TROOPS, INC. Announces 2021 Unaudited Interim Financial Results

News provided by

Nov 22, 2021, 16:30 ET

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 and outstanding as of June 30, 2021 and December 31, 2020, respectively		-		-
Ordinary shares, $0.004 par value, 500,000,000 shares authorized, 101,597,998 and 101,158,228 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		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 acquisition of a subsidiary		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