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Item 7. Management’s Discussion and Analysis

2023-04-03 compared with 2022-03-14 · 936 added, 327 removed, 5 unchanged (100% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial

condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere

in this report.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that

involve risks and uncertainties.

We were formed on October 8, 2018 for the purpose

of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business

combination with one or more target businesses.

Our efforts to identify a prospective target business will not be limited to any particular

industry or geographic region.

On November 3, 2021, the Company entered into

the Business Combination Agreement with TAG, OPH, Fintech, B2B, B2BSub, and HKSub.

OPH, through its wholly-owned subsidiaries, is engaged

in business-to-business services, while Fintech, through its wholly-owned subsidiaries, is engaged in the financial technology or fintech

B2BSub is a wholly-owned subsidiary of B2B, and HKSub is a wholly-owned subsidiary of B2BSub.

Pursuant to the Business Combination

Agreement, OPH will merge with HKSub prior to the closing of the business combination, with HKSub as the surviving entity.

At the closing

of the business combination, B2B and Fintech will merge with two Merger Sub I and Merger Sub II, respectively, resulting in B2B and Fintech

becoming wholly-owned subsidiaries of AGBA.

In consideration of the business combination, AGBA will issue 55,500,000 ordinary shares with

a deemed price per share of US$10.00 to certain persons as directed by TAG.

At the closing of the business combination, AGBA will deliver

to such persons as directed by TAG, in its capacity as the sole shareholder of B2B and Fintech, subject to compliance with applicable

law, the Aggregate Stock Consideration less three percent (3%) of the Aggregate Stock Consideration.

Subject to the provisions of the

Business Combination Agreement, AGBA will release the Holdback Shares at the end of six (6) months following the closing of the business

combination, which may be extended for an additional three-month period, provided that AGBA will be entitled to retain some or all of

the Holdback Shares to satisfy certain indemnification claims during the Survival Period.

We presently have no revenue, have had losses

since inception from incurring formation costs and have had no operations other than the active solicitation of a target business with

which to complete a business combination.

We have relied upon the sale of our securities and loans from our officers and directors to

fund our operations.

On May 16, 2019, the Company consummated its IPO

of 4,600,000 Units, which includes the full exercise of the over-allotment option.

Each Unit consists of one ordinary share, one redeemable

warrant, and one right to receive one-tenth (1/10) of an ordinary share upon the consummation of a business combination.

Each redeemable

warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary share, and each ten rights entitle the holder thereof to

receive one ordinary share at the closing of a business combination.

The Units were sold at an offering price of $10.00 per Unit, generating

gross proceeds of $46,000,000.

Simultaneously with the closing of the IPO, the Company consummated a Private Placement of 225,000 units

at a price of $10.00 per Private Unit, generating total proceeds of $2,250,000.

A total of $46,000,000 of the net proceeds from the sale

of Units in the IPO (including the over-allotment option units) and the Private Placements were placed in a trust account established

for the benefit of the Company’s public shareholders.

As of December 31, 2021, a total of $40,441,469

was held in a trust account established for the benefit of the Company’s public shareholders.

Our management has broad discretion with respect

to the specific application of the net proceeds of the IPO and the Private Placement, although substantially all of the net proceeds are

intended to be applied generally towards consummating a business combination.

On May 11, 2020, August 12, 2020, and November

10, 2020, the Company issued unsecured promissory note in the aggregate principal amount of $460,000 each time to our Sponsor in exchange

for its depositing such amount into the Company’s trust account in order to extend the amount of time it has available to complete

a business combination from May 16, 2020 to February 16, 2021.

On October 15, 2020, the Company dismissed Marcum

LLP as its independent registered public accounting firm and effective October 20, 2020, Friedman LLP has been engaged as the Company’s

new independent registered public accounting firm.

The audit committee of the Company’s board of directors (the “Audit Committee”),

on October 15, 2020, approved the dismissal of Marcum LLP and the engagement of Friedman LLP as the independent registered public accounting

On February 5, 2021, the Company held its extraordinary

meeting of shareholders.

During this meeting, the Company’s shareholders approved the proposals to (i) amend the second amended

and restated memorandum and articles of association to further extend the date by which it has to consummate a business combination three

times for three additional months each time from February 16, 2021 to November 16, 2021;

and (ii) amend the investment management trust

agreement, dated as of May 14, 2019 by and between the Company and Continental Stock Transfer & Trust Company, LLC (“Continental”)

to allow it to further extend the time to complete a business combination three times for three additional months each time from February

16, 2021 to November 16, 2021.

On February 8, 2021, 636,890 shares were redeemed by a number of shareholders at a price of approximately

$10.49 per share, including interest generated and extension payments deposited in the Trust Account, in an aggregate amount of $6,680,520.

None of the funds held in trust will be released from the trust account, other than interest income to pay any tax obligations, until

the earlier of the completion of an initial business combination within the required time period or our entry into liquidation if we have

not completed a business combination by November 16, 2021.

On February 10, May 11 and August 11, 2021, the

Company issued unsecured promissory note in the aggregate principal amount of $594,467 each time to our Sponsor in exchange for its

depositing such amount into the Company’s trust account in order to extend the amount of time it has available to complete a business

On November 2, 2021, the Company held its extraordinary

meeting of shareholders.

