UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38909

AGBA GROUP HOLDING LIMITED

(Exact name of registrant as specified in its charter)

British Virgin Islands		N/A
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

AGBA Tower

68 Johnston Road

Wan Chai, Hong Kong SAR

N/A

(Address of Principal Executive Offices)

(Zip Code)

+852 3601 8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares	AGBA	NASDAQ Capital Market
Warrants	AGBAW	NASDAQ Capital Market

As of May 15, 2024, there were 81,740,557 ordinary shares, par value $0.001 per share, issued and outstanding.

AGBA GROUP HOLDING LIMITED

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

		Page

PART I – FINANCIAL INFORMATION		1

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets	1

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	2

	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	3

	Unaudited Condensed Consolidated Statements of Cash Flows	4

	Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Control and Procedures	46

PART II – OTHER INFORMATION		47

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	47

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	48

SIGNATURES		49

PART I – FINANCIAL INFORMATION

AGBA GROUP HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	As of
	March 31, 2024			December 31, 2023
				(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,139,074		$	1,861,223
Restricted cash		15,588,916			16,816,842
Accounts receivable, net		1,749,981			2,970,636
Accounts receivable, net, related parties		892,394			1,094,225
Loans receivable, net		548,061			549,461
Notes receivable, net		412,360			557,003
Deposit, prepayments, and other receivables		1,776,069			1,769,582
Total current assets		23,106,855			25,618,972

Non-current assets:
Rental deposit, net		964,678			961,253
Loans receivable, net		1,073,444			1,054,841
Property and equipment, net		1,694,870			1,721,284
Right-of-use asset, net		11,027,961			11,508,153
Long-term investments, net		22,728,139			25,201,933
Long-term investments, net, related party		521,454			522,531
Total non-current assets		38,010,546			40,969,995

TOTAL ASSETS	$	61,117,401		$	66,588,967

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	17,896,780		$	19,754,041
Escrow liabilities		15,588,916			16,816,842
Borrowings		1,790,921			1,804,950
Borrowings, related party		5,000,000			5,000,000
Amounts due to the holding company		6,406,706			2,906,261
Income tax payable		138,554			328,720
Lease liabilities		1,246,496			1,229,329
Total current liabilities		48,068,373			47,840,143

Long-term liabilities:
Lease liabilities		10,304,995			10,646,053
Total long-term liabilities		10,304,995			10,646,053

TOTAL LIABILITIES		58,373,368			58,486,196

Commitments and contingencies (Note 18)

Shareholders’ equity:
Ordinary shares, $0.001 par value; 200,000,000 shares authorized, 74,391,357 and 68,661,998 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		74,391			68,662
Ordinary shares to be issued		5,320			4,854
Additional paid-in capital		76,607,535			74,103,494
Accumulated other comprehensive loss		(281,827	)		(473,087	)
Accumulated deficit		(73,661,386	)		(65,601,152	)
Total shareholders’ equity		2,744,033			8,102,771

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	61,117,401		$	66,588,967

See accompanying notes to unaudited condensed consolidated financial statements.

AGBA GROUP HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Three months ended March 31,
	2024			2023
Revenues:
Interest income:
Loans	$	41,317		$	38,158
Total interest income		41,317			38,158
Non-interest income:
Commissions		6,722,758			10,015,627
Recurring asset management service fees		650,086			780,962
Recurring asset management service fees, related party		242,130			238,933
Total non-interest income		7,614,974			11,035,522
Total revenues		7,656,291			11,073,680

Operating expenses:
Interest expense		(207,222	)		(165,096	)
Commission expense		(4,446,242	)		(7,295,492	)
Sales and marketing expense		(482,874	)		(1,856,903	)
Research and development expense		(458,338	)		(878,986	)
Personnel and benefit expense		(6,058,989	)		(9,605,190	)
Legal and professional fee		(875,111	)		(3,395,440	)
Allowance for expected credit losses		(991,338	)		—
Other general and administrative expenses		(1,998,044	)		(2,460,381	)
Total operating expenses		(15,518,158	)		(25,657,488	)

Loss from operations		(7,861,867	)		(14,583,808	)

