mF International Ltd 6-K, filed Oct 16, 2024
mF International Ltd (MFI)
About this 6-K
mF International Ltd filed this 6-K on October 16, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For
the month of October
Commission
File Number:
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
mF International Limited, a British Virgin Islands company (the “Company”), is furnishing its unaudited condensed consolidated financial statements and notes for the six months ended June 30, 2024 and 2023. The financial statements and notes are attached as Exhibit 99.1 to this report of foreign private issuer on Form 6-K, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2024 is attached as Exhibit 99.2 to this report of foreign private issuer on Form 6-K.
On October 15, 2024, the Company issued a press release announcing its unaudited financial results for the six months ended June 30, 2024 and 2023, a copy of which press release is attached as Exhibit 99.3 to this report of foreign private issuer on Form 6-K.
Entry into Two Business Development and Marketing Consulting Agreements
As previously reported on a Current Report on Form 6-K filed by the Company with the Securities and Exchange Commission on May 31, 2024, on May 20, 2024, the Company entered into a business development and marketing consulting agreement (the “Malaysia Consulting Agreement”) with CAKL Holdings Sdn Bhd, a Malaysian company that specializes in marketing and business development in Malaysia (the “Malaysian Consultant”). Pursuant to the Malaysia Consulting Agreement, the Company has agreed to pay the Malaysian Consultant an aggregate of US$700,000 as compensation, and the Malaysian Consultant has agreed, for a period of two years, to provide consulting services to the Company, including, but not limited to, assisting the Company in business expansion and evaluating marketing strategy, formulating and executing sales strategies, conducting market research and data collection to support the Company’s business planning, providing professional planning and advertising promotion schemes to attract potential clients for the Company, negotiating joint market development programs with clients from Southeast Asia on behalf of the Company, communicating with relevant government agencies in Southeast Asia on behalf of the Company to obtain necessary approvals, assisting the Company in negotiating contracts with potential clients and other matters related to sales and business expansion.
On May 22, 2024, the Company entered into a business development and marketing consulting agreement (the “China Consulting Agreement”) with Shenzhen Yijincheng Business Consulting Co., Ltd., a Chinese company that specializes in marketing and business development in China (the “Chinese Consultant”). Pursuant to the China Consulting Agreement, the Company has agreed to pay the Chinese Consultant an aggregate of US$900,000 as compensation, and the Chinese Consultant has agreed, for a period of two years, to provide consulting services to the Company, including, but not limited to, assisting the Company in business expansion and evaluating marketing strategy, formulating and executing sales strategies, conducting market research and data collection to support the Company’s business planning, providing professional planning and advertising promotion schemes to attract potential clients for the Company, negotiating joint market development programs with clients from China on behalf of the Company, communicating with relevant government agencies in China on behalf of the Company to obtain necessary approvals, assisting the Company in negotiating contracts with potential clients and other matters related to sales and business expansion in China.
The foregoing descriptions of the Malaysia Consulting Agreement and the China Consulting Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Malaysia Consulting Agreement and the China Consulting Agreement, copies of which are filed herewith as Exhibit 10.1 and Exhibit 10.2 and are incorporated by reference herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| mF International Limited | ||
| Date: October 15, 2024 | By: | /s/ Chi Weng Tam |
| Name: | Chi Weng Tam | |
| Title: | Chief Executive Officer and Executive Director | |
EXHIBIT INDEX
Exhibit 10.1
Business Development & Marketing Consulting Agreement
(This Agreement shall supersede and replace any and all prior agreements executed between Party A and Party B on April 16th, 2024.)
Party A
mF International Ltd (Hereinafter referred to as “Party A”, “MFI”)
Party B:
CAKL Holdings Sdn Bhd (Hereinafter referred to as “Party B”, “CAKL”)
Party A is a publicly listed company on Nasdaq in the United States, with the stock ticker MFI. Party B is a consulting company based in Malaysia specializing in marketing and business development. Party A has decided to hire Party B as a consultant for business development, market expansion, sales channel establishment, marketing strategies, and product planning, etc. Party B also agrees to act as a consultant for Party A.
Scope of Service
Party B agrees to provide consulting services for Party A as follows:
| ● | Assist Party A in business expansion and evaluation of marketing strategy. | |
| ● | Formulate and execute sales strategies and make adjustments based on results. | |
| ● | Conduct market research and data collection to support Party A’s business planning. | |
| ● | Provide professional planning and advertising promotion schemes to attract more potential clients for Party A. | |
| ● | Negotiate joint market development programs with clients from Southeast Asia on behalf of Party A. | |
| ● | Communicate with relevant government agencies on behalf of Party A to obtain necessary approvals. | |
| ● | Assist Party A in negotiating contracts with potential clients. | |
| ● | Other matters related to sales and business expansion. |
Service Period
The service period between both Parties will be two years, from May 20th, 2024, to May 19th, 2026. After the service expires, this Agreement can be extended for an additional 6 months upon written agreement by both parties.
Conflict of interest
During the term of the agreement with Party B, Party A has the right to request services from Party B during reasonable working hours. However, Party B not only provides services to Party A, but also has the right to provide corresponding services to other entities and individuals. If the services provided by Party B to other individuals or entities conflict or contradict with this agreement in terms of commercial interests to a certain extent, Party B must promptly notify Party A in writing. Upon receiving the notice, Party A has the right to decide whether to continue to fulfill this agreement with Party B. If Party A does not raise objections within seven days after receiving the notice, it implies that Party A allows Party B to engage in other business activities and agrees that Party B continues to provide services to other parties.
Party B’s right
Party B has no right to sign any agreement, contract, or letter of intent on behalf of Party A. Unless Party A issues a written authorization, Party B has no right to represent Party A or assume any legal rights and responsibilities on behalf of Party A.
Compensation
Party A agrees to pay Party B a compensation of $700,000 (SEVEN HUNDRED THOUSAND USD) for the two years term of Agreement. The compensation can be paid to Party B, or to the company or individual designated by Party B.
Confidentiality and non-Passover Clause
In this agreement, “Confidential Information” refers to any information disclosed by the disclosing party to the recipient party that is considered confidential (whether in written, oral, electronic document, samples, specimens, computer programs, or any other form), or any information and data related to the project obtained by the recipient party during project negotiations or obtained by the recipient party during the project, which is not known to the public, or any information and data that is exclusive or confidential to the target party in the project process. This includes but is not limited to any information and data related to the project, as well as any information related to the disclosing party’s strategies, operations, methods, systems, processes, plans or intentions, intellectual property rights, trade secrets, market opportunities, business or financial matters. Party B agrees to strictly observe the confidentiality of Party A’s business, operations, or prospects. Without prior consent from Party A, Party B shall not disclose Party A’s trade secrets and other confidential information to any third party, except Party A’s lawyers, auditors, commercial and investment banks.
Written Modification
Any modification of this Agreement shall come into force only after it is confirmed in writing by both parties.
Copies of the Agreement
This Agreement is made in duplicate. Each copy can be regarded as the original copy of the contract. Both parties can exchange the original copies by fax or other electronic signing methods such as Email. All copies signed by fax or other electronic signing methods will be regarded as the original copies and shall take effect immediately.
Governing Law and Dispute Resolution
This agreement is governed by the laws of the Hong Kong Special Administrative Region. The establishment, validity, interpretation, performance, and resolution of disputes arising from this agreement shall be governed by the laws of the Hong Kong Special Administrative Region.
Payment Instruction
Company Name:
Account Number
USD：
HKD：
Bank Name:
Bank Code:
Swift Code:
Bank Address:
Signature
If both parties understand and agree to the above terms, please sign at the designated place in this Agreement. This Agreement shall take effect immediately upon the signatures of both parties.
This page is for signature and has no legal content.
Party A: mF International Limited
Authorized Representative:
Signature _________________________
Date of Signing: May 20th, 2024
Party B: CAKL Holdings Sdn Bhd
Authorized Representative:
Signature _________________________
Date of Signing: May 20th, 2024
Exhibit 10.2
Business Development & Marketing Consulting Agreement
(This Agreement shall supersede and replace any and all prior agreements executed between Party A and Party B on April 16th, 2024, and April 29, 2024.)
Party A
mF International Ltd (Hereinafter referred to as “Party A”, “MFI”)
Party B:
Shenzhen Yijincheng Business Consulting Co., Ltd. (Hereinafter referred to as “Party B”, “Yijincheng”)
Party A is a publicly listed company on Nasdaq in the United States, with the stock ticker MFI. Party B is a national marketing and business development consulting firm located in Shenzhen, China. Party A has decided to hire Party B as a consulting advisor for business development, market expansion, sales channel construction and marketing strategies in mainland China. Party B also agrees to serve as Party A’s consulting advisor.
Scope of Services
Party B agrees to provide the following consulting services to Party A:
| ● | Assist Party A in business expansion and evaluation of marketing strategy proposals. | |
| ● | Formulate and execute sales strategies, and make adjustments based on results. | |
| ● | Conduct market research and data collection to support Party A’s business planning. | |
| ● | Provide professional planning and advertising promotion proposals to attract more potential customers. | |
| ● | Represent Party A in negotiations with clients in mainland China for joint market development. | |
| ● | Communicate with relevant government agencies on behalf of Party A to obtain necessary approvals. | |
| ● | Assist Party A in contract negotiations with potential clients. | |
| ● | Other sales and business development matters. |
Term of Service
The service term for the cooperation between both parties is 2 years, from May 22, 2024, to May 21, 2026. Upon expiration of the service term, this Agreement may be extended for an additional 6 months with written consent from both parties.
Conflict of interest
During the term of this Agreement, Party A has the right to request services from Party B within reasonable working hours. However, Party B not only provides exclusive services to Party A but also has the right to provide corresponding services to other companies and individuals. If the services provided by Party B to other individuals or entities conflict or have certain business interests with this Agreement, Party B must promptly notify Party A in writing. After receiving the notification, Party A has the right to decide whether to continue the performance of this Agreement. If Party A does not raise any objections within seven days of receiving this notification, it will be deemed that Party A allows Party B to engage in other business and agrees to Party B continuing to provide services to others.
Authority of Party B
Party B shall not have the authority to sign any agreements, contracts, or letters of intent on behalf of Party A. Unless Party A provides written authorization, Party B shall not represent Party A or assume any legal responsibilities on behalf of Party A.
Compensation
Party A agrees to pay Party B a fee of $900,000. The payment can be made to Party B or to a company or individual designated by Party B.
Any other expenses incurred by Party B, including but not limited to personnel expenses, travel expenses, communication, taxes, etc., shall be borne entirely by Party B.
Confidentiality and Non-Disclosure Terms
In this agreement, “Confidential Information” refers to any information disclosed by the disclosing party that is considered confidential (whether in written, oral, electronic document, sample, template, calculation program, or any other form), or any information related to the project that the receiving party obtains during negotiations that is not publicly known, or any proprietary or confidential information pertaining to Party A that the receiving party becomes aware of during the project. This includes, but is not limited to, any information and materials related to the project, as well as any disclosing party’s strategies, operations, methods, systems, processes, plans or intentions, intellectual property, trade secrets, market opportunities, business, or financial matters. Party B agrees to keep confidential all information regarding Party A’s business, operations, or prospects, and shall not disclose Party A’s trade secrets and other confidential information to any third party without Party A’s prior consent, except to Party A’s lawyers, auditors, business and investment banks.
Written Modifications
Any changes to this Agreement must be confirmed in writing by both parties to take effect.
Copies of the Agreement
This Agreement is made in two copies, each of which can be regarded as the original. The signing parties may exchange the originals via fax or other electronic signing methods such as email. All faxed signatures or other electronically signed agreements will be considered originals and take effect immediately.
Governing Law and Dispute Resolution
This agreement shall be governed by the laws of the Hong Kong Special Administrative Region. The establishment, validity, interpretation, performance, and resolution of disputes arising from this agreement shall be subject to the laws of the Hong Kong Special Administrative Region.
Payment Instruction
**HKD Account (Hong Kong Dollars)**
Account Name:
Account Number:
Bank Name:
Bank SWIFT Code:
**USD Account (US Dollars)**
Account Name:
Account Number:
Bank Name:
Bank SWIFT Code:
Signature
If both parties understand and agree to the above terms, please sign at the designated place in this Agreement. This Agreement shall take effect immediately upon the signatures of both parties.
This page is for signature and has no legal content.