During this meeting, the Company’s shareholders approved the proposals to (i) amend the third amended and

restated memorandum and articles of association to further extend the date by which it has to consummate a business combination two times

for three additional months each time from November 16, 2021 to May 16, 2022;

and (ii) amend the investment management trust agreement,

dated as of May 14, 2019 by and between the Company and Continental to allow it to further extend the time to complete a business combination

two times for three additional months each time from November 16, 2021 to May 16, 2022.

On November 10, 2021 and February 7, 2022, the

Company issued unsecured promissory note in the aggregate principal amount of $546,991 each time to our Sponsor in exchange for its

depositing such amount into the Company’s trust account in order to extend the amount of time it has available to complete a business

combination to May 16, 2022.

The outbreak of the COVID-19 coronavirus has resulted

in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and potential target companies

may defer or end discussions for a potential business combination with us whether or not COVID-19 affects their business operations.

extent to which COVID-19 impacts completion of the proposed business combination will depend on future developments, which are highly

uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain

COVID-19 or treat its impact, among others.

We may be unable to complete a business combination if continued concerns relating to COVID-19

restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services

providers are unavailable to negotiate and consummate a transaction in a timely manner.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides

information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition.

The discussion should be read in conjunction with our audited consolidated financial statements included elsewhere in this Annual Report.

This discussion contains forward-looking statements based upon our current expectations, estimates and projections, and involves numerous

risks and uncertainties.

Actual results may differ materially from those contained in any forward-looking statements due to, among other

considerations, the matters discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking

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:

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.

Platform Business:

The Group operates as a “financial supermarket” offering over 1,800 financial products to a large universe of retail and corporate customers.

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.

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.

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.

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.

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 December 31, 2022, there were around 1,600 financial advisors at “Focus”, organized into

32 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, during 2022, we

expanded 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

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.).

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:

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.

market knowledge and understanding.

productive and well-trained salesforce.

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 year ended December 31, 2022, the Company

made $24.6 million from commission in the Distribution Business.

The revenue attributed to the Company during 2022 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:-

As of December 31, 2022, OnePlatform made $6.3

million in commissions and recurring service fees representing a 34% decline from 2021.

2022 revenues reflect only commission

and service fees generated after the business combination effected in November 2022.

OnePlatform also made $0.2 million in interest income

from loans it granted to customers.

OnePlatform further made commission income from the agency of real estate projects.

The OnePlatform brand currently covers 44 insurance

providers selling 657 products, and 40 asset management fund houses with over 1,000 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 December 31, 2022 include:

An investment in Tandem Money Limited, a UK digital bank.

An investment in CurrencyFair Limited, a B2B and B2C payments

An investment in Oscar Health Inc., a US direct-to-consumer

digital health insurer.

An investment in Goxip Inc., a fashion media platform based

in Hong Kong.

An investment in LC Healthcare Fund I, L.P., a PRC healthcare

and healthtech investment fund.

Carrying amount in

US$ thousands (1)

December 31, 2022

December 31, 2021

Tandem Money Limited

CurrencyFair Limited

Oscar Health Inc.

LC Healthcare Fund I, L.P.

(1) Carrying amount represents Fintech’s attributable interest

in the investment portfolio asset.

The Fintech Business previous investments

include an investment in Nutmeg, a UK-based digital wealth manager, focused on robo-advisory and digital wealth management services.

June 2021, JPMorgan Chase complete its 100% acquisition of Nutmeg.

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

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 centres 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.

Recent Development

Business Combination

On November 14, 2022, we consummated the Business

Combination with AGBA Acquisition Limited.

Pursuant to the Business Combination Agreement, AGBA Acquisition Limited became, through an

acquisition merger, the 100% owner of the issued and outstanding securities of each of TAG International Limited (“B2B” or

“TIL”) and TAG Asia Capital Holdings Limited (“Fintech” or “TAC”) ,

in exchange for 55,500,000 ordinary shares of AGBA, par value US$0.001 per share to TAG (subject to certain indemnity holdback provisions

as outlined in the Business Combination Agreement).

For more information, see Note 4 to the Company’s consolidated financial statements,

Reverse Recapitalization with AGBA Acquisition Limited.

The Business Combination is anticipated to be

accounted for as a reverse merger in accordance with U.S.

Under this method of accounting, we will be treated as the “acquired”

company for financial reporting purposes.

This determination was primarily based on TAG’s majority of the voting power of the post-combination

company, TAG’s senior management comprising all of the senior management of the post-combination company, and our operations comprising

the ongoing operations of the post-combination company.

Accordingly, for accounting purposes, the Business Combination will be treated

as the equivalent of our issuing shares for the net assets of AGBA, accompanied by a recapitalization.

The net assets of AGBA will be

stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination will be

our continuing operation.

Key Factors Affecting Our Results of Operations and Future Performance

We believe that our financial performance has

been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described below, each of which presents

growth opportunities for our business.

These factors also pose important challenges that we must successfully address in order to sustain

our growth and improve our results of operations.

Our ability to successfully address these challenges is subject to various risks and

uncertainties, including those described in Part I, Item 1A of this Form 10-K.

Key Components of Results of Operations

Currently, we are operating the below business

segments and generating operating revenue streams as follows:

Operating Revenues from Major Business

Distribution Business

Facilitating the placement of insurance, investment, real estate and other financial products and services to our customers, through licensed brokers, in exchange for initial and ongoing commissions received from product providers, including insurance companies, fund houses and other product specialists.

Platform Business

In exchange for receiving platform commissions or fees:

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

Managing an ensemble of fintech investments

Healthcare Business

Managing healthcare investment

All of the Company’s revenues were generated

in Hong Kong.

