Triller Group Inc 10-Q for FY2024 Q3
Triller Group Inc. (ILLR)
About this 10-Q
Triller Group Inc filed this 10-Q on November 14, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.44M
- down 58.8% from $13.21M a year earlier
- Net loss
- $9.42M
- compared with a net loss of $12.92M a year earlier
- Diluted EPS
- -$0.29
- compared with -$0.40 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
Commission File No.
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Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
As of November 12, 2024,
there were
Triller Group Inc.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| ASSETS | (Unaudited) | (Audited) | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Accounts receivable, net, related parties | ||||||||
| Loans receivable, net | ||||||||
| Notes receivable, net | ||||||||
| Promissory notes receivable from Triller LLC | ||||||||
| Deposit, prepayments, and other receivables, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Rental deposit, net | ||||||||
| Loans receivable, net | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Long-term investments, net | ||||||||
| Long-term investments, net, related party | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Escrow liabilities | ||||||||
| Borrowings | ||||||||
| Borrowings, related party | ||||||||
| Amount due to the holding company | ||||||||
| Convertible promissory notes payable, net | ||||||||
| Income tax payable | ||||||||
| Operating lease liabilities, current | ||||||||
| Warrant liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ (deficit) equity: | ||||||||
| Preferred stock, $ | ||||||||
| Series A-1 preferred stock, $ | ||||||||
| Series B preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Common stock to be issued | ||||||||
| Subscription receivable | ( | ) | ||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ (deficit) equity | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY | $ | $ | ||||||
| # |
See accompanying notes to unaudited condensed consolidated financial statements.
1
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||||
| Loans interest income | $ | $ | $ | $ | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | ||||||||||||||||
| Recurring asset management service fees | ||||||||||||||||
| Recurring asset management service fees, related party | ||||||||||||||||
| Total non-interest income | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Commission expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Sales and marketing expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research and development expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Personnel and benefit expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Legal and professional fee | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Legal and professional fee, related party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Office and operating fee, related party | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other general and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Foreign exchange gain (loss), net | ( | ) | ||||||||||||||
| Investment income (loss), net | ( | ) | ( | ) | ||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||||||
| Change in fair value of forward share purchase liability | ( | ) | ||||||||||||||
| Loss on settlement of forward share purchase agreement | ( | ) | ||||||||||||||
| Rental income | ||||||||||||||||
| Sundry income | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common stocks outstanding – basic and diluted# | ||||||||||||||||
| Net loss per share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| # |
See accompanying notes to unaudited condensed consolidated financial statements.
2
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the nine months ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||
| Common stock | Common stock to be issued | Additional | Accumulated other | Total | |||||||||||||||||||||||||||||||||||
| Note | No.
of share# | Amount | No.
of share# | Amount | Subscription receivable | paid-in capital | comprehensive (loss) income | Accumulated deficit | stockholders’ equity (deficit) | ||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Issuance of common stocks to settle finder fee | (14) (iv) | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stocks for private placement | (14) (v) | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||
| Issuance of common stocks to independent directors under 2024 Equity Incentive Plan | (14) (viii) | — | — | ||||||||||||||||||||||||||||||||||||
| Share-based compensation to consultants | (14) (iii), (ix) | — | — | ||||||||||||||||||||||||||||||||||||
| Share-based compensation to directors, officers, and employees | (14) (i), (ii), (vii), (x), (xi) | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||||
| Shares issued for service rendered and purchase option | (14) (vi) | — | — | ||||||||||||||||||||||||||||||||||||
| Fractional shares from forward and reverse splits | (14) (xii) | — | ( | ) | — | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| For the nine months ended September 30, 2023 | ||||||||||||||||||||||||||||||||
| Common stock | Common stock to be issued | Additional | Accumulated other | Total | ||||||||||||||||||||||||||||
| No.
of shares# | Amount | No.
of Shares# | Amount | paid-in capital | comprehensive loss | Accumulated deficit | stockholders’ equity | |||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Issuance of common stocks to settle finder fee | — | |||||||||||||||||||||||||||||||
| Issuance of holdback shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation | — | |||||||||||||||||||||||||||||||
| Forgiveness of amount due to the holding company | — | — | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net loss for the period | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | — | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
| # |
See accompanying notes to unaudited condensed consolidated financial statements.
3
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Share-based compensation expense | ||||||||
| Non-cash lease expense | ||||||||
| Depreciation on property and equipment, net | ||||||||
| Interest income on loans receivable, net | ( | ) | ( | ) | ||||
| Interest income on notes receivable, net | ( | ) | ||||||
| Interest income on promissory notes receivable from Triller LLC | ( | ) | ||||||
| Interest expense on convertible promissory notes payable, net | ||||||||
| Interest expense on borrowings | ||||||||
| Foreign exchange gain, net | ( | ) | ( | ) | ||||
| Investment loss (income), net | ( | ) | ||||||
| Gain on disposal of property and equipment, net | ( | ) | ||||||
| Provision for allowance for expected credit losses | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Change in fair value of forward share purchase liability | ||||||||
| Loss on settlement of forward share purchase agreement | ||||||||
| Reversal of annual bonus accrued in prior year | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Loans receivable | ||||||||
| Deposits, prepayments, and other receivables | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Escrow liabilities | ( | ) | ( | ) | ||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Income tax payable | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of long-term investments, net | ||||||||
| Purchase of notes receivable, net | ( | ) | ||||||
| Dividends received from long-term investments, net | ||||||||
| Proceeds from sale of notes receivable, net | ||||||||
| Proceeds from disposal of property and equipment, net | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Advances from the holding company | ||||||||
| Repayment of borrowings | ( | ) | ||||||
| Issue of promissory notes to Triller LLC | ( | ) | ||||||
| Proceeds from convertible promissory note payable, net | ||||||||
| Settlement of forward share purchase agreement | ( | ) | ||||||
| Proceeds from borrowings | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect on exchange rate change on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Net change in cash, cash equivalent and restricted cash | ( | ) | ||||||
| Beginning of period | ||||||||
| End of period | $ | $ | ||||||
| Supplementary cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Cash received for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Issuance of common stock to settle payables | $ | $ | ||||||
| Forgiveness of amount due to the holding company | $ | $ | ||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| As of September 30, | ||||||||
| 2024 | 2023 | |||||||
| Reconciliation to amounts on condensed consolidated balance sheets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 1 － DESCRIPTION OF BUSINESS
Organization
Triller Group Inc. (“ILLR”, “Triller Group”, or the “Company”) (formerly AGBA Group Holding Limited (“AGBA”)) is formed in the State of Delaware, on October 15, 2024, which was established to domicile its legal jurisdiction from British Virgin Islands to the State of Delaware.
The Company, through its subsidiaries, currently operates a wealth and health platform, and offers a wide range of financial service and products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds and lending businesses in Hong Kong. ILLR is also engaged in financial technology business and financial investments, managing an ensemble of fintech investments and healthcare investment and operating a health and wealth management platform with a broad spectrum of services and value-added information in health, insurance, investments and social sharing.
Merger Transaction
On October 15, 2024, the Company consummated the merger transaction with Triller Corp., a Delaware corporation (“Triller”), pursuant to that certain Amended and Restated Agreement and Plan of Merger, dated as of August 30, 2024 (as further amended, the “Merger Agreement”), by and between AGBA, its wholly owned subsidiary AGBA Social Inc. (“Merger Sub”), Triller and Bobby Sarnevesht, as sole representative of the Triller stockholders. Details are described in note 4.
The accompanying unaudited condensed consolidated financial statements reflected the operating results of AGBA for the three and nine months ended September 30, 2024 before the completion of the merger transaction.
NOTE 2 － SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying unaudited condensed consolidated financial statements and notes.
| ● | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements of the Company are presented in United State dollars (“US$” or “$”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements have been omitted pursuant to such rules and regulations. The consolidated balance sheet as of December 31, 2023 derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 28, 2024.
5
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The unaudited condensed consolidated financial statements as of September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows. The results of operations for the three and nine months ended September 30, 2024 and 2023 are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
| ● | Principal of Consolidation |
The accompanying unaudited condensed consolidated financial statements include the unaudited financial statements of ILLR and its subsidiaries. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. The unaudited financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances between ILLR and its subsidiaries are eliminated upon consolidation.
| ● | Use of Estimates and Assumptions |
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property and equipment, impairment of long-lived assets, allowance for expected credit losses, notes receivables, promissory notes receivable, share-based compensation, convertible promissory notes payable, warrant liabilities, provision for contingent liabilities, revenue recognition, income tax provision, deferred taxes and uncertain tax position, and allocation of expenses from the holding company.
The inputs into the management’s judgments and estimates consider the geopolitical tension, inflationary and high interest rate environment and other macroeconomic factors on the Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
| ● | Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited condensed consolidated statements of operations and comprehensive loss.
6
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
The reporting currency of the Company is US$ and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition, the Company and subsidiaries are operating in Hong Kong maintain their books and record in their local currency, Hong Kong dollars (“HK$”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of unaudited financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the unaudited condensed consolidated statements of changes in stockholders’ (deficit) equity.
| September 30, 2024 | September 30, 2023 | |||||||
| Period-end HK$:US$ exchange rate | ||||||||
| Period average HK$:US$ exchange rate | ||||||||
| ● | Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Hong Kong and Hong Kong is not protected by Federal Deposit Insurance Corporation (“FDIC”) insurance. However, management does not believe there is a significant risk of loss.
| ● | Restricted Cash |
Restricted cash consists of funds held in escrow accounts reflecting the restricted cash and cash equivalents maintained in certain bank accounts that are held for the exclusive interest of the Company’s customers. The Company currently acts as a custodian to manage the assets and investment portfolio on behalf of its customers under the terms of certain contractual agreements, which the Company does not have the right to use for any purposes, other than managing the portfolio.
The Company restricts the use of the assets underlying the funds held in escrow to meet with regulatory or contractual requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under current liabilities.
| ● | Accounts Receivable, net |
Accounts receivable, net include trade accounts due from customers in insurance brokerage and asset management businesses, less the allowance for expected credit losses.
Accounts receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution of the insurance policies. Credit terms with the products providers of investment, unit and mutual funds and asset portfolio are mainly 90 days or a credit period mutually agreed between the contracting parties. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the allowance for expected credit losses is adequate, and provides allowance when necessary.
The Company does not hold any collateral or other credit enhancements over its accounts receivable balances.
7
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| ● | Loans Receivable, net |
Loans receivable, net are related to residential mortgage loan that are carried at unpaid principal and interest balances, less the allowance for expected credit losses on loans receivable and charge-offs.
Loans are placed on nonaccrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a loan is placed on nonaccrual status, any interest accrued but not received is reversed against interest income. Payments received on a nonaccrual loan are either applied to protective advances, the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A nonaccrual loan may be restored to accrual status when principal and interest payments have been brought current and the loan has performed in accordance with its contractual terms for a reasonable period (generally six months).
If the Company determines that a loan is impaired, the Company next determines the amount of the impairment. The amount of impairment on collateral dependent loans is charged off within the given fiscal quarter. Generally, the amount of the loan and negative escrow in excess of the appraised value less estimated selling costs, for the fair value of collateral valuation method, is charged off. For all other loans, impairment is measured as described below in “Allowance for Expected Credit Losses on Financial Instruments”.
| ● | Allowance for Expected Credit Losses on Financial Instruments |
In accordance with ASC Topic 326, “Credit Losses – Measurement of Credit Losses on Financial Instruments” (ASC 326), the Company utilizes the current expected credit losses (“CECL”) model to determine an allowance that reflects its best estimate of the expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits and others receivable which is recorded as a liability to offset the receivables. The CECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate expected credit losses. Accounts receivable, loans receivable, notes receivable, and deposits and others receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense.
For the three months ended September 30, 2024
and 2023, the aggregated provision for allowance for expected credit losses on accounts receivable, loans receivable, notes receivable,
and other receivables was $
For the nine months ended September 30, 2024 and
2023, the aggregated provision for allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, and
other receivables was $
| ● | Promissory Notes Receivable from Triller LLC |
Promissory notes receivable from Triller LLC is stated at carrying value and receivable in the next twelve months. Interest income is recognized at a fixed interest rate over the prevailing periods on the unaudited condensed consolidated statements of operations and comprehensive loss (see Note 5).
| ● | Long-Term Investments, net |
The Company invests in equity securities with readily determinable fair values, equity securities that do not have readily determinable fair values, and warrant with purchase option.
8
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Equity securities with readily determinable fair values are carried at fair value with any unrealized gains or losses reported in earnings.
