| LONG-TERM INVESTMENTS, NET |
NOTE 10 —
LONG-TERM INVESTMENTS, NET
Long-term investments, net consisted of the following:
| |
|
As of December 31, |
|
| |
|
Ownership interest |
|
|
2024 |
|
|
Ownership interest |
|
|
2023 |
|
| Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment C |
|
|
0.00 |
%* |
|
|
1 |
|
|
|
0.00 |
%* |
|
|
1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment A |
|
|
8.37 |
% |
|
|
5,479 |
|
|
|
8.37 |
% |
|
|
5,827 |
|
| Investment B |
|
|
3.63 |
% |
|
|
255 |
|
|
|
3.63 |
% |
|
|
342 |
|
| Investment D |
|
|
4.49 |
% |
|
|
16,621 |
|
|
|
4.47 |
% |
|
|
16,880 |
|
| Investment E, related party |
|
|
4.00 |
% |
|
|
525 |
|
|
|
4.00 |
% |
|
|
523 |
|
| Investment F (a) |
|
|
— |
|
|
|
— |
|
|
|
4.00 |
% |
|
|
2,152 |
|
| Investment G (b) |
|
|
56.93 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Investment H (c) |
|
|
3.76 |
% |
|
|
2,574 |
|
|
|
— |
|
|
|
— |
|
| Net carrying value |
|
|
|
|
|
$ |
25,455 |
|
|
|
|
|
|
$ |
25,725 |
|
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 gain (loss). Investment C was
listed and publicly traded on Nasdaq Stock Exchange.
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. 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. Notes:
| (a) | 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 approximately $2.15 million
and the transaction was completed on February 19, 2024. |
| (b) | In connection with the Merger Transaction, the Company held a 56.93%
equity interest in Bare Knuckle Fighting Championships, Inc. (“BKFC”) as of December 31, 2024. BKFC is a licensed combat sports
platform that stages live and streaming bareknuckle fighting events featuring established professionals in boxing, mixed martial arts,
kickboxing and Muay Thai. Notwithstanding the Company’s majority equity ownership, the Company determined that it did not have a
controlling financial interest and significant influence in BKFC, as it lacked the power to direct the activities that most significantly
impact BKFC’s economic performance. Based on an evaluation of BKFC’s governance structure, contractual arrangements, and actual
operating practices, strategic, operational, and financing decisions are all directed by BKFC’s founder, and BKFC operates independently
of the Company. Accordingly, the Company accounted for its investment in BKFC as a non-marketable equity security measured at cost less
impairment in accordance with ASC 321, Investments — Equity Securities. |
| | (c) |
In September 2024, the Company subscribed 285,353
Class C Units of Investment H, a Nevada limited liability private company, representing a 3.79% equity interest of Investment H as of
transfer date, for a non-cash consideration of approximately $18.5 million. The consideration was payable by the issuance of 3.56 million
shares of ordinary shares of AGBA at the current market value of 5.18 per share. Accordingly, the Company accounted for its investment
in Investment H as a non-marketable equity security measured at cost less impairment in accordance with ASC 321, Investments —
Equity Securities. (see Note 19(a)(vi))
Subsequently, the Company agreed to transfer all its
equity interest in Investment H to a consulting firm for partial settlement of consultancy services (see Note 26(vii)).
|
The following table presents the movement of non-marketable
equity securities as of December 31, 2024 and 2023:
| | |
As of December 31, | |
| | |
2024 | | |
2023 | |
| Balance at beginning of year | |
$ | 25,725 | | |
$ | 34,590 | |
| Additions | |
| 18,457 | | |
| 289 | |
| Disposal | |
| (2,152 | ) | |
| — | |
| Adjustments: | |
| | | |
| | |
| Downward adjustments | |
| (15,971 | ) | |
| (10,093 | ) |
| Foreign exchange adjustment | |
| (604 | ) | |
| 939 | |
| Balance at end of year | |
$ | 25,455 | | |
$ | 25,725 | |
Cumulative unrealized gains and losses, included
in the carrying value of the Company’s non-marketable equity securities:
| | |
As of December 31, | |
| | |
2024 | | |
2023 | |
| Downward adjustments (including impairment) | |
$ | (53,318 | ) | |
$ | (37,347 | ) |
| Upward adjustments | |
| 6,209 | | |
| 6,209 | |
| Total | |
$ | (47,109 | ) | |
$ | (31,138 | ) |
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, | |
| | |
2024 | | |
2023 | |
| Marketable equity securities: | |
| | | |
| | |
| Realized gain from sale of Investment C | |
$ | — | | |
$ | 1,544 | |
| | |
| | | |
| | |
| Non-marketable equity securities: | |
| | | |
| | |
| Unrealized losses (including impairment) – Investment F | |
| — | | |
| (9,922 | ) |
| Unrealized losses (including impairment) – Investment B | |
| (88 | ) | |
| (171 | ) |
| Unrealized losses (including impairment) – Investment H | |
| (15,883 | ) | |
| — | |
| Dividend income | |
| — | | |
| 1,670 | |
| Investment loss, net | |
$ | (15,971 | ) | |
$ | (6,879 | ) |
During
the year ended December 31, 2024, the Company recognized investment loss of approximately $16.0 million, primarily related to Investment
H. The fair value of Investment H was determined based on recent financing rounds of the investee. The Company evaluated differences
in rights and preferences of the securities transacted compared to those held by Company, as well as the timing, volume, and nature of
the transactions. Based on this evaluation, the Company concluded that the financing rounds provided observable evidence of fair value
under current market conditions.
|