances.
| As of | ||||||||
| September 30,
2023 | December 31,
2022 | |||||||
| Customer E | % | % | ||||||
| Customer F | % | % | ||||||
| Customer G | % | % | ||||||
| (c) | Economic and political risk |
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
| (d) | Exchange rate risk |
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ and Sterling on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
For
the three months ended September 30, 2023 and 2022, the Company recorded the foreign exchange loss of $
For
the nine months ended September 30, 2023 and 2022, the Company recorded the foreign exchange gain of $
| (e) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
F-32
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
NOTE 21 — COMMITMENTS AND CONTINGENCIES
Litigation — From time to time, the Company is involved in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
As at September 30, 2023, the Company involved with various legal proceedings:-
Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former shareholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action
Case: HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies
and the former directors, shareholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation
from an inducement of the fund subscription and claimed for compensatory damage of approximately $
Action
Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant
by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and
claimed for compensatory damage of approximately $
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred.
Notes
Receivable Agreement — Pursuant to the Agreements, subject to demand, the Company is committed to subscribe the notes of Investment
A with an aggregate amount of $
Capital Contribution in Investment F —
Pursuant to the subscription agreement, being a limited partner of Investment F, subject to demand, the Company was committed to contribute
an aggregate capital amount of $
Sale and Purchase Agreement — Pursuant
to the agreement dated April 5, 2023, entered with Sony Life Singapore Pte. Ltd. (“SLS”), an independent third party, the
Company is committed to purchase
F-33
AGBA GROUP HOLDING LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”))
Equity Purchase Agreement — Pursuant
to the equity purchase agreement dated September 7, 2023, entered into with Williamsburg Venture Holdings, LLC (“Williamsburg”),
an independent third party, it agreed to invest up to $
Nasdaq
Compliance — On September 20, 2023, the Company received a written notice (the
“Notice”) from Nasdaq, notifying that the Company had publicly traded under $1.00 per share for a period of 30 consecutive
trading days or more, which failed to comply with Nasdaq Listing Rule 5550(a)(2) and Nasdaq Listing Rule 5810(c)(3)(A). The Notice
had no immediate effect but, before March 18, 2024, the Company was required to regain compliance by trading at least $
NOTE 22 — SUBSEQUENT EVENTS
On October 17, 2023, the Company completed to
sell the office premises, which classified as asset held for sale as of September 30, 2023, for a consideration of $
On November 7, 2023, the Company signed private placement binding term
sheets with an institutional investor, the Company’s Chief Executive Officer, Mr. Ng Wing Fai, and the Company’s management
team pursuant to which the Company will receive gross proceeds of approximately $
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before unaudited condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2023, up to November 14, 2023 that the unaudited condensed consolidated financial statements were available to be issued.
F-34
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us”, “the Group” or the “Company” refer to AGBA Group Holding Limited. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section included in our 2022 Annual Report filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Business Overview
We are a leading one-stop financial supermarket based in Hong Kong servicing over 400,000 individual and corporate customers. We offer the broadest set of financial services and healthcare products in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) through a tech-led ecosystem, enabling clients to unlock the choices that best suit their needs.
We currently operate four major areas of businesses, comprising of:
| 1. | Distribution Business: The Group’s powerful financial advisor business is the largest in the market, it engages in the personal financial advisory business (including advising and sales of a full range of financial services products including long-term life insurance, savings and mortgages), with additional internal and external channels being developed and added. |
| 2. | Platform Business: The Group operates as a “financial supermarket” offering over 1,800 financial products to a large universe of retail and corporate customers. |
| 3. | Healthcare Business: Through the Group’s 4% stake in and a strategic partnership with HCMPS, operating as one of the largest healthcare management organizations in the Hong Kong and Macau region, with over 800 doctors in its network. Established in 1979, it is one of the most reputed healthcare brands in Hong Kong. |
| 4. | Fintech Business: The Group has an ensemble of leading FinTech assets and businesses in Europe and Hong Kong. In addition to financial gains, the Group also derives substantial knowledge transfers from its investee companies, supporting the development and growth of the Group’s new business models. |
1
Distribution Business
The Distribution Business comprises a variety of captive financial services distribution channels. We have built a market leading financial advisors distribution channel in Hong Kong. We have also built other distribution channels alongside our market leading financial advisors business.
Our combined captive distribution channels enable us to directly access one of the largest pools of customers accessible to independent financial services providers in Hong Kong.
| Channel | Description | |
| Financial Advisors Business (“FA Business”) | “Focus” is engaged in the distribution of life insurance, asset management, property-casualty and Mandatory Provident Fund products through its teams of independent financial advisors (brokers). | |
| Alternative Distribution Business | A collection of distribution channels, including salaried financial planners targeting HNWI, development teams pursuing corporate partnerships and incubating financial advisors teams. | |
| Digital Business | AGBA Money is a direct-to-consumer digital app that provides various financial products and services to retail customers. |
Our largest distribution channel is the FA Business, operating under the brand name Focus. With its large salesforce of financial advisors, “Focus” provides a wide range of financial products and independent advisory services to individual and corporate customers, primarily in connection with life insurance products. Our FA Business has been the clear market leader in the insurance brokerage industry in Hong Kong for decades, building up a large and highly productive salesforce. As of September 30, 2023, there were around 1,261 financial advisors at “Focus”, organized into 28 sales teams. Each team is led by a “tree head”, responsible for managing the financial advisors within their teams.
In addition to the FA Business, we continue to expand our distribution footprint with the establishment and expansion of a number of additional distribution channels, collectively known as our Alternative Distribution Business. These distribution channels are targeted at specific customer segments and/or capturing specific distribution opportunities.
Combined with our Digital Business, we now have a well-diversified range of distribution channels and capabilities.
During 2022, we continued to make significant investments into developing and expanding our financial advisors salesforce, broadening and deepening the product range, as well as upgrading the supporting infrastructure. Our infrastructure not only supports the financial consultants in engaging with their customers, it also provides extensive operational support in relation to the processing of transactions, associated payment flows, as well as after-sales services. Building our infrastructure required substantial investments into technological, operational and financial systems, as well as the development of comprehensive operational and support teams (operations support, customer services, payments, etc.). Since many of the financial products offered to our customers are regulated, on top of the various operational requirements, we have built significant internal capabilities in the areas of risk and internal control, as well as legal and compliance to ensure an appropriate level of regulatory compliance and supervision.
As a result of our efforts to expand our distribution capabilities and improve our supporting infrastructure, we have successfully developed these inter-related strategic assets:
| ● | Vast customer base in Hong Kong and growing customer base in Mainland China. |
| ● | State-of-the-art supporting infrastructure. |
| ● | Relationships with and access to a broad range of leading global financial product providers. |
| ● | Deep market knowledge and understanding. |
| ● | Highly productive and well-trained salesforce. |
2
We will continue to capitalize on these core strategic assets and match them with the emerging opportunities in our three core industries (life insurance, wealth management and healthcare).
For the three and nine months ended September 30, 2023, the Company made $11.9 million and $37.6 million, respectively from commission in the Distribution Business. The revenue attributed to the Company during the first quarter of 2023 only captured an insignificant portion of the revenues actually generated by the financial advisors currently associated with Focus.
Upon the re-opening of China Border, we will continue to widen our distribution footprint and actively explore further opportunities to develop partnerships and generate customer leads on the ground in Mainland China, as well as refining our abilities to service our customer base. We expect sales volumes to return to the levels previously recorded, prior to the pandemic period, especially with the re-opening of the Mainland border and the ongoing integration of Hong Kong into the Greater Bay area.
Platform Business
The Platform business, through OPH and its subsidiaries, is a one-stop financial supermarket with a breadth of products and services that is unrivaled in Hong Kong sourced from leading global product providers.
The Platform Business was set up to take advantage of the decades-long experience we built up in supporting the largest financial advisors salesforce in Hong Kong. We were already servicing a large pool of customers and in the process, built up a wide library of world class financial products and constructed a state-of-the-art technological and operational infrastructure.
The Platform Business now operates this full-service platform under its “OnePlatform” brand and has opened it up to banks, other financial institutions, family offices, brokers, and individual independent financial advisors that are looking for support in advising and serving their retail clients.
Our technology-enabled Platform Business offers a wide range of financial products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, money lending and real estate agency.
In addition to its unrivaled product-shelf, the Platform Business offers digital-enabled sales management and support solutions, business operations support, comprehensive customer services, and training support.
Currently, our platform financial services and investment products mainly comprise mutual fund distributions, portfolio management, money lending, insurance and Mandatory Provident Fund (MPF) products, and international real estate referral and brokerage services, as discussed below:-
The OnePlatform brand currently covers 74 insurance providers selling over 1,200 products, and 45 asset management fund houses with over 970 products.
Fintech Business
The Fintech Business has collected an ensemble of valuable fintech assets in its investment portfolio. Fintech Business’ management team has strived to establish the business as a leading name in the fintech investment sector.
Core Fintech investments held under the Fintech Business as of September 30, 2023 include:
| 1. | An investment in Tandem Money Limited, a UK digital bank. |
| 2. | An investment in CurrencyFair Limited, a B2B and B2C payments company. |
| 3. | An investment in Oscar Health Inc., a US direct-to-consumer digital health insurer. |
| 4. | An investment in Goxip Inc., a fashion media platform based in Hong Kong. |
| 5. | An investment in LC Healthcare Fund I, L.P., a PRC healthcare and healthtech investment fund. |
3
| Carrying
amount in US$ thousands (1) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Tandem Money Limited | 16,179 | 16,031 | ||||||
| CurrencyFair Limited | 5,575 | 5,718 | ||||||
| Oscar Health Inc.(2) | — | 2,443 | ||||||
| Goxip Inc. | 512 | 513 | ||||||
| LC Healthcare Fund I, L.P. | 9,375 | 11,805 | ||||||
Notes:
| (1) | Carrying amount represents Fintech’s attributable interest in the investment portfolio asset. |
| (2) | During the nine months ended September 30, 2023, the Company partially sold 993,108 shares of Oscar Health Inc. on Nasdaq Stock Exchange with an average current market price of $4.01 per share, resulting with a realized gain of $1.5 million. |
Healthcare Business
We currently hold a 4% equity stake in HCMPS, one of the leading healthcare management organizations in Hong Kong.
Founded in 1979 and currently operating under the Dr. Jones Fok & Associates Medical Scheme Management Limited (“JFA”) brand, JFA is one of the most reputed healthcare brands in Hong Kong. It has four self-operated medical centers and a network of over 700 healthcare service providers – providing healthcare schemes for more than 500 corporate clients with over 300,000 scheme members. JFA’s clients include blue chip companies from various industry and leading insurers. Apart from Hong Kong, JFA is the largest operator in Macau with around 70 clinics.
JFA operates a city-wide medical network that includes 340 general practitioners (“GP”), 11 laboratories and imaging centers, 273 specialist doctors, 25 physiotherapy centers, 12 Chinese medicine practitioner clinics, all based in Hong Kong, and 69 GP clinics in Macau. Over 380,000 out-patient and in-patient visits are recorded annually through HCMPS’s medical network. JFA offers its patients a full range of medical services, including general services, specialist services, physiotherapy, Chinese medicine, dental, vaccination, X-ray, laboratories and imaging services.
We believe that the future of healthcare is in “Smart Health” – technology that offers improved patient-care management and leverages data as the new tool for solving complex healthcare challenges with reduced operating costs. We will focus on technology/digitalization and consumerization of healthcare to create an ecosystem empowering customers to proactively manage their health and well-being and to improve their access to healthcare at a lower cost – with connectivity across the care continuum. We believe that JFA has the captive customer base, infrastructure and product/service offerings to optimize customer experience to further grab market share.
We are currently working to transform JFA into the best medical care institution in Asia by 2025, redefining industry standards in the Greater Bay Area and offering market-leading customer care and best-in-class infrastructure empowered by data analytics.
4
Results of Operations
Three months ended September 30, 2023 vs. Three months ended September 30, 2022
| Three months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Revenues: | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 41 | $ | 38 | 3 | 7.89 | ||||||||||
| Total interest income | 41 | 38 | 3 | 7.89 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | 12,169 | 12,169 | — | — | ||||||||||||
| Recurring service fees | 752 | 793 | (41 | ) | (5.17 | ) | ||||||||||
| Total non-interest income | 12,921 | 12,962 | (41 | ) | (0.32 | ) | ||||||||||
| Total revenues from others | 12,962 | 13,000 | (38 | ) | (0.29 | ) | ||||||||||
| Non-interest income: | ||||||||||||||||
| Recurring service fees | 245 | 244 | 1 | 0.41 | ||||||||||||
| Total revenues from related parties | 245 | 244 | 1 | 0.41 | ||||||||||||
| Total revenues | 13,207 | 13,244 | (37 | ) | (0.28 | ) | ||||||||||
| Operating cost and expenses: | ||||||||||||||||
| Commission expense | (8,916 | ) | (8,038 | ) | 878 | 10.92 | ||||||||||
| Sales and marketing expense | (754 | ) | (1,457 | ) | (703 | ) | (48.25 | ) | ||||||||
| Technology expense | (741 | ) | (335 | ) | 406 | 121.19 | ||||||||||
| Personnel and benefit expense | (7,764 | ) | (3,325 | ) | 4,439 | 133.50 | ||||||||||
| Other general and administrative expenses | (5,982 | ) | (1,094 | ) | 4,888 | 446.80 | ||||||||||
| Total operating cost and expenses | (24,157 | ) | (14,249 | ) | 9,908 | 69.53 | ||||||||||
| Loss from operations | (10,950 | ) | (1,005 | ) | 9,945 | 989.55 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 17 | 7 | 10 | 142.86 | ||||||||||||
| Interest expense | (393 | ) | (20 | ) | 373 | 1,865.00 | ||||||||||
| Foreign exchange loss, net | (864 | ) | (2,083 | ) | (1,219 | ) | (58.52 | ) | ||||||||
| Investment (loss) income, net | (793 | ) | 742 | (1,535 | ) | (206.87 | ) | |||||||||
| Change in fair value of warrant liabilities | 1 | — | 1 | N/A | ||||||||||||
| Rental income | 79 | 79 | — | — | ||||||||||||
| Sundry income | 38 | 14 | 24 | 171.43 | ||||||||||||
| Total other expense, net | (1,915 | ) | (1,261 | ) | 654 | 51.86 | ||||||||||
| Loss before income taxes | (12,865 | ) | (2,266 | ) | 10,599 | 467.74 | ||||||||||
| Income tax expense | (56 | ) | (127 | ) | (71 | ) | (55.91 | ) | ||||||||
| NET LOSS | $ | (12,921 | ) | $ | (2,393 | ) | 10,528 | 439.95 | ||||||||
Revenue
The following table summarizes the major operating revenues for the three months ended September 30, 2023 and 2022:
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 11,876 | $ | 11,753 | 123 | 1.05 | ||||||||||
| Platform Business | 1,331 | 1,491 | (160 | ) | (10.73 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 13,207 | $ | 13,244 | (37 | ) | (0.28 | ) | ||||||||
5
Distribution Business
The Distribution Business contributed 89.92% and 88.74% of the total revenue for the three months ended September 30, 2023 and 2022, respectively. Income from the Distribution Business mainly related to commissions earned from insurance policies, which slightly increased by US$0.1 million, or 1.05%, from US$11.8 million in 2022 to US$11.9 million in 2023. The largest segment of the Distribution Business is our FA Business, operated under the “Focus” brand name.
Summarized revenue breakdown by product and type of contracts:
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| By product: | ||||||||||||||||
| Life insurance | $ | 11,147 | $ | 11,516 | (369 | ) | (3.20 | ) | ||||||||
| Property-casualty insurance | 467 | 88 | 379 | 430.68 | ||||||||||||
| Mandatory provident fund and related revenues | 262 | 149 | 113 | 75.84 | ||||||||||||
| 11,876 | 11,753 | 123 | 1.05 | |||||||||||||
| By the type of contracts: | ||||||||||||||||
| - New and or current year | 11,496 | 11,418 | 78 | 0.68 | ||||||||||||
| - Recurring | 380 | 335 | 45 | 13.43 | ||||||||||||
| TOTAL | $ | 11,876 | $ | 11,753 | 123 | 1.05 | ||||||||||
Platform Business
The Platform Business contributed 10.08% and 11.26% of the total revenue for the three months ended September 30, 2023 and 2022, respectively.