Equity securities that do not have readily determinable fair values mainly consist of investments in privately-held companies. They are accounted for, at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
Warrant with a purchase option of equity securities was recorded as an investment in non-marketable equity securities and measured at the fair value.
At each reporting period, the Company makes a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
| ● | Property and Equipment, net |
| Expected useful life | ||
| Land and building | ||
| Furniture, fixtures and equipment | ||
| Computer equipment | ||
| Motor vehicle |
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
| ● | Impairment of Long-Lived Assets |
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property and equipment owned and held by the Company are reviewed 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 evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. impairment losses were recognized for the three and nine months ended September 30, 2024 and 2023.
| ● | Borrowings |
Borrowings are recognized at fair value and repayable in the next twelve months. Interest expense is recognized on a fixed interest rate on the unaudited condensed consolidated statements of operations and comprehensive loss.
| ● | Convertible Promissory Notes Payable, net |
The Company accounts for its convertible promissory notes payable, net in accordance with ASC Topic 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”), whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC Topic 815-15, “Derivatives and Hedging – Embedded Derivatives” or the substantial premium model in ASC 470-20 applies. Where the substantial premium model applies, the premium is recorded in additional paid-in capital. The resulting debt discount is amortized over the period during which the convertible promissory notes payable are expected to be outstanding as additional non-cash interest expenses.
9
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| ● | Warrant Liabilities |
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the fair value are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations and comprehensive loss. The Company accounts for its Public Warrants as equity and the (i) SPAC Private Warrants, (ii) Warrants – Class A, and (iii) Common Warrants as liabilities.
Warrants classified as liabilities are recorded at fair value and are remeasured at each reporting date until settlement. Changes in fair value is recognized as a component of change in fair value of warrant liability in the unaudited condensed consolidated statements of operations and comprehensive loss. Transaction costs allocated to warrants that are presented as a liability are immediately expensed in the unaudited condensed consolidated statements of operations and comprehensive loss. Warrants classified as equity instruments are initially recognized at fair value and are not subsequently remeasured.
| ● | Revenue Recognition |
The Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASC 606”).
ASC 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers. The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
10
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Certain portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows:
Commissions
The Company earns commissions from the sale of investment products to customers. The Company enters into commission agreements with customers which specify the key terms and conditions of the arrangement. Commissions are separately negotiated for each transaction and generally do not include rights of return, credits or discounts, rebates, price protection or other similar privileges, and typically paid on or shortly after the transaction is completed. Upon the purchase of an investment product, the Company earns a commission from customers, calculated as a fixed percentage of the investment products acquired by its customers. The Company defines the “purchase of an investment product” for its revenue recognition purpose as the time when the customers referred by the Company has entered into a subscription contract with the relevant product provider and, if required, the customer has transferred a deposit to an escrow account designated by the Company to complete the purchase of the investment products. After the contract is established, there are no significant judgments made when determining the one-time commission price. Therefore, commissions are recorded at a point in time when the investment product is purchased.
The Company also facilitates the arrangement between insurance providers and individuals or businesses by providing insurance placement services to the insureds, and is compensated in the form of one-time commissions from the respective insurance providers. The Company primarily facilitates the placement of life, general and MPF insurance products. The Company determines that insurance providers are the customers.
The Company primarily earns commission income arising from the facilitation of the placement of an effective insurance policy, which is recognized at a point in time when the performance obligation has been satisfied upon execution of the insurance policy as the Company has no future or ongoing obligation with respect to such policies. The commission fee rate, which is paid by the insurance providers, based on the terms specified in the service contract which are agreed between the Company and insurance providers for each insurance product being facilitated through the Company. The commission earned is equal to a percentage of the premium paid to the insurance provider. Commission from renewed policies is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy).
In accordance with ASC Topic 606, “Revenue Recognition: Principal Agent Considerations”, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue in a gross or net basis depends upon whether the Company has control over the services prior to transferring it. Control is demonstrated by the Company which is primarily responsible for fulfilling the provision of placement services through the Company’s licensed insurance brokers to provide agency services. The commissions from insurance providers are recorded on a gross basis and commission paid to independent contractors or channel costs are recorded as commission expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
The Company also offers the sale solicitation of real estate property to the final customers and is compensated in the form of commissions from the corresponding property developers pursuant to the service contracts. Commission income is recognized at a point of time upon the sale contracts of real estate property is signed and executed.
11
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Recurring Asset Management Service Fees
The Company provides asset management services to investment funds or investment product providers in exchange for recurring asset management service fees. Recurring asset management service fees are determined based on the types of investment products the Company distributes and are calculated as a fixed percentage of the fair value of the total investment of the investment products, calculated daily. These customer contracts require the Company to provide investment management services, which represents a performance obligation that the Company satisfies over time. After the contract is established, there are no significant judgments made when determining the transaction price. As the Company provides these services throughout the contract term, for the method of calculating recurring service fees, revenue is calculated on a daily basis over the contract term, quarterly billed and recognized. Recurring service agreements do not include rights of return, credits or discounts, rebates, price protection, performance component or other similar privileges and the circumstances under which the fixed percentage fees, before determined, could be not subject to clawback. Payment of recurring asset management service fees are normally on a regular basis (typically monthly or quarterly).
Interest Income
The Company offers money lending services from loan origination in form of mortgage and personal loans. Interest income is recognized monthly in accordance with their contractual terms and recorded as interest income in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company does not charge prepayment penalties from its customers. Interest income on mortgage and personal loans is recognized as it accrued using the effective interest method. Accrual of interest income on mortgage loans is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 180 days delinquent.
Disaggregation of Revenue
| For the three months ended September 30, 2024 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring asset management service fees | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
12
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring asset management service fees | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| For the nine months ended September 30, 2024 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring asset management service fees | — | — | — | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | |||||||||||||||||||
| Insurance brokerage service | Asset management service | Money lending service | Real estate agency service | Total | ||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans | $ | $ | $ | $ | $ | |||||||||||||||
| Non-interest income: | ||||||||||||||||||||
| Commissions | ||||||||||||||||||||
| Recurring asset management service fees | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
13
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| ● | Rental Income |
Rental income represents monthly rental received from the Company’s tenants. The Company recognizes rental income on a straight-line basis over the lease term in accordance with the lease agreement.
| ● | Comprehensive Loss |
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income (loss), its components and accumulated balances. Comprehensive income (loss) as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive loss, as presented in the accompanying unaudited condensed consolidated statements of stockholders’ (deficit) equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive loss is not included in the computation of income tax expense or benefit.
| ● | Employee Benefits |
Full time employees of the Hong Kong subsidiaries participate in a defined contribution Mandatory Provident Fund retirement benefit scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance.
| ● | Income Taxes |
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial
statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be
recognized in the unaudited condensed consolidated financial statements when it is more likely than not the position will be
sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest
amount of tax benefit that has a greater than
For the three and nine months ended September 30, 2024 and 2023, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2024 and December 31, 2023, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax authorities.
| ● | Share-Based Compensation |
The Company accounts for share-based compensation in accordance with the fair value recognition provision of ASC Topic 718, “Stock Compensation”. The Company grants share awards, including common stocks and restricted share units, to eligible participants. Share-based compensation expense for share awards is measured at fair value on the grant date. The fair value of restricted stock with either solely a service requirement or with the combination of service and performance requirements is based on the closing fair market value of the common stocks on the date of grant. Share-based compensation expense is recognized over the awards requisite service period. For awards with graded vesting that are subject only to a service condition, the expense is recognized on a straight-line basis over the service period for the entire award.
14
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| ● | Net Loss Per Share |
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net (loss) income divided by the weighted average shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common stocks (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 common stocks 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 EPS.
| ● | Segment Reporting |
ASC Topic 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in the unaudited condensed consolidated financial statements for details on the Company’s business segments.
| Segments | Scope of Service | Business Activities | ||
| Distribution Business | Insurance Brokerage Business | |||
| Platform Business | - Asset Management Business | - Providing access to financial products and services to licensed brokers. - Providing operational support for the submission and processing of product applications. - Providing supporting tools for commission calculations, customer engagement, sales team management, customer conversion, etc. - Providing training resources and materials. - Facilitating the placement of investment products for the fund and/or product provider, in exchange for the fund management services. | ||
| - Money Lending Service | ||||
| - Real Estate Agency Service | ||||
| Fintech Business | Investment Holding | |||
| Healthcare Business | Investment Holding |
15
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
All of the Company’s revenues were generated in Hong Kong for the three and nine months ended September 30, 2024 and 2023 and all of the Company’s long-lived assets were located in Hong Kong as of September 30, 2024 and December 31, 2023.
| ● | Leases |
Under ASU 2016-02, Leases (Topic 842) (“Topic 842”), leases are categorized as operating or financing lease at inception. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease terms include options to renew or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company has recognized right of use (“ROU”) assets and corresponding lease liabilities on the Company’s condensed consolidated balance sheets for its operating lease agreements with contractual terms greater than 12 months. Lease liabilities are based on the present value of remaining lease payments over the lease term. As the discount rate implied in the Company’s leases is not readily determinable, the present value is calculated using the Company’s incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized basis with similar terms.
Leases with a term of twelve months or less upon the commencement date are considered short-term leases, are not included on the condensed consolidated balance sheets and are expensed on a straight-line basis over the lease term.
| ● | Related Parties |
The Company follows the ASC Topic 850-10, “Related Party” (“ASC 850”) for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850, the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The unaudited condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of unaudited condensed consolidated financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the unaudited condensed consolidated financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
16
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| ● | Commitments and Contingencies |
The Company follows the ASC Topic 450, “Contingencies” to report accounting for contingencies. Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
| ● | Fair Value Measurement |
The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; |
| ● | Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and |
| ● | Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable, notes receivable, deposits, prepayments and other receivables, amount due to the holding company, accounts payable, escrow liabilities, borrowings and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of loans receivable approximates the carrying amount. The Company accounts for loans receivable at cost, subject to expected credit losses assessment.
17
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of September 30, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| Description | 2024 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable equity securities | $ | $ | $ | $ | ||||||||||||
| Investments under purchase option | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| As of December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
| Description | 2023 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Assets: | ||||||||||||||||
| Marketable equity securities | $ | | $ | | $ | $ | ||||||||||
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
| ● | Recently Issued Accounting Pronouncements |
As of September 30, 2024, the Company has implemented all applicable new accounting standards and updates issued by the Financial Accounting Standards Board (“FASB”) that were in effect. There were no new standards or updates during the nine months ended September 30, 2024 that had a material impact on the unaudited condensed consolidated financial statements.
Recently Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB amended guidance in ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The revised guidance requires that a public entity disclose significant segment expenses regularly reviewed by the chief operating decision maker (CODM), including public entities with a single reportable segment. The amended guidance is effective for fiscal years beginning in January 2024 and interim periods beginning January 2025 on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact on its unaudited condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting periods beginning in January 2025. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact on its unaudited condensed consolidated financial statements.
18
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 3 — LIQUIDITY AND GOING CONCERN
The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. They do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
For the nine months ended September 30, 2024,
the Company reported net loss of $
The Company has determined that the prevailing conditions and ongoing liquidity risks encountered by the Company raise substantial doubt about the ability to continue as a going concern for at least one year following the date these unaudited condensed consolidated financial statements are issued. The ability to continue as a going concern is dependent on the Company’s ability to successfully implement its current operating plan and fund-raising exercises. The Company believes that it will be able to grow its revenue base and control expenditures. In parallel, the Company will monitor its capital structure and operating plans and search for potential funding alternatives in order to finance the development activities and operating expenses. The Company is continuing its plan to further grow and expand operations and seek sources of capital to pay the contractual obligations as they come due. To access capital to fund operations or provide growth capital, the Company will need to raise capital in one or more debt and/or equity offerings.
However, the Company cannot predict the exact amount or timing of the alternatives or guarantee those alternatives will be favorable to its stockholders. Any failure to obtain financing when required will have a material adverse impact on the Company’s business, operation and financial result. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 28, 2024, for further information about the liquidity and going concern.
NOTE 4 — COMPLETION OF MERGER TRANSACTION
The Merger Transactions
In April 2024, the Company entered into a certain
Agreement and Plan of Merger (the “Original Merger Agreement”). On August 30, 2024, the Company entered into an Amended and
Restated Agreement and Plan of Merger (as further amended, the “Merger Agreement”) by and between the Merger Sub, Triller,
and Bobby Sarnevesht. The Merger Agreement has amended, restated and superseded the Original Merger Agreement accordingly (the “Merger
Transactions”). Pursuant to the Merger Agreement, (a) Triller will complete its reorganization (the “Triller Reorganization”)
with Triller Hold Co LLC (“Triller LLC”), (b) the Company will domesticate to the United States as a Delaware corporation
(the “AGBA Domestication”), pursuant to which, among other things, all AGBA ordinary shares, par value $
Stockholders’ Approval
On September 19, 2024, the Merger Transaction and other related proposals were approved by the stockholders of the Company at the extraordinary general meeting of stockholders (the “EGM”).