Operating Revenue and Other Gain (Loss)

We have disaggregated our operating revenue from

contracts with customers into categories based on the nature of the revenue, as well as other gains (losses) from our investment portfolio.

The following table presents the revenue streams by segments, with the presentation of revenue categories presented on the consolidated

statements of operations for the years indicated:

For the year ended December 31, 2022

Distribution Business #

Platform Business

Fintech Business

Healthcare Business

Interest income

Non-interest incomes:

Recurring service fee

Total revenues

Investment loss, net

$ (8,937,431 )

For the year ended December 31, 2021

Distribution Business

Platform Business

Fintech Business

Healthcare Business

Interest income

Non-interest incomes:

Recurring service fee

Total revenues

Investment income, net

$ 130,255,232

prior to the consummation of Business Combination, which was effected in November 2022, commissions generated by the financial advisors currently associated with Focus, along with associated potential platform commissions and fees, were attributable to the Legacy Group.

Operating Costs

Commission Expense

Commission expense represent

the portion of premiums from insurance or investment products retained by financial consultants, pursuant to the terms of their respective

Commission rates vary by market due to local practice, competition and regulations.

Commissions fluctuate directly in relation

to sales volume.

Sales and Marketing Expense

Sales and Marketing Expense primarily consist

of personnel-related costs attributable to our sales and marketing personnel, marketing expense for brand promotion and spending on marketing

programs to launch the insurance and investments products distributed by consultants.

Technology Expense

Technology expense primarily include personnel-related

costs attributable to our IT team, technology contractors, server facilities expenses, telecommunications expenses, software and hardware

expenses to support and maintain the Platform Business infrastructure.

Personnel and Benefit Expense

Personnel and benefit expense primarily consist

of personnel-related costs and benefits, stock-based compensation costs for employees in our executive, accounting and finance, project

management, corporate development, office administration, legal and human resources functions.

Other General and Administrative Expenses

Other general and administrative expenses

primarily consist of rent and facilities expenses allocated based upon total direct costs, as well as, professional services fees,

such as consulting, audit, tax and legal fees, general corporate costs and allocated overhead expenses.

We expect that our general and administrative

expenses will continue to increase in future periods, primarily due to increased headcount to support anticipated growth in our Distribution

and Platform Businesses, and due to incremental costs associated with operating as a public company, including costs to comply with the

rules and regulations applicable to companies listed on a securities exchange and costs related to compliance and reporting obligations

pursuant to the rules and regulations of the SEC and stock exchange listing standards, public relations, insurance and professional services.

Results of Operations

Our entire activity from inception up to May 16,

2019 was in preparation for the IPO.

Since the IPO, our activity has been limited to the evaluation of business combination candidates

and engaging in activities in connection with the proposed business combination transaction with TAG Business, and we will not be generating

any operating revenues until the closing and completion of our business combination.

For the year ended December 31, 2021, we had

a net loss of $769,316 which consisted of interest income from our trust account offset by operating expenses.

Comparison of the Years Ended December 31,

2022 and 2021:

The following tables set forth our results of operations for the years

presented in U.S.

dollars (in thousands) :

Years ended December 31,

(US$ in thousands)

Interest income:

Total interest income

Non-interest income:

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:

Interest expense

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):

Bank interest income

Interest income, related party

Foreign exchange loss, net

Loss on equity method investments

Investment (loss) income, net

Change in fair value of warrant liabilities

Change in fair value of forward share purchase liability

Rental income

Sundry income

Total other (expense) income, net

(Loss) income before income taxes

Income tax expense

NET (LOSS) INCOME

The following table summarizes the major operating

revenues from the year ended December 31, 2022, as compared to the corresponding year ended December 31, 2021:

(US$ in thousands)

Business segment

Distribution Business

Platform Business

Fintech Business

Healthcare Business

Distribution Business

The Distribution

Business contributed 79.18% and 8.11% of the total revenue for the years ended December 31, 2022 and 2021, respectively.

Income from the

Distribution Business mainly related to commissions earned, which significantly increased by US$23.7 million, or 2,546.24%, from US$0.9 million

in 2021 to US$24.6 million in 2022.

The largest segment of the Distribution Business is our FA Business, operated under the “Focus”

Prior to the consummation of Business Combination, which was effected in November 2022, 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 and 2021.

revenue breakdown by product and type of contracts:

(US$ in thousands)

Life insurance

Property-casualty insurance

Mandatory provident fund and related revenues

By the type of contracts:

– New and or current year

Platform Business

The Platform Business contributed 20.82% and

91.89% of the total revenue for the years ended December 31, 2022 and 2021, respectively.

(US$ in thousands)

Recurring service fees

Operating Expenses

generally consist of the $10,000 monthly payment to our Sponsor for office and administrative support, monthly professional fees

owed to our service providers, travel expenses, Nasdaq market listing fees and amortization of our directors and officers

insurance policy.

Operating expenses after our initial public offering increased dramatically due to our having commenced

operations, and certain professional expenses no longer being charged directly against paid-in-capital on our balance sheet, but now

being expensed in the consolidated statement of operations.

Commission Expense

(US$ in thousands)

Distribution Business

Platform Business

Fintech Business

Healthcare Business

The Distribution Business contributed 89.47% and

8.59% of the total commission expense for the years ended December 31, 2022 and 2021, respectively.

Commission expense for the Distribution

Business increased by US$16.5 million, or 4,972.29%, from US$0.3 million in 2021 to US$16.8 million in 2022.

of the increase in revenue associated with the Distribution Business, commission expense significantly increased.

