Triller Group Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures. Based on this evaluation of our disclosure controls and procedures as of December 31, 2022, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management’s Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting includes policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. As of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2022. Additionally, our independent registered public accounting firm will not be required to report on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 58 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth information about our directors and executive officers as of the date of this annual report. Name Age Title Mr. Ng Wing Fai 55 Chairman, Group Chief Executive Officer, and Executive Director Mr. Shu Pei Huang, Desmond 49 Acting Group Chief Financial Officer Ms. Wong Suet Fai, Almond 52 Group Chief Operating Officer/Executive Director Mr. Jeroen Nieuwkoop 51 Group Chief Strategy Officer Mr. Richard Kong 54 Deputy Group Chief Financial Officer/Company Secretary Mr. Brian Chan 56 Independent Director (1)(2)(3) Mr. Thomas Ng 67 Independent Director (1)(2)(3) Mr. Felix Yun Pun Wong 57 Independent Director (1)(2)(3) Note: (1) Member of the remuneration committee (2) Member of the nomination committee. (3) Member of the audit committee. Biographical Information Mr. Ng Wing Fai Mr. Ng has been served as Group Chief Executive Officer, the Chairman of the board of AGBA and as an executive director of the board of AGBA, since November 2022. Prior to joining AGBA, Mr. Ng was the Managing Partner and Founding Partner of Primus Pacific Partners, an Asian private equity fund with a focus on financial services. He was also previously the Managing Director of Fubon Financial Holding, the largest financial conglomerate in Taiwan, where he oversaw its overall strategy, capital markets, merger and acquisition activities and major change programs. He has previously served as the Managing Director and Head of the Asia-Pacific Financial Institutions Group at Salomon Smith Barney. Mr. Ng graduated from the University of Cambridge and obtained a master’s degree in business administration from Harvard University in 1994. Mr. Shu Pei Huang, Desmond Mr. Shu Pei Huang, Desmond currently serves as the Acting Group Chief Financial Officer (Principal Financial Officer) since November 2022. Mr. Shu also presently serves as a director of both B2B and Fintech. He was also a director of OnePlatform Holdings Limited prior to the OnePlatform Holdings Limited merger. Prior to joining AGBA, Mr. Shu was the Vice President of Primus Holdings (H.K.) Ltd, an Asia investment holding company with a focus on the financial services industry. Prior to that, he was the corporate development manager of DRB-HICOM Berhad, one of the largest diverse conglomerates in Malaysia with business across banking, insurance, automobile, and services. Mr. Shu has over 20 years of experience in the investment banking and financial services industry and has gained all-round experience through working with MIMB Investment Bank, SIBB Investment Bank, and KPMG Corporate Services. Mr. Shu graduated from University of Kentucky with a Bachelor of Business Administration in Finance and Bachelor of Science in Accounting; Master of Science in Finance from Golden Gate University, USA. Ms. Wong Suet Fai, Almond Ms. Wong has served as an executive director of the board of AGBA since November 2022. She has over the past 20 years of related experience, encompassing organizational and talent development, compensations and benefits management, staff training and engagement, organizational efficiency. Prior to joining AGBA, Ms. Wong held different positions in AXA, Sun Life Financial, Hutchison Ports, CSL Telecommunications and Wyeth. Ms. Wong graduated with a Bachelor of Business Administration from Hong Kong Baptist University in 1995 and obtained a Master of Business Administration from University of Leicester in 2003. She completed the Advanced Management Program offered by Harvard Business School in 2018. 59 Mr. Jeroen Nieuwkoop Mr. Jeroen Nieuwkoop currently serves as the Group Chief Strategy Officer of the Company, since November 2022. Mr. Nieuwkoop previously worked at Fubon Financial and Primus Pacific Partners and has over 20 years’ experience in private equity, funds set-up, investments and divestments, mergers and acquisitions, as well as general corporate finance across the financial services industry in Asia. Mr. Nieuwkoop started his career as an investment banker in the Financial Institutions Group at Salomon Smith Barney (now known as Citigroup) in New York. Mr. Nieuwkoop obtained his Master of Science (MSc) in Business Administration and Management, General from Erasmus University Rotterdam. Mr. Richard Kong Mr. Richard Kong is the Company’s Deputy Group Chief Financial Officer and Company Secretary, since November 2022. Mr. Kong has over 25 years of experience in the finance and accounting fields. Prior to joining AGBA, he was the Chief Financial Officer and Company Secretary of a company listed in Hong Kong for over 14 years where he gained extensive experience in corporate exercises, corporate governance, and compliance-related matters. Previously, he was a manager at Ernst & Young Hong Kong. Mr. Kong holds a Bachelor of Business Administration (BBA) in Accounting from Hong Kong Baptist University and Master of Business Administration (MBA) from University of South Australia. He is also a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants. Brian Chan Mr. Chan has served as a member of the board of directors of AGBA as an independent director since November 2022. Mr. Chan has over 23 years of experience handling litigations for civil claims, intellectual property rights protection and enforcement. Since September 2007 to present, Mr. Chan has been a Senior Partner at Chan, Tang & Kwok Solicitors, a member of the International Trademark Attorneys Association. From September 1995 to August 2007 he was an Associate at Baker & McKenzie, Associate at Stephenson Harwood & Lo, Partner at Stevenson, Wong & Co., Solicitors and Consultant at Benny Kong & Peter Tang. Additionally, Mr. Chan has acted as a Counsel to various Hong Kong and cross-border mergers and acquisitions and commercial matters since August 1999. Mr. Chan is also a frequent speaker on legal issues for intellectual property rights for the Hong Kong Productivity council. Mr. Chan graduated with a Bachelor of Laws Degree and passed the Solicitors’ Finals of the Law Society of England and Wales in 1993. Thomas Ng Mr. Ng has served as a member of the board of directors of AGBA as an independent director since November 2022. Thomas Ng has 30 years of broad experience engaging in the fields of Education, Media, Retailing Marketing and Finance. He is a pioneer of IT in education and he was the author of “Digital English Lab,” one of the first series of digital books in Hong Kong. Since September 2018, he has been the Chief Executive Officer of e-chat, an IPFS block chain social media focused company. From March 2017 to April 2018, Mr. Ng was the Chief Financial Officer of Duofu Holdings Group Co. Limited. In February 2016, Mr. Ng founded Shang Finance Limited and was the Chief Executive Officer until February 2017. From March 2015 to November 2015, Mr. Ng was the Chief Financial Officer of World Unionpay Group Shares Limited. In August 2003, Mr. Ng established Fuji (Hong Kong) Co. Ltd. and was the Chief Executive Officer until December 2014. Mr. Ng obtained a Certificate of Education majoring in English from the University of Hong Kong in 2000. Felix Yun Pun Wong Mr. Wong has served as a member of the board of directors of AGBA as an independent director since November 2022. Mr. Wong currently acts as the Chief Financial Officer of Inception Growth Acquisition Limited, a publicly listed special purpose acquisition corporation (NASDAQ: IGTA). He has acted in this capacity since April 9, 2021. He has years of executive experience with multiple leadership positions and a track record in helping private companies enter the public market. He has been the principal of Ascent Partners Advisory Service Limited, a finance advisory firm, since March 2020. From November 2017 to December 2020, Mr. Wong held the position of Chief Financial Officer at Tottenham Acquisition I Limited, a publicly listed special purpose acquisition corporation, which merged with Clene Nanomedicine Inc. (NASDAQ: CLNN) in December 2020. From August 2015 to September 2017, he served as Chief Financial Officer at Raytron Technologies Limited, a leading Chinese national high-tech enterprise. His main responsibilities in these rules have included overseeing the financial functions of the firms, assisting in establishing corporate ventures for investment, and working on deal origination of new businesses in the corporate groups. Prior to these efforts, he was Chief Financial Officer and Executive Director of Tsing Capital from January 2012 to July 2015, where he managed four funds with a total investment amount of US$600 million and focused on environmental and clean technology investments. Mr. Wong also served as senior director and chief financial officer of Spring Capital, a US$250 million fund, from October 2008 until June 2011. Additionally, Mr. Wong was the chief financial officer of Natixis Private Equity Asia from November 2006 till October 2008 and an associate director of JAFCO Asia from March 2002 to October 2006. Mr. Wong was a finance manager for Icon Medialab from July 2000 to December 2001, a senior finance manager of Nielsen from August 1998 to July 2000, Planning-Free Shopper from April 1992 to August 1998, and an auditor at PricewaterhouseCoopers from August 1989 until March 2000. Mr. Wong earned his Masters of Business degree in 2003 from Curtin University in Australia and a Professional Diploma in Company Secretaryship and Administration from the Hong Kong Polytechnic University in 1989. 60 Board Committees of the Company Audit Committee The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The principal functions of the Audit Committee of the Company will include, among other things: ● appointing, compensating, retaining, replacing, and overseeing the work of the independent registered public accounting firm engaged by the Company; ● pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by the Company, and establishing pre-approval policies and procedures; ● reviewing and discussing with the independent auditors regarding all relationships the auditors have with the Company in order to evaluate their continued independence; ● setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; ● setting clear policies for audit partner rotation in compliance with applicable laws and regulations; ● obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues, and (iii) all relationships between the independent registered public accounting firm and the Company to assess the independent registered public accounting firm’s independence; ● reviewing and approving any related party transaction required to be disclosed pursuant to SEC regulations prior to the Company entering into such transaction; and ● reviewing with management, the independent registered public accounting firm, and the Company’s legal advisors, as appropriate, of any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding the financial statements or accounting policies of the Company and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC, or other regulatory authorities. The Audit Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong , each of whom qualifies as an independent director according to the rules and regulations of the SEC and Nasdaq with respect to Audit Committee membership. We have also determined that Mr. Felix Yun Pun Wong qualifies as an “audit committee financial expert.” The chair of our Audit Committee is Mr. Felix Yun Pun Wong. In addition, all of the Audit Committee members meet the requirements for financial literacy under applicable SEC and Nasdaq rules. The board of directors of AGBA has adopted a new written charter for the Audit Committee, which is available on the Company’s website after adoption. The reference to AGBA’s website address in this annual report does not include or incorporate by reference the information on the AGBA’s website into this annual report. 61 Remuneration Committee The principal functions of the Remuneration Committee of the Company include, among other things: ● reviewing and approving on an annual basis the corporate goals and objectives relevant to the compensation of our executive officers, evaluating their performance in light of such goals and objectives and determining, and approving the remuneration of our executive officers based on such evaluation; ● reviewing, evaluating, and recommending changes, if appropriate, to the remuneration of our non-employee directors; ● administering the Company’s equity compensation plans and agreements with the Company executive officers and directors; ● reviewing and approving policies and procedures relating to perquisites and expense accounts of the executive officers of the Company; ● assisting management in complying with registration statement and annual report disclosure requirements; ● if required, producing a report on executive compensation to be included in the Company’s annual proxy statement; and ● reviewing and approving the Company’s overall compensation philosophy. Our Remuneration Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong . The board of directors has adopted a new written charter for the Remuneration Committee, which will be available on the Company’s website after adoption. The reference to the AGBA website address in this annual report does not include or incorporate by reference the information on the Company’s website into this annual report. Nomination Committee The principal functions of the Nomination Committee of AGBA include, among other things: ● considering qualified candidates for positions on the board of directors of the Company; ● creating and maintaining an evaluation process to ensure that all directors to be nominated to the board of directors during the annual shareholders’ meeting are appropriately qualified in accordance with the company’s organizational documents and applicable law and regulations; ● making recommendations to the board of directors regarding candidates to fill vacancies on the board; ● making recommendations to the board, regarding the size and composition of the board; and ● reviewing the membership of the various committees of the board of directors and making recommendations for future appointments. AGBA’s Nomination Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong . AGBA’s board of directors has adopted a new written charter for the Nomination Committee, which is available on the Company’s website after adoption. The reference to the AGBA’s website address in this annual report does not include or incorporate by reference the information on AGBA’s website into this annual report. Limitations on Liability and Indemnification of Directors and Officers The Fifth Amended and Restated Memorandum and Articles of Association, has been effective upon consummation of the Business Combination, limits the Company’s directors’ liability in accordance with BVI law. Subject to BVI law, the Fifth Amended and Restated Memorandum and Articles of Association, which has been effective on November 14, 2022, provide that the Company will, in certain situations, indemnify every director, secretary, or other officer of the Company (but not including the company’s auditors) and the personal representatives of the same against all actions, proceedings, costs, charges, expenses, losses, damages, or liabilities incurred or sustained by such indemnified person, including legal fees, other than by reason of such person’s own dishonesty or fraud, as determined by a court of competent jurisdiction, in or about the conduct of the company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of their duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such person in defending (whether successfully or otherwise) any proceedings concerning the company or its affairs in any court whether in the British Virgin Islands or elsewhere. 62 The Company plans to maintain a directors’ and officers’ insurance policy pursuant to which the Company’s directors and officers are insured against liability for actions taken in their capacities as directors and officers. We believe that these provisions in the Fifth Amended and Restated Memorandum and Articles of Association, which has been effective on November 14, 2022, and these indemnification agreements are necessary to attract and retain qualified persons as directors and officers. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, or control persons, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Family Relationships No family relationships exist among any of our directors or executive officers. Code of Ethics The Company’s board of directors has adopted a Code of Ethics applicable to its directors, executive officers, and team members that complies with the rules and regulations of Nasdaq and the SEC. The Code of Ethics is available on AGBA’s website. In addition, AGBA intends to post on the Corporate Governance section of AGBA’s website all disclosures that are required by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the Code of Ethics. The reference to AGBA’s website address in this annual report does not include or incorporate by reference the information on the Company’s website into this annual report. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our shares of ordinary share and other equity securities. These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a) forms filed by such reporting persons. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that, during 2022, our directors, executive officers, and ten percent stockholders complied with all Section 16(a) filing requirements. ITEM 11. EXECUTIVE COMPENSATION This section provides an overview of our executive compensation programs. We are considered an “emerging growth company” within the meaning of the Securities Act for purposes of the SEC’s executive compensation disclosure rules. Accordingly, our reporting obligations with respect to our “named executive officers” extend only to the individuals who serve as the principal executive officer and the next two most highly compensated executive officers as of the end of the prior fiscal year, as well as up to two additional individuals for whom disclosure would have been provided based on their compensation levels but for the fact that the individual was not serving as an executive officer at the end of the prior fiscal year. The Named Executive Officers for 2022 fiscal year are Mr. Ng Wing Fai (Group Chief Executive Officer), Mr. Shu Pei Huang Desmond (Acting Group Chief Financial Officer), Ms. Wong Suet Fai Almond (Group Chief Operating Officer), Mr. Jeroen Nieuwkoop (Group Chief Strategy Officer), Mr. Richard Kong (Deputy Group Chief Financial Officer and Company Secretary). 63 Summary Compensation Table The following table summarizes information concerning the compensation awarded to, earned by and paid to the named executive officers and directors for services rendered to us for the years ended December 31, 2022 and 2021. Name and Principal Position Fiscal Year Salary ($) Bonus ($) Equity Awards ($) (2) All Other Compensation ($) Total ($) NG Wing Fai 2022 1,316,076 — 988,000 — 2,304,076 Group Chief Executive Officer, Chairman and Executive Director 2021 1,282,052 — — — 1,282,052 SHU Pei Huang, Desmond 2022 338,477 — 382,000 — 720,477 Acting Group Chief Financial Officer 2021 318,605 164,769 — — 483,374 WONG Suet Fai, Almond 2022 462,137 — 382,000 — 844,137 Group Chief Operating Officer 2021 440,569 — — 320 440,889 Jeroen Nieuwkoop 2022 440,755 — — — 440,755 Group Chief Strategy Officer 2021 273,334 68,923 — — 342,257 Richard Kong 2022 294,352 — 17,190 — 311,542 Deputy Group Chief Financial Officer and Company Secretary 2021 269,705 78,856 — — 348,561 Brian Chan (3) 2022 5,897 — — — 5,897 Independent Director 2021 — — — — — Thomas Ng (3) 2022 5,897 — — — 5,897 Independent Director 2021 — — — — — Felix Yun Pun Wong (3) 2022 5,897 — — — 5,897 Independent Director 2021 — — — — — (1) Represents all amounts earned as salary during the applicable fiscal year. For fiscal year 2022, the salary amounts have been converted to U.S. Dollars (USD) from Hong Kong Dollars (HKD) using the exchange rate of USD1 to HKD7.8 as of December 31, 2022. (2) These share awards were immediately vested on the date of grant, December 12, 2022 and December 29, 2022 (3) Directors began receiving cash fees under our director compensation program following the Closing. Executive Compensation Following the Closing of the Business Combination, we have deployed an executive compensation program that is consistent with our existing compensation policies and philosophies, which are designed to align compensation with business objectives and the creation of shareholder value, while enabling us to attract, motivate, and retain individuals who contribute to long-term success. We also note that decisions on the executive compensation program will be made by the Remuneration Committee. The following discussion is based on the present expectations as to the executive compensation program to be adopted by the Remuneration Committee. The executive compensation program actually adopted will depend on the judgment of the members of the Remuneration Committee and may differ from that set forth in the following discussion. We anticipate, however, that compensation for the Named Executive Officers will reflect their current compensation in both form and amount. 64 Employment Agreements Pursuant to the Business Combination Agreement, we entered into employment agreements with each of the Named Executive Officers and directors. The Named Executive Officers’ base salaries is set pursuant to the employment agreements. We anticipate that the salaries of the Named Executive Officers will be reviewed annually by the Remuneration Committee based upon advice and counsel of its advisors. Equity-Based Awards We have granted the equity-based awards to reward past or long-term performance of the Named Executive Officers and other high-performing employees. We believe that providing a meaningful portion of the total compensation package in the form of equity-based awards will align the incentives of our executive officers with the interests of our shareholders and serve to motivate and retain the individual executives. By extending the same incentives to all of our employees, we believe that we will be able to reward exceptional employees for their contributions to AGBA and promote continued loyalty. Equity-based awards will be awarded under the Share Award Scheme. Other Compensation We continue to maintain various employee benefit plans, including health and retirement plans, comparable to those already in place in which the Named Executive Officers will participate. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) each person who is known by us to be the beneficial owner of more than 5% of our issued and outstanding ordinary shares, (ii) each of our officers and directors, and (iii) all of our officers and directors as a group as of December 31, 2022. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ordinary shares beneficially owned by them. The following table does not reflect record of beneficial ownership of any ordinary shares issuable upon exercise of the warrants or conversion of rights, as the warrants are not exercisable within 60 days of December 31, 2022 and the rights are not convertible within 60 days of December 31, 2022. Subject to the paragraph above, the percentage ownership of issued shares is based on 59,576,985 shares of the Company’s ordinary shares issued and outstanding as of as of March 10, 2023. The business address for each of the following entities or individuals is AGBA Tower, 68 Johnston Road Wan Chai, Hong Kong SAR. Name and Address of Beneficial Owner Number of Shares % Five Percent Beneficial Owners of AGBA TAG Holdings Limited (1) 53,835,000 90.4 % Directors and Named Executive Officers of AGBA Ng Wing Fai — — Shu Pei Huang, Desmond — — Jeroen Nieuwkoop — — Richard Kong — — Wong Suet Fai, Almond — — Brian Chan 18,000 * Thomas Ng 18,000 * Felix Wong — — All Directors and Named Executive Officers of the Company as a group (8 individuals) 36,000 * * Less than 1%. (1) TAG has undertaken not to make any such distribution to its ultimate beneficial shareholders. Nothing in this undertaking, however, shall prevent TAG, subject to compliance with applicable law, from pledging or encumbering its AGBA shares or selling or otherwise disposing of any or all of the AGBA shares to any other person or persons for value consideration. 65 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related Party Transaction Policy On November 10, 2022, our Board adopted a written policy regarding the review and approval or disapproval by our Audit Committee of transactions between us, or any of our subsidiaries, and any related person (defined to include our executive officers, directors or director nominees, any stockholder beneficially owning in excess of 5% of our ordinary shares or securities exchangeable for our ordinary share, and any immediate family member of any of the foregoing persons) (the “Related Person Transaction Policy”). In reviewing related person transactions, our Audit Committee considers all relevant facts and circumstances, including the extent of the related person’s direct or indirect interest in the transaction. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or to vote on the transaction. Certain related person transactions described below were consummated prior to our adoption of the formal, written policy described above, and, accordingly, the foregoing policies and procedures were not followed with respect to these transactions. However, we believe that the terms obtained and consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or amounts that would be paid or received, as applicable, in arm’s-length transactions at such time. Related Person Transactions –– AGBA Acquisition Limited (“AAL”) Insider Shares In October 2018, AAL’s Chief Executive Officer, Gordon Lee, subscribed for an aggregate of 1,000 AAL ordinary shares for an aggregate purchase price of US$1, or approximately US$0.001 per share. On February 22, 2019, AGBA issued an aggregate of 1,149,000 ordinary shares to Initial Shareholder for an aggregate purchase price of US$25,000 in cash (together with the shares issued to Mr. Lee — the Insider Shares). Simultaneously on February 22, 2019, the Sponsor transferred an aggregate of 114,000 ordinary shares to certain directors and officers of AAL, at a price of approximately US$0.02 per share, which is identical to the original price. The Initial Shareholders have agreed not to transfer, assign or sell any of the Insider Shares (except to certain permitted transferees) until (1) the earlier of six months after the date of the consummation of an initial business combination and (2) the date on which AAL consummates a liquidation, merger, stock exchange or other similar transaction which results in all of AAL’s shareholders having the right to exchange their AGBA Shares for cash, securities or other property; provided, however, that if the last sale price of the AGBA Shares equals or exceeds US$12.00 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period, 50% of the Insider Shares will be released promptly thereafter. Private Placement Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 225,000 Private Placement Units at a price of US$10.00 per Private Placement Unit, or US$2,250,000 in the aggregate. Administrative Services Agreement AAL entered into an agreement with its Sponsor, commencing on May 16, 2019 through the earlier of the consummation of a business combination or AAL’s liquidation, to pay the Sponsor a monthly fee of US$10,000 for general and administrative services. This agreement expired and terminated on November 14, 2022. 66 Related Party Extensions Loan Originally, according to its initial Memorandum and Articles of Association, AAL had 12 months from the consummation of the IPO to consummate a business combination, and if AAL anticipated that it may not be able to consummate a business combination within those 12 months, AAL may, but was not obligated to, extend the period of time to consummate a business combination three times by an additional three months each time (for a total of up to 21 months to consummate a business combination). On February 5, 2021, AAL held an extraordinary meeting of shareholders where AAL’s shareholders approved proposals to (i) amend the 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 AAL and Continental to allow it to further extend the time to consummate a business combination three times for three additional months each time from February 16, 2021 to November 16, 2021. On November 2, 2021, AAL held another extraordinary meeting of shareholders where AAL’s shareholders approved 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 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 AAL and Continental to allow it to further extend the time to consummate a business combination two times for three additional months each time from November 16, 2021 to May 16, 2022. On May 3, 2022, AAL held its annual meeting of shareholders. During this meeting, AAL’s shareholders approved the proposals, among other things, 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 May 16, 2022 to November 16, 2022; and (ii) amend the investment management trust agreement, dated as of May 14, 2019 by and between AAL and Continental to allow it to further extend the time to consummate a business combination two times for three additional months each time from May 16, 2022 to November 16, 2022. On May 3, 2022, 283,736 AGBA Shares were redeemed by a number of shareholders at a price of approximately US$11.24 per share, in an aggregate principal amount of US$3,189,369. On May 9, 2022, AGBA issued an unsecured promissory note to its Sponsor, in the amount of US$504,431, which amount was deposited into the trust account to extend the available time to complete a business combination to August 16, 2022. On August 9, 2022, AAL issued an unsecured promissory note in an amount of US$504,431 to its Sponsor, which amount was deposited into the trust account to extend the amount of available time to complete a business combination until November 16, 2022. On each of May 11, 2020, August 12, 2020, and November 10, 2020, AGBA issued a total of three notes to the Sponsor, each in an amount of US$460,000, and on each of February 10, 2021, May 11, 2021, and August 11, 2021, AGBA issued a total of three additional notes to the Sponsor, each in an amount of US$594,466.50, pursuant to which all such amounts had been deposited into the trust account in order to extend the amount of available time to consummate a business combination until November 16, 2021. On each of November 10, 2021, and February 7, 2022, AGBA issued an additional note to the Sponsor in the amount of US$546,991 deposited into the trust account in order to extend the amount of available time to consummate a business combination until May 16, 2022. On each of May 9, 2022, and August 9, 2022, AGBA issued an unsecured promissory note to its Sponsor, in the amount of US$504,431, which amount was deposited into the trust account to extend the available time to complete a business combination to November 16, 2022. The Notes are non-interest bearing and are payable upon the closing of a business combination. In addition, the Notes may be converted, at the lender’s discretion, into additional AGBA units, which are the same as the Private Placement Units, at a price of US$10.00 per unit. Upon completion of the Business Combination, each of AGBA’s issued and outstanding convertible notes and related party balances to its sponsor, AGBA Holding Limited, were automatically converted into an aggregate of 792,334 ordinary shares. Related Person Transactions –– AGBA Group Holding Limited (“AGBA”) Administrative Services Agreements TAG Financial Holdings Service Agreements On June 24, 2021, each of OnePlatform Wealth Management Limited (“OWM”), OnePlatform International Property Limited (“OIP”), OnePlatform Asset Management Limited (“OAM”), and Hong Kong Credit Corporation Limited (“HKCC”) entered into separate, but substantially similar, Service Agreements with TAG Financial Holdings Limited (“TAG Financial Holdings”), a member of the Legacy Group. As the members of the Legacy Group presently share office space in the AGBA Tower (see “ Information about AGBA — Property ” for additional information about the office space used by AGBA), TAG Financial Holdings, pursuant to these four agreements, agreed to provide certain premises and administrative services to each of OWM, OIP, OAM, and HKCC. With respect to premises services, TAG Financial Holdings agreed to pay for, among other things, building management fees, government rates and rent, office rent, and lease-related interest and depreciation for OWM, OIP, OAM, and HKCC, subject to reimbursement. With respect to administrative services, TAG Financial Holdings agreed to pay for, among other things, office consumables, cleaning fees, A/C, electricity, and water for OWM, OIP, OAM, and HKCC, subject to reimbursement. The service fees are charged in accordance with a standard formula included in each of the contracts, corresponding to their office space occupancy and employee headcount respectively. 