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Commission | $ | 293 | $ | 416 | (123 | ) | (29.57 | ) | ||||||||
| Recurring service fees | 996 | 1,037 | (41 | ) | (3.95 | ) | ||||||||||
| Loans | 42 | 38 | 4 | 10.53 | ||||||||||||
| TOTAL | $ | 1,331 | $ | 1,491 | (160 | ) | (10.73 | ) | ||||||||
Operating Expenses
Commission Expense
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 8,593 | $ | 7,655 | 938 | 12.25 | ||||||||||
| Platform Business | 323 | 383 | (60 | ) | (15.67 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 8,916 | $ | 8,038 | 878 | 10.92 | ||||||||||
The Distribution Business contributed 96.38% and 95.24% of the total commission expense for the three months ended September 30, 2023 and 2022, respectively. Commission expense for the Distribution Business increased by US$0.9 million, or 12.25%, from US$7.7 million in 2022 to US$8.6 million in 2023. The increase mainly attributed to the bonus payment during the three months ended September 30, 2023 to retain the financial advisors.
6
Sales and Marketing Expense
Sales and Marketing expense decreased by US$0.7 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The decrease in sales and marketing expense is mainly attributed to lower spending associated with “AGBA” corporate branding and associated product campaigns for celebrating the successful listing in last year.
Technology Expense
Technology expense increased by US$0.4 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The increase was primarily due to increased headcount to support the continuing growth in the business expansion.
Personnel and Benefit Expense
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Personnel and benefit | $ | 6,446 | $ | 3,325 | 3,121 | 93.86 | ||||||||||
| Share-based compensation to employees | 1,318 | — | 1,318 | N/A | ||||||||||||
| TOTAL | $ | 7,764 | $ | 3,325 | 4,439 | 133.50 | ||||||||||
Personnel and benefit cost increased by US$3.1 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The increase was primarily due to the increased headcount to support the continuing growth of the Platform Business and Distribution Business.
Share-Based Compensation
Pursuant to the Share Award Scheme (the “Scheme”), the Company filed S-8 registration statement to register 11,675,397 ordinary shares on February 24, 2023.
During the three months ended September 30, 2023, the Company recorded US$1.3 million in share-based compensation expense on the restricted share units. There was no such expense during the three months ended September 30, 2022. The fair value of the restricted share units is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis.
Other General and Administrative Expenses
| Three
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Depreciation | $ | 23 | $ | 96 | (73 | ) | (76.04 | ) | ||||||||
| Financial data subscription expense | 154 | 132 | 22 | 16.67 | ||||||||||||
| Legal and professional fees | 1,379 | 245 | 1,134 | 462.86 | ||||||||||||
| Office rental and operating fees | 1,221 | 560 | 661 | 118.04 | ||||||||||||
| Share-based compensation (service related) | 2,151 | — | 2,151 | N/A | ||||||||||||
| Other operating expenses | 1,054 | 61 | 993 | 1,627.87 | ||||||||||||
| TOTAL | $ | 5,982 | $ | 1,094 | 4,888 | 446.80 | ||||||||||
Total other general and administrative expenses increased by US$4.9 million, or 446.80%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The net increase was mainly due to the increase in legal and professional fees of US$1.1 million, office rental and operating fees of US$0.7 million, and share-based compensation of $2.2 million. Upon the consummation of Business Combination, the post-combination entity has expensed more as a listed company, with a significant increase in the legal and professional fees and office rental and operating fees increased were primarily attributed to 1) the US legal counsel fee incurred and 2) the office and administrative expenses pay to the holding company for the use of office premises in Trust Tower and Hopewell Centre, including building management fees, government rates and rent, office rent, lease-related interest, and depreciation actually incurred by the holding company, with the increased occupancy from business expansion. Share-based compensation for the three months ended September 30, 2023 was mainly related to marketing consultancy service rendered by certain third party consultants.
7
Loss from Operations
Loss from operations increased by US$9.9 million, or 989.55%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The increase was mainly attributable to the increase in operating expenses of US$9.9 million.
Other Income (Expense), Net
Interest Income
Interest income increased by US$0.01 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.
Interest Expense
Interest expense increased by US$0.4 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. The increase was mainly attributed to the increase in short-term borrowings during the period.
Foreign Exchange Loss, Net
Foreign exchange loss mainly represented the unrealized net foreign exchange gain (loss) from the translation of long-term investments which are mostly denominated in Sterling. The net foreign exchange loss decreased by US$1.2 million or 58.52% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, due to the stronger Sterling exchange rate.
Investment (Loss) Income, Net
| Three
month ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Unrealized gain in marketable equity securities | $ | — | $ | 742 | (742 | ) | (100.00 | ) | ||||||||
| Unrealized loss in non-marketable equity securities | (1,030 | ) | — | 1,030 | N/A | |||||||||||
| Dividend income | 237 | — | 237 | N/A | ||||||||||||
| TOTAL | $ | (793 | ) | $ | 742 | (1,535 | ) | (206.87 | ) | |||||||
Investment loss decreased by US$1.5 million, or 206.87%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, mainly as a result of the unrealized loss in non-marketable equity securities of US$1.0 million, offset by dividend income of US$0.2 million for the three months ended September 30, 2023 as compared to $0.7 million unrealized gain in marketable equity securities for the same period ended in 2022.
Income Tax Expense
Income tax expense decreased by US$0.07 million, or 55.91% for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily attributable to the over provision of income tax for prior years.
Net Loss
Net loss increased by US$10.5 million, or 439.95% for the three months ended September 30, 2023, as compared to September 30, 2022, primarily due to the increase in operating cost and expenses of US$9.9 million and increase in other expense, net of US$0.7 million.
8
Nine months ended September 30, 2023 vs Nine months ended September 30, 2022
| Nine months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Revenues: | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 118 | $ | 137 | (19 | ) | (13.87 | ) | ||||||||
| Total interest income | 118 | 137 | (19 | ) | (13.87 | ) | ||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | 38,507 | 15,933 | 22,574 | 141.68 | ||||||||||||
| Recurring service fees | 2,301 | 2,615 | (314 | ) | (12.01 | ) | ||||||||||
| Total non-interest income | 40,808 | 18,548 | 22,260 | 120.01 | ||||||||||||
| Total revenues from others | 40,926 | 18,685 | 22,241 | 119.03 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Recurring service fees | 725 | 725 | — | — | ||||||||||||
| Total revenues from related parties | 725 | 725 | — | — | ||||||||||||
| Total revenues | 41,651 | 19,410 | 22,241 | 114.59 | ||||||||||||
| Operating cost and expenses: | ||||||||||||||||
| Commission expense | (28,196 | ) | (11,219 | ) | 16,977 | 151.32 | ||||||||||
| Sales and marketing expense | (3,125 | ) | (2,088 | ) | 1,037 | 49.66 | ||||||||||
| Technology expense | (2,678 | ) | (619 | ) | 2,059 | 332.63 | ||||||||||
| Personnel and benefit expense | (22,672 | ) | (8,734 | ) | 13,938 | 159.58 | ||||||||||
| Other general and administrative expenses | (20,493 | ) | (3,176 | ) | 17,317 | 545.25 | ||||||||||
| Total operating cost and expenses | (77,164 | ) | (25,836 | ) | 51,328 | 198.67 | ||||||||||
| Loss from operations | (35,513 | ) | (6,426 | ) | 29,087 | 452.65 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 385 | 24 | 361 | 1,504.17 | ||||||||||||
| Interest expense | (806 | ) | (20 | ) | 786 | 3,930.00 | ||||||||||
| Foreign exchange gain (loss), net | 41 | (4,690 | ) | 4,731 | 100.87 | |||||||||||
| Investment income (loss), net | 489 | (2,793 | ) | 3,282 | 117.51 | |||||||||||
| Change in fair value of warrant liabilities | 3 | — | 3 | N/A | ||||||||||||
| Change in fair value of forward share purchase liability | (82 | ) | — | (82 | ) | N/A | ||||||||||
| Loss on settlement of forward share purchase agreement | (379 | ) | — | (379 | ) | N/A | ||||||||||
| Rental income | 217 | 236 | (19 | ) | (8.05 | ) | ||||||||||
| Sundry income | 122 | 169 | (47 | ) | (27.81 | ) | ||||||||||
| Total other expense, net | (10 | ) | (7,074 | ) | (7,064 | ) | (99.86 | ) | ||||||||
| Loss before income taxes | (35,523 | ) | (13,500 | ) | 22,023 | 163.13 | ||||||||||
| Income tax expense | (56 | ) | (232 | ) | (176 | ) | (75.86 | ) | ||||||||
| NET LOSS | $ | (35,579 | ) | $ | (13,732 | ) | 21,847 | 159.10 | ||||||||
Revenue
The following table summarizes the major operating revenues for the nine months ended September 30, 2023 and 2022:
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 37,569 | $ | 14,307 | 23,262 | 162.59 | ||||||||||
| Platform Business | 4,082 | 5,103 | (1,021 | ) | (20.01 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 41,651 | $ | 19,410 | 22,241 | 114.59 | ||||||||||
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Distribution Business
The Distribution Business contributed 90.20% and 73.71% of the total revenue for the nine months ended September 30, 2023 and 2022, respectively. Income from the Distribution Business mainly related to commissions earned, which significantly increased by US$23.3 million, or 162.59%, from US$14.3 million in 2022 to US$37.6 million in 2023. The largest segment of the Distribution Business is our FA Business, operated under the “Focus” brand name. Commissions generated by the financial advisors currently associated with Focus, along with associated potential platform commissions and fees, were attributable to the Legacy Group and as such not reflected in the results for the Distribution Business for 2022.
Summarized revenue breakdown by product and type of contracts:
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| By product: | ||||||||||||||||
| Life insurance | $ | 35,286 | $ | 14,014 | 21,272 | 151.79 | ||||||||||
| Property-casualty insurance | 1,523 | 136 | 1,387 | 1,019.85 | ||||||||||||
| Mandatory provident fund and related revenues | 760 | 157 | 603 | 384.08 | ||||||||||||
| 37,569 | 14,307 | 23,262 | 162.59 | |||||||||||||
| By the type of contracts: | ||||||||||||||||
| - New and or current year | 36,944 | 13,718 | 23,226 | 169.31 | ||||||||||||
| - Recurring | 625 | 589 | 36 | 6.11 | ||||||||||||
| TOTAL | $ | 37,569 | $ | 14,307 | 23,262 | 162.59 | ||||||||||
Platform Business
The Platform Business contributed 9.80% and 26.29% of the total revenue for the nine months ended September 30, 2023 and 2022, respectively.
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Commission | $ | 938 | $ | 1,626 | (688 | ) | (42.31 | ) | ||||||||
| Recurring service fees | 3,026 | 3,340 | (314 | ) | (9.40 | ) | ||||||||||
| Loans | 118 | 137 | (19 | ) | (13.87 | ) | ||||||||||
| TOTAL | $ | 4,082 | $ | 5,103 | (1,021 | ) | (20.01 | ) | ||||||||
Operating Expenses
Commission Expense
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 27,133 | $ | 9,630 | 17,503 | 181.75 | ||||||||||
| Platform Business | 1,063 | 1,589 | (526 | ) | (33.10 | ) | ||||||||||
| Fintech Business | — | -— | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 28,196 | $ | 11,219 | 16,977 | 151.32 | ||||||||||
The Distribution Business contributed 96.23% and 85.84% of the total commission expense for the nine months ended September 30, 2023 and 2022, respectively. Commission expense for the Distribution Business increased by US$17.5 million, or 181.75%, from US$9.6 million in 2022 to US$27.1 million in 2023. As a result of the increase in revenue associated with the Distribution Business, commission expense relatively increased.
10
Sales and Marketing Expense
Sales and Marketing expense increased by US$1.0 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase in sales and marketing expense mainly reflects spending associated with “AGBA” corporate branding and associated product campaigns, celebrating it’s the successful listing, through public relations, corporate video and campaigns, digital marketing and public advertisements.
Technology Expense
Technology expense increased by US$2.1 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase was primarily due to increased headcount to support the continuing growth in the business expansion.
Personnel and Benefit Expense
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Personnel and benefit | $ | 18,719 | $ | 8,734 | 9,985 | 114.32 | ||||||||||
| Share-based compensation to employees | 3,953 | — | 3,953 | N/A | ||||||||||||
| TOTAL | $ | 22,672 | $ | 8,734 | 13,938 | 159.58 | ||||||||||
Personnel and benefit cost increased by US$10.0 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase was primarily due to the increased headcount to support the continuing growth of the Platform Business and Distribution Business.
Share-Based Compensation
Pursuant to the Share Award Scheme (the “Scheme”), the Company filed S-8 registration statement to register 11,675,397 ordinary shares on February 24, 2023.
During the nine months ended September 30, 2023, the Company recorded US$4.0 million in share-based compensation expense on the restricted share units. There was no such expense during the nine months ended September 30, 2022. The fair value of the restricted share units is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis.
Other General and Administrative Expenses
| Nine
months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Depreciation on property and equipment | $ | 238 | $ | 288 | (50 | ) | (17.36 | ) | ||||||||
| Financial data subscription expense | 293 | 401 | (108 | ) | (26.93 | ) | ||||||||||
| Legal and professional fees | 4,474 | 711 | 3,763 | 529.25 | ||||||||||||
| Office rental and operating fees | 5,089 | 1,564 | 3,525 | 225.38 | ||||||||||||
| Share-based compensation (service related) | 8,026 | — | 8,026 | N/A | ||||||||||||
| Other operating expenses | 2,373 | 212 | 2,161 | 1,019.34 | ||||||||||||
| TOTAL | $ | 20,493 | $ | 3,176 | 17,317 | 545.25 | ||||||||||
Total other general and administrative expenses increased by US$17.3 million, or 545.25%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The net increase was mainly due to the increase in legal and professional fees of US$3.8 million, office rental and operating fees of US$3.5 million, share-based compensation of US$8.0 million, other operating expenses of US$2.2 million, offset by a decrease in financial data subscription expense of US$0.1 million. Upon the consummation of Business Combination, the post-combination entity has expensed more as a listed company, with a significant increase in the legal and professional fees and office rental and operating fees increased were primarily attributed to 1) the US legal counsel fee incurred and 2) the office and administrative expenses pay to the holding company for the use of office premises in Trust Tower and Hopewell Centre, including building management fees, government rates and rent, office rent, lease-related interest, and depreciation actually incurred by the holding company, with the increased occupancy from business expansion. Share-based compensation for the nine months ended September 30, 2023 was mainly related to marketing consultancy services rendered by certain third party consultants, payable by aggregated 4,400,000 ordinary shares at the market price ranging from $0.860 to $2.124 per share.
11
Loss from Operations
Loss from operations increased by US$29.1 million, or 452.65%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase was mainly attributable to the increase in operating expenses of US$51.3 million and offset by the increase in revenues of US$22.2 million.
Other Income (Expense), Net
Interest Income
Interest income increased by US$0.4 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.
Interest Expense
Interest expense increased by US$0.8 million for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. The increase was mainly attributed to the increase in borrowings during the period.
Foreign Exchange Gain (Loss), Net
Foreign exchange gain (loss) mainly represented the unrealized net foreign exchange gain (loss) from the translation of long-term investments which are mostly denominated in Sterling. The net foreign exchange gain increased by US$4.7 million or 100.87% for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, due to the stronger Sterling exchange rate.
Investment Income (Loss), Net
| Nine
month ended September 30, | ||||||||||||||||
| 2023 | 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Unrealized loss in marketable equity securities | $ | — | $ | (2,793 | ) | (2,793 | ) | (100.00 | ) | |||||||
| Realized gain in marketable equity securities | 1,543 | — | 1,543 | N/A | ||||||||||||
| Unrealized loss in non-marketable equity securities | (2,458 | ) | — | 2,458 | N/A | |||||||||||
| Dividend income | 1,404 | — | 1,404 | N/A | ||||||||||||
| TOTAL | $ | 489 | $ | (2,793 | ) | 3,282 | 117.51 | |||||||||
Investment income increased by US$3.3 million, or 117.51%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, mainly as a result of the realized gain of US$1.5 million on the sale of the shares of Oscar Health Inc. in the open market at the average market price of $4.01 per shares and dividend income of US$1.4 million, offset by unrealized loss in non-marketable equity securities of US$2.5 million, which was fewer than the unrealized loss in marketable securities of US$2.8 million.
Loss on settlement of forward share purchase agreement
Loss on settlement of forward share purchase agreement was resulted from the early termination of the Meteora Backstop Agreement on June 29, 2023. For the nine months ended September 30, 2023, the loss on settlement of forward share purchase agreement was $0.4 million recognized in the unaudited condensed consolidated statements of operations and comprehensive loss.