Sales and Marketing Expense

Sales and Marketing expense increased by US$10.9

million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

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

expense increased by US$0.8 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

was primarily due to increased headcount to support anticipated growth in the business and platform expansion.

Personnel and Benefit Expense

(US$ in thousands)

Personnel and benefit

Share based compensation

Personnel and benefit cost increased by

US$10.7 million for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

The increase was primarily

due to the increased headcount to support the continuing growth of the Platform Business and Distribution Business.

Share-Based Compensation

Upon the Closing of the Business Combination,

the Share Award Scheme (the “Scheme”) was approved and adopted to recognize the contributions to the Business Combination

by eligible employees, directors, and consultants and to retain them for our continuing operations and the development of our businesses.

On December 13, 2022, we granted 5,507,600 ordinary

shares under the Scheme.

507,600 ordinary shares were vested immediately on the date of grant for compensating the contributions and prior

services by and performance of eligible employees.

The remaining 5,000,000 ordinary shares were granted as restricted share units (“RSUs”)

to employees and consultants as additional compensation.

These RSUs typically are vested over one to four years period from 2023 to 2026.

The weighted average grant-date fair value of the shares granted during the year ended December 31, 2022 was $2.47 per share.

On December 29, 2022, we granted 438,500 ordinary

shares under the Scheme to the directors and officers of the Company.

The weighted average grant-date fair value of the shares granted

during the year ended December 31, 2022 was $1.91 per share.

the year ended December 31, 2022, the Company recorded US$2.1 million in share-based

compensation expense.

There was no such expense during the year ended December 31, 2021.

Other General and Administrative Expense

(US$ in thousands)

Financial data subscription expense

Legal and professional fees

Management fee expense

Rent and facility expenses

Other operating expenses

Total other general and administrative expenses

increased by US$0.4 million, or 6.82%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

net increase was mainly due to the increase in financial data subscription expenses of US$0.3 million, depreciation of US$0.3 million,

management fee expense of US$0.7 million, others of US$0.4 million, offset by a decrease in legal and professional fees of US$0.8 million

and rent and facility expense of US$0.7 million.

Loss from Operations

Loss from operations increased by US$19.9 million,

or 235.63%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

The increase was mainly attributable

to the increase in operating expenses of US$39.5 million.

Other Income (Expense), net

Bank Interest Income

Bank interest income increased by US$0.05 million

for the year ended December 31, 2022.

Interest Income, Related Party

No interest income was earned for the year ended

December 31, 2022, as compared to US$0.2 million of interest income for the year ended December 31, 2021.

Interest income, related

party mainly represented the bond interest income derived from certain corporate bonds issued by the shareholder, which were purchased

in September 2020.

Foreign Exchange Loss, net

Foreign exchange loss mainly represented the unrealized

net foreign exchange loss from the translation of long-term investments which are mostly denominated in Sterling.

The net foreign exchange

loss increased by US$1.73 million or 188.85% for the year ended December 31, 2022, as compared to the year ended December 31, 2021,

due to the stronger Sterling exchange rate.

Loss on Equity Method Investments

No loss on equity method investment was shared

by the Company for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

Loss on equity method investment

mainly represented our share of the investees’ losses in Nutmeg, which was fully sold in September 2021.

Investment (Loss) Income, Net

(US$ in thousands)

Unrealized loss in marketable equity securities

Unrealized gain in non-marketable equity securities

Unrealized loss in non-marketable equity securities

Realized gain

Dividend income

Investment loss increased by US$139.2 million,

or 106.86%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021, mainly as a result of the realized

gain on the sale of our investment into Nutmeg of US$139.1 million during the year ended December 31 2021.

Change in fair value of forward share purchase

The forward share purchase liability (“FSP

liability”) under the Meteora Backstop Agreement is valued using a Black-Scholes model, which is considered to be Level 3 fair value

measurement on a recurring basis.

For the year ended December 31, 2022, the change in fair value of liability was $5.4 million, as recognized

in the consolidated statements of operations.

Rental Income

Rental income increased by US$0.3 million for

the year ended December 31, 2022, as compared to the year ended December 31, 2021, which was earned from the leasing of our owned office

Income Tax Expense

Income tax expense decreased by US$23.4 million,

or 99.47%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily attributable to potential

tax provision related to the capital gain on equity investments realized during the year ended December 31, 2021.

Net (Loss) Income

Net loss increased by US$141.0 million, or

146.15% for the year ended December 31, 2022, as compared to December 31, 2021, due primarily to the realized gain on the sale of our

investment into Nutmeg during the year ended December 31 2021.

Liquidity and Capital Resources

As of December 31, 2021, we had cash outside our

trust account of $164,863 available for working capital needs.

All remaining cash was held in the trust account and is generally

unavailable for our use, prior to the business combination.

Our management is of the opinion that we have sufficient funds to meet our

working capital requirements and debt obligations as they become due for at least one year from the date of this report.

On May 16, 2019, we consummated the IPO of 4,600,000

Units (which includes the full exercise of the underwriter’s over-allotment option), at a price of $10.00 per Unit, generating gross

proceeds of $46,000,000.

Simultaneously with the closing of the IPO, we consummated the sale of 225,000 Private Units, at a price of $10.00

per Unit, generating gross proceeds of $2,250,000.

Following the IPO and the exercise of the over-allotment

option, a total of $46,000,000 was placed in the Trust Account.

We incurred approximately $1,533,781 in IPO related costs, including $1,150,000

of underwriting fees and approximately $383,781 of IPO Costs.