67 Pursuant to these service agreements and their predecessor arrangements, AGBA, collectively, paid TAG Financial Holdings US$3,190,064 and US$2,463,553 for the years ended December 31, 2022 and 2021, respectively, for premises and administrative expenses. The management of AGBA anticipates that these Service Agreements will continue after the Business Combination and until either party thereto provides one month written notice of termination, to ensure continued smooth operation on a stand-alone basis. Human Resource Services Pursuant to an Agreement for Supply Services, signed in March 2020, Perform Financial Planning Services Limited (“PFPSL”), a member of the Legacy Group, provides centralized human resource, administrative, and other related services to members of the Legacy Group, including members of AGBA — OAM, OIP, OWM, and HKCC. In particular, PFPSL is responsible for engaging and compensating independent contractors and/or employees to provide services to members of the Legacy Group pursuant to their respective service and/or employment contracts. PFPSL receives referral income on all insurance products supported by OWM on a 60-70% basis. The agreement also provides a standard mechanism for members of the Legacy Group to refer potential employees to other members of the Legacy Group. Any party thereto may terminate the agreement with three months’ notice. The management of AGBA anticipates that PFPSL will continue to provide such services to AGBA following the Business Combination. Real Property On January 25, 2022, AGBA purchased an office building located at Kaiseng Commercial Centre, No 4 & 6, Hankow Road, Kowloon, Hong Kong from the Legacy Group for a consideration of approximately US$8.0 million. The purchase price was offset by the deduction of a previously paid earnest deposit of US$7.2 million and partially settled by cash. The management of AGBA expects to use this office building for its own occupancy and to meet its anticipated business expansion in the foreseeable period. This transaction is not expected to affect the existing Trust Tower lease or current administrative service agreements. CurrencyFair Stake Acquisition On March 18, 2022, AGBA entered into a sale and purchase agreement with the Legacy Group to acquire 4,158,963 shares of CurrencyFair at the historical carrying amount of US$6.56 million. The transaction closed in April 2022, resulting in AGBA owning 8.37% equity interest of CurrencyFair. OnePlatform Asset Management Limited Fund Asset Management Service JFA Capital is a closed-ended investment vehicle incorporated in the Cayman Islands and a member of the Legacy Group. Upon its incorporation JFA Capital engaged a third-party fund manager who, in turn, engaged OnePlatform Asset Management (“OAM”) as a sub-manager. On May 7, 2018, JFA Capital and OAM agreed for JFA Capital to terminate its existing management arrangement and appoint OAM as its sole manager. OAM is licensed by the Hong Kong Securities and Futures Commission under type 1 (Dealing in securities), type 4 (Advising on securities), and type 9 (asset management). OAM is also a “professional investor” as defined under the Securities and Futures Ordinance of Hong Kong. OAM, accordingly, provides management of JFA Capital’s portfolio assets for a management fee and a performance fee, as dictated by the management agreement. For the years ended December 31, 2022 and 2021, JFA Capital paid OAM US$600,778 and US$877,425, respectively. The arrangement is non-exclusive, and OAM is permitted to invest in or advise other investment funds. OAM is also permitted to delegate its functions, powers, and duties to any person, subject to remaining liable for the actions of its delegate. The term of this management arrangement is indefinite, subject to 90 days’ notice by either party, and the management of AGBA anticipates that OAM will continue to provide fund management services to JFA Capital following the Business Combination. 68 In addition to JFA Capital, OAM also provides management services for other funds, including NSD Capital, a third-party Cayman-incorporated fund. For the years ended December 31, 2022 and 2021, NSD Capital paid OAM US$69,134 and US$69,650, respectively, for management services. The management of AGBA anticipate that OAM will continue to provide fund management services to NSD Capital following the Business Combination. LC Healthcare Fund I, L.P. Stake Acquisition In October 2022, AGBA entered into a sale and purchase agreement with the shareholder to acquire 4% equity interest in LC Healthcare Fund I, L.P. at the historical carrying amount of US$9.67 million. Dividend Distribution On January 18, 2022, TAG Asia Capital Holdings Limited (“TAC”) was approved to declare and distribute a special dividend of $47 million to TAG Holdings Limited, the shareholder who represented 1 ordinary share of TAC. The dividends were paid by offsetting the receivable due from the shareholder and the remaining balance was paid by cash. The special dividend distribution was made due to the investment income from the sale of all equity interest in Nutmeg Saving and Investment Limited in September 2021. Indemnification Effective immediately upon the consummation of the Business Combination, the Company will enter into customary indemnification arrangements with each of the newly elected directors and newly appointed executive officers of the Company. Pursuant to these indemnification agreements the Company will indemnify such directors and executive officers under the circumstances and to the extent provided for therein, from and against all losses, claims, etc., to the fullest extent permitted under BVI law and the Fifth Amended and Restated Memorandum and Articles of Association. Director Independence Our board of directors has undertaken a review of the independence of each director. Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong are all non-employee directors, all of whom our Board has determined to be independent pursuant to Nasdaq rules. All of the members of our Audit Committee, Nomination Committee and Remuneration Committee are independent pursuant to Nasdaq rules. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Public Accounting Fees The following table sets forth fees billed by our auditors during the last two fiscal years for services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees, services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered. 69 The following table shows the aggregate fees from our current principal accounting firm, WWC., P.C. and the former principal accounting firm, Friedman LLP for the fiscal years as shown. (US Dollars) Years Ended December 31, Category 2022 2021* WWC, P.C.: Audit Fees $ 460,000 $ – Audit Related Fees – – Tax Fees – – All Other Fees – – $ 460,000 $ – Marcum LLP (Formerly Friedman LLP): Audit Fees $ 114,450 $ 64,597 Audit Related Fees – – Tax Fees – – All Other Fees – – $ 114,450 $ 64,597 Audit fees for the fiscal year ended December 31, 2022 rendered by WWC., P.C. relate to professional services rendered for the audit of our consolidated financial statements and quarterly review. Audit fees for the fiscal years ended December 31, 2022 and 2021 rendered by Marcum LLP (formerly Friedman LLP) relate to professional services rendered for the audits of our predecessor’s financial statements, quarterly reviews, issuance of consents, the Business Combination and review of documents filed with the SEC. 70 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements: (1) The financial statements required to be included in this Annual Report on Form 10-K are included in Item 8 herein. (2) All supplemental schedules have been omitted since the information is either included in the financial statements or the notes thereto or they are not required or are not applicable. (3) See attached Exhibit Index of this Annual Report on Form 10-K (b) Exhibits The following documents are filed as exhibits to this annual report, including those exhibits incorporated herein by reference to one of our prior filings under the Securities Act or the Exchange Act. Exhibit No. Description 2.1 Business Combination Agreement, dated November 3, 2021, by and among AGBA Acquisition Limited, AGBA Merger Sub I Limited, AGBA Merger Sub II Limited, TAG International Limited, TAG Asset Partners Limited, OnePlatform International Limited, OnePlatform Holdings Limited, TAG Asia Capital Holdings Limited, and TAG Holdings Limited (incorporated by reference to Exhibit 2.1 to AGBA’s 8-K filed with the SEC on November 18, 2022) 2.2 Amendment No. 1 to the Business Combination Agreement, dated November 18, 2021 (incorporated by reference to Exhibit 2.2 to AGBA’s 8-K filed with the SEC on November 18, 2022) 2.3 Amendment No. 2 to the Business Combination Agreement, dated January 4, 2022 (incorporated by reference to Exhibit 2.3 to AGBA’s 8-K filed with the SEC on November 18, 2022) 2.4 Amendment No. 3 to the Business Combination Agreement, dated May 4, 2022 (incorporated by reference to Exhibit 2.4 to AGBA’s 8-K filed with the SEC on November 18, 2022) 2.5 Business Combination Agreement Waiver and Amendment, dated October 21, 2022 (incorporated by reference to Exhibit 2.5 to AGBA’s 8-K filed with the SEC on November 18, 2022) 3.1 Fifth Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 to AGBA’s 8-K filed with the SEC on November 18, 2022) 4.1 Form of Ordinary Share certificate (incorporated by reference to Exhibit 4.1 to AGBA’s 8-K filed with the SEC on November 18, 2022) 4.2 Form of Warrant (incorporated by reference to Exhibit 4.2 to AGBA’s 8-K filed with the SEC on November 18, 2022) 4.3 Description of Registrant’s Securities 4.4 Warrant Agreement dated May 14, 2019, by and between Continental Stock Transfer & Trust Company and the Registrant (incorporated by reference to Exhibit 4.5 to AGBA’s 8-K filed with the SEC on May 17, 2019) 10.2 Share Award Scheme (incorporated by reference to Exhibit 10.2 to AGBA’s 8-K filed with the SEC on November 18, 2022) 10.3 Letter of Appointment and Transfer (Ng Wing Fai) (incorporated by reference to Exhibit 10.3 to AGBA’s 8-K filed with the SEC on November 18, 2022) 10.4 Letter of Appointment and Transfer (Wong Suet Fai Almond) (incorporated by reference to Exhibit 10.4 to AGBA’s 8-K filed with the SEC on November 18, 2022) 21.1 Subsidiaries of the Registrant 23.1 Consent of WWC, P.C. 23.2 Consent of Friedman LLP 31.1 Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ITEM 16. FORM 10-K SUMMARY None. 71 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AGBA GROUP HOLDING LIMITED Dated: April 3, 2023 By: /s/ Wing Fai NG Name: Wing Fai NG Title: Group Chief Executive Officer (Principal Executive Officer) AGBA GROUP HOLDING LIMITED Dated: April 3, 2023 By: /s/ Shu Pei Huang, Desmond Name: Shu Pei Huang, Desmond Title: Acting Group Chief Financial Officer (Principal Accounting and Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s/ Wing Fai NG Group Chief Executive Officer (Principal executive officer) and Executive Director April 3, 2023 /s/ Wong Suet Fai, Almond Executive Director April 3, 2023 Wong Suet Fai, Almond /s/ Brian Chan Independent Director April 3, 2023 Brian Chan /s/ Thomas Ng Independent Director April 3, 2023 Thomas Ng /s/ Felix Yun Pun Wong Independent Director April 3, 2023 Felix Yun Pun Wong 72 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 1171) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID: 711) F-3 Consolidated Balance Sheets F-4 Consolidated Statements of Operations and Comprehensive (Loss) Income F-5 Consolidated Statements of Changes in Shareholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 – F-44 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To: The Board of Directors and Shareholders of AGBA Group Holding Limited Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of AGBA Group Holding Limited and subsidiaries (collectively the “Company”) as of December 31, 2022, and the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2022, the related notes, and financial statement schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter – Reverse Recapitalization As discussed in Note 4, the Company entered into a reverse recapitalization transaction whereby the Company merged with TAG International Limited (formerly known as OnePlatform Holdings Limited) and Subsidiaries, and TAG Asia Capital Holdings Limited and Subsidiaries (“TIL&TAG”). As the basis of the presentation of the consolidated financial statements as of December 31, 2022 and 2021 and for the years then ended that necessitate the application of retrospective adjustments reflecting the transaction to the first period presented, our audit included performing audit procedures on the adjustments. We believe our procedure provide evidence for us to conclude that management has properly applied the adjustments. We were not engaged to audit the combined financial statements of TIL&TAG as of December 31, 2021 for the year then ended; the combined financial statements of TIL&TAG were audited by another registered public accounting firm, and that registered public accounting firm expressed an unqualified opinion with an explanatory paragraph indicating that there was substantial doubt that TIL&TAG would continue as going concern. Emphasis of Matter – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the consolidated financial statements, the Company has incurred substantial net loss and had net cash outflows from operating activities during the year ended December 31, 2022 and reported accumulated deficit as at December 31, 2022. These circumstances give rise to substantial doubt that the Company will continue as a going concern. Management’s plans in regards to these matters are also described in Note 3 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this doubt and uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ WWC, P.C. WWC, P.C . Certified Public Accountants PCAOB ID No. 1171 We have served as the Company’s auditor since 2022. San Mateo, California April 3, 2023 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To The Shareholders and Board of Directors and of AGBA Group Holding Limited Opinion on the Financial Statements We have audited, before the effects of the reverse recapitalization described in Note 4, the accompanying consolidated balance sheet of AGBA Group Holding Limited (previously the combined balance sheet of OnePlatform Holdings Limited and Subsidiaries and TAG Asia Capital Holdings Limited and Subsidiaries) (the “Company”) as of December 31, 2021, the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity (deficit) and cash flows for the year ended December 31, 2021 and the related notes (collectively referred to as the “2021 financial statements”) (the combined financial statements before the effects of the reverse recapitalization as described in Note 4 are not presented herein). In our opinion, the 2021 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We were not engaged to audit, review or apply any procedures to the adjustments to retroactively apply the effects of the reverse recapitalization described in Note 4, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by another registered public accounting firm. Explanatory Paragraph — Going Concern The accompanying 2021 financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the 2021 financial statements, the Company does not have sufficient working capital at December 31, 2021, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding this matter are also described in Note 3. The 2021 financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These 2021 financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 2021 financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 2021 financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the 2021 financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the 2021 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the 