TROOPS, INC. Announces 2021 Unaudited Interim Financial Results

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HONG KONG, Nov. 23, 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.

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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

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

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