Party A: mF International Limited
Authorized Representative:
| Signature | ||
| Date of Signing: May 22th, 2024 | ||
Party B: Shenzhen Yijincheng Business Consulting Co., Ltd.
Authorized Representative:
| Signature | ||
| Date of Signing: May 22th, 2024 | ||
Exhibit 99-1
mF INTERNATIONAL LIMITED AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2023 and June 30, 2024
| HK$ | HK$ | US$ | ||||||||||
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash | ||||||||||||
| Restricted cash | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepaid expenses, current | ||||||||||||
| Deposits and other current assets | ||||||||||||
| Investment at fair value | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Operating lease right-of-use assets | ||||||||||||
| Prepaid expenses, non-current | ||||||||||||
| Long term deposit | ||||||||||||
| Deferred initial public offering (“IPO”) costs | ||||||||||||
| Total non-current assets | ||||||||||||
| Total assets | ||||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accrued expenses and other payables | ||||||||||||
| Amount due to a related party | ||||||||||||
| Bank borrowings, current | ||||||||||||
| Contract liabilities | ||||||||||||
| Operating lease liabilities, current | ||||||||||||
| Income tax payable | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Bank borrowings, non-current | ||||||||||||
| Operating lease liabilities, non-current | ||||||||||||
| Deferred tax liabilities, net | ||||||||||||
| Total non-current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Ordinary shares, authorized to issue an number of ordinary shares of par value (“Ordinary Shares”), and shares issued and outstanding as of December 31, 2023 and June 30, 2024, respectively | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
For the Six Months Ended June 30, 2023 and 2024
| HK$ | HK$ | US$ | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Revenue | ||||||||||||
| Cost of revenue | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expense | ||||||||||||
| Research and development expense | ||||||||||||
| General and administrative expense | ||||||||||||
| Total operating expenses | ||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||||||
| Realized loss on disposal of financial assets at fair value | ( | ) | ||||||||||
| Change in fair value on financial assets at fair value | ( | ) | ||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||
| Comprehensive income | ( | ) | ( | ) | ||||||||
| Weighted average shares outstanding – basic and diluted* | ||||||||||||
| Earnings (loss) per share – basic and diluted* | ) | ) | ||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended June 30, 2023 and 2024
| Shares* | Amount | Capital | Earnings | Loss | Total | |||||||||||||||||||
| For the six months ended June 30, 2023 | ||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares* | Amount | Capital | Earnings | Loss | Total | |||||||||||||||||||
| HK$ | HK$ | HK$ | HK$ | HK$ | ||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Dividend declared | - | ( | ) | ( | ) | |||||||||||||||||||
| Foreign currency translation adjustments | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ||||||||||||||||||||||
| For the six months ended June 30, 2024 | ||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in | Retained | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Loss | Total | |||||||||||||||||||
| HK$ | HK$ | HK$ | HK$ | HK$ | ||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Issuance of Ordinary Shares — initial public offer, net of issuance costs | ||||||||||||||||||||||||
| Foreign currency translation adjustments | - | |||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2023 and 2024
| HK$ | HK$ | US$ | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation of property and equipment | ||||||||||||
| Amortization of intangible assets | ||||||||||||
| Amortization of right-of-use assets and interest of lease liabilities | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Realized loss on disposal of financial assets at fair value | ||||||||||||
| Change in fair value on financial assets at fair value | ||||||||||||
| Deferred tax expense (benefit) | ( | ) | ( | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||||||
| Deposits and other current assets | ( | ) | ( | ) | ||||||||
| Accrued expenses and other payables | ( | ) | ( | ) | ( | ) | ||||||
| Contract liabilities | ||||||||||||
| Income tax payable | ( | ) | ( | ) | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ( | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Costs incurred for software development | ( | ) | ( | ) | ( | ) | ||||||
| Disposals of investment at fair value | ||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Dividend paid | ( | ) | ||||||||||
| Repayment of bank borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Deferred IPO costs | ( | ) | ||||||||||
| Proceeds from IPO, net of offering costs | ||||||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||||||
| Effect of exchange rate changes on cash and restricted cash | ( | ) | ||||||||||
| Net change in cash and restricted cash | ( | ) | ||||||||||
| Cash and restricted cash, beginning of period | ||||||||||||
| Cash and restricted cash, end of period | ||||||||||||
| Reconciliation of cash and restricted cash to the consolidated balance sheets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Total cash and restricted cash | ||||||||||||
| Supplemental disclosure information: | ||||||||||||
| Cash paid for income tax | ||||||||||||
| Cash paid for interest | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Business Description
Organization and Nature of Operations
mF International Limited (the “Company” or “mF International”) is a limited liability company established under the laws of the British Virgin Islands on June 15, 2022. It is a holding company with no business operation. The Company conducts its business mainly through its three subsidiaries in Hong Kong (collectively, the “Group”). The Group is principally engaged in research and development and sales of financial trading solutions via internet or platform as software as a service.
As of June 30, 2024, the Company has direct or indirect interests in the following subsidiaries:
Schedule of Direct or Indirect Interests of Subsidiaries
| Name | Place and date of incorporation | Ownership | Principal activity | |||
| m-FINANCE Limited (“m-FINANCE”) | ||||||
| m-FINANCE Trading Technologies Limited (“mFTT”) | ||||||
| Omegatraders Systems Limited (“OTX “) | ||||||
| m-FINANCE Software (Shenzhen) Limited (“SZ WFOE”) |
Reorganization
A reorganization of the legal structure of the Company (the “Reorganization”) was completed on August 22, 2022. Prior to the Reorganization, the Company’s main Hong Kong subsidiary, m-FINANCE, with its three subsidiaries mFTT, OTX and SZ WFOE, were ultimately controlled by Gaderway Investments Limited.
As part of the Reorganization, mF International was incorporated under the laws of the British Virgin Islands on June 15, 2022, and being interspersed between Gaderway Investments Limited and m-FINANCE. Consequently, mF International became the holding company of m-FINANCE, with its three subsidiaries on August 22, 2022. The Company and its subsidiaries resulting from Reorganization has always been under the common control of the same controlling shareholder, Gaderway Investments Limited, before and after the Reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying unaudited condensed consolidated financial statements.
| F-6 |
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Initial Public Offering
On April 24, 2024, the Company
completed its IPO of
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2024 include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flows for such interim periods. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of results to be expected for the full year of 2024. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements as of and for the years ended December 31, 2022 and 2023.
The unaudited condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Use of Estimates and Assumptions
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Significant estimates required to be made by management, include, but are not limited to, the allowance for credit losses for accounts receivable and impairment assessment for the internally developed software. Actual results could differ from those estimates.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies (Continued)
Foreign Currency Translation
The Company uses Hong Kong Dollar (“HK$”) as its reporting currency. The functional currency of the Company in British Virgin Islands is United States Dollar (“US$”). For the Company’s subsidiaries in Hong Kong, the functional currency is HK$. For the Company’s subsidiary in the PRC, the functional currency is RMB. The functional currencies are the respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”.
In the unaudited condensed consolidated financial statements, the financial information of the Company and other entities located outside of the Hong Kong has been translated into HK$. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, and expenses, gains and losses are translated using the average rate for the period. Gains or losses resulting from foreign currency transactions are included in the accompanying unaudited condensed consolidated statements of income and comprehensive income.
Convenience Translation
Translations
of amounts in the unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of income and comprehensive
income, unaudited condensed consolidated statements of changes in shareholders’ equity and unaudited condensed consolidated statements
of cash flows from HK$ into US$ as of and for the six months ended June 30, 2024 are solely for the
Investment at fair value
Investment at fair value represents the amount of short-term foreign exchange investment made by the Company involving buying the currency of one country while selling that of another with the intention to optimize a trading algorithm based on live market interactions. The management of the Company intended to retain such funds to continue making short-term foreign exchange investment in such investment accounts in the near future. Such balance is classified as current asset and measured in fair value under ASC 820. Any gain or loss arising from the transactions would be recognized in profit or loss.
Fair Value of Financial Instruments
The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
ASC 820 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash, accounts receivable, amounts due from related parties, operating lease, prepaid expenses and other current assets, contract liabilities, income taxes payable, amounts due to a related party, accrued expenses and other current liabilities approximate the fair value of the respective assets and liabilities as of December 31, 2023 and June 30, 2024 owing to their short-term nature or present value of the assets and liabilities.
The Company values its short-term investments which mainly consist of foreign exchange investment with certain brokerage companies to trade with foreign currencies, based on the quoted market value and the Company classifies the valuation techniques that use these inputs as Level 1, because the prices of the foreign currencies are quoted in the active market.
The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as shown in the following table.
Schedule of Fair Value Hierarchy
| December 31, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Balance at fair value | |||||||||||||
| HK$ | HK$ | HK$ | HK$ | |||||||||||||
| Assets | ||||||||||||||||
| Investment at fair value - Foreign exchange investment | ||||||||||||||||
| June 30, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Balance at fair value | |||||||||||||
| HK$ | HK$ | HK$ | HK$ | |||||||||||||
| Assets | ||||||||||||||||
| Investment at fair value - Foreign exchange investment | ||||||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Investment at fair value - Foreign exchange investment | ||||||||||||||||
The Company’s non-financial assets, such as property and equipment would be measured at fair value only if they were determined to be impaired.
Cash
Cash
include cash on hand and demand deposits in accounts maintained with commercial banks that can be added or withdrawn without limitation
with original maturities of less than three months. The Company maintains the bank accounts in Hong Kong. Cash balances in bank accounts
in Hong Kong are protected up to HK$
Restricted Cash
Restricted cash represents an indemnity escrow that was funded by the Company and held by the escrow agent for the purpose of satisfying the indemnification obligations of the Company pursuant to the underwriting agreement in connection with the IPO.
Accounts Receivable
On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASC 326 requires the application of a credit loss model based prospectively on current expected credit losses (CECL), and replaces the previous model based retrospectively on past incurred losses. The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost, with no material cumulative-effect adjustment to shareholders’ equity recognized as of January 1, 2023.
The
Company carries accounts receivable at the face amounts less an allowance for estimated credit losses. The Company estimated its allowance
for credit losses using relevant available information from internal and external sources relating to past events, current conditions
and reasonable and supportable forecasts. Upon the adoption of ASC 326 on January 1, 2023, the Company recorded HK$
Prepaid Expenses
Prepaid expenses represent advance payments made to the service providers for the IT solution services, insurance, legal and professional services, marketing and promotion, repair and maintenance and telecommunications. Prepaid expenses are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2023 and June 30, 2024, management believes that the Company’s prepaid expenses are not impaired.
Deferred IPO costs
Deferred
IPO costs consist primarily of direct expenses paid to attorneys, consultants, underwriters, and other parties related to the Company’s
IPO. The balance was offset with the proceeds received at the closing of the IPO. The Company completed its IPO on April 24, 2024
and reclassified its deferred offering costs, HK$
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies (Continued)
Lease
At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Company assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
The operating right-of-use assets and related operating lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease term.
The lease standard provides practical expedients for an entity ongoing accounting. The Company elected to apply the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement. Lease terms used to compute the present value of lease payments do not include any option to extend, renew or terminate the lease that the Company is not able to reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities do not include leases with a lease term of 12 months or less.
The Company did not adopt the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Non-lease components include payments for building management, utilities and property tax. It separates the non-lease components from the lease components to which they relate.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets.
Operating lease right-of-use of assets
The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Operating lease liabilities
Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Company incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Company is reasonably certain to exercise.
Lease liability is measured at amortized cost using the effective interest rate method. It is remeasured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Company’s assessment of option purchases, contract extensions or termination options.
Property and Equipment, net
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is provided for on a straight-line basis over the estimated useful lives of the related assets as follows:
Schedule of Estimated Useful Lives of Related Assets
| Computer equipment | ||
| Furniture and fixture | ||
| Office equipment | ||
| Leasehold improvements |
Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of Income and comprehensive income in other income or expenses.
The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies (Continued)
Intangible assets, net
The Company’s internally developed software is used in providing financial trading solutions services to customers and the customers access and uses the software over the internet or via a dedicated line in which an end user of the software does not take possession of the software. In accordance with ASC 350-40, internally developed software is capitalized during the application development stage. Research and development expenses related to salaries and payroll related costs for employees involved in the preliminary project stage and activities occurring after the implementation of the software are expensed as incurred. Costs incurred for software upgrades are capitalized if they result in additional functionalities or substantial enhancements. Development costs cease capitalization upon completion of all substantial testing when the software is substantially complete and ready for its intended use and are amortized on a straight-line basis over the estimated useful life, which is generally three years. Amortization of internal-use software begins when the software is ready for its intended use.
