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, 2023, 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, 2023, 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 controls over financial reporting was effective as of December 31, 2023. 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. 59 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. Robert E. Diamond, Jr. 72 Chairman of the Board Mr. Ng Wing Fai 56 Group Chief Executive Officer and Executive Director Mr. Shu Pei Huang, Desmond 50 Acting Group Chief Financial Officer Ms. Wong Suet Fai, Almond 53 Group Chief Operating Officer Mr. Jeroen Nieuwkoop 52 Group Chief Strategy Officer Mr. Richard Kong 55 Deputy Group Chief Financial Officer/Company Secretary Mr. Brian Chan 57 Independent Director (1)(2)(3) Mr. Thomas Ng 68 Independent Director (1)(2)(3) Mr. Felix Yun Pun Wong 58 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. Robert E. Diamond is Founding Partner and Chief Executive Officer of Atlas Merchant Capital and has been since its inception in 2013. Until 2012, Mr. Diamond was Chief Executive of Barclays, having previously held the position of President of Barclays and was responsible for Barclays Capital and Barclays Global Investors (“BGI”). He became an executive director of Barclays in 2005 and was a member of the Barclays Executive Committee. Prior to Barclays, Mr. Diamond held senior executive positions at Credit Suisse First Boston and Morgan Stanley in the United States, Europe and Asia. Mr. Diamond worked at Credit Suisse First Boston from 1992 to 1996, where his roles included Vice Chairman and Head of Global Fixed Income and Foreign Exchange in New York, as well as Chairman, President and CEO of Credit Suisse First Boston Pacific. Mr. Diamond worked at Morgan Stanley from 1979 to 1992, including as the Head of European and Asian Fixed Income Trading. 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. 60 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. 61 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. 62 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. 63 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 2023, 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 2023 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). 64 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, 2023 and 2022. Name and Principal Position Fiscal Year Salary ($) Bonus ($) Equity Awards ($) (2) All Other Compensation ($) Total ($) Robert E. Diamond, Jr. 2023 286,110 - - - 286,110 Chairman of the Board 2022 - - - - - NG Wing Fai 2023 1,367,305 - 268,323 - 1,635,628 Group Chief Executive Officer and Executive Director 2022 1,316,076 - 988,000 2,304,076 SHU Pei Huang, Desmond 2023 351,455 - 139,734 - 491,189 Acting Group Chief Financial Officer 2022 338,477 - 382,000 720,477 WONG Suet Fai, Almond 2023 479,624 - 139,734 321 619,679 Group Chief Operating Officer 2022 462,137 - 382,000 - 844,137 Jeroen Nieuwkoop 2023 457,433 - 139,734 - 597,167 Group Chief Strategy Officer 2022 440,755 - - - 440,755 Richard Kong 2023 309,949 - 27,218 641 337,808 Deputy Group Chief Financial Officer and Company Secretary 2022 294,352 - 17,190 - 311,542 Brian Chan (3) 2023 46,154 - - - 46,154 Independent Director 2022 5,897 - - - 5,897 Thomas Ng (3) 2023 46,154 - - - 46,154 Independent Director 2022 5,897 - - - 5,897 Felix Yun Pun Wong (3) 2023 46,154 - - - 46,154 Independent Director 2022 5,897 - - - 5,897 (1) Represents all amounts earned as salary during the applicable fiscal year. For fiscal year 2023, 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, 2023. (2) For the fiscal year of 2023, these share awards were granted in December 2022 and vested in December 2023. (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. 65 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, 2023. 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, 2023 and the rights are not convertible within 60 days of December 31, 2023. Subject to the paragraph above, the percentage ownership of issued shares is based on 70,385,742 shares of the Company’s ordinary shares issued and outstanding as of February 29, 2024. 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) 55,500,000 78.9 % Directors and Named Executive Officers of AGBA Robert E. Diamond, Jr. — — Ng Wing Fai 857,606 1.22 % Shu Pei Huang, Desmond 313,780 * Jeroen Nieuwkoop 140,080 — Richard Kong 97,857 * Wong Suet Fai, Almond 345,680 * Brian Chan 18,000 * Thomas Ng 18,000 * Felix Wong — — All Directors and Named Executive Officers of the Company as a group (8 individuals) 845,600 * * 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. 66 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. 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$6,039,520 and US$3,190,064 for the years ended December 31, 2023 and 2022, 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. 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, 2023 and 2022, JFA Capital paid OAM US$900,993 and US$900,778, 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. 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, 2023 and 2022, NSD Capital paid OAM US$69,150 and US$69,134, 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. 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. 68 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. 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 2023 2022* WWC, P.C.: Audit Fees $ 630,000 $ 460,000 Audit Related Fees — — Tax Fees — — All Other Fees 6,000 — $ 636,000 $ 460,000 Marcum LLP (Formerly Friedman LLP): Audit Fees $ — $ 114,450 Audit Related Fees — — Tax Fees — — All Other Fees — — $ — $ 114,450 Audit fees for the fiscal years ended December 31, 2023 and 2022 rendered by WWC., P.C. relate to professional services rendered for the audit of our consolidated financial statements, quarterly reviews, and issuance of consents. Audit fees for the fiscal year ended December 31, 2022 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. 69 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) 3.2 Amendment to the 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 January 3, 2024) 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 (incorporated by reference to AGBA’s 10-K filed with the SEC on April 3, 2023) 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. 26 Purchases of Equity Securities by the Issuer and Affiliated Purchasers 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. 97.1 Clawback Policy 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. 70 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: March 28, 2024 By: /s/ Wing Fai NG Name: Wing Fai NG Title: Group Chief Executive Officer (Principal Executive Officer) AGBA GROUP HOLDING LIMITED Dated: March 28, 2024 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/ Robert E. Diamond, Jr. Chairman of the Board March 28, 2024 Robert E. Diamond, Jr. /s/ Wing Fai NG Group Chief Executive Officer (Principal executive officer) and Executive Director March 28, 2024 Wing Fai NG /s/ Brian Chan Independent Director March 28, 2024 Brian Chan /s/ Thomas Ng Independent Director March 28, 2024 Thomas Ng /s/ Felix Yun Pun Wong Independent Director March 28, 2024 Felix Yun Pun Wong 71 AGBA GROUP HOLDING LIMITED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 1171) F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Loss F-4 Consolidated Statements of Changes in Shareholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 to F-49 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To: The Board of Directors and Shareholders of AGBA Group Holding Limited Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of AGBA Group Holding Limited and subsidiaries (collectively the “Company”) as of December 31, 2023, and 2022, and the related consolidated statements of operations and comprehensive loss, cash flows, shareholders’ equity, and the related notes (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, 2023, and 2022, and the results of its operations and its cash flows in each of the years for the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company incurred substantial losses during the year ended December 31, 2023. As of December 31, 2023, the Company had a working capital deficit and net cash outflows from operating activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Restatement of Previously Issued Consolidated Financial Statements As discussed in Note 2 to the consolidated financial statements, the Company has restated its consolidated financial statements as of December 31, 2022 to correct certain misstatements. 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 audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits, 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 audits 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 audits 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 audits provide 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 March 28, 2024 F- 2 AGBA GROUP HOLDING LIMITED CONSOLIDATED BALANCE SHEETS (Currency expressed in United States Dollars (“US$”)) As of December 31, 2023 2022 ASSETS (restated) Current assets: Cash and cash equivalents $ 1,861,223 $ 6,449,876 Restricted cash 16,816,842 44,844,196 Accounts receivable, net 2,970,636 2,822,162 Accounts receivable, net, related parties 1,094,225 272,546 Loans receivable, net 549,461 517,479 Notes receivable, net 557,003 — Income tax recoverable — 260,120 Deposit, prepayments, and other receivables, net 1,769,582 589,786 Total current assets 25,618,972 55,756,165 Non-current assets: Rental deposit, net 961,253 — Loans receivable, net 1,054,841 1,072,392 Property and equipment, net 1,721,284 7,359,416 Right-of-use asset, net 11,508,153 — Long-term investments, net 25,201,933 36,510,803 Long-term investments, net, related party 522,531 522,557 Total non-current assets 40,969,995 45,465,168 TOTAL ASSETS $ 66,588,967 $ 101,221,333 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 19,754,041 $ 20,274,429 Escrow liabilities 16,816,842 29,487,616 Borrowings 1,804,950 4,477,254 Borrowings, related party 5,000,000 — Amounts due to the holding company 2,906,261 6,289,743 Income tax payable 328,720 — Lease liabilities 1,229,329 — Forward share purchase liability — 13,491,606 Total current liabilities 47,840,143 74,020,648 Long-term liabilities: Lease liabilities 10,646,053 — Warrant liabilities — 4,548 Deferred tax liabilities — 45,858 Total long-term liabilities 10,646,053 50,406 TOTAL LIABILITIES 58,486,196 74,071,054 Commitments and contingencies (Note 24) Shareholders’ equity: Ordinary shares, $ 0.001 par value; 200,000,000 shares authorized, 68,661,998 and 58,376,985 shares issued and outstanding as of December 31, 2023 and 2022, respectively 68,662 58,377 Ordinary shares to be issued 4,854 1,665 Additional paid-in capital 74,103,494 43,870,308 Accumulated other comprehensive loss ( 473,087 ) ( 384,938 ) Accumulated deficit ( 65,601,152 ) ( 16,395,133 ) Total shareholders’ equity 8,102,771 27,150,279 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 66,588,967 $ 101,221,333 See accompanying notes to the consolidated financial statements. F- 3 AGBA GROUP HOLDING LIMITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Currency expressed in United States Dollars (“US$”)) For the years ended December 31, 2023 2022 Revenues: Interest income: Loans $ 157,190 $ 176,175 Total interest income 157,190 176,175 Non-interest income: Commissions 50,068,936 26,561,691 Recurring asset management service