Merger Closing
On October 15, 2024, the Company consummated the
Merger Agreement and completed the AGBA Domestication by changing its jurisdiction of incorporation from the British Virgin Islands to
the State of Delaware and changed its company name to “Triller Group Inc.” (“Triller Group” or “ILLR”). Pursuant
to the Certificate of Incorporation of the Company, the par value of the common stock and preferred stock of the Company is $
19
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
In connection with the consummation of the Merger
Transaction, on the closing date, the Company acquired
| (i) | issued |
| (ii) |
| (iii) | issued |
| (iv) | issued |
| (v) | converted all existing Triller restricted stock units into
|
| (vi) | adjusted an aggregate of |
Following the closing, the Company issued an aggregate
of
At the closing date and following the completion of the Merger Transaction and after giving effect to the Forward Split effected on October
1, 2024 and Reverse Split effected on October 15, 2024, the Company had approximately
To date, the common stocks of ILLR were listed and traded on the Nasdaq Stock Market under the symbol “ILLR”.
NOTE 5 — PROMISSORY NOTES RECEIVABLE AND PAYABLE
Financing Arrangements with Triller and Yorkville
On April 25, 2024, the Company entered into the
A&R SEPA with YA II PN, LTD, a Cayman Islands exempt limited partnership (“Yorkville”), and Triller. Pursuant to the A&R
SEPA, Triller, or the Company after the transactions contemplated by the Merger Agreement are closed, has the right to sell to Yorkville
up to $
In connection with the A&R SEPA, Yorkville
agreed to an advance to the Triller in the form of convertible promissory notes in a principal amount up to $
20
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Second Pre-Paid Advance
On June 28, 2024, the Company, Triller and Yorkville
entered into the Second A&R SEPA to modify the A&R SEPA dated April 25, 2024. Pursuant to the Second A&R SEPA, Yorkville will
(i) provide for the assignment by Triller and assumption by the Company of the rights and obligations of Triller under the A&R SEPA
and the promissory note of the First Pre-Paid Advance of $
In connection with the Second A&R SEPA, the
Company issued convertible promissory notes in an aggregate of $
Common Warrants to Yorkville
Also, pursuant to the Second A&R SEPA, the Company issued a warrant
(the “Common Warrant”) to Yorkville to purchase up to a number of shares of common stock of the Company equal to
Promissory Notes Receivable from Triller
In connection with the First and Second Pre-Paid
Advances issued by Yorkville under A&R SEPA and the Second A&R SEPA, Yorkville advanced $
As of September 30, 2024, the promissory note
receivable from Triller was $
Convertible Promissory Notes Payable, net
As of September 30, 2024, the aggregate principal
amount of the First and Second Pre-Paid Advances are $
The Company recorded amortization of debt discount
of convertible promissory notes payable as interest expense in the unaudited condensed consolidated statements of operations and comprehensive
loss of $
The Company recorded accrued interest of
convertible promissory notes payable in interest expense in the unaudited condensed consolidated statements of operations
and comprehensive loss of $
21
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 6 — RESTRICTED CASH
As of September 30, 2024 and December 31, 2023,
the Company has $
NOTE 7 － ACCOUNTS RECEIVABLE, NET
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Accounts receivable – related parties | ||||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The accounts receivable due from related parties represented the management service rendered to the portfolio assets of a related companies, which are controlled by the holding company, for a compensation of asset management service fee income at the predetermined rate based on the respective portfolio of asset values invested by the final customers. The amount is unsecured, interest-free and with a credit term mutually agreed.
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Balance at beginning of period/year | $ | $ | ||||||
| Additions | ||||||||
| Foreign translation adjustment | ||||||||
| Balance at end of period/year | $ | $ | ||||||
The Company generally conducts its business with creditworthy third parties. The Company determines, on a quarterly basis, the probable losses and an allowance for expected credit losses determined in accordance with the CECL model, based on historical losses, current economic conditions, forecasted future economic and market considerations, and in some cases, evaluating specific customer accounts for risk of loss. Accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
For the three and nine months ended September 30, 2024, the Company
has evaluated the probable losses on the accounts receivable and made a provision for allowance for expected credit losses of $
For the three and nine months ended September
30, 2023, the Company has evaluated the probable losses on the accounts receivable and made a provision for allowance for expected credit
losses of $
22
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 8 － LOANS RECEIVABLE, NET
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Residential mortgage loans | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Loans receivable, net | $ | $ | ||||||
| Classifying as: | ||||||||
| Current portion | $ | $ | ||||||
| Non-current portion | ||||||||
| Loans receivable, net | $ | $ | ||||||
The interest rates on loans issued ranged between
Mortgage loans are made to either business or
individual customers in Hong Kong for a period of
Estimated allowance for expected credit losses is determined on quarterly basis, in accordance with the CECL model, for general credit risk of the overall portfolio, which is relied on an assessment of specific evidence indicating doubtful collection, historical loss experience, loan balance aging and prevailing economic conditions. If there is an unexpected deterioration of a customer’s financial condition or an unexpected change in economic conditions, including macroeconomic events, the Company will assess the need to adjust the allowance for expected credit losses. Any such resulting adjustments would affect earnings in the period that adjustments are made.
For the three and nine months ended September
30, 2024, the Company has evaluated the probable losses on loans receivable and made a provision for allowance for expected credit losses
of $
For the three and nine months ended September 30, 2023, the Company
has evaluated the probable losses on loans receivable and made a provision for allowance for expected credit losses of $
NOTE 9 － NOTES RECEIVABLE, NET
On February 24, 2023, the Company entered into a subscription agreement
and a convertible loan note instrument (collectively the “Agreements”) with Investment A. Pursuant to the Agreements, the
Company agrees to subscribe an aggregate amount of $
23
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 10 － LONG-TERM INVESTMENTS, NET
| As of | ||||||||||||||||
| Ownership interest | September 30, 2024 | Ownership interest | December 31, 2023 | |||||||||||||
| Marketable equity securities: | ||||||||||||||||
| Investment C | %* | $ | %* | $ | ||||||||||||
| Non-marketable equity securities: | ||||||||||||||||
| Investment A | % | % | ||||||||||||||
| Investment B | % | % | ||||||||||||||
| Investment D | % | % | ||||||||||||||
| Investment E, related party | % | % | ||||||||||||||
| Investment F | % | |||||||||||||||
| Investment G under purchase option | ||||||||||||||||
| Net carrying value | $ | $ | ||||||||||||||
| * |
Investments in Marketable Equity Securities
Investments in equity securities, such as, marketable securities, are accounted for at its current market value with the changes in fair value recognized in net gain (loss). Investment C was listed and publicly traded on Nasdaq Stock Exchange.
As of September 30, 2024 and December 31, 2023, Investment C was recorded
at fair value of $
Investments in Non-Marketable Equity Securities
Investments in non-marketable equity securities consist of investments in limited liability companies in which the Company’s interests are deemed minor and long-term, strategic investments in companies that are in various stages of development, and investments in close-ended partnership funds which concentrated in the healthcare sector. These investments do not have readily determinable fair values and, therefore, are reported at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.
24
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Management assesses each of these investments on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investee’s financial condition, the business outlook for its products and technology, its projected results and cash flow, financing transactions subsequent to the acquisition of the investment, the likelihood of obtaining subsequent rounds of financing and cash usage. The Company is not required to determine the fair value of these investments unless impairment indicators existed. When an impairment exists, the investment will be written down to its fair value by recording the corresponding charge as a component of other income (expense), net. Fair value is estimated using the best information available, which may include cash flow projections or other available market data.
On February 5, 2024, the Company entered into
a purchase and sale agreement with an independent third party to sell all its equity interest in Investment F for a purchase price of
$
Investments Under Purchase Option
On September 6, 2024, the Company received the
warrant containing a purchase option to acquire
Under ASC Topic 820-10, the warrant was classified as Level 3 due to the use of unobservable inputs. The fair value of the warrant is valued by an independent valuer using a Binominal pricing model with the following key inputs at the measurement date:
| As of | ||||
| September 30, 2024 | ||||
| Input | ||||
| Share price | $ | |||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Exercise price | $ | |||
| Warrant remaining life | 5 years | |||
25
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Balance at beginning of period/year | $ | $ | ||||||
| Additions | ||||||||
| Disposal | ( | ) | ||||||
| Adjustments: | ||||||||
| Downward adjustments | ( | ) | ( | ) | ||||
| Foreign exchange adjustment | ||||||||
| Balance at end of period/year | $ | $ | ||||||
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Downward adjustments (including impairment) | $ | ( | ) | $ | ( | ) | ||
| Upward adjustments | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| For the three months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Marketable equity securities: | ||||||||
| Unrealized gain (loss) from the changes in fair value – Investment C | $ | $ | ( | ) | ||||
| Non-marketable equity securities: | ||||||||
| Unrealized loss (including impairment) – Investment F | ( | ) | ||||||
| Dividend income | ||||||||
| Investment income (loss), net | $ | $ | ( | ) | ||||
| For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Marketable equity securities: | ||||||||
| Unrealized gain from the changes in fair value – Investment C | $ | $ | ||||||
| Realized gain from sale of Investment C | ||||||||
| Non-marketable equity securities: | ||||||||
| Unrealized loss (including impairment) – Investment B | ( | ) | ||||||
| Unrealized loss (including impairment) – Investment F | ( | ) | ||||||
| Dividend income | ||||||||
| Investment (loss) income, net | $ | ( | ) | $ | ||||
26
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 11 － BORROWINGS
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Mortgage borrowings | $ | $ | ||||||
| Short-term borrowings, related party | ||||||||
| Total | $ | $ | ||||||
Mortgage Borrowings
In February 2023, the Company obtained a mortgage loan of $
In July 2024, the Company partially settled $
Short-term Borrowings
In September 2023, the Company obtained a short-term
borrowing of $
NOTE 12 － OPERATING LEASES
The Company has entered into commercial operating
lease with an independent third party for the use of an office in Hong Kong. The lease has original terms exceeding
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Operating lease: | ||||||||
| Right-of-use asset | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Right-of-use asset, net | $ | $ | ||||||
| Lease liabilities: | ||||||||
| Current lease liabilities | $ | $ | ||||||
| Non-current lease liabilities | ||||||||
| Total lease liabilities: | $ | $ | ||||||
27
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Operating lease expense for the three months ended
September 30, 2024 and 2023 was $
Operating lease expense for the nine months ended September 30, 2024
and 2023 was $
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Weighted average discount rate | % | % | ||||||
| Weighted average remaining lease term (years) | ||||||||
| For the year ending September 30, | Operating lease | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Future minimum lease payments | $ | |||
NOTE 13 － WARRANTS
In connection with the Merger Transaction aforementioned
in note 4, the exercise prices for, and the shares underlying, all previously outstanding public warrants (“AGBA Public Warrants”),
private warrants issued in AGBA’s SPAC IPO (“AGBA SPAC Private Warrants”), Class A warrants (“AGBA Class A Warrants”),
and common warrants (“AGBA Common Warrants,” together with AGBA Class A Warrants and AGBA SPAC Private Warrants, “AGBA
Private Warrants,” together with AGBA Public Warrants, “AGBA Warrants”) issued by AGBA were adjusted in accordance with
the terms of such warrant instruments to reflect the previously announced and implemented 1.9365-to-1 Forward Split and 1-for-4 Reverse
Split.
The Company has issued the different classes of warrants, as follows:
Public Warrants
Each public warrant entitles the holder thereof to purchase one-quarter
(1/4) of one share of common stock at a price of $
28
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Once the public warrants become exercisable, the Company may call the outstanding warrants (including any outstanding warrants issued upon exercise of the unit purchase option issued to Maxim Group LLC) for redemption:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the last sales price of the common stock equals
or exceeds $ |
| ● | if, and only if, there is a current registration statement in effect with respect to the common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the warrants for redemption as described above, the management of the Company will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of common stocks equal to the quotient obtained by dividing (x) the product of the number of common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether the Company will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of the common stock at the time the warrants are called for redemption, the Company’s cash needs at such time and concerns regarding dilutive share issuances.
The public warrants qualify for the derivative scope exception under ASC 815 and are therefore presented as a component of Stockholders’ Equity Section on the condensed consolidated balance sheets without subsequent fair value re-measurement.