The
Company evaluates annually its intangible assets for potential impairment when events or changes in circumstances indicate that the carrying
amount of the assets may not be recoverable. There were
The estimated useful lives of intangible assets are as follows:
Schedule of Estimated Useful Lives of Intangible Assets
| Internally developed software | ||
| Software |
Impairment of Long-Lived Assets
The
Company reviews the recoverability of its long-lived assets whenever events or changes in circumstances (such as a significant adverse
change to market conditions that will impact the future use of the assets) indicate that the carrying amount of an asset may no longer
be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to
the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum
of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss,
which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. There were
Revenue Recognition
The core principle of the new revenue standard is that a company should recognize 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. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation.
The Company has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
The Company elected a practical expedient that it does not adjust the promised amount of consideration for the effects of a significant financing component if the Company expects that, upon the inception of revenue contracts, the period between when the Company transfers its promised services or deliverables to its clients and when the clients pay for those services or deliverables will be one year or less.
As a practical expedient, the Company elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.
The Company is engaged in the development and provision of financial trading solutions to customers via internet or platform as software as a service.
The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies (Continued)
The Company enters into contracts with customers that include promises to transfer various services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation.
The Company provides trading solution services to customers (including brokers and institutional clients) for their trading on forex, commodity and bullion, through the Company’s internally developed trading platform as software as a service. The Company’s internally developed software is used in providing financial trading solutions services to customers and the customers access and uses the software over the internet or via a dedicated line in which an end user of the software does not take possession of the software. The Company’s trading solution provides a variety of functions suitable for front-end transaction executions and back-office settlement operations. In a contract with a customer, it would normally require the Company to perform or delivery one or more of the following in return for a consideration. The contract normally includes one or more of the following services, subject to the request of the customers, and the transaction price of each service fee has stated stand-alone in the contract with reference to the Company’s price list. The Company identified each distinct service as a performance obligation. The recognition and measurement of revenues is based on the assessment of individual contract terms.
The Company’s principal revenue stream includes:
| (a) | Initial set up, installation and customization services |
The Company provides initial set up, installation and customization services of trading platform solution and financial value-added services for each customer as agreed upon in the contracts. Initial set up, installation and customization services are services to help the customer to configure the platform according to the needs of the customers. The Company provides specific customization as part of its development and provision of financial trading solutions. The Company’s customization services include development of customer-requested functions and features on the Company’s platform per customer specifications, i.e., the software specifications. Such services are undertaken specifically for the customer in question and do not necessarily benefit other customers.
As the initial set up, installation and customization services are capable of being distinct and the promise to transfer the service is distinct within the context of the contract, the Company concludes that the initial set up, installation and customization services to be accounted for as a single performance obligation. The entire transaction prices of initial set up, installation and customization services are allocated to a single performance obligation and the Company recognizes revenue based on its effort or inputs to the satisfaction of a performance obligation over time as work progresses because of the continuous transfer of control to the customer. The Company uses the input method to represent a reasonable measure of progress towards the satisfaction of a performance in order to estimate the portion of revenue earned.
| (b) | Subscriptions |
The Company provides customers the right to access its internally developed trading platform for the use of the trading solutions services for a specified period of time.
The Company concludes that each monthly subscription fee (1) is distinct and (2) meets the criteria for recognizing revenue over time. In addition, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the clients is substantially similar for each month. Therefore, the Company concludes that the monthly subscription fee satisfies the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation. The Company recognizes revenues from subscriptions ratably when it satisfies its performance obligations throughout the contract terms.
| (c) | Hosting, support and maintenance services |
The Company provides hosting, technical support and maintenance services to customers for the use of the trading solutions services for a specific period. The Company concludes that each monthly hosting, support and maintenance service fee (1) is distinct and (2) meets the criteria for recognizing revenue over time. In addition, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the clients is substantially similar for each month. Therefore, the Company concludes that the monthly hosting, support and maintenance service fee satisfies the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation. The Company recognizes revenues from hosting, support and maintenance services ratably when it satisfies its performance obligations throughout the contract terms.
| (d) | Liquidity services |
The Company provides liquidity services to customers for the use of the fully automatic hedging solution and sending their clients’ orders directly to liquidity providers such as institutional brokers, market makers, exchanges and prime of prime brokers. The Company’s liquidity services enable its customers to access and match with the liquidity made available by liquidity providers through the Company’s trading solutions. The liquidity services are distinct and are identified as one performance obligation. As stipulated in the contract, the Company will charge a liquidity service income based on the transaction volume of orders sent directly to the liquidity providers under the liquidity services provided by the Company, with a minimum monthly fee for certain customers. The Company will review the customers’ transaction volume of orders monthly and the revenue from providing liquidity services between customers and liquidity providers is recognized at point in time.
| (e) | White label services |
The Company provides white label services to customers by allowing them to add additional labels or brands to the trading platform services. This provides customers the highest flexibility to operate their trading platform business based on their individual business development strategy or marketing needs at a lower operating cost. The Company concludes that each monthly white label service fee at fixed rate (1) is distinct and (2) meets the criteria for recognizing revenue over time. In addition, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the clients is substantially similar for each month. Therefore, the Company concludes that the monthly white label service fee satisfies the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation. The Company recognizes revenues from white label services ratably when it satisfies its performance obligations throughout the contract terms.
| (f) | Quotes/news/package subscription services |
The Company provides subscription services to customers for professional strategy analysis, economic calendar, instant news, real-time quotes and data feed. The Company will subscribe for the information or data from the service providers and will convert the raw data into usable data that can be used in the trading platform of the Company. The Company concludes that each monthly subscription fee at a fixed rate (1) is distinct and (2) meets the criteria for recognizing revenue over time. In addition, the Company concludes that the services provided each month are substantially similar and result in the transfer of substantially similar services to the customers each month. That is, the benefit consumed by the clients is substantially similar for each month. Therefore, the Company concludes that the monthly subscription service fee satisfies the requirements of ASC 606-10-25-14(b) to be accounted for as a single performance obligation. The Company recognizes revenues from subscription services ratably when it satisfies its performance obligations throughout the contract terms.
The following table presents disaggregated information of revenues by business lines for the six months ended June 30, 2023 and 2024, respectively:
Schedule of Disaggregation Information of Revenues
| 2023 | 2024 | 2024 | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Initial set up, installation and customization services | ||||||||||||
| Subscriptions | ||||||||||||
| Hosting, support and maintenance services | ||||||||||||
| Liquidity services | ||||||||||||
| White label services | ||||||||||||
| Quotes/news/package subscription services | ||||||||||||
| Total revenue | ||||||||||||
Revenue disaggregated by timing of revenue recognition for six months ended June 30, 2023 and 2024 is disclosed in the table below:
| 2023 | 2024 | 2024 | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Point in time | ||||||||||||
| Over time | ||||||||||||
| Total revenue | ||||||||||||
The
Company also selected to apply the practical expedients allowed under ASC Topic 606 to omit the disclosure of remaining performance obligations
for contracts with an original expected duration of one year or less. There was
Cost of Revenue
The Company’s cost of revenue is primarily comprised of the amortization of the internally developed software, staff costs and other direct costs associated with providing trading solution services, including data center and support costs related to delivering online services. These costs are expenses as incurred.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies (Continued)
Contract Liabilities
The Company’s contract liabilities include payments received in advance of performance under trading solution service contracts which will be recognized as revenue as the Company executed the trading solution services with customers under the contract, as well as the deferred installation service fee received from trading solution services.
Contract Liabilities are recognized when the customers pay consideration before the Company recognizes the related revenue. Contract Liabilities would also be recognized if the Company has an unconditional right to receive consideration before the Company recognizes the related revenue.
Research and development
Research and development expenses primarily consist of payroll and other personnel-related expenses of the Company’s software development team.
Income Taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.
The Company believes there were no uncertain tax positions as of December 31, 2023 and June 30, 2024, respectively. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. In general, the Inland Revenue Department of Hong Kong has up to seven years to conduct examinations of the Company’s tax filings. Accordingly, the profits tax returns filed for the tax years from 2018 to 2023 of the Company’s Hong Kong subsidiaries remain open to examination by the taxing jurisdictions. The Company is not currently under examination by an income tax authority, nor has it been notified that an examination is contemplated.
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS are computed by dividing income available to ordinary shareholders of the Company by the weighted average ordinary shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. As of December 31, 2023 and June 30, 2024, there were no dilutive shares.
Comprehensive Income
Comprehensive income consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of foreign currency translation adjustment resulting from the Company translating its financial statements from functional currency into reporting currency.
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is 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, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.
Significant Risks
Market Risk of Financial Instruments
We are subject to financial market risks, including changes in foreign currency exchange rate risk with respect to our investments at fair value consisting of short-term foreign exchange investments made by the Company which is denominated in the US$. The fluctuation in US$ may result in increase or decrease in the value of our investments at fair value. We consider the foreign exchange risk in relation to transactions denominated in US$ with respect to HK$ is not significant as HK$ is pegged to US$.
The trades of foreign currencies conducted by the Company are denominated in the US$ and are paired with currencies with strong liquidity traded in highly transparent markets, including such currencies as the EURO, USD, GBP, CHF, AUD, CAD and NZD, etc. Fluctuation in exchange rates, changes in monetary and/or fiscal policy or inflation in the countries in which the Company paired its trades of foreign currencies could have a material adverse effect on its results of operations. The clear position limits and floating profit/loss limits are set to manage the market risks of its foreign exchange positions.
Currency Risk
The Company’s operating activities are transacted in HK$. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. The Company considers the foreign exchange risk in relation to transactions denominated in HK$ with respect to US$ is not significant as HK$ is pegged to US$.
Concentration and Credit Risk
Financial instruments that potentially subject the Company to the concentration of credit risks consist of cash and accounts receivable. The maximum exposures of such assets to credit risk are their carrying amounts as of the balance sheet dates. The Company deposits its cash with financial institutions located in Hong Kong. The Company believes that no significant credit risk exists as these financial institutions have high credit quality and the Company has not incurred any losses related to such deposits.
For the credit risk related to accounts receivable, the Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. The Company establishes an allowance for credit losses based upon estimates, factors surrounding the credit risk of specific customers and other information. The allowance amounts were immaterial for all periods presented. The management believes that its contract acceptance, billing, and collection policies are adequate to minimize material credit risk. Application for progress payment of contract works is made on a regular basis. The Company seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the management. The management considers the credit risk of prepayment to be relatively low, and there is no material impact over the initial adoption of CECL model because the advanced payments made to the service providers for the IT solution and insurance services and the vendors for certain prepaid services were mainly for the coming 12 months.
For the six months ended June 30, 2023 and 2024, all of the Company’s assets were located in Hong Kong and all of the Company’s revenues were derived from its subsidiaries located in Hong Kong. The Company has a concentration of its revenue and accounts receivable with specific customers.
For
the six months ended June 30, 2023 and 2024, no customer accounted for over
Two
customers’ accounts receivable accounted for
As
of June 30, 2024, three customers’ accounts receivable accounted for
For
the six months ended June 30, 2023 and 2024, no vendor accounted for over
As
of December 31, 2023, one supplier’s accounts payable accounted for
Interest rate risk
Fluctuations in market interest rates may negatively affect the Company’s financial condition and results of operations. The Company is exposed to floating interest rate risk on cash deposits and floating rate borrowings, and the risks due to changes in interest rates is not material. The Company has not used any derivative financial instruments to manage the interest risk exposure.
Recently Issued Accounting Standards, not yet Adopted by the Company
The ASU 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures enhances existing income tax disclosures primarily related to the rate reconciliation and income taxes paid information. With regard to the improvements to disclosures of rate reconciliation, a public business entity is required on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. Similarly, a public entity is required to provide the amount of income taxes paid (net of refunds received) disaggregated by (1) federal, state, and foreign taxes and by (2) individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures, for example, an entity is required to provide (1) pretax income (or loss) from continuing operations disaggregated between domestic and foreign, and (2) income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. ASU 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU will be effective for annual periods beginning after December 15, 2024. Entities are required to apply the ASU on a prospective basis. The adoption of ASU 2023-09 is not expected to materially impact the Company’s consolidated balance sheets, statements of income and comprehensive income, cash flows or disclosures.