Other income (expense):
Interest income		12,597			170,526
Foreign exchange (loss) gain, net		(227,341	)		556,311
Investment (loss) income, net		(37,356	)		1,723,064
Change in fair value of warrant liabilities		—			680
Change in fair value of forward share purchase liability		—			(82,182	)
Rental income		14,066			59,507
Sundry income		77,188			56,644
Total other (expense) income, net		(160,846	)		2,484,550

Loss before income taxes		(8,022,713	)		(12,099,258	)

Income tax (expense) benefit		(37,521	)		26,648

NET LOSS	$	(8,060,234	)	$	(12,072,610	)

Other comprehensive income (loss):
Foreign currency translation adjustment		191,260			(133,204	)

COMPREHENSIVE LOSS	$	(7,868,974	)	$	(12,205,814	)

Weighted average number of ordinary shares outstanding – basic and diluted		70,111,578			60,670,198

Net loss per ordinary share – basic and diluted	$	(0.11	)	$	(0.20	)

See accompanying notes to unaudited condensed consolidated financial statements.

AGBA GROUP HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Currency expressed in United States Dollars (“US$”), except for number of shares)

			For the three months ended March 31, 2024
			Ordinary shares				Ordinary shares to be issued						Additional		Accumulated other comprehensive						Total
	Note		No. of shares		Amount		No. of shares			Amount			paid-in capital		(loss) income			Accumulated deficit			shareholders’ equity

Balance as of January 1, 2024				68,661,998	$	68,662		4,854,284		$	4,854		$	74,103,494	$	(473,087	)	$	(65,601,152	)	$	8,102,771

Issuance of ordinary shares to management team		12(v)		435,484		435		(435,484	)		(435	)		—		—			—			—
Issuance of ordinary shares to settle finder fee		12(ii)		1,000,000		1,000		—			—			402,000								403,000
Share-based compensation		12(i), (iii), (iv), (vi)		4,293,875		4,294		900,899			901			2,102,041		—			—			2,107,236
Foreign currency translation adjustment				—		—		—			—			—		191,260			—			191,260
Net loss for the period				—		—		—			—			—		—			(8,060,234	)		(8,060,234	)

Balance as of March 31, 2024				74,391,357	$	74,391		5,319,699		$	5,320		$	76,607,535	$	(281,827	)	$	(73,661,386	)		2,744,033

	For the three months ended March 31, 2023
	Ordinary shares				Ordinary shares to be issued				Additional		Accumulated other						Total
	No. of shares		Amount		No. of shares		Amount		paid-in capital		comprehensive loss			Accumulated deficit			shareholders’ equity

Balance as of January 1, 2023		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		2,173,913		2,174		—		—		3,997,826		—			—			4,000,000
Share-based compensation		1,200,000		1,200		—		—		3,905,400		—			—			3,906,600
Forgiveness of amount due to the holding company		—		—		—		—		3,000,000		—			—			3,000,000
Foreign currency translation adjustment		—		—		—		—		—		(133,204	)		—			(133,204	)
Net loss for the period		—		—		—		—		—		—			(12,072,610	)		(12,072,610	)

Balance as of March 31, 2023		61,750,898	$	61,751		1,665,000	$	1,665	$	54,773,534	$	(518,142	)	$	(28,467,743	)		25,851,065

See accompanying notes to unaudited condensed consolidated financial statements.

AGBA GROUP HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars (“US$”))

	For the three months ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(8,060,234	)	$	(12,072,610	)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation expense		1,748,281			3,906,600
Non-cash lease expense		641,952			—
Depreciation of property and equipment		22,878			101,172
Interest income on notes receivable		(11,454	)		—
Interest expense on borrowings		207,222			—
Foreign exchange (gain) loss, net		227,341			(556,311	)
Investment loss (income), net		37,356			(1,723,064	)
Gain on disposal of property and equipment		(15,345	)		—
Allowance for expected credit losses		991,338			—
Change in fair value of warrant liabilities		—			(680	)
Change in fair value of forward share purchase liability		—			82,182

Change in operating assets and liabilities:
Accounts receivable		1,180,031			(468,190	)
Loans receivable		(17,203	)		9,721
Deposits, prepayments, and other receivables		(244,813	)		(515,863	)
Accounts payable and accrued liabilities		(1,661,484	)		1,227,534
Escrow liabilities		(1,227,926	)		(24,067	)
Lease liabilities		(484,808	)		—
Income tax payable		(190,166	)		(163,287	)