Income Tax Expense
Income tax expense decreased by US$0.2 million, or 75.86% for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily attributable to the over provision of income tax for prior years.
Net Loss
Net loss increased by US$21.8 million, or 159.10% for the nine months ended September 30, 2023, as compared to nine months ended September 30, 2022, primarily due to the increase in operating cost and expenses of US$51.3 million, offset by the increase in revenues of US$22.2 million and increase in other expense, net of US$7.1 million.
12
Liquidity and Capital Resources
Sources of Liquidity
We have a history of operating losses and negative cash flow. During the nine months ended September 30, 2023, we reported a net loss of US$35.6 million and reported a negative operating cash flow of US$33.4 million. As of September 30, 2023, our cash balance was US$1.6 million for working capital use. Our management estimates that currently available cash will not be able to provide sufficient funds to meet the planned obligations for the next 12 months starting September 30, 2023.
Our ability to continue as a going concern is dependent on our ability to successfully implement our plans. Our management believes that it will be able to continue to grow our revenue base and control expenditures. In parallel, AGBA continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed in order to finance our business development activities, general and administrative expenses, and growth strategy. These alternatives include external borrowings, raising funds through public equity, or tapping debt markets. Although there is no assurance that, if needed, we will be able to pursue these fundraising initiatives and have access to the capital markets going forward. The unaudited condensed consolidated financial statements attached to this Form 10-Q do not include any adjustments that might result from the outcome of these uncertainties.
Future Liquidity
On a recurring basis, the primary future cash needs of the Company will be focused on operating activities, working capital, capital expenditures, investment, regulatory and compliance costs. The ability of the Company to fund these needs will depend, in part, on its ability to generate or raise cash in the future, which is subject to general economic, financial, competitive, regulatory, and other factors that are beyond its control.
The ability to fund our operating needs will depend on its future ability to continue to generate positive cash flow from operations and raise capital in the capital markets. Our management believe that we will meet known or reasonably likely future cash requirements through the combination of cash flows from operating activities, available cash balances, and external borrowings and fund raising. Our management expects that the primary cash requirements in 2023 will be to fund capital expenditures for (i) expansion of the Distribution Business and (ii) Platform Business.
If our sources of liquidity need to be augmented, additional cash requirements would likely need to be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms, or at all, in the future.
We expect that operating losses could continue into the foreseeable future as we continue to invest in growing our businesses. Based upon our current operating plans, our management believes that cash and cash equivalents will not be able to provide sufficient funds to its operations for at least the next 12 months from the date of its unaudited condensed consolidated financial statements provided with this Form 10-Q. However, these forecasts involve risks and uncertainties, and actual results could vary materially.
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenues growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our brand, and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
13
Cash Flows
As of September 30, 2023, we had cash and cash equivalents totalling US$1.6 million, and US$20.6 million in restricted cash.
As of December 31, 2022, we had cash and cash equivalents totalling US$6.4 million, and US$44.8 million in restricted cash.
The following table summarizes our cash flows for the periods presented:
| Nine
months ended September 31, | ||||||||
| 2023 | 2022 | |||||||
| (US$ in thousands) | ||||||||
| Net cash used in operating activities | $ | (33,365 | ) | $ | (2,132 | ) | ||
| Net cash provided by (used in) investing activities | 4,687 | (6,870 | ) | |||||
| Net cash used in financing activities | (415 | ) | (12,776 | ) | ||||
| Effect on exchange rate change on cash and cash equivalents | (26 | ) | (364 | ) | ||||
| Net change in cash, cash equivalents and restricted cash | (29,119 | ) | (22,142 | ) | ||||
| Cash, cash equivalents and restricted cash, at the beginning | 51,294 | 73,081 | ||||||
| Cash, cash equivalents and restricted cash, at the end | 22,175 | 50,939 | ||||||
| Representing as: | ||||||||
| Cash and cash equivalents | 1,622 | 16,261 | ||||||
| Restricted cash – fund held in escrow | 20,553 | 34,678 | ||||||
| $ | 22,175 | $ | 50,939 | |||||
The following table sets forth a summary of our working capital:
| September 30,
2023 | December 31, 2022 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Total Current Assets | $ | 34,734 | $ | 55,756 | (21,022 | ) | (37.70 | ) | ||||||||
| Total Current Liabilities | 74,545 | 97,021 | (22,476 | ) | (23.17 | ) | ||||||||||
| Working Deficit | (39,811 | ) | (41,265 | ) | (1,454 | ) | (3.52 | ) | ||||||||
Working Deficit
The working deficit as of September 30, 2023 and December 31, 2022 was amounted to approximately US$39.8 million and US$41.3 million, respectively, a decrease of US$1.5 million or 3.52%.
Cash Flows from Operating Activities
Net cash used in operating activities was US$33.4 million and US$2.1 million for the nine months ended September 30, 2023 and 2022, respectively.
Net cash used in operating activities for the nine months ended September 30, 2023 was primarily the result of the net loss of US$35.6 million, an increase in accounts receivable of US$0.6 million, increase in deposits, prepayments, and others receivable of US$2.9 million, decrease in escrow liabilities of US$8.9 million, decrease in lease liabilities of US$0.6 million and decrease in income tax payable of US$0.1 million. These amounts were partially offset by the increase in accounts payable and accrued liabilities of US$5.5 million, and non-cash adjustments consisting of share-based compensation expense of US$12.0 million, non-cash lease expense of US$0.9 million, depreciation of property and equipment of US$0.2 million, interest income on notes receivable of US$0.02 million, net foreign exchange gain of US$0.04 million, net investment income of US$0.5 million, allowance for credit losses on financial instruments of US$0.7 million, loss on settlement of forward share purchase agreement of US$0.4 million and reversal of annual bonus accrued in prior year of US$3.8 million.
14
Net cash used in operating activities for the nine months ended September 30, 2022 was primarily the result of the net loss of US$13.7 million, decrease in loans receivable of US$2.3 million, an increase in accounts payable and accrued liabilities of US$2.8 million, an increase in escrow liabilities of US$0.2 million, an increase in income tax payable of US$0.3 million, and non-cash adjustments consisting of unrealized investment loss of US$2.8 million, net foreign exchange loss of US$4.7 million, and depreciation on property and equipment of US$0.3 million. These amounts were partially offset by the increase in accounts receivable of US$1.5 million, increase in deposits, prepayments, and others receivable of US$0.3 million.
Cash Flows from Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2023 of US$4.7 million was primarily due to proceeds from sale of investments of US$4.0 million, dividend received from long-term investments of US$1.4 million, offset by the purchase of notes receivable of US$0.6 million and purchase of property and equipment of US$0.1 million.
Net cash used in investing activities for the nine months ended September 30, 2022 of US$6.9 million was primarily due to the proceeds from sale of investments of US$1.8 million, offset by the purchase of property and equipment of US$0.9 million, and payment of earnest deposit of US$7.8 million for the purchase of long-term investments.
Cash Flows from Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2023 of US$0.4 million was primarily due to advances from holding company of US$6.3 million, proceeds from borrowings of US$7.2 million, offset by the settlement of forward share purchase agreement of US$14.0 million.
Net cash used in financing activities for the nine months ended September 30, 2022 of US$12.8 million was primarily due to advances from the holding company of US$0.2 million, proceeds from borrowings of US$4.5 million, offset by the dividend distribution of US$17.4 million to the holding company.
Liquidity and Going Concern
Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The management of the Company estimates that currently available cash will not be able to provide sufficient funds to meet the Company’s planned obligations for the next 12 months from the date that these unaudited condensed consolidated financial statements were made available to be issued.
For the nine months ended September 30, 2023, we reported a net loss of approximately US$35.6 million. With a significant increase in our operating costs, described in the paragraph below, we had an accumulated deficit of approximately US$75.0 million as of September 30, 2023.
However, coupled with its business expansion, we reported significant sales growth with total revenue of approximately US$41.7 million for the nine months ended September 30, 2023 (2022: US$19.4 million), and resulted with an operating loss of approximately US$35.5 million (2022: US$6.4 million). We expect to continue our business growth, while closely monitoring our future spending.
Our ability to continue as a going concern is dependent on the management’s ability to successfully implement its plans and fund-raising exercises. Our management team believes that we will be able to continue to grow our revenue base and control our expenditures. In parallel, our management team will continually monitor our capital structure and operating plans and search for potential funding alternatives in order to finance our business development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity or debt markets. However, we cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable to our shareholders. Any failure to obtain financing when required will have a material adverse impact on our business, operation and financial result.
Certain potential funding alternatives have been carried by us, as follows:
| 1. | On September 7, 2023, we entered into an equity purchase agreement with an independent third party to agree to invest up to $50 million over a 36-month period. |
| 2. | On November 7, 2023, we signed private placement binding term sheets with an institutional investor, our Chief Executive Officer, Mr. Ng Wing Fai, and our management team pursuant to which we will receive gross proceeds of approximately $6,242,850, in consideration of (i) 8,918,357 ordinary shares of our ordinary shares, and (ii) warrants to purchase up to 1,783,671 ordinary shares at a purchase price of $0.70 per ordinary share and associated warrants. The warrants have an exercise price of $1.00 per our ordinary share and shall be exercised with more than $500,000 for each exercise. |
With these funding initiatives, our management believes that we would be able to strengthen our financial position, improve our liquidity, and enhance our ability to navigate the challenging market conditions.
15
Capital Commitments
Notes Receivable Agreement — Pursuant to the Agreements, subject to demand, the Company is committed to subscribe the notes of Investment A with an aggregate amount of $1,673,525, in batches, which are payable on or before January 31, 2024. As of September 30, 2023, the remaining committed subscription amount was $1,084,439.
Capital Contribution in L.C. Healthcare Fund I, L.P. — As of September 30, 2023, the remaining committed capital amount in Investment F was $304,489.
Sale and Purchase Agreement — Pursuant to the Agreement entered with Sony Life Singapore Pte. Ltd. (“SLS”), the Company is committed to purchase 100% equity interest in Sony Life Financial Advisers Pte. Ltd. for a cash consideration of SGD2,500,000 (equivalent to $1,882,000). On September 26, 2023, the Company and SLS entered a supplementary agreement to extend the closing date of the transaction from September 30, 2023 to December 31, 2023.
Equity Purchase Agreement — Pursuant to the Agreement entered with Williamsburg Venture Holdings, LLC (the “Investor”), pursuant to which the Investor agreed to invest up to Fifty Million Dollars ($50,000,000) over a 36-month period (unless otherwise determined therein) in accordance with the terms and conditions of an Equity Purchase Agreement, dated as of September 7, 2023, by and between the Company and the Investor (the “Equity Purchase Agreement”). During the term, the Company shall be entitled to put to the Investor, and the Investor shall be obligated to purchase, such number of ordinary shares of the Company (such shares, the “Put Shares”) and at such price as are determined in accordance with the Equity Purchase Agreement. The per share purchase price for the Put Shares shall be the average of the highest and lowest traded price of the ordinary shares on the principal market for five (5) consecutive trading days immediately preceding the relevant Closing Date (defined therein), as reported by Bloomberg Finance L.P. or other reputable source. Further, in consideration of the Company’s Put rights, the Investor shall be entitled to 600,000 ordinary shares of the Company within no later than 5 trading days from the date of the Equity Purchase Agreement and pursuant to the Equity Purchase Agreement, the Investor may not acquire at any point, more than 5% of the outstanding ordinary shares of the Company. In connection with the Equity Purchase Agreement, the parties also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to register with the SEC the ordinary shares issuable under the Equity Purchase Agreement, among other securities.
Nasdaq Compliance — On September 20, 2023, the Company received written notice (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that, based on the closing bid price of the Company’s ordinary shares, par value $0.001 per share (the “Ordinary Shares”), for the last 30 consecutive trading days, the Company no longer complies with the minimum bid price requirement for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”), and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the Minimum Bid Price Requirement exists if the deficiency continues for a period of 30 consecutive trading days.
Off-Balance Sheet Arrangements
We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.
We have not engaged in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, net revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Stock Repurchase Program
On April 18, 2023, our Board of Directors approved the repurchase of 1,000,000 ordinary shares (the “2023 Share Repurchase Program”). Under the 2023 Share Repurchase Program, we are authorized to re-purchase up to 1,000,000 ordinary shares at a maximum price of $10 per share from the open market, for a term of one year, no later than April 18, 2024.
Critical Accounting Policies, Judgements and Estimates
The preparation of financial statements in conformity with GAAP requires us to make judgments, estimates, and assumptions in the preparation of our unaudited condensed consolidated financial statements. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as reported in our 2022 Annual Report on Form 10-K.
16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.
17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As at September 30, 2023, the Company involved with various legal proceedings:-
Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former shareholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies and the former directors, shareholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation from an inducement of the fund subscription and claimed for compensatory damage of approximately $2 million (equal to HK$17.1million). The case is on-going and parties have yet to attempt mediation. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed for compensatory damage of approximately $1.67 million (equal to HK$13 million). The Company previously made $0.84 million as contingency loss for the year ended December 31, 2021. Parties participated in a mediation held on March 25, 2022 and negotiated for settlement through without prejudice correspondence, no settlement was reached. The case is on-going and legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or any further potential loss, if any.
ITEM 1A. RISK FACTORS.
As smaller reporting company we are not required to make disclosures under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The Company approved a share repurchase program on April 18, 2023 authorizing to purchase up to 1,000,000 ordinary shares at a maximum price of $10 per share from the open market, for a term of one year, expiry in April 2024. The Company did not repurchase ordinary shares or entered into 10b5-1 plan during the three months period ended September 30, 2023. The Company adopted its share repurchase plan with the goal of returning excess capital to shareholders in accordance with our capital allocation policy. The share repurchase plan permits the exercise of the plan through open-market repurchases, private transactions and other similar transactions.
Company Rule 10b5-1 Trading Arrangements
The Company did not repurchase ordinary shares or entered into 10b5-1 plan during the three months period ended September 30, 2023.
Other Information
During the quarter ended September 30, 2023, none of the Company’s directors or officers who are subject to the filing requirements of Section 16 of the Securities Exchange Act adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.