The ASU 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures provides improvements to reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple measures of segment profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU should be adopted retrospectively to all periods presented in the financial statements unless it is impracticable to do so. The adoption of ASU 2023-07 is not expected to materially impact the Company’s consolidated balance sheets, statements of income and comprehensive income, cash flows or disclosures.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated balance sheets, statements of income and comprehensive income, cash flows or disclosures.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
3. Accounts Receivable, net
Accounts receivable, net consisted of the following:
Schedule of Accounts Receivable, Net
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Accounts receivable, net | ||||||||||||
The movement of allowance for credit losses was as follows:
Schedule of Allowance for Doubtful Accounts and Credit Losses
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Beginning balance | ||||||||||||
| Write off | ( | ) | ||||||||||
| Addition | ||||||||||||
| Ending balance | ||||||||||||
4. Contract Liabilities
Contract liabilities consisted of the following:
Schedule of Contract Liabilities
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Billings in advance of performance obligation under contracts | ||||||||||||
The Company’s contract liabilities include payments received in advance of performance under trading solution service contracts which will be recognized as revenue as the Company executed the trading solution services with customers under the contract, as well as the deferred installation and customization service fee received from trading solution services.
The movement in contract liabilities was as follows:
Schedule of Movement In Contract Liabilities
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Beginning balance | ||||||||||||
| Decrease in contract liabilities as a result of recognizing revenue during the year was included in the contract liabilities at the beginning of the year | ( | ) | ( | ) | ( | ) | ||||||
| Increase in contract liabilities as a result of billings in advance of performance obligation under contracts | ||||||||||||
| Ending balance | ||||||||||||
No billings in advance of performance received are expected to be recognized as income after more than one year.
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
5. Prepaid Expenses
Prepaid expenses, current, consisted of the following:
Schedule of Prepaid Expenses and Other Current Assets
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Prepaid insurance | ||||||||||||
| Prepaid legal and professional fees | ||||||||||||
| Prepaid marketing | ||||||||||||
| Prepaid repair and maintenance | ||||||||||||
| Prepaid others | ||||||||||||
| Prepaid expenses, current | ||||||||||||
Prepaid expenses, noncurrent, were comprised of the following:
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Prepaid marketing | ||||||||||||
| Prepaid repair and maintenance | ||||||||||||
| Prepaid expenses, non-current | ||||||||||||
6. Deposits and Other Current Assets
Deposits and other current assets were comprised of:
Schedule of Other Current Assts
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Utility deposits | ||||||||||||
| Other receivables | ||||||||||||
| Deposits and other current assets | ||||||||||||
Other receivables represented an amount the Company initially transferred to a payment platform for paying its service providers in the U.S. This fund transfer was returned by its banking institution on July 11, 2024.
7. Long term deposit
Schedule of Long term deposit
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Rental deposit | ||||||||||||
| Long term deposit | ||||||||||||
Long term deposit consists of the rental deposit to a lessor for the Company’s office lease agreement initially entered in 2019. In November 2023, the Company renewed its operating lease agreement with the lessor, which will expire in January 2026. The rental deposit will be refunded to the Company upon the termination or expiration of the lease agreement, as well as the delivery of the vacant leased property to the lessor by the Company. The Company intends to extend the lease agreement of the office facility. Accordingly, the deposit is classified as long-term.
8. Property and Equipment, net
Property and equipment, stated at cost less accumulated depreciation, consisted of the following:
Schedule of Property and Equipment
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Computer equipment | ||||||||||||
| Furniture and fixture | ||||||||||||
| Office equipment | ||||||||||||
| Leasehold improvements | ||||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
| Net book value | ||||||||||||
Depreciation
expense of property and equipment totalled HK$
During
the six months ended June 30, 2024, the Company disposed of a computer server with a cost of HK$
9. Intangible Assets, net
Intangible assets, stated at cost less accumulated amortization, consisted of the following:
Schedule of Intangible assets
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Software | ||||||||||||
| Internally developed software | ||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Intangible assets, net | ||||||||||||
Amortization
expense of intangible assets totalled HK$
Amortization expense expected for the next five years is as follows:
Schedule of Expected Amortization Expense
| Year ending December 31, | HK$ | US$ | ||||||
| 2024 (remaining) | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Total | ||||||||
10. Leases
The Company leases an office under a non-cancelable operating lease agreement. Pursuant to the new lease standard ASC 842-10-55, this lease is treated as an operating lease. The Company’s lease agreement does not have a discount rate that is readily determinable. The incremental borrowing rate is determined at lease commencement or lease modification and represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. This lease is on a fixed payment basis. None of the leases include contingent rentals.
Schedule of Lease Term
| Description of lease | Lease term | |
| Office at Wanchai, Hong Kong | ||
| Office at Wanchai, Hong Kong |
(a) Amounts recognized in the consolidated balance sheet:
Schedule of Operating Lease Amounts Recognized in the Consolidated Balance Sheet
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Right-of-use assets | ||||||||||||
| Operating lease liabilities - current | ||||||||||||
| Operating lease liabilities - non-current | ||||||||||||
| Weighted average remaining lease term (in years) | ||||||||||||
| Weighted average discount rate (%) | ||||||||||||
(b) A summary of lease cost recognized in the Company’s unaudited condensed consolidated statements of income and supplemental cash flow information related to operating leases for the six months ended June 30, 2023 and 2024 is as follows:
Schedule of Lease Cost
| June 30, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Operating lease expense | ||||||||||||
| Cash paid for operating leases | ||||||||||||
| Operating lease right-of-use assets, obtained in exchange for operating lease liabilities | ||||||||||||
(c) The following table shows the remaining contractual maturities of the Company’s operating lease liabilities as of June 30, 2024:
Schedule of Remaining Contractual Maturities of Operating Lease Liabilities
| HK$ | US$ | |||||||
| Year ending December 31, | ||||||||
| 2024 (remaining) | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total future lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of operating lease liabilities | ||||||||
mF International Limited and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
11. Accrued Expenses and Other Payables
Components of accrued expenses and other current liabilities are as follows:
Schedule of Accrued Expenses And Other Current Liabilities
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Accrued bonus | ||||||||||||
| Accrued commission | ||||||||||||
| Accrued legal and professional fee | ||||||||||||
| Accrued network and data services | ||||||||||||
| Accrued others | ||||||||||||
| Total accrued expenses and other payables | ||||||||||||
12. Bank Borrowings
Components of bank borrowings are as follows as of:
Schedule of Bank Borrowings
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Bank of Communications (Hong Kong) Limited – Loan 1 (1) | ||||||||||||
| Standard Chartered Bank (Hong Kong) Limited – Loan 2 (2) | ||||||||||||
| Standard Chartered Bank (Hong Kong) Limited – Loan 3 (3) | ||||||||||||
| Standard Chartered Bank (Hong Kong) Limited – Loan 4 (4) | ||||||||||||
| Total | ||||||||||||
| Less: current portion of long-term bank borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Non-current portion of long-term bank borrowings | ||||||||||||
| (1) | |
| (2) | |
| (3) | |
| (4) |
Interest
expenses pertaining to the above bank borrowings for the six months ended June 30, 2023 and 2024 amounted to HK$
Maturities of the bank borrowings were as follows:
Schedule of Maturities of the Bank Borrowings
| HK$ | US$ | |||||||
| Year ending December 31, | ||||||||
| 2024 (remaining) | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total bank borrowings repayments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total | ||||||||
13. Income Taxes
British Virgin Islands
Under the current and applicable laws of BVI, the Company is not subject to tax on income or capital gains.
China
The
Company’s subsidiary, m-FINANCE Software (Shenzhen) Limited (“SZ WFOE”), established in the PRC, is subject to PRC
Enterprises Income Tax rate of
Hong Kong
In
accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within
Hong Kong at the applicable tax rate on taxable income. From year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are
The components of the income tax provision were as follows:
Schedule of Components of the Income Tax Provision
| 2023 | 2024 | 2024 | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Current tax: | ||||||||||||
| Hong Kong | ||||||||||||
| Total current tax | ||||||||||||
| Deferred tax: | ||||||||||||
| Hong Kong | ( | ) | ( | ) | ||||||||
| Total deferred tax | ( | ) | ( | ) | ||||||||
| Total income tax expense | ( | ) | ( | ) | ||||||||
The reconciliation of statutory income tax rate to our effective income tax rate was as follows:
Schedule of Reconciliation of Statutory Income Tax Rate
| 2023 | 2024 | 2024 | ||||||||||
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Profit (loss) before income taxes | ( | ) | ( | ) | ||||||||
| Hong Kong Profits Tax rate | % | % | % | |||||||||
| Income taxes computed at Hong Kong Profits Tax rate | ( | ) | ( | ) | ||||||||
| Reconciling items: | ||||||||||||
| Tax effect of income that is not taxable | ( | ) | ( | ) | ( | ) | ||||||
| Tax effect of expenses that are not deductible (2) | ||||||||||||
| The effect of tax rates in different tax jurisdictions | ||||||||||||
| Research and development credit (1) | ( | ) | ( | ) | ( | ) | ||||||
| Tax credits | ( | ) | ( | ) | ||||||||
| Others | ||||||||||||
| Income tax expenses | ( | ) | ( | ) | ||||||||
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2023 and 2024.
| (1) |
Research
and development expenditures eligible for deduction are classified into “Type A expenditures” which are qualified for 100
per cent deduction, and “Type B expenditures” which are qualified for the enhanced tax deduction. Type B expenditures have
a two-tiered deduction regime. The deduction is 300% for the first HK$
| (2) |
14. Related Party Balance and Transactions
The following is a list of related parties which the Company has transactions with:
| (a) | Tai Wai (Stephen) Lam, a director and a shareholder of the Company. | |
| (b) | Chi Weng Tam, a director, an executive officer and a shareholder of the Company. | |
| (c) | PrimeTime Global Technologies Limited, indirectly controlled by Gaderway Investments Limited | |
| (d) | Gaderway Investments Limited, the shareholder of the Company. |
| a. | Accounts receivable – a related party |
As of December 31, 2023 and June 30, 2024, the balances of accounts receivable from a related party were as follows:
Schedule of Accounts Receivable from Related Party
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||||||
| HK$ | HK$ | US$ | ||||||||||||||
| PrimeTime Global Technologies Limited (c) | (1 | ) | ||||||||||||||
| (c) |
| (1) |
| b. | Due to a related party |
As of December 31, 2023 and June 30, 2024, the balances of amounts due to a related party were as follows:
Schedule of Amounts Due to Related Parties
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||||||
| HK$ | HK$ | US$ | ||||||||||||||
| Gaderway Investments Limited (d) | (2 | ) | ||||||||||||||
| (d) |
| (2) |
| c. | Personal guarantees from related parties for bank loans |
Tai Wai (Stephen) Lam and Chi Weng Tam, the directors and shareholders of the Company, have jointly or severally provided personal guarantees for several bank loans of the Company. For details, please refer to Note 11.
15. Shareholders’ Equity
Ordinary Shares
The
Company was established under the laws of the British Virgin Islands on June 15, 2022. The Company is authorized to issue an
number of Ordinary Shares of
On
April 22, 2024, the Company completed its IPO of Ordinary Shares at a public offering price of $ per Ordinary Share on Nasdaq
Capital Market under the symbol “MFI”. As a result of the offering, the outstanding and issued Ordinary Shares of the Company
increased to . The Company received net proceeds of $
Dividend
On
March 23, 2022, m-FINANCE declared an interim dividend of HK$ per share (equivalent to US$ per share), or HK$
On
June 30, 2022, m-FINANCE declared an interim dividend of HK$ per share (equivalent to US$ per share) or HK$
On
August 15, 2022, m-FINANCE declared an interim dividend of HK$ per share (equivalent to US$ per share) or HK$
On
March 27, 2023, the Company declared an interim dividend of HK$ per share (equivalent to US$ per share), or HK$
On
July 31, 2023, the Company declared an interim dividend of HK$ per share (equivalent to US$ per share), or HK$
16. Commitments and Contingencies
Commitments
As of June 30, 2024, the Company did not have any significant capital and other commitments.
Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made.
17. Segment Reporting
ASC 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.
Based on the management’s assessment, the Company determined that it has only one operating segment and therefore one reportable segment as defined by ASC 280. The Company’s assets are all located in Hong Kong and all of the Company’s revenue, based on the location of services, and expense are derived in the Hong Kong. Therefore, no geographical segments are presented.
18. Subsequent Events
The Company evaluated all events and transactions that occurred after June 30, 2024 up through the date the Company issued the unaudited condensed consolidated financial statements. There was no subsequent event occurred that would require recognition or disclosure in the Company’s unaudited condensed consolidated financial statements.
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information in this report contains forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Disclosure Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors.
Overview
mF International Limited (“the Company”, “it”, “its”, “we”, “our”, “us”) is a BVI holding company with three Hong Kong-based subsidiaries providing financial trading solutions by principally engaging in research and development and sales of financial trading solutions. m-FINANCE Limited, our principal operating subsidiary (“m-FINANCE,” and, together with m-FINANCE Trading Technologies Ltd., a Hong Kong company (“mFTT”), and Omegatraders Systems Limited, a Hong Kong company (“OTX”), the “Operating Subsidiaries”), is one of the financial service market participants with clients in Hong Kong, mainland China and Southeast Asia, and a bullion trading platform solution provider for the Chinese Gold and Silver Exchange (CGSE) Society member in Hong Kong. m-FINANCE has approximately 20 years of experience in providing real-time mission critical forex, bullion/commodities trading platform solutions, financial value-added services, mobile applications and financial information for brokers and institutional clients via internet or platform as software as a service. m-FINANCE has provided a wide range of top-notch services, including mF4 Trading Platform, Bridge and Plugins, CRM System, ECN System, Liquidity Solutions, Cross-platform “Broker+” Solution, Social Trading Applications and other value-added services.
Key factors that affect operating results
Our results of operations have been and will continue to be affected by a number of factors, including those set out below:
General market conditions of the capital market and financial trading industry in Hong Kong
Our Operating Subsidiaries’ business is closely related to the capital market and financial trading industry in Hong Kong. Through our Operating Subsidiaries, we provide financial trading solutions and the services provided by the Operating Subsidiaries are affected by the capital market in Hong Kong. Any material deterioration in the financial and economic conditions of the financial and capital market in Hong Kong could materially and adversely affect the business and prospects of our Operating Subsidiaries. The Hong Kong financial and capital market is susceptible to changes in the global, as well as domestic economic, social and political conditions, including, but not limited to, interest rate fluctuations, volatility of foreign currency exchange rates, monetary policy changes and legal and regulatory changes. When there are unfavorable changes to the global or local market conditions, the financial and securities market in Hong Kong may experience negative fluctuations in its performance. It may directly affect the demand for our Operating Subsidiaries’ services, pricing strategies, the level of business activities and, consequently, our revenue derived therefrom. This may materially and adversely affect our financial condition and results of operations.
Our Operating Subsidiaries’ abilities to design and develop new services
The financial service industry is characterized by rapidly evolving technology and standards, and our future success will depend on our ability to enhance our current financial trading solutions and to introduce new financial trading solutions that keep pace with these rapidly evolving technologies and standards. As such, our success is susceptible to our ability to integrate new technologies and standards into their financial trading solutions, create new solutions and adapt to changing business models and customers in a timely manner. As a result, we may need to invest significant resources in research and development to maintain our market position, keep pace with technological changes and compete effectively. As of December 31, 2023 and June 30, 2024, the ending balance of the capitalized product development costs, net of accumulated amortization, was HK$15.3 million and HK$16.6 million (US$2.1 million), respectively. The failure to improve our financial trading solutions and services, offer new financial trading solutions and adapt to changing business models in a timely and cost-effective manner could materially and adversely affect the business of our operations, financial condition and results of operations.
Competition
With the rise of electronic trading in recent years, the industry has attracted the presence of both Hong Kong-based and international companies. As such, our operations face potential competition with various financial trading solution providers in the same industry. Although we face competition from bigger, better capitalized and well-established companies, we believe that our operations have differentiated our services with a comprehensive range of financial trading solutions with high flexibility, established reputation with proven track record and strong and innovative development capabilities. Should we fail to compete with our competitors, maintain our competitive advantage or keep pace with technological changes, our overall results of operations could be adversely affected.
Our top five customers accounted for 32.3% and 29.7% of our total revenues for the six months ended June 30, 2023 and 2024, respectively. Our customers are mainly sourced by referrals through existing clients and our expansive and expanding social and professional networks of well-established brokers.
To expand our business, we started incurring significant spending on marketing activities and aim to further grow our customer base. We continue to incur expenses in our promotional efforts through different online and offline media/channels to increase the number of customer accounts, which can potentially lead to increased revenues.
The Operating Subsidiaries rely on IT staff and other skilled workers to complete their projects and the retention and recruitment of these skilled professionals is challenging.
There is a limited pool of IT staff and other skilled workers with the requisite skills, know-how and experience required for our Operating Subsidiaries’ business. As the quality of IT and technical know-how are vital to the business of our subsidiaries, attracting and retaining talent are essential components of our business strategy. We may have to offer better salaries, incentive packages and training opportunities to attract and retain sufficiently skilled workers to maintain our operations and growth, which may increase our costs and reduce our profitability. For the six months ended June 30, 2023 and 2024, our employee compensation and benefits included in the cost of revenue were HK$2.8 million and HK$3.7 million (US$0.5 million), respectively and our employee compensation and benefits included in general & administrative expenses was HK$1.3 million and HK$3.1 million (US$0.4 million), respectively. We cannot be certain that we will be able to retain our existing IT staff and other skilled workers and recruit additional qualified professionals to support the future operations and growth of our operations. Any failure to do so may adversely affect the business and growth of our operations.
Quantitative and qualitative disclosures about market risk
We are subject to financial market risks, including changes in foreign currency exchange rate risk with respect to our investment at fair value consisting of short-term foreign exchange investment made by the Company which is denominated in the US$. The fluctuation in US$ may result in an increase or decrease in the value of our investment at fair value. We consider the foreign exchange risk in relation to transactions denominated in US$ with respect to HK$ is not significant as HK$ is pegged to US$.
The trades of foreign currencies conducted are denominated in the US$ and are paired with currencies with strong liquidity traded in highly transparent markets, including such currencies as the EURO, USD, GBP, CHF, AUD and CAD, etc. Fluctuations in exchange rates, changes in monetary and/or fiscal policy or inflation in the countries in which we paired our trades of foreign currencies could have a material adverse effect on our results of operations. The clear position limits and floating profit/loss limits are set to manage the market risks of our foreign exchange positions. For the six months ended June 30, 2023 and 2024, we traded foreign currencies of transaction amounts of US$4.0 million and nil, respectively, while we had realized loss on disposal of financial assets at fair value and change in fair value on financial assets at fair value in the aggregate amount of HK$9,965 and nil, respectively. The realized loss on disposal of financial assets at fair value and change in fair value on financial assets at fair value represented 0.0312% and 0.0 % of our trading transaction amounts of foreign currencies for the six months ended June 30, 2023 and 2024, respectively. To minimize the risk of volatility of the foreign currencies in the financial and currency market, we did not initiate any trades of foreign currencies during the six months ended June 30, 2024.
The transaction details of each foreign currency pair were set out below:
| For the six months ended June 30, | ||||||||||||||||
| 2023 | 2024 | 2023 | 2024 | |||||||||||||
| Foreign currency pair | Transaction in carrying amounts | Transaction in notional amounts | ||||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| AUD/USD | 2,724 | - | 272,445 | - | ||||||||||||
| EUR/USD | 4,447 | - | 635,113 | - | ||||||||||||
| GBP/USD | 10,474 | - | 1,594,253 | - | ||||||||||||
| USD/CAD | 7,262 | - | 1,088,000 | - | ||||||||||||
| USD/CHF | 3,500 | - | 482,000 | - | ||||||||||||
| USD/JPY | - | - | - | - | ||||||||||||
| XAU/USD | - | - | - | - | ||||||||||||
| 28,407 | - | 4,071,811 | - | |||||||||||||
Recent Developments
On May 20, 2024, the Company entered into two business development and marketing consulting agreements with Malaysian and PRC consultants (the “Consultants”), respectively. Besides further expanding its market in China, the Company intends to explore its presence in Southeast Asia. Pursuant to the agreements, the Consultants will provide consulting services to the Company, including, but not limited to, assisting it in business expansion and evaluation of marketing strategy, formulating and executing sales strategies, conducting market research and data collection to support its business planning, providing professional planning and advertising promotion schemes to attract potential clients for it, negotiating joint market development programs with clients from Southeast Asia regions and China on behalf of it, communicating with relevant government agencies on behalf of it to obtain necessary approvals, assisting it in negotiating contracts with potential clients and other matters related to sales and business expansion. The total service fee for both agreements is US$ 1.6 million (approximately HK$12.5 million), which will be amortized over the service period from the last week of May 2024 through May 2026. As a result of these marketing arrangements, our selling and marketing expenses rose by HK$0.7 million during the six months ended June 30, 2024.
Results of operations Comparison of six months ended June 30, 2023 and 2024
The following table sets forth key components of our results of operations for the six months ended June 30, 2023 and 2024:
| For the six months ended June 30, | % of | |||||||||||||||||||
| 2023 | 2024 | 2024 | Variance | variance | ||||||||||||||||
| HK$ | HK$ | US$ | HK$ | |||||||||||||||||
| Revenue | 14,153,693 | 12,470,969 | 1,597,143 | (1,682,724 | ) | (11.9 | )% | |||||||||||||
| Cost of revenue | 6,896,648 | 7,184,748 | 920,142 | 288,100 | 4.2 | % | ||||||||||||||
| Gross profit | 7,257,045 | 5,286,221 | 677,001 | (1,970,824 | ) | (27.2 | )% | |||||||||||||
| Operating expenses | ||||||||||||||||||||
| Selling and marketing expenses | 79,200 | 918,731 | 117,661 | 839,531 | 1,060.0 | % | ||||||||||||||
| Research and development expenses | - | 109,231 | 13,989 | 109,231 | 100.0 | % | ||||||||||||||
| General and administrative expenses | 4,620,203 | 10,580,763 | 1,355,066 | 5,960,560 | 129.0 | % | ||||||||||||||
| Total operating expenses | 4,699,403 | 11,608,725 | 1,486,716 | 6,909,322 | 147.0 | % | ||||||||||||||
| Income (loss) from operations | 2,557,642 | (6,322,504 | ) | (809,715 | ) | (8,880,146 | ) | (347.2 | )% | |||||||||||
| Other income (expense) | ||||||||||||||||||||
| Other income (expenses), net | 43,643 | (18,096 | ) | (2,318 | ) | (61,739 | ) | (141.5 | )% | |||||||||||
| Realized loss on disposal of financial assets at fair value | (7,874 | ) | - | - | 7,874 | (100.0 | )% | |||||||||||||
| Change in fair value on financial assets at fair value | (2,091 | ) | - | - | 2,091 | (100.0 | )% | |||||||||||||
| Interest expense, net | (201,624 | ) | (99,354 | ) | (12,724 | ) | 102,270 | (50.7 | )% | |||||||||||
| Total other expense, net | (167,946 | ) | (117,450 | ) | (15,042 | ) | 50,496 | (30.1 | )% | |||||||||||
| Income (loss) before income taxes | 2,389,696 | (6,439,954 | ) | (824,757 | ) | (8,829,650 | ) | (369.5 | )% | |||||||||||
| Income tax expense (benefits) | 169,358 | (893,363 | ) | (114,412 | ) | (1,062,721 | ) | (627.5 | )% | |||||||||||
| Net income (loss) | 2,220,338 | (5,546,591 | ) | (710,345 | ) | (7,766,929 | ) | (349.8 | )% | |||||||||||
| Other comprehensive loss | ||||||||||||||||||||
| Foreign currency translation adjustment | (157 | ) | 3,480 | (5,099 | ) | 3,637 | 2,316.6 | % | ||||||||||||
| Comprehensive income | 2,220,181 | (5,543,111 | ) | (715,444 | ) | (7,763,292 | ) | (349.7 | )% | |||||||||||
Revenue
The following table sets forth the breakdown of our revenue by major revenue type for the six months ended June 30, 2023 and 2024, respectively:
| For the Six Months Ended June 30, | % of | |||||||||||||||||||
| 2023 | 2024 | 2024 | Variance | variance | ||||||||||||||||
| HK$ | HK$ | US$ | HK$ | |||||||||||||||||
| Initial set up, installation and customization services | 3,658,174 | 1,106,009 | 141,645 | (2,552,165 | ) | (69.8 | )% | |||||||||||||
| Subscription | 5,038,199 | 5,407,403 | 692,520 | 369,204 | 7.3 | % | ||||||||||||||
| Hosting, support and maintenance services | 1,980,230 | 2,331,269 | 298,563 | 351,039 | 17.7 | % | ||||||||||||||
| Liquidity service | 1,234,655 | 983,104 | 125,905 | (251,551 | ) | (20.4 | )% | |||||||||||||
| White label service | 960,484 | 1,494,188 | 191,359 | 533,704 | 55.6 | % | ||||||||||||||
| Quotes/news/package subscription services | 1,281,951 | 1,148,996 | 147,151 | (132,955 | ) | (10.4 | )% | |||||||||||||
| Total revenue | 14,153,693 | 12,470,969 | 1,597,143 | (1,682,724 | ) | (11.9 | )% | |||||||||||||
Our revenue shrank by HK$1.7 million, or 11.9%, from HK$14.2 million for the six months ended June 30, 2023 to HK$12.5 million (US$1.6 million) for the six months ended June 30, 2024, primarily because of a plunge in our revenue from initial set up, installation and customization services, liquidity service and quotes/news/package subscription services, partially offset by an increase in our subscriptions, hosting, support and maintenance services, and white label service.