Net cash used in operating activities		(6,857,034	)		(10,196,863	)

Cash flows from investing activities:
Proceeds from sale of long-term investments		2,152,251			3,969,764
Purchase of convertible note receivable		—			(589,086	)
Dividend received from long-term investments		—			608,714
Proceeds from disposal of property and equipment		15,345			—

Net cash provided by investing activities		2,167,596			3,989,392

Cash flows from financing activities:
Advances from the holding company		3,500,445			1,684,101
Proceeds from borrowings		—			1,783,521

Net cash provided by financing activities		3,500,445			3,467,622

Effect on exchange rate change on cash, cash equivalents and restricted cash		238,918			81,849

Net change in cash, cash equivalent and restricted cash		(950,075	)		(2,658,000	)

BEGINNING OF PERIOD		18,678,065			51,294,072

END OF PERIOD	$	17,727,990		$	48,636,072

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes	$	227,112		$	128,816
Cash received from interest	$	1,143		$	170,526
Cash paid for interest	$	65,270		$	165,096

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING ACTIVITIES
Issuance of ordinary shares to settle payables	$	403,000		$	4,000,000
Forgiveness of amount due to the holding company	$	—		$	3,000,000

	As of
	March 31, 2024		March 31, 2023
Reconciliation to amounts on unaudited condensed consolidated balance sheets:
Cash and cash equivalents	$	2,139,074	$	3,653,778
Restricted cash		15,588,916		44,982,294

Total cash, cash equivalents and restricted cash	$	17,727,990	$	48,636,072

See accompanying notes to unaudited condensed consolidated financial statements.

AGBA GROUP HOLDING LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Currency expressed in United States Dollars (“US$”))

NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

AGBA Group Holding Limited (“AGBA” or the “Company”) is incorporated on October 8, 2018 in British Virgin Islands.

The Company, through its subsidiaries, is operating a wealth and health platform, offering a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, lending, and real estate in overseas. AGBA is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing.

The accompanying unaudited condensed consolidated financial statements of the Company are presented in United State dollars (“US$” or “$”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2023 derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 28, 2024.

The unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2024 and 2023, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.

●

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the financial statements of AGBA and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between AGBA and its subsidiaries are eliminated upon consolidation.

●

Use of Estimates and Assumptions

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for expected credit losses, notes receivable, share-based compensation, provision for contingent liabilities, revenue recognition, 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 unaudited condensed consolidated statements of operations and comprehensive loss.

The reporting currency of the Company is United States Dollar (“US$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the unaudited condensed consolidated statements of changes in shareholders’ equity.

Translation of amounts from HK$ into US$ has been made at the following exchange rates for the three months ended March 31, 2024 and 2023:

	March 31, 2024		March 31, 2023
Period-end HK$:US$ exchange rate		0.12781		0.12739
Period average HK$:US$ exchange rate		0.12788		0.12759

●

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 consists of funds held in escrow accounts reflecting the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers. The Company currently acts 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.

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.

●

Loans Receivable, net

Loans receivable, net are related to residential mortgage loan 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 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 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 three months ended March 31, 2024 and 2023, the aggregated allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, and other receivables was $991,338 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.

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 Topic360, 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 cashflows 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 three months ended March 31, 2024 and 2023.

●

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 unaudited condensed consolidated statements of operations and comprehensive loss.

●

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations and comprehensive loss. The Company accounts for its Public Warrants as equity and the Private Warrants as liabilities.

●

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. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the commission price. Therefore, commissions are recorded at point in time when the investment product is purchased.

The Company also facilitates the arrangement between insurance providers and individuals or businesses by providing insurance placement services to the insureds, and is compensated in the form of commissions from the respective insurance providers. The Company primarily facilitates the placement of life, general and MPF insurance products. The Company determines that insurance providers are the customers.

The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy).

In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed.

Recurring 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 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 unaudited condensed consolidated statement of operations and comprehensive loss. The Company does not charge prepayment penalties from its customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of interest income on mortgage loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 180 days delinquent.

