# EDGAR Filing Document

**Accession Number:** 0001848275
**File Stem:** 0001213900-23-001420
**Filing Date:** 2023-1
**Character Count:** 120609
**Document Hash:** 20376f6bb2c9065c2a497197ac383a87
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-001420.hdr.sgml**: 20230106

**ACCESSION NUMBER**: 0001213900-23-001420

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 58

**CONFORMED PERIOD OF REPORT**: 20220930

**FILED AS OF DATE**: 20230106

**DATE AS OF CHANGE**: 20230106

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TOP Financial Group Ltd
- **CENTRAL INDEX KEY:** 0001848275
- **STANDARD INDUSTRIAL CLASSIFICATION:** SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41407
- **FILM NUMBER:** 23515589

**BUSINESS ADDRESS:**
- **STREET 1:** 118 CONNAUGHT ROAD WEST
- **STREET 2:** ROOM 1101
- **CITY:** HONG KONG
- **STATE:** K3
- **ZIP:** 000000
- **BUSINESS PHONE:** 852-3107-0731

**MAIL ADDRESS:**
- **STREET 1:** 118 CONNAUGHT ROAD WEST
- **STREET 2:** ROOM 1101
- **CITY:** HONG KONG
- **STATE:** K3
- **ZIP:** 000000

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Zhong Yang Financial Group Ltd
- **DATE OF NAME CHANGE:** 20210226

?xml version="1.0" encoding="ASCII"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of January 2023

Commission File Number: 001-41407

**<u>TOP FINANCIAL GROUP LIMITED</u>**

(Translation of registrant's name into English)

**118 Connaught Road West**

**Room 1101**

**Hong Kong**

(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 ☒ &nbsp;&nbsp;&nbsp;&nbsp; Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

**Exhibit Index**

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | [Management's Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended September 30, 2022 and 2021](ea170934ex99-1_topfinancial.htm) |
| 99.2 | [Unaudited Interim Condensed Consolidated Financial Statements for the Six Months Ended September 30, 2022 and 2021](ea170934ex99-2_topfinancial.htm) |

---

**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.

---

| | | |
|:---|:---|:---|
| Date: January 6, 2023 | **TOP FINANCIAL GROUP LIMITED** | **TOP FINANCIAL GROUP LIMITED** |
|  | By: | */s/ Ka Fai Yuen* |
|  | Name: | Ka Fai Yuen |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

*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**

TOP Financial Group Limited ("TFGL") is a holding company incorporated in the Cayman Islands with operations conducted in Hong Kong by its operating subsidiaries, ZYSL and ZYCL, both incorporated in Hong Kong, and WIN100 TECH, incorporated in the British Virgin Islands (the "Operating Subsidiaries"). We, through our Operating Subsidiaries, are an online provider of securities and futures trading services founded in Hong Kong by a group of experienced professionals and talents. Our goal is to become the preferred trading platform for Asian investors worldwide. We enable our customers to trade on renowned stock and futures exchanges around the world, including the Chicago Mercantile Exchange ("CME"), Hong Kong Futures Exchange ("HKFE"), The New York Mercantile Exchange ("NYMEX"), The Chicago Board of Trade ("CBOT"), The Commodity Exchange ("COMEX"), Eurex Exchange ("EUREX"), ICE Clear Europe Limited ("ICEU"), Singapore Exchange ("SGX"), Australia Securities Exchange ("ASX"), Bursa Malaysia Derivatives Berhad ("BMD"), and Osaka Exchange (OSE). We create value for our customers by providing reliable trading platforms, user-friendly web and app interface, and 24-hour seamless customer support. Our Operating Subsidiaries generate revenues primarily by charging commission fees on futures transactions at a flat rate for each futures transaction contract, and trading solution services fees charged at a fixed rate per transaction with a minimum monthly fee. Currently our customers are mainly high volume and frequency trading institutional and individual investors.

Our revenues were US$5.2 million and US$3.2 million for the six months ended September 30, 2022 and 2021, respectively. We, through our Operating Subsidiaries, generated net income of US$1.8 million and US$0.9 million for the six months ended September 30, 2022 and 2021, respectively. We plan to keep our business growing by expanding our customer base to include retail investors of a wider range of wealth within the Asian communities across the globe, by increasing the products we offer to include securities and futures from a larger number of stock exchanges, and by starting to offer services such as asset management, and contracts for difference ("CFD") products and services.

**Factors Affecting Our Results of Operations**

Our business and operating results are influenced by general factors that affect the online securities and futures brokerage industry focusing on Southeast Asian investors, including economic and political conditions, the evolving needs of investors, changes in trading volume, changes in demand for online trading, changes in wealth and availability of funds of our target customers, and regulatory changes governing the online brokerage industry. In addition, the following company specific factors can directly affect our results of operations materially:

*Our ability to retain existing customers and attract new customers in a cost-effective manner*

We consider customer churn rate to be an important indicator of our attractiveness to customers. Our total registered customer number increased from 292 as of March 31, 2021 to 296 as of September 30, 2022.

During the six months ended September 30, 2022, we had 26 revenue-generating accounts in total, including 10 accounts for futures trading, 7 accounts for securities trading, nil accounts for structured notes subscriber services and 9 accounts for trading solution services. During the six months ended September 30, 2021, we had 61 revenue-generating accounts in total, including 15 accounts for futures trading, 8 accounts for securities trading, 29 accounts for structured notes subscriber services and 9 accounts for trading solution services.

Our top five customers accounted for 77.1% and 94.8% of our total revenues for the six months ended September 30, 2022 and 2021, respectively. Our customers are mainly sourced by referral through our shareholders' expansive and expanding social and professional networks of high-net-worth individuals. Currently, we have not incurred significant spending on marketing activities. To expand our business, we aim to diversify our customer base by attracting smaller retail customers, whom we can charge higher commission rates. We expect 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 trading volume and revenues.

We currently pursue a niche market strategy in Hong Kong and plan to expand to Southeast Asia as the first step in achieving the final goal of becoming the preferred online trading platforms for Asian investors worldwide, including the United States. As a relatively young firm new to the market, although we face competition from bigger, better capitalized, and well established companies including other trading firms and banking institutions, our ability to understand and meet our target customers' needs, coupled with our strong client relationships, allow us to rise to the challenge. Our ability to continuously provide our customers with low-latency trading platforms and high quality services at competitive prices, and the outcome of our advertising and marketing activities, will affect whether we can retain our existing customers and attract new customers.

 

*Our ability to earn commissions from brokerage services* 

We charge commission fees for the brokerage services we offer. Our ability to earn commission fees, interest income largely depends on the number of customers on our trading platforms and their trading volume, and the commission rates we charge.

It has become increasingly common for online trading platforms to offer free brokerage services. As a provider of brokerage services on chargeable only trading platforms, we are confident that we can differentiate ourselves from our competitors, as we offer low-latency trading platforms, a wide range of products from multiple exchanges, quality customer services and maintain a good relationship with our customers. Most of our customers are professional customers seeking for quality trading platforms to execute their orders timely and accurately rather than cost saving.

We anticipate a future possibility of having to lower our commission rates in order to remain competitive, but we believe that a larger trading volume would make up for the effects of lowered commission rates on our revenues. We also plan to develop new sources of income from asset management, and CFD products and services, as we have seen the demand for these services by our customers.

*Our ability to effectively improve technology infrastructure*

Our technology infrastructure and compliance capabilities are critical for us to offer high quality products and services as well as to retain and attract users and customers. They also enable us to facilitate secure, fast and cost-efficient financial transactions on our platform. We must continue to upgrade and expand our technology infrastructure and to strengthen our compliance system to keep pace with the growth of our business and to develop new features and services for our users and customers. With the continuous improvement of our technology infrastructure and compliance capabilities, we are able to serve more consolidated accounts. We also expect cash segregated for regulatory purposes and payables due to customers on our balance sheet to increase significantly as a result of such growth. We intend to invest more resources on customer verification, record keeping, compliance and trading-related functions for consolidated accounts. Our ability to serve more consolidated accounts, depends on, among other things, our ability to support all aspects of customer verification, record keeping and compliance functions using our technology and human resources.

 

*Our ability to develop a diverse customer base and offer new and innovative products and services* 

 

Historically, we have generated a significant portion of our revenues through the provision of online brokerage services including commissions for execution of trades and interest income. Key success factors of the online brokerage industry include expansion of products and services that add value to customers, acquisition of licenses in different jurisdictions and enhancement of user experience. To this end, we intend to continue strengthening the innovation, security, efficiency and effectiveness of our brokerage services, including our user-friendly interface, comprehensive functionalities and customer service capabilities. Particularly, we intend to expand our service offerings to CFD trading and increase the proportion of revenues generated from them.

We also plan to continue integrating value-added services, including asset management services to increase revenues streams. Our ability to maintain and attract new customers principally depends on the quality of our products and services as well as our brand equity. We expect our operating cost and expenses to continue to increase as we provide more innovative and effective products and services.

<u>Contract for Difference</u>

 

We are preparing the launch of CFD products and services in the second quarter of 2023. We expect to generate CFD trading revenues from (i) commissions, (ii) bid/offer spreads, (iii) difference in interest rates. In particular, we plan to:

---

| | |
|:---|:---|
| i). | charge commissions for all CFD transactions. The amount of commissions we charge is largely based on the trading volume, with commission rates varying between US$2.25 to US$50 per lot, based on the per-lot value and the type of product traded, as well as discounts offered to different clients. |

---

ii). mark up the bid/offer spreads for CFD products on top of the prices offered by our clients, exchanges or third-party market makers, as the case may be. Our price mark-ups over the price offered by an exchange vary depending on the underlying product.

iii). automatically roll-over currency positions each day and provide either a credit or debit for the interest rate difference between the two currencies in the pairs being held. The clients' debits are our gains.

<u>Asset Management Services</u>

Based on our clients' different needs, we plan to provide personalized investment strategies to optimize their asset allocations. Our clients can purchase a wide variety of investment portfolios, which include assets such as stocks, bonds, ETFs, investment funds and derivatives. We charge management fees based on their assets under management as well as commissions for certain transactions.

*Our ability to provide stable and low-latency trading platforms to our customers*

As an online brokerage service provider, we attract new customers and retain our existing customers by providing them with stable and low-latency trading platforms. Especially when the market is volatile and high trade volume is expected, we are able to avoid delays in execution of customers' trading orders and assist the customers to accomplish their investment plan.

Our plan to maintain our quality trading platform involves keeping our system hardware and software up to date, conducting regular stress tests, and providing IT training to our staff. We also plan to have regular meetings with our network provider to ensure the stability of internet services in support of our trading platform. We have implemented emergency backup plan in case of system failure. Our backup system is able to support our customers' trading activities until the core system is fixed. Our stable and low-latency trading platforms are a core part of our strength, and we are committed to continue our efforts in maintaining the reliability and efficiency of our trading platforms.

 

*Our ability to meet the regulatory requirements to provide brokerage, margin financing and asset management services in Hong Kong*

Brokerage services, margin financing and asset management are highly regulated in Hong Kong. While our operations are mainly located in Hong Kong, we are inevitably subject to the relevant laws and regulations, in particular, the Securities and Futures Ordinance (Cap. 571) ("SFO"), under the supervision of the Securities and Futures Commission of Hong Kong ("HKSFC"). Pursuant to the SFO, we have to comply with all application provisions concerning statutory obligations such as maintenance of minimum capital adequacy, specific regulatory reporting, and availability of responsible officers.

We monitor our capital level on daily basis so as to fulfill the statutory requirements. Before making a significant movement of our cash, we will estimate the effect of sub activity on our capital level and make sure to remain compliant with the regulations. Accordingly, we also have statutory obligations to report to the authority on monthly basis about our capital level maintained at the end of the month and if any significant fluctuations occurred that we shall notify the authority.

Besides, as required by the SFO, there must be at least two responsible officers per regulated activity, who will supervise our regulated business and assume greater responsibilities over the SFO compliance. To maintain compliance, we have always maintained two to three experienced responsible officers for each regulated activity. To retain our responsible officers and stay compliant with the availability of responsible officer, we offer attractive remuneration packages and align their interests with the Company's interests.

***Impact of COVID-19 on our business***

Since early 2020, the ongoing COVID-19 pandemic has caused significant disruption to worldwide economic activities, including economic activities in Hong Kong (where we operate in), and in China, (where our significant customer base locates). The Chinese government and the local Hong Kong government have imposed travel restrictions and quarantine requirements in response to COVID-19. These measures hinder our client development, as clients who do not currently reside in Hong Kong could not easily travel to Hong Kong to open bank accounts, which affect their ability to trade on our platform. We have suspended face-to-face account opening, and instead implemented remote KYC procedures, which have partially compensated for the challenges caused by COVID-19 related restrictions.

Through our timely adaptation to remote procedures, our total registered customer number increased from 292 as of March 31, 2022 to 296 as of September 30, 2022. In the year ended March 31, 2022, we had 74 revenue-generating accounts in total, including 16 accounts for futures trading, 15 accounts for securities trading, 34 accounts for structured notes subscriber services and 9 accounts for trading solution services. In the six months ended September 30, 2022, we had 26 revenue-generating accounts in total, including 10 accounts for futures trading, 7 accounts for securities trading, and 9 accounts for trading solution services.

During the period from April 2022 to September 2022, the trading volume of futures contracts increased by 28.8% year on year. During the period from April 2021 to September 2021, the trading volume of futures contracts decreased by 71.4% year on year. We believed the decrease was caused by the investors' reduced risk tolerance as a result of capital market volatility. However, we are uncertain as to when the COVID-19 pandemic will be constrained, so these government measures could continue to hinder us for a prolonged period of time, and we cannot guarantee our current remote procedures will be sufficient to allow us to attain our target growth in the future. In addition, whether the COVID-19 pandemic will lead to a prolonged downturn in the economy is still unknown, and we cannot be certain if a prolonged downturn in the economy will affect our clients' trading activities. Although the COVID-19 pandemic has not severely affected our financial results so far, we cannot assure you that the COVID-19 pandemic will not materially and adversely affect our business, financial condition, and operations in the future.

**Key Components of Results of Operations**

***Revenues***

Our revenues consist of commissions, trading solution services and other service revenues, trading gains, interest income and others. The following table sets forth the breakdown of our total revenues, both in absolute amount and as a percentage of our total revenues, for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **US$** | **%** | **US$** | **%** |
| **Revenues:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Futures brokerage commissions | 2639572 | 51.2 | 2432281 | 75.7 |
| &nbsp;&nbsp;&nbsp;Trading solution services fees | 2369296 | 45.9 | 978126 | 30.5 |
| &nbsp;&nbsp;&nbsp;Other service revenues | 56778 | 1.1 | 295528 | 9.2 |
| &nbsp;&nbsp;&nbsp;Trading gains (losses) | 6098 | 0.1 | (497476) | (15.5) |
| &nbsp;&nbsp;&nbsp;Interest income and others | 85664 | 1.7 | 2306 | 0.1 |
| **Total revenues** | **5157408** | **100.0** | **3210765** | **100.0** |

---

*Futures brokerage commissions*

Futures brokerage commissions represent commission income on futures broking that are charged at a fixed rate for each transaction our customers executed through our online trading platforms, all of which are under the consolidated accounts where the customer information is not disclosed to the third party brokers. We receive commissions from customers and pay the execution and clearing fees to our clearing brokers. The fixed rates applied to the customers vary depending on the type of customer, the type of transaction, the trading method, and the trade volume from the particular customer. Commissions from futures broking make up for most of our revenues, at 51.2% and 75.7% of the total revenues for the six months ended September 30, 2022 and 2021, respectively.

*Trading solution services fees*

During the six months ended September 30, 2021, we started providing trading solution services to customers (including individuals, proprietary trading companies or brokerage companies) for their trading on derivatives, equity, CFD and financial products, through our internally developed proprietary investment management software. We provide a variety of functions suitable for front-end transaction executions and back-office settlement operations. We charge each customer a fixed amount of initial installation fee and the monthly service fee based on a fixed rate per transaction executed on the platform with a minimum monthly fee. Trading solution services fees accounted for 45.9% and 30.5% of total revenues during the six months ended September 30, 2022 and 2021, respectively.

 

*Other service revenues*

 

Other service revenues represent the revenues generated from rendering other financial services including securities brokerage, consulting services, structured note subscriber services and currency exchange services. Since December 2020, we have entered into the structured products business with fund houses and asset management companies and are responsible for providing subscriber services. We generally receive subscription fees calculated with reference to the amount subscribed by our clients of the structured products. For the six months ended September 30, 2022 and 2021, other service revenues accounted for 1.1% and 9.2% of total revenues, respectively.

The margin financing services did not generate any revenue for the six months ended September 30, 2022 and 2021. For options trading, we have the capacity to offer options trading services and they are available to our clients. However, there was no revenue generated from options trading services for the relevant periods.

*Trading gains (losses)*

 

We began proprietary trading in US stocks since March 2020. The trading gain (losses) mainly consist of realized and unrealized gains and losses from investment in US stocks, which are included in securities owned, at fair value. Trading gains make up for 0.1% and negative 15.5% of total revenues for the six months ended September 30, 2022 and 2021, respectively.

*Interest income and others*

 

Interest income and others primarily consist of interests earned on bank deposits.

***Expenses***

 ****

The following table sets forth our operating cost and expenses, both in absolute amount and as a percentage of total revenues, for the years indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** |
|  | **2022** | **2022** | **2021** | **2021** |
|  | **US$** | **%** | **US$** | **%** |
| **Expenses:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Commission expenses | 1737516 | 33.7 | 1514176 | 47.2 |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 487974 | 9.5 | 288583 | 9.0 |
| &nbsp;&nbsp;&nbsp;Communications and technology | 309600 | 6.0 | 213921 | 6.7 |
| &nbsp;&nbsp;&nbsp;Occupancy | 62461 | 1.2 | 60986 | 1.9 |
| &nbsp;&nbsp;&nbsp;Travel and business development | 125704 | 2.4 | 24440 | 0.8 |
| &nbsp;&nbsp;&nbsp;Professional fees | 524574 | 10.2 | 177938 | 5.5 |
| &nbsp;&nbsp;&nbsp;Interest income and others | 71396 | 1.4 | 21413 | 0.7 |
| **Total expenses** | **3319225** | **64.4** | **2301457** | **71.8** |

---

*Commission expenses*

Commission expenses represent the fees we paid to our broker partners, when we place a client order to an exchange market through these partners. We expect that our commission expenses will increase in absolute amount as we expand our brokerage business and offer more products from securities and futures exchanges around the world. We place orders through broker partners except for orders to the Hong Kong Stock Exchange. Commission expenses accounted for 33.7% and 47.2% of our revenues for the six months ended September 30, 2022 and 2021, respectively.

*Compensation and benefits*

 

Compensation and benefits represent the salaries, performance based discretionary bonuses and contribution to retirement fund. Compensation and benefits expenses accounted for 9.5% and 9.0% of our revenues for the six months ended September 30, 2022 and 2021, respectively.

*Communications and technology*

 

Communications and technology expenses represent fees we paid for the use of third party electronic trading systems, including an online stock trading system, an online futures trading system, and another futures trading system that was a one-time incidental cost pursuant to a customer's special request, as well as the outsourced trading solution support services. Communications and technology expenses accounted for 6.0% and 6.7% of our revenues for the six months ended September 30, 2022 and 2021, respectively.

*Occupancy*

 

Occupancy expenses are the rental expenses we paid for our office premises, which accounted for 1.2% and 1.9% of our revenues for the six months ended September 30, 2022 and 2021, respectively.

*Travel and business development, Professional fees and Other administrative expenses*

Travel and business development expenses include overseas and local travelling, and the entertainment expenses. Professional fees are mainly the service fees for auditing, consulting, legal, and other professional services which are needed during the ordinary course of our business operation. Other administrative expenses primarily consist of fees paid to the Stock Exchange of Hong Kong and Chicago Mercantile Exchange, business entertainment expenses, exchange difference, depreciation expense, finance costs and other miscellaneous expenses such as utilities. All of these expenses accounted for 14.0% and 7.0% of our revenues for the six months ended September 30, 2022 and 2021, respectively.

**Taxation**

*Cayman Islands* and *British Virgin Islands*

Under the current laws of the Cayman Islands and British Virgin Islands, we are not subject to tax on income or capital gains. Neither Cayman Islands nor British Virgin Islands withholding tax will be imposed upon payments of dividends to our shareholders.

*Hong Kong*

Our subsidiaries incorporated in Hong Kong are subjected to Hong Kong profits tax at a rate of 16.5% for taxable income earned in Hong Kong before April 1, 2018. Starting from the financial year commencing on April 1, 2018, the two-tiered profits tax regime took effect, under which the tax rate is 8.25% on assessable profits of the first HK$2 million and 16.5% on any assessable profits in excess of HK$2 million. For connected entities, as is the case of our two Hong Kong subsidiaries, ZYSL and ZYCL, only one of the connected entities can elect to be charged at two-tiered tax rates. For the six months ended September 30, 2022 and 2021, ZYSL has elected to be charged at two-tiered tax rates, while ZYCL is still subject to Hong Kong profits tax rate at 16.5% of taxable income earned in Hong Kong. Hong Kong does not impose a withholding tax on dividends.

**Results of Operations**

The following table sets forth a summary of our consolidated results of operations for the six months ended September 30, 2022 and 2021 as indicated, and provides information regarding the dollar and percentage increase or (decrease) during such periods. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The operating results in any period are not necessarily indicative of the results that may be expected for any future trends.

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** <br> **September 30,** | **For the Six Months Ended** <br> **September 30,** |
|  | **2022** | **2021** |
| **Revenues** |  |  |
| &nbsp;&nbsp;&nbsp;Futures brokerage commissions | $2639572 | $2432281 |
| &nbsp;&nbsp;&nbsp;Trading solution services fees | 2369296 | 978126 |
| &nbsp;&nbsp;&nbsp;Other service revenues | 56778 | 295528 |
| &nbsp;&nbsp;&nbsp;Trading gains (losses) | 6098 | (497476) |
| &nbsp;&nbsp;&nbsp;Interest income and others | 85664 | 2306 |
| **Total revenues** | **5157408** | **3210765** |
| **Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Commission expenses | 1737516 | 1514176 |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 487974 | 288583 |
| &nbsp;&nbsp;&nbsp;Communications and technology | 309600 | 213921 |
| &nbsp;&nbsp;&nbsp;Occupancy | 62461 | 60986 |
| &nbsp;&nbsp;&nbsp;Travel and business development | 125704 | 24440 |
| &nbsp;&nbsp;&nbsp;Professional fees | 524574 | 177938 |
| &nbsp;&nbsp;&nbsp;Other administrative expenses | 71396 | 21413 |
| **Total expenses** | **3319225** | **2301457** |
| **Income before income taxes** | **1838183** | **909308** |
| Income tax expenses | - | 42865 |
| **Net income** | **1838183** | **866443** |

---

***Revenues***

Total revenues increased by 60.6% from US$3.2 million in six months ended September 30, 2021 to US$5.2 million in six months ended September 30, 2022. The increase was mainly driven by an increase of $0.2 million in future brokerage commission, an increase of $1.4 million in trading solution services, and a change from trading gain (loss) of US$0.5 million.

*Futures brokerage commissions –* Futures brokerage commissions increased by 8.5% from US$2.4 million in the six months ended September 30, 2021 to US$2.6 million in the six months ended September 30, 2022, primarily due to increased futures contract volume on our platform. Trading volume of futures contracts increased from 1.4 million of futures contracts in the six months ended September 30, 2021 to 1.9 million of futures contracts in the six months ended September 30, 2022.

*Trading solution services fees –* The Company commenced trading solution services to customers since May 2021. For the six months ended September 30, 2022 and 2021, the Company generated revenues of $2.4 million and $1.0 million, respectively, from provision of trading solution services to nine customers.

 

*Trading gains (losses) –*The Company had trading losses of US$0.5 million in the six months ended September 30, 2021 as compared to trading gains of US$6,098 in the six months ended September 30, 2022, which was mainly driven by the market condition of the US stock market.

***Expenses***

*Commission expenses –* Commission expenses increased by 14.7% to US$1.7 million in the six months ended September 30, 2022 from US$1.5 million in the six months ended September 30, 2021. The increase in commission expenses was in line with the increase of commission income resulting from increase of futures contract volume on our platform from 1.4 million of futures contracts in the six months ended September 30, 2021 to 1.9 million of futures contracts in the six months ended September 30, 2022.

*Compensation and benefits –* Compensation and benefits increased by 69.1% from US$0.3 million in the six months ended September 30, 2021 to US$0.5 million in the six months ended September 30, 2022, which was mainly caused by employment of a responsible officer during the six months ended September 30, 2022.

*Communications and technology –* Communications and technology expenses increased by 44.7% from US$0.2 million in the six months ended September 30, 2021 to US$0.3 million in the six months ended September 30, 2022 due to providing increased trading solution services to our customers.

*Travel and business development –* Travel and business development expenses increased by 414.3% from US$24,440 in the six months ended September 30, 2021 to US$0.1 million in the six months ended September 30, 2022. The increase was primarily due to increase of travel expenses incurred to the United States for celebration of the Company's listing on NASDAQ.

*Professional fees –* Professional fees increased by 194.8% from US$0.2 in the six months ended September 30, 2021 to US$0.5 million in the six months ended September 30, 2022. The increase in professional fees was primarily incurred for initial public offering ("IPO") audit fees.

 ****

***Income before income taxes***

We had an income before income taxes of US$1.8 million and US$0.9 million in the six months ended September 30, 2022 and 2021, respectively. Our operating margin was 35.6% and 28.3% in the six months ended September 30, 2022 and 2021, respectively.

***Income tax expense***

We are subject to Hong Kong profits tax and under Hong Kong tax laws; ZYSL and ZYCL are exempted from income tax on its foreign-derived income. Our income tax expense decreased from US$0.04 million in the six months ended September 30, 2021 to US$nil for the six months ended September 30, 2022, which was primarily due to decrease of the onshore profit generated by ZYSL in the six months ended September 30, 2022.

***Net income***

As a result of the foregoing, our net income increased by 112.2% from US$0.9 million in the six months ended September 30, 2021 to US$1.8 million in the six months ended September 30, 2022.

**Discussion of Certain Balance Sheet Items**

The following table sets forth selected information from our unaudited condensed consolidated balance sheets as of September 30, 2022 and March 31, 2022. This information should be read together with our consolidated financial statements and related notes included in the Form 20-F which filed with Securities and Exchange Commission ("SEC") on August 16, 2022.

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2022** | **March 31,**<br>**2022** |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $23485746 | $6199213 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 2187567 | 1757546 |
| &nbsp;&nbsp;&nbsp;Receivables from broker-dealers and clearing organizations | 1971101 | 2360157 |
| &nbsp;&nbsp;&nbsp;Receivables from customers | 2843072 | 1230542 |
| &nbsp;&nbsp;&nbsp;Payments on behalf of customers for trading activities | 2626386 |  |
| &nbsp;&nbsp;&nbsp;Receivables from a customer – related party | 1512129 |  |
| &nbsp;&nbsp;&nbsp;Securities owned, at fair value | 2013675 | 1288747 |
| &nbsp;&nbsp;&nbsp;Fixed assets, net | 413934 | 421285 |
| &nbsp;&nbsp;&nbsp;Intangible asset, net | 63696 | 63837 |
| &nbsp;&nbsp;&nbsp;Right of use assets | 202536 | 242665 |
| &nbsp;&nbsp;&nbsp;Deposit for long-term investments | 200000 |  |
| &nbsp;&nbsp;&nbsp;Income tax recoverable | 45863 | 20292 |
| &nbsp;&nbsp;&nbsp;Other assets | 1054300 | 296532 |
| **Total assets** | $**38620005** | $**13880816** |
| **Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;Payable to customers | $3660323 | $3210113 |
| &nbsp;&nbsp;&nbsp;Payable to customer – related parties | 99204 | 99423 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | 145855 | 131317 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 201774 | 244861 |
| **Total liabilities** | $**4107156** | $**3685714** |

---

***Cash and cash equivalents***

Cash and cash equivalents consist of funds deposited with banks, which are highly liquid and are unrestricted as to withdrawal or use. The total balance of cash and cash equivalents increased from US$6.2 million as of March 31, 2021 to US$23.5 million as of September 30, 2022, primarily as a result of net proceeds of $22.7 million raised in IPO, net off against cash of $4.7 million used in operating activities.

 ****

***Restricted cash***

Restricted cash mainly represents the amount of cash deposited by our customers that have been segregated as obligated by the rules mandated by the primary regulators of our certain subsidiaries. A corresponding payable due to customers is recorded upon receipt of the cash from the customer. Our restricted cash increased from US$1.8 million as of March 31, 2021 to US$2.2 million as of September 30, 2022, which was in line with trading volume of futures contracts.

***Receivables from broker-dealers and clearing organizations***

Receivables from broker-dealers and clearing organizations arise from the business of dealing in futures or investment securities. Broker-dealers will require balances to be placed with them in order to cover the positions taken by its customers, which are repayable on demand subsequent to settlement date. Clearing house receivables typically represent proceeds receivable on trades that have yet to settle and are usually collected within two days. Generally, our receivables from broker-dealers and clearing organizations change daily depending on various factors, including the trading volume in net buy/sell transactions, futures contracts, long/short position and frequency of transactions on each specific day. Our receivables from broker-dealers and clearing organizations decreased by 16.5% from US$2.4 million as of March 31, 2022 to US$2.0 million as of September 30, 2022, mainly due to such daily fluctuations.

 **

***Receivables from customers***

 **

Receivables from customers include the future brokerage commissions due, trading solution services fees and other amounts due from customers once the transactions have been executed and completed. The balance of receivables due from customers increased from US$1.2 million as of March 31, 2022 to US$2.8 million as of September 30, 2022. The increase was a result of increase of trading solution services and we provided a longer credit term to our existing customers to keep customer relationship.

***Payments on behalf of customers for trading activities***

Payment on behalf of customers for trading activities represent payments advanced by the Company on behalf of customers for investment securities through broker dealers. The customers do not have the rights to direct the trading of these securities until they payoff the outstanding balance.

 ****

***Amount due from a related party***

Amount due from a related party represents the payment on behalf of one related party for trading activities. As of the date of this report, the related party fully repaid the balance to the Company.

***Securities owned, at fair value***

Securities owned, at fair value, mainly represented investment in US stocks, all of which are on S&P500 index. The Company also invested in HK stocks since fiscal year 2021.

***Payables to customers***

Payables to customers represent payables related to the Company's customer trading activities, which include the cash deposits received by the Company as requested by third party broker-dealers to place with them in order to cover the positions taken by its customers, clearing house payables due on pending trades and payable on demand, as well as the bank balances held on behalf of customers. Our payables to customers increased by 14.0%, from US$3.2 million as of March 31, 2022 to US$3.7 million as of September 30, 2022. Our payables to customers change daily depending on various factors, including the trading volume, net buy/sell transactions, futures contracts, long/short position and frequency of transactions on each specific day. The change of these items from the value as of March 31, 2022 to the value as of September 30, 2022 was mainly due to such daily fluctuations.

 ****

**Liquidity and Capital Resources**

Our principal sources of liquidity to finance our operating activities have been net cash generated from operating activities and equity financing. As of September 30, 2022, we had US$25.7 million in cash, cash equivalents and restricted cash, out of which US$14.7 million was held in U.S. dollars and the rest was held in Hong Kong dollars and other currencies.

On June 3, 2022, the Company completed its initial public offering on the National Association of Securities Dealers Automated Quotations ("NASDAQ"). In this offering, 5,000,000 ordinary shares were issued at a price of $5.00 per share. The gross proceeds received from the initial public offering totaled US$25.0 million.

We believe that our current cash, cash equivalents and restricted cash and our anticipated cash flows from operations will be sufficient to meet our cash needs for general corporate purposes for at least the next 12 months. After this offering, we may decide to enhance our liquidity position or increase our cash reserve for future operations and investments through additional financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increasing fixed obligations and could result in operating covenants that would restrict our operations.

 ****

*Regulatory Capital Requirements*

Subject to certain exemptions specified under the Securities and Futures (Financial Resources) Rules of Hong Kong (the "HK Financial Resources Rules"), two of our Hong Kong subsidiaries, ZYSL and ZYCL, are securities dealers and asset management companies registered with the Securities and Futures Commission of Hong Kong (the "HKSFC"), an independent statutory body set up in accordance with the Securities and Futures Ordinance of the law of Hong Kong, and thus are required to maintain minimum paid-up share capital and required liquid capital in accordance with the HK Financial Resources Rules. The following table sets forth a summary of the key requirements under the HK Financial Resources Rules that are applicable to ZYSL and ZYCL:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Company** | **Type of regulated activities governed<br> by the HKSFC** | | **Minimum amount of paid- <br> up capital** | | **Required liquid<br> capital** |
| ZYSL | Type 1 and 2 | HK$ | 10000000 | HK$ | 3,000,000 or <sup>(i)</sup> |
| ZYCL | Type 4, 5 and 9 | HK$ | 5000000 | HK$ | 3,000,000 or <sup>(i)</sup> |

---

(i) for
company licensed for any regulated activities other than Type 3 regulated activities, its variable required liquid capital, which means
5% of the aggregate of (a) its adjusted liabilities, (b) the aggregate of the initial margin requirements in respect of outstanding futures
contracts and outstanding options contracts held by it on behalf of its clients, and (c) the aggregate of the amounts of margin required
to be deposited in respect of outstanding futures contracts and outstanding options contracts held by it on behalf of its clients, to
the extent that such contracts are not subject to the requirement of payment of initial margin requirements.

As of September 30, 2022 and March 31, 2022, all of our operating subsidiaries were in compliance with their respective regulatory capital requirements.

*Cash Flows*

**Six months ended September 30, 2022 and 2021**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** |
|  | **2022** | **2021** |
|  | **US$** | **US$** |
| Net cash (used in) provided by operating activities | (4721077) | 2336583 |
| Net cash used in investing activities | (200000) |  |
| Net cash provided by financing activities | 22651029 |  |
| Effect of exchange rates on cash, cash equivalents and restricted cash | (13398) | (13246) |
| Net increase in cash, cash equivalents and restricted cash | 17716554 | 2323337 |
| Cash, cash equivalents and restricted cash, beginning of period | 7956759 | 6835476 |
| Cash, cash equivalents and restricted cash, end of period | **25673313** | **9158813** |

---

*Operating activities*

Net cash used in operating activities in the six months ended September 30, 2022 was US$4.7 million, as compared to the net profit of US$1.8 million. The difference was primarily attributable to (i) an increase of US$1.6 million in receivables due from customers as a result of increase in revenues from trading solution services, (ii) an increase of US$4.1 million in payments on behalf of customers for trading securities, including both third parties and related parties, and (iii) an increase of US$0.9 million in other assets.

Net cash provided by operating activities in the six months ended September 30, 2021 was US$2.3 million, as compared to the net profit of US$0.9 million. The difference was primarily attributable to (i) an increase of US$2.6 million in payables to customers including third party and related party customers, (ii) an increase of US$0.8 million in receivables from customers and (iii) an increase of $0.3 million in securities owned, at fair value.

*Investing activities*

Net cash used in investing activities in the six months ended September 30, 2022 was US$0.2 million, which was fully used in payments of deposits for long-term investments.

We had no cash provided by or used in investing activities for the six months ended September 30, 2021.

 

*Financing activities*

Net cash provided by financing activities in the six months ended September 30, 2022 was US$22.7 million, which was provided by net proceeds of US$22.7 million from issuance of ordinary shares in the initial public offering.

We had no cash provided by or used in financing activities for the six months ended September 30, 2021.

**Off-Balance Sheet Commitments and Arrangements**

We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders' equity or that are not reflected in our consolidated financial statements. Moreover, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

**Critical Accounting Policies, Judgments and Estimates**

Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies previously disclosed in our Form 20-F filed on August 16, 2022.

**Recent Accounting Pronouncements**

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report.

**Internal Control over Financial Reporting**

Prior to the completion of this offering, we were a private company with limited accounting personnel and other resources with which to address our internal control and procedures over financial reporting. We have identified "material weaknesses" and other control deficiencies in our internal control over financial reporting. Auditing Standard No. 5, published by the U.S. Public Company Accounting Oversight Board ("PCAOB"), defines a "material weakness" as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. Such material weaknesses, if not timely remedied, may lead to significant misstatements in our consolidated financial statements in the future.

One material weakness that has been identified related to our lack of sufficient financial reporting and accounting personnel with appropriate knowledge of the generally accepted accounting principles in the United States ("U.S. GAAP") and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements. The other material weakness that has been identified related to our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.

To remedy the identified material weaknesses, we have implemented and will continue to implement several measures to improve our internal control over financial reporting, including: (i) recruiting additional employees and external consultants with extensive knowledge of U.S. GAAP and SEC financial reporting requirements within our finance and accounting department; (ii) setting up a comprehensive accounting policy, checklists and procedure manual in accordance with U.S. GAAP and SEC financial reporting requirements; (iii) implementing new closing and reporting procedures to ensure the accuracy and adequacy of financial data for the preparation of financial statements, (iv) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel; (v) improving financial oversight function for handling complex accounting issues under U.S. GAAP; and (vi) continuously developing and enhancing our internal audit function for the financial reporting matters. However, the implementation of these measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting.

Pursuant to the JOBS Act, we qualify as an "emerging growth company as we recorded revenues less than US$1.07 billion in our most recent fiscal year, which allows us to take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act, in the assessment of the emerging growth company's internal control over financial reporting.

Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley Act for purposes of identifying and reporting any weakness in our internal control over financial reporting, which, however, will be required once we become a public company and after we cease to be an "emerging growth company" as such term is defined in the JOBS Act. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have been identified.

**Holding Company Structure**

TFGL is a holding company incorporated in the Cayman Islands with no material operations of its own. We conduct our operations primarily in Hong Kong through our subsidiaries in Hong Kong.

As a result, TFGL's ability to pay dividends may depend upon dividends paid by our Hong Kong subsidiaries. If our existing Hong Kong subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.

**Inflation**

Inflation in Hong Kong has not materially affected our results of operations in recent years. According to the Census and Statistics Department of Hong Kong, the year-over-year percent changes in the consumer price index was an increase of 1.7% and 0.6% for fiscal years ended March 31, 2022 and 2021, respectively. Although we have not been affected by inflation in the past, we may be affected if Hong Kong and any other jurisdiction where we operate in the future experience higher rates of inflation in the future.

**Quantitative and Qualitative Disclosures about Market Risk**

 

*Foreign Exchange Risk*

Substantially all of our revenues and expenses are denominated in U.S. dollars and Hong Kong dollars and our expenses are denominated in U.S. dollars, Hong Kong dollars and Euro. We have not used any derivative financial instruments to hedge exposure to such risk. Financial instruments held for proprietary trading are denominated in Hong Kong dollars, U.S. dollars and EURO. Although in general our exposure to foreign exchange risks should be limited, the value of your investment in our Ordinary Shares will be affected by the exchange rate between the U.S. dollar and Hong Kong dollar as well as between U.S. dollar and EURO because a substantial portion of our operating costs and expenses is effectively denominated in EURO, while our Ordinary Shares will be traded in U.S. dollars. We may seek to reduce the currency risk by entering into foreign currency instruments. We did not have any currency hedging instruments as of September 30, 2022 and March 31, 2022, however management monitors movements in exchange rates closely.

To the extent we need to convert U.S. dollars into Hong Kong dollars for our operations, appreciation of Hong Kong dollar against the U.S. dollar would reduce the amount in Hong Kong dollars we receive from the conversion. Conversely, if we decide to convert Hong Kong dollars into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares, or for other business purposes, appreciation of the U.S. dollar against the Hong Kong dollar would reduce the U.S. dollar amounts available to us.

*Interest Rate Risk*

Our exposure to interest rate risk relates primarily from our bank deposits and receivables from brokers and dealers. We have not used any derivative financial instruments to manage our interest risk exposure. Although these interest earning instruments carry a degree of interest rate risk, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However, our future interest income may fall short of expectations due to changes in market interest rates.

*Credit Risk*

Our exposure to credit risk, which will cause a financial loss to us due to failure to discharge an obligation by the counterparties, relates primarily to our bank deposits (including our own cash at banks as well as the segregated clients account balances), receivables from brokers and dealers, and amount due from a related company. We consider the maximum exposure to credit risk equals to the carrying amount of these financial assets in the consolidated statement of financial position.

For bank deposits and receivables from brokers and dealers, the credit risk is limited as the counterparties are reputable financial institutions, brokers, dealers or clearing houses, which are governed by regulators including the Hong Kong Monetary Authority, and the HKSFC. The credit risk exposure arising from the amount due to a related company is considered to be minimal as the related company is owned by our major shareholder and under common control.

Other than concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings, we do not have any other significant concentrations of credit risk.

To mitigate the credit risk from defaults, we have adopted a credit policy of dealing with creditworthy counterparties only, which are also under continuous monitoring. Our credit exposure is controlled by counterparty limits that are reviewed and approved by our senior management periodically.

*Price risk*

Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or all instruments in the market. We are exposed to price risk in respect of financial instruments held for proprietary trading, which comprises investments in certain equity securities. The exposure is limited to the carrying amount of the financial instruments.

**Disclosure Regarding Forward-Looking Statements**

Statements in this current report with respect to the Company's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. Therefore, investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.

All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

## Exhibit 99.2

?xml version="1.0" encoding="ASCII"?

**Exhibit 99.2**

**Top Financial Group Limited**

**Condensed Consolidated Balance Sheets**

**(Expressed in U.S. Dollars, except for the number of shares)**

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2022** | **March 31,**<br>**2022** |
|  | **(unaudited)** | |
| **Assets** |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $23485746 | $6199213 |
| &nbsp;&nbsp;&nbsp;Restricted cash | 2187567 | 1757546 |
| &nbsp;&nbsp;&nbsp;Receivables from broker-dealers and clearing organizations | 1971101 | 2360157 |
| &nbsp;&nbsp;&nbsp;Receivables from customers | 2843072 | 1230542 |
| &nbsp;&nbsp;&nbsp;Payments on behalf of customers for trading activities | 2626386 | - |
| &nbsp;&nbsp;&nbsp;Receivables from a customer – related party | 1512129 | - |
| &nbsp;&nbsp;&nbsp;Securities owned, at fair value | 2013675 | 1288747 |
| &nbsp;&nbsp;&nbsp;Fixed assets, net | 413934 | 421285 |
| &nbsp;&nbsp;&nbsp;Intangible asset, net | 63696 | 63837 |
| &nbsp;&nbsp;&nbsp;Right of use assets | 202536 | 242665 |
| &nbsp;&nbsp;&nbsp;Deposit for long-term investments | 200000 | - |
| &nbsp;&nbsp;&nbsp;Income tax recoverable | 45863 | 20292 |
| &nbsp;&nbsp;&nbsp;Other assets | 1054300 | 296532 |
| **Total assets** | $**38620005** | $**13880816** |
| **Liabilities and shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;Payable to customers | $3660323 | $3210113 |
| &nbsp;&nbsp;&nbsp;Payable to customer – related parties | 99204 | 99423 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | 145855 | 131317 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 201774 | 244861 |
| **Total liabilities** | **4107156** | **3685714** |
| Commitments and contingencies |  |  |
| **Shareholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common shares, $0.001 par value, 150,000,000 shares authorized; 35,050,000 and 30,000,000 shares issued and outstanding at September 30, 2022 and March 31, 2022, respectively) | 35050 | 30000 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 25423909 | 2934595 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 9102714 | 7264531 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (48824) | (34024) |
| **Total shareholders' equity** | **34512849** | **10195102** |
| **Total liabilities and shareholders' equity** | $**38620005** | $**13880816** |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Top Financial Group Limited**

**Unaudited Condensed Consolidated Statements of Income and Comprehensive Income**

**(Expressed in U.S. dollar, except for the number of shares)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended**<br> **September 30,** | **For the Six Months Ended**<br> **September 30,** |
|  | **2022** | **2021** |
| **Revenues** |  |  |
| &nbsp;&nbsp;&nbsp;Futures brokerage commissions | $2639572 | $2432281 |
| &nbsp;&nbsp;&nbsp;Trading solution services fees | 2369296 | 978126 |
| &nbsp;&nbsp;&nbsp;Other service revenues | 56778 | 295528 |
| &nbsp;&nbsp;&nbsp;Trading gains (losses) | 6098 | (497476) |
| &nbsp;&nbsp;&nbsp;Interest income and others | 85664 | 2306 |
| **Total revenues** | **5157408** | **3210765** |
| **Expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Commission expenses | 1737516 | 1514176 |
| &nbsp;&nbsp;&nbsp;Compensation and benefits | 487974 | 288583 |
| &nbsp;&nbsp;&nbsp;Communications and technology | 309600 | 213921 |
| &nbsp;&nbsp;&nbsp;Occupancy | 62461 | 60986 |
| &nbsp;&nbsp;&nbsp;Travel and business development | 125704 | 24440 |
| &nbsp;&nbsp;&nbsp;Professional fees | 524574 | 177938 |
| &nbsp;&nbsp;&nbsp;Other administrative expenses | 71396 | 21413 |
| **Total expenses** | **3319225** | **2301457** |
| **Income before income taxes** | **1838183** | **909308** |
| Income tax expenses | - | 42865 |
| **Net income** | **1838183** | **866443** |
| **Other comprehensive loss** |  |  |
| &nbsp;&nbsp;&nbsp;Total foreign currency translation adjustment | (14800) | (9228) |
| **Total comprehensive income** | $**1822383** | $**857215** |
| **Earnings per share:** |  |  |
| &nbsp;&nbsp;&nbsp;**Basic and diluted\***  | $**0.06** | $**0.03** |
| **Weighted average number of common shares outstanding:** |  |  |
| &nbsp;&nbsp;&nbsp;**Basic and Diluted\***  | **33280055** | **30000000** |

---

\* Retrospectively restated for effect of share reorganization (see Note 7).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Top Financial Group Limited**

**Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity**

**(Expressed in U.S. dollar, except for the number of shares)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Shares** | **Common Shares** | | | | |
|  | **Shares\*** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Retained**<br> **Earnings** | **Accumulated<br> Other<br> Comprehensive**<br>**Income (Loss)** | **Total**<br>**Shareholders'**<br>**Equity** |
| **Balance as of March 31, 2021** | 30000000 | $30000 | $2934595 | $3773226 | $16366 | $6754187 |
| &nbsp;&nbsp;&nbsp;Net income |  | - | - | 866443 | - | 866443 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | - | - | - | - | (9228) | (9228) |
| **Balance as of September 30, 2021** | **30000000** | $**30000** | $**2934595** | $**4639669** | $**7138** | $**7611402** |
| **Balance as of March 31, 2022** | 30000000 | $30000 | $2934595 | $7264531 | $(34024) | $10195102 |
| Issuance of common shares pursuant to initial public offering ("IPO") | 5000000 | 5000 | 22489364 | - | - | 22494364 |
| Issuance of common shares to a service provider for successful IPO | 50000 | 50 | (50) | - | - | - |
| &nbsp;&nbsp;&nbsp;Net income |  | - | - | 1838183 | - | 1838183 |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | - | - | - | - | (14800) | (14800) |
| **Balance as of September 30, 2022** | **35050000** | $**35050** | $**25423909** | $**9102714** | $**(48824)** | $**34512849** |

---

\* Retrospectively restated for effect of share reorganization (see Note 7).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Top Financial Group Limited**

**Unaudited Condensed Consolidated Statements of Cash Flows**

**(Expressed in U.S. dollar)**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended September 30,** | **For the Six Months Ended September 30,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| Net income | $1838183 | $866443 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation | 7336 | 4536 |
| &nbsp;&nbsp;&nbsp;Amortization of right of use assets | 49683 | 4756 |
| Change in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Receivables from customers | (1612530) | (840205) |
| &nbsp;&nbsp;&nbsp;Receivables from a customer – related party | (1512129) | (36486) |
| &nbsp;&nbsp;&nbsp;Payment on behalf of customers for trading activities | (2626387) | - |
| &nbsp;&nbsp;&nbsp;Receivables from broker-dealers and clearing organizations | 383982 | (38945) |
| &nbsp;&nbsp;&nbsp;Securities owned, at fair value | (726480) | (313621) |
| &nbsp;&nbsp;&nbsp;Other assets | (915313) | (327100) |
| &nbsp;&nbsp;&nbsp;Payable to customers | 456063 | 1857416 |
| &nbsp;&nbsp;&nbsp;Payable to customers – related parties | - | 801339 |
| &nbsp;&nbsp;&nbsp;Contract liabilities | - | 313329 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | 14777 | 7012 |
| &nbsp;&nbsp;&nbsp;Income tax payable | (25624) | 42865 |
| &nbsp;&nbsp;&nbsp;Lease liabilities | (52638) | (4756) |
| **Net cash (used in) provided by operating activities** | **(4721077)** | **2336583** |
| **Cash flows from financing activities:** |  |  |
| Payment of deposits for long-term investments | (200000) | - |
| **Net cash used in financing activities** | **(200000)** | **-**  |
| **Cash flows from financing activities:** |  |  |
| Proceeds from issuance of common shares pursuant to IPO, net of issuance cost | 22651029 | - |
| **Net cash provided by financing activities** | **22651029** | **-**  |
| Effect of exchange rates on cash, cash equivalents and restricted cash | (13398) | (13246) |
| Net increase in cash, cash equivalents and restricted cash | 17716554 | 2323337 |
| Cash, cash equivalents and restricted cash, beginning of period | 7956759 | 6835476 |
| Cash, cash equivalents and restricted cash, end of period | $**25673313** | $**9158813** |
| **Reconciliation of cash, cash equivalents and restricted cash** |  |  |
| Cash and cash equivalents | $23485746 | $4683928 |
| Restricted cash | 2187567 | 4474885 |
| **Total cash, cash equivalents, and restricted cash** | $**25673313** | $**9158813** |
| **Supplemental disclosures of cash flow information:** |  |  |
| Cash paid for interest | $- | $- |
| **Non-cash operating, investing and financing activities** |  |  |
| Right of use assets obtained in exchange for operating lease obligations | $9852 | $298178 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**1. Organization and Description of Business**

TOP Financial Group Limited (formerly "Zhong Yang Financial Group Limited") ("TFGL") is a company incorporated in Cayman Islands with limited liability on August 1, 2019. ZYFGL is a parent holding company with no operations. Effective on July 13, 2022 , the Company changed its name from "Zhong Yang Financial Group Limited" to "TOP Financial Group Limited" ("Name Change").

TFGL has two wholly-owned subsidiaries, ZYSL (BVI) Limited ("ZYSL (BVI)") and ZYCL (BVI) Limited ("ZYCL (BVI)"), both which are investment holding entities formed under the laws and regulations of the British Virgin Islands on August 29, 2019.

Zhong Yang Securities Limited ("ZYSL"), a wholly-owned subsidiary of ZYSL (BVI), was established in accordance with laws and regulations of Hong Kong on April 22, 2015 with a registered capital of HKD 18,000,000 (approximately $2.3 million). ZYSL is a limited liability corporation licensed with the Hong Kong Securities and Futures Commission ("HKSFC") to carry out regulated activities including Type 1 Dealing in Securities and Type 2 Dealing in Futures Contracts.

Zhong Yang Capital Limited ("ZYCL"), a wholly-owned subsidiary of ZYCL (BVI), was established in accordance with laws and regulations of Hong Kong on September 29, 2016 with a registered capital of HKD 5,000,000 (approximately $0.6 million). ZYCL is a limited liability corporation licensed with the HKSFC to carry out regulated activities Type 4 Advising on Securities, Type 5 Advising on Futures Contracts and Type 9 Asset Management.

Six subsidiaries, ZYAL (BVI) Limited ("ZYAL (BVI)"), ZYTL (BVI) Limited ("ZYTL (BVI)"), ZYNL (BVI) Limited ("ZYNL (BVI)"), WIN100 Tech Limited ("WIN100 TECH"), ZYPL (BVI) Limited ("ZYPL (BVI)"), and ZYXL (BVI) Limited ("ZYXL (BVI)") were incorporated under the laws of British Virgin Islands on January 7, 2021, January 12, 2021, January 20, 2021, May 14, 2021, July 14, 2022 and July 14, 2022, respectively. These subsidiaries are dormant as of the date of this report, except for WIN100 TECH, which provides trading solutions for clients trading on the world's major derivatives and stock exchanges.

TFGL together with its subsidiaries (collectively, the "Company") are primarily engaged in providing futures brokerage and other financial services in Hong Kong through a trading platform to its customers. The Company generates brokerage commission income by enabling its customer to trade on multiple exchanges around the world.

On June 3, 2022, the Company completed its initial public offering on the National Association of Securities Dealers Automated Quotations ("NASDAQ"). In this offering, 5,000,000 ordinary shares were issued at a price of $5.00 per share. The gross proceeds received from the initial public offering totaled US$25.0 million. The offering closed on June 3, 2022 and the Ordinary Shares began trading on June 1, 2022 on The Nasdaq Capital Market under the ticker symbol "TOP."

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**1. Organization and Description of Business (Continued)**

***Reorganization***

Reorganization of the legal structure of the Company ("Reorganization") has been completed on March 26, 2020 by carrying out a sequence of contemplated transactions, where the Company became the holding company of all entities discussed above.

Previous to the reorganization, both ZYSL and ZYCL were held by Zhong Yang Holdings Company (the "Predecessor Parent Company"), a company incorporated in Hong Kong with limited liability on April 21, 2015. The Predecessor Parent Company was owned 55.5% by Ms. Yang Junli, 20.2% by Ms. Ji An, 10% by Mr. Chen Tseng Yuan, 8.3% by Ms. Lo Yung Yung, 4% by Ms. Chen Hong, and 2% by Mr. Li Jian. The first step of the Reorganization was incorporating TFGL, which had then incorporated ZYSL (BVI) and ZYCL (BVI) on August 29, 2019. With the approval obtained from HKSFC, the ownership interests in ZYSL and ZYCL were transferred from the Predecessor Parent Company to ZYSL (BVI) and ZYCL (BVI), respectively on March 26, 2020.

Before and after the Reorganization, the Company, together with its wholly-owned subsidiaries, are ultimately and effectively controlled by the same shareholders. Hence, the Reorganization is considered under common control. The consolidation of the Company and its subsidiaries has been accounted for at historical cost as of the beginning of the first period presented in the accompanying consolidated financial statements.

**2. Summary of Significant Accounting Policies**

*Basis of presentation and principle of consolidation*

The interim unaudited condensed consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").

The unaudited condensed consolidated balance sheets as of September 30, 2022 and for the unaudited condensed consolidated statement of operations and comprehensive loss for the six months ended September 30, 2022 and 2021 have been prepared without audit, pursuant to the rules and regulations of the SEC and pursuant to Regulation S-X. Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto, included in the Form 20-F for the fiscal year ended March 31, 2022, which was filed with the SEC on August 16, 2022 .

In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared using the same accounting policies as used in the preparation of the Company's unaudited condensed consolidated financial statements for the year ended March 31, 2022. The results of operations for the six months ended September 30, 2022 and 2021 are not necessarily indicative of the results for the full years.

The unaudited condensed consolidated financial statements include the financial statements of parent company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Use of estimates*

The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U. S. requires the use of estimates and assumptions that affect both the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

*Cash and cash equivalents*

Cash and cash equivalents consist of deposits with banks and all highly liquid investments, with maturities of three months or less. The Company maintains its cash in bank deposit accounts which at times may exceed insured limits. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk on cash and cash equivalents.

 

*Restricted cash* 

The balance of restricted cash represents the bank balance the Company held on behalf of customers. The Company maintains segregated bank accounts with authorized institutions to hold clients' monies arising from its normal course of business. The segregated clients account balance are restricted for client transactions and governed by the Securities and Futures (Client Money) Rule under the Hong Kong Securities and Futures Ordinance ("HKSFO"). The Company has classified such segregated clients account balances as restricted cash.

*Securities owned, at fair value*

Securities owned, at fair value, mainly investment in common stocks, are recorded at fair value with the resulting realized and unrealized gains and losses reflected in trading gains in the consolidated statements of income and comprehensive income. Realized gains and losses from securities transactions are recorded on the identified cost basis. All securities transactions and transaction costs are recorded on a trade date basis.

*Receivables from broker-dealers and clearing organizations*

Receivables arise from the business of dealing in futures or investment securities. Broker-dealers will require balances to be placed with them in order to cover the positions taken by its customers. Clearing house receivables typically represent proceeds receivable on trades that have yet to settle and are usually collected within two days. The balance of receivables from broker-dealers and clearing organizations represents such receivables related to the Company's customer trading activities and proprietary trading activities.

As of September 30, 2022 and March 31, 2022, receivables from broker-dealers and clearing organizations consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2022** | **March 31,**<br>**2022** |
| Receivables from broker-dealers and clearing organizations for futures customer accounts | $1844613 | $2112402 |
| Receivables from broker-dealers and clearing organizations for securities customer accounts | 32692 | 84333 |
| Receivables from broker-dealers and clearing organizations for securities proprietary trading | 93796 | 163422 |
|  | $**1971101** | $**2360157** |

---

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Receivables from customers*

 

Receivables from customers include the future brokerage commissions due, trading solution services fees and other amounts due from customers once the transactions have been executed and completed. Receivables from customers are recorded net of allowance for doubtful accounts. Revenues earned from the future brokerage service are included in future brokerage commission, and revenues earned from trading solution services are included in trading solution services income. The amounts receivable from customers that are determined by management to be uncollectible and are recorded as bad debt expense in the consolidated statements of operations. For the six months ended September 30, 2022 and 2021, no allowance for doubtful accounts were recorded.

*Payment on behalf of customers for trading activities*

Payment on behalf of customers for trading activities represent payments advanced by the Company on behalf of customers for investment securities through broker dealers. The customers do not have the rights to direct the trading of these securities until they payoff the outstanding balance.

*Fixed assets, net*

Fixed assets are stated at cost less accumulated depreciation and impairment losses. Depreciation is provided using the straight-line method based on the estimated useful life. The useful lives of office equipment as follows:

---

| | |
|:---|:---|
| Computer and electronic equipment | 3-5 years |
| Software | 3-5 years |
| Furniture and fixtures | 4 years |
| Investment properties | 50 years |

---

As of September 30, 2022 and March 31, 2022, the Company had three apartments in Cambodia and accounted for these apartments as investment properties. The Company holds these apartments for the purpose to earn rental expenses or capital appreciation.

Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed 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 disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income and other comprehensive income in other income or expenses.

*Intangible assets*

Intangible assets are originally recognized at cost. The useful lives of intangible assets are assessed to be either finite or indefinite. The Company's intangible assets consist of eligibility rights to trade on or through the Stock Exchange of Hong Kong Limited (the "SEHK"). Management has determined that such assets have indefinite useful lives. These intangible assets are not amortized and tested for impairment annually either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on a prospective basis.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Impairment of long-lived assets*

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the six months ended September 30, 2022 and 2021.

*Operating* leases

Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. The Company leases its office from a third-party lessor since September 2021, before that the Company leased the same office from the Predecessor Parent Company (see note 8), which is classified as an operating lease in accordance with Topic 842.

At the commencement date of the lease agreement between the Company and the third party lessor, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of September 30, 2022 and March 31, 2022.

*Payables to customers*

Payables to customers arise from the business of dealing in futures and investment securities. Payables to customers represent payables related to the Company's customer trading activities, which include the cash deposits received by the Company as requested by third party broker-dealers to place with them in order to cover the positions taken by its customers, clearing house payables due on pending trades and payable on demand, as well as the bank balances held on behalf of customers.

*Revenue Recognition*

 

*a)* *Revenue from Contracts with Customers* 

ASC 606 establishes principles for reporting information about the nature, amount, timing and uncertainty of revenues and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenues to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. In according with ASC 606, revenues are recognized when the Company satisfies the performance obligations by delivering the promised services to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Revenue Recognition (continued)*

 

*a)* *Revenue from Contracts with Customers (continued)* 

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 applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs of obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year, which need to be recognized as assets.

<u>Futures brokerage commissions</u>

The Company earns fees and commissions from futures brokerage services based on a fixed rate for each transaction, all of which are under the consolidated accounts where the customer information are not disclosed to the third party brokers. When a customer executes a futures transaction through the Company's platform, futures brokerage commission is recognized upon the completion of this transaction. Only a single performance obligation is identified for each futures trading transaction, and the performance obligation is satisfied on the trade date because that is when the underlying financial instrument is identified, the pricing of brokerage service is agreed upon and the promised services are delivered to customers. All of the Company's revenues from contracts with customers are recognized at a point in time. The futures brokerage service could not be cancelled once it's executed and is not refundable, so returns and allowances are not applicable. Commissions are charged for each customer trade order executed and cleared by the third-party brokers. The Company recognizes revenues on a gross basis as the Company is determined to be the primary obligor in fulfilling the trade order initiated by the customer. The Company may offer volume rebate as trading incentive to certain customer. The Company will review the customer's transaction volume monthly and provide volume rebates on the commission charged to specific customers with large volume transactions. The volume rebate offered to such customer is accounted for as a variable consideration and determined based on most-likely amount method, which is recognized as a reduction of revenues. The Company did not offer volume rebates during the six months ended September 30, 2022 and 2021.

<u>Trading solution services fees</u>

The Company provides trading solution services to customers (e.g. individuals, proprietary trading companies or brokerage companies) for their trading on derivatives, equity, CFD and other financial products, through the internally developed proprietary investment management software. The Company's trading solution provides a variety of functions suitable for front-end transaction executions to back-office settlement operations. The Company implements the initial installation of such software for each customer and provides hosting services for a period of time, generally two years, as agreed in the contracts. The initial installation is considered as a set-up activity, rather than a promised service to customer, which provides no incremental benefit to customer beyond permitting the access and use the hosted application. The Company identifies a single performance obligation from its contracts with customers. The Company charges each customer a fixed amount of initial installation fee and the monthly service fee based on a fixed rate per each transaction executed on the platform with a minimum monthly fee required. The Company recognizes the trading solution services as satisfied over the time.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Revenue Recognition (continued)*

*a)* *Revenue from Contracts with Customers (continued)* 

<u>Other service revenues</u>

The Company also provides other financial services including securities brokerage, consulting services, currency exchange services and structured note subscriber services, and earns securities brokerage commissions, consultancy fee income and other revenues, which are recognized when the service is rendered according to the relevant contracts. For the six months ended September, 2022 and 2021, other revenues accounted for 1.1% and 9.2% of total revenues from contracts with customers, respectively.

<u>Contract liabilities</u>

The Company's contract liabilities include payments received in advance of performance under structure note subscription service contracts which will be recognized as revenue as the Company executed the subscription service with brokers under the contract, as well as the deferred installation service fee received from trading solution services.

<u>Sources of revenue</u>

The Company has one revenue generating reportable geographic segment under ASC Topic 280 "Segment Reporting" and derives its revenues primarily from its futures brokerage service. The following table presents revenues from contracts with customers, in accordance with ASC Topic 606, by major source:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** <br> **September 30,** | **For the Six Months Ended** <br> **September 30,** |
|  | **2022** | **2021** |
| **Futures brokerage commissions** |  |  |
| &nbsp;&nbsp;&nbsp;Commission on futures broking earned from Hong Kong Exchange | $449699 | $607030 |
| &nbsp;&nbsp;&nbsp;Commission on futures broking from overseas Exchanges | 2189873 | 1825251 |
| &nbsp;&nbsp;&nbsp;**Total futures brokerage commissions** | 2639572 | 2432281 |
| &nbsp;&nbsp;&nbsp;**Trading solution services fees** | 2369296 | 978126 |
| &nbsp;&nbsp;&nbsp;**Other service revenues** | 56778 | 295528 |
| **Total major sources of revenues** | $**5065646** | $**3705935** |

---

*b)* *Trading gains, interest income and other* 

Trading gains and losses along with interest income fall within the scope of ASC Topic 825, Financial Instruments, which is excluded from the scope of ASC Topic 606. Trading gains and losses mainly consist of realized and unrealized gains and losses from the investment in US common stocks, which are included in Securities owned, at fair value. Interest and other income primarily consist of interests earned on bank deposit.

 

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

 

*Commission expenses*

Commission expenses related to futures and other financial service transactions are primarily transaction cost paid to broker-dealers. These costs are expensed as incurred.

 

*Income taxes*

The Company accounts for income taxes in accordance with the U.S. GAAP. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that taxable income to be utilized with prior net operating loss carried forwards. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of September 30, 2022 and March 31, 2022, there was no temporary differences and no deferred tax asset or liability recognized.

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, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company does not believe that there was any uncertain tax position as of September 30, 2022 and March 31, 2022.

 

*Earnings per share*

Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the six months ended September 30, 2022 and 2021, the Company had no dilutive stocks.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Translation of foreign currencies*

The functional currency is U.S. dollar for the Company's Cayman Island operations and Hong Kong dollar for all other entities' operations. The Company's reporting currency is the U.S. dollar. Assets and liabilities denominated in foreign currencies are translated at year-end exchange rates, income statement accounts are translated at average rates of exchange for the year and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive income (loss). Gains or losses resulting from foreign currency transactions are included in net income.

The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **September 30,** | **September 30,** | **March 31,** | **March 31,** |
|  | **2022** | **2022** | **2022** | **2022** |
| Year-end spot rate |  | 7.8498 |  | 7.8325 |

---

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | **2022** | **2021** |
| Average rate | 7.8472 | 7.7718 |

---

*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 the fair value hierarchy are described below:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 assets included securities owned, at fair value.

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. As of September 30, 2022 and March 31, 2022, and for the six months ended September 30, 2022 and 2021, there was no Level 2 assets owned.

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. As of September 30, 2022 and March 31, 2022, and for the six months ended September 30, 2022 and 2021, there was no Level 3 assets owned.

As of September 30, 2022 and March 31, 2022, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, restricted cash, receivables from customers, payments on behalf of customers for trading activities, receivables from broker-dealers and clearing organizations, securities owned, at fair value, payables to customers. The carrying amount of cash and cash equivalents, restricted cash, receivables from broker-dealers and clearing organizations, receivables from customers, payments on behalf of customers for trading activities, and payables to customers approximate their fair values because of the short-term nature of these instruments. Securities owned, at fair value as of September 30, 2022 and March 31, 2022, mainly consist of common stock investments and are based upon quoted market price.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**2. Summary of Significant Accounting Policies (Continued)**

*Segment reporting*

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the "CODM"), which is comprised of certain members of the Company's management team. Consequently, the Company has determined that it has only one reportable operating segment.

 

*Concentration*

For the six months ended September 30, 2022, three customers accounted for approximately 31%, 23% and 10% of the total revenue, respectively. For the six months ended September 30, 2021, three customers accounted for approximately 56%, 18% and 12% of the total revenue, respectively.

For the six months ended September 30, 2022, two brokers accounted for 74% and 25% the total commission expenses, respectively. For the six months ended September 30, 2021, two brokers accounted for 79% and 21% of the total commission expenses, respectively.

*Recent Accounting Pronouncements*

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**3. Fixed assets, Net**

As of September 30, 2022 and March 31, 2022, fixed assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,**<br>**2022** | **March 31,**<br>**2022** |
| Investment properties | $413890 | $413890 |
| Computer and electronic equipment | 48129 | 53626 |
| Software | 3050 | 3056 |
| Furniture and fixtures | 405 | 4929 |
| Less: accumulated depreciation | (51540) | (54216) |
|  | $**413934** | $**421285** |

---

Depreciation expense was $7,336 and $4,536 for the six months ended September 30, 2022 and 2021, respectively.

**4. Employee Benefits**

All salaried employees of the Company in Hong Kong are enrolled in a Mandatory Provident Fund Scheme ("MPF scheme") scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance, within two months of employment. The MPF scheme is a defined contribution retirement plan administered by an independent trustee. The Company makes regular contributions of 5% of the employee's relevant income to the MPF scheme, subject to a maximum of $191 per month. Contributions to the plan vest immediately. The Company recorded MPF expense of $8,936 and $8,262 for the six months ended September 30, 2022 and 2021, respectively.

**5. Fair Value**

The following table present information about the Company's assets by major category measured at fair value on a recurring basis as of September 30, 2022 and March 31, 2022, and indicates the fair value hierarchy of the valuation technique utilized by the Company to determine such fair value.

Assets measured at fair value on a recurring basis as of September 30, 2022 and March 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** | **As of September 30, 2022** |
|  | | **Fair Value** | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **Carrying**<br>**Value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Assets:** | | | | | |
| Securities owned, at fair value | $2013675 | $2013675 | $&nbsp;&nbsp;&nbsp;&nbsp; - | $&nbsp;&nbsp;&nbsp;&nbsp; - | $2013675 |
| **Total assets at fair value** | $**2013675** | $**2013675** | $**-**  | $**-**  | $**2013675** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **As of March 31, 2022** | **As of March 31, 2022** | **As of March 31, 2022** | **As of March 31, 2022** | **As of March 31, 2022** |
|  | | **Fair Value** | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **Carrying**<br>**Value** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Assets:** | | | | | |
| Securities owned, at fair value | $1288747 | $1288747 | $&nbsp;&nbsp;&nbsp;&nbsp; - | $&nbsp;&nbsp;&nbsp;&nbsp; - | $1288747 |
| **Total assets at fair value** | $**1288747** | $**1288747** | $**-**  | $**-**  | $**1288747** |

---

There was no transfer between any levels during the six months ended September 30, 2022 and 2021.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**6. Operating lease**

As of September 30, 2022, the Company had two non-cancelable office operating lease agreements with two third-party lessors, with lease term of two years and three years, respectively. Both lease agreements matured in September 2024. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of its incremental borrowing rate.

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2022** | **March 31,<br> 2022** |
| Right of use assets | $202536 | $242665 |
| Operating lease liabilities | $201774 | $244861 |

---

The weighted average remaining lease terms and discount rates for the above operating lease were as follows as of September 30, 2022 and March 31, 2022:

---

| | | |
|:---|:---|:---|
|  | **September 30, <br> 2022** | **March 31,<br> 2022** |
| **Remaining lease term and discount rate** | | |
| Weighted average remaining lease term (years) | 1.94 | 2.46 |
| Weighted average discount rate | 5.00% | 5.00% |

---

During the six months ended September 30, 2022 and 2021, the Company incurred total operating lease expenses of $55,312 and $59,178, respectively.

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2021:

---

| | |
|:---|:---|
| Six months ended March 31, 2023 | $52970 |
| Twelve months ended March 31, 2024 | 105939 |
| Twelve months ended March 31, 2025 and thereafter | 44141 |
| Total lease payments | 203050 |
| Less: imputed interest | (1276) |
| **Present value of lease liabilities** | $201774 |

---

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**7. Equity**

<u>Ordinary shares</u>

The Company's authorized share capital is 50,000,000 ordinary shares, par value $0.001 per share. On August 1, 2019, the Company issued 50,000,000 ordinary shares, which issuance was considered as being part of the reorganization of the Company.

On September 9, 2021, the sole shareholder of the Company surrendered 20,000,000 ordinary shares of US$0.001 par value each for no consideration. On September 9, 2021 the Company's shareholders and Board of Directors approved to amend the authorized share capital from US$50,000, divided into 50,000,000 ordinary shares of a par value of US$0.001 per share, to US$150,000, divided into 150,000,000 ordinary shares of a par value of US$0.001 per share. The Company believes it is appropriate to reflect the such changes in share structure on a retroactive basis pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all periods presented. As a result, the Company had 150,000,000 authorized shares, par value of US$0.001, of which 30,000,000 issued and outstanding as of March 31, 2021 and for the six months ended March 31, 2021.

On June 3, 2022, the Company completed its IPO on NASDAQ. In this offering, 5,000,000 ordinary shares were issued at a price of $5.00 per share.

On June 17, 2022, the Company issued 50,000 ordinary shares to its US counsel as a service fee for successful listing. The Company recorded the issuance as a reduction against additional paid-in capital.

As of September 30, 2022 and March 31, 2022, the Company had 35,050,000 and 30,000,000 ordinary shares issued and outstanding, respectively.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**8. Related Party Transactions and Balances**

*a. Nature of relationships with related parties*

---

| | |
|:---|:---|
| **Name** | **Relationship with the Company** |
| Zhong Yang Holdings Limited | Predecessor Parent Company, owned by the same group of shareholders and determined to be a related party upon the completion of the Reorganization (See Note 1) on March 26, 2020. |
| Sunx Global Limited | Predecessor Parent Company owns 95% of Sunx Global Limited. |
| Mr. Huaixi Yang | Immediate family member of Ms. Junli Yang, the Chairwoman of the Board |
| WSYQR Limited | Wholly owned by Mr. Huaixi Yang |

---

*b. Related parties transactions*

---

| | | | |
|:---|:---|:---|:---|
|  | | **For the Six Months Ended<br> September 30,** | **For the Six Months Ended<br> September 30,** |
|  | <br>**Nature** | **2022** | **2021** |
| Zhong Yang Holdings Limited | Rental expenses | $&nbsp;&nbsp;&nbsp;&nbsp;- | $54422 |
| Mr. Huaixi Yang | Structure note subscription fee and interest income | $- | $6426 |

---

*c. Balance with related parties* 

 

---

| | | | |
|:---|:---|:---|:---|
|  | **Nature** | **September 30,<br> 2022** | **March 31,<br> 2022** |
| Mr. Huaixi Yang (1) | Receivables from a customer – a related party | $1512129 | $- |
| Mr. Huaixi Yang (1) | Payable to customers - related parties | $- | $3378 |
| Sunx Global Limited (2) | Payable to customers - related parties | $30580 | $30647 |
| WSYQR Limited (3) | Payable to customers - related parties | $68624 | $65398 |

---

 

(1) The
balances due from Mr. Huaixi Yang represented the payment on behalf of the related party for his trading securities investment through
a broker dealer.

(2) The
balances due to Sunx Global Limited represented the bank balances held on behalf of the related party that were received by the Company
for its futures and securities investments.

(3) The
balances due to WSYQR Limited represented the bank balances held on behalf of the related party that were received by the Company for
its structure note investments.

**Top Financial Group Limited**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**For the Six Months Ended September 30, 2022 and 2021**

**9. Regulatory Requirements**

The following table illustrates the minimum regulatory capital as established by the Hong Kong Securities and Futures Commission that the Company's subsidiaries were required to maintain as of September 30, 2022 and March 31, 2022 and the actual amounts of capital that were maintained.

Capital requirements as of September 30, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Minimum**<br>**Regulatory**<br>**Capital**<br>**Requirements** |<br>**Capital**<br>**Levels**<br>**Maintained** |<br>**Excess**<br>**Net**<br>**Capital** |<br>**Percent of**<br>**Requirement**<br>**Maintained** |
| Zhong Yang Securities Limited | $382175 | $2195725 | $1813550 | 575% |
| Zhong Yang Capital Limited | 382175 | 644985 | 262810 | 169% |
| **Total** | $**764350** | $**2840710** | $**2076360** | **372%** |

---

Capital requirements as of March 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Minimum**<br>**Regulatory**<br>**Capital**<br>**Requirements** |<br>**Capital**<br>**Levels**<br>**Maintained** |<br>**Excess**<br>**Net**<br>**Capital** |<br>**Percent of**<br>**Requirement**<br>**Maintained** |
| Zhong Yang Securities Limited | $383019 | $5107820 | $4724801 | 1334% |
| Zhong Yang Capital Limited | 383019 | 647686 | 264666 | 169% |
| **Total** | $**766038** | $**5755506** | $**4989467** | **751%** |

---

**10. Subsequent Events**

On November 11, 2022, ZYFL (BVI) Limited and ZYIL (BVI) Limited, two subsidiaries of the Company, were incorporated under the laws of British Virgin Islands.

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