Our liquidity needs have been satisfied to date

through receipt of $25,000 from the sale of the insider shares, advances from our Sponsor and an affiliate of our Sponsor in an aggregate

amount of $952,761 outstanding as of December 31, 2021, and the remaining net proceeds from our IPO and Private Placement.

We intend to use substantially all of the net

proceeds of the IPO, including the funds held in the Trust Account, to acquire a target business or businesses and to pay our expenses

relating thereto.

To the extent that our capital stock is used in whole or in part as consideration to effect our business combination,

the remaining proceeds held in the Trust Account, as well as any other net proceeds not expended, will be used as working capital to finance

the operations of the target business.

Such working capital funds could be used in a variety of ways including continuing or expanding

the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products.

Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of

our business combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.

We may not be able to obtain additional financing.

If we are unable to raise additional capital, it may be required to take additional measures to conserve liquidity from the filing date

of this Form 10-K, assuming that a business combination is not consummated during that time.

Over this time period, we will be using

these funds primarily for activities relating to consummating the proposed business combination with TAG Business.

If our estimates of the costs of consummating

our proposed business combination is less than the actual amount necessary to do so, or the amount of interest available to us from the

trust account is less than we expect as a result of the current interest rate environment, we may have insufficient funds available to

operate our business prior to our initial business combination.

Moreover, we may need to obtain additional financing either to consummate

our initial business combination or because we become obligated to redeem a significant number of our public shares upon consummation

of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of

our initial business combination.

Following our initial business combination, if cash on hand is insufficient, we may need to obtain additional

financing in order to meet our obligations, and there is no assurance that such financing can be obtained on favorable terms, or at all.

Off-Balance Sheet Financing Arrangements

As of December 31, 2021, we did not have any off-balance

sheet arrangements.

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements.

participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable

interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered

into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other

entities, or entered into any non-financial assets.

Contractual Obligations

At December 31, 2021, we have long-term liabilities.

did not have any long-term debt, capital lease obligations or operating lease obligations.

Maxim is entitled to a deferred fee of

$1,840,000 (i.e, four percent (4.0%) of the IPO proceeds, or $0.40 per unit).

The deferred fee will be paid in cash upon the closing

a business combination from the amounts held in the trust account.

Such deferred amount will only be payable upon closing of a business

Further, the deferred amount paid to Maxim upon the closing of a business combination will be reduced by two percent (2.0%),

or $0.20 per unit, for each unit that is redeemed by shareholders in connection with the business combination.

If the business combination

is not consummated, the deferred amount will be forfeited.

Maxim will not be entitled to any interest accrued on the deferred amount.

Critical Accounting Policies

Sources of Liquidity

We have a history of operating losses and negative

For the year ended December 31, 2021, we achieved profitability primarily due to cash proceeds of approximately US$186.82 million

from the sale of its investment (Nutmeg) during the year.

The remaining balance from the sale proceeds of US$1.86 million was subsequently

received in January 2022.

We, in turn, repaid a net amount of approximately US$163.80 million to the shareholder to pay off outstanding

debt, and paid US$7.18 million as earnest deposit for the purchase of an office premise from the shareholder.

Also, we paid US$3.43 million

for the addition in long-term investments.

As of December 31, 2021, we had a cash balance of US$38.6 million.

During the year ended December 31, 2022, we reported

a net loss of US$44.52 million and reported a negative operating cash flow of US$19.30 million.

As of December 31, 2022, our cash balance

was US$6.45 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 December 31, 2022.

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 consolidated financial statements attached to this Form 10-K do not include any adjustments that might result

from the outcome of these uncertainties.

On November 14, 2022, we completed our business

combination with AGBA Acquisition Limited.

We renamed the combined entity “AGBA Group Holding Limited” and our ordinary shares

and warrants began trading on the Nasdaq Capital Market on November 15, 2022 under the ticker symbols “AGBA” and “AGBAW,”

respectively.

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

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.

Following the completion of Business Combination,

we will independently manage the capital structure of the Company and our sources of liquidity.

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 Platform Business and (ii) fintech investments.

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 equivalents will not be able to provide sufficient funds to its operations for at least the next 12 months from

the date of its consolidated financial statements provided with this Form 10-K.

However, these forecasts involve risks and uncertainties,

and actual results could vary materially.

Our management has based this estimate on assumptions that may prove to be wrong, and we could

deplete our capital resources sooner than we expect.

See “— Liquidity and Going Concern ” below.

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.

As of December 31, 2022, we had cash and cash

equivalents totalling $6.4 million, and $44.8 million in restricted cash.

As of December 31, 2021, we had cash and cash

equivalents totalling $38.6 million, and $34.5 million in restricted cash.

Comparison of the year ended December 31,

2022 and 2021

The following table summarizes our cash flows

for the years presented:

(US$ in thousands)

Net cash used in operating activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) financing activities

Effect on exchange rate change on cash and cash equivalents

Net change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, at the beginning

Cash, cash equivalents and restricted cash, at the end

Representing as:-

Cash and cash equivalents

Restricted cash – forward share purchase agreement

Restricted cash – fund held in escrow

The following table sets forth a summary of our

working capital:

Total Current Assets

Total Current Liabilities

Working Capital (Deficit)

The working deficit as of December 31, 2022 amounted

to approximately US$41.27 million, as compared to working capital of approximately US$22.42 million at December 31, 2021.

The decline in working capital was mainly due to the additional operating capital deployed in the business expansion.