Disaggregation of Revenue

The Company has disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation revenue categories presented on the unaudited condensed consolidated statements of operations and comprehensive loss for the periods indicated:

	For the three months ended March 31, 2024
	Distribution Business		Platform Business
	Insurance brokerage service		Asset management service		Money lending service		Real estate agency service		Total

Interest income:
Loans	$	—	$	—	$	41,317	$	—	$	41,317

Non-interest income:
Commissions		6,415,020		307,738		—		—		6,722,758
Recurring asset management service fees		—		892,216		—		—		892,216

	$	6,415,020	$	1,199,954	$	41,317	$	—	$	7,656,291

	For the three months ended March 31, 2023
	Distribution Business		Platform Business
	Insurance brokerage service		Asset management service		Money lending service		Real estate agency service		Total

Interest income:
Loans	$	—	$	—	$	38,158	$	—	$	38,158

Non-interest income:
Commissions		9,687,819		323,762		—		4,046		10,015,627
Recurring asset management service fees		—		1,019,895		—		—		1,019,895

	$	9,687,819	$	1,343,657	$	38,158	$	4,046	$	11,073,680

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Rental Income

Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement.

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Comprehensive Loss

ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of shareholder’s equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

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Employee Benefits

Full time employees of the Hong Kong subsidiaries participate in a defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Contributions are made by both the employer and the employee at the rate of 5% on the employee’s relevant salary, subject to a salary cap of $3,846 (HK$30,000).

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Income Taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the three months ended March 31, 2024 and 2023, the Company did not have any interest and penalties associated with tax positions. As of March 31, 2024 and December 31, 2023, 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.

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Share-Based Compensation

The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, Stock Compensation. The Company grants share awards, including ordinary shares and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the ordinary shares on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award.

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Net Loss Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC Topic 260”). ASC Topic 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net (loss) income divided by the weighted average ordinary share outstanding for the year. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

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Segment Reporting

ASC Topic 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.

The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has the following operating segments:

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 three months ended March 31, 2024 and 2023 and all of the Company’s non-current assets were located in Hong Kong as of March 31, 2024 and December 31, 2023.

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Leases

The Company follows ASC Topic 842, Leases (“ASC Topic 842”), utilizing the modified retrospective transition method with no adjustments to comparative periods presented. On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (ASC Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the unaudited condensed consolidated balance sheets 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 in the unaudited condensed consolidated statements of operations and comprehensive loss and statements of cash flows. ASC Topic 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the FASB including ASC Topic 840, Leases.

When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASU 2016-02: (i) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements; and (ii) the Company elected to apply the package of practical expedients for existing arrangements entered into prior to January 1, 2021 to not reassess (a) whether an arrangement is or contains a lease, (b) the lease classification applied to existing leases, and (c) initial direct costs. The Company has not entered any lease agreements with lease terms of 12 months or less during the three months ended March 31, 2024 and year ended December 31, 2023. 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.

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Related Parties

The Company follows ASC Topic 850-10, Related Party (“ASC 850”) for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC 850, the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

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Commitments and Contingencies

The Company follows ASC Topic 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

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Fair Value Measurement

The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

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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

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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 receivable, notes receivable, deposits, prepayments and other receivables, amount due to the holding company, accounts payable, escrow liabilities, borrowings and accrued liabilities 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 loan receivable approximates the carrying amount. The Company accounts for loans receivable at cost, subject to expected credit losses assessment.

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 March 31, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

Description	As of March 31, 2024		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)

Assets:
Marketable equity securities	$	966	$	966	$	—	$	—

Description	As of December 31, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)

Assets:
Marketable equity securities	$	595	$	595	$	—	$	—

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Recently Issued Accounting Pronouncements

As of March 31, 2024, the Company has implemented all applicable new accounting standards and updates issued by the FASB that were in effect. There were no new standards or updates during the three months ended March 31, 2024 that had a material impact on the unaudited condensed consolidated financial statements.

NOTE 3 — LIQUIDITY AND GOING CONCERN

The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. They do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

For the three months ended March 31, 2024, the Company reported net loss of $8,060,234 and net cash outflows from operating activities of $6,857,034. As of March 31, 2024, the Company had an accumulated deficit of $73,661,386 and cash and cash equivalents of $2,139,074.