18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
19
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AGBA GROUP HOLDING LIMITED | ||
| Date: November 14, 2023 | By: | /s/ Ng Wing Fai |
| Name: | Ng Wing Fai | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: November 14, 2023 | By: | /s/ Shu Pei Huang, Desmond |
| Name: | Shu Pei Huang, Desmond | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
20
Exhibit 26
ISSUER PURCHASES OF EQUITY SECURITIES
Use the checkbox to indicate if any officer or director reporting pursuant to section 16(a) of the Exchange Act (15 U.S.C. 78p(a)), or for foreign private issuers as defined by Rule 3b-4(c) (17 CFR 240.3b-4(c)), any director or member of senior management who would be identified pursuant to Item 1 of Form 20-F (17 CFR 249.220f), purchased or sold shares of the class of the issuer’s equity securities that are registered pursuant to section 12 of the Exchange Act and subject of a publicly announced plan or program within four (4) business days before or after the issuer’s announcement of such repurchase plan or program or the announcement of an increase of an existing share repurchase plan or program. ☐
| Execution Date | Class of Shares | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs | Total Number of Shares Purchased on the Open Market | Total Number of Shares Purchased that are Intended to Qualify for the Safe Harbor in Rule 10b-18 | Total Number of Shares Purchased Pursuant to a Plan that is Intended to Satisfy the Affirmative Defense Conditions of Rule 10b5-1c | ||||||||||||||||||||||||||
| - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ng Wing Fai, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of AGBA Group Holding Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2023 | By: | /s/ Ng Wing Fai |
| Name: | Ng Wing Fai | |
| Title: | Chief Executive Officer and President | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Shu Pei Huang, Desmond, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of AGBA Group Holding Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2023 | By: | /s/ Shu Pei Huang, Desmond |
| Name: | Shu Pei Huang, Desmond | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of AGBA Group Holding Limited (the “Company”) on Form 10-Q for the quarter ended September 30, 2023 as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. |
Date: November 14, 2023
| /s/ Ng Wing Fai | |
| Ng Wing Fai | |
| Chief Executive Officer | |
| (Principal executive officer) |
Date: November 14, 2023
| /s/ Shu Pei Huang, Desmond | |
| Shu Pei Huang, Desmond | |
| Chief Financial Officer | |
| (Principal financial and accounting officer) |
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Ordinary shares, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Ordinary shares, shares authorized | 200,000,000 | 200,000,000 |
| Ordinary shares, shares issued | 67,561,998 | 58,376,985 |
| Ordinary shares, shares outstanding | 67,561,998 | 58,376,985 |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Interest income: | ||||
| Loans | $ 41,472 | $ 38,260 | $ 117,805 | $ 137,454 |
| Total interest income | 41,472 | 38,260 | 117,805 | 137,454 |
| Non-interest income: | ||||
| Commissions | 12,168,777 | 12,168,614 | 38,507,460 | 15,932,771 |
| Recurring service fees | 751,727 | 793,353 | 2,300,703 | 2,614,729 |
| Total non-interest income | 12,920,504 | 12,961,967 | 40,808,163 | 18,547,500 |
| Total revenues from others | 12,961,976 | 13,000,227 | 40,925,968 | 18,684,954 |
| Non-interest income: | ||||
| Recurring service fees | 244,525 | 243,925 | 725,146 | 725,193 |
| Total revenues from related parties | 244,525 | 243,925 | 725,146 | 725,193 |
| Total revenues | 13,206,501 | 13,244,152 | 41,651,114 | 19,410,147 |
| Operating cost and expenses: | ||||
| Commission expense | (8,915,811) | (8,037,869) | (28,195,740) | (11,219,182) |
| Sales and marketing expense | (753,545) | (1,456,739) | (3,125,432) | (2,088,391) |
| Technology expense | (740,847) | (335,404) | (2,678,645) | (618,501) |
| Personnel and benefit expense | (7,764,353) | (3,325,369) | (22,671,813) | (8,734,387) |
| Other general and administrative expenses | (5,981,447) | (1,093,733) | (20,493,152) | (3,175,351) |
| Total operating cost and expenses | (24,156,003) | (14,249,114) | (77,164,782) | (25,835,812) |
| Loss from operations | (10,949,502) | (1,004,962) | (35,513,668) | (6,425,665) |
| Other income (expense): | ||||
| Interest income | 16,875 | 7,546 | 384,656 | 24,161 |
| Interest expense | (393,013) | (20,085) | (805,789) | (20,085) |
| Foreign exchange (loss) gain, net | (864,383) | (2,083,020) | 41,467 | (4,690,476) |
| Investment (loss) income, net | (792,907) | 741,811 | 488,589 | (2,793,242) |
| Change in fair value of warrant liabilities | 1,106 | 3,481 | ||
| Change in fair value of forward share purchase liability | (82,182) | |||
| Loss on settlement of forward share purchase agreement | (378,895) | |||
| Rental income | 78,820 | 78,630 | 217,091 | 236,344 |
| Sundry income | 38,061 | 13,724 | 122,128 | 169,252 |
| Total other expense, net | (1,915,441) | (1,261,394) | (9,454) | (7,074,046) |
| Loss before income taxes | (12,864,943) | (2,266,356) | (35,523,122) | (13,499,711) |
| Income tax expense | (55,886) | (127,186) | (55,606) | (232,540) |
| NET LOSS | (12,920,829) | (2,393,542) | (35,578,728) | (13,732,251) |
| Other comprehensive income (loss): | ||||
| Foreign currency translation adjustment | 15,555 | (37,370) | (84,414) | (417,729) |
| TOTAL COMPREHENSIVE LOSS | $ (12,905,274) | $ (2,430,912) | $ (35,663,142) | $ (14,149,980) |
| Weighted average number of ordinary shares outstanding – basic (in Shares) | 67,505,476 | 55,500,000 | 64,401,341 | 55,500,000 |
| Net loss per ordinary share – basic (in Dollars per share) | $ (0.19) | $ (0.04) | $ (0.55) | $ (0.25) |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (Parentheticals) - $ / shares |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Weighted average number of ordinary shares outstanding diluted | 67,505,476 | 55,500,000 | 64,401,341 | 55,500,000 |
| Net loss per ordinary share diluted | $ (0.19) | $ (0.04) | $ (0.55) | $ (0.25) |
Unaudited Condesed Consolidated Statements of Changes in Shareholders' (Deficit) Equity - USD ($) |
Ordinary Shares |
Ordinary Shares to be Issued |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Retained Earnings (Accumulated Deficit) |
Receivable from the Shareholder |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 53,835 | $ 1,665 | $ 38,706,226 | $ (179,461) | $ 52,125,502 | $ (29,562,195) | $ 61,145,572 |
| Balance (in Shares) at Dec. 31, 2021 | 53,835,000 | 1,665,000 | |||||
| Special dividend to the holding company | (47,000,000) | 29,562,195 | (17,437,805) | ||||
| Foreign currency translation adjustment | (274,351) | (274,351) | |||||
| Net loss for the period | (447,394) | (447,394) | |||||
| Balance at Mar. 31, 2022 | $ 53,835 | $ 1,665 | 38,706,226 | (453,812) | 4,678,108 | 42,986,022 | |
| Balance (in Shares) at Mar. 31, 2022 | 53,835,000 | 1,665,000 | |||||
| Balance at Dec. 31, 2021 | $ 53,835 | $ 1,665 | 38,706,226 | (179,461) | 52,125,502 | (29,562,195) | 61,145,572 |
| Balance (in Shares) at Dec. 31, 2021 | 53,835,000 | 1,665,000 | |||||
| Net loss for the period | (13,732,251) | ||||||
| Balance at Sep. 30, 2022 | $ 53,835 | $ 1,665 | 38,706,226 | (597,190) | (8,606,749) | (3,165,188) | 26,392,599 |
| Balance (in Shares) at Sep. 30, 2022 | 53,835,000 | 1,665,000 | |||||
| Balance at Mar. 31, 2022 | $ 53,835 | $ 1,665 | 38,706,226 | (453,812) | 4,678,108 | 42,986,022 | |
| Balance (in Shares) at Mar. 31, 2022 | 53,835,000 | 1,665,000 | |||||
| Foreign currency translation adjustment | (106,008) | (106,008) | |||||
| Net loss for the period | (10,891,315) | (10,891,315) | |||||
| Balance at Jun. 30, 2022 | $ 53,835 | $ 1,665 | 38,706,226 | (559,820) | (6,213,207) | 31,988,699 | |
| Balance (in Shares) at Jun. 30, 2022 | 53,835,000 | 1,665,000 | |||||
| Foreign currency translation adjustment | (37,370) | (37,370) | |||||
| Advances to the holding company | (3,165,188) | (3,165,188) | |||||
| Net loss for the period | (2,393,542) | (2,393,542) | |||||
| Balance at Sep. 30, 2022 | $ 53,835 | $ 1,665 | 38,706,226 | (597,190) | (8,606,749) | $ (3,165,188) | 26,392,599 |
| Balance (in Shares) at Sep. 30, 2022 | 53,835,000 | 1,665,000 | |||||
| Balance at Dec. 31, 2022 | $ 58,377 | $ 1,665 | 43,870,308 | (384,938) | (39,395,133) | $ 4,150,279 | |
| Balance (in Shares) at Dec. 31, 2022 | 58,376,985 | 1,665,000 | 58,376,985 | ||||
| Issuance of ordinary shares to settle finder fee | $ 2,174 | 3,997,826 | $ 4,000,000 | ||||
| Issuance of ordinary shares to settle finder fee (in Shares) | 2,173,913 | ||||||
| Share-based compensation | $ 1,200 | 3,905,400 | 3,906,600 | ||||
| Share-based compensation (in Shares) | 1,200,000 | ||||||
| Forgiveness of amounts due to the holding company | 3,000,000 | 3,000,000 | |||||
| Foreign currency translation adjustment | (133,204) | (133,204) | |||||
| Net loss for the period | (12,072,610) | (12,072,610) | |||||
| Balance at Mar. 31, 2023 | $ 61,751 | $ 1,665 | 54,773,534 | (518,142) | (51,467,743) | 2,851,065 | |
| Balance (in Shares) at Mar. 31, 2023 | 61,750,898 | 1,665,000 | |||||
| Balance at Dec. 31, 2022 | $ 58,377 | $ 1,665 | 43,870,308 | (384,938) | (39,395,133) | $ 4,150,279 | |
| Balance (in Shares) at Dec. 31, 2022 | 58,376,985 | 1,665,000 | 58,376,985 | ||||
| Net loss for the period | $ (35,578,728) | ||||||
| Balance at Sep. 30, 2023 | $ 67,562 | 72,435,372 | (469,352) | (74,973,861) | $ (2,940,279) | ||
| Balance (in Shares) at Sep. 30, 2023 | 67,561,998 | 67,561,998 | |||||
| Balance at Mar. 31, 2023 | $ 61,751 | $ 1,665 | 54,773,534 | (518,142) | (51,467,743) | $ 2,851,065 | |
| Balance (in Shares) at Mar. 31, 2023 | 61,750,898 | 1,665,000 | |||||
| Issuance of holdback shares | $ 1,665 | $ (1,665) | |||||
| Issuance of holdback shares (in Shares) | 1,665,000 | (1,665,000) | |||||
| Share-based compensation | $ 4,046 | 4,600,274 | 4,604,320 | ||||
| Share-based compensation (in Shares) | 4,046,100 | ||||||
| Forgiveness of amounts due to the holding company | 5,600,000 | 5,600,000 | |||||
| Foreign currency translation adjustment | 33,235 | 33,235 | |||||
| Net loss for the period | (10,585,289) | (10,585,289) | |||||
| Balance at Jun. 30, 2023 | $ 67,462 | 64,973,808 | (484,907) | (62,053,032) | 2,503,331 | ||
| Balance (in Shares) at Jun. 30, 2023 | 67,461,998 | ||||||
| Share-based compensation | $ 100 | 3,468,180 | 3,468,280 | ||||
| Share-based compensation (in Shares) | 100,000 | ||||||
| Forgiveness of amounts due to the holding company | 3,993,384 | 3,993,384 | |||||
| Foreign currency translation adjustment | 15,555 | 15,555 | |||||
| Net loss for the period | (12,920,829) | (12,920,829) | |||||
| Balance at Sep. 30, 2023 | $ 67,562 | $ 72,435,372 | $ (469,352) | $ (74,973,861) | $ (2,940,279) | ||
| Balance (in Shares) at Sep. 30, 2023 | 67,561,998 | 67,561,998 |
Nature of Business and Basis of Presentation |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Nature of Business and Basis of Presentation [Abstract] | |
| NATURE OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION
AGBA Group Holding Limited (“AGBA” or the “Company”) was incorporated on October 8, 2018 in British Virgin Islands.
The Company, through its subsidiaries, is operating a wealth and health platform, offering a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, lending, and real estate in overseas. AGBA is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing.
The accompanying unaudited condensed consolidated financial statements of the Company are presented in United State dollars (“US$” or “$”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2022 derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022.
The unaudited condensed consolidated financial statements as of September 30, 2023 and December 31, 2022 and for the three and nine months ended September 30, 2023 and 2022, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Summary of Significant Accounting Policies |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 － SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
The accompanying unaudited condensed consolidated financial statements include the financial statements of AGBA and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between AGBA and its subsidiaries are eliminated upon consolidation.
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for credit losses, notes receivable, share-based compensation, warrant liabilities, forward share purchase liability, provision for contingent liabilities, revenue recognition, income tax provision, deferred taxes and uncertain tax position, and allocation of expenses from holding company.
The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations and comprehensive loss.
The reporting currency of the Company is US$ and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited condensed consolidated statements of changes in shareholders’ (deficit) equity.
Translation of amounts from HK$ into US$ has been made at the following exchange rates for the nine months ended September 30, 2023 and 2022:
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Hong Kong.
Restricted cash consist of funds held in escrow accounts reflecting (i) the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers and (ii) the full obligation to an investor in connection with the Meteora Backstop Agreement (see Note 4).
The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities.
Accounts receivable, net include trade accounts due from customers in insurance brokerage and asset management businesses.
Accounts receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate, and provides allowance when necessary.
The Company does not hold any collateral or other credit enhancements over its accounts receivable balances.
Loans receivable, net are residential mortgage loans that carried at unpaid principal balances, less the allowance for credit losses on loans receivable and charge-offs.
Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months).
If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally, the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in Allowance for Credit Losses on Financial Instruments.
In accordance with ASC Topic 326 “Credit Losses – Measurement of Credit Losses on Financial Instruments” (ASC Topic 326), the Company utilizes the current expected credit losses (“CECL”) model to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits, prepayments and others receivable which is recorded as a liability to offset the receivables. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts receivable, loans receivable, notes receivable, and deposits, prepayments, and others receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense.
The Company invests in equity securities with readily determinable fair values and equity securities that do not have readily determinable fair values.
Equity securities with readily determinable fair values are carried at fair value with any unrealized gains or losses reported in earnings.
Equity securities that do not have readily determinable fair values mainly consist of investments in privately-held companies. They are accounted for, at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
Assets to be disposed of by sale are reported at the lower of the carrying value or fair value less cost to sell when the Company has committed to a sale agreement and would be reported separately as asset held for sale in the unaudited condensed consolidated balance sheets.
Property and equipment, net are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment owned and held 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. impairment losses were recognized for the three and nine months ended September 30, 2023 and 2022.
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”).
ASC Topic 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers. The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
Certain portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC Topic 606, as follows:
Commissions
The Company earns commissions from the sale of investment products to customers. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the one-time commission price. Therefore, commissions are recorded at point in time when the investment product is purchased.
The Company also facilitates the arrangement between insurance providers and individuals or businesses by providing insurance placement services to the insureds, and is compensated in the form of one-time commissions from the respective insurance providers. The Company primarily facilitates the placement of life, general and MPF insurance products. The Company determines that insurance providers are the customers.
The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy).
In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed.
Recurring service fees
The Company provides asset management services to investment funds or investment product providers in exchange for recurring service fees. Recurring service fees are determined based on the types of investment products the Company distributes and are calculated as a fixed percentage of the fair value of the total investment of the investment products, calculated daily. These customer contracts require the Company to provide investment management services, which represents a performance obligation that the Company satisfies over time. After the contract is established, there are no significant judgments made when determining the transaction price. As the Company provides these services throughout the contract term, for the method of calculating recurring service fees, revenue is calculated on a daily basis over the contract term, quarterly billed and recognized. Recurring service agreements do not include rights of return, credits or discounts, rebates, price protection, performance component or other similar privileges and the circumstances under which the fixed percentage fees, before determined, could be not subject to clawback. Payment of recurring service fees are normally on a regular basis (typically monthly or quarterly).
Interest income
The Company offers money lending services from loan origination in form of mortgage and personal loans. Interest income is recognized monthly in accordance with their contractual terms and recorded as interest income in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company does not charge prepayment penalties from its customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of interest income on mortgage and personal loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 180 days delinquent.
Disaggregation of Revenue
The Company has disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation revenue categories presented on the unaudited condensed consolidated statements of operation and comprehensive loss for the periods indicated:
Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement.
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive loss, as presented in the accompanying statements of shareholders’ (deficit) equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive loss is not included in the computation of income tax expense or benefit.
Full time employees of the Hong Kong subsidiaries participate in a defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Contributions are made by both the employer and the employee at the rate of 5% on the employee’s relevant salary, subject to a salary cap of HK$30,000.
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the three and nine months ended September 30, 2023 and 2022, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, Stock Compensation. The Company grants share awards, including ordinary shares and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the ordinary shares on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award.
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC Topic 260”). ASC Topic 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. During the three and nine months ended September 30, 2023 and 2022, there were no dilution impact.
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has the following operating segments:
All of the Company’s revenues were generated in Hong Kong.
The Company follows ASC Topic 842, Leases (“ASC Topic 842”), utilizing the modified retrospective transition method with no adjustments to comparative periods presented. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (ASC Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC Topic 842 requires that lessees recognize right-of-use asset and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC Topic 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the unaudited condensed consolidated statements of operations and comprehensive loss and statements of cash flows. ASC Topic 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases.
When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs.
The accounting update also requires that for operating leases, a lessee recognize interest expense on the lease liability and the amortization of the right-of-use asset as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
The Company follows the ASC Topic 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
The Company follows the ASC Topic 450-20, Commitments to report accounting 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, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted 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 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 at this time 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.
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, deposits, prepayments and others receivable, accounts payable and accrued liabilities, escrow liabilities and amounts due to the holding company approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of loans receivable, notes receivable and borrowings approximate their carrying amounts. They are accounted at amortized cost, subject to impairment testing.