As of September 30, 2024 and December 31, 2023,
there were
Other than the public warrants, the Company has accounted for and presented certain warrants as liabilities on the condensed consolidated balance sheets, in accordance with ASC 480. The fair value of the warrant liabilities is valued by an independent valuer using a Binominal pricing model. The warrant liabilities were classified as Level 3 due to the use of unobservable inputs.
SPAC Private Warrants
The SPAC private warrants are identical to
the public warrants, except that the SPAC private warrants and the common stocks issuable upon the exercise of the SPAC private
warrants were not transferable, assignable or salable until after the completion of the business combination on November 14, 2022,
subject to certain limited exceptions. Additionally, the SPAC private warrants will be exercisable on a cashless basis and will be
non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the SPAC private warrants are
held by someone other than the initial purchasers or their permitted transferees, the SPAC private warrants will be redeemable by
the Company and exercisable by such holders on the same basis as the public warrants at a price of $
As of September 30, 2024 and December 31, 2023,
there were
The changes in fair value for the three and nine months ended September
30, 2024 were $(
The changes in fair value for the three and nine
months ended September 30, 2023 were $
29
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Warrants – Class A
On May 2, 2024, the Company issued
As of September 30, 2024 and December 31, 2023,
there were
The changes in fair value for the three and nine
months ended September 30, 2024 were $
Common Warrants
One June 28, 2024, the Company issued
As of September 30, 2024 and December 31, 2023,
there were
The changes in fair value for the three and nine
months ended September 30, 2024 were $
| As of | ||||||||||||||||
| As of September 30, 2024 | December 31, 2023 | |||||||||||||||
| Common Warrants | Warrants – Class A | SPAC Private Warrants | SPAC Private Warrants | |||||||||||||
| Input | ||||||||||||||||
| Share price | $ | $ | $ | $ | ||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
| Volatility | % | % | % | % | ||||||||||||
| Exercise price | $ | $ | $ | $ | ||||||||||||
| Warrant remaining life | ||||||||||||||||
30
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 14 － STOCKHOLDERS’ (DEFICIT) EQUITY
To date, the Company’s common stock is currently traded on the Nasdaq Capital Market under the symbol “ILLR”, which was previously traded under the symbol “AGBA.”
On October 15, 2024, the Company changed its domicile from British Virgin Islands to the State of Delaware.
Preferred Stock
On October 15, 2024, the Company filed its articles of incorporation with the Secretary of State of Delaware, to authorize shares of preferred stock and provide that shares of preferred stock may be issued from time to time in one or more series. The Company’s board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series.
To date, the Company has authorized a total of
A description of each class of preferred stock is listed below:
Series A-1 Preferred Stock
The Company designated up to
There were shares of Series A-1 Preferred Stock issued and outstanding as of September 30, 2024 and December 31, 2023.
Series B Preferred Stock
The Company designated up to
There were shares of Series B Preferred Stock issued and outstanding as of September 30, 2024 and December 31, 2023.
31
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Common Stock (or equivalent to ordinary shares)
Forward and Reverse Stock Splits
On October 1, 2024, the Company effected a 1.9365-to-1
forward stock split (the “Forward Split”), resulting increase in the total number of authorized ordinary shares from
Further,
To date, the Company has
During the nine months ended September 30, 2024,
the Company issued
| (i) |
| (ii) |
| (iii) |
| (iv) |
| (v) |
| (vi) |
| (vii) |
| (viii) |
| (ix) |
| (x) |
| (xi) |
| (xii) |
There were
During the three months ended September 30, 2024
and 2023, the Company recorded $
During the nine months ended September 30, 2024 and 2023, the Company
recorded $
32
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Common Stock To Be Issued
There were and
Subscription Receivable
Subscription receivable is related to the private
placement commenced in November 2023, whose common stocks were issued to a director of the Company on May 2, 2024. The gross proceed of
$
Forgiveness of Amount Due to the Holding Company
During the nine months ended September 30, 2024
and 2023, the holding company of the Company agreed to forgive a debt of and $
2023 Share Award Scheme
Pursuant to the Share Award Scheme, the Company
filed S-8 registration statement to register up to
The fair value of the common stock granted during the period is measured based on the closing price of the Company’s common stocks as reported by Nasdaq Exchange on the date of grant. For those vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
As of September 30, 2024,
During the three months ended September 30, 2024 and 2023, the Company recorded and share-based compensation expense, respectively which is included in the personnel and benefit expenses in the unaudited condensed consolidated statements of operations and comprehensive loss.
During the nine months ended September 30, 2024 and 2023, the Company
recorded $
33
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Restricted Share Units (“RSUs”)
In December 2022, the Company approved and granted
For the RSUs, the fair value is recognized over
the period based on the derived service period (usually the vesting period), on a straight-line basis. The valuations assume no dividends
will be paid. The Company has assumed
On January 22, 2024 and June 18, 2024, the Company
issued
During the three months ended September 30, 2024
and 2023, the Company recorded $
During the nine months ended September 30, 2024
and 2023, the Company recorded $
As of September 30, 2024 and December 31, 2023,
total unrecognized compensation remaining to be recognized in future periods for RSUs totaled $
| As of | ||||||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||||||||||
| Number of RSUs | Weighted Average Grant Price | Number of RSUs | Weighted Average Grant Price | |||||||||||||
| Outstanding, beginning of period/year | $ | $ | ||||||||||||||
| Vested | $ | ( | ) | $ | ||||||||||||
| Forfeited | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | ||||||
| Outstanding, end of period/year | $ | $ | ||||||||||||||
2024 Equity Incentive Plan
Pursuant to the 2024 Equity Incentive Plan (the
“2024 Plan”), the Company filed S-8 registration statement to register
The fair value of the common stock granted during the period is measured based on the closing price of the Company’s common stock as reported by Nasdaq Exchange on the date of grant. For those vested immediately on the date of grant, the fair value is recognized as share-based compensation expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
As of September 30, 2024,
During the three months ended September 30, 2024,
the Company recorded $
During the nine months ended September 30, 2024,
the Company recorded $
34
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 15 － OPERATING EXPENSES
Commission Expense
Pursuant to the terms of respective contracts, commission expense represents certain premiums from insurance or investment products paid to agents. Commission rates vary by market due to local practice, competition, and regulations. The Company charged commission expense on a systematic basis that is consistent with the revenue recognition.
During the three months ended September 30, 2024
and 2023, the Company recorded $
During the nine months ended September 30, 2024
and 2023, the Company recorded $
Personnel and Benefit Expense
Personnel and benefit expense mainly consisted of salaries and bonus paid and payable to the employees of the Company.
During the three months ended September 30, 2024
and 2023, the Company recorded $
During the nine months ended September 30, 2024
and 2023, the Company recorded $
Legal and Professional Fees
Legal and professional fees mainly consisted of certain professional consulting services in legal, audit, accounting and taxation, and others.
During the three months ended September 30, 2024
and 2023, the Company recorded $
During the nine months ended September 30, 2024
and 2023, the Company recorded $
Other General and Administrative Expenses
The Company incurred different types of expenditures under other general and administrative expenses. They primarily consist of depreciation of property and equipment and management fee expenses which are allocated for certain corporate office expenses.
During the three months ended September 30, 2024 and 2023, the Company recorded $
During the nine months ended September 30, 2024
and 2023, the Company recorded $
35
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 16 － INCOME TAXES
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Income tax expense | $ | $ | $ | $ | ||||||||||||
The Company’s subsidiaries mainly operate in Hong Kong that are subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
Upon the redomiciliation from the British Virgin
Islands to the State of Delaware, the Company is subjected to the federal income tax rate of
British Virgin Islands
The Company’s subsidiaries incorporated in the British Virgin Islands are not subject to taxation. In addition, upon payments of dividends by these entities to their stockholder, no British Virgin Islands withholding tax will be imposed.
Hong Kong
The Company’s subsidiaries operating in
Hong Kong is subject to the Hong Kong Profits Tax at the income tax rates ranging from
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Deferred tax assets, net: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net | $ | $ | ||||||
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Balance as of beginning of the period/year | $ | ( | ) | $ | ( | ) | ||
| Addition | ( | ) | ( | ) | ||||
| Balance as of end of the period/year | $ | ( | ) | $ | ( | ) | ||
36
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
As of September 30, 2024 and December 31, 2023,
the operations incurred $
Uncertain tax positions
The Company evaluates the uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of September 30, 2024 and December 31, 2023, the Company did not have any significant unrecognized uncertain tax positions. The Company incurred and settled minimal interest related to potential underpaid income tax expenses for the nine months ended September 30, 2024 and did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from September 30, 2024.
NOTE 17 － SEGMENT INFORMATION
| For the three months ended September 30, 2024 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment income, net | ||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
37
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment loss, net | ( | ) | ( | ) | ||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
| For the nine months ended September 30, 2024 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment loss, net | ( | ) | ( | ) | ||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
38
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| Distribution Business | Platform Business | Fintech Business | Healthcare Business | Total | ||||||||||||||||
| Revenue, net | ||||||||||||||||||||
| - Interest income | $ | $ | $ | $ | $ | |||||||||||||||
| - Non-interest income | ||||||||||||||||||||
| Commission expense | ||||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Income (loss) from operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Investment income, net | ||||||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | |||||||||||||||
All of the Company’s customers and operations are based in Hong Kong.
NOTE 18－ RELATED PARTY BALANCES AND TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by the holding company. Amounts represent advances or amounts paid in satisfaction of liabilities.
| As of | ||||||||||||
| September 30, 2024 | December 31, 2023 | |||||||||||
| Balance with related parties: | ||||||||||||
| Accounts receivable | (a) | $ | $ | |||||||||
| Borrowings | (b) | $ | $ | |||||||||
| Amount due to the holding company | (c) | $ | $ | |||||||||
| Long-term investment – Investment E | (d) | $ | $ | |||||||||
| Subscription receivable | (e) | $ | $ | |||||||||
| (a) |
| (b) |
| (c) |
| (d) |
| (e) |
39
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
In the ordinary course of business, during the
three and nine months ended September 30, 2024 and 2023, the Company involved with transactions, either at cost or current market prices
and on the normal commercial terms among related parties.
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||
| Nature of transactions | ||||||||||||||||||
| Asset management service income | (f) | $ | $ | $ | $ | |||||||||||||
| Office and operating fee charge | (g) | $ | $ | $ | $ | |||||||||||||
| General and administrative expense allocated | (h) | $ | $ | $ | $ | |||||||||||||
| Legal and professional fees | (i) | $ | $ | $ | $ | |||||||||||||
| (f) |
| (g) |
| (h) |
| (i) |
Apart from the transactions and balances detailed elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
NOTE 19 － RISK AND UNCERTAINTIES
The Company is exposed to the following risk and uncertainties:
| (a) | Concentration risk |
| For the three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Customer | Revenues | Percentage of revenues | Revenues | Percentage of revenues | ||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer B | $ | % | $ | % | ||||||||||||
| Customer C | $ | % | $ | % | ||||||||||||
| Customer D | $ | % | $ | % | ||||||||||||
40
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| For the nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| Customer | Revenues | Percentage of revenues | Revenues | Percentage of revenues | ||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer B | $ | % | $ | % | ||||||||||||
| Customer C | $ | % | $ | % | ||||||||||||
| Customer D | $ | % | $ | % | ||||||||||||
| Customer E | $ | % | $ | % | ||||||||||||
| * |
| As of | ||||||||
| Customer | September 30, 2024 | December 31, 2023 | ||||||
| Customer A | $ | $ | ||||||
| Customer C | $ | |||||||
| Customer D | $ | $ | ||||||
| * |
| (b) | Credit risk |
Financial instruments that potentially
subject the Company to credit risk consist of cash equivalents, restricted cash, accounts receivable, loans receivable, and notes
receivables. Cash equivalents are maintained with high credit quality institutions, the composition and maturities of which are
regularly monitored by management. Effective from October 1, 2024, the Hong Kong Deposit Protection Board pays compensation up to a
limit of HK$
For accounts receivable, loans receivable, and notes receivables, the Company determines, on a continuing basis, the probable losses and sets up an allowance for expected credit losses based on the estimated realizable value. Credit of money lending business is controlled by the application of credit approvals, limits and monitoring procedures.
The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans and the assessment of borrower credit quality, such as, credit risk scores, collateral and collection history. Individual credit scores are assessed by credit bureau, such as TransUnion. Internal risk grade ratings reflect the credit quality of the borrower, as well as the value of collateral held as security. To minimize credit risk, the Company requires collateral arrangements to all mortgage loans and has policies and procedures for validating the reasonableness of the collateral valuations on a regular basis. Management believes that these policies effectively manage the credit risk from advances.