The Company has determined that the prevailing conditions and ongoing liquidity risks encountered by the Company raise substantial doubt about the ability to continue as a going concern for at least one year following the date these unaudited condensed consolidated financial statements are issued. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement its current operating plan and fund-raising exercises. The Company believes that it will be able to grow its revenue base and control expenditures. In parallel, the Company will monitor its capital structure and operating plans and search for potential funding alternatives in order to finance the development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity or debt markets. However, the Company cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable to its shareholders. Any failure to obtain financing when required will have a material adverse impact on the Company’s business, operation and financial result. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 28, 2024, for further information about the liquidity and going concern.

NOTE 4 — RESTRICTED CASH

As of March 31, 2024 and December 31, 2023, the Company has $15,588,916 and $16,816,842 fund held in escrow, respectively. Fund held in escrow primarily comprised of escrow funds held in bank accounts on behalf of the Company’s customers. The Company is currently 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 5 - ACCOUNTS RECEIVABLE, NET

Accounts receivable, net consisted of the following:

	As of
	March 31, 2024			December 31, 2023

Accounts receivable	$	1,862,569		$	3,283,118
Accounts receivable – related parties		1,333,967			1,094,225
Less: allowance for expected credit losses		(554,161	)		(312,482	)
Accounts receivable, net	$	2,642,375		$	4,064,861

The accounts receivable due from related parties represented the management service rendered to the portfolio assets of a 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, with a credit term mutually agreed.

The following table presents the activity in the allowance for expected credit losses:

	As of
	March 31, 2024			December 31, 2023
Balance at beginning of period	$	312,482		$	94,447
Allowance for expected credit losses		242,455			217,475
Foreign translation adjustment		(776	)		560
Balance at end of period		554,161			312,482

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 current expected credit losses model, based on historical losses, current economic conditions, forecasted future economic and market considerations, and in some cases, evaluating specific customer accounts for risk of loss. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.

For the three months ended March 31, 2024 and 2023, the Company has evaluated the probable losses on the accounts receivable and made an allowance for expected credit losses of $242,455 and nil, respectively.

NOTE 6 - LOANS RECEIVABLE, NET

The Company’s loans receivable, net was as follows:

	As of
	March 31, 2024			December 31, 2023

Residential mortgage loans	$	1,622,731		$	1,605,531
Less: allowance for expected credit losses		(1,226	)		(1,229	)
Loans receivable, net		1,621,505			1,604,302

Classifying as:
Current portion	$	548,061		$	549,461
Non-current portion		1,073,444			1,054,841
Loans receivable, net	$	1,621,505		$	1,604,302

The interest rates on loans issued ranged between 9.00% and 10.50% per annum for the three months ended March 31, 2024 (For the three months ended March 31, 2023: 9.00% to 10.00%). Mortgage loans and secured by collateral in the pledge of the underlying real estate properties owned by the borrowers. As of March 31, 2024, the net carrying amount of the loans receivable was $1,621,505, which included an interest receivable of $64,041.

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 March 31, 2024 and December 31, 2023.

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 three months ended March 31, 2024 and 2023, the Company has evaluated the probable losses is minimal and there were no allowance for expected credit losses on loans receivable.

NOTE 7 - 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 amount of $1,673,525, which is 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 March 31, 2024 and December 31, 2023, the Company subscribed $589,086 notes.

As of March 31, 2024 and December 31, 2023, the net carrying amount of the notes receivable was $412,360 and $557,003, which included an interest receivable of $11,454 and $34,665, respectively.

Subsequently, the Company entered into a purchase and sale agreement with an independent third party to sell all its convertible loan notes on Investment A for a purchase price of $412,360 and the transaction was completed on April 30, 2024.

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 unaudited condensed consolidated statements of operations and comprehensive loss. For the three months ended March 31, 2024 and 2023, the Company has evaluated the probable losses on the notes receivable and made an allowance for expected credit losses of $155,026 and nil, respectively.