Revenue from our initial set up, installation and customization services plummeted by HK$2.6 million, or 69.8%, from HK$3.7 million for the six months ended June 30, 2023 to HK$1.1 million for the same period in 2024. The number of customers in this revenue stream, particularly initial set up service, decreased by 35.0% during the six months ended June 30, 2024 compared to the same period in 2023. The decrease was mainly due to the decreased demand for customization services.
Liquidity service revenue also dropped by HK$0.2 million, or 20.4%, from HK$1.2 million for the six months ended June 30, 2023 to HK$1.0 million in the same period in 2024. The liquidity service fee is charged based on the transaction volume of orders sent directly to the liquidity providers. We experienced a lower transaction volume, 641,450, in the six months ended June 30, 2024 compared to 855,703 in the same period in 2023.
Our quotes/news/package subscription services are value-added and optional services to our customers. Through the subscription of this service line, we offer financial strategy analysis, financial calendar, real-time quotes and financial information and news to our customers. Compared to HK$1.3 million in the six months ended June 30, 2023, the quotes/news/package subscription services revenues for the same period in 2024 was HK$1.2 million (US$0.2 million) with a decrement of HK$0.1 million or 10.4%. Although the overall number of customers in this revenue stream increased by 25.0%, the decline in revenue of this service line was driven by the type of data feed service package subscribed by our customers. During the six months ended June 30, 2024, our customers subscribed to the basic data feed service instead of premium service package.
Despite the reduction in the revenues from initial setup, installation and customization services, liquidity service and quotes/news/package subscription services, we experienced a growth in revenues from licensing, hosting, support and maintenance services and white label service.
Subscription revenue grew slightly by HK$0.4 million, or 7.3%, from HK$5.0 million in the six months ended June 30, 2023 to HK$5.4 million in the same period in 2024. During the six months ended June 30, 2024, the number of customers of this service line increased by 20.0% compared to the same period in 2023. Subscription service represents the right to access granted to our trading platform to our customers over the contract term after the initial setup or customization is completed. The increase in subscription revenue represented an increase in the access right to our trading platforms granted to those customers to whom we had delivered the initial setup or customization of the trading platforms in the prior year.
Our hosting, support and maintenance services revenues also increased by HK$0.3 million, or 17.7%, from HK$2.0 million in the six months ended June 30, 2023 to HK$2.3 million (US$0.3 million) in the same period in 2024. During the six months ended June 30, 2024, the number of customers of this service line increased by 16.7% compared to the same period in 2023. The growth in this revenue stream aligned with the increment in licensing revenue. We provided hosting, support and maintenance services to our customers to whom we had delivered the implementation of the new or customized trading platforms.
White label service revenue increased by HK$0.5 million from HK$1.0 million for the six months ended June 30, 2023 to HK$1.5 million in the same period in 2024. The Company provides white label services to customers by allowing them to add additional labels or brands to the trading platform services. This provides customers the highest flexibility to operate their trading platform business based on their individual business development strategy or marketing needs at a lower operating cost. We experienced an 83.3% growth in the number of customers in this revenue stream during the six months ended June 30, 2024 compared to the same period in 2023.
Cost of revenue
The following table sets forth the breakdown of our cost of revenue for the six months ended June 30, 2023 and 2024:
| For the six months ended June 30, | % of | |||||||||||||||||||
| 2023 | 2024 | 2024 | Variance | variance | ||||||||||||||||
| HK$ | HK$ | US$ | HK$ | |||||||||||||||||
| Internet services cost | 733,435 | 717,636 | 91,907 | (15,799 | ) | (2.2 | )% | |||||||||||||
| Employee compensation and benefits | 2,803,543 | 3,682,124 | 471,565 | 878,581 | 31.3 | % | ||||||||||||||
| Subscription costs | 59,012 | 51,277 | 6,567 | (7,735 | ) | (13.1 | )% | |||||||||||||
| Outsourcing fees | 124,046 | 93,884 | 12,024 | (30,162 | ) | (24.3 | )% | |||||||||||||
| Amortization of intangible assets | 3,044,041 | 2,464,762 | 315,659 | (579,279 | ) | (19.0 | )% | |||||||||||||
| Commission expense | 126,987 | 170,464 | 21,831 | 43,477 | 34.2 | % | ||||||||||||||
| Others | 5,584 | 4,601 | 589 | (983 | ) | (17.6 | )% | |||||||||||||
| Total cost of revenue | 6,896,648 | 7,184,748 | 920,142 | 288,100 | 4.2 | % | ||||||||||||||
Our cost of revenue increased by HK$0.3 million, or 4.2%, from HK$6.9 million for the six months ended June 30, 2023 to HK$7.2 million for the six months ended June 30, 2024, which was predominantly driven by a spike in employee compensation and benefits by HK$0.9 million, partially offset by a reduction in amortization of intangible assets by HK$0.6 million.
Internet service cost
Internet service cost represented costs in relation to server hosting service provided by data center service providers as well as costs of acquiring an internet data line from various service providers for internet access. The internet service costs for the six months ended June 30, 2024 slightly fell by HK$0.01 million, or 2.2%, compared to the same period in 2023.
Employee compensation and benefits
Employee compensation and benefits consist primarily of payroll and other personnel-related expenses of our staff who support our trading solution services. Employee compensation and benefits for the six months ended June 30, 2024 surged by HK$0.9 million, or 31.3%, compared to the same period in 2023. During the six months ended June 30, 2024, the Company offered appreciation bonuses and salary increases to its staff.
Subscription costs
Our subscription costs represent the amount we paid our financial news and market information service providers. We convert the raw data into usable data that can be utilized in our trading platform. For the six months ended June 30, 2024, our subscription costs decreased by HK$0.008 million or 13.1% compared to the same period in 2023. Such decrease corresponded to the decline in our quotes/news/package subscription services revenues for the six months ended June 30, 2024, as aforementioned.
Outsourcing fees
We may outsource some implementation or customization tasks to our related parties and/or independent third parties. The outsourcing costs mainly represent the charges and fees paid to those subcontractors who handle a portion of our implementation and customization projects. Compared to the six months ended June 30, 2023, the outsourcing fees fell by HK$0.03 million, or 24.3%, in the same period in 2024. The decrement in outsourcing fees was chiefly driven by a reduction in the number of customers for initial setup and customization services during the six months ended June 30, 2024 compared to the same period in 2023, as previously discussed.
Amortization of intangible assets
Our amortization of intangible assets mainly represents an amortization of our capitalized internal product development cost of financial trading solutions.
Commission expense
Commission expense represents the fee we paid to business partners and our salespersons who brought new businesses. The commission was generally determined based on a certain percentage of revenue generated from customers referred by business partners and our salespersons.
Gross profit
Our total gross profit decreased by HK$2.0 million, or 27.2 %, from HK$7.3 million for the six months ended June 30, 2023 to HK$5.3 million for the six months ended June 30, 2024. The decline in our gross profit for the six months ended June 30, 2024 was primarily driven by the decrease in our revenue and a hike in employee compensation and benefits in the current period.
Operating expenses
Our operating expenses consisted of the following:
| For the six months ended June 30, | % of | |||||||||||||||||||
| 2023 | 2024 | 2024 | Variance | variance | ||||||||||||||||
| HK$ | HK$ | US$ | HK$ | |||||||||||||||||
| Selling and marketing expenses | 79,200 | ; | 117,661 | 839,531 | 1,060.0 | % | ||||||||||||||
| Research and development expenses | - | 109,231 | 13,989 | 109,231 | 100.0 | % | ||||||||||||||
| General and administrative expenses | 4,620,203 | 10,580,763 | 1,355,066 | 5,960,560 | 129.0 | % | ||||||||||||||
| Total operating expenses | 4,699,403 | 11,608,725 | 1,486,716 | 6,909,322 | 147.0 | % | ||||||||||||||
Our selling and marketing expenses mainly represent the advertising, promotional and marketing expenses. Our selling and marketing expenses surged by HK$0.8 million, or 1,060.0%, from HK$0.07 million for the six months ended June 30, 2023 to HK$0.9 million for the six months ended June 30, 2024. During the six months ended June 30, 2024, in order to boost our revenue, we contracted the Consultants to assist us in exploring new customers and planning our business strategy, marketing and promotional activities.
Our research and development expense pertains to the project research stage and primarily consists of payroll and other personnel-related expenses of our software development team. Our research and development expenses increased by HK$0.1 million, or 100.0%, from nil for the six months ended June 30, 2023 to HK$0.1 million (US$0.01 million) for the six months ended June 30, 2024. We expect that our expenditures for research and development may increase in terms of monetary value and may increase as a percentage of our total revenue over time, as we intend to expand their software development capacity to continue to improve existing functions and develop new functions.
Our general and administrative expenses include the depreciation expenses of property and equipment, employee compensations, insurance, legal and professional fees, office expenses, rent and utilities, travel, allowance for credit losses, and others. Our general and administrative expenses rose by HK$6.0 million, or 129.0%, from HK$4.6 million for the six months ended June 30, 2023 to HK$10.6 million (US$1.4 million) for the six months ended June 30, 2024, largely driven by a surge in employee compensation and benefits of HK$1.8 million, insurance of HK$0.4 million, legal and professional fees of HK$3.7 million and travel by HK$0.1 million. During the six months ended June 30, 2024, we offered an appreciation bonus and compensation increase to our executives and staff. We also incurred additional insurance coverage cost for our directors and executives as well as audit fees, legal fees, transfer agent fee, investor relations, printing, and advisory fees subsequent to the completion of initial public offerings. Our travel expenses also increased during the six months ended June 30, 2024, as our executives travelled for conference and business meetings.
Other income (expenses)
Our other income (expenses) consisted of the following:
| For the six months ended June 30, | % of | |||||||||||||||||||
| 2023 | 2024 | 2024 | Variance | variance | ||||||||||||||||
| HK$ | HK$ | US$ | HK$ | |||||||||||||||||
| Other income | ||||||||||||||||||||
| Sundry income | 49,343 | 29,275 | 3,749 | (20,068 | ) | (40.7 | )% | |||||||||||||
| Government subsidies | 34,261 | - | - | (34,261 | ) | (100.0 | )% | |||||||||||||
| Foreign exchange transaction gain | - | 23,978 | 3,071 | 23,978 | 100.0 | % | ||||||||||||||
| Others | - | 65 | 8 | 65 | 100.0 | % | ||||||||||||||
| Other income | 83,604 | 53,318 | 6,828 | (30,286 | ) | (36.2 | )% | |||||||||||||
| Other expenses | ||||||||||||||||||||
| Other expenses | 39,961 | 71,414 | 9,146 | 31,453 | 78.7 | % | ||||||||||||||
| Other expenses | 39,961 | 71,414 | 9,146 | 31,453 | 78.7 | % | ||||||||||||||
| Total other income (expenses), net | 43,643 | (18,096 | ) | (2,318 | ) | (61,739 | ) | (141.5 | )% | |||||||||||
Other income included the following components:
We charged handling service fees for services provided to customers for using the multi-asset trading software by the MT4/MT5 (forex trading platforms) service providers. Some customers requested such services from the MT4/MT5 service providers and MT4/MT5 charged us in exchange for the services. The sundry income is the net amount we receive from our customers and the amount we pay to MT4/MT5 service providers. Compared to the same period in 2023, the decrease in sundry income during the six months ended June 30, 2024 was mainly due to the decrease in customers’ requests for such service.