fees 2,992,918 3,372,449 Recurring asset management service fees, related party 970,143 969,912 Total non-interest income 54,031,997 30,904,052 Total revenues from others 54,189,187 31,080,227 Operating expenses: Interest expense ( 784,479 ) ( 140,644 ) Commission expense ( 37,287,519 ) ( 18,823,458 ) Sales and marketing expense ( 3,708,557 ) ( 11,141,672 ) Research and development expense ( 4,557,196 ) ( 1,209,035 ) Personal and benefit expense ( 27,217,822 ) ( 21,928,504 ) Legal and professional fees ( 13,601,274 ) ( 1,265,866 ) Legal and professional fees, related party ( 333,332 ) — Allowance for expected credit losses on financial instruments ( 1,077,184 ) ( 16,509 ) Other general and administrative expenses ( 9,467,146 ) ( 4,905,636 ) Total operating expenses ( 98,034,509 ) ( 59,431,324 ) Loss from operations ( 43,845,322 ) ( 28,351,097 ) Other income (expense): Interest income 383,720 99,132 Foreign exchange gain (loss), net 909,227 ( 2,643,261 ) Investment loss, net ( 6,878,869 ) ( 8,937,431 ) Change in fair value of warrant liabilities 4,548 8,952 Change in fair value of forward share purchase liability ( 82,182 ) ( 5,392,293 ) Loss on settlement of forward share purchase agreement ( 378,895 ) — Gain on disposal of property and equipment 664,816 — Rental income 239,239 315,233 Sundry income 64,237 504,735 Total other expense, net ( 5,074,159 ) ( 16,044,933 ) Loss before income taxes ( 48,919,481 ) ( 44,396,030 ) Income tax expense ( 286,538 ) ( 124,605 ) NET LOSS $ ( 49,206,019 ) $ ( 44,520,635 ) Other comprehensive loss: Foreign currency translation adjustment ( 88,149 ) ( 205,477 ) COMPREHENSIVE LOSS $ ( 49,294,168 ) $ ( 44,726,112 ) Weighted average number of ordinary shares outstanding Basic and diluted 65,265,397 56,084,858 Net loss per ordinary share Basic and diluted $ ( 0.75 ) $ ( 0.79 ) See accompanying notes to the consolidated financial statements. F- 4 AGBA GROUP HOLDING LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Currency expressed in United States Dollars (“US$”), except for number of shares) For the years ended December 31, 2023 and 2022 Ordinary shares Ordinary shares to be issued Additional Receivable from the Accumulated other (Accumulated deficit) Total Note No. of share Amount No. of share Amount paid-in capital holding company comprehensive (loss) income retained earnings shareholders’ equity Balance as of January 1, 2022 53,835,000 $ 53,835 1,665,000 $ 1,665 $ 38,706,226 $ ( 29,562,195 ) $ ( 179,461 ) $ 52,125,502 $ 61,145,572 Restatement (2) — — — — — — — 23,000,000 23,000,000 Balance as of January 1, 2022 (restated) (17) (i) 53,835,000 $ 53,835 1,665,000 $ 1,665 $ 38,706,226 $ ( 29,562,195 ) $ ( 179,461 ) $ 75,125,502 $ 84,145,572 Automatic conversion of public and private rights into ordinary shares (17) (i) 482,500 483 — — ( 483 ) — — — — Issuance of ordinary shares to settle payables (17) (i) 792,334 792 — — 7,202,278 — — — 7,203,070 Issuance of ordinary shares to settle finder fee (17) (i) 555,000 555 — — ( 555 ) — — — — Transaction costs in related to Business Combination — — — — ( 8,308,754 ) — — — ( 8,308,754 ) Shares and warrants from reverse recapitalization with AGBA Acquisition Limited, net of redemption 2,712,151 2,712 — — 6,282,184 — — — 6,284,896 Special dividend to the holding company — — — — — 29,562,195 — ( 47,000,000 ) ( 17,437,805 ) Share-based compensation — — — — 2,088,725 — — — 2,088,725 Initial measurement of forward share purchase liability — — — — ( 8,099,313 ) — — — ( 8,099,313 ) Forgiveness of amounts due to the holding company — — — — 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 (restated) 58,376,985 58,377 1,665,000 1,665 43,870,308 — ( 384,938 ) ( 16,395,133 ) 27,150,279 Issuance of ordinary shares to settle finder fee (17) (ii) 2,173,913 2,174 — — 3,997,826 — — — 4,000,000 Issuance of holdback shares (17) (iv) 1,665,000 1,665 ( 1,665,000 ) ( 1,665 ) — — — — — Issuance of ordinary shares for private placement (17) (vii) — — 2,643,300 2,643 1,847,667 — — — 1,850,310 Issuance of ordinary shares for commitment fee (17) (v) 600,000 600 — — 275,400 — — — 276,000 Share-based compensation (17) (iii),(vi),(viii) 5,846,100 5,846 2,210,984 2,211 11,518,909 — — — 11,526,966 Forgiveness of amounts due to the holding company — — — — 12,593,384 — — — 12,593,384 Foreign currency translation adjustment — — — — — — ( 88,149 ) — ( 88,149 ) Net loss for the year — — — — — — — ( 49,206,019 ) ( 49,206,019 ) Balance as of December 31, 2023 68,661,998 $ 68,662 4,854,284 $ 4,854 $ 74,103,494 $ — $ ( 473,087 ) $ ( 65,601,152 ) $ 8,102,771 See accompanying notes to the consolidated financial statements. F- 5 AGBA GROUP HOLDING LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed in United States Dollars (“US$”)) For the years ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 49,206,019 ) $ ( 44,520,635 ) Adjustments to reconcile net loss to net cash used in operating activities Share-based compensation expense 11,235,026 2,088,725 Non-cash lease expense 1,496,286 — Depreciation of property and equipment 261,323 392,873 Interest income on notes receivable ( 34,665 ) — Interest expense on borrowings 784,479 — Foreign exchange (gain) loss, net ( 909,227 ) 2,643,261 Investment loss, net 6,878,869 8,937,431 Allowance for expected credit losses on financial instruments 1,077,184 — Change in fair value of warrant liabilities ( 4,548 ) ( 8,952 ) Change in fair value of forward share purchase liability 82,182 5,392,293 Gain on disposal of property and equipment ( 664,816 ) — Loss on settlement of forward share purchase agreement 378,895 — Reversal of over-accruals staff bonus ( 3,595,028 ) — Change in operating assets and liabilities: Accounts receivable ( 1,187,628 ) ( 1,947,089 ) Loans receivable ( 15,656 ) 2,319,054 Deposits, prepayments, and other receivables ( 2,495,082 ) ( 198,512 ) Accounts payable and accrued liabilities 6,894,066 10,877,792 Escrow liabilities ( 12,670,774 ) ( 4,998,181 ) Lease liabilities ( 1,130,008 ) — Income tax payable 542,982 ( 282,459 ) Net cash used in operating activities ( 42,282,159 ) ( 19,304,399 ) Cash flows from investing activities: Proceeds from sale of investments 3,976,657 1,853,473 Purchase of notes receivable ( 589,086 ) — Purchase of long-term investments ( 288,581 ) — Addition in long-term investments, related party — ( 16,228,690 ) Dividend received from long-term investments 1,670,045 1,154,749 Proceeds from sale of property and equipment 6,127,576 — Purchase of property and equipment ( 104,846 ) ( 968,367 ) Net cash provided by (used in) investing activities 10,791,765 ( 14,188,835 ) Cash flows from financing activities: Advances from the holding company 9,342,972 9,752,275 Settlement of forward share purchase agreement ( 13,952,683 ) — Proceeds from borrowings 7,746,414 4,464,391 Repayments of borrowings ( 6,026,937 ) — Proceeds from private placement 1,850,310 — Dividend paid to the holding company — ( 17,437,805 ) Cash proceeds from reverse recapitalization, net of redemption — 15,356,580 Net cash (used in) provided by financing activities ( 1,039,924 ) 12,135,441 Effect on exchange rate change on cash, cash equivalents and restricted cash ( 85,689 ) ( 429,542 ) Net change in cash, cash equivalent and restricted cash ( 32,616,007 ) ( 21,787,335 ) BEGINNING OF YEAR 51,294,072 73,081,407 END OF YEAR $ 18,678,065 $ 51,294,072 SUPPLEMENTAL CASH FLOW INFORMATION: Cash received from income tax refund $ 427,363 $ 125,353 Cash paid for income taxes $ 172,334 $ 531,592 Cash received from interest $ 349,055 $ 99,132 Cash paid for interest $ 784,479 $ 140,644 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Initial recognition of operating lease liabilities related to right-of-use asset $ 12,512,585 $ — Forgiveness of amounts due to the holding company $ 12,593,384 $ 6,000,000 Issuance of ordinary shares to settle finder fee $ 4,000,000 $ — Issuance of ordinary shares to settle payables $ — $ 7,203,070 Purchase of property and equipment, through earnest deposit $ — $ 7,182,131 Special dividend to the holding company offset with amount due from the holding company $ — $ 29,562,195 Transaction costs in related to Business Combination $ — $ 8,308,754 Liability assumed related to forward share purchase agreement $ — $ 13,491,606 As of December 31, 2023 2022 Reconciliation to amounts on consolidated balance sheets: Cash and cash equivalents $ 1,861,223 $ 6,449,876 Restricted cash 16,816,842 44,844,196 Total cash, cash equivalents and restricted cash $ 18,678,065 $ 51,294,072 See accompanying notes to the consolidated financial statements. F- 6 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION AGBA Group Holding Limited (“AGBA” or the “Company”) was incorporated on October 8, 2018 in British Virgin Islands. The Company, through its subsidiaries, is operating a wealth and health platform, offering a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, lending, and real estate in overseas. AGBA is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing. 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 5). 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”). Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. The accompanying consolidated financial statements reflect the activities of AGBA and each of the subsidiaries as of December 31, 2023 and 2022: 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”) ● ● ● ● 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”) ● ● ● ● British Virgin Islands company Incorporated on October 26, 2015 Issued and outstanding 50,000 ordinary shares at $1 par value Investment holding 100% owned by AGBA F- 7 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OnePlatform Wealth Management Limited (“OWM”) ● ● ● ● 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 OnePlatform International Property Limited (“OIP”) ● ● ● ● 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”) ● ● ● ● ● 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 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 (“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- 8 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 share for HK$1 Property investment holding 100% owned by TRHL TAG Technologies Limited (“TAGTL”) ● ● ● ● 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 (“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”) ● ● ● ● 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”) ● ● ● ● 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 (“FLL”) ● ● ● ● Hong Kong company Incorporated on September 14, 2021 Issued and outstanding 100 ordinary shares for HK$100 ($13) No operations since inception 100% owned by AGBA Innovation AGBA and its subsidiaries are hereinafter referred to as the “Company”. F- 9 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS The Company has restated the accompanying consolidated financial statements and related disclosure for the year ended December 31, 2022 that were previously included in the Form 10-K filed with the SEC on April 3, 2023. Restatement Background In June 2021, the Company received the offer from JP Morgan Chase Holdings LLC to purchase all its equity interest in Nutmeg Saving and Investment Limited (“Nutmeg”). Nutmeg is incorporated in the United Kingdom and engaged in the provision of online discretionary investment management services. The cash consideration was approximately $ 187 million (equivalent to approximately GBP 135 million) and fully received in September 2021, resulting in a realized gain of approximately $ 139 million (equivalent to approximately GBP 101 million). As of December 31, 2021, the Company recorded an income tax payable of $ 23 million based on the Hong Kong profit tax rate of 16.5 %. The Company corrected its previous conclusion of provision of income tax liabilities of $ 23 million related to the disposal of Nutmeg. The Company had previously believed that the gain from the sale of Nutmeg should have been taxed at the 16.5 % profit tax rate in Hong Kong during the year of disposal, resulting in a recorded income tax liability of $ 23 million. After reassessing whether income tax should be provided, the Company reviewed that there was an error resulting from the improper application of US tax law and Hong Kong tax law due to the mistaken omission of the consideration of Hong Kong tax law, and came to the conclusion that there should be no income tax applied when selling a long-term investment in Hong Kong. The impact of restatement The impact of the accounting errors was a cumulative reduction in the income tax provision of $ 23 million and a cumulative decrease in the accumulated deficit of $ 23 million, and it had no impact on the consolidated statements of operations and comprehensive loss and the consolidated statements of cash flows for the year ended December 31, 2022. The following table summarized the effect of the restatement on each financial statement line items as of and for the year ended December 31, 2022, as indicated: Summary of restatement – consolidated balance sheet As of December 31, 2022 As Previously Reported Adjustment As Restated Income tax payable $ 23,000,000 $ ( 23,000,000 ) $ — Total current liabilities $ 97,020,648 $ ( 23,000,000 ) $ 74,020,648 Total liabilities $ 97,071,054 $ ( 23,000,000 ) $ 74,071,054 Accumulated deficit $ ( 39,395,133 ) $ 23,000,000 $ ( 16,395,133 ) Total shareholders’ equity $ 4,150,279 $ 23,000,000 $ 27,150,279 Summary of restatement – consolidated statement of changes in shareholders’ equity For the year December 31, 2022 As Previously Reported Adjustment As Restated Balance as of January 1, 2022 Accumulated (deficit) retained earnings $ 52,125,502 $ 23,000,000 $ 75,125,502 Balance as of December 31, 2022 Accumulated (deficit) retained earnings $ ( 39,395,133 ) $ 23,000,000 $ ( 16,395,133 ) F- 10 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 — 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. ● 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 expected credit losses, notes receivable, share-based compensation, warrant liabilities, forward share purchase liability, provision for contingent liabilities, revenue recognition, leases, income tax provision, deferred taxes and uncertain tax position, and allocation of expenses from the holding company. The inputs into the management’s judgments and estimates consider the geopolitical tension, inflationary and high interest rate environment and other macroeconomic factors 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 and comprehensive loss. F- 11 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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, 2023 and 2022: December 31, 2023 December 31, 2022 Year-end HK$:US$ exchange rate 0.1281 0.1281 Annual average HK$:US$ exchange rate 0.1277 0.1277 ● 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 and Hong Kong is not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance. However, management does not believe there is a significant risk of loss. ● 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 5 for the details of the Meteora Backstop Agreement). The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities. ● Accounts Receivable, net Accounts receivable, net include trade accounts due from customers in insurance brokerage and asset management businesses, less the allowance for expected credit losses. Accounts receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the allowance for expected credit losses is adequate and provides allowance when necessary. The Company does not hold any collateral or other credit enhancements over its accounts receivable balances. F- 12 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ● Loans Receivable, net Loans receivable, net are related to residential mortgage loans that are carried at unpaid principal and interest balances, less the allowance for expected credit losses on loans receivable and charge-offs. Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months). If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in “Allowance for Expected Credit Losses on Financial Instruments”. ● Allowance for Expected Credit Losses on Financial Instruments In accordance with ASC Topic 326 “Credit Losses – Measurement of Credit Losses on Financial Instruments” (ASC Topic 326), the Company utilizes the current expected credit losses (“CECL”) model to determine an allowance that reflects its best estimate of the expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits, prepayments and others receivable which is recorded as a liability to offset the receivables. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate expected credit losses. Accounts receivable, loans receivable, notes receivable, and deposits, prepayments, and others receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense. For the years ended December 31, 2023 and 2022, the aggregated allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, and other receivables was $ 1,077,184 and $ 16,509 , respectively. ● Deposit, prepayments, and other receivables, net Deposit, prepayments, and other receivables, net represented the deposit paid for technology systems and services, prepayments for various consultancy services and other operating expenses such as insurance premium less the allowance for expected credit losses. It is presented under the current assets of the consolidated balance sheets based on the expected collection date. ● Rental deposit, net Rental deposit, net represented the deposit paid for the long-term office leases, less the allowance for expected credit losses. It is presented under the non-current assets of the consolidated balance sheet based on the expected collection date. For the years ended December 31, 2023 and 2022, the Company has evaluated the probable losses on the rental deposits and made an allowance for expected credit losses of $ 14,833 and nil , respectively. ● Long-Term Investments, net The Company invests in equity securities with readily determinable fair values and equity securities that do not have readily determinable fair values. Equity securities with readily determinable fair values are carried at fair value with any unrealized gains or losses reported in earnings. F- 13 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equity securities that do not have readily determinable fair values mainly consist of investments in privately-held companies. They are accounted for, at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. ● Property and Equipment, net Property and equipment, net are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values, if any: 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 Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations. ● Impairment of Long-Lived Assets In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment losses were recognized for the years ended December 31, 2023 and 2022. ● 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. ● Borrowings Borrowings are recognized at fair value and repayable in the next twelve months. Interest expense is recognized on a fixed interest rate on the consolidated statements of operations . ● Warrants 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. F- 14 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ● Revenue Recognition The Company earns and receives most of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC Topic 606”). ASC Topic 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer). Certain portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC Topic 606, as follows: Commissions The Company earns commissions from the sale of investment products to customers, who are insurance companies and fund houses. 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 by customer, 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. F- 15 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the consolidated statements of operations and comprehensive loss. The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed. Recurring Asset Management Service Fees The Company provides asset management services to investment funds or investment product providers in exchange for recurring asset management service fees. Recurring asset management 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 asset management 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 asset management service fees are normally on a regular basis (typically monthly or quarterly). Interest Income The Company offers money lending services from loan origination in form of mortgage and personal loans. Interest income is recognized monthly in accordance with their contractual terms and recorded as interest income in the consolidated statement of operations. The Company does not charge prepayment penalties from its 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. F- 16 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 and comprehensive loss for the years indicated: For the year ended December 31, 2023 Distribution Business Platform Business Insurance brokerage service Asset management service Money lending service Real estate agency service Total Interest income: Loans $ — $ — $ 157,190 $ — $ 157,190 Non-interest income: Commissions 48,886,928 1,138,432 — 43,576 50,068,936 Recurring asset management service fees — 3,963,061 — — 3,963,061 $ 48,886,928 $ 5,101,493 $ 157,190 $ 43,576 $ 54,189,187 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 asset management service fees — 4,342,361 — — 4,342,361 $ 24,610,309 $ 6,106,671 $ 176,175 $ 187,072 $ 31,080,227 ● 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 holding company. 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. ● Research and Development Research and development expenses include the costs of developing software for business purpose and costs to improve the business operation flow. All research and development costs are expensed as incurred. F- 17 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ● Comprehensive Loss 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. ● Employee Benefits Full time employees of the Hong Kong subsidiaries participate in a defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Contributions are made by both the employer and the employee at the rate of 5 % on the employee’s relevant salary, subject to a salary cap of $ 3,846 (HK$ 30,000 ). ● Income Taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For the years ended December 31, 2023 and 2022, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2023 and 2022, 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. ● Net Loss Per Share The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC Topic 260”). ASC Topic 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net loss divided by the weighted average ordinary share outstanding for the 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. For the years ended December 31, 2023 and 2022, there were no dilution impact. ● Segment Reporting ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. F- 18 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 for the years ended December 31, 2023 and 2022 and all of the Company’s non-current assets were located in Hong Kong as of December 31, 2023 and 2022. ● Leases The Company follows ASC Topic 842, Leases (“ASC Topic 842”), utilizing the modified retrospective transition method with no adjustments to comparative periods presented. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (ASC Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC Topic 842 requires that lessees recognize right-of-use asset and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. It requires for leases longer than one year, a lessee to recognize in the statement of financial condition a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. ASC Topic 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the consolidated statements of operations and comprehensive loss and statements of cash flows. ASC Topic 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the FASB including ASC Topic 840, Leases. F- 19 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs. The Company has not entered any lease agreements with lease terms of 12 months or less during the years ended December 31, 2023 and 2022. The Company elected not to separate non-lease components from lease components; therefore, it will account for lease component and the non-lease components as a single lease component when there is only one vendor in the lease contract for the office leases. Lease payments are fixed. The accounting update also requires that for operating leases, a lessee recognize interest expense on the lease liability and the amortization of the right-of-use asset as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements. ● Related Parties The Company follows the ASC Topic 850-10, Related Party for the identification of related parties and disclosure of related party transactions. Pursuant to section 850-10-20, the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated 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 consolidated 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. F- 20 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ● 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 consolidated 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 consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. ● Fair Value Measurement The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: ● Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; ● Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and ● Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans and notes receivable, deposits, prepayments and other receivables, accounts payable and accrued liabilities, escrow liabilities, borrowings and amounts due to the holding company approximate at their fair values because of the short-term nature of these financial instruments. Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of loans receivable approximates the carrying amount. The Company accounts for loans receivable at cost, subject to expected credit losses assessment. F- 21 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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, 2023 and 2022 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. As of December 31, Quoted Prices in Active Markets Significant Other Observable Inputs Significant Other Unobservable Inputs Description 2023 (Level 1) (Level 2) (Level 3) Assets: Marketable equity securities $ 595 $ 595 $ — $ — As of 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 $ — $ — Liabilities: Forward share purchase liability $ 13,491,606 $ — $ — $ 13,491,606 Warrant liabilities 4,548 — — 4,548 Total $ 13,496,154 $ — $ — $ 13,496,154 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 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. Recently adopted accounting standards In June 2016, the FASB issued Accounting Standards Update No. 2016 - 13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016 - 13”). ASU 2016 - 13 added a new impairment model (known as the CECL model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, accounts receivables, notes receivables, loans receivable, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. As an emerging growth company, the Company was permitted to adopt the new standard for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted the new standard effective January 1, 2023, which didn’t have a material impact on the consolidated financial statements. New accounting standards not yet adopted In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The purpose of the update was to improve financial reporting by requiring disclosures of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all periods presented in the consolidated financial statements. Management is evaluating the impact on the Company’s consolidated financial statements. F- 22 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires disclosure of incremental income tax information within the rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company’s management does not believe the adoption of ASU 2023-09 will have a material impact on its consolidated financial statements and disclosures. 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 comprehensive loss and cash flows. NOTE 4 — 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. They do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. For the year ended December 31, 2023, the Company reported net loss of $ 49,206,019 and net cash outflows from operating activities of $ 42,282,159 . As of December 31, 2023, the Company had a working capital deficit of $ 22,221,171 , an accumulated deficit of $ 65,601,152 and cash and cash equivalents of $ 1,861,223 . The Company has determined that the prevailing conditions and ongoing liquidity risks encountered by the Company raise substantial doubt about the ability to continue as a going concern for at least one year following the date these consolidated financial statements are issued. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement its current operating plan and fund-raising exercises. The Company believes that it will be able to grow its revenue base and control expenditures. In parallel, the Company will monitor its capital structure and operating plans and search for potential funding alternatives in order to finance the development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity or debt markets. However, the Company cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable to its shareholders. Any failure to obtain financing when required will have a material adverse impact on the Company’s business, operation and financial result. Certain funding alternatives have been carried by the Company, as follows: 1. On September 7, 2023, the Company entered into an equity purchase agreement with Williamsburg Venture Holdings, LLC (“Williamsburg”), an independent third party to agree to invest up to $ 50 million over a 36-month period (see Note 17). 2. On November 7, 2023, the Company entered into private placement binding term sheets with an institutional investor, the Company’s Chief Executive Officer, Mr. Ng Wing Fai, and the Company’s management team pursuant to which the Company will receive gross proceeds of approximately $ 5,128,960 , in consideration of (i) 7,349,200 ordinary shares of the Company, and (ii) warrants to purchase up to 1,469,840 Ordinary Shares at a purchase price of $ 0.70 per ordinary share and associated warrants. As of December 31, 2023, the Company received the proceeds of $ 1,850,310 (see Note 17). The above funding alternatives were not enforceable and were subject to being exercised the rights by the counterparties. With these funding initiatives, the Company believes that it would be able to strengthen its financial position, improve its liquidity, and enhance its ability to navigate the challenging market conditions. F- 23 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 — 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. The transaction was accounted for as a “reverse recapitalization” in accordance with 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. F- 24 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 — RESTRICTED CASH Pursuant to the Meteora Backstop Agreement dated November 9, 2022, the fund held in the escrow account for the forward share purchase is restricted to the Company for the nine months following the consummation of the Business Combination in November 2022, unless the investors (“Meteora”) sell the shares in the market or redeems the shares. Notwithstanding the sale of shares by Meteora, the restricted cash will be used to settle any of the Company’s repurchase obligations. On June 29, 2023, the Company and Meteora entered into an agreement to early terminate the Meteora Backstop Agreement. Prior to the termination, Meteora sold 1,191,016 shares in the open market at a price ranging from $ 1.51 to $ 1.61 per share. Pursuant to the early termination clauses of Meteora Backstop Agreement, the Company released $ 14.0 million from restricted cash to settle the obligation to Meteora. Pursuant to the termination agreement, the Company is not obligated to purchase the remaining 124,949 shares (the “Shares”) from Meteora and they shall have no obligation to sell the Shares to the Company. In addition, they may dispose the Shares at its discretion in the open market not less than $ 2 per share before September 29, 2023 and no conditions or restrictions thereafter. As a result, the Company released the remaining $ 1.5 million from restricted cash to settle the obligation to Meteora. With the early termination and sale of shares by Meteora, the forward share purchase liability (“FSP liability”) was fully settled and a loss on settlement of $ 378,895 was recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023. As of December 31, 2023, restricted cash included 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. NOTE 7 — ACCOUNTS RECEIVABLE, NET Accounts receivable, net consisted of the following: As of December 31, 2023 2022 Accounts receivable $ 3,283,118 $ 2,916,609 Accounts receivable – related parties 1,094,225 272,546 Less: allowance for expected credit losses ( 312,482 ) ( 94,447 ) Accounts receivable, net $ 4,064,861 $ 3,094,708 The accounts receivable due from related parties represented the management service rendered to the portfolio assets of related companies, which are controlled by the holding company, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. The amount is unsecured, interest-free and with a credit term mutually agreed. F- 25 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table presents the activity in the allowance for expected credit losses: As of December 31, 2023 2022 Balance at beginning of year $ 94,447 $ 94,576 Allowance for expected credit losses 217,475 — Foreign translation adjustment 560 ( 129 ) Balance at end of year $ 312,482 $ 94,447 The Company generally conducts its business with creditworthy third parties. The Company determines, on a quarterly basis, the probable losses and an allowance for expected credit losses determined in accordance with the CECL model, based on historical losses, current economic conditions, forecasted future economic and market considerations, and in some cases, evaluating specific customer accounts for risk of loss. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant. For the years ended December 31, 2023 and 2022, the Company has assessed the probable loss and made an allowance for expected credit losses of $ 217,475 and nil on accounts receivable, respectively. NOTE 8 — LOANS RECEIVABLE, NET The Company’s loans receivable, net was as follows: As of December 31, 2023 2022 Residential mortgage loans $ 1,605,531 $ 1,589,871 Less: allowance for expected credit losses ( 1,229 ) — Loans receivable, net $ 1,604,302 $ 1,589,871 Classifying as: Current portion $ 549,461 $ 517,479 Non-current portion 1,054,841 1,072,392 Loans receivable, net $ 1,604,302 $ 1,589,871 F- 26 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The interest rates on loans issued ranged between 9.00 % and 10.50 % (2022: 9.00 % to 10.00 %) per annum for the year ended December 31, 2023. Mortgage loans are secured by collateral in the pledge of the underlying residential properties owned by the borrowers. As of December 31, 2023, the net carrying amount of the loans receivable was $ 1,604,302 , which included an interest receivable of $ 40,100 . Mortgage loans are made to either business or individual customers in Hong Kong for a period of 1 to 25 years, which are fully collateralized and closely monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of December 31, 2023 and 2022. The following table presents the activity in the allowance for expected credit losses: As of December 31, 2023 2022 Balance at beginning of year $ — $ 76,799 Allowance for expected credit losses 1,225 — Written-off — ( 76,799 ) Foreign translation adjustment 4 — Balance at end of year $ 1,229 $ — Estimated allowance for expected credit losses is determined on quarterly basis, in accordance with the CECL model, for general credit risk of the overall portfolio, which is relied on an assessment of specific evidence indicating doubtful collection, historical loss experience, loan balance aging and prevailing economic conditions. If there is an unexpected deterioration of a customer’s financial condition or an unexpected change in economic conditions, including macroeconomic events, the Company will assess the need to adjust the allowance for expected credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made. For the years ended December 31, 2023 and 2022, the Company has assessed the probable loss and made an allowance for expected credit losses of $ 1,225 and nil on loans receivable, respectively. NOTE 9 — NOTES RECEIVABLE, NET On February 24, 2023, the Company entered into a subscription agreement and a convertible loan note instrument (collectively the “Agreements”) with Investment A. Pursuant to the Agreements, the Company agrees to subscribe an aggregate amount of $ 1,673,525 notes, in batches, which are payable on or before January 31, 2024 and bears a fixed interest rate of 8 % per annum. The maturity date of the notes receivable is April 30, 2024. As of December 31, 2023, the Company subscribed $ 589,086 notes. As of December 31, 2023, the net carrying amount of the notes receivable was $ 557,003 , which including an interest receivable of $ 34,665 . F- 27 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table presents the activity in the allowance for expected credit losses: As of December 31, 2023 Balance at beginning of year $ — Allowance for expected credit losses 69,581 Foreign translation adjustment 180 Balance at end of year $ 69,761 In accordance with ASC Topic 326, the Company accounts for its allowance for expected credit losses on notes receivable using the CECL model. Periodic changes to the allowance for expected credit losses are recognized in the consolidated statements of operations and comprehensive loss. For the year ended December 31, 2023, the Company has evaluated the probable losses on the notes receivable and made an allowance for expected credit losses of $ 69,581 . NOTE 10 — DEPOSIT, PREPAYMENTS AND OTHER RECEIVABLES , NET Deposit, prepayment and other receivables, net consisted of the following: As of December 31, 2023 2022 Deposits $ 710,702 $ 364,490 Prepayments 1,026,767 104,262 Other receivables 850,361 163,207 2,587,830 631,959 Less: allowance for expected credit losses ( 818,248 ) ( 42,173 ) Deposit, prepayment and other receivables, net $ 1,769,582 $ 589,786 The following table presents the activity in the allowance for expected credit losses: As of December 31, 2023 2022 Balance at beginning of year $ 42,173 $ 25,650 Allowance for expected credit losses 774,070 16,509 Foreign translation adjustment 2,005 14 Balance at end of year $ 818,248 $ 42,173 In accordance with ASC Topic 326, the Company accounts for its allowance for expected credit losses on deposit and other receivables using the CECL model. Periodic changes to the allowance for expected credit losses are recognized in the consolidated statements of operations and comprehensive loss. For the years ended December 31, 2023 and 2022, the Company has evaluated the probable losses on the deposit and other receivables and made an allowance for expected credit losses of $ 774,070 and $ 16,509 . F- 28 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 — LONG-TERM INVESTMENTS, NET Long-term investments, net consisted of the following: As of December 31, Ownership interest 2023 Ownership interest 2022 Marketable equity securities: Investment C 0.00 %* $ 595 0.46 % $ 2,443,593 Non-marketable equity securities: Investment A 8.37 % 5,826,703 8.37 % 5,717,678 Investment B 3.63 % 342,000 3.63 % 513,000 Investment D 4.47 %# 16,880,384 4.92 % 16,030,943 Investment E, related party 4.00 % 522,531 4.00 % 522,557 Investment F 4.00 % 2,152,251 4.00 % 11,805,589 Total 25,723,869 34,589,767 Net carrying value $ 25,724,464 $ 37,033,360 * Less than 0.001 % # Decrease in percentage due to share dilution Investments in Marketable Equity Securities Investments in marketable equity securities are accounted for at their current market value with changes in fair value recognized in net loss. Investment C was listed and publicly traded on Nasdaq Stock Exchange. During the year ended December 31, 2023, the Company sold 993,108 shares of Investment C at the average market price of $ 4.01 per share, resulting with a realized gain of $ 1,543,543 . As of December 31, 2023 and 2022, Investment C was recorded at fair value of $ 595 and $ 2,443,593 , which were traded at a closing price of $ 9.15 and $ 2.46 per share, respectively. Investments in Non-Marketable Equity Securities Investments in non-marketable equity securities consist of investments in limited liability companies in which the Company’s interests are deemed minor and long-term, strategic investments in companies that are in various stages of development, and investments in a close-ended partnership funds which concentrated in the healthcare sector. These investments do not have readily determinable fair values and, therefore, are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Management assesses each of these investments on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and cash usage. The Company is not required to determine the fair value of these investments unless impairment indicators existed. When an impairment exists, the investment will be written down to its fair value by recording the corresponding charge as a component of other income (expense), net. Fair value is estimated using the best information available, which may include cash flow projections or other available market data. Subsequently on February 5, 2024, the Company entered into a purchase and sale agreement with an independent third party to sell all of its equity interest in Investment F for a purchase price of $ 2.15 million and the transaction was completed on February 19, 2024. F- 29 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table presents the movement of non-marketable equity securities as of December 31, 2023 and 2022: As of December 31, 2023 2022 Balance at beginning of year $ 34,589,767 $ 25,496,534 Additions 288,581 16,228,690 Adjustments: Upward adjustments — 2,137,021 Downward adjustments (note) ( 10,092,729 ) ( 6,898,549 ) Foreign exchange adjustment 938,250 ( 2,373,929 ) Balance at end of year $ 25,723,869 $ 34,589,767 Cumulative unrealized gains and losses, included in the carrying value of the Company’s non-marketable equity securities: As of December 31, 2023 2022 Downward adjustments (including impairment) $ ( 37,347,329 ) $ ( 27,254,600 ) Upward adjustments 6,209,357 6,209,357 Total $ ( 31,137,972 ) $ ( 21,045,243 ) Investment loss, net is recorded as other expense in the Company’s consolidated statements of operations and comprehensive loss, and consisted of the following: For the years ended December 31, 2023 2022 Marketable equity securities: Unrealized gain (loss) from the changes in fair value – Investment C $ 272 $ ( 5,330,652 ) Realized gain from sale of Investment C 1,543,543 — Non-marketable equity securities: Unrealized (loss)/gains (including impairment) – Investment F ( 9,922,184 ) 2,137,021 Unrealized (loss) (including impairment) – Investment B ( 170,545 ) ( 756,478 ) Unrealized (loss) (including impairment) – Investment A — ( 6,142,071 ) Dividend income 1,670,045 1,154,749 Investment loss, net $ ( 6,878,869 ) $ ( 8,937,431 ) Note: Downward adjustments represent unrealized loss (including impairment) of Investment B and F of $ 170,545 and $ 9,922,184 for the year ended December 31, 2023, respectively (2022: unrealized loss (including impairment) of Investment A and B of $ 6,142,071 , and $ 756,478 respectively). F- 30 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 — PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: As of December 31, 2023 2022 As cost: Land and building $ 1,885,786 $ 7,881,202 Furniture, fixtures and equipment 39,743 13,412 Computer equipment 243,314 164,536 Motor vehicles 108,989 108,994 2,277,832 8,168,144 Less: accumulated depreciation ( 556,548 ) ( 808,728 ) Property and equipment, net $ 1,721,284 $ 7,359,416 Depreciation expense for the years ended December 31, 2023 and 2022 were $ 261,323 and $ 392,873 , respectively. For the year ended December 31, 2023, the Company sold one of its office premises to an independent third party for a consideration of $ 6.13 million and a gain on disposal of $ 664,816 was recognized. The office premise was pledged for a mortgage loan (see Note 13). NOTE 13 — BORROWINGS As of December 31, 2023 2022 Mortgage borrowings $ 1,804,950 $ 4,477,254 Short-term borrowings, related party 5,000,000 — Total $ 6,804,950 $ 4,477,254 Mortgage Borrowings In September 2022, the Company obtained a mortgage loan of $ 4,457,104 (equivalent to HK$ 34,800,000 ) from a finance company in Hong Kong, which bears interest at a fixed rate of 10.85 % per annum, was repayable in October 2023. The loan was pledged by a fixed charge on an office premises owned by the Company. In October 2023, the loan was fully settled with the completion of the sale of the office premises (see Note 12). In February 2023, the Company obtained a mortgage loan of $ 1,793,001 (equivalent to HK$ 14,000,000 ) from a finance company in Hong Kong, which bears an average interest rate at 13.75 % per annum and becomes repayable in February 2024. The loan was pledged by a fixed charge on an office premises owned by the Company. Short-term Borrowings In September 2023, the Company obtained a short-term borrowing of $ 5,000,000 from the Company’s major shareholder’s ultimate holding company, which bears interest at a fixed rate of 12.00 % per annum, repayable in October 2023. The borrowing is secured by a lien on the