The following table presents information about the Company’s assets that were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Besides, there were no new standards or updates during the nine months ended September 30, 2023 that had a material impact on the unaudited condensed consolidated financial statements. |
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Liquidity and Going Concern |
9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||
| Liquidity and Going Concern [Abstract] | |||||||
| LIQUIDITY AND GOING CONCERN | NOTE 3 — LIQUIDITY AND GOING CONCERN
The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. They do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
For the nine months ended September 30, 2023, the Company reported $35,578,728 net loss and $33,364,662 net cash outflows from operating activities. As of September 30, 2023, the Company had an accumulated deficit of $74,973,861 and cash and cash equivalents of $1,622,425.
The Company has determined that the prevailing conditions and ongoing liquidity risks encountered by the Company raise substantial doubt about the ability to continue as a going concern for at least one year following the date these unaudited condensed consolidated financial statements are issued. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement its current operating plan and fund-raising exercises. The Company believes that it will be able to grow its revenue base and control expenditures. In parallel, the Company will monitor its capital structure and operating plans and search for potential funding alternatives in order to finance the development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity or debt markets. However, the Company cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable to its shareholders. Any failure to obtain financing when required will have a material adverse impact on the Company’s business, operation and financial result.
Certain potential funding alternatives have been carried by the Company, as follows:
With these funding initiatives, the Company believes that it would be able to strengthen its financial position, improve its liquidity, and enhance its ability to navigate the challenging market conditions. |
Restricted Cash |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Restricted Cash [Abstract] | |
| RESTRICTED CASH | NOTE 4 — RESTRICTED CASH
Pursuant to the Meteora Backstop Agreement dated November 9, 2022, the fund held in the escrow account for the forward share purchase is restricted to the Company for the nine months following the consummation of the Business Combination in November 2022, unless the investors (“Meteora”) sell the shares in the market or redeems the shares. Notwithstanding the sale of shares by Meteora, the restricted cash will be used to settle any of the Company’s repurchase obligations.
On June 29, 2023, the Company and Meteora entered into an agreement to early terminate the Meteora Backstop Agreement. Prior to the termination, Meteora sold 1,191,016 shares in the open market at a price ranging from $1.51 to $1.61 per share.
Pursuant to the early termination clauses of Meteora Backstop Agreement, the Company released $14.0 million from restricted cash to settle the obligation to Meteora and retained $1.7 million which is reflected in the cash and cash equivalents on the unaudited condensed consolidated balance sheets.
Pursuant to the termination agreement, the Company is not obligated to purchase the remaining 124,949 shares (the “Shares”) from Meteora and they shall have no obligation to sell the Shares to the Company. In addition, they may dispose the Shares at its discretion in the open market not less than $2 per share before September 29, 2023 and no conditions or restrictions thereafter. As a result, the Company released the remaining $1.5 million from restricted cash to settle the obligation to Meteora. As of September 29, 2023, Meteora held 124,949 shares unsold.
With the early termination and sale of shares by Meteora, the forward share purchase liability (“FSP liability”) was fully settled and a loss on settlement of and $378,895 was recorded in the unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023, respectively. |
Accounts Receivable, Net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE, NET | NOTE 5 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
The accounts receivable due from related parties represented the management service rendered to the portfolio assets of related companies, which are controlled by the holding company, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. The amount is unsecured, interest-free and with a credit term mutually agreed.
The Company generally conducts its business with creditworthy third parties. The Company determines, on a quarterly basis, the probable losses and an allowance for credit losses determined in accordance with the CECL model, based on historical losses, current economic conditions, forecasted future economic and market considerations, and in some cases, evaluating specific customer accounts for risk of loss. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
For the three and nine months ended September 30, 2023, the Company has assessed the probable loss and made an allowance for credit losses of $143,101 and $211,050 on accounts receivable, respectively.
For the three and nine months ended September 30, 2022, there was expected credit losses to accounts receivable. |
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Loans Receivable, Net |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LOANS RECEIVABLE, NET | NOTE 6 — LOANS RECEIVABLE, NET
The Company’s loans receivable, net was as follows:-
The interest rates on loans issued ranged between 9.00% and 10.50% per annum for the nine months ended September 30, 2023 and 2022. Mortgage loans are secured by collateral in the pledge of the underlying residential properties owned by the borrowers.
Mortgage loans are made to either business or individual customers in Hong Kong for a period of 1 to 25 years, which are fully collateralized and closely monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of September 30, 2023 and December 31, 2022.
Estimated allowance for credit losses is determined on quarterly basis, in accordance with the CECL model, for general credit risk of the overall portfolio, which is relied on an assessment of specific evidence indicating doubtful collection, historical loss experience, loan balance aging and prevailing economic conditions. If there is an unexpected deterioration of a customer’s financial condition or an unexpected change in economic conditions, including macroeconomic events, the Company will assess the need to adjust the allowance for credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.
For the three and nine months ended September 30, 2023, the Company has evaluated the probable losses and made an allowance for credit losses of $1,414 and $1,414 on loans receivable, respectively.
For the three and nine months ended September 30, 2022, the Company has evaluated the probable losses and no expected credit losses is determined. |
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Asset Held For Sale |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Assets Held For Sale [Abstract] | |
| ASSET HELD FOR SALE | NOTE 7 — ASSET HELD FOR SALE
On June 28, 2023, the Company entered into a provisional purchase and sale agreement with an independent third party to sell one of its office premises for a consideration of $6.15 million and the carrying amount of the asset held for sale was $5.47 million was reclassified from the property and equipment, net on that date.
On July 20, 2023, a formal purchase and sale agreement was signed. As of September 30, 2023, the Company received deposits of $0.6 million, in total.
Subsequently on October 17, 2023, the transaction has been completed and remaining consideration has been settled in cash. |
Notes Receivable, Net |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes Receivable, Net [Abstract] | |
| NOTES RECEIVABLE, NET | NOTE 8 — NOTES RECEIVABLE, NET
On February 24, 2023, the Company entered into a subscription agreement and a convertible loan note instrument (collectively the “Agreements”) with Investment A. Pursuant to the Agreements, the Company agrees to subscribe an aggregate amount of $1,673,525 notes, in batches, which are payable on or before January 31, 2024 and bears a fixed interest rate of 8% per annum. The maturity of the notes receivable is on April 30, 2024.
As of September 30, 2023, the carrying amount of the notes receivable was $613,533, which including an interest receivable of $23,217.
In accordance with ASC Topic 326, the Company accounts for its allowance for credit losses on notes receivable using the CECL model. Periodic changes to the allowance for credit losses are recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. For the three and nine months ended September 30, 2023, the Company has evaluated the probable losses on the notes receivable and no expected credit losses was determined. |
Long-Term Investments, Net |
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| Long-Term Investments, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LONG-TERM INVESTMENTS, NET | NOTE 9 — LONG-TERM INVESTMENTS, NET
Long-term investments consisted of the following:
Investments in Marketable Equity Securities
Investments in marketable securities are accounted for at their current market value with the changes in fair value recognized in net loss. Investment C was listed and publicly traded on Nasdaq Stock Exchange.
During the nine months ended September 30, 2023, the Company sold 993,108 shares of Investment C at the average market price of $4.01 per share, resulting with a realized gain of $1,541,736.
As of September 30, 2023 and December 31, 2022, Investment C was recorded at fair value of $408 and $2,443,593, which were traded at a closing price of $5.57 and $2.46 per share, respectively.
Investments in Non-Marketable Equity Securities
Investments in non-marketable equity securities consist of investments in limited liability companies in which the Company’s interests are deemed minor and long-term, strategic investments in companies that are in various stages of development, and investments in a close-ended partnership funds which concentrated in the healthcare sector. These investments do not have readily determinable fair values and, therefore, are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
Management assesses each of these investments on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and cash usage. The Company is not required to determine the fair value of these investments unless impairment indicators existed. When an impairment exists, the investment will be written down to its fair value by recording the corresponding charge as a component of other income (expense), net. Fair value is estimated using the best information available, which may include cash flow projections or other available market data.
The following table presents the changes in fair value of non-marketable equity securities which are measured using Level 3 inputs as of September 30, 2023 and December 31, 2022:
Cumulative unrealized gains and losses, included in the carrying value of the Company’s non-marketable equity securities:
Investment loss (income), net is recorded as other income (expense) and consisted of the following:
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Property and Equipment, Net |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT, NET | NOTE 10 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
Depreciation expense for the three months ended September 30, 2023 and 2022 were $22,821 and $95,878, respectively.
Depreciation expense for the nine months ended September 30, 2023 and 2022 were $238,315 and $288,230, respectively.
On June 28, 2023, the carrying amount of an office premises of $5.47 million was reclassified to asset held for sale as the Company entered into a provisional purchase and sale agreement with an independent third party to sell the office premises in October 2023 (see Note 7). |
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Borrowings |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BORROWINGS | NOTE 11 — BORROWINGS
Mortgage Borrowings
In September 2022, the Company obtained a mortgage loan from a finance company in Hong Kong, which bears interest at a fixed rate of 10.85% per annum, is repayable in October 2023. The loan was secured with the office premises which classified as asset held for sale. Subsequent to the completion of the sales in October 2023, the loan was settled (see Note 7).
In February 2023, the Company obtained another mortgage loan from another finance company in Hong Kong, which bears an average interest rate at 13.75% per annum, is repayable in February 2024. The loan was secured with an office premises held by the Company, located in Hong Kong.
Short-term Borrowings
In September 2023, the Company obtained a short-term borrowing of $5.0 million from the Company’s major shareholder of ultimate holding company, which bears interest at a fixed rate of 12.00% per annum, repayable in October 2023. The borrowing is secured by a lien on the partial equity interest in Investment D owned by the Company. Subsequently in October 2023, the Company entered into an agreement to extend the maturity date to November 30, 2023.
In September 2023, the Company obtained another short-term borrowing of $0.4 million from an independent third party, which is unsecured, bears interest at a fixed rate of 6.00% per annum and repayable in October 2023. The borrowing was subsequently settled in October 2023. |
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Forward Share Purchase Liability |
9 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Forward Share Purchase Liabilitiy [Abstract] | ||||||||||||||||||||||||||||||||||||
| FORWARD SHARE PURCHASE LIABILITY | NOTE 12 — FORWARD SHARE PURCHASE LIABILITY
During the nine months ended September 30, 2023, subject to the sale of shares by investors and early termination of the Meteora Backshop Agreement (see Note 4), FSP liability was fully settled with a loss of $378,895 recorded in the unaudited condensed consolidated statements of operations and comprehensive loss.
The FSP liability as of December 31, 2022 under the Meteora Backstop Agreement is valued by an independent valuer using a Black-Scholes model, which is considered to be Level 3 fair value measurement. The following table present the quantitative information regarding Level 3 fair value measurement of the FSP liability:
For the three and nine months ended September 30, 2023, the change in fair value of FSP liability was and $82,182, respectively, which were charged to unaudited condensed consolidated statements of operations and comprehensive loss. |
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Lease |
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| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASE | NOTE 13 — LEASE
Operating lease right-of-use (“ROU”) asset and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
During the nine months ended September 30, 2023, the Company has entered into a commercial operating lease with an independent third party for the use of an office in Hong Kong. The lease has an original term exceeding 1 year, but not more than 3 years with an option to renew a further term of 3 years. At lease inception, after consideration, the Company was certain that the renewal option would be exercised, after the original term. The operating lease is included in “Right-of-use asset, net” on the unaudited condensed consolidated balance sheets and represents the Company’s right to use the underlying asset during the lease term. The Company’s obligation to make lease payments are included in “Lease liabilities” on the unaudited condensed consolidated balance sheets.
Supplemental balance sheet information related to the operating lease was as follows:
Operating lease expense for the three and nine months ended September 30, 2023 was $640,920 and $854,470, respectively. There was operating lease expense for the three and nine months ended September 30, 2022.
Other supplemental information about the Company’s operating lease as of September 30, 2023 are as follow:
Maturities of operating lease liabilities as of September 30, 2023 were as follows:
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Warrant Liabilities |
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| Warrant Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WARRANT LIABILITIES | NOTE 14 — WARRANT LIABILITIES
The private warrants are accounted for as liabilities in accordance with ASC 480 and are presented as liabilities on the unaudited condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, there were 225,000 private warrants outstanding.
The fair value of the private warrants is valued by an independent valuer using a Binominal pricing model. The warrants were classified as Level 3 due to the use of unobservable inputs.
The key inputs in the Binominal pricing model were as follows at their measurement dates:
As of September 30, 2023 and December 31, 2022, the aggregate value of the private warrants was $1,067 and $4,548, respectively. The changes in fair value for the three and nine months ended September 30, 2023 was $1,106 and $3,481, respectively. |
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Shareholders’ (Deficit) Equity |
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| SHAREHOLDERS’ (DEFICIT) EQUITY | NOTE 15 — SHAREHOLDERS’ (DEFICIT) EQUITY
Ordinary shares
As of September 30, 2023 and December 31, 2022, the Company has authorized share of 200,000,000 ordinary shares with a par value $0.001.
On March 21, 2023, the Company issued 2,173,913 ordinary shares to Apex Twinkle Limited to partially settle the finder fee payable.
On May 22, 2023, the Company issued 946,100 ordinary shares to the directors and officers of the Company under the Share Award Scheme (the “Scheme”) for compensating the contributions of prior services and performance, which was approved and granted previously in December 2022.
On June 6, 2023, the holdback shares of 1,665,000 ordinary shares were fully released and issued.
During the nine months ended September 30, 2023, pursuant to the Scheme, the Company issued in aggregate of 4,400,000 ordinary shares to certain consultants to compensate the services rendered.
As of September 30, 2023 and December 31, 2022, there were 67,561,998 and 58,376,985 ordinary shares issued and outstanding, respectively.
Public Warrants
Each public warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary share at a price of $11.50 per full share, subject to adjustment as discussed herein. The warrants became exercisable 90 days after the Closing of the Business Combination and will expire five years after the Closing of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrant holder.
Once the warrants become exercisable, the Company may call the outstanding warrants (including any outstanding warrants issued upon exercise of the unit purchase option issued to Maxim Group LLC) for redemption:
If the Company calls the warrants for redemption as described above, the management of the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption, the Company’s cash needs at such time and concerns regarding dilutive share issuances.
Private Warrants
The private warrants are identical to the public warrants, except that the private warrants and the ordinary shares issuable upon the exercise of the private warrants were not transferable, assignable or salable until after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.
The private warrants are accounted as liabilities, remeasured to fair value on a recurring basis, with changes in fair value recorded to the unaudited condensed consolidated statements of operations and comprehensive loss (see Note 14).
As of September 30, 2023 and December 31, 2022, there were 4,600,000 public warrants and 225,000 private warrants outstanding.
Share Award Scheme
On February 24, 2023, pursuant to the Scheme, the Company registered 11,675,397 ordinary shares to be issued. As of September 30, 2023, the Company issued 5,346,100 ordinary shares under the Scheme.
The fair value of the ordinary shares granted under the scheme is measured based on the closing price of the Company’s ordinary shares as reported by Nasdaq Exchange on the date of grant.
For those ordinary shares vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
For the restricted share units (“RSUs”), the fair value is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis. The valuations assume no dividends will be paid. The Company has assumed 10% forfeitures.
During the three and nine months ended September 30, 2023, the Company recorded $3,468,280 and $11,979,200 share-based compensation expense, respectively, which is included in the operating cost and expenses in the unaudited condensed consolidated statements of operations and comprehensive loss.
As of September 30, 2023, total unrecognized compensation remaining to be recognized in future periods for RSUs totaled $7.1 million. They are expected to be recognized over the weighted average period of 2.0 years.
A summary of the activities for the Company’s RSUs as of September 30, 2023 and December 31, 2022 is as follow:
Forgiveness of Amounts Due to the Holding Company
During the three and nine months ended September 30, 2023, TAG agreed to forgive the Company $4.0 million and $12.6 million, in aggregate, respectively representing certain amounts due to it and treat as additional paid-in capital. |
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Operating Cost and Expenses |
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| Operating Cost and Expenses [Abstract] | |
| OPERATING COST AND EXPENSES | NOTE 16 — OPERATING COST AND EXPENSES
Commission Expense
Pursuant to the terms of respective contracts, commission expense represents certain premiums from insurance or investment products paid to agents. Commission rates vary by market due to local practice, competition, and regulations. The Company charged commission expense on a systematic basis that is consistent with the revenue recognition.
During the three months ended September 30, 2023 and 2022, the Company recorded $8,915,811 and $8,037,869 commission expenses, respectively.