NOTE 8 - LONG-TERM INVESTMENTS, NET

Long-term investments, net consisted of the following:

	As of
	Ownership interest			March 31, 2024		Ownership interest			December 31, 2023

Marketable equity securities:
Investment C		0.00	%*	$	966		0.00	%*	$	595

Non-marketable equity securities:
Investment A		8.37	%		5,691,356		8.37	%		5,826,703
Investment B		3.63	%		304,000		3.63	%		342,000
Investment D		4.47	%		16,731,817		4.47	%		16,880,384
Investment E, related party		4.00	%		521,454		4.00	%		522,531
Investment F		—			—		4.00	%		2,152,251
Total					23,248,627					25,723,869

Net carrying value				$	23,249,593				$	25,724,464

*	Less than 0.001%

Investments in Marketable Equity Securities

Investments in equity securities, such as, marketable securities, are accounted for at its current market value with the changes in fair value recognized in net loss. Investment C was listed and publicly traded on Nasdaq Stock Exchange.

As of March 31, 2024 and December 31, 2023, Investment C was recorded at fair value of $966 and $595, which were traded at a closing price of $14.87 and $9.15 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.

On February 5, 2024, the Company entered into a purchase and sale agreement with an independent third party to sell all its equity interest in Investment F for a purchase price of $2.15 million and the transaction was completed on February 19, 2024.

The following table presents the movement of non-marketable equity securities as of March 31, 2024 and December 31, 2023:

	As of
	March 31, 2024			December 31, 2023
Balance at beginning of period	$	25,723,869		$	34,589,767
Additions		—			288,581
Disposal		(2,152,251	)		—
Adjustments:
Downward adjustments (note)		(37,727	)		(10,092,729	)
Foreign exchange adjustment		(285,264	)		938,250
Balance at end of period	$	23,248,627		$	25,723,869

Cumulative unrealized gains and losses, included in the carrying value of the Company’s non-marketable equity securities:

	As of
	March 31, 2024			December 31, 2023

Downward adjustments (including impairment)	$	(37,385,056	)	$	(37,347,329	)
Upward adjustments		6,209,357			6,209,357
Total	$	(31,175,699	)	$	(31,137,972	)

Investment (loss) income, net is recorded as other expense in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss, and consisted of the following:

	For the three months ended March 31,
	2024			2023
Marketable equity securities:
Unrealized gain from the changes in fair value – Investment C	$	371		$	266
Realized gain from sale of Investment C		—			1,541,736

Non-marketable equity securities
Unrealized losses (including impairment) – Investment B		(37,727	)		—
Unrealized losses (including impairment) – Investment F		—			(427,652	)
Dividend income		—			608,714
Investment (loss) income, net	$	(37,356	)	$	1,723,064

Note:

Downward adjustments represent unrealized losses (including impairment) of Investment B of $37,727 for the three months ended March 31, 2024 (For the three months ended March 31, 2023: unrealized loss (including impairment) of Investment F of $427,652).

NOTE 9 - BORROWINGS

	As of
	March 31, 2024		December 31, 2023

Mortgage borrowings	$	1,790,921	$	1,804,950
Short-term borrowings, related party		5,000,000		5,000,000
Total		6,790,921		6,804,950

Mortgage Borrowings

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. The Company is currently in negotiations for an extension on the repayment of mortgage loans with the lender. At the date of filing, both parties have not reached into the mutual agreement.

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, February 2024 and April 2024, the Company entered into certain supplementary agreements to renew and extend the maturity to November 2023, December 2023, January 2024, March 2024, April 2024, and May 2024, respectively.

NOTE 10 - 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.

The Company entered into a commercial operating lease with an independent third party for the use of an office in Hong Kong. The lease has an original term exceeding 1 year, but not more than 3 years with an option to renew a further term of 3 years. At lease inception, after consideration, the Company was certain that the renewal option would be exercised, after the original term. The operating lease is included in “Right-of-use asset, net” on the unaudited condensed consolidated balance sheets and represents the Company’s right to use the underlying asset during the lease term. The Company’s obligation to make lease payments are included in “Lease liabilities” on the unaudited condensed consolidated balance sheets.

Supplemental balance sheet information related to the operating lease was as follows:

	As of
	March 31, 2024		December 31, 2023
Operating lease:
Right-of-use asset	$	12,531,247