partial equity interest in Investment D owned by the Company. In October 2023, November 2023, December 2023 and February 2024, the Company entered into certain supplementary agreements to renew and extend the maturity to November 2023, December 2023, January 2024 and March 2024, respectively. F- 31 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 — FORWARD SHARE PURCHASE LIABILITY (“FSP Liability”) During the year ended December 31, 2023, pursuant to the sale of shares by investors and early termination of the Meteora Backshop Agreement (see Note 5), FSP liability was fully settled with a loss of $ 378,895 recorded in the consolidated statements of operations and comprehensive loss. The FSP liability as of December 31, 2022 under the Meteora Backstop Agreement is valued by an independent valuer using a Black-Scholes model, which is considered to be Level 3 fair value measurement. The following table present the quantitative information regarding Level 3 fair value measurement of the FSP liability: As of December 31, 2022 Input Share price $ 1.54 Risk-free interest rate 4.16 % Volatility 52.19 % Exercise price $ 12.34 Term 0.61 years For the year ended December 31, 2023, the change in fair value of FSP liability of $ 82,182 was charged to the consolidated statements of operations and comprehensive loss. NOTE 15 — LEASE Operating lease right-of-use (“ROU”) asset and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”) in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. During the year ended December 31, 2023, the Company has entered into a commercial operating lease with an independent third party for the use of an office in Hong Kong. The lease has an original term exceeding 1 year, but not more than 3 years with an option to renew a further term of 3 years. At lease inception, after consideration, the Company was certain that the renewal option would be exercised, after the original term. The operating lease is included in “Right-of-use asset, net” on the consolidated balance sheets and represents the Company’s right to use the underlying asset during the lease term. The Company’s obligation to make lease payments are included in “Lease liabilities” on the consolidated balance sheets. Supplemental balance sheet information related to the operating lease was as follows: As of December 31, 2023 Operating lease: Right-of-use asset 12,512,585 Less: accumulated depreciation ( 1,004,432 ) Right-of-use asset, net $ 11,508,153 Lease liabilities: Current lease liabilities 1,229,329 Non-current lease liabilities 10,646,053 Total lease liabilities $ 11,875,382 Operating lease expense for the years ended December 31, 2023 and 2022 was $ 1,496,286 and nil , respectively, is included in other general and administrative expenses in the consolidated statements of operations and comprehensive loss. F- 32 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Other supplemental information about the Company’s operating lease as of December 31, 2023 are as follow: Weighted average discount rate 6.58 % Weighted average remaining lease term (years) 5.42 Maturities of operating lease liabilities as of December 31, 2023 were as follows: For the year ended December 31, Operating lease 2024 $ 1,942,181 2025 1,942,181 2026 2,676,638 2027 3,201,250 2028 3,201,250 Thereafter 1,333,854 Total minimum lease payments 14,297,354 Less: imputed interest ( 2,421,972 ) Total operating lease liabilities $ 11,875,382 NOTE 16 — WARRANT LIABILITIES Private warrants 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, 2023 and 2022, there were 225,000 private warrants outstanding. The fair value of the private warrants is valued by an independent valuer using a Binominal pricing model. The warrants were classified as Level 3 due to the use of unobservable inputs. The key inputs into the Binominal pricing model were as follows at their measurement dates: As of December 31, 2023 2022 Input Share price $ 0.49 $ 1.54 Risk-free interest rate 4.04 % 4.16 % Volatility 48.66 % 52.19 % Exercise price $ 11.50 $ 11.50 Warrant remaining life 3.9 years 4.9 years As of December 31, 2023 and 2022, the aggregate value of the private warrants was nil and $ 4,548 , respectively. The changes in fair value for the years ended December 31, 2023 and 2022 were $ 4,548 and $ 8,952 , respectively. Warrants – Class A In December 2023, the Company consummated the private placement and received cash proceeds in exchange of 2,643,300 ordinary shares and 528,660 warrants to be issued. These warrants have an exercise price of $ 1.00 per share and shall be exercised with more than $ 500,000 per tranche (see Note 17). F- 33 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 17 — SHAREHOLDERS’ EQUITY Ordinary Shares As of December 31, 2023 and 2022, the Company has authorized shares of 200,000,000 ordinary shares with a par value $ 0.001 . Ordinary Shares transactions for the year ended December 31, 2022 (i) On November 14, 2022, pursuant to the Business Combination (as described in Note 5), 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. Ordinary Shares transactions for the year ended December 31, 2023 (ii) On March 21, 2023, the Company issued 2,173,913 ordinary shares to Apex Twinkle Limited to partially settle the finder fee payable. (iii) On May 22, 2023, the Company issued 946,100 ordinary shares to the directors and officers of the Company under the Share Award Scheme (the “Scheme”) for compensating the contributions of prior services and performance. These shares were approved and granted previously in December 2022. (iv) On June 6, 2023, the holdback shares of 1,665,000 ordinary shares were fully released and issued. (v) On December 5, 2023, the Company issued 600,000 ordinary shares to Williamsburg, an independent third party, as a commitment fee under the equity purchase agreement dated September 7, 2023. (vi) During the year ended December 31, 2023, the Company issued 4,900,000 ordinary shares to certain consultants to compensate their services rendered. As of December 31, 2023 and 2022, there were 68,661,998 and 58,376,985 ordinary shares issued and outstanding, respectively. Ordinary Shares To Be Issued (vii) On November 7, 2023, the Company entered into certain term sheets among an institutional investor, the Company’s Chief Executive Officer, Mr. Ng Wing Fai, and the Company’s management team for the private placement with an offering price at $ 0.70 per ordinary share. In December 2023, the Company consummated the private placement with an independent institutional investor and received gross proceeds of $ 1,850,310 in exchange of (i) 2,643,300 ordinary shares, and (ii) warrants purchase up to 528,660 ordinary shares at a purchase price of $ 0.70 per ordinary share. The warrants have an exercise price of $ 1.00 per share and shall be exercised with more than $ 500,000 per tranche. (viii) In December 2023, the Company settled the accrued salary of $ 1.43 million with an aggregate of 2,210,984 ordinary shares to the directors and officers of the Company at the current market price ranging from $ 0.442 to $ 0.70 per share. Subsequently in February 2024, the Company issued 435,484 shares for the settlement of the accrued salary. 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. 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- 34 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 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 and remeasured to fair value on a recurring basis, with changes in fair value recorded in the consolidated statements of operations (see Note 16). As of December 31, 2023 and 2022, there were 4,600,000 public warrants and 225,000 private warrants outstanding. Warrant - Class A Each warrant entitles the holder to purchase one-fifth (1/5) of one ordinary share at a price of $ 0.70 per full share. The warrants will be exercisable six months after the issuance date for a period of five years after the exercise date. The warrants have an exercise price of $ 1.00 per share and shall be exercised with more than $ 500,000 per tranche. As of December 31, 2023, 528,660 warrants are to be issued under Warrant - Class A, in connection with the private placement. Forgiveness of Amounts Due to the Holding Company During the years ended December 31, 2023 and 2022, the holding company of the Company agreed to forgive a debt of $ 12,593,384 and $ 6,000,000 , in aggregate, respectively, representing certain amounts due to it and treat as additional paid-in capital. F- 35 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Share Award Scheme Immediately following the consummation of Business Combination, the Company’s shareholders approved the Scheme, which became effective on September 14, 2022. Subsequently, on February 24, 2023, the Company registered 11,675,397 ordinary shares to be issued under the Scheme. The fair value of the ordinary shares granted under the scheme is measured based on the closing price of the Company’s ordinary shares as reported by Nasdaq Exchange on the date of grant. For those ordinary shares vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the consolidated statements of operations and comprehensive loss. Share-based compensation On May 22, 2023, the Company issued 946,100 ordinary shares to compensate the contributions of prior services and performance of the eligible employees, directors and officers, which was approved and granted previously in December 2022. Restricted Share Units (“RSUs”) In December 2022, the Company approved and granted 5,000,000 ordinary shares as RSUs to employees and consultants as additional compensation under the Scheme. These RSUs typically will be vested over one to four years period from 2023 to 2026. 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. During the year ended December 31, 2023, the Company recorded $ 1,856,732 share-based compensation expense, which is included in the personal and benefit expenses in the consolidated statements of operations and comprehensive loss. As of December 31, 2023, total unrecognized compensation remaining to be recognized in future periods for RSUs totaled $ 1.9 million. They are expected to be recognized over the weighted average period of 1.67 years. A summary of the activities for the Company’s RSUs as of December 31, 2023 and 2022 is as follow: As of December 31, 2023 2022 Number of RSUs Weighted Average Grant Price Number of RSUs Weighted Average Grant Price Outstanding, beginning of year 5,000,000 $ 2.47 — $ — Granted — $ — 5,000,000 $ 2.47 Vested ( 346,542 ) $ 2.47 — $ — Forfeited ( 3,343,730 ) $ ( 2.47 ) — $ — Outstanding, end of year 1,309,728 $ 2.47 5,000,000 $ 2.47 F- 36 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 18 — OPERATING EXPENSES Commission Expense Pursuant to the terms of respective contracts, commission expense represents certain premiums from insurance or investment products paid to agents. Commission rates vary by market due to local practice, competition, and regulations. The Company charged commission expense on a systematic basis that is consistent with the revenue recognition. During the years ended December 31, 2023 and 2022, the Company recorded $ 37,287,519 and $ 18,823,458 commission expenses, respectively. Personnel and Benefit Expense Personnel and benefit expense mainly consisted of salaries and bonus paid and payable to the employees of the Company. During the year ended December 31, 2023, the Company reversed the annual bonus of $ 3.6 million that was already accrued for the year ended December 