Cash Flows from Operating Activities

Net cash used in operating activities was US$19.30 million

for the year ended December 31, 2022, as compared to net cash used in operating activities of US$2.15 million for the year ended

December 31, 2021.

Net cash used in operating activities for the

year ended December 31, 2022 was primarily the result of a net loss of US$44.52 million, a decrease in loans receivable of US$2.32

million, and an increase in accounts payable and accrued liabilities of US$10.88 million.

These amounts were partially offset by the increase

in accounts receivable of US$1.95 million, deposits, prepayments, and other receivable of US$0.20 million, decrease in escrow liabilities

of US$5.00 million, income tax payable of US$0.28 million and non-cash adjustments consisting of unrealized investment loss of US$8.94 million,

net foreign exchange loss of US$2.64 million, share based compensation of US$2.09 million, change in fair value of forward share purchase

liability of US$5.39 million and depreciation of property and equipment of US$0.39 million.

Net cash used in operating activities for

the year ended December 31, 2021 was primarily the result of the net income of US$96.46 million, decreases in accounts receivable of US$1.74

million, loans receivable of US$16.73 million, and an increase in income tax payable of US$22.93 million.

These amounts were partially

offset by non-cash adjustments, consisting of realized gain on sale of Nutmeg of US$139.16 million, loss on equity method investments

of US$1.60 million, unrealized investment loss of US$8.87 million, an increase in deposits, prepayments, and other receivables of US$1.98

million, a decrease in accounts payable and accrued liabilities of US$0.43 million and a decrease in escrow liabilities of US$9.80 million.

Cash Flows from Investing Activities

Net cash used in investing activities for

the year ended December 31, 2022 of US$14.19 million was primarily due to proceeds from sale of investments of US$1.85 million,

and dividend received from long-term investments of $1.15 million, offset by the addition in long-term investments of US$16.23 million, and the purchase of property and equipment of US$0.97 million.

Net cash provided by investing activities for

the year ended December 31, 2021 of US$177.49 million, was primarily due to the proceeds from the sale of Nutmeg of US$186.82 million,

the proceeds from the redemption of short-term bond of US$1.29 million, partially offset by the addition in long-term investments of US$3.43

million and the payment of earnest deposit of US$7.18 million for the purchase of an office premise from the shareholder.

Cash Flows from Financing Activities

Net cash provided by financing activities for

the year ended December 31, 2022 of US$12.14 million was primarily due to advances from the shareholder of US$9.75 million, proceeds from

borrowings of US$4.46 million, cash proceeds from reverse recapitalization of US$15.36 million, offset by the dividend distribution of

US$17.44 million to the shareholder that occurred in early 2022.

Net cash used in financing activities for the

year ended December 31, 2021 of US$163.87 million, was primarily due to the repayment of the shareholder’s loan of US$163.80 million.

Liquidity and Going Concern

Our 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 consolidated financial statements

were made available to be issued.

For the year ended December 31, 2022, we

reported a net loss of approximately US$44.52 million.

With a significant increase in our operating costs, described in the paragraph

below, we had an accumulated deficit of approximately US$39.40 million as of December 31, 2022.

However, coupled with its business expansion,

we reported significant sales growth with annual revenue of approximately US$31.08 million during 2022 (2021:

US$11.47 million), and resulting

with an operating loss of approximately US$28.35 million (2021:

US$8.45 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.

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 evaluate various potential funding alternatives that may be needed in order to finance our business

development activities, general and administrative expenses and growth strategy.

We intend to raise additional capital through

private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable,

or will be sufficient to enable us to fully complete its development activities or sustain operations.

If we are unable to raise sufficient

additional funds, we will have to develop and implement a plan to further extend payables, reduce overhead, or scale back our current

business plan until sufficient additional capital is raised to support further operations.

There can be no assurance that such a plan

will be successful.

Material Cash Requirements

We reported a net loss during the year ended December

However, we expect to generate profitable operating results within the foreseeable future, after a full recovery from the anti-pandemic

policy in Hong Kong and getting access to the collective sales capabilities force of the sale channels associated with our distribution

Our management expects sales volumes to return to levels previously recorded at the predecessor company prior to the pandemic,

especially with the re-opening of the Mainland border and the ongoing integration of Hong Kong into the Greater Bay area .

result, management expects our net cash position to expand in 2023 and to be in excess of 2021.

As of December 31, 2022, we had an accumulated

deficit of US$39.40 million.

Our material cash requirements are highly dependent upon additional financial support associated with our

its business operations for the next 12 – 18 months.

Capital commitments

As of December 31, 2022, there were no capital

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.

We do not participate in transactions that create

relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, or VIEs, which

would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet

financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any

non-financial assets.

Critical Accounting Policies and Estimates

Our audited consolidated

financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require

us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements,

the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the audited consolidated financial

statements and accompanying footnotes.

Out of our significant accounting policies, which are described in “Note 2—Summary

of significant accounting policies” of our audited consolidated financial statements included under Item 8 of Part II in this Annual

Report, certain accounting policies are deemed “critical,” as they require our management’s highest degree of judgment,

estimates and assumptions.

While our management believes our judgments, estimates and assumptions are reasonable, they are based on information

presently available and actual results may differ significantly from those estimates under different assumptions and conditions.

● Basis of Presentation

These accompanying consolidated financial

statements have been prepared in U.S.

Dollars in conformity with generally accepted accounting principles in the United States of

America (“U.S.

GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that

are necessary to present fairly the financial position, and the results of its operations and its cash flows.

Use of Estimates

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting

Actual results could differ from those estimates.

The Company considers all short-term investments

with an original maturity of three months or less when purchased to be cash equivalents.

The Company did not have any cash equivalents

as of December 31, 2021 or 2020.

Cash and Investments Held in Trust Account

At December 31, 2021 and 2020, the assets held

in the Trust Account are held in cash and US Treasury securities.

The Company classified investments that are directly

invested in U.S.

Treasuries as available for sales and money market funds are classified in accordance with the trading method.

All marketable

securities are recorded at their estimated fair value.

Unrealized gains and losses for available-for-sale securities are recorded in other

comprehensive loss.

The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily

Impairments are considered other than temporary if they are related to deterioration in credit risk or if it is likely the Company

will sell the securities before the recovery of the cost basis.

Realized gains and losses and declines in value determined to be other

than temporary are determined based on the specific identification method and are reported in other income (expense), net in the consolidated

statements of operations and comprehensive loss.

Warrant liabilities

The Company accounts for the Warrants in

accordance with the guidance contained in ASC 815-40-15-7D and 7F under which the Private Warrants do not meet the criteria for

equity treatment and must be recorded as liabilities.

Accordingly, the Company classifies the Private Warrants as liabilities at

their fair value and adjusts the Private Warrants to fair value at each reporting period.

This liability is subject to

re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our consolidated statement

of operations.

The Private Warrants are valued using a Black Scholes model.

Ordinary Shares Subject To Possible Redemption

The Company accounts for its ordinary shares subject

to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity”.

shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value.

Conditionally

redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder

or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary

At all other times, ordinary shares are classified as shareholders’ equity.

The Company’s ordinary shares feature

certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future

Accordingly, at and December 31, 2021 and 2020, 3,646,607 and 4,600,000 ordinary shares subject to possible redemption, respectively,

are presented as temporary equity, outside of the shareholders’ equity section of the Company’s consolidated balance sheets.

Fair Value of Financial Instruments

FASB ASC Topic 820 “ Fair Value Measurements

and Disclosures ” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the

buyer and the seller at the measurement date.

In determining fair value, the valuation techniques consistent with the market approach,

income approach and cost approach shall be used to measure fair value.

FASB ASC Topic 820 establishes a fair value hierarchy for inputs,

which represent the assumptions used by the buyer and seller in pricing the asset or liability.

These inputs are further defined as observable

and unobservable inputs.

Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market

data obtained from sources independent of the Company.

Unobservable inputs reflect the Company’s assumptions about the inputs that

the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.

The fair value hierarchy is categorized into three

levels based on the inputs as follows:

Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Valuation adjustments and block discounts are not being applied.

Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.

Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.

Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value of the Company’s certain

assets and liabilities, which qualify as financial instruments under ASC 820, “ Fair Value Measurements and Disclosures ,”

approximates the carrying amounts represented in the balance sheet.

The fair values of cash and cash equivalents, and other current assets,

accrued expenses, due to Sponsor are estimated to approximate the carrying values as of December 31, 2021 and 2020 due to the short maturities

of such instruments.

The following table presents information about

the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2021 and 2020, and

indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

Quoted Prices

Significant Other Observable Inputs

Significant Other Unobservable

Treasury Securities held in Trust Account*

Warrant liabilities

Quoted Prices

Other Observable Inputs

Significant Other Unobservable

Treasury Securities held in Trust Account*

The accompanying consolidated financial statements

are presented in United States dollars (“US$” or “$”) and have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP”) and pursuant to the accounting and disclosure rules and regulations

Securities and Exchange Commission (the “SEC”).

The Business Combination was accounted for as

a reverse recapitalization in accordance with U.S.

GAAP (the “Reverse Recapitalization”).

Under this method of accounting,

AGBA is treated as the “acquired” company and both of TIL and TAC are treated as the acquirer for financial reporting purposes.

Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of TIL and TAC issuing stock for the

net assets of AGBA, accompanied by a recapitalization.

The net assets of AGBA are stated at historical cost, with no goodwill or other

intangible assets recorded.

Both of TIL and TAC were determined to be the accounting acquirer based on the following predominant factors:

● TIL and TAC’s shareholders have a

majority of voting rights in the Company;

● the Board and senior management are primarily composed of

individuals associated with TIL and TAC;

● the operations of TIL and TAC comprise the ongoing operations

of the Company.

The consolidated assets, liabilities and results

of operations prior to the Reverse Recapitalization are those of TIL and TAC.

On the Closing Date, and subject to the terms and conditions

of the Business Combination Agreement, AGBA became, through an acquisition merger, 100% owner of the issued and outstanding shares of

each TIL and TAC, in exchange for 55,500,000 AGBA Shares.

The shares and corresponding capital amounts and losses per share, prior to

the Business Combination, have been retroactively restated in the consolidated financial statements.

● Use of Estimates and Assumptions

The preparation of 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 consolidated financial statements and the reported amounts

of revenues and expenses during the years presented.

Significant accounting estimates reflected in the Company’s consolidated financial

statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for doubtful accounts, 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 the shareholder.

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.

results could differ from these estimates.

● Long-Term Investments, net

The Company invests in debt securities, equity

securities with readily determinable fair values, equity securities that do not have readily determinable fair values, and equity method

Investment in debt securities consist of corporate

bonds issued by the Company’s shareholder.

Debt securities are classified as held-to-maturity and carried at cost, adjusted for

the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.

premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

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.