Government subsidies
Government subsidies primarily related to the funds for participation in promotion activities in 2023. The Operating Subsidiaries received government subsidies that totaled HK$34,261 and nil for the six months ended June 30, 2023 and 2024, respectively
Foreign exchange transaction gain
The foreign currency transaction gain during the six months ended June 30, 2024 was predominantly attributable to the appreciation of the Hong Kong dollar against the U.S. dollar.
Other expenses included the following components:
Other expenses included bank charges, penalties, foreign currency exchange loss and other expenses. Other expenses for the six months ended June 30, 2024 increased by HK$0.03 million, or 78.7%, compared to the same period in 2023. The higher bank charges were attributable to the rise in total other expenses in the current period. Our bank charges increased by HK0.03 million, or 93.1%, from HK$0.03 million in the six months ended June 30, 2023 to HK$0.07 million (US$0.009 million) in the same period in 2024 due to a higher transaction volume of international remittance for our legal and professional services related to our initial public offering and listing in the U.S. equity market.
Realized loss on disposal of financial assets at fair value and change in fair value on financial assets at fair value.
Realized loss on disposal of financial assets at fair value and change in fair value on financial assets at fair value represents realized loss on disposal of and change in fair value on financial assets at fair value from certain investment agreements with certain brokerage companies to trade with foreign currencies, at fair value, with the intention to optimize a trading algorithm based on live market interactions. The change in fair value on financial assets at fair value was mainly due to the increased volatility in the financial and currency market. For the six months ended June 30, 2023 and 2024, we recognized a realized loss on disposal of financial assets of HK$0.008 million and nil, respectively. For the six months ended June 30, 2023 and 2024, we recorded a change in fair value on financial assets at fair value in the amount of HK$0.002 million and nil, respectively. To minimize the risk of the volatility of foreign currencies in the financial market, we did not initiate any trades of foreign currencies during the six months ended June 30, 2024.
Interest expense, net
Interest expense, net includes interest expenses on bank borrowings, offset by interest income we earned for the savings or time deposits in our bank accounts. Our interest expense, net was HK$0.2 million and HK$0.1 million (US$0.012 million) for the six months ended June 30, 2023 and 2024, respectively. Our interest expense on bank borrowings was HK$ 0.3 million and HK$0.2 million for the six months ended June 30, 2023 and 2024, respectively, partially offset by interest income from our savings and time deposits in our bank accounts of HK$0.04 million and HK$ 0.08 million (US$0.01 million) for the six months ended June 30, 2023 and 2024, respectively. During the six months ended June 30, 2024, our bank institutions offered a higher interest rate for time deposits, which was attributable to a higher interest income. Simultaneously, we incurred a lower interest expense in the six months ended June 30, 2024 compared to the same period in 2023. Our interest payments on our bank loans decreased as our loan principal balances decreased.
Income tax expense (benefits)
We generated income tax benefits of HK$0.8 million (US$0.1 million) in the six months ended June 30, 2024 contrary to income tax expense of HK$0.2 million in the same period in 2023. Our subsidiary, m-Finance, incurred a book and tax loss in the six months ended June 30, 2024 and generated book and taxable income in the same period in 2023.
Net income (loss)
As a result of our operations aforementioned, we reported a net income of HK$2.2 million and a net loss of HK$5.5 million (US$0.7 million) for the six months ended June 30, 2023 and 2024, respectively.
Other comprehensive income (loss)
As a result of the above, we posted a comprehensive income of HK$2.2 million and a comprehensive loss of HK$5.5 million (US$0.7 million) for the six months ended June 30, 2023 and 2024, respectively.
Liquidity and capital resources
We financed our daily operations and business development through cash generated from the operations of its subsidiaries and bank borrowings. As of December 31, 2023 and June 30, 2024, its cash and restricted cash balance was HK$6.8 million and HK$32.8 million (US$4.2 million), respectively.
We believe that our current cash and loans from banks will be sufficient to meet our working capital needs in the next 12 months from the date of this filing. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we determine to accelerate our growth, then additional financing may be required. No assurance can be given, however, that additional financing, if required, would be available at all or on favorable terms. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing that involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.
The following table sets forth a summary of our cash flows for the periods indicated:
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Net cash provided by (used in) operating activities | 3,925,715 | (17,704,981 | ) | (2,267,457 | ) | |||||||
| Net cash used in investing activities | (2,128,342 | ) | (3,721,789 | ) | (476,645 | ) | ||||||
| Net cash (used in) provided by financing activities | (7,031,708 | ) | 47,459,180 | 6,078,043 | ||||||||
| Effect of exchange rate changes on cash and restricted cash | (1,030 | ) | 3,480 | 446 | ||||||||
| Net change in cash and restricted cash | (5,235,365 | ) | 26,035,890 | 3,334,387 | ||||||||
| Cash and restricted cash at the beginning of period | 12,063,731 | 6,810,418 | 872,202 | |||||||||
| Cash and restricted cash at the end of period | 6,828,366 | 32,846,308 | 4,206,589 | |||||||||
Operating activities
Net cash provided by operating activities amounted to HK$3.9 million for the six months ended June 30, 2023, mainly derived from (i) net income of HK$2.2 million the six months ended June 30, 2023; (ii) various non-cash items of HK$4.0 million, such as amortization of intangible assets of HK$3.0 million, amortization of right-of-use assets and interest of lease liabilities of HK$0.8 million and depreciation of property and equipment of HK$0.08 million; and (iii) changes in operating assets and liabilities of HK$2.3 million. Changes in operating assets and liabilities mainly included (i) a decrease in accrued expenses and other current liabilities of HK$1.6 million, which was mainly due to the payment of payroll before the period ended June 30, 2023; (ii) an increase in accounts receivable of HK$1.3 million, which was mainly due to more billing to customers based on services provided closer to the end of the six months ended June 30, 2023; (iii) an increase in contract liabilities of HK$1.1 million due to more advances received from customers under the new projects; (iv) a decrease in operating lease liabilities of HK$0.8 million, mainly due to the recognition of operating lease expenses on a straight-line basis over the lease term; and (iv) a decrease in prepaid expenses and other current assets of HK$0.2 million, which was mainly due to the timing of payments for internet service costs.
Net cash used in operating activities, HK$17.7 million, for the six months ended June 30, 2024 was driven by the current period’s net loss of HK$5.5 million (US$0.7 million) as adjusted for non-cash items and the change in operating activities. Adjustments for non-cash items principally comprised the following items: depreciation of property and equipment, HK$0.02 million (US$0.002 million), amortization of intangible assets, HK$2.4 million (US$0.3 million), amortization of right-of-use assets, HK$0.8 million (US$0.1 million), allowance for credit loss, HK$0.07 million (US$0.009 million) and deferred tax benefits, HK$0.9 million (US$0.1 million). Cash outflow from the change in operating activities included prepayments to our vendors, HK$18.1 million (US$2.3 million), deposit payment to the lessor, HK0.4 million (US$0.05 million), payments to service vendors, HK$1.4 million (US$0.2 million), income tax payments, HK$0.1 million (US$0.02 million) and office rent payments, HK$0.8 million (US$0.1 million). Our overall cash outflow was partially offset by customer collections, HK$1.3 million (US$0.2 million) and advance cash receipts from our customers, HK$4.9 million (US$0.6 million).
Investing activities
Net cash used in investing activities amounted to HK$2.1 million for the six months ended June 30, 2023, representing costs to obtain and develop software of HK$3.1 million and was partially offset by disposals of financial assets at fair value of HK$1.0 million during the six months ended June 30, 2023.
Net cash used in investing activities, HK$3.7 million (US$0.5 million), for the six months ended June 30, 2024, pertained to the purchase of computer equipment, HK$0.009 million (US$0.001 million) and costs incurred for software development, HK$3.7 million (US$0.5 million).
Financing activities
Net cash used in financing activities amounted to HK$7.0 million for the six months ended June 30, 2023, which included the dividend paid to a shareholder of HK$2.5 million, an increase in deferred IPO costs of HK$2.7 million and repayment of bank borrowings of HK$1.8 million.
Net cash provided by financing activities, HK$47.5 million (US$6.0 million), for the six months ended June 30, 2024, was mainly driven by the proceeds from our initial public offering net of offering costs, HK$49.4 million (US$6.3 million), partially offset by repayment of bank borrowings of HK$1.9 million (US$0.3 million).
Off-balance sheet arrangements
We did not have, during the periods presented, nor do we currently have any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical accounting estimates
Our discussion and analysis of our financial condition and results of operations relates to our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
Our critical accounting policies and practices include the following: (i) revenue recognition and (ii) intangible assets. For a detailed discussion of our significant accounting policies and related judgments, please see “Note 2 – Summary of Significant Accounting Policies” of the Notes to Unaudited Condensed Consolidated Financial Statements. You should read the following description of critical accounting estimates in conjunction with our unaudited condensed consolidated financial statements and other disclosures included in this filing.
Allowance for credit losses
We carry accounts receivable at the face amounts less a reserve for estimated credit losses. We estimated our reserve for credit losses using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Consequently, to reflect the cumulative effects of the adoption of ASC 326, we recorded the balance of the reserve for credit losses was HK$0.5 million as of January 1, 2023. During the six months ended June 30, 2023 and 2024, we recorded HK$0.07 million and HK$0.07 million (US$0.009 million), respectively, allowance for credit losses related to accounts receivable on the unaudited condensed consolidated statements of operations and comprehensive income.
Recently accounting pronouncements
See the discussion of the recent accounting pronouncements contained in “Note 2 – Summary of Significant Accounting Policies” of the Notes to Unaudited Condensed Consolidated Financial Statements.
Exhibit 99.3
mF International Limited Announces First Six Months of Fiscal Year 2024 Financial Results
Hong Kong, October 15, 2024 /PRNewswire/ — mF International Limited (the “Company” or “mF International”) (Nasdaq: MFI), a Hong Kong-based experienced financial trading solution provider, today announced its unaudited financial results for the six months ended June 30, 2024.
Mr. Chi Weng Tam, Executive Director and Chief Executive Officer of the Company, commented, “Despite facing certain revenue challenges, we have demonstrated resilience and adaptability in our business model. Our growth in subscriptions, hosting, support, maintenance, and white-label services reflects the increasing reliance of clients on our trading platforms and the demand for flexible solutions that meet varied needs. This highlights our efforts in retaining customers and diversifying our service offerings in a challenging environment. Additionally, we continue to make substantial investments to expand our business. In May 2024, we entered into two business development and marketing consulting agreements totaling US$1.6 million with consultants in China and Malaysia, which we believe may enable future growth. With the support from these professional consulting services, we are confident in our ability to adapt, explore new opportunities, and generate additional revenue in the years ahead. Moving forward, we are committed to enhancing our technological offerings, expanding our customer base in new regions, and investing strategically in our talent and infrastructure. We believe these steps will strengthen our market position and provide a robust foundation for sustainable growth and improved financial performance. We remain confident in our robust business strategy and our resilient, diversified service portfolio, which we expect may ultimately lead to the delivery of long-term value to our shareholders.”
First Six Months of Fiscal Year 2024 Financial Highlights
| ● | Revenue was HK$12.5 million (US$1.6 million) for the six months ended June 30, 2024, compared to HK$14.2 million for the same period last year. |
| ● | Gross profit was HK$5.3 million (US$0.7 million) for the six months ended June 30, 2024, compared to HK$7.3 million for the same period last year. |
| ● | Net loss was HK$5.5 million (US$0.7 million) for the six months ended June 30, 2024, compared to net income of HK$2.2 million for the same period last year. |
| ● | Basic and diluted loss per share was HK$0.45 (US$0.06) for the six months ended June 30, 2024, compared to basic and diluted earnings per share of HK$0.19 for the same period last year. |
First Six Months of Fiscal Year 2024 Financial Results
Revenue
Revenue was HK$12.5 million (US$1.6 million) for the six months ended June 30, 2024, which decreased by 11.9% from HK$14.2 million for the same period last year, primarily because of a plunge in revenue from initial set up, installation and customization services, liquidity service and quotes/news/package subscription services, partially offset by an increase in subscriptions, hosting, support and maintenance services, and white label service.
| ● | Revenue from initial set up, installation and customization services was HK$1.1 million (US$0.1 million) for the six months ended June 30, 2024, which decreased by 69.8% from HK$3.7 million for the same period last year. The decrease was mainly due to the decreased demand for customization services. |
| ● | Revenue from subscriptions was HK$5.4 million (US$0.7 million) for the six months ended June 30, 2024, which increased by 7.3% from HK$5.0 million for the same period last year. The increase in subscription revenue represented an increase in the access right to the Company’s trading platforms granted to those customers to whom it had delivered the initial set up or customization of the trading platforms in the prior year. |
| ● | Revenue from hosting, support and maintenance services was HK$2.3 million (US$0.3 million) for the six months ended June 30, 2024, which increased by 17.7% from HK$2.0 million for the same period last year. The increase in this revenue stream aligned with the increment in licensing revenue. |
| ● | Revenue from liquidity services was HK$1.0 million (US$0.1 million) for the six months ended June 30, 2024, which decreased by 20.4% from HK$1.2 million for the same period last year. The decrease was mainly due to a lower transaction volume. |
| ● | Revenue from white label services was HK$1.5 million (US$0.2 million) for the six months ended June 30, 2024, which increased by 55.6% from HK$1.0 million for the same period last year. The increase was mainly due to the growth in the number of customers in this revenue stream. |
| ● | Revenue from quotes/news/package subscription services was HK$1.2 million (US$0.2 million) for the six months ended June 30, 2024, which decreased by 10.4% from HK$1.3 million for the same period last year. The decrease was driven by the type of data feed service package subscribed by the customers. During the six months ended June 30, 2024, the Company’s customers subscribed to the basic data feed service instead of premium service package. |
Cost of Revenue
Cost of revenue was HK$7.2 million (US$0.9 million) for the six months ended June 30, 2024, which increased by 4.2% from HK$6.9 million for the same period last year, which was mainly driven by a spike in employee compensation and benefits by HK$0.9 million, partially offset by a reduction in amortization of intangible assets by HK$0.6 million.
Gross Profit
Gross profit was HK$5.3 million (US$0.7 million) for the six months ended June 30, 2024, which decreased by 27.2% from HK$7.3 million for the same period last year.
Operating Expenses
Total operating expenses were HK$11.6 million (US$1.5 million) for the six months ended June 30, 2024, increased by 147.0% from HK$4.7 million for the same period last year.
| ● | Selling and marketing expenses were HK$0.9 million (US$0.1 million) for the six months ended June 30, 2024, compared to HK$0.08 million for the same period last year, mainly because the Company contracted two consultants to assist it in exploring new customers and planning its business strategy, and marketing and promotional activities. |
| ● | Research and development expenses were HK$0.1 million (US$0.01 million) for the six months ended June 30, 2024, from nil for the same period last year, as the Company intends to expand its software development team’s software development capacity to continue to improve existing functions and develop new functions. |
| ● | General and administrative expenses were HK$10.6 million (US$1.4 million) for the six months ended June 30, 2024, compared to HK$4.6 million for the same period last year, because of a surge in employee compensation and benefits of HK$1.8 million, insurance expense of HK$0.4 million, legal and professional fees of HK$3.7 million and travel expenses by HK$0.1 million. During the six months ended June 30, 2024, the Company offered an appreciation bonus and compensation increase to its executives and staff. The Company also incurred additional insurance coverage cost for its directors and executives as well as audit fees, legal fees, transfer agent fees, investor relations, printing, and advisory fees subsequent to the completion of its initial public offering. Its travel expenses also increased during the six months ended June 30, 2024 as its executives travelled for conferences and business meetings. |
Total Other Expense
Total other expenses, net was HK$0.1 million (US$0.02 million) for the six months ended June 30, 2024, compared to HK$0.2 million for the same period last year.
Net Income (Loss)
Net loss was HK$5.5 million (US$0.7 million) for the six months ended June 30, 2024, compared to net income of HK$2.2 million for the same period last year.
Basic and Diluted Earnings (Loss) per Share
Basic and diluted loss per share was HK$0.45 (US$0.06) for the six months ended June 30, 2024, compared to basic and diluted earnings per share of HK$0.19 for the same period last year.
Financial Condition
As of June 30, 2024, the Company had cash and restricted cash of HK$32.8 million (US$4.2 million), compared to HK$6.8 million as of June 30, 2023.
Net cash used in operating activities was HK$17.7 million (US$2.3 million) for the six months ended June 30, 2024, compared to net cash provided by operating activities of HK$3.9 million for the same period last year.
Net cash used in investing activity was HK$3.7 million (US$0.5 million) for the six months ended June 30, 2024, compared to HK$2.1 million for the same period last year.
Net cash provided by financing activities was HK$47.5 million (US$6.1 million) for the six months ended June 30, 2024, compared to net cash used in financing activities of HK$7.0 million for the same period last year.
Exchange Rate Information
Translations of amounts from HK$ into US$ as of and for the years ended June 30, 2024 are solely for the convenience of the reader and were calculated at the noon buying rate of US$1=HK$7.8083, which was the foreign exchange rate on June 28, 2024, as published in H.10 statistical release of the United States Federal Reserve Board in its weekly release on July 1, 2024.
About mF International Limited
mF International Limited is a British Virgin Islands holding company with three operating subsidiaries in Hong Kong. The Company’s principal Hong Kong subsidiary, m-FINANCE Limited (“mF,” or “m-FINANCE”), is a Hong Kong-based experienced financial trading solution provider principally engaged in the development and provision of financial trading solutions via internet or platform as software as a service, or SaaS. m-FINANCE has approximately 20 years of experience providing real-time mission critical forex, bullion/commodities trading platform solutions, financial value-added services, mobile applications and financial information for brokers and institutional clients in the region. With clients located over mainland China, Hong Kong and Southeast Asia, m-FINANCE provides customers with the mF4 Trading Platform, Bridge and Plugins, CRM System, ECN System, Liquidity Solutions, Cross-platform “Broker+” Solution, Social Trading Apps and other value-added services. For more information, please visit the Company’s website: https://ir.m-finance.com/.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “views,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar words. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.
For investor and media inquiries, please contact:
mF International Limited
Investor Relations Department
Email: ir@m-finance.net
Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
As of December 31, 2023 and June 30, 2024
| December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash | 6,810,418 | 30,506,308 | 3,906,908 | |||||||||
| Restricted cash | - | 2,340,000 | 299,681 | |||||||||
| Accounts receivable, net | 2,579,475 | 1,112,573 | 142,486 | |||||||||
| Prepaid expenses, current | 371,143 | 12,922,493 | 1,654,969 | |||||||||
| Deposits and other current assets | - | 403,250 | 51,644 | |||||||||
| Investment at fair value | 343,862 | 343,862 | 44,038 | |||||||||
| Total current assets | 10,104,898 | 47,628,486 | 6,099,726 | |||||||||
| Non-current assets | ||||||||||||
| Property and equipment, net | 36,511 | 28,356 | 3,632 | |||||||||
| Intangible assets, net | 15,336,589 | 16,584,716 | 2,123,986 | |||||||||
| Operating lease right-of-use assets | 2,957,515 | 2,258,388 | 289,229 | |||||||||
| Prepaid expenses, non-current | - | 5,594,226 | 716,446 | |||||||||
| Long term deposit | 431,972 | 431,972 | 55,322 | |||||||||
| Deferred initial public offering (“IPO”) costs | 4,984,334 | - | - | |||||||||
| Total non-current assets | 23,746,921 | 24,897,658 | 3,188,615 | |||||||||
| Total assets | 33,851,819 | 72,526,144 | 9,288,341 | |||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accrued expenses and other payables | 1,782,265 | 376,731 | 48,248 | |||||||||
| Amount due to a related party | 306,110 | 306,110 | 39,203 | |||||||||
| Bank borrowings, current | 3,863,852 | 3,923,880 | 502,527 | |||||||||
| Contract liabilities | 4,619,690 | 9,489,991 | 1,215,372 | |||||||||
| Operating lease liabilities, current | 1,392,826 | 1,406,045 | 180,071 | |||||||||
| Income tax payable | 217,478 | 93,409 | 11,963 | |||||||||
| Total current liabilities | 12,182,221 | 15,596,166 | 1,997,384 | |||||||||
| Non-current liabilities | ||||||||||||
| Bank borrowings, non-current | 6,062,904 | 4,101,554 | 525,281 | |||||||||
| Operating lease liabilities, non-current | 1,570,307 | 852,343 | 109,159 | |||||||||
| Deferred tax liabilities, net | 2,292,955 | 1,399,592 | 179,244 | |||||||||
| Total non-current liabilities | 9,926,166 | 6,353,489 | 813,684 | |||||||||
| Total liabilities | 22,108,387 | 21,949,655 | 2,811,068 | |||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| Shareholders’ equity | ||||||||||||
| Ordinary shares, authorized to issue an unlimited number of ordinary shares of no par value, 11,585,000 and 13,251,667 shares issued and outstanding as of December 31, 2023 and June 30, 2024, respectively | 3,900 | 3,900 | 500 | |||||||||
| Additional paid-in capital | 2,042,379 | 46,418,547 | 5,950,728 | |||||||||
| Retained earnings | 9,778,545 | 4,231,954 | 541,565 | |||||||||
| Accumulated other comprehensive loss | (81,392 | ) | (77,912 | ) | (15,520 | ) | ||||||
| Total shareholders’ equity | 11,743,432 | 50,576,489 | 6,477,273 | |||||||||
| Total liabilities and shareholders’ equity | 33,851,819 | 72,526,144 | 9,288,341 | |||||||||
mF International Limited and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
For the Six Months Ended June 30, 2023 and 2024
| For the six months ended June 30, | ||||||||||||
| 2023 | 2024 | 2024 | ||||||||||
| HK$ | HK$ | US$ | ||||||||||
| Revenue | 14,153,693 | 12,470,969 | 1,597,143 | |||||||||
| Cost of revenue | 6,896,648 | 7,184,748 | 920,142 | |||||||||
| Gross profit | 7,257,045 | 5,286,221 | 677,001 | |||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expense | 79,200 | 918,731 | 117,661 | |||||||||
| Research and development expense | - | 109,231 | 13,989 | |||||||||
| General and administrative expense | 4,620,203 | 10,580,763 | 1,355,066 | |||||||||
| Total operating expenses | 4,699,403 | 11,608,725 | 1,486,716 | |||||||||
| Income (loss) from operations | 2,557,642 | (6,322,504 | ) | (809,715 | ) | |||||||
| Other income (expense) | ||||||||||||
| Other income (expenses), net | 43,643 | (18,096 | ) | (2,318 | ) | |||||||
| Realized loss on disposal of financial assets at fair value | (7,874 | ) | - | - | ||||||||
| Change in fair value on financial assets at fair value | (2,091 | ) | - | - | ||||||||
| Interest expense, net | (201,624 | ) | (99,354 | ) | (12,724 | ) | ||||||
| Total other expense, net | (167,946 | ) | (117,450 | ) | (15,042 | ) | ||||||
| Income (loss) before income taxes | 2,389,696 | (6,439,954 | ) | (824,757 | ) | |||||||
| Income tax expense (benefit) | 169,358 | (893,363 | ) | (114,412 | ) | |||||||
| Net income (loss) | 2,220,338 | (5,546,591 | ) | (710,345 | ) | |||||||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | (157 | ) | 3,480 | (5,099 | ) | |||||||
| Comprehensive income | 2,220,181 | (5,543,111 | ) | (715,444 | ) | |||||||
| Weighted average shares outstanding – basic and diluted* | 11,585,000 | 12,196,111 | 12,196,111 | |||||||||
| Earnings (loss) per share – basic and diluted* | 0.192 | (0.45 | ) | (0.06 | ) | |||||||
* Giving retroactive effect to the 1 for 231.7 share split effected on August 11, 2023.