2021 financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Friedman LLP We served as the Company’s auditor from 2021 through 2022. New York, NY May 16, 2022 F- 3 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) CONSOLIDATED BALANCE SHEETS (Currency expressed in United States Dollars (“US$”)) As of December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 6,449,876 $ 38,595,610 Restricted cash 44,844,196 34,485,797 Accounts receivable, net 2,822,162 908,727 Accounts receivable, net, related parties 272,546 238,892 Loans receivables, net 517,479 123,611 Earnest deposit, the shareholder — 7,182,131 Consideration receivable — 1,861,348 Income tax recoverable 260,120 — Deposit, prepayments, and other receivables 589,786 383,399 Total current assets 55,756,165 83,779,515 Non-current assets: Loans receivables, net 1,072,392 3,785,314 Property and equipment, net 7,359,416 1,653,458 Long-term investments, net 37,033,360 33,292,013 Total non-current assets 45,465,168 38,730,785 TOTAL ASSETS $ 101,221,333 $ 122,510,300 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 20,274,429 $ 3,850,015 Escrow liabilities 29,487,616 34,485,797 Borrowings 4,477,254 — Amount due to shareholder 6,289,743 — Forward share purchase liability 13,491,606 — Income tax payable and provision 23,000,000 23,028,916 Total current liabilities 97,020,648 61,364,728 Long-term liabilities: Warrant liabilities 4,548 — Deferred tax liabilities 45,858 — Total long-term liabilities 50,406 — TOTAL LIABILITIES 97,071,054 61,364,728 Commitments and contingencies (Note 21) — — Shareholders’ equity: Ordinary shares, $ 0.001 par value; 200,000,000 shares authorized, 58,376,985 and 53,835,000 shares issued and outstanding as of December 31, 2022 and 2021, respectively (1) 58,377 53,835 Ordinary shares to be issued 1,665 1,665 Additional paid-in capital 43,870,308 38,706,226 Receivable from the shareholder — ( 29,562,195 ) Accumulated other comprehensive loss ( 384,938 ) ( 179,461 ) (Accumulated deficit) retained earnings ( 39,395,133 ) 52,125,502 Total shareholders’ equity 4,150,279 61,145,572 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 101,221,333 $ 122,510,300 (1) Retroactively restated for the reverse recapitalization as described in Note 4. See accompanying notes to the consolidated financial statements. F- 4 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Currency expressed in United States Dollars (“US$”)) Years ended December 31, 2022 2021 Revenues: Interest income: Loans $ 176,175 $ 961,522 Total interest income 176,175 961,522 Non-interest income: Commissions 26,561,691 5,168,233 Recurring service fees 3,372,449 4,391,773 Total non-interest income 29,934,140 9,560,006 Total revenues from others 30,110,315 10,521,528 Non-interest income: Recurring service fees 969,912 947,075 Total revenues from related parties 969,912 947,075 Total revenues 31,080,227 11,468,603 Operating cost and expenses: Interest expense ( 140,644 ) ( 484,020 ) Commission expense ( 18,823,458 ) ( 3,866,251 ) Sales and marketing expense ( 11,141,672 ) ( 205,543 ) Technology expense ( 1,209,035 ) ( 414,230 ) Personnel and benefit expense ( 21,928,504 ) ( 9,152,522 ) Other g eneral and administrative expenses ( 6,188,011 ) ( 5,793,160 ) Total operating cost and expenses ( 59,431,324 ) ( 19,915,726 ) Loss from operations ( 28,351,097 ) ( 8,447,123 ) Other income (expense): Bank interest income 99,132 47,737 Interest income, related party — 203,632 Foreign exchange loss, net ( 2,643,261 ) ( 915,062 ) Loss on equity method investment — ( 1,596,555 ) Investment (loss) income, net ( 8,937,431 ) 130,255,232 Change in fair value of warrant liabilities 8,952 — Change in fair value of forward share purchase liability ( 5,392,293 ) — Rental income 315,233 — Sundry income 504,735 421,107 Total other (expense) income, net ( 16,044,933 ) 128,416,091 (Loss) income before income taxes ( 44,396,030 ) 119,968,968 Income tax expense ( 124,605 ) ( 23,505,445 ) NET (LOSS) INCOME $ ( 44,520,635 ) $ 96,463,523 Other comprehensive loss: Foreign currency translation adjustment ( 205,477 ) ( 393,601 ) COMPREHENSIVE (LOSS) INCOME $ ( 44,726,112 ) $ 96,069,922 Weighted average number of ordinary shares outstanding (1) - Basic 56,084,858 55,500,000 - Diluted 56,084,858 55,500,000 Net (loss) income per ordinary share (1) - Basic $ ( 0.79 ) $ 1.74 - Diluted $ ( 0.79 ) $ 1.74 (1) Retroactively restated for the reverse recapitalization as described in Note 4. See accompanying notes to the consolidated financial statements. F- 5 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Currency expressed in United States Dollars (“US$”), except for number of shares) Ordinary shares Ordinary shares to be issued Additional paid-in Receivable from the Accumulated other comprehensive (loss) (Accumulated deficit) retained Total shareholders’ No. of share Amount No. of share Amount capital shareholder income earnings equity Balance as of January 1, 2021 53,835,000 $ 53,835 1,665,000 $ 1,665 $ 38,706,226 $ — $ 214,140 $ ( 44,338,021 ) $ ( 5,362,155 ) Advances to the shareholder — — — — — ( 29,562,195 ) — — ( 29,562,195 ) Net income for the year — — — — — — — 96,463,523 96,463,523 Foreign currency translation adjustment — — — — — — ( 393,601 ) — ( 393,601 ) Balance as of December 31, 2021 53,835,000 $ 53,835 1,665,000 $ 1,665 $ 38,706,226 $ ( 29,562,195 ) $ ( 179,461 ) $ 52,125,502 $ 61,145,572 Automatic conversion of public and private rights into ordinary shares (Note 14) 482,500 483 — — ( 483 ) — — — — Issuance of ordinary shares to settle payables (Note 14) 792,334 792 — — 7,202,278 — — — 7,203,070 Issuance of ordinary shares to settle finder fee (Note 14) 555,000 555 — — ( 555 ) — — — — Transaction costs in related to Business Combination (Note 14) — — — — ( 8,308,754 ) — — — ( 8,308,754 ) Shares and warrants from reverse recapitalization with AGBA Acquisition Limited, net of redemption (Note 4) 2,712,151 2,712 — — 6,282,184 — — — 6,284,896 Special dividend to the shareholder — — — — — 29,562,195 — ( 47,000,000 ) ( 17,437,805 ) Share-based compensation (Note 15) — — — — 2,088,725 — — — 2,088,725 Initial measurement of forward share purchase liability — — — — ( 8,099,313 ) — — ( 8,099,313 ) Forgiveness of amount due to shareholder — — — — 6,000,000 — — — 6,000,000 Net loss for the year — — — — — — — ( 44,520,635 ) ( 44,520,635 ) Foreign currency translation adjustment — — — — — — ( 205,477 ) — ( 205,477 ) Balance as of December 31, 2022 58,376,985 $ 58,377 1,665,000 $ 1,665 $ 43,870,308 $ — $ ( 384,938 ) $ ( 39,395,133 ) $ 4,150,279 See accompanying notes to the consolidated financial statements. F- 6 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed in United States Dollars (“US$”)) Years ended December 31, 2022 2021 Cash flows from operating activities: Net (loss) income $ ( 44,520,635 ) $ 96,463,523 Adjustments to reconcile net (loss) income to net cash used in operating activities Share-based compensation expense 2,088,725 — Depreciation of property and equipment 392,873 45,383 Loss on disposal of property and equipment — 73 Accreted interest — ( 203,632 ) Provision for legal contingency loss — 836,308 Foreign exchange loss, net 2,643,261 184,747 Investment loss (income), net 8,937,431 ( 130,255,232 ) Loss on equity method investment — 1,596,555 Change in fair value of warrant liabilities ( 8,952 ) — Change in fair value of forward share purchase liability 5,392,293 — Change in operating assets and liabilities: Accounts receivable ( 1,947,089 ) 1,735,113 Loans receivable 2,319,054 16,728,359 Deposits, prepayments, and other receivables ( 198,512 ) ( 1,979,015 ) Accounts payable and accrued liabilities 10,877,792 ( 432,770 ) Escrow liabilities ( 4,998,181 ) ( 9,800,663 ) Income tax payable ( 282,459 ) 22,927,192 Net cash used in operating activities ( 19,304,399 ) ( 2,154,059 ) Cash flows from investing activities: Proceeds from sale of investments 1,853,473 186,820,950 Payment of earnest deposit, the shareholder — ( 7,182,131 ) Addition in long-term investments, related party ( 16,228,690 ) ( 523,269 ) Addition in long-term investments — ( 2,904,522 ) Proceeds from redemption of corporate bonds, related party — 1,286,628 Dividend received from long-term investments 1,154,749 — Purchase of property and equipment ( 968,367 ) ( 3,603 ) Net cash (used in) provided by investing activities ( 14,188,835 ) 177,494,053 Cash flows from financing activities: Advances from (repayment to) the shareholder 9,752,275 ( 163,798,115 ) Proceeds from borrowings 4,464,391 — Dividend paid to the shareholder ( 17,437,805 ) — Cash proceeds from reverse recapitalization, net of redemption 15,356,580 — Repayment of bank borrowings — ( 73,591 ) Net cash provided by (used in) financing activities 12,135,441 ( 163,871,706 ) Effect on exchange rate change on cash, cash equivalents and restricted cash ( 429,542 ) ( 155,154 ) Net change in cash, cash equivalent and restricted cash ( 21,787,335 ) 11,313,134 BEGINNING OF YEAR 73,081,407 61,768,273 END OF YEAR $ 51,294,072 $ 73,081,407 SUPPLEMENTAL CASH FLOW INFORMATION: Cash received from income tax recoverable $ 125,353 $ — Cash paid for income taxes $ 531,592 $ — Cash paid for interest $ 140,644 $ 1,200 Reconciliation to amounts on consolidated balance sheets: Cash and cash equivalents $ 6,449,876 $ 38,595,610 Restricted cash 44,844,196 34,485,797 Total cash, cash equivalents and restricted cash $ 51,294,072 $ 73,081,407 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Purchase of property and equipment, through earnest deposit $ 7,182,131 $ — Special dividend to the shareholder offset with amount due from the shareholder $ 29,562,195 $ — Issuance of ordinary shares to settle payables $ 7,203,070 $ — Transaction costs in related to Business Combination $ 8,308,754 — Forgiveness of amount due to shareholder $ 6,000,000 $ — Liability assumed related to forward share purchase agreement $ 13,491,606 $ — See accompanying notes to the consolidated financial statements. F- 7 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 1 － BUSINESS OVERVIEW AND BASIS OF PRESENTATION AGBA Group Holding Limited (“AGBA” or the “Company”) (formerly known as AGBA Acquisition Limited), is incorporated on October 8, 2018 in British Virgin Islands. On November 14, 2022, the Company changed its name from “AGBA Acquisition Limited” to “AGBA Group Holding Limited”. The Company, through its subsidiaries, is operating a wealth and health oneplatform, offering a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, lending, and real estate in overseas. AGBA is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing. On November 14, 2022 (“Closing Date”), AGBA, AGBA Merger Sub I Limited, AGBA Merger Sub II Limited, TAG International Limited, TAG Asset Partners Limited, OnePlatform International Limited, OnePlatform Holdings Limited, TAG Asia Capital Holdings Limited, and TAG Holdings Limited (“TAG”) completed the business combination transaction and AGBA became the 100 % beneficial owner of all of the issued and outstanding shares and other equity interest of TAG International Limited and TAG Asia Capital Holdings Limited. The transaction was accounted for as a “reverse recapitalization” and AGBA was treated as the “acquired” company for accounting purposes (see Note 4). Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. The accompanying consolidated financial statements reflect the activities of AGBA and each of the subsidiaries as of December 31, 2022 and 2021: Name Background Ownership TAG International Limited (“TIL”) ● British Virgin Islands company ● Incorporated on October 25, 2021 ● Issued and outstanding 1 ordinary share at $1 par value ● Investment holding 100% owned by AGBA TAG Asset Partners Limited (“TAP”) ● British Virgin Islands company ● Incorporated on October 25, 2021 ● Issued and outstanding 1 ordinary share at $1 par value ● Investment holding 100% owned by TIL OnePlatform International Limited (“OIL”) (amalgamated with OnePlatform Holdings Limited on August 11, 2022) ● Hong Kong company ● Incorporated on November 2, 2021 ● Issued and outstanding 100 ordinary shares for HK$100 ($13) ● Investment holding 100% owned by TAP TAG Asia Capital Holdings Limited (“TAC”) (formerly known as Convoy Capital Holdings Limited) ● British Virgin Islands company ● Incorporated on October 26, 2015 ● Issued and outstanding 1 ordinary share at $1 par value ● Investment holding 100% owned by AGBA OnePlatform Wealth Management Limited (“OWM”) (formerly known as GET Mdream Wealth Management Limited) ● Hong Kong company ● Incorporated on February 5, 2003 ● Issued and outstanding 240,764,705 ordinary shares for HK$120,851,790 ($15,493,819) ● Provision of insurance and mandatory provident fund schemes brokerage services 99.89% owned by OIL F- 8 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) OnePlatform International Property Limited (“OIP”) (formerly known as Convoy International Property Consulting Limited) ● Hong Kong company ● Incorporated on May 21, 2014 ● Issued and outstanding 30,001,200 ordinary shares for HK$30,001,200 ($3,846,308) ● Provision of overseas real estate brokerage services 100% owned by OIL OnePlatform Asset Management Limited (“OAM”) (formerly known as Convoy Asset Management Limited) ● Hong Kong company ● Incorporated on November 24, 1999 ● Issued and outstanding 264,160,000 ordinary shares for HK$272,000,000 ($34,871,795) ● Licensed by the Securities and Futures Commission of Hong Kong ● Provision of investment advisory, funds dealing, introducing broker, and asset management services 100% owned by OIL Kerberos (Nominee) Limited (“KNL”) ● Hong Kong company ● Incorporated on April 20, 2007 ● Issued and outstanding 1 ordinary share for HK$1 ● Registered under The Hong Kong Trustee Ordinance ● Provision of escrow services 100% owned by OAM Maxthree Limited (“Maxthree”) ● British Virgin Islands company ● Incorporated on April 12, 2006 ● Issued and outstanding 1 ordinary share at $1 par value ● Investment holding 100% owned by OIL OnePlatform Credit Limited (formerly known as Artley Finance (HK) Limited) (“OCL”) ● Hong Kong company ● Incorporated on August 6, 1982 ● Issued and outstanding 169,107,379 ordinary shares for HK$169,107,379 ($21,680,433) ● Registered under the Hong Kong Money Lenders Ordinance ● Provision of money lending services 100% owned by Maxthree Hong Kong Credit Corporation Limited (“HKCC”) ● Hong Kong company ● Incorporated on March 16, 1982 ● Issued and outstanding 139,007,381 ordinary shares for HK$139,007,381 ($17,821,459) ● Registered under the Hong Kong Money Lenders Ordinance ● Provision of money lending services 100% owned by OCL F- 9 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Trendy Reach Holdings Limited (“TRHL”) ● British Virgin Islands company ● Incorporated on October 5, 2015 ● Issued and outstanding 1 ordinary share at HK$1 ● Investment holding 100% owned by Maxthree Profit Vision Limited (“PVL”) ● Hong Kong company ● Incorporated on October 9, 2015 ● Issued and outstanding 1 ordinary shares for HK$1 ● Property investment holding 100% owned by TRHL TAG Technologies Limited (“TAGTL”) (formerly known as Convoy Technologies Limited) ● British Virgin Islands company ● Incorporated on October 23, 2015 ● Issued and outstanding 1 ordinary share at $1 par value ● Investment in financial technology business 100% owned by TAC AGBA Group Limited (formerly known as Tandem Money Hong Kong Limited) (“AGL”) ● Hong Kong company ● Incorporated on November 28, 2019 ● Issued and outstanding 10,000 ordinary shares for HK$10,000 ($1,282) ● Operating as cost center for the Company 100% owned by TAGTL Tandem Fintech Limited (“TFL”) (formerly known as Hit Fintech Solutions Limited) ● Hong Kong company ● Incorporated on October 6, 2017 ● Issued and outstanding 9,000,000 ordinary shares for HK$9,000,000 ($1,153,846) ● Operating an online insurance comparison platform 100% owned by TAC AGBA Innovation Limited (“AGBA Innovation”) (formerly known as OnePlatform FinBiz Solutions Limited) ● Hong Kong company ● Incorporated on February 26, 2016 ● Issued and outstanding 1 ordinary share for HK$1 ● No operations since inception 100% owned by OIL FinLiving Limited ● Hong Kong company ● Incorporated on September 14, 2021 ● Issued and outstanding 100 ordinary share for HK$100 ($13) ● No operations since inception 100% owned by AGBA Innovation AGBA and its subsidiaries are hereinafter referred to as (the “Company”). NOTE 2 － SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes. ● Basis of Presentation The accompanying consolidated financial statements are presented in United States dollars (“US$” or “$”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). F- 10 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) 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. ● Principles of Consolidation The accompanying consolidated financial statements include the financial statements of AGBA and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between AGBA and its subsidiaries are eliminated upon consolidation. ● Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. ● 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. F- 11 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The inputs into the management’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates. ● Foreign Currency Translation and Transaction Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations. The reporting currency of the Company is US$ and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830-30, Translation of Financial Statement , using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the statements of changes in shareholders’ equity. Translation of amounts from HK$ into US$ has been made at the following exchange rates for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Year-end HK$:US$ exchange rate 0.1281 0.1283 Annual average HK$:US$ exchange rate 0.1277 0.1287 ● Cash and Cash Equivalents Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Hong Kong. ● Restricted Cash Restricted cash consist of funds held in escrow accounts reflecting (i) the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers and (ii) the full obligation to an investor in connection with the Meteora Backstop Agreement (see Note 4). The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities. ● Accounts Receivable, net Accounts receivable include trade accounts due from customers in insurance brokerage and asset management businesses. F- 12 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate and provides allowance when necessary. The allowance is based on management’s best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance or direct written-off after all means of collection have been exhausted and the likelihood of collection is not probable. The Company’s management continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. The Company does not hold any collateral or other credit enhancements overs its accounts receivable balances. ● Loans Receivable, net Loans receivables are carried at unpaid principal balances, less the allowance for loan losses and charge-offs. The loans receivables portfolio consists of real estate mortgage loans and personal loans. Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months). If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in Allowance for Loan Losses. ● Allowance for Loan Losses (“ALL”) The adequacy of the Company’s ALL is determined, in accordance with ASC Topic 450-20 Loss Contingencies includes management’s review of the Company’s loan portfolio, including the identification and review of individual problem situations that may affect a borrower’s ability to repay. In addition, management reviews the overall portfolio quality through an analysis of delinquency and non-performing loan data, estimates of the value of underlying collateral, current charge-offs and other factors that may affect the portfolio, including a review of regulatory examinations, an assessment of current and expected economic conditions and changes in the size and composition of the loan portfolio. The ALL reflects management’s evaluation of the loans presenting identified loss potential, as well as the risk inherent in various components of the portfolio. There is significant judgment applied in estimating the ALL. These assumptions and estimates are susceptible to significant changes based on the current environment. Further, any change in the size of the loan portfolio or any of its components could necessitate an increase in the ALL even though there may not be a decline in credit quality or an increase in potential problem loans. ● 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 investments. 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. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. F- 13 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) 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 323: 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. ● Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: Expected useful life Land and building Shorter of 50 years or lease term Furniture, fixtures and equipment 5 years Computer equipment 3 years Motor vehicle 3 years Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. ● Impairment of Long-Lived Assets In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets , all long-lived assets such as property and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment losses were recognized for the years ended December 31, 2022 and 2021. ● Accounts Payable Accounts payable represent commission payable to the Company’s financial advisors for the sale of investment funds, investment products, or insurance products. The carrying amount approximates fair value because of the short-term maturity. F- 14 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) ● Borrowings Borrowings are initially recognized at fair value and repayable in the next twelve months. Subsequently, they are measured at amortized cost. Interest expense is recognized on a fixed interest rate on the consolidated statements of operations. ● Warrant Liabilities 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. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The Company 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. 2014-09, 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. Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). F- 15 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) 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: Commissions The Company earns commissions from the sale of investment products to customers. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the 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 products. The Company determines that insurance providers are the customers. The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy). In accordance with ASC 606, Revenue Recognition: Principal Agent Considerations , the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the 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. Recurring Service Fees The Company provides asset management services to investment funds or investment product providers in exchange for recurring service fees. Recurring service fees are determined based on the types of investment products the Company distributes and are calculated as a fixed percentage of the fair value of the total investment of the investment products, calculated daily. These customer contracts require the Company to provide investment management services, which represents a performance obligation that the Company satisfies over time. After the contract is established, there are no significant judgments made when determining the transaction price. As the Company provides these services throughout the contract term, for the method of calculating recurring service fees, revenue is calculated on a daily basis over the contract term, quarterly billed and recognized. Recurring service agreements do not include rights of return, credits or discounts, rebates, price protection, performance component or other similar privileges and the circumstances under which the fixed percentage fees, before determined, could be not subject to clawback. Payment of recurring service fees are normally on a regular basis (typically monthly or quarterly). F- 16 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) 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 customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of 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. Disaggregation of Revenue The Company has disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation of revenue categories presented on the consolidated statements of operations for the years, as indicated: For the year ended December 31, 2022 Distribution Business Platform Business Insurance brokerage service Asset management service Money lending service Real estate agency service Total Interest income: Loans $ - $ - $ 176,175 $ - $ 176,175 Non-interest income: Commissions 24,610,309 1,764,310 - 187,072 26,561,691 Recurring service fees - 4,342,361 - - 4,342,361 $ 24,610,309 $ 6,106,671 $ 176,175 $ 187,072 $ 31,080,227 For the year ended December 30, 2021 Distribution Business Platform Business Insurance brokerage service Asset management service Money lending service Real estate agency service Total Interest income: Loans $ - $ - $ 961,522 $ - $ 961,522 Non-interest income: Commissions 929,555 4,081,590 - 157,088 5,168,233 Recurring service fees - 5,338,848 - - 5,338,848 $ 929,555 $ 9,420,438 $ 961,522 $ 157,088 $ 11,468,603 F- 17 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) ● Rental Income Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement. ● Cost Allocation Cost allocation includes allocation of certain general and administrative, sales and marketing expenses and other operating costs paid by the shareholder. General and administrative expenses consist primarily of payroll and related expenses of senior management and the Company’s employees, shared management expenses, including accounting, consulting, legal support services, rent, and other expenses to provide operating support to the related businesses. Allocated sales and marketing expense was mainly marketing expenses. These allocations are made using a proportional cost allocation method by considering the proportion of revenues, headcounts as well as estimates of time spent on the provision of services attributable to the Company. ● Sales and marketing Sales and marketing expenses include the costs of advertising, promotions, seminars, and other programs. In accordance with ASC Topic 720-35, Advertising Costs , advertising costs are expensed as incurred. ● Comprehensive (Loss) Income ASC Topic 220, Comprehensive Income , establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive (loss) income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive (loss) income, as presented in the accompanying consolidated statements of changes in shareholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive (loss) income is not included in the computation of income tax expense or benefit. ● Income Taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2022 and 2021, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax positions. The Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities. ● Share-Based Compensation The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, Stock Compensation . The Company grants share awards, including ordinary shares and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the ordinary shares on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award. F- 18 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) ● Net (Loss) Income Per Share The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC 260”) . ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net (loss) income divided by the weighted average ordinary share outstanding for the year. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. ● Segment Reporting ASC Topic 280, Segment Reporting , establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has the following operating segments: Segments Scope of Service Business Activities Distribution Business Insurance Brokerage Service 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 - Asset Management Service 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 - Money Lending Service Providing the lending services whereby the Company makes secured and/or unsecured loans to creditworthy customers - Real Estate Agency Service Solicitation of real estate sales for the developers, in exchange for commissions Fintech Business Investment holding Managing an ensemble of fintech investments Healthcare Business Investment holding Managing an ensemble of healthcare-related investments All of the Company’s revenues were generated in Hong Kong. F- 19 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) ● Related Parties The Company follows the ASC Topic 850-10, Related Party (“ASC 850”) for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850, the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operations are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. ● Commitments and Contingencies The Company follows the ASC Topic 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. F- 20 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) ● 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: ● Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; ● Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and ● Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, consideration receivable, deposits, prepayments and other receivables, accounts payable and accrued liabilities, escrow liabilities, amount due to shareholder and 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. The Company accounts for loans receivable at cost, subject to impairment testing. The following table presents information about the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022 and 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. December 31, Quoted Prices in Active Markets Significant Other Observable Inputs Significant Other Unobservable Inputs Description 2022 (Level 1) (Level 2) (Level 3) Assets: Marketable equity securities $ 2,443,593 $ 2,443,593 $ - $ - Non-marketable equity securities $ 34,589,767 $ - $ - $ 34,589,767 Liabilities: Forward share purchase liability $ 13,491,606 $ - $ - $ 13,491,606 Warrant liabilities $ 4,548 $ - $ - $ 4,548 December 31, Quoted Prices in Active Markets Significant Other Observable Inputs Significant Other Unobservable Inputs Description 2021 (Level 1) (Level 2) (Level 3) Assets: Marketable equity securities $ 7,795,479 $ 7,795,479 $ - $ - Non-marketable equity securities $ 25,496,534 $ - $ - $ 25,496,534 F- 21 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) 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. 119 and 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 operations. The Company is in the process of determining the effects the adoption will have on its consolidated financial statements. Except for 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. NOTE 3 — LIQUIDITY AND GOING CONCERN CONSIDERATION The accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the year ended December 31, 2022, the Company reported $ 44.5 million net loss and $ 19.3 million net cash outflows from operating activities. As of December 31, 2022, the Company had an accumulated losses of $ 39.4 million and cash and cash equivalents of $ 6.4 million. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement various plans. The Company believes that it will be able to continue to grow the Company’s revenue base and control expenditures. In parallel, the Company continually monitors its capital structure and operating plans and evaluates various potential funding alternatives that may be needed in order to finance the Company’s business development activities, general and administrative expenses and growth strategy. These alternatives include external borrowings and continue to pursue fundraising in the next twelve months. Although there is no assurance that, if needed, the Company will be successful with its fundraising initiatives, the Company believes that the business combination transaction significantly increases its ability to access the capital going forward. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. F- 22 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Without realization of additional capital, there is substantial doubt about the Company can continue as a going concern. However, the Company has obtained adequate and continuing financial support from its major shareholder to meet its debts as they fall due and sustain the operation through the next 12 months from the date that these consolidated financial statements were made available to issue. NOTE 4 — REVERSE RECAPITALIZATION WITH AGBA ACQUISITION LIMITED On the Closing Date, pursuant to the Business Combination Agreement, the following share transactions were completed: ● 4,825,000 public and private rights were automatically converted to 482,500 ordinary shares of AGBA. ● 792,334 ordinary shares of AGBA were issued to settle the outstanding payables. ● 555,000 ordinary shares of AGBA were issued to Apex Twinkle Limited as the finder fee in connection with the Business Combination. ● 53,835,000 ordinary shares of AGBA were issued to TAG as consideration for the Business Combination and 1,665,000 ordinary shares, representing as 3% holdback shares for indemnification purpose were reserved. All the holdback shares will be released to TAG in six months following the Closing. Immediately after giving effect to the Business Combination, AGBA has 58,376,985 ordinary shares issued and outstanding, and 4,825,000 warrants outstanding. TAG became a major shareholder of the Company. Preceding to the Closing, on November 9, 2022, AGBA entered into the Forward Share Purchase Agreement (the “Meteora Backstop Agreement”) with Meteora Special Opportunity Fund I, L.P., a Delaware limited partnership, Meteora Select Trading Opportunities Master, L.P., a Cayman Islands limited partnership, and Meteora Capital Partners, L.P., a Delaware limited partnership (collectively “Meteora”). Pursuant to the Meteora Backstop Agreement, Meteora has agreed to purchase up to 2,500,000 AGBA ordinary shares in the open market at prices no higher than the redemption price, including from other AGBA shareholders that elected to redeem and subsequently revoked their prior elections to redeem their shares, following the expiration of AGBA’s redemption offer. AGBA has agreed to purchase those shares from Meteora on a forward basis, up to the lessor of (i) that number of AGBA shares then held by Meteora, and (ii) the difference of (x) the number of shares held by Meteora at Closing (which shall be no more than 2,500,000 Ordinary Shares in the aggregate) minus (y) that number of shares equal to (I) the product of (A) $ 0.12 , multiplied by (B) the number of shares held by the Meteora at Closing (such product, the “Commitment Share Value”), divided by (II) the value weighted average price for the preceding 30 trading days ending on the day that is 30 days following the Closing (the number of shares derived in (y), the “Commitment Shares”, and the lesser of (1) and (2), the “Puttable Shares”), unless otherwise agreed to in writing by all parties, at a price per Share equal to the sum of (i) the redemption price as contemplated by the Definitive Proxy Statement (the “Redemption Price”), plus (ii) $ 0.45 (the sum of (i) and (ii), the “Base Price”), plus (iii) the result of (X) the Base Price, multiplied by (Y) the number of Commitment Shares, divided by (Z) the number of Puttable Shares (such sum of (i), (ii) and (iii), the “Shares Purchase Price”); provided that the Shares Purchase Price will be reduced by $ 0.15 for the first full calendar quarter after 90 days following the Closing sooner than the Put Date that the Put occurs if the Put does so occur, plus an additional reduction of $ 0.10 if the Put occurs before 90 days following the Closing. The purchase price payable by AGBA will be escrowed in the amount of the redemption price per share. At the election of AGBA, $ 0.45 of the Shares Purchase Price can be paid using Ordinary Shares rather than cash. The Meteora Backstop Agreement matures nine months after the closing of the Business Combination. F- 23 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The transaction was accounted for as a “reverse recapitalization” in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) because the primary assets of AGBA would be nominal following the close of the Business Combination. Under this method of accounting, AGBA was treated as the “acquired” company for financial reporting purposes and both of TIL and TAC were determined to be the accounting acquirer based on the terms of the Business Combination and other factors including: (i) TIL and TAC’s shareholders have a majority of the voting power of the combined company, (ii) TIL and TAC comprises a majority of the governing body of the combined company, and TIL and TAC’s senior management comprises all of the senior management of the combined company, and (iii) TIL and TAC comprises all of the ongoing operations of the combined entity. Accordingly, for accounting purposes, this transaction was treated as the equivalent of the Company issuing shares for the net assets of AGBA, accompanied by a recapitalization. The shares and net loss per ordinary share, prior to the Reverse Recapitalization, have been retroactively restated. The net assets of AGBA were recorded at historical carrying amount, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization are those of TIL and TAC. NOTE 5 — RESTRICTED CASH As of December 31, 2022, the Company had $ 44.8 million of restricted cash, of which (i) $ 29.5 million (2021: $ 34.5 million) was held in certain bank accounts on behalf of the Company’s customers and (ii) $ 15.3 million (2021: Nil) was held in an escrow account in connection with the Meteora Backstop Agreement. For the funds held on behalf of the customers, the Company is acted as a custodian to manage the assets and investment portfolio on behalf of its customers under the terms of certain contractual agreements, which the Company does not have the right to use for any purposes, other than managing the portfolio. Upon receiving escrow funds, the Company records a corresponding escrow liability. Pursuant to the Meteora Backstop Agreement, the fund held in the escrow account for the forward share purchase is restricted to the Company for the nine months following the consummation of the Business Combination, unless Meteora sells the shares in the market or redeems the shares in nine months after the closing of the Business Combination. Notwithstanding the sale of shares by Meteora, the restricted cash will be used to settle any of the Company’s repurchase obligations. NOTE 6 － ACCOUNTS RECEIVABLE, NET Accounts receivable, net consisted of the following: As of December, 2022 2021 Accounts receivable $ 2,916,609 $ 1,003,303 Accounts receivable – related parties 272,546 238,892 Less: allowance for doubtful accounts ( 94,447 ) ( 94,576 ) Accounts receivable, net $ 3,094,708 $ 1,147,619 The accounts receivable due from related parties represented the management service rendered to the portfolio assets of related companies, which are controlled by the shareholder, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. The amount is unsecured, interest-free and with a credit term mutually agreed. The following table presents the activity in the allowance for doubtful accounts: As of December 31, 2022 2021 Balance at beginning of year $ 94,576 $ 95,121 Foreign translation adjustment ( 129 ) ( 545 ) Balance at end of year $ 94,447 $ 94,576 For the years ended December 31, 2022 and 2021, the Company had no provision for the allowance of doubtful accounts. The Company has not experienced any significant bad debt write-offs of accounts receivable in the past. F- 24 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company generally conducts its business with creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for doubtful accounts, based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience and forecasted economic and market conditions. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant. At December 31, 2022 and 2021, no outstanding accounts are 90 days or more past due. NOTE 7 － LOANS RECEIVABLES, NET The Company’s loan portfolio was as follows: As of December 31, 2022 2021 Mortgage loans $ 1,589,871 $ 3,908,925 Personal loans to affiliates, unsecured - 76,799 Total loans 1,589,871 3,985,724 Less: allowance for loan losses - ( 76,799 ) Loans receivables, net $ 1,589,871 $ 3,908,925 Reclassifying as: Current portion $ 517,479 $ 123,611 Non-current portion 1,072,392 3,785,314 Loans receivables, net $ 1,589,871 $ 3,908,925 The interest rates on loans issued ranged between 9.00 % and 10.00 % (2021: 6.25 % to 10.00 %) per annum for the year ended December 31, 2022. Mortgage loans are secured by collateral in the pledge of the underlying real estate properties owned by the borrowers. Mortgage loans are made to either business or individual customers in Hong Kong for a period of 3 to 25 years. The following table presents the activity in the allowance for loan losses for the fiscal years: As of December 31, 2022 2021 Balance at beginning of year $ 76,799 $ 88,436 Written-off ( 76,799 ) ( 11,637 ) Balance at end of year $ - $ 76,799 For the years ended December 31, 2022 and 2021, the Company had no provision for the allowance of loan losses. Allowance for loan losses is estimated on a bi-annual basis based on an assessment of specific evidence indicating doubtful collection, historical experience, loan balance aging and prevailing economic conditions. F- 25 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Age Analysis of Loans by Class Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. As of December 31, 2022 2021 Within credit term $ 1,589,871 $ 3,908,925 Past due: 30-59 days - - 60-89 days - - 90 or more days due and still accruing interest - - Nonaccrual - - Total loans $ 1,589,871 $ 3,908,925 Loan Maturity By Class The following table presents the maturities of loan balances for the years presented: As of December 31, Maturities 2022 2021 Within 1 year $ 517,479 $ 123,611 1-5 years 76,040 1,160,591 5-10 years 149,342 939,081 More than 10 years 847,010 1,685,642 Total loans $ 1,589,871 $ 3,908,925 Interest on loans receivable is accrued and credited to income as earned. Accrual of interest is generally discontinued when either (i) reasonable doubt exists as to the full, timely collection of interest or principal or (ii) when a loan becomes past due by more than 180 days (The further extension of loan past due status is subject to management final approval and on case-by-case basis). Credit Quality Information The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. The Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances. The Company’s internally assigned risk grades are as follows: Pass: Loans are of acceptable risk. Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management’s close attention. Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature. Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable. F- 26 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Loss: Loans have been identified for charge-off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated: As of December 31, Credit grades 2022 2021 Pass $ 1,589,871 $ 3,908,925 OAEM - - Substandard - - Doubtful - - Loss - - Total loans $ 1,589,871 $ 3,908,925 NOTE 8 － EARNEST DEPOSIT During the year ended December 31, 2022, the Company made a refundable earnest deposit of $ 7.84 million for the purchase of 4,158,963 shares of Investment A from the shareholder. The purchase price is amounted to approximately $ 6.56 million at the historical carrying amount. The transaction was completed on April 20, 2022. This transaction is recorded based on the historical carrying amount to the shareholder accordingly. As of December 31, 2021, earnest deposit represented a refundable deposit of $ 7.18 million for the purchase of an office premises from the shareholder. The purchase price is amounted to approximately $ 8.00 million at the current market value. The transaction was completed on January 25, 2022. This transaction is recorded based on the historical carrying amount to the shareholder accordingly. NOTE 9 － LONG-TERM INVESTMENTS, NET Long-term investments, net consisted of the following: As of December 31, Ownership interest 2022 Ownership interest 2021 Marketable equity securities: Investment C 0.46 % $ 2,443,593 0.47 % $ 7,795,479 Non-marketable equity securities: Investment A 8.37 % 5,717,678 3.55 % 5,790,115 Investment B 3.63 % 513,000 3.30 % 1,270,848 Investment D 4.92 % 16,030,943 5.11 % 17,912,302 Investment E 4.00 % 522,557 4.00 % 523,269 Investment F 4.00 % 11,805,589 - - Total 34,589,767 25,496,534 Net carrying value $ 37,033,360 $ 33,292,013 Equity Method Investments The Company generally accounts for the investments in equity security under the equity method in compliance of ASC Topic 323. Investments where the Company has significant influence, but not control, over the investee are accounted for under the equity method. The equity method investments are stated at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. 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. F- 27 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) As of December 31, 2022, the Company had no equity method investment as all the equity investments were disposed during the year ended December 31, 2021. During the year ended December 31, 2021, the Company sold the entire interest ( 51 %) in Investee A to the shareholder for a consideration of $ 159,413 at its net carrying value, resulted with a loss on the sale of $ 32,826 . During the year ended December 31, 2021, the Company sold the entire interest in Investee B to JP Morgan Chase for a cash consideration of approximately $ 186.8 million, resulted with a realized gain of approximately $ 139.2 million. The Company received the cash proceeds of $ 184.9 million during the year ended December 31, 2021 and the remaining balance was received in January 2022. For the year ended December 31, 2021, the Company recorded a loss of $ 1,596,555 on equity method investments. Debt Securities Investment in debt securities consist of corporate bonds issued by the Company’s shareholder which 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. In November 2021, the corporate bonds were fully redeemed by the shareholder. The Company earned the interest income of $ 203,632 for the year ended December 31, 2021. Investments in Marketable Equity Securities Investments in equity securities, such as, marketable securities, are accounted for at fair value with changes in fair value recognized in net income (loss). During the year ended December 31, 2021, Investment C was listed and publicly traded on Nasdaq Stock Exchange in March 2021 and there was a transfer into Level 1 from Level 3 in the fair value hierarchy of Investment C, as a result of a change in market liquidity. As of December 31, 2022 and 2021, Investment C was recorded at fair value of $ 2,443,593 and $ 7,795,479 , which were traded at a closing price of $ 2.46 and $ 7.85 per share, respectively. For the years ended December 31, 2022 and 2021, the Company had an unrealized loss of $ 5,330,652 and $ 12,398,717 , respectively in the changes in fair value. Investments in Non-Marketable Equity Securities Investments in non-marketable equity securities consist of investments in limited liability companies in which the Company’s interests are deemed minor and long-term, strategic investments in companies that are in various stages of development, and investments in a close-ended partnership funds which concentrated in the healthcare sector. These investments do not have readily determinable fair values and, therefore, are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Management assesses each of these investments on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and cash usage. When an impairment exists, the investment will be written down to its fair value by recording the corresponding charge as a component of other income (expense), net. Fair value is estimated using the best information available, which may include cash flow projections or other available market data. F- 28 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The following table presents the changes in fair value of non-marketable equity securities which are measured using Level 3 inputs at December 31, 2022 and 2021: As of December 31, 2022 2021 Balance at beginning of year $ 25,496,534 $ 39,416,469 Additions 16,228,690 3,427,791 Change from Level 3 to Level 1 - ( 20,194,196 ) Adjustments: Upward adjustments 2,137,021 3,531,464 Downward adjustments ( 6,898,549 ) - Foreign exchange adjustment ( 2,373,929 ) ( 684,994 ) Balance at end of year $ 34,589,767 $ 25,496,534 Cumulative unrealized gains and losses, included in the carrying value of the Company’s non-marketable equity securities: As of December 31, 2022 2021 Downward adjustments (including impairment) $ ( 27,254,600 ) $ ( 20,356,051 ) Upward adjustments $ 6,209,357 $ 4,072,336 Investment income is recorded as other income in the Company’s consolidated statements of operations and consisted of the following: Years ended December 31, 2022 2021 Marketable equity securities: Unrealized loss from the changes in fair value – Investment C $ ( 5,330,652 ) $ ( 12,398,717 ) Non-marketable equity securities: Unrealized gains – Investment F 2,137,021 3,531,464 Unrealized losses (including impairment) – Investment A and B ( 6,898,549 ) - Realized gains – Investee B - 139,122,485 Dividend income 1,154,749 - Investment (loss) income, net $ ( 8,937,431 ) $ 130,255,232 NOTE 10 － PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: As of December 31, 2022 2021 As cost: Land and building $ 7,881,202 $ 1,888,450 Furniture, fixtures and equipment 13,412 10,868 Computer equipment 164,536 60,287 Motor vehicles 108,994 109,143 8,168,144 2,068,748 Less: accumulated depreciation ( 808,728 ) ( 415,290 ) Property and equipment, net $ 7,359,416 $ 1,653,458 During the year ended December 31, 2022, the Company purchased an office premises from the shareholder, through the acquisition of TRHL and PVL, which were previously controlled by the shareholder. The purchase price was amounted to approximately $ 6.0 million at the net carrying value of the office premises. The transaction was completed on January 25, 2022 and recorded at the historical carrying amount accordingly. F- 29 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company accounted for this acquisition as an asset acquisition under ASC Topic 805-50 and the Company adopted the Regulation S-X and concluded that this acquisition was not significant. Accordingly, the presentation of the assets acquired, historical financial statements under Rule 3-05 and related pro forma information under Article 11 of Regulation S-X, respectively, are not required to be presented. Depreciation expense for the years ended December 31, 2022 and 2021 were $ 392,873 and $ 45,383 , respectively. NOTE 11 － BORROWINGS In September 2022, the Company obtained a mortgage loan from a finance company in Hong Kong, which bears interest at a fixed rate of 10.85 % per annum, is repayable in September 2023 and secured by an office premises with carrying amount of $ 5.7 million located in Hong Kong. NOTE 12 － FORWARD SHARE PURCHASE LIABILITY The forward share purchase liability (“FSP liability”) under the Meteora Backstop Agreement is valued by an independent valuer using a Black-Scholes model, which is considered to be Level 3 fair value measurement. The following table presents a summary of the changes in fair value of the FSP liability, a Level 3 liability, measured on a recurring basis. Fair value of FSP liability as of November 14, 2022 8,099,313 Change in fair value 5,392,293 Fair value of FSP liability as of December 31, 2022 $ 13,491,606 For the year ended December 31, 2022, the change in fair value of FSP liability was $ 5,392,293 , recognized in the consolidated statements of operations. The following table presents the quantitative information regarding Level 3 fair value measurements of the FSP liability. December 31, 2022 November 14, 2022 Input Share price $ 1.54 $ 5.71 Risk-free interest rate 4.16 % 4.16 % Volatility 52.19 % 52.19 % Exercise price $ 12.34 $ 12.25 Term 0.61 year 0.75 year NOTE 13 － WARRANT LIABILITIES The private warrants are accounted for as liabilities in accordance with ASC 480 and are presented as liabilities on the consolidated balance sheets. As of December 31, 2022, there were 225,000 private warrants outstanding. The fair values of the private warrants are valued by an independent valuer using a Binominal pricing model. The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs. F- 30 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The key inputs into the Binominal pricing model were as follows at their measurement dates: December 31, 2022 November 14, 2022 Input Share price $ 1.54 $ 5.71 Risk-free interest rate 4.16 % 4.16 % Volatility 52.19 % 52.19 % Exercise price $ 11.50 $ 11.50 Warrant remaining life 4.9 years 5 years As of December 31, 2022 and upon the closing of Business Combination, the aggregate value of the private warrants was $ 4,548 and $ 13,500 , respectively. The changes in fair value for the year ended December 31, 2022 was $ 8,952 . To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for investments categorized in Level 3. Level 3 financial liabilities consist of the private warrant liability for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. NOTE 14 － SHAREHOLDERS’ EQUITY Ordinary Shares On the Closing Date, pursuant to the Business Combination (as described in Note 4), the following share transactions were completed: ● 4,825,000 public and private rights were automatically converted to 482,500 ordinary shares of AGBA. ● 792,334 ordinary shares of AGBA were issued to settle the outstanding payables. ● 555,000 ordinary shares of AGBA were issued to Apex Twinkle Limited as the finder fee in connection with the Business Combination. ● 53,835,000 ordinary shares of AGBA were issued to TAG as consideration for the Business Combination and 1,665,000 ordinary shares, representing as 3% holdback shares were reserved. In addition, upon the closing of the Business Combination, pursuant to the terms of the Fifth Amended and Restated Memorandum and Articles of Association, the Company increased its authorized share from 100,000,000 to 200,000,000 ordinary shares with a par value $0.001. As of December 31, 2022, there were 58,376,985 ordinary shares issued and outstanding and 1,665,000 ordinary shares to be issued under the reserve. Public Warrants Each public warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary share at a price of $ 11.50 per full share, subject to adjustment as discussed herein. The warrants became exercisable 90 days after the Closing of the Business Combination and will expire five years after the Closing of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrant holder. F- 31 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Once the warrants become exercisable, the Company may call the outstanding warrants (including any outstanding warrants issued upon exercise of the unit purchase option issued to Maxim Group LLC) for redemption: ● in whole and not in part; ● at a price of $0.01 per warrant; ● upon a minimum of 30 days’ prior written notice of redemption, ● if, and only if, the last sales price of the ordinary shares equals or exceeds $16.50 per share for any 20 trading days within a 30 trading day period ending three business days before the Company send the notice of redemption, and ● if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. If the Company calls the warrants for redemption as described above, the management of the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our ordinary shares at the time the warrants are called for redemption, the Company’s cash needs at such time and concerns regarding dilutive share issuances. Private Warrants The private warrants are identical to the public warrants, except that the private warrants and the ordinary shares issuable upon the exercise of the private warrants were not transferable, assignable or salable until after the completion of the Business Combination, subject to certain limited exceptions. Additionally, the private warrants will be exercisable on a cashless basis and will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the private warrants are held by someone other than the initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. The private warrants are accounted as liabilities, remeasured to fair value on a recurring basis, with changes in fair value recorded to the consolidated statements of operations (see Note 13). As of December 31, 2022 and 2021, there were 4,600,000 public warrants and 225,000 private warrants outstanding. Rights Each holder of a right is automatically converted to one-tenth (1/10) of an ordinary share of the Company upon consummation of the Business Combination. Upon the closing of Business Combination, 4,825,000 rights were automatically converted to 482,500 ordinary shares of the Company. There were no outstanding rights as of December 31, 2022. Forgiveness of Amount Due to Shareholder During the year ended December 31, 2022, TAG agreed to forgive the Company $ 6 million, in aggregate, representing certain amount due to it and treat as additional paid-in capital. F- 32 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Dividend Distribution On January 18, 2022, TAC was approved to declare and distribute a special dividend of $ 47 million to TAG Holdings Limited, the shareholder who represented 1 ordinary share of TAC. The dividends were paid by offsetting the receivable due from the shareholder and the remaining balance was paid by cash. The special dividend distribution was made due to the investment income from the sale of all equity interest in Nutmeg Saving and Investment Limited in September 2021. NOTE 15 － SHARE-BASED COMPENSATION Upon the Closing of the Business Combination, all the shareholders of the Company have adopted and approved the Share Award Scheme (the “Scheme”) to recognize the contributions to the Business Combination by the eligible participants of the Company and to retain them for the continuing operation and development of the Company. Pursuant to the Scheme, the maximum number of shares to be awarded under the Scheme shall not be in excess of 20 % of the total issued and outstanding ordinary shares of the Company. The Scheme provides for grants of share awards and restricted share units. Restricted share units is the grant of a right to receive a specified number of the Company’s ordinary shares upon lapse of a specified forfeiture condition such as completion of a specified period of service or achievement of certain specified performance. Directors, officers, consultants, and employees of the Company, as well as others performing consulting service providers for the Company, are eligible for grants under the Scheme. On December 13, 2022, the Company approved and granted 5,507,600 ordinary shares under the Scheme. Among 5,507,600 shares, 507,600 shares granted are vested immediately on the date of grant for compensating the contributions of prior services and performance of the eligible employees. The remaining 5,000,000 shares are granted as restricted share units (“RSUs”) to employees and consultants as additional compensation. These RSUs typically will be 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, the Company further approved and granted 438,500 ordinary shares to the directors and officers of the Company under the Scheme. The share awards are granted for compensating the contributions of prior services by certain employees and immediately vested. The weighted average grant-date fair value of the shares granted during the year ended December 31, 2022 was $ 1.91 per share. The fair value of the ordinary shares granted during the year is measured based on the closing price of the Company’s ordinary shares as reported by Nasdaq Exchange on the date of grant. For those vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the consolidated statements of operations. For the RSUs, the fair value is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis. The valuations assume no dividends will be paid. The Company has assumed 10 % forfeitures for restricted share units. At December 31, 2022, total unrecognized compensation remaining to be recognized in future periods totalled $ 12.33 million for RSUs and they are expected to be recognized over the weighted average period of 2.7 years. The Company recorded $ 2,088,725 share-based compensation expense for the year ended December 31, 2022, which is included in the operating expenses in the consolidated statements of operations. A summary of the activities for the Company’s RSUs for the year ended December 31, 2022 is as follow: Year ended December 31, 2022 Number of RSUs Weighted Average Grant Price Outstanding, beginning of year - $ - Granted 5,000,000 $ 2.47 Outstanding, end of year 5,000,000 $ 2.47 F- 33 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 16 － NET (LOSS) INCOME PER SHARE On the Closing Date, the Company completed the Business Combination with both of TIL and TAC, whereby the Company received 55,500,000 shares in exchange for all of its share capital. The effect of the Business Combination was recast to reflect the reverse recapitalization as of January 1, 2021, and will be utilized for the calculation of earnings per share in all prior periods. The per share amounts have been updated to show the effect of the exchange on earnings per share as if the exchange occurred at the beginning of both fiscal years for the consolidated financial statements of the Company. The impact of the stock exchange is also shown on the Company’s consolidated statements of changes in shareholders’ equity. Since the Company reported a net loss for the year ended December 31, 2022, it was required by ASC 260 to use basic weighted-average shares outstanding when calculating diluted net loss per share for the year ended December 31, 2022, as the potential dilutive securities are anti-dilutive. Years ended December 31, 2022 2021 Numerator: Net (loss) income attributable to the Company’s shareholders $ ( 44,520,635 ) $ 96,463,523 Denominator: Weighted average ordinary shares outstanding Basic 56,084,858 55,500,000 Diluted 56,084,858 55,500,000 Net (loss) income per share Basic $ ( 0.79 ) $ 1.74 Diluted $ ( 0.79 ) $ 1.74 For the year ended December 31, 2022, diluted weighted average ordinary shares outstanding is equal to basic weighted average ordinary shares, due to the Company’s net loss position. Hence, no ordinary shares equivalents were included in the computation of diluted net loss per share since such inclusion would have been antidilutive. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, because such securities had an antidilutive impact: Years ended December 31, 2022 2021 Public and private warrants (Note 14) 4,825,000 - Shares award granted (Note 15) 5,946,100 - 10,771,100 - NOTE 17 － INCOME TAX EXPENSE The provision for income tax expense consisted of the following: Years ended December 31, 2022 2021 Current tax $ 118,073 $ 23,505,445 Deferred tax 6,532 - Income tax expense $ 124,605 $ 23,505,445 F- 34 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company’s subsidiaries mainly operate in Hong Kong that are subject to taxes in the jurisdictions in which they operate, as follows: British Virgin Islands The Company is incorporated in the British Virgin Islands and is not subject to taxation. In addition, upon payments of dividends by these entities to their shareholder, no British Virgin Islands withholding tax will be imposed. Hong Kong The Company’s subsidiaries operating in Hong Kong are subject to the Hong Kong profits tax at the income tax rates ranging from 8.25 % to 16.5 % on the assessable income arising in Hong Kong during its tax year. The reconciliation of income tax rate to the effective income tax rate based on (loss) income before income tax expense for the years ended December 31, 2022 and 2021 are as follows: Years ended December 31, 2022 2021 (Loss) income before income taxes $ ( 44,396,030 ) $ 119,968,968 Statutory income tax rate 16.5 % 16.5 % Income tax expense at statutory rate ( 7,325,345 ) 19,794,880 Income not subject to taxes ( 71,468 ) ( 41,476 ) Non-deductible items: - Share-based compensation 344,640 — - Investment loss, net 1,474,676 2,037,253 - Change in fair values of warrant liabilities and FSP liability 888,251 — - Items not subject to tax deduction 1,925,846 1,435,277 Tax effect on temporary differences not recognized 1,003 ( 126,870 ) Under (over) provision of prior years 31,284 ( 38,939 ) Net operating loss 2,895,733 457,680 Tax holiday ( 21,838 ) ( 23,802 ) Other ( 18,177 ) 11,442 Income tax expense $ 124,605 $ 23,505,445 The following table sets forth the significant components of the deferred tax liabilities and assets of the Company: As of December 31, 2022 2021 Deferred tax liabilities: Accelerated depreciation $ 45,858 $ - Deferred tax assets, net: Net operating loss carryforwards 5,461,370 2,483,436 Less: valuation allowance ( 5,461,370 ) ( 2,483,436 ) - - Deferred tax liabilities, net $ 45,858 $ - As of December 31, 2022 and 2021, the operations incurred $ 33.1 million and $ 15.1 million, respectively of cumulative net operating losses which can be carried forward to offset future taxable income. Net operating loss can be carried forward indefinitely but cannot be carried back to prior years. There are no group relief provisions for losses or transfers of assets under Hong Kong tax regime. Each company within a corporate group is taxed as a separate entity. The Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes that it is more likely that not all of these assets will be realized in the future. The valuation allowance is reviewed annually. F- 35 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Uncertain