Investments in an entity in which the ownership

is greater than 20% but less than 50%, or where other facts and circumstances indicate that the Company has the ability to exercise significant

influence over the operating and financing policies of an entity, are accounted for using the equity method in accordance with ASC Topic

Investments – Equity Method and Joint Ventures .

Equity method investments are recorded initially at cost and adjusted

subsequently to recognize the share of the earnings, losses or other changes in capital of the investee entity after the date of acquisition.

The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events

or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

At each reporting period, the Company makes a

qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.

● Warrant Liabilities

* included in cash and investments

held in trust account on the Company’s consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject

the Company to concentration of credit risk consist of cash and trust accounts in a financial institution which, at times may exceed the

Federal depository insurance coverage of $250,000.

The Company has not experienced losses on these accounts and management believes the

Company is not exposed to significant risks on such accounts.

Net Loss Per Share

The Company calculates net loss per share in accordance

with ASC Topic 260, “Earnings per Share”.

In order to determine the net loss attributable to both the redeemable shares and

non-redeemable shares, the Company first considered the undistributed loss allocable to both the redeemable ordinary shares and non-redeemable

ordinary shares and the undistributed loss is calculated using the total net loss less any dividends paid.

The Company then allocated

the undistributed loss ratably based on the weighted average number of shares outstanding between the redeemable and non-redeemable ordinary

Any remeasurement of the accretion to redemption value of the ordinary shares subject to possible redemption was considered to

be dividends paid to the public stockholders.

As of December 31, 2021, the Company has not considered the effect of the warrants sold

in the Initial Public Offering to purchase an aggregate of 2,412,500 shares in the calculation of diluted net loss per share, since the

exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive

and the Company did not have any other dilutive securities and other contracts that could, potentially, be exercised or converted into

ordinary share and then share in the earnings of the Company.

As a result, diluted loss per share is the same as basic loss per share

for the period presented.

The net loss per share presented in the statements

of operations is based on the following:

Accretion of carrying value to redemption value

Net loss including accretion of carrying value to redemption value

$ (5,353,871 )

Ordinary share

Redeemable Ordinary share

Non-Redeemable Ordinary share

Basic and diluted net loss per share:

Allocation of net loss including carrying value to redemption value

Accretion of carrying value to redemption value

Allocation of net income (loss)

Denominators:

Weighted-average shares outstanding

Basic and diluted net income (loss) per share

Related Parties

Parties, which can be a corporation or individual,

are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant

influence over the other party in making financial and operational decisions.

Companies are also considered to be related if they are

subject to common control or common significant influence.

Recent Accounting Pronouncements

The Company has considered all new accounting

pronouncements and has concluded that there are no new pronouncements that may have a material impact on the results of operations, financial

condition, or cash flows, based on the current information.

The Company accounts

for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms

and applicable authoritative guidance in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC

Topic 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial

instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements

for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether

the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,

among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the

time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified

warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at

the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required

to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter.

the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.

accounts for its Public Warrants as equity and the Private Warrants as liabilities.

● 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.

Revenue from Contracts with Customers (Topic 606) (“ASC 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.

Identify the contract(s) with a customer.

Identify the performance obligations in

the contract.

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.

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.

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 606, as follows:

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 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 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 insured and is compensated in the form

of commission from the respective insurance providers.

The Company primarily facilitates the placement of life, general and MPF insurance

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 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

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 statements of operations.

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.

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 consolidated statement of operations.

The Company does not charge prepayment penalties from its

Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method.

interest income on mortgage loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account

becomes 180 days delinquent.

● 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.

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.

● Fair Value Measurement

The Company follows the guidance of the ASC Topic

820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), with respect to financial assets and liabilities that

are measured at fair value.

ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair

value as follows:

based upon unadjusted quoted prices for identical instruments traded in active markets;

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;

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

The carrying value of the Company’s financial

cash and cash equivalents, restricted cash, accounts receivable, consideration receivable, deposits, prepayments and other

receivables, accounts payable and accrued liabilities, escrow liabilities, borrowings 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 approximates the carrying amount.

accounts for loans receivable at cost, subject to impairment testing.

Fair value estimates are made at a specific point

in time based on relevant market information about the financial instruments.

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

From time to time, new accounting pronouncements

are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company

as of the specified effective date.

Unless otherwise discussed, the Company believes that the impact of recently issued standards that

are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In June 2022, the FASB issued Accounting Standards

Update (ASU) No.

2022-03 Fair Value Measurements (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale

Restrictions .

These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of

the unit of account of the equity security and, therefore, is not considered in measuring fair value.

This guidance is effective for public

business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023.

Early adoption

is permitted.

The Company has assessed ASU 2022-03 and early adopted the guidance during the second quarter of 2022.

The adoption did

not have a material impact on the Company’s consolidated financial statements.

In June 2016, the

Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments — Credit

Losses (Topic 326).

The new standard amends guidance on reporting credit losses for assets held at amortized cost basis

and available-for-sale debt securities.

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses

(Topic 326) and Leases (Topic 842) — Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

Update to SEC Section on Effective Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842), which

amends the effective date of the original pronouncement for smaller reporting companies.

ASU 2016-13 and its amendments will

be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022.

The Company believes

the adoption will modify the way the Company analyses financial instruments, but it does not anticipate a material impact on results of

The Company is in the process of determining the effects the adoption will have on its consolidated financial statements.

the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated

balance sheets, statements of operations and cash flows.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required

to make disclosures under this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis