TROOPS, INC. Announces 2021 Unaudited Interim Financial Results
HONG KONG, Nov. 22, 2021 /PRNewswire/ -- TROOPS, Inc. (Nasdaq: TROO) ("TROOPS" or the "Company"), a conglomerate group of various businesses with its headquarters based in Hong Kong. The group is principally engaged in (a) money lending business in Hong Kong providing mortgage loans to high quality target borrowers (b) property investment to generate additional rental income and (c) the development, operation and management of an online financial marketplace that provides one-stop financial technology solutions including API services by leveraging artificial intelligence, big data and blockchain, and cloud computing (SaaS). The group's vision is to operate as a conglomerate to build synergy within its own sustainable ecosystem thereby creating value to its shareholders, today announced its unaudited operating results for the six months ended June 30, 2021.
2021 Interim Results Overview
Revenue
Our sales were $1.28 million for the six months ended June 30, 2021, which decreased by $0.26 million, or 16.9% from $1.54 million for the same period of 2020. During the six months ended June 30, 2021, we through 11 Hau Fook Street, Vision Lane and Paris Sky earned property lease and management income of $0.52 million, compared to income of $0.60 million in 2020. We through Giant Credit and First Asia Finance earned interest on loans from money lending services of $0.64 million for the six months ended June 30, 2021, compared to $0.90 million for the same period of 2020. We through GFS and Apiguru earned financial technology solutions and services income of $0.12 million for the six months ended June 30, 2021, compared to $0.04 million for the same period of 2020.
Below is the summary presenting the Company's revenues disaggregated by products and services and timing of revenue recognition:
For the six months ended June 30, | ||||||||
Revenue by recognition over time | 2021 | 2020 | ||||||
(Unaudited) | (Unaudited) | |||||||
Revenue by recognition over time | $ | 1,283 | $ | 1,536 | ||||
$ | 1,283 | $ | 1,536 | |||||
For the six months ended June 30, | ||||||||
Revenue by major product line | 2021 | 2020 | ||||||
(Unaudited) | (Unaudited) | |||||||
Interest on loans | $ | 642 | $ | 901 | ||||
Property lease and management | 521 | 596 | ||||||
Financial technology solutions and services | 120 | 39 | ||||||
$ | 1,283 | $ | 1,536 | |||||
Cost of revenues
For the six months ended June 30, 2021, cost of revenues decreased by $0.24 million, or 15.2%, to $1.34 million from $1.58 million for the six months ended June 30, 2020. Our cost of revenues mainly includes the amortization of Trademarks and Service Contracts, which were $0.16 million and $0.20 million during the six months ended June 30, 2021 and 2020, respectively.
Gross loss
Our gross loss was $0.06 million and $0.05 million for the six months ended June 30, 2021 and 2020.
General and administrative expenses
General and administrative expenses amounted to approximately $1.35 million for the six months ended June 30, 2021, $0.16 million or 10.6% lower than $1.51 million for the same period of previous year. This decrease was mainly due to lower share based compensation paid to management of approximately $0.12 million and decreased in legal and consultancy fee of approximately $0.05 million.
General and administrative expenses include office staff salary and benefits, legal, professional fees, office expenses, travel expenses, entertainment, IT consultancy and support services expenses, depreciation, amortization of intangible assets.Gain on change in fair value of warrant derivative liability
Our gain on change in fair value of warrant derivative liability was $0.25 million for the six months ended June 30, 2021, compared to a loss of $0.03 million for the same period of 2020. The gain was due to exercise of warrants, which we issued to our investor and placement agent in May 2017.
Income tax benefit
Income benefit was $0.15 million for the six months ended June 30, 2021, a decrease of $0.02 million, from income tax benefit of $0.17 million for the same period of 2020. Income tax benefit was related to the deferred tax impact on intangible assets and property and plant.
Our PRC entities for the six months ended June 30, 2021 and 2020 were subject to the statutory PRC enterprise income tax rate of 25.0%. Our subsidiaries in Hong Kong are subject to Hong Kong taxation on income derived from their activities conducted in Hong Kong at a rate of 16.5%. Our subsidiary in Australia is subject to the Australian lower company tax rate of 26.0%.
Profit and loss from discontinued operations, net of income tax
Profit from discontinued operation, net of income tax, of $0.02 million for the six months ended June 30, 2020 represent the net profit from Boca.
Net loss
As a result of the various factors described above, net loss for the six months ended June 30, 2021 was $1.20 million, as compared to $1.94 million for the same period of 2020.
About TROOPS, Inc.
TROOPS, Inc. is a conglomerate group of various businesses with its headquarters based in Hong Kong. The group is principally engaged in (a) money lending business in Hong Kong providing mortgage loans to high quality target borrowers (b) property investment to generate additional rental income and (c) the development, operation and management of an online financial marketplace that provides one-stop financial technology solutions including API services by leveraging artificial intelligence, big data and blockchain, and cloud computing (SaaS). The group's vision is to operate as a conglomerate to build synergy within its own sustainable ecosystem thereby creating value to its shareholders. For more information about TROOPS, please visit our investor relations website: www.troops.co
Safe Harbor and Informational Statement
This announcement contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of the Company set forth herein and those preceded by or that include the words "believe," "expect," "anticipate," "future," "will," "intend," "plan," "estimate" or similar expressions, are "forward-looking statements". Forward-looking statements in this release include, without limitation, the effectiveness of the Company's multiple-brand, multiple channel strategy and the transitioning of its product development and sales focus and to a "light-asset" model. Although the Company's management believes that such forward-looking statements are reasonable, it cannot guarantee that such expectations are, or will be, correct. These forward looking statements involve a number of risks and uncertainties, which could cause the Company's future results to differ materially from those anticipated. These forward-looking statements can change as a result of many possible events or factors not all of which are known to the Company, which may include, without limitation, our ability to have effective internal control over financial reporting; our success in designing and distributing products under brands licensed from others; management of sales trend and client mix; possibility of securing loans and other financing without efficient fixed assets as collaterals; changes in government policy in China; China's overall economic conditions and local market economic conditions; our ability to expand through strategic acquisitions and establishment of new locations; compliance with government regulations; legislation or regulatory environments; geopolitical events, and other events and/or risks outlined in TROOPS 's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F and other filings. All information provided in this press release and in the attachments is as of the date of the issuance, and TROOPS does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
TROOPS, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
AS OF JUNE 30, 2021, AND DECEMBER 31, 2020 | ||||||||
(In thousands of U.S. dollars except share and per share data) | ||||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 10,297 | $ | 3,028 | ||||
Accounts receivable, net | 27 | 8 | ||||||
Loans receivable, net of provision for loan losses of $2,172 and $2,172, respectively | 6,046 | 22,096 | ||||||
Interest receivable | 4 | 286 | ||||||
Other receivables and prepayments, net of provision for credit losses of $39 and $39, respectively | 154 | 232 | ||||||
Total current assets | 16,528 | 25,650 | ||||||
Deposits for acquisition of a subsidiaries | 4,966 | 4,966 | ||||||
Plant and equipment, net | 51,235 | 52,141 | ||||||
Operating lease right-of-use assets, net | 120 | 199 | ||||||
Intangible assets, net | 285 | 446 | ||||||
Long-term loans receivable, net of $nil provision for loan losses | 36 | 1,621 | ||||||
Goodwill | 5,107 | 5,107 | ||||||
Total assets | $ | 78,277 | $ | 90,130 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Short-term bank loan | $ | - | $ | 201 | ||||
Accounts payable, trade | 66 | - | ||||||
Other payables and accrued liabilities | 1,991 | 946 | ||||||
Operating lease liability, current | 120 | 160 | ||||||
Unsecured promissory note due to shareholder | - | 5,192 | ||||||
Taxes payable | 537 | 657 | ||||||
Warrant derivative liability | - | 249 | ||||||
Convertible notes - current | 38 | 42 | ||||||
Total current liabilities | 2,752 | 7,447 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long-term bank loan | - | 6,040 | ||||||
Operating lease liability, non-current | - | 39 | ||||||
Convertible notes – non-current | 87 | 118 | ||||||
Non-current Deferred tax liabilities | 5,707 | 5,859 | ||||||
Total liabilities | 8,546 | 19,503 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred stock, $0.001 par value, 1,000,000 shares authorized, nil and nil issued | - | - | ||||||
Ordinary shares, $0.004 par value, 500,000,000 shares authorized, 101,597,998 | 406 | 405 | ||||||
Additional paid-in-capital | 135,643 | 135,347 | ||||||
Retained earnings (deficit) | (66,312) | (65,120) | ||||||
Accumulated other comprehensive income (loss) | (6) | (5) | ||||||
Total TROOPS, INC. shareholders' equity | 69,731 | 70,627 | ||||||
Non-controlling interests | - | - | ||||||
Total shareholders' equity | 69,731 | 70,627 | ||||||
Total liabilities and shareholders' equity | $ | 78,277 | $ | 90,130 | ||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
TROOPS, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||
(In thousands of U.S. dollars except share and per share data) | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
REVENUES | $ | 1,283 | $ | 1,536 | ||||
COST OF REVENUES | 1,344 | 1,582 | ||||||
GROSS LOSS | (61) | (46) | ||||||
OPERATING EXPENSES: | ||||||||
General and administrative expenses | 1,352 | 1,507 | ||||||
Total operating expenses | 1,352 | 1,507 | ||||||
OPERATING LOSS FROM CONTINUING OPERATIONS | (1,413) | (1,553) | ||||||
OTHER INCOME (EXPENSES): | ||||||||
Interest expense | (181) | (566) | ||||||
Other income, net | 3 | 19 | ||||||
Gain (Loss) on change in fair value of warrant derivative liability | 247 | (29) | ||||||
Total other income (expenses), net | 69 | (576) | ||||||
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTERESTS | (1,344) | (2,129) | ||||||
INCOME TAX BENEFIT (EXPENSE) | 152 | 166 | ||||||
NET LOSS FROM CONTINUING OPERATIONS | $ | (1,192) | $ | (1,963) | ||||
PROFIT FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | - | 20 | ||||||
NET LOSS | $ | (1,192) | $ | (1,943) | ||||
Net profit attributable to non-controlling interests – discontinued operations | - | (10) | ||||||
Net loss attributable to ordinary shareholders of TROOPS, Inc. | $ | (1,192) | $ | (1,953) | ||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||
Foreign currency translation adjustment | (1) | - | ||||||
COMPREHENSIVE LOSS | $ | (1,193) | $ | (1,953) | ||||
LOSS PER SHARE: | ||||||||
Basic | $ | (0.01) | $ | (0.02) | ||||
Diluted | $ | (0.01) | $ | (0.02) | ||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES: | ||||||||
Basic | 101,341,930 | 95,334,536 | ||||||
Diluted | 101,341,930 | 95,334,536 | ||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
TROOPS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||||
(In thousands of U.S. dollars except share data) | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Retained | Other | |||||||||||||||||||||||||||
Ordinary Shares | Paid-in | Earnings | Comprehensive | Non-controlling | ||||||||||||||||||||||||
Shares | Par Value | Capital | (Deficit) | Loss | interests | Total | ||||||||||||||||||||||
BALANCE, January 1, 2021 | 101,158,228 | $ | 405 | $ | 135,347 | $ | (65,120) | $ | (5) | $ | - | $ | 70,627 | |||||||||||||||
Shares issued for equity compensation plan | 439,770 | 1 | 262 | - | - | - | 263 | |||||||||||||||||||||
Equity component of the 2018 Notes | 34 | 34 | ||||||||||||||||||||||||||
Net loss | - | - | - | (1,192) | - | - | (1,192) | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | (1) | - | (1) | |||||||||||||||||||||
BALANCE, June 30, 2021 (unaudited) | 101,597,998 | $ | 406 | $ | 135,643 | $ | (66,312) | $ | (6) | $ | - | $ | 69,731 | |||||||||||||||
BALANCE, January 1, 2020 | 80,026,647 | $ | 320 | $ | 116,943 | $ | 2,316 | $ | (10) | $ | 196 | $ | 119,765 | |||||||||||||||
Shares issued for equity compensation plan | 80,000 | 1 | 941 | - | - | - | 942 | |||||||||||||||||||||
Equity component of the 2018 Notes | - | - | 31 | - | - | - | 31 | |||||||||||||||||||||
Shares issued on | 15,992,000 | 63 | 14,009 | - | - | - | 14,072 | |||||||||||||||||||||
Shares issued on financing | 4,500,000 | 18 | 3,582 | - | - | - | 3,600 | |||||||||||||||||||||
Net loss | - | - | - | (1,952) | - | 10 | (1,942) | |||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | - | - | |||||||||||||||||||||
BALANCE, June 30, 2020 (unaudited) | 100,598,647 | $ | 402 | $ | 135,506 | $ | 364 | $ | (10) | $ | 206 | $ | 136,468 | |||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
TROOPS, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||
(In thousands of U.S. dollars) | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
CASH FLOWS FROM OPFRATING ACTIVITIES: | ||||||||
Net loss | $ | (1,192) | $ | (1,963) | ||||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 1,127 | 1,283 | ||||||
Deferred income taxes | (152) | 160 | ||||||
Change in fair value of warrant derivative liability | (247) | 29 | ||||||
Share-based compensation expenses | 261 | 380 | ||||||
Change in operating assets | ||||||||
Accounts receivable, trade | (19) | 62 | ||||||
Loans receivable | 17,635 | 10,648 | ||||||
Other receivables and prepayments | 78 | 5,782 | ||||||
Interest receivable | 282 | 870 | ||||||
Customer deposits | - | 182 | ||||||
Other current assets | - | - | ||||||
Change in operating liabilities | ||||||||
Accounts payables, trade | 66 | - | ||||||
Other payables and accrued liabilities | 1,045 | (5,085) | ||||||
Operating lease liabilities | - | (2) | ||||||
Taxes payable | (120) | (729) | ||||||
Net cash provided by continuing operations | 18,764 | 11,617 | ||||||
Net cash provided by discontinued operations | - | 656 | ||||||
Net cash provided by operating activities | 18,764 | 12,273 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | (63) | (119) | ||||||
Proceeds from acquisition of subsidiaries | - | 981 | ||||||
Repayments on shareholder promissory notes | (5,192) | (17,663) | ||||||
Net cash used in continuing operations | (5,255) | (16,801) | ||||||
Net cash used in discontinued operations | - | (217) | ||||||
Net cash used in investing activities | (5,255) | (17,018) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayment of bank borrowings | (6,240) | (76) | ||||||
Proceeds from shares issuance | - | 3,600 | ||||||
Net cash (used in) provided by financing activities | (6,240) | 3,524 | ||||||
NET INCREASE (DECREASE) IN CASH | 7,269 | (1,221) | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,028 | 5,161 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 10,297 | $ | 3,940 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
Cash paid for interest | 3 | 127 | ||||||
Cash paid for income taxes | 281 | 628 | ||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Common stock issued for acquisition of a subsidiary | - | 14,072 | ||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
SOURCE TROOPS
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