tax positions The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2022 and 2021 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2022. NOTE 18 － SEGMENT INFORMATION ASC Topic 280, Segment Reporting , establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. Currently, the Company has four business segments comprised of the related products and services, as follows: Segments Scope of Business Activities 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 - 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 customerse; and - 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 The four business segments were determined based primarily on how the chief operating decision maker views and evaluates the operations. Operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Other factors, including market separation and customer specific applications, go-to-market channels, products and services are considered in determining the formation of these operating segments. F- 36 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The following tables present the summary information by segment for the years ended December 31, 2022 and 2021: For the year ended December 31, 2022 Distribution Business Platform Business Fintech Business Healthcare Business Total Revenue, net - Interest income $ - $ 176,175 $ - $ - $ 176,175 - Non-interest income 24,610,309 6,293,743 4,896 - 30,908,948 Less: inter-segment - - ( 4,896 ) - ( 4,896 ) 24,610,309 6,469,918 - - 31,080,227 Commission expense 16,839,870 1,983,588 - - 18,823,458 Depreciation 884 391,104 885 - 392,873 Loss from operations ( 4,960,505 ) ( 10,767,796 ) ( 12,622,796 ) - ( 28,351,097 ) Investment loss, net - - ( 8,937,431 ) - ( 8,937,431 ) Total assets $ 3,556,198 $ 59,001,756 $ 38,140,822 $ 522,557 $ 101,221,333 For the year ended December 31, 2021 Distribution Business Platform Business Fintech Business Healthcare Business Total Revenue, net - Interest income $ - $ 961,522 $ - $ $ 961,522 - Non-interest income 929,555 9,577,526 - - 10,507,081 Less: inter-segment - - - - - 929,555 10,539,048 - - 11,468,603 Commission expense 332,381 3,533,870 - - 3,866,251 Depreciation 521 42,170 2,692 - 45,383 Income (loss) from operations ( 6,061,091 ) 2,777,746 ( 5,163,778 ) - ( 8,447,123 ) Investment income, net - - 130,255,232 - 130,255,232 Total assets $ 1,320,791 $ 54,511,457 $ 66,154,783 $ 523,269 $ 122,510,300 All of the Company’s customers and operations are based in Hong Kong. NOTE 19 － RELATED PARTY BALANCES AND TRANSACTIONS In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by the shareholder. Amounts represent advances or amounts paid in satisfaction of liabilities. Related party balances consisted of the following: As of December 31, 2022 2021 Balance with related parties: Accounts receivable (a) $ 272,546 $ 238,892 Non-marketable equity securities – Investment E - 523,269 Balance with the shareholder: Earnest deposit $ - $ 7,182,131 Amount due to shareholder (b) 6,289,743 - Receivable from the shareholder - 29,562,195 (a) Accounts receivable due from related parties represented the management service rendered to two individual close-ended investment private funds registered in the Cayman Islands, which is controlled by the shareholder. (b) Amount due to shareholder are those trade and nontrade payables arising from transactions between the Company and the shareholder, such as advances made by the shareholder on behalf of the Company, advances made by the Company on behalf of the shareholder, and allocated shared expense paid by the shareholder. F- 37 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) In the ordinary course of business, during the years ended December 31, 2022 and 2021, the Company involved with transactions, either at cost or current market prices and on the normal commercial terms among related parties. The following table provides the transactions with these parties for the periods as presented (for the portion of such period that they were considered related): For the years ended December 31, 2022 2021 Transaction with related parties: Asset management service income (c) $ 969,912 $ 947,075 Management fee income - 100,483 Interest income on debt securities - 203,632 Commission expenses (d) 48,398 181,359 Redemption of corporate bonds - 1,286,628 Sales of investment – Investee A - 159,413 Purchase of non-marketable equity security – Investment E - 523,269 Purchase of non-marketable equity security – Investment F (e) 9,668,568 - Transaction with the shareholder: Interest expense on note payable to the shareholder - 482,820 Office and operating fee charge (f) 3,190,064 2,463,553 General and administrative expense allocated (g) 2,645,731 867,207 Purchase of investment from the shareholder (h) 6,560,122 - Purchase of office building from the shareholder (i) 5,995,249 - Declaration of special dividends to the shareholder (j) $ 47,000,000 $ - (c) Under the management agreements, the Company shall provide management service to the portfolio assets held by two individual close-ended investment private funds in the Cayman Islands, which is controlled by the shareholder, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. (d) Commission fee on insurance brokerage and asset management referral at the predetermined rate based on the service fee. (e) The Company purchased 4 % equity interest in Investment F from a related party in October 2022, based on its historical carrying amount. (f) Pursuant to the service agreement, the Company agreed to pay the office and operating expenses to the shareholder for the use of office premises, including, among other things, building management fees, government rates and rent, office rent, and lease-related interest and depreciation that were actually incurred by the shareholder. Also, the shareholder charged back the reimbursement of legal fee and debt collection fee in the ordinary course of business. (g) Certain amounts of other general and administrative expenses were allocated by the shareholder. (h) The Company purchased 4,158,963 shares of Investment A from the shareholder at the historical carrying amount and the transaction was completed in April 2022. (i) The Company purchased an office premises from the shareholder in January 2022, based on its historical carrying amount. (j) On January 18, 2022, TAC approved to declare and distribute a special dividend of $ 47 million to TAG Holdings Limited, the shareholder who represented 1 ordinary share of TAC. The dividends were paid by offsetting the receivable due from the shareholder amounted to $ 29,561,195 and the remaining balance was paid by cash. The special dividend distribution was made due to the investment income from the sale of Nutmeg in September 2021. Apart from the transactions and balances detailed above and elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related party transactions during the years presented. F- 38 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) NOTE 20 － CONCENTRATIONS OF RISK The Company is exposed to the following concentrations of risk: (a) Major customers For the year ended December 31, 2022, the customers who accounted for 10% or more of the Company’s revenues and its outstanding receivable balances at year-end dates, are presented as follows: Year ended December 31, 2022 December 31, 2022 Customer Revenues Percentage of revenues Accounts receivable Customer A $ 6,816,652 22 % $ 305,841 Customer B $ 5,823,065 19 % $ 432,858 For the year ended December 31, 2021, there was no single customer who accounted for 10% or more of the Company’s revenues. All of the Company’s major customers are located in Hong Kong. (b) Credit risk Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, accounts and loans receivables. Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$ 500,000 (approximately $ 64,050 ) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2022, cash and cash equivalents of $ 6.4 million and fund held in escrow of $ 29.5 million were maintained at financial institutions in Hong Kong, of which approximately $ 34.7 million was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. For accounts and loans receivables, the Company determines, on a continuing basis, the probable losses and sets up an allowance for doubtful accounts and loan losses based on the estimated realizable value. Credit of money lending business is controlled by the application of credit approvals, limits and monitoring procedures. The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. To minimize credit risk, the Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances. The Company’s third-party customers that represent more than 10 % of total combined loans receivables, and their related net loans receivables balance as a percentage of total combined loans receivables, as of December 31, 2022 and 2021 were as follows: As of December 31, 2022 2021 Customer C - 59.0 % Customer D 37.4 % 15.3 % Customer E 31.6 % 13.0 % Customer F 31.0 % 12.6 % (c) Economic and political risk The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations. F- 39 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) (d) Exchange rate risk The Company cannot guarantee that the current exchange rate will remain steady. Therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ and Sterling on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice. For the years ended December 31, 2022 and 2021, the Company recorded the foreign exchange loss of $ 2,643,261 and $ 915,062 , respectively, mainly attributable from the long-term investments which are mostly denominated in Sterling. (e) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases. NOTE 21 － COMMITMENTS AND CONTINGENCIES Litigation — From time to time, the Company is involved in various legal proceedings and claims in the ordinary course of business. However, the Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows. As at December 31, 2022, the Company involved in the following legal proceedings:- Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former shareholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. Subsequent to the year ended December 31, 2022, in February 2023, the Court granted leave for this action be set down for trial of 13 days, which the period has yet to be fixed. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any. Action Case: HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies and the former directors, shareholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation from an inducement of the fund subscription and claimed for compensatory damage of approximately $ 2 million (equal to HK$ 17 .1million). The case is on-going and parties have yet to attempt mediation. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any. Action Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed for compensatory damage of approximately $ 1.67 million (equal to HK$ 13 million). The Company previously made $ 0.84 million as contingency loss for the year ended December 31, 2021. Parties participated in a mediation held on March 25, 2022 and negotiated for settlement through without prejudice correspondence, no settlement was reached. There is an up-coming case management hearing on July 25, 2023 and legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or any further potential loss, if any. F- 40 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred. Forward Share Purchase Agreement — Pursuant to the Meteora Backstop Agreement, the Company is committed to purchase up to 2,500,000 shares of its issued and outstanding ordinary shares from Meteora in nine months following the Closing of Business Combination (see Note 4). NOTE 22 － SUBSEQUENT EVENTS In accordance with ASC Topic 855, “ Subsequent Events ”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2022, up to the date that the audited consolidated financial statements were available to be issued. On February 24, 2023, the Company entered into a Subscription Agreement and a Convertible Loan Note Instrument (the “Note”) (collectively the “Agreements”) with CurrencyFair Limited (“CurrencyFair”), its 8.37 %-owned investee (Investment A). Pursuant to the Agreements, the Company agrees to subscribe an amount of $ 1,673,525 , which is payable on or before January 31, 2024 and bears a fixed interest rate of 8 % per annum. At the maturity on April 30, 2024 , the Company, at its discretion, has option to convert the Note into the voting shares of CurrencyFair. Subsequently, up to the issuance of the audited consolidated financial statements, the Company paid $ 589,086 for the subscription of the Note. On February 24, 2023, pursuant to the Share Award Scheme, the Company registered and reserved 11,675,397 ordinary shares, representing 20 % of the total issued and outstanding ordinary shares of the Company as of December 31, 2022, for issuance or may become issuable. On March 3, 2023, pursuant to the Share Award Scheme, the Company approved and granted 1,200,000 ordinary shares to a consultant. The shares are vested and issued immediately on the date of grant to compensate the prior services provided. The weighted average grant-date fair value of the shares granted was $ 2.1575 per share. NOTE 23－PARENT ONLY FINANCIAL INFORMATION The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 5-04 and concluded that it was applicable for the Company to disclose the financial statements for AGBA Group Holding Limited, the parent company. The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2022. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. F- 41 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) The following presents condensed parent company only financial information of AGBA Group Holding Limited. Condensed balance sheet As of December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 85,955 Restricted cash 15,356,580 Deposit, prepayments, and other receivables 1,715 Total current assets 15,444,250 Non-current assets: Investments in subsidiaries 13 Total non-current assets 13 TOTAL ASSETS 15,444,263 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities: Other payables and accrued liabilities 6,577,351 Amounts due to subsidiaries 13 Amounts due to related companies 1,327,107 Forward share purchase liability 13,491,606 Total current liabilities 21,396,077 Long-term liabilities: Warrant liabilities 4,548 Total long-term liabilities 4,548 TOTAL LIABILITIES 21,400,625 Commitments and contingencies - Shareholders’ deficit: Ordinary shares, $ 0.001 par value; 200,000,000 shares authorized, 58,376,985 shares issued and outstanding 58,377 Ordinary shares to be issued 1,665 Additional paid-in capital 1,867,335 Accumulated deficit ( 7,883,739 ) Total shareholders’ deficit ( 5,956,362 ) TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $ 15,444,263 F- 42 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Condensed Statement of Operation For the year ended December 31, 2022 Operating cost and expenses: Share-based compensation expense $ ( 2,088,725 ) Other general and administrative expenses ( 479,407 ) Total operating cost and expenses ( 2,568,132 ) Loss from operations ( 2,568,132 ) Other income (expense): Change in fair value of warrant liabilities 8,952 Change in fair value of forward share purchase liability ( 5,392,293 ) Sundry income 67,734 Total other expense, net ( 5,315,607 ) Loss before income taxes ( 7,883,739 ) Income tax expense - NET LOSS $ ( 7,883,739 ) F- 43 AGBA GROUP HOLDING LIMITED (Formerly known as AGBA Acquisition Limited) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares) Condensed Statement of Cash Flows For the year ended December 31, 2022 Cash flows from operating activities: Net loss $ ( 7,883,739 ) Adjustments to reconcile net loss to net cash used in operating activities Share-based compensation expense 2,088,725 Change in fair value of warrant liabilities ( 8,952 ) Change in fair value of forward share purchase liability 5,392,293 Change in operating assets and liabilities: Deposits, prepayments, and other receivables ( 1,715 ) Other payables and accrued liabilities ( 839,181 ) Net cash used in operating activities ( 1,252,569 ) Cash flows from financing activities: Advances from related companies 1,338,524 Cash proceeds due to reverse recapitalization 15,356,580 Net cash provided by financing activities 16,695,104 Net change in cash, cash equivalent and restricted cash 15,442,535 BEGINNING OF YEAR - END OF YEAR $ 15,442,535 Reconciliation to amounts on consolidated balance sheets: Cash and cash equivalents $ 85,955 Restricted cash 15,356,580 Total cash, cash equivalents and restricted cash $ 15,442,535 F-44