During the nine months ended September 30, 2023 and 2022, the Company recorded $28,195,740 and $11,219,182 commission expenses, respectively.
Personnel and Benefit Expense
Personnel and benefit expense mainly consisted of salaries and bonus paid and payable to the employees of the Company. During the nine months ended September 30, 2023, the Company reversed the annual bonus of $3.8 million that was already accrued for the year ended December 31, 2022.
During the three months ended September 30, 2023 and 2022, the Company recorded $7,764,353 and $3,325,369 personnel and benefit expense, respectively.
During the nine months ended September 30, 2023 and 2022, the Company recorded $22,671,813 and $8,734,387 personnel and benefit expense, respectively.
Other General and Administrative Expenses
The Company incurred different types of expenditures under other general and administrative expenses. They primarily consist of depreciation of property and equipment, legal and professional fees, and management fee expenses which are allocated for certain corporate office expenses.
During the three months ended September 30, 2023 and 2022, the Company recorded $5,981,447 and $1,093,733 other general and administrative expenses, respectively.
During the nine months ended September 30, 2023 and 2022, the Company recorded $20,493,152 and $3,175,351 other general and administrative expenses, respectively. |
Income Taxes |
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| INCOME TAXES | NOTE 17 — INCOME TAXES
The provision for income taxes consisted of the following:
The Company’s subsidiaries that are subject to taxes in the jurisdictions in which they operate, as follows:
British Virgin Islands
The Company is incorporated in the British Virgin Islands and is not subject to taxation. In addition, upon payments of dividends by these entities to their shareholder, no British Virgin Islands withholding tax will be imposed.
Hong Kong
The Company’s subsidiaries operating in Hong Kong is subject to the Hong Kong Profits Tax at the income tax rates ranging from 8.25% to 16.5% on the assessable income arising in Hong Kong during its tax year.
The following table sets forth the significant components of the deferred tax liabilities and assets of the Company as of September 30, 2023 and December 31, 2022:
As of September 30, 2023 and December 31, 2022, the operations incurred $53.4 million and $33.1 million, respectively of cumulative net operating losses which can be carried forward to offset future taxable income. Net operating loss can be carried forward indefinitely but cannot be carried back to prior years. There are no group relief provisions for losses or transfers of assets under Hong Kong tax regime. Each company within a corporate group is taxed as a separate entity. The Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes that it is more likely that these assets will not be realized in the future. The valuation allowance is reviewed annually.
Uncertain tax positions
The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the nine months ended September 30, 2023 and 2022 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from September 30, 2023. |
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Segment Information |
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| Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION | NOTE 18 — SEGMENT INFORMATION
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.
Currently, the Company has four business segments comprised of the following products and services:
The four business segments were determined based primarily on how the chief operating decision maker views and evaluates the operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services are considered in determining the formation of these operating segments.
The following tables present the summary information by segment for the three and nine months ended September 30, 2023 and 2022:
All of the Company’s customers, operations and assets are based in Hong Kong. |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Balances and Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY BALANCES AND TRANSACTIONS | NOTE 19 — RELATED PARTY BALANCES AND TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by the holding company. Amounts represent advances or amounts paid in satisfaction of liabilities.
Related party balances consisted of the following:
In the ordinary course of business, during the three and nine months ended September 30, 2023 and 2022, the Company involved with transactions, either at cost or current market prices and on the normal commercial terms among related parties. The following table provides the transactions with these parties for the periods as presented (for the portion of such period that they were considered related):
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented. |
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Concentrations of Risk |
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| Concentrations of Risk [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONCENTRATIONS OF RISK | NOTE 20 — CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
For the three and nine months ended September 30, 2023, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances at period-end dates, are presented as follows:
For the three and nine months ended September 30, 2022, there was no single customer who accounted for 10% or more of the Company’s revenues.
All of the Company’s major customers are located in Hong Kong.
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, accounts receivable, loans receivable and notes receivable. Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$500,000 (approximately $63,855) if the bank with which an individual/a company hold its eligible deposit fails. As of September 30, 2023, cash balance of $1.6 million and fund held in escrow of $20.6 million were maintained at financial institutions in Hong Kong, of which approximately $21.8 million was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
For accounts receivable, loans receivable and notes receivable, the Company determines, on a continuing basis, the probable losses and sets up an allowance for credit losses and loan losses based on the estimated realizable value. Credit of money lending business is controlled by the application of credit approvals, limits and monitoring procedures.
The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. To minimize credit risk, the Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances.
The Company’s third-party customers that represent more than 10% of total combined loans receivable, and their related net loans receivable balance as a percentage of total combined loans receivable, as of September 30, 2023 and December 31, 2022 were as follows:
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ and Sterling on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
For the three months ended September 30, 2023 and 2022, the Company recorded the foreign exchange loss of $864,383 and $2,083,020, respectively, mainly attributable from the long-term investments which are mostly denominated in Sterling.
For the nine months ended September 30, 2023 and 2022, the Company recorded the foreign exchange gain of $41,467 and exchange loss of $4,690,476, respectively, mainly attributable from the long-term investments which are mostly denominated in Sterling.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases. |
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
| Commitments and Contingencies [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 21 — COMMITMENTS AND CONTINGENCIES
Litigation — From time to time, the Company is involved in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
As at September 30, 2023, the Company involved with various legal proceedings:-
Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former shareholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies and the former directors, shareholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation from an inducement of the fund subscription and claimed for compensatory damage of approximately $2 million (equal to HK$17.1million). The case is on-going and parties have yet to attempt mediation. Legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed for compensatory damage of approximately $1.67 million (equal to HK$13 million). The Company previously made $0.84 million as contingency loss for the year ended December 31, 2021. Parties participated in a mediation held on March 25, 2022 and negotiated for settlement through without prejudice correspondence, no settlement was reached. The case is on-going and legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred.
Notes Receivable Agreement — Pursuant to the Agreements, subject to demand, the Company is committed to subscribe the notes of Investment A with an aggregate amount of $1,673,525, in batches, which are payable on or before January 31, 2024. As of September 30, 2023, the remaining committed subscription amount was $1,084,439.
Capital Contribution in Investment F — Pursuant to the subscription agreement, being a limited partner of Investment F, subject to demand, the Company was committed to contribute an aggregate capital amount of $10 million. As of September 30, 2023, the remaining committed capital amount in Investment F was $304,489.
Sale and Purchase Agreement — Pursuant to the agreement dated April 5, 2023, entered with Sony Life Singapore Pte. Ltd. (“SLS”), an independent third party, the Company is committed to purchase 100% equity interest in Sony Life Financial Advisers Pte. Ltd. for a cash consideration of SGD2,500,000 (equivalent to $1,882,000). On September 26, 2023, the Company and SLS entered into a supplementary agreement to extend the closing date of the transaction from September 30, 2023 to December 31, 2023.
Equity Purchase Agreement — Pursuant to the equity purchase agreement dated September 7, 2023, entered into with Williamsburg Venture Holdings, LLC (“Williamsburg”), an independent third party, it agreed to invest up to $50 million over a 36-month period. During the term, the Company shall be entitled to put, and Williamsburg shall be obligated to purchase, such number of ordinary shares of the Company at price determined. In consideration, the Company is committed to issue 600,000 ordinary shares to Williamsburg. Pursuant to the registration rights agreement, the issuance of shares was subject to the registration process with SEC.
Nasdaq Compliance — On September 20, 2023, the Company received a written notice (the “Notice”) from Nasdaq, notifying that the Company had publicly traded under $1.00 per share for a period of 30 consecutive trading days or more, which failed to comply with Nasdaq Listing Rule 5550(a)(2) and Nasdaq Listing Rule 5810(c)(3)(A). The Notice had no immediate effect but, before March 18, 2024, the Company was required to regain compliance by trading at least $1.00 per share for a minimum of 10 consecutive trading days. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. As of the date of the unaudited condensed consolidated financial statements, the Company is still consecutively trading under $1.00, directors of the Company are investigating actions, where appropriate, to regain the compliance, by March 18, 2024. |
Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 22 — SUBSEQUENT EVENTS
On October 17, 2023, the Company completed to sell the office premises, which classified as asset held for sale as of September 30, 2023, for a consideration of $6.15 million (See Note 7).
On November 7, 2023, the Company signed private placement binding term sheets with an institutional investor, the Company’s Chief Executive Officer, Mr. Ng Wing Fai, and the Company’s management team pursuant to which the Company will receive gross proceeds of approximately $6,242,850, in consideration of (i) 8,918,357 ordinary shares of the Company, and (ii) warrants to purchase up to 1,783,671 ordinary shares at a purchase price of $0.70 per ordinary share and associated warrants. The warrants have an exercise price of $1.00 per AGBA share and shall be exercised with more than $500,000 for each exercise.
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before unaudited condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2023, up to November 14, 2023 that the unaudited condensed consolidated financial statements were available to be issued. |
Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principal of Consolidation |
The accompanying unaudited condensed consolidated financial statements include the financial statements of AGBA and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between AGBA and its subsidiaries are eliminated upon consolidation. |
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| Use of Estimates and Assumptions |
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for credit losses, notes receivable, share-based compensation, warrant liabilities, forward share purchase liability, provision for contingent liabilities, revenue recognition, income tax provision, deferred taxes and uncertain tax position, and allocation of expenses from holding company. The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
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| Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations and comprehensive loss. The reporting currency of the Company is US$ and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited condensed consolidated statements of changes in shareholders’ (deficit) equity. Translation of amounts from HK$ into US$ has been made at the following exchange rates for the nine months ended September 30, 2023 and 2022:
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| Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Hong Kong. |
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| Restricted Cash |
Restricted cash consist of funds held in escrow accounts reflecting (i) the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers and (ii) the full obligation to an investor in connection with the Meteora Backstop Agreement (see Note 4). The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities. |
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| Accounts Receivable, net |
Accounts receivable, net include trade accounts due from customers in insurance brokerage and asset management businesses. Accounts receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate, and provides allowance when necessary.
The Company does not hold any collateral or other credit enhancements over its accounts receivable balances. |
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| Loans Receivable, net |
Loans receivable, net are residential mortgage loans that carried at unpaid principal balances, less the allowance for credit losses on loans receivable and charge-offs. Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months). If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally, the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in Allowance for Credit Losses on Financial Instruments. |
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| Allowance for Credit Losses on Financial Instruments |
In accordance with ASC Topic 326 “Credit Losses – Measurement of Credit Losses on Financial Instruments” (ASC Topic 326), the Company utilizes the current expected credit losses (“CECL”) model to determine an allowance that reflects its best estimate of the lifetime expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits, prepayments and others receivable which is recorded as a liability to offset the receivables. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate lifetime expected credit losses. Accounts receivable, loans receivable, notes receivable, and deposits, prepayments, and others receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense. |
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| Long-Term Investments |
The Company invests in equity securities with readily determinable fair values and equity securities that do not have readily determinable fair values. Equity securities with readily determinable fair values are carried at fair value with any unrealized gains or losses reported in earnings. Equity securities that do not have readily determinable fair values mainly consist of investments in privately-held companies. They are accounted for, at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
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| Asset Held For Sale |
Assets to be disposed of by sale are reported at the lower of the carrying value or fair value less cost to sell when the Company has committed to a sale agreement and would be reported separately as asset held for sale in the unaudited condensed consolidated balance sheets. |
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| Property and Equipment, net |
Property and equipment, net are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. |
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| 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 property and equipment owned and held 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. impairment losses were recognized for the three and nine months ended September 30, 2023 and 2022. |
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| Revenue Recognition |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”). ASC Topic 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers. The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). Certain portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC Topic 606, as follows: Commissions The Company earns commissions from the sale of investment products to customers. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the one-time commission price. Therefore, commissions are recorded at point in time when the investment product is purchased. The Company also facilitates the arrangement between insurance providers and individuals or businesses by providing insurance placement services to the insureds, and is compensated in the form of one-time commissions from the respective insurance providers. The Company primarily facilitates the placement of life, general and MPF insurance products. The Company determines that insurance providers are the customers. The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy). In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed.
Recurring service fees The Company provides asset management services to investment funds or investment product providers in exchange for recurring service fees. Recurring service fees are determined based on the types of investment products the Company distributes and are calculated as a fixed percentage of the fair value of the total investment of the investment products, calculated daily. These customer contracts require the Company to provide investment management services, which represents a performance obligation that the Company satisfies over time. After the contract is established, there are no significant judgments made when determining the transaction price. As the Company provides these services throughout the contract term, for the method of calculating recurring service fees, revenue is calculated on a daily basis over the contract term, quarterly billed and recognized. Recurring service agreements do not include rights of return, credits or discounts, rebates, price protection, performance component or other similar privileges and the circumstances under which the fixed percentage fees, before determined, could be not subject to clawback. Payment of recurring service fees are normally on a regular basis (typically monthly or quarterly). Interest income The Company offers money lending services from loan origination in form of mortgage and personal loans. Interest income is recognized monthly in accordance with their contractual terms and recorded as interest income in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company does not charge prepayment penalties from its customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of interest income on mortgage and personal loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 180 days delinquent. Disaggregation of Revenue The Company has disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation revenue categories presented on the unaudited condensed consolidated statements of operation and comprehensive loss for the periods indicated:
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| Rental Income |
Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement. |
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| Comprehensive Loss |
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive loss, as presented in the accompanying statements of shareholders’ (deficit) equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive loss is not included in the computation of income tax expense or benefit.
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| Employee Benefits |
Full time employees of the Hong Kong subsidiaries participate in a defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Contributions are made by both the employer and the employee at the rate of 5% on the employee’s relevant salary, subject to a salary cap of HK$30,000. |
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| Income Taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the three and nine months ended September 30, 2023 and 2022, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2023 and December 31, 2022, the Company did not have any significant unrecognized uncertain tax positions. The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities. |
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| Share-Based Compensation |
The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, Stock Compensation. The Company grants share awards, including ordinary shares and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the ordinary shares on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award. |
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| Net Loss Per Share |
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC Topic 260”). ASC Topic 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. During the three and nine months ended September 30, 2023 and 2022, there were no dilution impact. |
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| Segment Reporting |
ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has the following operating segments:
All of the Company’s revenues were generated in Hong Kong. |
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| Leases |
The Company follows ASC Topic 842, Leases (“ASC Topic 842”), utilizing the modified retrospective transition method with no adjustments to comparative periods presented. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (ASC Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC Topic 842 requires that lessees recognize right-of-use asset and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC Topic 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the unaudited condensed consolidated statements of operations and comprehensive loss and statements of cash flows. ASC Topic 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases.
When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs. The accounting update also requires that for operating leases, a lessee recognize interest expense on the lease liability and the amortization of the right-of-use asset as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements. |
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| Related Parties |
The Company follows the ASC Topic 850-10, Related Party for the identification of related parties and disclosure of related party transactions. Pursuant to section 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
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| Commitments and Contingencies |
The Company follows the ASC Topic 450-20, Commitments to report accounting 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, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted 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 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 at this time 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. |
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| Fair Value Measurement |
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, deposits, prepayments and others receivable, accounts payable and accrued liabilities, escrow liabilities and amounts due to the holding company approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of loans receivable, notes receivable and borrowings approximate their carrying amounts. They are accounted at amortized cost, subject to impairment testing. The following table presents information about the Company’s assets that were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
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| Recently Issued Accounting Pronouncements |
Besides, there were no new standards or updates during the nine months ended September 30, 2023 that had a material impact on the unaudited condensed consolidated financial statements. |
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Summary of Significant Accounting Policies (Tables) |
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| Summary of Significant Accounting Policies (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Exchange Rates | Translation
of amounts from HK$ into US$ has been made at the following exchange rates for the nine months ended September 30, 2023 and 2022:
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| Schedule of Estimated Residual Values | Property and equipment, net are stated at cost
less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the
following expected useful lives from the date on which they become fully operational:
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| Schedule of Revenue Streams by Segments | The following table presents the revenue streams by segments, with the presentation
revenue categories presented on the unaudited condensed consolidated statements of operation and comprehensive loss for the periods indicated:
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| Schedule of Operating Segments | Currently,
the Company has four business segments comprised of the following products and services:
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| Schedule of Fair Value Hierarchy of the Valuation Techniques | The
following table presents information about the Company’s assets that were measured at fair value on a recurring basis as of September
30, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value.
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| Operating Segments [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies (Tables) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Segments | Based on management’s assessment, the Company determined that
it has the following operating segments:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable, Net | Accounts
receivable, net consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loans Receivable, Net | The
Company’s loans receivable, net was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Investments, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-Term Investments, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-Term Investments | Long-term
investments consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Changes in Fair Value of Non-Market Equity Securities | The
following table presents the changes in fair value of non-marketable equity securities which are measured using Level 3 inputs as of September
30, 2023 and December 31, 2022:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Cumulative Unrealized Gains and Losses | Cumulative
unrealized gains and losses, included in the carrying value of the Company’s non-marketable equity securities:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Investment Loss (Income), Net | Investment
loss (income), net is recorded as other income (expense) and consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment Net | Property
and equipment, net consisted of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Borrowings |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward Share Purchase Liability (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Forward Share Purchase Liabilitiy [Abstract] | ||||||||||||||||||||||||||||||||||||
| Schedule of Level 3 Fair Value Measurement of the FSP Liability | The following table present the quantitative information regarding Level 3
fair value measurement of the FSP liability:
|
|||||||||||||||||||||||||||||||||||
Lease (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Balance Sheet Information | Supplemental
balance sheet information related to the operating lease was as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Supplemental Information | Other
supplemental information about the Company’s operating lease as of September 30, 2023 are as follow:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities of Operating Lease Liabilities | Maturities
of operating lease liabilities as of September 30, 2023 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant Liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrant Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Inputs into the Binominal Pricing Model Measurement | The key inputs in the Binominal pricing model were as follows at their
measurement dates:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ (Deficit) Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Activities for the Company’s RSUs | A summary of the activities for the Company’s RSUs as of September
30, 2023 and December 31, 2022 is as follow:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Provision for Income Taxes | The
provision for income taxes consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Liabilities and Assets | The
following table sets forth the significant components of the deferred tax liabilities and assets of the Company as of September 30, 2023
and December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Business Segments Comprised | Currently,
the Company has four business segments comprised of the following products and services:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Information by Segment | The
following tables present the summary information by segment for the three and nine months ended September 30, 2023 and 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Balances and Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Balances and Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Balances | Related
party balances consisted of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Ordinary Course of Business | The following table provides the transactions
with these parties for the periods as presented (for the portion of such period that they were considered related):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations of Risk (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Concentrations of Risk [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenue and Outstanding Receivable | For
the three and nine months ended September 30, 2023, the customers who accounted for 10% or more of the Company’s revenues and its
outstanding receivable balances at period-end dates, are presented as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Net Loans Receivable Balance as a Percentage of Total Loans Receivable | The
Company’s third-party customers that represent more than 10% of total combined loans receivable, and their related net loans receivable
balance as a percentage of total combined loans receivable, as of September 30, 2023 and December 31, 2022 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Details) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
HKD ($)
|
Sep. 30, 2022
USD ($)
|
|
| Summary of Significant Accounting Policies [Abstract] | |||||
| Impairment losses | |||||
| Employee’s relevant salary, percentage | 5.00% | 5.00% | |||
| Salary cap (in Dollars) | $ 30,000 | ||||
| Tax benefit, percentage | 50.00% | 50.00% | |||
Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates |
Sep. 30, 2023 |
Sep. 30, 2022 |
|---|---|---|
| Period-end [Member] | ||
| Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates [Line Items] | ||
| HK$:US$ exchange rate | 0.12771 | 0.12739 |
| Period Average [Member] | ||
| Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates [Line Items] | ||
| HK$:US$ exchange rate | 0.12766 | 0.12767 |
Summary of Significant Accounting Policies (Details) - Schedule of Estimated Residual Values |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Land and building [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Expected useful life, description | Shorter of 50 years or lease term |
| Office improvement [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Expected useful life | 3 years |
| Furniture, fixtures and equipment [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Expected useful life | 5 years |
| Computer equipment [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Expected useful life | 3 years |
| Motor vehicle [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Expected useful life | 3 years |
Summary of Significant Accounting Policies (Details) - Schedule of Operating Segments - Business Acquisition [Member] |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Distribution Business [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | Insurance Brokerage Business |
| Business Activities | - Facilitating the placement of insurance to our customers, through licensed brokers, in exchange for initial and ongoing commissions received from insurance companies. |
| Platform Business [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | - Asset Management Business |
| Business Activities | - Providing access to financial products and services to licensed brokers. - Providing operational support for the submission and processing of product applications. - Providing supporting tools for commission calculations, customer engagement, sales team management, customer conversion, etc. - Providing training resources and materials. - Facilitating the placement of investment products for the fund and/or product provider, in exchange for the fund management services. |
| Platform Business Two [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | - Money Lending Service |
| Business Activities | - Providing the lending services whereby the Company makes secured and/or unsecured loans to creditworthy customers. |
| Platform Business Three [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | - Real Estate Agency Service |
| Business Activities | - Solicitation of real estate sales for the developers, in exchange for commissions. |
| Fintech Business [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | Investment Holding |
| Business Activities | - Managing an ensemble of fintech investments. |
| Healthcare Business [Member] | |
| Segment Reporting Information [Line Items] | |
| Scope of Service | Investment Holding |
| Business Activities | - Managing an ensemble of healthcare-related investments. |
Summary of Significant Accounting Policies (Details) - Schedule of Fair Value Hierarchy of the Valuation Techniques - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Assets: | ||
| Marketable equity securities | $ 408 | $ 2,443,593 |
| Non-marketable equity securities | 32,161,840 | 34,589,767 |
| Liabilities: | ||
| Forward share purchase liability | 13,491,606 | |
| Warrant liabilities | 1,067 | 4,548 |
| Quoted Prices in Active Markets (Level 1) [Member] | ||
| Assets: | ||
| Marketable equity securities | 408 | 2,443,593 |
| Non-marketable equity securities | ||
| Liabilities: | ||
| Forward share purchase liability | ||
| Warrant liabilities | ||
| Significant Other Observable Inputs (Level 2) [Member] | ||
| Assets: | ||
| Marketable equity securities | ||
| Non-marketable equity securities | ||
| Liabilities: | ||
| Forward share purchase liability | ||
| Warrant liabilities | ||
| Significant Other Unobservable Inputs (Level 3) [Member] | ||
| Assets: | ||
| Marketable equity securities | ||
| Non-marketable equity securities | 32,161,840 | 34,589,767 |
| Liabilities: | ||
| Forward share purchase liability | 13,491,606 | |
| Warrant liabilities | $ 1,067 | $ 4,548 |
Restricted Cash (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 29, 2023 |
Jun. 29, 2023 |
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Restricted Cash [Abstract] | |||||
| Investors sold shares (in Shares) | 1,191,016 | 124,949 | 124,949 | ||
| Invesment open market at a price range (in Dollars per share) | $ 2 | ||||
| Restricted cash | $ 1,500,000 | $ 20,552,946 | $ 20,552,946 | $ 34,678,192 | |
| Shares unsold (in Shares) | 124,949 | ||||
| Loss on settlement | (378,895) | ||||
| Minimum [Member] | |||||
| Restricted Cash [Abstract] | |||||
| Invesment open market at a price range (in Dollars per share) | $ 1.51 | ||||
| Maximum [Member] | |||||
| Restricted Cash [Abstract] | |||||
| Invesment open market at a price range (in Dollars per share) | $ 1.61 | ||||
| Meteora Backstop Agreement [Member] | |||||
| Restricted Cash [Abstract] | |||||
| Restricted cash | 14,000,000 | 14,000,000 | |||
| Cash and cash equivalents | $ 1,700,000 | $ 1,700,000 | |||
Accounts Receivable, Net (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Accounts Receivable, Net [Line Items] | ||||
| Credit losses on accounts receivable | $ 143,101 | $ 211,050 | ||
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable, Net - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts Receivable, Net (Details) - Schedule of Accounts Receivable, Net [Line Items] | ||
| Accounts receivable | $ 2,917,588 | $ 2,916,609 |
| Less: allowance for credit losses | (305,304) | (94,447) |
| Accounts receivable, net | 3,458,924 | 3,094,708 |
| Related Party [Member] | ||
| Accounts Receivable, Net (Details) - Schedule of Accounts Receivable, Net [Line Items] | ||
| Accounts receivable – related parties | $ 846,640 | $ 272,546 |
Loans Receivable, Net (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
|
| Loans Receivable, Net (Details) [Line Items] | ||||
| Interest rate percentage | 9.00% | 9.00% | 10.50% | |
| Allowance for estimated credit losses | $ 1,414 | $ 1,414 | ||
| Hong Kong [Member] | ||||
| Loans Receivable, Net (Details) [Line Items] | ||||
| Term loans | 1 year | 1 year | 25 years |
Loans Receivable, Net (Details) - Schedule of Loans Receivable, Net - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule Of Loans Receivable Net Abstract | ||
| Residential mortgage loans | $ 1,585,875 | $ 1,589,871 |
| Less: allowance for credit losses | (1,414) | |
| Loans receivable, net | 1,584,461 | 1,589,871 |
| Classifying as: | ||
| Current portion | 524,504 | 517,479 |
| Non-current portion | 1,059,957 | 1,072,392 |
| Loans receivable, net | $ 1,584,461 | $ 1,589,871 |
Asset Held For Sale (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Jun. 28, 2023 |
|---|---|---|
| Assets Held For Sale [Line Items] | ||
| Office premises with a consideration | $ 6,150 | |
| Assets held for sale | $ 5,470 | |
| Deposit received | $ 600 |
Notes Receivable, Net (Details) - USD ($) |
1 Months Ended | 9 Months Ended | |
|---|---|---|---|
Feb. 24, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Notes Receivable, Net [Abstract] | |||
| Aggregate amount of notes | $ 1,673,525 | ||
| Fixed interest rate | 8.00% | ||
| Notes receivable | $ 613,533 | ||
| Interest receivable | $ 23,217 | ||
Long-Term Investments, Net (Details) |
9 Months Ended | ||||
|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
$ / shares
shares
|
Sep. 30, 2022
USD ($)
|
Jun. 30, 2023
$ / shares
|
Dec. 31, 2022
$ / shares
|
Apr. 20, 2022
shares
|
|
| Long-Term Investments, Net (Details) [Line Items] | |||||
| Percentage of long term investments | 0.001% | ||||
| Investment shares | shares | 993,108 | 4,158,963 | |||
| Market price of per share | $ 0.6 | $ 1.54 | |||
| Realized gain (loss) | $ | $ 1,541,736 | ||||
| Fair value of investment | 408 | 2,443,593 | |||
| Closing price of per share | $ 5.57 | $ 2.46 | |||
| Investments in Marketable Equity Securities [Member] | |||||
| Long-Term Investments, Net (Details) [Line Items] | |||||
| Market price of per share | $ 4.01 | ||||
Long-Term Investments, Net (Details) - Schedule of Changes in Fair Value of Non-Market Equity Securities - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of Changes in Fair Value of Non-Market Equity Securities [Abstract] | ||
| Balance at beginning of period/year | $ 34,589,767 | $ 25,496,534 |
| Additions | 16,228,690 | |
| Downward adjustments | (2,457,537) | (6,898,549) |
| Upward adjustments | 2,137,021 | |
| Foreign exchange adjustment | 29,610 | (2,373,929) |
| Balance at end of period/year | $ 32,161,840 | $ 34,589,767 |
Long-Term Investments, Net (Details) - Schedule of Cumulative Unrealized Gains and Losses - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Cumulative Unrealized Gains and Losses [Abstract] | ||
| Downward adjustments (including impairment) | $ (29,712,137) | $ (27,254,600) |
| Upward adjustments | $ 6,209,357 | $ 6,209,357 |
Long-Term Investments, Net (Details) - Schedule of Investment Loss (Income), Net - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Investment Loss (Income), Net [Abstract] | ||||
| Unrealized gain (loss) from the changes in fair value – Investment C | $ (11) | $ 741,811 | $ 87 | $ (2,793,242) |
| Realized gain from sale of Investment C | 1,541,736 | |||
| Unrealized losses – Investment F | (1,029,766) | (2,457,537) | ||
| Dividend income | 236,870 | 1,404,303 | ||
| Investment income (loss), net | $ (792,907) | $ 741,811 | $ 488,589 | $ (2,793,242) |
Property and Equipment, Net (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Jun. 28, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | |||||
| Depreciation expenses | $ 22,821 | $ 95,878 | $ 238,315 | $ 288,230 | |
| Carrying value reclassified as held for sale | $ 5,470,000 | ||||
Property and Equipment, Net (Details) - Schedule of Property and Equipment Net - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 2,271,338 | $ 8,168,144 |
| Less: accumulated depreciation | (532,115) | (808,728) |
| Property and equipment, net | 1,739,223 | 7,359,416 |
| Land and building [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 1,880,409 | 7,881,202 |
| Furniture, fixtures and equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 39,630 | 13,412 |
| Computer equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | 242,621 | 164,536 |
| Motor vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 108,678 | $ 108,994 |
Borrowings (Details) - USD ($) $ in Millions |
9 Months Ended | ||||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Oct. 30, 2023 |
Oct. 06, 2023 |
Feb. 28, 2023 |
Sep. 30, 2022 |
|
| Borrowings (Details) [Line Items] | |||||
| Fixed interest rate | 12.00% | 6.00% | |||
| Short-term borrowing (in Dollars) | $ 5.0 | ||||
| Mortgage Loans [Member] | Hong Kong [Member] | |||||
| Borrowings (Details) [Line Items] | |||||
| Fixed interest rate | 13.75% | 10.85% | |||
| Short-term Borrowings [Member] | |||||
| Borrowings (Details) [Line Items] | |||||
| Short-term borrowing (in Dollars) | $ 0.4 |
Borrowings (Details) - Schedule of Borrowings - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Borrowings [Abstract] | ||
| Mortgage borrowings | $ 6,281,574 | $ 4,477,254 |
| Short-term borrowings | 5,446,975 | |
| Total | $ 11,728,546 | $ 4,477,254 |
Forward Share Purchase Liability (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Forward Share Purchase Liabilitiy [Line Items] | |||
| Loss on settlement | $ (378,895) | ||
| Change in fair value of FSP liability | $ 82,182 | ||
Forward Share Purchase Liability (Details) - Schedule of Level 3 Fair Value Measurement of the FSP Liability - Level 3 [Member] |
12 Months Ended |
|---|---|
|
Dec. 31, 2022
$ / shares