41
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Customer F | % | % | ||||||
| Customer G | % | % | ||||||
| Customer H | % | % | ||||||
| (c) | Economic and political risk |
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
| (d) | Exchange rate risk |
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ and Sterling on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| (e) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
NOTE 20 － COMMITMENTS AND CONTINGENCIES
Litigation — From time to time, the Company is involved in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition, operating results, or cash flows.
As of September 30, 2024, the Company involved with various legal proceedings:
Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former stockholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
42
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
Action Case:
HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies and
the former directors, stockholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation from
an inducement of the fund subscription and claimed for compensatory damage of approximately $
Action Case:
HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by
the Plaintiff. This action alleged misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed
for compensatory damage of approximately $
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred.
Sale and Purchase Agreement — Pursuant
to the agreement dated April 5, 2023, entered with Sony Life Singapore Pte. Ltd. (“SLS”), an independent third party, the
Company is committed to purchase
Nasdaq Compliance — On March 20,
2024, Nasdaq granted an additional 180 calendar days period or until September 16, 2024, to the Company to regain the compliance. On May
3, 2024, the closing bid price of the common stocks of the Company has been over $
43
TRILLER GROUP INC.
(Formerly AGBA Group Holding Limited)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
NOTE 21 － SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the unaudited condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2024, up to November 14, 2024 that the unaudited condensed consolidated financial statements were available to be issued.
On October 1, 2024 and October 14, 2024, the Company effected a Forward Split and a Reverse Split, respectively. Details are described in Note 1.
On October 15, 2024, the Company consummated the Merger Transaction and the details are described in Note 4.
On October 31, 2024, the Company entered into
a preliminary sales and purchase agreement with an independent third party to sell an office premises with a cash consideration of approximately
$
44
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us”, “the Group” or the “Company” refer to Triller Group Inc. (formerly AGBA Group Holding Limited (“AGBA”)). References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section included in our 2023 Annual Report filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Triller Group Inc. is formed in the State of Delaware, on October 15, 2024, which was established to domicile its legal jurisdiction from British Virgin Islands to the State of Delaware.
Merger Transaction
In April 2024, we entered into a certain Agreement and Plan of Merger (the “Original Merger Agreement”) by and between our subsidiary, AGBA Social Inc., Triller Corp., a Delaware corporation (“Triller”), and Bobby Sarnevesht, as sole representative of the Triller stockholders. On August 30, 2024, all parties further entered into an Amended and Restated Agreement and Plan of Merger (as further amended, the “Merger Agreement”). The Merger Agreement has amended, restated and superseded the Original Merger Agreement accordingly (the “Merger Transaction”).
On September 19, 2024, our shareholders approved the Merger Transaction and other related proposals at the extraordinary general meeting of shareholders.
On October 15, 2024, we consummated the Merger Transaction and issued an aggregate of 107,674,877 shares of our common stock, 11,801,804 shares of our Series A-1 preferred stock, and 30,851 shares of our Series B preferred stock.
Domestication and Name Change
In connection with the Merger Transaction, we completed the domestication of our jurisdiction to domicile from British Virgin Islands to the State of Delaware, United States of America, and changed our company name from “AGBA Group Holding Limited” to “Triller Group Inc.”
45
Forward and Reverse Stock Splits
On October 1, 2024, we effected a 1.9365-to-1 forward stock split (the “Forward Split”), resulting increase in the total number of authorized ordinary shares from 1,500,000,000 to 2,904,753,145, increase in the outstanding ordinary shares from 97,736,035 shares to 189,265,804 shares and reduction of par value from $0.001 to $0.00516395 per share.
Further, on October 15, 2024, we effected a 1-for-4 reverse stock split (the “Reverse Split”), resulting in the proportional adjustments to the par value of the ordinary shares, the authorized number of ordinary shares, and the number of outstanding ordinary shares. Proportional adjustments were also made to all outstanding warrants and common warrants in accordance with their respective terms. All fractional shares were rounded up to the nearest whole share with respect to outstanding ordinary shares. All share numbers and per share amounts are retroactively presented in this Form 10-Q to reflect the impact of the Forward Split and the Reverse Split if they had taken effect on January 1, 2023.
Nasdaq Trading
To date, our common stock and public warrants are traded on the Nasdaq Capital Market under the symbol “ILLR” and “ILLRW,” respectively, which were previously traded under the symbol “AGBA” and “AGBAW.”
Business overview
We are a leading one-stop financial supermarket based in Hong Kong servicing over 400,000 individual and corporate customers. We offer the broadest set of financial services and healthcare products in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) through a tech-led ecosystem, enabling clients to unlock the choices that best suit their needs.
We currently operate four major areas of businesses, comprising of:
| 1. | Distribution Business: The Group’s powerful financial advisor business is the largest in the market, it engages in the personal financial advisory business (including advising and sales of a full range of financial services products including long-term life insurance, savings and mortgages), with additional internal and external channels being developed and added. |
| 2. | Platform Business: The Group operates as a “financial supermarket” offering over 1,800 financial products to a large universe of retail and corporate customers. |
| 3. | Healthcare Business: Through the Group’s 4% stake in and a strategic partnership with HCMPS, operating as one of the largest healthcare management organizations in the Hong Kong and Macau region, with over 800 doctors in its network. Established in 1979, it is one of the most reputed healthcare brands in Hong Kong. |
| 4. | Fintech Business: The Group has an ensemble of leading FinTech assets and businesses in Europe and Hong Kong. In addition to financial gains, the Group also derives substantial knowledge transfers from its investee companies, supporting the development and growth of the Group’s new business models. |
Distribution Business
The Distribution Business comprises a variety of captive financial services distribution channels. We have built a market leading financial advisors distribution channel in Hong Kong. We have also built other distribution channels alongside our market leading financial advisors business.
Our combined captive distribution channels enable us to directly access one of the largest pools of customers accessible to independent financial services providers in Hong Kong.
| Channel | Description | |
| Financial Advisors Business (“FA Business”) |
“Focus” is engaged in the distribution of life insurance, asset management, property-casualty and Mandatory Provident Fund products through its teams of independent financial advisors (brokers). | |
| Alternative Distribution Business | A collection of distribution channels, including salaried financial planners targeting HNWI, development teams pursuing corporate partnerships and incubating financial advisors teams. | |
| Digital Business | ILLR Money is a direct-to-consumer digital app that provides various financial products and services to retail customers. |
46
Our largest distribution channel is the FA Business, operating under the brand name Focus. With its large salesforce of financial advisors, “Focus” provides a wide range of financial products and independent advisory services to individual and corporate customers, primarily in connection with life insurance products. Our FA Business has been the clear market leader in the insurance brokerage industry in Hong Kong for decades, building up a large and highly productive salesforce. As of September 30, 2024, there were around 562 financial advisors at “Focus”, organized into 10 sales teams. Each team is led by a “tree head”, responsible for managing the financial advisors within their teams.
In addition to the FA Business, we continued to expand our distribution footprint with the establishment and expansion of a number of additional distribution channels, collectively known as our Alternative Distribution Business. These distribution channels are targeted at specific customer segments and/or capturing specific distribution opportunities.
Combined with our Digital Business, we now have a well-diversified range of distribution channels and capabilities.
During 2024, we continued to make significant investments into developing and expanding our financial advisors salesforce, broadening and deepening the product range, as well as upgrading the supporting infrastructure. Our infrastructure not only supports the financial consultants in engaging with their customers, it also provides extensive operational support in relation to the processing of transactions, associated payment flows, as well as after-sales services. Building our infrastructure required substantial investments into technological, operational and financial systems, as well as the development of comprehensive operational and support teams (operations support, customer services, payments, etc.). Since many of the financial products offered to our customers are regulated, on top of the various operational requirements, we have built significant internal capabilities in the areas of risk and internal control, as well as legal and compliance to ensure an appropriate level of regulatory compliance and supervision.
As a result of our efforts to expand our distribution capabilities and improve our supporting infrastructure, we have successfully developed these inter-related strategic assets:
| ● | Vast customer base in Hong Kong and growing customer base in Mainland China. |
| ● | State-of-the-art supporting infrastructure. |
| ● | Relationships with and access to a broad range of leading global financial product providers. |
| ● | Deep market knowledge and understanding. |
| ● | Highly productive and well-trained salesforce. |
We will continue to capitalize on these core strategic assets and match them with the emerging opportunities in our three core industries (life insurance, wealth management and healthcare).
For the nine months ended September 30, 2024, the Company made $15.21 million from commission in the Distribution Business. The revenue attributed to the Company during the first half year of 2024 only captured an insignificant portion of the revenues actually generated by the financial advisors currently associated with Focus.
47
We will continue to widen our distribution footprint and actively explore further opportunities to develop partnerships and generate customer leads on the ground in Mainland China, as well as refining our abilities to service our customer base. We expect sales volumes to return to the levels previously recorded, prior to the pandemic period, especially with the re-opening of the Mainland border and the ongoing integration of Hong Kong into the Greater Bay area.
Platform Business
The Platform business, through OPH and its subsidiaries, is a one-stop financial supermarket with a breadth of products and services that is unrivaled in Hong Kong sourced from leading global product providers.
The Platform Business was set up to take advantage of the decades-long experience we built up in supporting the largest financial advisors salesforce in Hong Kong. We were already servicing a large pool of customers and in the process, built up a wide library of world class financial products and constructed a state-of-the-art technological and operational infrastructure.
The Platform Business now operates this full-service platform under its “OnePlatform” brand and has opened it up to banks, other financial institutions, family offices, brokers, and individual independent financial advisors that are looking for support in advising and serving their retail clients.
Our technology-enabled Platform Business offers a wide range of financial products, covering life insurance, pensions, property-casualty insurance, stock brokerage, mutual funds, money lending and real estate agency.
In addition to its unrivaled product-shelf, the Platform Business offers digital-enabled sales management and support solutions, business operations support, comprehensive customer services, and training support.
Currently, our platform financial services and investment products mainly comprise mutual fund distributions, portfolio management, money lending, insurance and Mandatory Provident Fund (MPF) products, and international real estate referral and brokerage services, as discussed below:-
The OnePlatform brand currently covers 80 insurance providers selling 1,183 products, and 53 asset management fund houses with over 1,141 products.
Fintech Business
The Fintech Business has collected an ensemble of valuable fintech assets in its investment portfolio. Fintech Business’ management team has strived to establish the business as a leading name in the fintech investment sector.
Core Fintech investments held under the Fintech Business as of September 30, 2024 include:
| 1. | An investment in Tandem Money Limited, a UK digital bank. |
| 2. | An investment in CurrencyFair Limited, a B2B and B2C payments company. |
| 3. | An investment in Oscar Health Inc., a US direct-to-consumer digital health insurer. |
| 4. | An investment in Goxip Inc., a fashion media platform based in Hong Kong. |
| Carrying amount in | ||||||||
| US$ thousands (1) | ||||||||
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Tandem Money Limited | 17,751 | 16,880 | ||||||
| CurrencyFair Limited | 5,887 | 5,827 | ||||||
| Oscar Health Inc.(2) | — | — | ||||||
| Goxip Inc. | 306 | 342 | ||||||
| LC Healthcare Fund I, L.P. (3) | — | 2,152 | ||||||
Notes:
| (1) | Carrying amount represents Fintech’s attributable interest in the investment portfolio asset. |
48
| (2) | The Company partially sold 993,108 shares of Oscar Health Inc. on Nasdaq Stock Exchange with an average current market price of $4.01 per share in 2023. |
| (3) | On February 5, 2024, the Company sold all its equity interest in LC Healthcare Fund I, L.P. to an independent third party for a consideration of $2.15 million. |
Healthcare Business
We currently hold a 4% equity stake in HCMPS, one of the leading healthcare management organizations in Hong Kong.
Founded in 1979 and currently operating under the Dr. Jones Fok & Associates Medical Scheme Management Limited (“JFA”) brand, JFA is one of the most reputed healthcare brands in Hong Kong. It has four self-operated medical centres and a network of over 700 healthcare service providers – providing healthcare schemes for more than 500 corporate clients with over 300,000 scheme members. JFA’s clients include blue chip companies from various industry and leading insurers. Apart from Hong Kong, JFA is the largest operator in Macau with around 70 clinics.
JFA operates a city-wide medical network that includes 340 general practitioners (“GP”), 11 laboratories and imaging centers, 273 specialist doctors, 25 physiotherapy centers, 12 Chinese medicine practitioner clinics, all based in Hong Kong, and 69 GP clinics in Macau. Over 380,000 out-patient and in-patient visits are recorded annually through HCMPS’s medical network. JFA offers its patients a full range of medical services, including general services, specialist services, physiotherapy, Chinese medicine, dental, vaccination, X-ray, laboratories and imaging services.