31, 2022. During the years ended December 31, 2023 and 2022, the Company recorded $ 27,217,822 and $ 21,928,504 personnel and benefit expense, respectively. Legal and Professional Fees Legal and professional fees mainly consisted of certain professional consulting services in legal, audit, accounting and taxation, and others. During the years ended December 31, 2023 and 2022, the Company recorded $ 13,601,274 and $ 1,265,866 legal and professional fees, respectively. During the years ended December 31, 2023 and 2022, the Company recorded $ 333,332 and nil legal and professional fees, related party, respectively. Other General and Administrative Expenses The Company incurred different types of expenditures under other general and administrative expenses. They primarily consist of depreciation of property and equipment and management fee expenses which are allocated for certain corporate office expenses. During the years ended December 31, 2023 and 2022, the Company recorded $ 9,467,146 and $ 4,905,636 other general and administrative expenses, respectively. F- 37 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 19 — NET LOSS PER SHARE As the Company reported a net loss for the years ended December 31, 2023 and 2022, it was required by ASC 260 to use basic weighted-average shares outstanding when calculating diluted net loss per share for the years ended December 31, 2023 and 2022, as the potential dilutive securities are anti-dilutive. For the years ended December 31, 2023 2022 Numerator: Net loss attributable to the Company’s shareholders $ ( 49,206,019 ) $ ( 44,520,635 ) Denominator: Weighted average shares outstanding - Basic and diluted 65,265,397 56,084,858 Net loss per share - Basic and diluted $ ( 0.75 ) $ ( 0.79 ) For the years ended December 31, 2023 and 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: As of December 31, 2023 2022 Shares to be issued (Note 17): - 3 % Holdback shares — 1,665,000 - Private placement 2,643,300 — - Settlement of accrued salary 2,210,984 — Public and private warrants (Note 17) 4,825,000 4,825,000 Warrant – Class A (Note 17) 528,660 — Shares award outstanding (Note 17) 1,309,728 5,946,100 Total 11,517,672 12,436,100 NOTE 20 — INCOME TAX EXPENSE The provision for income tax expense consisted of the following: For the years ended December 31, 2023 2022 Current tax $ 332,275 $ 118,073 Deferred tax ( 45,737 ) 6,532 Income tax expense $ 286,538 $ 124,605 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. For the years ended December 31, 2023 and 2022, Hong Kong profits tax is calculated in accordance with the two-tiered profits tax rates regime. The applicable tax rate for the first HK$ 2 million of assessable profits is 8.25 % and assessable profits above HK$ 2 million will continue to be subject to the rate of 16.5 % for corporations in Hong Kong, effective from the year of assessment 2018/2019. F- 38 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The reconciliation of income tax rate to the effective income tax rate based on loss before income tax expense for the years ended December 31, 2023 and 2022 are as follows: For the years ended December 31, 2023 2022 Loss before income taxes $ ( 48,919,481 ) $ ( 44,396,030 ) Statutory income tax rate 16.5 % 16.5 % Income tax expense at statutory rate ( 8,071,714 ) ( 7,325,345 ) Income not subject to taxes ( 2,563,028 ) ( 71,468 ) Non-deductible items: - Share based compensation 1,853,779 344,640 - Investment loss 1,135,013 1,474,676 - Change in fair values — 888,251 Under provision of prior years 220,570 31,284 Change in valuation allowance 7,732,994 4,822,582 Tax holiday ( 21,076 ) ( 21,838 ) Other — ( 18,177 ) Income tax expense $ 286,538 $ 124,605 The following table sets forth the significant components of the deferred tax liabilities and assets of the Company as of December 31, 2023 and 2022: As of December 31, 2023 2022 Deferred tax liabilities: Accelerated depreciation $ — $ 45,858 Deferred tax liabilities $ — $ 45,858 As of December 31, 2023 2022 Deferred tax assets, net: Net operating loss carryforwards $ 8,909,692 $ 5,461,370 Less: valuation allowance ( 8,909,692 ) ( 5,461,370 ) Deferred tax assets, net: $ — $ — The movement of valuation allowance is as follows: For the years ended December 31, 2023 2022 Balance as of beginning of the year $ ( 5,461,370 ) $ ( 2,483,436 ) Additions ( 3,448,322 ) ( 2,977,934 ) Balance as of end of the year $ ( 8,909,692 ) $ ( 5,461,370 ) As of December 31, 2023 and 2022, the operations incurred $ 54.0 million and $ 33.1 million, respectively of cumulative net operating losses, which can be carried forward to offset future taxable income. Net operating loss can be carried forward indefinitely, but cannot be carried back to prior years. There are no group relief provisions for losses or transfers of assets under Hong Kong tax regime. Each company within a corporate group is taxed as a separate entity. The Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes that it is more likely that not all of these assets will be realized in the future. The valuation allowance is reviewed annually. Uncertain tax positions The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2023 and 2022, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2023 and 2022 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2023. F- 39 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 21 — SEGMENT INFORMATION ASC Topic 280, Segment Reporting , establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. Currently, the Company has four business segments comprised of the following products and services: 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 unsecured loans to creditworthy customers. - Providing the lending services whereby the Company makes secured and/or unsecured loans to creditworthy customers. - Solicitation of real estate sales for the developer, in exchange for commissions. Fintech Business Managing an ensemble of fintech investments Healthcare Business Managing an ensemble of healthcare-related investments 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- 40 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following tables present the summary information by segment for the years ended December 31, 2023 and 2022: For the year ended December 31, 2023 Distribution Business Platform Business Fintech Business Healthcare Business Total Revenue, net - Interest income $ — $ 157,190 $ — $ — $ 157,190 - Non-interest income 48,886,928 5,145,069 — — 54,031,997 Total revenue, net 48,886,928 5,302,259 — — 54,189,187 Commission expense 35,884,443 1,403,076 — — 37,287,519 Depreciation 1,045 232,479 27,799 — 261,323 Income (loss) from operations 5,886,741 ( 10,531,655 ) ( 39,200,408 ) — ( 43,845,322 ) Investment loss, net — — ( 6,878,869 ) — ( 6,878,869 ) Total assets as of December 31, 2023 $ 16,301,055 $ 23,546,029 $ 26,219,352 $ 522,531 $ 66,588,967 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 ) Total revenue, net 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 as of December 31, 2022 $ 3,556,198 $ 59,001,756 $ 38,140,822 $ 522,557 $ 101,221,333 All of the Company’s customers and operations are based in Hong Kong. F- 41 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 22 — 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, 2023 2022 Balance with related parties: Accounts receivable (a) $ 1,094,225 $ 272,546 Borrowings (b) $ 5,000,000 $ — Amounts due to the holding company (c) $ 2,906,261 $ 6,289,743 Long-term investment – Investment E (d) $ 522,531 $ 522,557 (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 holding company. (b) Borrowing is obtained from the Company’s major shareholder of ultimate holding company. The amount was secured, interest-bearing and repayable by the end of March 2024 (see Note 13). (c) Amounts due to the holding company are those nontrade payables arising from transactions between the Company and the holding company, such as advances made by the holding company on behalf of the Company, advances made by the Company on behalf of the holding company, and allocated shared expenses paid by the holding company. During the years ended December 31, 2023 and 2022, amounts due to the holding company of $ 12.6 million and $ 6.0 million, respectively, were forgiven (see Note 17). (d) The Company purchased 4 % equity interest in Investment E from a related party in May 2021, based on historical cost. The Company has a common director with Investment E. F- 42 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In the ordinary course of business, during the years ended December 31, 2023 and 2022, the Company involved with transactions, either at cost or current market prices and on the normal commercial terms among related parties. The following table provides the transactions with these parties for the years as presented (for the portion of such period that they were considered related): For the years ended December 31, 2023 2022 Asset management service income (e) $ 970,143 $ 969,912 Commission expense (f) — 48,398 Purchase of non-marketable equity security – Investment F (g) — 9,668,568 Office rental and operating fees (h) 6,039,520 3,190,064 General and administrative expense allocated (i) 1,724 2,645,731 Legal and professional fees (j) 333,332 — Purchase of investment from the holding company (k) — 6,560,122 Purchase of office building from the holding company (l) — 5,995,249 Declaration of special dividends to the holding company (m) $ — $ 47,000,000 (e) 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 holding company, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. (f) Commission fee on insurance brokerage and asset management referral at the predetermined rate based on the service fee. (g) The Company purchased 4 % equity interest in Investment F from a related party in October 2022, based on its historical carrying amount. (h) Pursuant to the service agreement, the Company agreed to pay the office and administrative expenses to the holding company 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 holding company. Also, the holding company charged back the reimbursement of legal fee and debt collection fee in the ordinary course of business. (i) Certain amounts of general and administrative expenses were allocated by the holding company. (j) On September 19, 2023, the Company entered into an advisory services agreement with a related company, which owned by the Chairman of the Company, for a monthly fee of $ 83,333 . The service will be terminated by either party upon 90 days prior written notice. (k) The Company purchased 4,158,963 shares of Investment A from the holding company and the transaction was completed on April 20, 2022 based on the historical cost to the holding company. (l) The Company purchased an office building from the holding company in January 2022, based on its historical carrying amount. (m) 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 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 had no other significant or material related party transactions during the years presented. F- 43 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23 — RISK AND UNCERTAINTIES The Company is exposed to the following risk and uncertainties: (a) Concentration risk For the years ended December 31, 2023 and 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: For the year ended December 31, 2023 As of December 31, 2023 Customer Revenues Percentage of revenues Accounts receivable Customer A $ 14,451,772 27 % $ 1,092,414 Customer B $ 5,960,681 11 % $ 61,455 Customer C $ 5,923,008 11 % $ 1,634 For the year ended December 31, 2022 As of December 31, 2022 Customer Revenues Percentage of revenues Accounts receivable Customer D $ 6,816,652 22 % $ 305,841 Customer A $ 5,823,065 19 % $ 432,858 All of the Company’s major customers are located in Hong Kong. (b) Credit risk Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, accounts receivable, loans receivable, and notes receivable. Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$ 500,000 (approximately $ 64,050 ) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2023, cash and cash equivalents of $ 1.9 million and fund held in escrow of $ 16.8 million were maintained at financial institutions in Hong Kong, of which approximately $ 18.2 million was subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. For accounts receivable, loans receivable, and notes receivable, the Company determines, on a continuing basis, the probable losses and sets up an allowance for expected credit losses based on the estimated realizable value. Credit of money lending business is controlled by the application of credit approvals, limits and monitoring procedures. F- 44 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. To minimize credit risk, the Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances. The Company’s third-party customers that represent more than 10 % of total combined loans receivable, and their related net loans receivable balance as a percentage of total combined loans receivable, as of December 31, 2023 and 2022 were as follows: As of December 31, 2023 2022 Customer E 37.3 % 37.4 % Customer F 30.9 % 31.6 % Customer G 31.8 % 31.0 % (c) Economic and political risk The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations. (d) Exchange rate risk The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ and Sterling on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice. (e) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases. F- 45 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 24 — 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 of December 31, 2023, 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. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, the Company 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 deceit and misrepresentation from an inducement of the fund subscription and claimed for compensatory damage of approximately $ 2 million (equal to HK$ 17.1 million). The case is on-going and parties have yet to attempt mediation. Legal counsel of the Company continues to handle this matter. At this stage in the proceedings, the Company is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any. Action Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed for compensatory damage of approximately $ 1.67 million (equal to HK$ 13 million). The Company previously made $ 0.84 million as contingency loss for the year ended December 31, 2021. Parties participated in a mediation held on March 25, 2022 and negotiated for settlement through without prejudice correspondence, no settlement was reached. The case is on-going and legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, the Company is unable to determine the probability of the outcome of the matter or the range of reasonable possible loss, if any. Action Case: HCA1957/2023 On December 15, 2023, the Company received an order from the High Court of the Hong Kong Special Administrative Region, demanding the Company to pay and settle the outstanding rent/mesne profit, management fees, air-conditioning charges, additional air-conditioning charges, government rates and interest in an aggregated amount of $ 1,383,424 (equivalent to HK$ 10,799,560 ) to the landlord of the office premises in four instalments scheduled from January 15, 2024 to March 31, 2024 together with legal costs of $ 6,405 (equivalent to HK$ 50,000 ). The Company makes a provision for the 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. F- 46 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes Receivable Agreement — Pursuant to the Agreements, subject to demand, the Company is committed to subscribe the notes of Investment A with an aggregate amount of $ 1,673,525 , in batches, which are payable on or before January 31, 2024. As of December 31, 2023, the remaining committed subscription amount was $ 1,084,439 . Sale and Purchase Agreement — Pursuant to the agreement dated April 5, 2023, entered with Sony Life Singapore Pte. Ltd. (“SLS”), an independent third party, the Company is committed to purchase 100 % equity interest in Sony Life Financial Advisers Pte. Ltd. for a cash consideration of SGD 2,500,000 (equivalent to $ 1,882,000 ). On December 28, 2023, the Company and SLS entered into a second supplementary agreement to extend the closing date of the transaction from December 31, 2023 to March 31, 2024. Nasdaq Compliance — On September 20, 2023, the Company received a written notice (the “Notice”) from Nasdaq, notifying that the Company had publicly traded under $ 1.00 per share for a period of 30 consecutive trading days or more, which failed to comply with Nasdaq Listing Rule 5550(a)(2) and Nasdaq Listing Rule 5810(c)(3)(A). The Notice had no immediate effect but, before March 18, 2024, the Company was required to regain compliance by trading at least $ 1.00 per share for a minimum of 10 consecutive trading days. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. As of the date of the consolidated financial statements, the Company is still consecutively trading under $ 1.00 , directors of the Company are investigating actions, where appropriate, to regain the compliance, by March 18, 2024. On March 20, 2024, Nasdaq has granted an additional 180 calendar days period or until September 16, 2024, to the Company to regain the compliance. NOTE 25 — SUBSEQUENT EVENTS On January 3, 2024, the Company received a written notice from Nasdaq, notifying that the Company had not maintained a minimum Market Value of Listed Securities (“MVLS”) of at least $ 35 million, which failed to comply with Nasdaq Listing Rule 5550(b)(2). The Notice had no immediate effect but, before July 1, 2024, the Company was required to regain compliance by having a minimum MVLS of at least $ 35 million for 10 consecutive trading days. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. As of the date of the consolidated financial statements, the Company was granted by Nasdaq with an additional 180 days, by September 16, 2024 to regain the compliance. On February 5, 2024, the Company entered into a purchase and sale agreement with an independent third party to sell all of its equity interest in Investment F for a consideration of $ 2.15 million. This transaction was completed on February 19, 2024. On February 26, 2024, the Company issued 1,723,744 ordinary shares to the directors and officers of the Company to compensate the services and performance at the current market prices. On March 12, 2024 and March 22, 2024, the Company issued 2,000,000 and 105,615 ordinary shares to certain consultants to compensate their services rendered at the current market price, respectively. On March 22, 2024, the Company issued 1,900,000 ordinary shares to certain employees and advisor of the Company to compensate the services and performance at the current market price. 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, 2023, up to the date that the audited consolidated financial statements were available to be issued. F- 47 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 26 — 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, 2023 and 2022. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The following presents condensed parent company only financial information of AGBA Group Holding Limited. Condensed balance sheets As of December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 129,660 $ 85,955 Restricted cash — 15,356,580 Amounts due from the holding company 133,070 — Amounts due from subsidiaries 908,811 — Deposit, prepayments, and other receivables 453,620 1,715 Total current assets 1,625,161 15,444,250 Non-current assets: Investments in subsidiaries 13 13 Total non-current assets 13 13 TOTAL ASSETS $ 1,625,174 $ 15,444,263 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities: Other payable and accrued liabilities $ 3,738,639 $ 6,577,351 Amounts due to subsidiaries 13 13 Amounts due to the related companies — 1,327,107 Forward share purchase liability — 13,491,606 Total current liabilities 3,738,652 21,396,077 Long-term liabilities: Warrant liabilities — 4,548 Total long-term liabilities — 4,548 TOTAL LIABILITIES 3,738,652 21,400,625 Commitments and contingencies (Note 24) Shareholders’ deficit: Ordinary shares, $ 0.001 par value; 200,000,000 shares authorized, 68,661,998 and 58,376,985 shares issued and outstanding as of December 31, 2023 and 2022, respectively 68,662 58,377 Ordinary shares to be issued 4,854 1,665 Additional paid-in capital 19,507,136 1,867,335 Accumulated deficit ( 21,694,130 ) ( 7,883,739 ) Total shareholders’ deficit ( 2,113,478 ) ( 5,956,362 ) TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $ 1,625,174 $ 15,444,263 F- 48 AGBA GROUP HOLDING LIMITED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Condensed Statements of Operations For the years ended December 31, 2023 2022 Operating cost and expenses: Share-based compensation expense $ ( 9,932,762 ) $ ( 2,088,725 ) Other general and administrative expenses ( 3,764,618 ) ( 479,407 ) Total operating cost and expenses ( 13,697,380 ) ( 2,568,132 ) Loss from operations ( 13,697,380 ) ( 2,568,132 ) Other income (expense): Change in fair value of warrant liabilities 4,548 8,952 Change in fair value of forward share purchase liability ( 82,182 ) ( 5,392,293 ) Loss on settlement of forward share purchase agreement ( 378,895 ) — Sundry income 343,518 67,734 Total other expense, net ( 113,011 ) ( 5,315,607 ) Loss before income taxes ( 13,810,391 ) ( 7,883,739 ) Income tax expense — — NET LOSS $ ( 13,810,391 ) $ ( 7,883,739 ) Condensed Statement of Cash Flows For the years ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 13,810,391 ) $ ( 7,883,739 ) Adjustments to reconcile net loss to net cash used in operating activities Share-based compensation expense 9,932,762 2,088,725 Change in fair value of warrant liabilities ( 4,548 ) ( 8,952 ) Change in fair value of forward share purchase liability 82,182 5,392,293 Loss on settlement of forward share purchase agreement 378,895 — Change in operating assets and liabilities: Deposits, prepayments, and other receivables ( 17,035 ) ( 1,715 ) Other payables and accrued liabilities 1,161,288 ( 839,181 ) Net cash used in operating activities ( 2,276,847 ) ( 1,252,569 ) Cash flows from financing activities: (Repayment to) advances from related companies ( 933,655 ) 1,338,524 Settlement of forward share purchase agreement ( 13,952,683 ) — Proceeds from private placement 1,850,310 — Cash proceeds from reverse recapitalization, net of redemption — 15,356,580 Net cash (used in) provided by financing activities ( 13,036,028 ) 16,695,104 Net change in cash, cash equivalent and restricted cash ( 15,312,875 ) 15,442,535 BEGINNING OF YEAR 15,442,535 — END OF YEAR $ 129,660 $ 15,442,535 As of December 31, 2023 2022 Reconciliation to amounts on consolidated balance sheets: Cash and cash equivalents $ 129,660 $ 85,955 Restricted cash — 15,356,580 Total cash, cash equivalents and restricted cash $ 129,660 $ 15,442,535 F- 49