| |
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
| Share price | $ 1.54 |
| Risk-free interest rate | 4.16% |
| Volatility | 52.19% |
| Exercise price | $ 12.34 |
| Term | 7 months 9 days |
Lease (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Leases [Line Items] | ||||
| Operating lease expense | $ 640,920 | $ 854,470 | ||
Lease (Details) - Schedule of Supplemental Balance Sheet Information - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Supplemental Balance Sheet Information Related To Operating Leases [Abstract] | ||
| Right-of-use asset, net | $ 11,926,714 | |
| Current lease liabilities | 1,206,449 | |
| Non-current lease liabilities | 10,929,511 | |
| Total lease liabilities | $ 12,135,960 |
Lease (Details) - Schedule of Other Supplemental Information |
Sep. 30, 2023 |
|---|---|
| Schedule of Other Supplemental Information of Operating Lease [Abstract] | |
| Weighted average discount rate | 6.58% |
| Weighted average remaining lease term (years) | 5 years 8 months 1 day |
Lease (Details) - Schedule of Maturities of Operating Lease Liabilities |
Sep. 30, 2023
USD ($)
|
|---|---|
| Schedule of Future Minimum Lease Payments [Abstract] | |
| 2024 | $ 1,936,642 |
| 2025 | 1,936,642 |
| 2026 | 2,355,135 |
| 2027 | 3,192,121 |
| 2028 | 3,192,121 |
| Thereafter | 2,128,081 |
| Total minimum lease payments | 14,740,742 |
| Less: imputed interest | (2,604,782) |
| Total operating lease liabilities | $ 12,135,960 |
Warrant Liabilities (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Warrant Liabilities [Line Items] | |||
| Warrant liabilities | $ 1,067 | $ 1,067 | $ 4,548 |
| Changes in fair value of warrant | $ 1,106 | $ 3,481 | |
| Private Warrants [Member] | |||
| Warrant Liabilities [Line Items] | |||
| Warrants outstanding (in Shares) | 225,000 | 225,000 | 225,000 |
Warrant Liabilities (Details) - Schedule of Inputs into the Binominal Pricing Model Measurement - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Share price | $ 0.6 | $ 1.54 |
| Risk-free interest rate | 4.67% | 4.16% |
| Volatility | 58.00% | 52.19% |
| Exercise price | $ 11.5 | $ 11.5 |
| Term | 4 years 4 months 13 days | 5 years |
Shareholders’ (Deficit) Equity (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Jun. 06, 2023 |
May 22, 2023 |
Mar. 21, 2023 |
Feb. 24, 2023 |
Dec. 31, 2022 |
|
| Shareholders’ Equity [Line Items] | ||||||||
| Ordinary shares, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 | |||||
| Ordinary shares, par value (in Dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||||
| Ordinary shares issued | 4,400,000 | 4,400,000 | 1,665,000 | 946,100 | 2,173,913 | |||
| Ordinary shares, shares issued | 67,561,998 | 67,561,998 | 58,376,985 | |||||
| Ordinary shares, shares outstanding | 67,561,998 | 67,561,998 | 58,376,985 | |||||
| Number of Shares Issued Per Unit | 1 | |||||||
| Ordinary share price per share (in Dollars per share) | $ 16.5 | $ 16.5 | ||||||
| Prior written notice | 30 days | |||||||
| Forfeitures, percentage | 10.00% | |||||||
| Share based compensation expenses (in Dollars) | $ 3,468,280 | $ 11,979,200 | ||||||
| Recognized weighted average period | 2 years | |||||||
| Additional paid-in capital (in Dollars) | $ 4,000,000 | $ 12,600,000 | ||||||
| Public Warrants [Member] | ||||||||
| Shareholders’ Equity [Line Items] | ||||||||
| Ordinary share price per share (in Dollars per share) | $ 11.5 | $ 11.5 | ||||||
| Exercisable warrants term | 90 days | 90 days | ||||||
| Expiration term | 5 years | |||||||
| Price of per warrant (in Dollars per share) | $ 0.01 | |||||||
| Class of warrant or right, redemption of warrants or rights,threshold trading days | 20 days | |||||||
| Class of warrant or right, redemption of warrants or rights, threshold consecutive trading days | 30 days | |||||||
| Threshold number of business days before sending notice of redemption to warrant holders. | 30 days | |||||||
| Warrants outstanding | 4,600,000 | 4,600,000 | 4,600,000 | |||||
| Private Warrants [Member] | ||||||||
| Shareholders’ Equity [Line Items] | ||||||||
| Warrants outstanding | 225,000 | 225,000 | 225,000 | |||||
| Share Award Scheme [Member] | ||||||||
| Shareholders’ Equity [Line Items] | ||||||||
| Ordinary shares issued | 5,346,100 | 5,346,100 | 11,675,397 | |||||
| Restricted Stock Units (RSUs) [Member] | ||||||||
| Shareholders’ Equity [Line Items] | ||||||||
| Unrecognized compensation (in Dollars) | $ 7,100,000 | $ 7,100,000 | ||||||
Shareholders’ (Deficit) Equity (Details) - Schedule of Activities for the Company’s RSUs - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of Activities for the Company’s RSUs [Abstract] | ||
| Number of RSUs, Outstanding, beginning | 5,000,000 | |
| Weighted Average Grant Price, beginning | $ 2.47 | |
| Number of RSUs, Granted | 5,000,000 | |
| Weighted Average Grant Price, Granted | $ 2.47 | |
| Number of RSUs, Outstanding, ending | 5,000,000 | 5,000,000 |
| Weighted Average Grant Price, Outstanding, ending | $ 2.47 | $ 2.47 |
Operating Cost and Expenses (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Operating Cost and Expenses [Line Items] | ||||
| Commission expenses | $ 8,915,811 | $ 8,037,869 | $ 28,195,740 | $ 11,219,182 |
| Annual bonus | 3,800,000 | 3,800,000 | ||
| Personnel and benefit expense | 7,764,353 | 3,325,369 | 22,671,813 | 8,734,387 |
| Other general and administrative expenses | $ 5,981,447 | $ 1,093,733 | $ 20,493,152 | $ 3,175,351 |
Income Taxes (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Income Taxes [Line Items] | ||
| Net operating losses carryforward offset future taxable income | $ 53.4 | $ 33.1 |
| Minimum [Member] | Hong Kong [Member] | ||
| Income Taxes [Line Items] | ||
| Income tax rates | 8.25% | |
| Maximum [Member] | Hong Kong [Member] | ||
| Income Taxes [Line Items] | ||
| Income tax rates | 16.50% |
Income Taxes (Details) - Schedule of Provision for Income Taxes - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Provision for Income Taxes [Abstract] | ||||
| Current tax | $ 55,886 | $ 127,186 | $ 55,606 | $ 232,540 |
Income Taxes (Details) - Schedule of Deferred Tax Liabilities and Assets - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred tax liabilities: | ||
| Deferred tax liabilities, net | $ 45,725 | $ 45,858 |
| Deferred tax assets, net: | ||
| Net operating loss carryforwards | 8,818,813 | 5,461,370 |
| Less: valuation allowance | (8,818,813) | (5,461,370) |
| Deferred tax assets |
Segment Information (Details) - Schedule of Business Segments Comprised |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Distribution Business [Member] | |
| Segment Information (Details) - Schedule of Business Segments Comprised [Line Items] | |
| Scope of Business Activities | Distribution Business - Facilitating the placement of insurance to our customers, through licensed brokers, in exchange for initial and ongoing commissions received from insurance companies. |
| Platform Business [Member] | |
| Segment Information (Details) - Schedule of Business Segments Comprised [Line Items] | |
| Scope of Business Activities | Platform Business - Providing access to financial products and services to licensed brokers. - Providing operational support for the submission and processing of product applications. - Providing supporting tools for commission calculations, customer engagement, sales team management, customer conversion, etc. - Providing training resources and materials. - Facilitating the placement of investment products for the fund and/or product provider, in exchange for the fund management services. - Providing the lending services whereby the Company makes secured and/or unsecured loans to creditworthy customers. - Solicitation of real estate sales for the developers, in exchange for commissions. |
| Fintech Business [Member] | |
| Segment Information (Details) - Schedule of Business Segments Comprised [Line Items] | |
| Scope of Business Activities | Fintech Business Managing an ensemble of fintech investments. |
| Healthcare Business [Member] | |
| Segment Information (Details) - Schedule of Business Segments Comprised [Line Items] | |
| Scope of Business Activities | Healthcare Business Managing an ensemble of healthcare-related investments. |
Segment Information (Details) - Schedule of Information by Segment - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Revenue, net | ||||
| Interest income | $ 41,472 | $ 38,260 | $ 117,805 | $ 137,454 |
| Non-interest income | 13,165,029 | 13,207,455 | 41,533,309 | 19,277,023 |
| Revenue, net | 13,206,501 | 13,244,152 | 41,651,114 | 19,410,147 |
| Less: inter-segment | (1,563) | (4,330) | ||
| Commission expense | 8,915,811 | 8,037,869 | 28,195,740 | 11,219,182 |
| Depreciation on property and equipment | 22,821 | 95,878 | 238,315 | 288,230 |
| Income (loss) from operations | (10,949,502) | (1,004,962) | (35,513,668) | (6,425,665) |
| Investment income (loss), net | (792,907) | 741,811 | 488,589 | (2,793,242) |
| Total assets | 82,581,149 | 95,553,724 | 82,581,149 | 95,553,724 |
| Distribution Business [Member] | ||||
| Revenue, net | ||||
| Interest income | ||||
| Non-interest income | 11,875,830 | 11,752,770 | 37,569,257 | 14,306,599 |
| Revenue, net | 11,875,830 | 11,752,770 | 37,569,257 | 14,306,599 |
| Less: inter-segment | ||||
| Commission expense | 8,592,596 | 7,655,418 | 27,133,073 | 9,630,556 |
| Depreciation on property and equipment | 261 | 251 | 783 | 623 |
| Income (loss) from operations | 2,084,397 | 1,087,410 | 5,337,353 | (1,680,985) |
| Investment income (loss), net | ||||
| Total assets | 16,283,632 | 5,656,231 | 16,283,632 | 5,656,231 |
| Platform Business [Member] | ||||
| Revenue, net | ||||
| Interest income | 41,472 | 38,260 | 117,805 | 137,454 |
| Non-interest income | 1,289,199 | 1,453,122 | 3,964,052 | 4,966,094 |
| Revenue, net | 1,330,671 | 1,491,382 | 4,081,857 | 5,103,548 |
| Less: inter-segment | ||||
| Commission expense | 323,215 | 382,451 | 1,062,667 | 1,588,626 |
| Depreciation on property and equipment | 15,439 | 95,532 | 216,953 | 286,817 |
| Income (loss) from operations | (5,487,680) | (1,548,819) | (9,542,528) | (3,594,692) |
| Investment income (loss), net | ||||
| Total assets | 33,054,207 | 53,250,392 | 33,054,207 | 53,250,392 |
| Fintech Business [Member] | ||||
| Revenue, net | ||||
| Interest income | ||||
| Non-interest income | 1,563 | 4,330 | ||
| Revenue, net | ||||
| Less: inter-segment | (1,563) | (4,330) | ||
| Commission expense | ||||
| Depreciation on property and equipment | 7,121 | 95 | 20,579 | 790 |
| Income (loss) from operations | (7,546,219) | (543,553) | (31,308,493) | (1,149,988) |
| Investment income (loss), net | (792,907) | 741,811 | 488,589 | (2,793,242) |
| Total assets | 32,722,269 | 36,127,334 | 32,722,269 | 36,127,334 |
| Healthcare Business [Member] | ||||
| Revenue, net | ||||
| Interest income | ||||
| Non-interest income | ||||
| Revenue, net | ||||
| Less: inter-segment | ||||
| Commission expense | ||||
| Depreciation on property and equipment | ||||
| Income (loss) from operations | ||||
| Investment income (loss), net | ||||
| Total assets | $ 521,041 | $ 519,767 | $ 521,041 | $ 519,767 |
Related Party Balances and Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Apr. 20, 2022 |
Jan. 18, 2022 |
|
| Related Party Balances and Transactions [Abstract] | ||||
| Amounts due to holding company | $ 4.0 | $ 12.6 | ||
| Investment of shares (in Shares) | 993,108 | 993,108 | 4,158,963 | |
| Special dividend payable | $ 47.0 |
Related Party Balances and Transactions (Details) - Schedule of Related Party Balances - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
||||||
|---|---|---|---|---|---|---|---|---|
| Schedule of Related Party Balances [Abstract] | ||||||||
| Accounts receivable | [1] | $ 846,640 | $ 272,546 | |||||
| Borrowing | [2] | 5,000,000 | ||||||
| Amounts due to the holding company | [3] | $ 6,289,743 | ||||||
| ||||||||
Related Party Balances and Transactions (Details) - Schedule of Ordinary Course of Business - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||||||||||||||
| Schedule of Ordinary Course of Business [Abstract] | ||||||||||||||||||
| Asset management service income | [1] | $ 244,525 | $ 243,925 | $ 725,146 | $ 725,193 | |||||||||||||
| Commission expenses | [2] | 75,165 | 131,182 | |||||||||||||||
| Office rental and operating fees | [3] | 1,123,804 | 559,366 | 4,895,849 | 1,563,673 | |||||||||||||
| General and administrative expense allocated | [4] | 272,132 | 1,722 | 817,968 | ||||||||||||||
| Purchase of investment from the holding company | [5] | 6,560,122 | ||||||||||||||||
| Purchase of office building from the holding company | [6] | 5,896,301 | ||||||||||||||||
| Declaration of special dividends to the holding company | [7] | $ 47,000,000 | ||||||||||||||||
| ||||||||||||||||||
Concentrations of Risk (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
|---|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
HKD ($)
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022 |
|
| Concentrations of Risk [Abstract] | ||||||
| Revenue outstanding receivable percentage | 10.00% | 10.00% | 10.00% | |||
| Revenue percentage | 10.00% | 10.00% | 10.00% | |||
| Deposit protection | $ 63,855 | $ 500,000 | ||||
| Cash and cash equivalents | $ 1,600,000 | 1,600,000 | ||||
| Fund held in escrow | 20,600,000 | 20,600,000 | ||||
| Maintained financial institutions amount | 21,800,000 | $ 21,800,000 | ||||
| Combined loans receivables percentage | 10.00% | 10.00% | 10.00% | |||
| Foreign exchange gain (loss) | $ (864,383) | $ (2,083,020) | $ 41,467 | $ (4,690,476) | ||
Concentrations of Risk (Details) - Schedule of Revenue and Outstanding Receivable |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
USD ($)
|
||||
| Customer A [Member] | |||||
| Revenue, Major Customer [Line Items] | |||||
| Revenues | $ 4,286,883 | $ 10,852,942 | |||
| Percentage of revenues | 32% | 26% | |||
| Accounts receivable | $ 902,895 | $ 902,895 | |||
| Customer B [Member] | |||||
| Revenue, Major Customer [Line Items] | |||||
| Revenues | [1] | $ 5,561,429 | |||
| Percentage of revenues | [1] | 13% | |||
| Accounts receivable | |||||
| Customer C [Member] | |||||
| Revenue, Major Customer [Line Items] | |||||
| Revenues | $ 1,503,454 | $ 4,609,083 | |||
| Percentage of revenues | 11% | 11% | |||
| Accounts receivable | $ 25,027 | $ 25,027 | |||
| Customer D [Member] | |||||
| Revenue, Major Customer [Line Items] | |||||
| Revenues | $ 1,581,322 | $ 4,633,225 | |||
| Percentage of revenues | 12% | 11% | |||
| Accounts receivable | $ 58,443 | $ 58,443 | |||
| |||||
Concentrations of Risk (Details) - Schedule of Related Net Loans Receivable Balance as a Percentage of Total Loans Receivable |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Concentrations of Risk (Details) - Schedule of Related Net Loans Receivable Balance as a Percentage of Total Loans Receivable [Line Items] | ||
| Percentage of total combined loans receivables | 31.10% | 31.00% |
| Customer E [Member] | ||
| Concentrations of Risk (Details) - Schedule of Related Net Loans Receivable Balance as a Percentage of Total Loans Receivable [Line Items] | ||
| Percentage of total combined loans receivables | 37.30% | 37.40% |
| Customer F [Member] | ||
| Concentrations of Risk (Details) - Schedule of Related Net Loans Receivable Balance as a Percentage of Total Loans Receivable [Line Items] | ||
| Percentage of total combined loans receivables | 31.60% | 31.60% |
Commitments and Contingencies (Details) $ / shares in Units, $ in Millions |
9 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
|
Dec. 15, 2020
USD ($)
|
Dec. 15, 2020
HKD ($)
|
Apr. 30, 2019
USD ($)
|
Apr. 30, 2019
HKD ($)
|
Sep. 30, 2023
USD ($)
$ / shares
shares
|
Jan. 31, 2024
USD ($)
|
Sep. 30, 2023
SGD ($)
shares
|
Dec. 31, 2021
USD ($)
|
|
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Subscription and claimed damage | $ 1,670,000 | $ 13 | $ 2,000,000 | $ 17 | ||||
| Contingency loss | $ 840,000 | |||||||
| Committed subscription amount | $ 1,084,439 | |||||||
| Aggregate capital amount | 10,000,000 | |||||||
| Committed capital amount | $ 304,489 | |||||||
| Equity interest percentage | 100.00% | 100.00% | ||||||
| Cash | $ 1,882,000 | $ 2,500,000 | ||||||
| Investor amount | $ 50 | |||||||
| Compliance trading per share (in Dollars per share) | $ / shares | $ 1 | |||||||
| Consecutively trading per share (in Dollars per share) | $ / shares | $ 1 | |||||||
| Forecast [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Notes payable | $ 1,673,525 | |||||||
| Williamsburg [Member] | ||||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||||
| Ordinary shares isuue (in Shares) | shares | 600,000 | 600,000 | ||||||
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) |
1 Months Ended | |
|---|---|---|
Nov. 07, 2023 |
Oct. 17, 2023 |
|
| Subsequent Events (Details) [Line Items] | ||
| Consideration on sale of office premises | $ 6,150,000 | |
| Gross proceeds | $ 6,242,850 | |
| Warrants exercised price | $ 500,000 | |
| Warrant [Member] | ||
| Subsequent Events (Details) [Line Items] | ||
| Shares issued (in Shares) | 1,783,671 | |
| Price per share (in Dollars per share) | $ 1 | |
| Ordinary Shares [Member] | ||
| Subsequent Events (Details) [Line Items] | ||
| Shares issued (in Shares) | 8,918,357 | |
| Price per share (in Dollars per share) | $ 0.7 |
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