We believe that the future of healthcare is in “Smart Health” – technology that offers improved patient-care management and leverages data as the new tool for solving complex healthcare challenges with reduced operating costs. We will focus on technology/digitalization and consumerization of healthcare to create an ecosystem empowering customers to proactively manage their health and well-being and to improve their access to healthcare at a lower cost – with connectivity across the care continuum. We believe that JFA has the captive customer base, infrastructure and product/service offerings to optimize customer experience to further grab market share.
We are currently working to transform JFA into the best medical care institution in Asia by 2025, redefining industry standards in the Greater Bay Area and offering market-leading customer care and best-in-class infrastructure empowered by data analytics.
49
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023:
The following tables set forth our results of operations for the periods presented in U.S. dollars (in thousands):
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Revenues: | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 60 | $ | 41 | 19 | 46.34 | ||||||||||
| Total interest income | 60 | 41 | 19 | 46.34 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | 4,785 | 12,169 | (7,384 | ) | (60.68 | ) | ||||||||||
| Recurring asset management service fees | 349 | 752 | (403 | ) | (53.59 | ) | ||||||||||
| Recurring asset management service fees, related party | 246 | 245 | 1 | 0.41 | ||||||||||||
| Total non-interest income | 5,380 | 13,166 | (7,786 | ) | (59.14 | ) | ||||||||||
| Total revenues | 5,440 | 13,207 | (7,767 | ) | (58.81 | ) | ||||||||||
| Operating expenses: | ||||||||||||||||
| Interest expense | (1,148 | ) | (393 | ) | 755 | 192.11 | ||||||||||
| Commission expense | (1,934 | ) | (8,916 | ) | (6,982 | ) | (78.31 | ) | ||||||||
| Sales and marketing expense | (93 | ) | (754 | ) | (661 | ) | (87.67 | ) | ||||||||
| Research and development expense | (401 | ) | (741 | ) | (340 | ) | (45.88 | ) | ||||||||
| Personnel and benefit expense | (6,827 | ) | (7,764 | ) | (937 | ) | (12.07 | ) | ||||||||
| Legal and professional fee | (2,594 | ) | (3,453 | ) | (859 | ) | (24.88 | ) | ||||||||
| Legal and professional fee, related party | (250 | ) | (78 | ) | 172 | 220.51 | ||||||||||
| Office and operating fee, related party | (1,088 | ) | (1,317 | ) | (229 | ) | (17.39 | ) | ||||||||
| Provision for allowance for expected credit losses | (135 | ) | (328 | ) | (193 | ) | (58.84 | ) | ||||||||
| Other general and administrative expenses | (1,153 | ) | (806 | ) | 347 | 43.05 | ||||||||||
| Total operating expenses | (15,623 | ) | (24,550 | ) | (8,927 | ) | (36.36 | ) | ||||||||
| Loss from operations | (10,183 | ) | (11,343 | ) | (1,160 | ) | (10.23 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 302 | 17 | 285 | 1,676.47 | ||||||||||||
| Foreign exchange gain (loss), net | 1,105 | (864 | ) | 1,969 | 227.89 | |||||||||||
| Investment loss, net | — | (793 | ) | (793 | ) | (100.00 | ) | |||||||||
| Change in fair value of warrant liabilities | (632 | ) | 1 | (633 | ) | (63,300.00 | ) | |||||||||
| Rental income | — | 79 | (79 | ) | (100.00 | ) | ||||||||||
| Sundry income | 26 | 38 | (12 | ) | (31.58 | ) | ||||||||||
| Total other income (expense), net | 801 | (1,522 | ) | 2,323 | 152.63 | |||||||||||
| Loss before income taxes | (9,382 | ) | (12,865 | ) | (3,483 | ) | (27.07 | ) | ||||||||
| Income tax expense | (37 | ) | (56 | ) | (19 | ) | (33.93 | ) | ||||||||
| NET LOSS | $ | (9,419 | ) | $ | (12,921 | ) | (3,502 | ) | (27.10 | ) | ||||||
Revenue
The following table summarizes the major operating revenues for the three months ended September 30, 2024 and 2023:
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 4,701 | $ | 11,876 | (7,175 | ) | (60.42 | ) | ||||||||
| Platform Business | 739 | 1,331 | (592 | ) | (44.48 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 5,440 | $ | 13,207 | (7,767 | ) | (58.81 | ) | ||||||||
50
Distribution Business
The Distribution Business contributed 86.42% and 89.92% of the total revenue for the three months ended September 30, 2024 and 2023, respectively. Income from the Distribution Business mainly related to commissions earned, which decreased by US$7.2 million, or 60.42%, from US$11.9 million in 2023 to US$4.7 million in 2024. The decrease in revenue primarily attributed from the economic recession and outward migration in Hong Kong. The largest segment of the Distribution Business is our FA Business, operated under the “Focus” brand name.
Summarized revenue breakdown by product and type of contracts:
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| By product: | ||||||||||||||||
| Life insurance | $ | 3,921 | $ | 11,147 | (7,226 | ) | (64.82 | ) | ||||||||
| Property-casualty insurance | 639 | 467 | 172 | 36.83 | ||||||||||||
| Mandatory provident fund and related revenues | 141 | 262 | (121 | ) | (46.18 | ) | ||||||||||
| 4,701 | 11,876 | (7,175 | ) | (60.42 | ) | |||||||||||
| By the type of contracts: | ||||||||||||||||
| - New and or current year | 4,701 | 11,496 | (6,795 | ) | (59.11 | ) | ||||||||||
| - Recurring | — | 380 | (380 | ) | (100.00 | ) | ||||||||||
| TOTAL | $ | 4,701 | $ | 11,876 | (7,175 | ) | (60.42 | ) | ||||||||
Platform Business
The Platform Business contributed 13.58% and 10.08% of the total revenue for the three months ended September 30, 2024 and 2023, respectively.
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Commission | $ | 84 | $ | 293 | (209 | ) | (71.33 | ) | ||||||||
| Recurring service fees | 595 | 996 | (401 | ) | (40.26 | ) | ||||||||||
| Loans | 60 | 42 | 18 | 42.86 | ||||||||||||
| TOTAL | $ | 739 | $ | 1,331 | (592 | ) | (44.48 | ) | ||||||||
Operating Expenses
Interest Expense
Interest expense increased by US$0.8 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The increase was mainly attributed to the interest expense and amortization of the debt discount on convertible notes payable.
Commission Expense
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 1,843 | $ | 8,593 | (6,750 | ) | (78.55 | ) | ||||||||
| Platform Business | 91 | 323 | (232 | ) | (71.83 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 1,934 | $ | 8,916 | (6,982 | ) | (78.31 | ) | ||||||||
51
The Distribution Business contributed 95.29% and 96.38% of the total commission expense for the three months ended September 30, 2024 and 2023, respectively. Commission expense for the Distribution Business decreased by US$6.8 million, or 78.55%, from US$8.6 million in 2023 to US$1.8 million in 2024. As a result of the decrease in revenue associated with the Distribution Business, commission expense decreased correspondingly.
Sales and Marketing Expense
Sales and marketing expense decreased by US$0.7 million or 87.67% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The decrease in sales and marketing expense is mainly attributed to lower spending associated with “AGBA” corporate branding and associated product campaigns for celebrating the successful listing.
Research and Development Expense
Research and development expense decreased by US$0.3 million or 45.88% for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The slight decrease was primarily due to decreased in headcounts.
Personnel and Benefit Expense
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Personnel and benefit | $ | 3,517 | $ | 6,446 | (2,929 | ) | (45.44 | ) | ||||||||
| Share-based compensation to employees | 3,310 | 1,318 | 1,992 | 151.14 | ||||||||||||
| TOTAL | $ | 6,827 | $ | 7,764 | (937 | ) | (12.07 | ) | ||||||||
Personnel and benefit cost decreased by US$1.0 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The decrease was primarily attributable to the reduction of headcounts during the period.
Share-based compensation for employees increased by US$2.0 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The increase was primarily due to the issuance of common stocks to our independent directors under the 2024 Equity Incentive Plan and issuance of common stocks to our officers and employees to compensate for their contributions of services and performance, offset by the decrease in the amortization of the fair value of the restricted share units due to the vested and forfeited shares in 2024. The fair value of the restricted share units is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis.
Legal and Professional Fees
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Legal and professional fee | $ | 1,915 | $ | 1,301 | 614 | 47.19 | ||||||||||
| Legal and professional fee, related party | 250 | 78 | 172 | 220.51 | ||||||||||||
| Consulting fees (share-based related) | 679 | 2,152 | (1,473 | ) | (68.45 | ) | ||||||||||
| TOTAL | $ | 2,844 | $ | 3,531 | (687 | ) | (19.46 | ) | ||||||||
52
Legal and professional fees in aggregate decreased by US$0.7 million, or 19.46%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The decrease was primarily attributed to the decrease in the consulting fees incurred during the period, which settled by the issuance of our common stocks.
Legal and professional fees, related party of $0.3 million for the three months ended September 30, 2024 represented the advisory service fee paid to a related company which owned by the Chairman of the Company.
Consulting fees under share-based compensation for the three months ended September 30, 2024 was mainly related to the corporate strategic consultancy, intelligence technology consultancy, and business marketing service rendered by certain third party consultants, equal to 5,349,582 shares of common stock at the market price ranging from US$0.339 to US$2.5111 per share.
Other General and Administrative Expense
| Three months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Depreciation on property and equipment | $ | 23 | $ | 23 | — | — | ||||||||||
| Depreciation on right-of-use assets | 467 | 446 | 21 | 4.71 | ||||||||||||
| Financial data subscription expense | 67 | 155 | (88 | ) | (56.77 | ) | ||||||||||
| Interest expense on lease liabilities | 173 | 199 | (26 | ) | (13.07 | ) | ||||||||||
| Building management fee and utilities | 247 | 166 | 81 | 48.80 | ||||||||||||
| Overseas travelling expense | 52 | 129 | (77 | ) | (59.69 | ) | ||||||||||
| Other operating expenses | 124 | (312 | ) | 436 | 139.74 | |||||||||||
| TOTAL | $ | 1,153 | $ | 806 | 347 | 43.05 | ||||||||||
Total other general and administrative expenses increased US$0.3 million, or 43.05%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The net increase was mainly due to the increase in building management fee and utilities of US$0.08 million and other operating expenses of US$0.4 million, offset by the decrease in depreciation on right-of-use assets of US$0.09 million, and overseas travelling expense of US$0.08 million. The depreciation on right-of-use assets and the interest expense on lease liabilities were mainly attributed to the commercial operating lease entered with an independent third party for the use of an office premises in Hong Kong. The lease has original terms exceeding one year, but not more than three years with an option to renew for a further term of three years.
Loss from Operations
Loss from operations decreased by US$1.2 million, or 10.23%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The decrease was mainly attributable to the decrease in operating expenses of US$8.9 million, offset by the decrease in revenues of $7.8 million.
Other Income (Expense), net
Interest Income
Interest income increased by US$0.3 million for the three months ended September 30, 2024.
Foreign Exchange Gain (Loss), net
Foreign exchange gain (loss), net mainly represented the unrealized net foreign exchange gain (loss) from the translation of long-term investments which are mostly denominated in Sterling. The net foreign exchange gain increased by US$2.0 million or 227.89% for the three months ended September 30, 2024, as compared to the net foreign exchange loss for the three months ended September 30, 2023, due to the continuous strong Sterling exchange rate.
53
Investment Loss, Net
Investment loss decreased by US$0.8 million, or 100.00%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, mainly because of the decrease in unrealized loss in non-marketable equity securities of US$1.0 million, and decrease in dividend income of US$0.2 million.
Change in fair value of warrant liabilities
We classified the SPAC Private Warrants, Warrant – Class A, and Common Warrants as liabilities at their fair value and adjust them to fair value at each reporting period. These warrant liabilities are subject to re-measurement of each balance sheet date until exercised. For the three months ended September 30, 2024 and 2023, we recognized the change in fair value in aggregate of $0.6 million and nil in our condensed consolidated statements of operations and comprehensive loss.
Net Loss
Net loss decreased by US$3.5 million, or 27.10% for the three months ended September 30, 2024, as compared to three months ended September 30, 2023, primarily due to the decrease in operating expense of US$8.9 million, offset by the decrease in total revenues of US$7.8 million and increase in other income of US$2.3 million.
Nine months ended September 30, 2024 vs nine months ended September 30, 2023
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Revenues: | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 123 | $ | 118 | 5 | 4.24 | ||||||||||
| Total interest income | 123 | 118 | 5 | 4.24 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Commissions | 15,661 | 38,507 | (22,846 | ) | (59.33 | ) | ||||||||||
| Recurring asset management service fees | 1,503 | 2,301 | (798 | ) | (34.68 | ) | ||||||||||
| Recurring asset management service fees, related party | 730 | 725 | 5 | 0.69 | ||||||||||||
| Total non-interest income | 17,894 | 41,533 | (23,639 | ) | (56.92 | ) | ||||||||||
| Total revenues | 18,017 | 41,651 | (23,634 | ) | (56.74 | ) | ||||||||||
| Operating expenses: | ||||||||||||||||
| Interest expense | (1,723 | ) | (806 | ) | 917 | 113.77 | ||||||||||
| Commission expense | (7,697 | ) | (28,196 | ) | (20,499 | ) | (72.70 | ) | ||||||||
| Sales and marketing expense | (606 | ) | (3,125 | ) | (2,519 | ) | (80.61 | ) | ||||||||
| Research and development expense | (1,354 | ) | (2,678 | ) | (1,324 | ) | (49.44 | ) | ||||||||
| Personnel and benefit expense | (18,364 | ) | (22,672 | ) | (4,308 | ) | (19.00 | ) | ||||||||
| Legal and professional fee | (4,707 | ) | (12,423 | ) | (7,716 | ) | (62.11 | ) | ||||||||
| Legal and professional fee, related party | (750 | ) | (78 | ) | 672 | 861.54 | ||||||||||
| Office and operating fee, related party | (3,281 | ) | (5,089 | ) | (1,808 | ) | (35.53 | ) | ||||||||
| Provision for allowance for expected credit losses | (1,878 | ) | (661 | ) | 1,217 | 184.12 | ||||||||||
| Other general and administrative expenses | (3,441 | ) | (2,242 | ) | 1,199 | 53.48 | ||||||||||
| Total operating expenses | (43,801 | ) | (77,970 | ) | (34,169 | ) | (43.82 | ) | ||||||||
| Loss from operations | (25,784 | ) | (36,319 | ) | (10,535 | ) | (29.01 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 390 | 385 | 5 | 1.30 | ||||||||||||
| Foreign exchange gain, net | 826 | 41 | 785 | 1,914.63 | ||||||||||||
| Investment (loss) income, net | (37 | ) | 489 | (526 | ) | (107.57 | ) | |||||||||
| Change in fair value of warrant liabilities | (4,281 | ) | 3 | (4,284 | ) | (142,800.00 | ) | |||||||||
| Change in fair value of forward share purchase liability | — | (82 | ) | (82 | ) | (100.00 | ) | |||||||||
| Loss on settlement of forward share purchase agreement | — | (379 | ) | (379 | ) | (100.00 | ) | |||||||||
| Rental income | 14 | 217 | (203 | ) | (93.55 | ) | ||||||||||
| Sundry income | 121 | 122 | (1 | ) | (0.82 | ) | ||||||||||
| Total other (expense) income, net | (2,967 | ) | 796 | (3,763 | ) | (472.74 | ) | |||||||||
| Loss before income taxes | (28,751 | ) | (35,523 | ) | (6,772 | ) | (19.06 | ) | ||||||||
| Income tax expense | (98 | ) | (56 | ) | 42 | 75.00 | ||||||||||
| NET LOSS | $ | (28,849 | ) | $ | (35,579 | ) | (6,730 | ) | (18.92 | ) | ||||||
54
Revenue
The following table summarizes the major operating revenues for the nine months ended September 30, 2024 and 2023:
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 15,211 | $ | 37,569 | (22,358 | ) | (59.51 | ) | ||||||||
| Platform Business | 2,806 | 4,082 | (1,276 | ) | (31.26 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 18,017 | $ | 41,651 | (23,634 | ) | (56.74 | ) | ||||||||
Distribution Business
The Distribution Business contributed 84.43% and 90.20% of the total revenue for the nine months ended September 30, 2024 and 2023, respectively. Income from the Distribution Business mainly related to commissions earned, which significantly decreased by US$22.4 million, or 59.51%, from US$37.6 million in 2023 to US$15.2 million in 2024. The largest segment of the Distribution Business is our FA Business, operated under the “Focus” brand name. The decrease in revenue primarily attributed from the economic recession and outward migration in Hong Kong.
Summarized revenue breakdown by product and type of contracts:
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| By product: | ||||||||||||||||
| Life insurance | $ | 13,811 | $ | 35,286 | (21,475 | ) | (60.86 | ) | ||||||||
| Property-casualty insurance | 1,034 | 1,523 | (489 | ) | (32.11 | ) | ||||||||||
| Mandatory provident fund and related revenues | 366 | 760 | (394 | ) | (51.84 | ) | ||||||||||
| 15,211 | 37,569 | (22,358 | ) | (59.51 | ) | |||||||||||
| By the type of contracts: | ||||||||||||||||
| - New and or current year | 15,130 | 36,944 | (21,814 | ) | (59.05 | ) | ||||||||||
| - Recurring | 81 | 625 | (544 | ) | (87.04 | ) | ||||||||||
| TOTAL | $ | 15,211 | $ | 37,569 | (22,358 | ) | (59.51 | ) | ||||||||
55
Platform Business
The Platform Business contributed 15.57% and 9.80% of the total revenue for the nine months ended September 30, 2024 and 2023, respectively.
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Commission | $ | 450 | $ | 938 | (488 | ) | (52.03 | ) | ||||||||
| Recurring service fees | 2,233 | 3,026 | (793 | ) | (26.21 | ) | ||||||||||
| Loans | 123 | 118 | (5 | ) | (4.24 | ) | ||||||||||
| TOTAL | $ | 2,806 | $ | 4,082 | (1,276 | ) | (31.26 | ) | ||||||||
Operating Expenses
Commission Expense
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Business segment | ||||||||||||||||
| Distribution Business | $ | 7,124 | $ | 27,133 | (20,009 | ) | (73.74 | ) | ||||||||
| Platform Business | 573 | 1,063 | (490 | ) | (46.10 | ) | ||||||||||
| Fintech Business | — | — | — | — | ||||||||||||
| Healthcare Business | — | — | — | — | ||||||||||||
| TOTAL | $ | 7,697 | $ | 28,196 | (20,499 | ) | (72.70 | ) | ||||||||
The Distribution Business contributed 92.56% and 96.23% of the total commission expense for the nine months ended September 30, 2024 and 2023, respectively. Commission expense for the Distribution Business decreased by US$20.0 million, or 73.74%, from US$27.1 million in 2023 to US$7.1 million in 2024. As a result of the decrease in revenue associated with the Distribution Business, commission expense decreased correspondingly.
Sales and Marketing Expense
Sales and Marketing expense decreased by US$2.5 million or 80.61%, from US$3.1 million in 2023 to US$0.6 million in 2024. The decrease in sales and marketing expense is mainly attributed to lower spending associated with “AGBA” corporate branding and associated product campaigns for celebrating the successful listing.
Research and Development Expense
Research and development expense decreased by US$1.3 million or 49.44%, from US$2.7 million in 2023 to US$1.4 million in 2024. The decrease was primarily due to decreased in headcounts.
Personnel and Benefit Expense
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Personnel and benefit | $ | 12,987 | $ | 18,719 | (5,732 | ) | (30.62 | ) | ||||||||
| Share-based compensation to employees | 5,377 | 3,953 | 1,424 | 36.02 | ||||||||||||
| TOTAL | $ | 18,364 | $ | 22,672 | (4,308 | ) | (19.00 | ) | ||||||||
56
Personnel and benefit cost decreased by US$4.3 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The decrease was primarily due to the decrease in headcounts in both Platform Business and Distribution Business.
Share-based compensation for employees increased by US$1.4 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The increase was primarily due to the issuance of common stocks to our independent directors under the 2024 Equity Incentive Plan and issuance of common stocks to our officers and employees to compensate for their contributions of services and performance, offset by the decrease in the amortization of the fair value of the restricted share units due to the vested and forfeited shares in 2024. The fair value of the restricted share units is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis.
Legal and Professional Fees
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Legal and professional fees | $ | 3,612 | $ | 4,396 | (784 | ) | (17.83 | ) | ||||||||
| Legal and professional fees, related party | 750 | 78 | 672 | 861.54 | ||||||||||||
| Consulting fees (share-based related) | 1,095 | 8,027 | (6,932 | ) | (86.36 | ) | ||||||||||
| TOTAL | $ | 5,457 | $ | 12,501 | (7,044 | ) | (56.35 | ) | ||||||||
Legal and professional fees in aggregate decreased by US$7.0 million, or 56.35%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The decrease was primarily attributed to the decrease in the consulting fees incurred during the period, which settled by the issuance of our common stocks.
Legal and professional fees, related party of $0.8 million for the nine months ended September 30, 2024 represented the advisory service fee paid to a related company which owned by the Chairman of the Company.
Consulting fees under share-based compensation for the nine months ended September 30, 2024 was mainly related to the corporate strategic consultancy, intelligence technology consultancy, and business marketing service rendered by certain third party consultants, equal to 6,078,488 shares of common stock at the market price ranging from US$0.339 to US$2.5111 per share.
Other General and Administrative Expenses
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Depreciation on property and equipment | $ | 69 | $ | 238 | (169 | ) | (71.01 | ) | ||||||||
| Depreciation on right-of-use assets | 1,386 | 594 | 792 | 133.33 | ||||||||||||
| Financial data subscription expense | 254 | 294 | (40 | ) | (13.61 | ) | ||||||||||
| Interest expense on lease liabilities | 542 | 266 | 276 | 103.76 | ||||||||||||
| Building management fee and utilities | 749 | 633 | 116 | 18.33 | ||||||||||||
| Overseas travelling expense | 256 | 350 | (94 | ) | (26.86 | ) | ||||||||||
| Other operating expenses | 185 | (133 | ) | 318 | 239.10 | |||||||||||
| TOTAL | $ | 3,441 | $ | 2,242 | 1,199 | 53.48 | ||||||||||
Total other general and administrative expenses increased by US$1.2 million, or 53.48%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The net increase was mainly due to the increase in depreciation on right-of-use assets of US$0.8 million, interest expense on lease liabilities of US$0.3 million, building management fee and utilities of US$0.1 million, and other operating expenses of $0.3 million, offset by the decrease in depreciation on property and equipment of US$0.2 million. The depreciation on right-of-use assets and the interest expense on lease liabilities were mainly attributed to the commercial operating lease entered with an independent third party for the use of an office premises in Hong Kong. The lease has original terms exceeding one year, but not more than three years with an option to renew for a further term of three years.
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Loss from Operations
Loss from operations decreased by US$10.5 million, or 29.01%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The decrease was mainly attributable to the significant decrease in operating expenses of $34.2 million, offset by decrease in revenues of $23.6 million.
Other Income (Expense), net
Foreign Exchange Gain, net
Foreign exchange gain, net mainly represented the unrealized net foreign exchange gain from the translation of long-term investments which are mostly denominated in Sterling. The net foreign exchange gain increased by US$0.8 million or 1,914.63% for the nine months ended September 30, 2024, as compared to the net foreign exchange gain for the nine months ended September 30, 2023, due to continuous strong Sterling exchange rate.
Investment (Loss) Income, Net
| Nine months ended September 30, | ||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Realized gain in marketable equity securities | $ | 1 | $ | 1,543 | (1,542 | ) | (99.94 | ) | ||||||||
| Unrealized loss in non-marketable equity securities | (38 | ) | (2,458 | ) | (2,420 | ) | (98.45 | ) | ||||||||
| Dividend income | — | 1,404 | (1,404 | ) | (100.00 | ) | ||||||||||
| TOTAL | $ | (37 | ) | $ | 489 | (526 | ) | (107.57 | ) | |||||||
Investment loss decreased by US$0.5 million, or 107.57%, for the nine months ended September 30, 2024, as compared to the investment income for the nine months ended September 30, 2023, mainly because of the decrease in realized gain in marketable equity securities of US$1.5 million, decrease in dividend income of US$1.4 million, and offset by the decrease in unrealized loss in non-marketable equity securities of US$2.4 million. The decrease in realized gain in marketable equity securities and dividend income was mainly due to the disposal of long-term investments.
Change in Fair Value of Warrant Liabilities
We classified the SPAC Private Warrants, Warrants – Class A, and Common Warrants as liabilities at their fair value and adjust them to fair value at each reporting period. These warrant liabilities are subject to re-measurement of each balance sheet date until exercised. For the nine months ended September 30, 2024 and 2023, we recognized the change in fair value in aggregate of $(4.3) million and $0.003 million, respectively in our condensed consolidated statements of operations and comprehensive loss.
Rental Income
Rental income was earned from the leasing of our owned office premises. For the nine months ended September 30, 2024, the rental income decreased by US$0.2 million, or 93.55%, as compared to the nine months ended September 30, 2023 was resulted from the sale of one of the office premises in 2023.
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Income Tax Expense
Income tax expense increased by US$0.04 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily attributable to the provision of income tax during the period.
Net Loss
Net loss decreased by US$6.7 million, or 18.92% for the nine months ended September 30, 2024, as compared to nine months ended September 30, 2024, primarily due to the decrease in operating expenses of US$34.2 million, offset by the decrease in revenue of $23.6 million and other expense, net of US$3.8 million.
Liquidity and Capital Resources
Sources of Liquidity
We have a history of operating losses and negative cash flow. For the nine months ended September 30, 2024, we reported a net loss of US$28.8 million and reported a negative operating cash flow of US$20.7 million. As of September 30, 2024, our cash balance was US$5.1 million for working capital use. Our management estimates that currently available cash will not be able to provide sufficient funds to meet the planned obligations for the next 12 months.
Our ability to continue as a going concern is dependent on our ability to successfully implement our plans. Our management believes that it will be able to continue to grow our revenue base and control expenditures. In parallel, ILLR continually monitors its capital structure and search for potential funding alternatives in order to finance our business development activities and operating expenses. ILLR is continuing its plan to further grow and expand operations and seek sources of capital to pay the contractual obligations as they come due. To access capital to fund operations or provide growth capital, we will need to raise capital in one or more debt and/or equity offerings. Although there is no assurance that, if needed, we will be able to pursue these fundraising initiatives and have access to the capital markets going forward. The unaudited condensed consolidated financial statements attached to this Form 10-Q do not include any adjustments that might result from the outcome of these uncertainties.
Future Liquidity
On a recurring basis, the primary future cash needs of the Company will be focused on operating activities, working capital, capital expenditures, investment, regulatory and compliance costs. The ability of the Company to fund these needs will depend, in part, on its ability to generate or raise cash in the future, which is subject to general economic, financial, competitive, regulatory, and other factors that are beyond its control.
The ability to fund our operating needs will depend on its future ability to continue to generate positive cash flow from operations and raise capital in the capital markets. Our management believe that we will meet known or reasonably likely future cash requirements through the combination of cash flows from operating activities, available cash balances, and external borrowings and fund raising. Our management expects that the primary cash requirements in 2024 will be to fund capital expenditures for (i) expansion of the Distribution Business and (ii) Platform Business.
If our sources of liquidity need to be augmented, additional cash requirements would likely need to be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms, or at all, in the future.
We expect that operating losses could continue into the foreseeable future as we continue to invest in growing our businesses. Based upon our current operating plans, our management believes that cash and equivalents will not be able to provide sufficient funds to its operations for at least the next 12 months from the date of its unaudited condensed consolidated financial statements provided with this Form 10-Q. However, these forecasts involve risks and uncertainties, and actual results could vary materially.
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenues growth, the timing and extent of spending on sales and marketing, the expansion of sales and marketing activities, the timing of new product introductions, market acceptance of our brand, and overall economic conditions. We may also seek additional capital to fund our operations, including through the sale of equity or debt financings. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
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Cash Flows
As of September 30, 2024, we had cash and cash equivalents totaling $5.1 million, and $13.7 million in restricted cash.
As of December 31, 2023, we had cash and cash equivalents totaling $1.9 million, and $16.8 million in restricted cash.
Comparison of the nine months ended September 30, 2024 and 2023
The following table summarizes our cash flows for the periods presented:
| Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| (US$ in thousands) | ||||||||
| Net cash used in operating activities | $ | (20,742 | ) | $ | (33,365 | ) | ||
| Net cash provided by investing activities | 2,580 | 4,687 | ||||||
| Net cash provided by (used in) financing activities | 18,254 | (415 | ) | |||||
| Effect on exchange rate change on cash and cash equivalents | (19 | ) | (26 | ) | ||||
| Net change in cash, cash equivalents and restricted cash | 73 | (29,119 | ) | |||||
| Cash, cash equivalents and restricted cash, at the beginning | 18,678 | 51,294 | ||||||
| Cash, cash equivalents and restricted cash, at the end | $ | 18,751 | $ | 22,175 | ||||
| Representing as: | ||||||||
| Cash and cash equivalents | 5,093 | 1,622 | ||||||
| Restricted cash – fund held in escrow | 13,658 | 20,553 | ||||||
| $ | 18,751 | $ | 22,175 | |||||
The following table sets forth a summary of our working capital:
| September 30, 2024 | December 31, 2023 | Variance | ||||||||||||||
| (US$ in thousands) | $ | % | ||||||||||||||
| Total Current Assets | $ | 52,073 | $ | 25,619 | 26,454 | 103.26 | ||||||||||
| Total Current Liabilities | 92,562 | 47,840 | 44,722 | 93.48 | ||||||||||||
| Working Capital Deficit | $ | (40,489 | ) | $ | (22,221 | ) | 18,268 | 82.21 | ||||||||
Working Capital Deficit
The working capital deficit as of September 30, 2024 and December 31, 2023 was amounted to approximately US$40.5 million and US$22.2 million, respectively, an increase of US$18.3 million or 82.21%. The increase was mainly attributed to the issuance of convertible promissory note payable of $32.5 million and warrant liabilities of $4.3 million, offset by the receivable from Triller LLC of $28.3 million and deposit, prepayments, and other receivables, net of $1.8 million.
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Cash Flows from Operating Activities
Net cash used in operating activities was US$20.7 million and US$33.4 million for the nine months ended September 30, 2024 and 2023, respectively.
Net cash used in operating activities for the nine months ended September 30, 2024 was primarily the result of the net loss of US$28.8 million, deposits, prepayments, and others receivable of US$0.6 million, decrease in accounts payable and accrued liabilities of US$2.3 million, decrease in escrow liabilities of US$3.2 million, decrease in lease liabilities of US$1.5 million and decrease in income tax payable of US$0.1 million. These amounts were partially offset by the decrease in accounts receivable of US$0.7 million, loans receivable of US$0.05 million, and non-cash adjustments consisting of share-based compensation expense of US$6.4 million, non-cash lease expense of US$1.9 million, depreciation of property and equipment of US$0.07 million, interest income on loans receivable of US$0.1 million, interest income on promissory note receivables of US$0.4 million, interest expense on convertible promissory notes payable of $1.1 million, interest expense on borrowings of $0.6 million, net foreign exchange gain of US$0.8 million, provision for allowance for expected credit losses of US$1.9 million, and change in fair value of warrant liabilities of US$4.3 million.
Net cash used in operating activities for the nine months ended September 30, 2023 was primarily the result of the net loss of US$35.6 million, an increase in accounts receivable of US$0.6 million, increase in deposits, prepayments, and others receivable of US$2.9 million, decrease in escrow liabilities ofUS$8.9 million, decrease in lease liabilities of US$0.6 million and decrease in income tax payable of US$0.1 million. These amounts were partially offset by the decrease in loans receivable of US$0.1 million, increase in accounts payable and accrued liabilities of US$5.5 million, and non-cash adjustments consisting of share-based compensation expense ofUS$12.0million, non-cash lease expense of US$0.9 million, depreciation of property and equipment of US$0.2 million, interest income on loans receivable of US$0.1 million, interest income on notes receivable of US$0.02 million, net foreign exchange gain of US$0.04 million, net investment income of US$0.5 million, allowance for credit losses on financial instruments of US$0.7 million, loss on settlement of forward share purchase agreement of US$0.4 million and reversal of annual bonus accrued in prior year of US$3.8 million.
Cash Flows from Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2024 of US$2.6 million was primarily due to proceeds from sale of long-term investments of US$2.2 million and proceeds from sale of convertible notes receivable of US$0.4 million.
Net cash provided by investing activities for the nine months ended September 30, 2023 of US$4.7 million was primarily due to proceeds from sale of investments of US$4.0 million, dividend received from long-term investments of US$1.4 million, offset by the purchase of notes receivable of US$0.6million and purchase of property and equipment of US$0.1 million.
Cash Flows from Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2024 of US$18.3 million was primarily due to advances from the holding company of US$15.6 million, proceeds from convertible promissory note payable of US$23.4 million, offset by repayments of borrowings of US$0.8 million and issuance of promissory notes to Triller LLC of US$20.0 million.
Net cash used in financing activities for the nine months ended September 30, 2023 of US$0.4 million was primarily due to advances from holding company of US$6.3 million, proceeds from borrowings of US$7.2 million, offset by the settlement of forward share purchase agreement of US$14.0 million.
Liquidity and Going Concern
Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The management of the Company estimates that currently available cash will not be able to provide sufficient funds to meet the Company’s planned obligations for the next 12 months from the date that these unaudited condensed consolidated financial statements were made available to be issued.
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For the nine months ended September 30, 2024, we reported a net loss of approximately US$28.8 million. With a significant decrease in our revenues, described in the paragraph below, we had an accumulated deficit of approximately US$94.4 million as of September 30, 2024.
Coupled with the economic recession in Hong Kong, we reported a sales decline with total revenue of approximately US$18.1 million for the nine months ended September 30, 2024 (nine months ended September 30, 2023: US$41.7 million) and resulting with an operating loss of approximately US$25.8 million (nine months ended September 30, 2023: US$36.3 million). We expect to continue our business growth, while closely monitoring our future spending.
Our ability to continue as a going concern is dependent on the management’s ability to successfully implement its plans. Our management team believes that we will be able to continue to grow our revenue base and control our expenditures. In parallel, our management team will continually monitor our capital structure and operating plans and evaluate various potential funding alternatives that may be needed in order to finance our business development activities, general and administrative expenses and growth strategy.
We intend to raise additional capital through various debt and equity offerings, but there can be no assurance that these funds will be available on terms acceptable, or will be sufficient to enable us to fully complete its development activities or sustain operations. If we are unable to raise sufficient additional funds, we will have to develop and implement a plan to further extend payables, reduce overhead, or scale back our current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Capital Commitments
Sale and Purchase Agreement — Pursuant to the agreement dated April 5, 2023, entered with Sony Life Singapore Pte. Ltd. (“SLS”), an independent third party, the Company is committed to purchase 100% equity interest in Sony Life Financial Advisers Pte. Ltd. for a cash consideration of SGD2,500,000 (equivalent to $1,882,000). On December 28, 2023, the Company and SLS entered into a second supplementary agreement to extend the closing date of the transaction from December 31, 2023 to March 31, 2024. On March 29, 2024, the Company and SLS entered into a third supplementary agreement to extend the closing date of the transaction from March 31, 2024 to May 9, 2024. Pursuant to the third supplementary agreement, the Company paid SGD250,000 (equivalent to $188,200) to SLS as the partial payment to cash consideration on April 12, 2024. On May 9, 2024, the Company and SLS entered into a fourth supplementary agreement to extend the closing date of the transaction from May 9, 2024 to May 20, 2024. On June 18, 2024, the Company and SLS entered into a fifth supplementary agreement to extend the closing date of the transaction from May 20, 2024 to July 31, 2024. Pursuant to the fifth supplementary agreement, the Company paid an aggregate of SGD150,000 (equivalent to $112,920) as the extension fee and indemnification fee in July 2024. On September 25, 2024, the Company and SLS entered into a sixth supplementary agreement to extend the closing date of the transaction from July 31, 2024 to October 31, 2024. Up to the date of the unaudited condensed consolidated financial statements available to be issued, further extension on the closing date of the transaction is under negotiation between SLS and the Company.
Nasdaq Compliance — On March 20, 2024, Nasdaq granted an additional 180 calendar days period or until September 16, 2024, to the Company to regain the compliance. On May 3, 2024, the closing bid price of the common stocks of the Company has been over $1.00 per share for a minimum of 10 consecutive trading days. Accordingly, Nasdaq confirmed that the Company regained compliance with Rule 5550(a)(2) and that this matter is now closed.
Off-Balance Sheet Arrangements
We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.
We have not engaged in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, net revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Policies, Judgements and Estimates
The preparation of financial statements in conformity with GAAP requires us to make judgments, estimates, and assumptions in the preparation of our unaudited condensed consolidated financial statements. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as reported in our 2023 Annual Report on Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As of September 30, 2024, the Company involved with various legal proceedings:
Action Case: HCA702/2018 On March 27, 2018, the writ of summons was issued against the Company and seven related companies of the former shareholder by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. On February 23, 2023, the Court granted leave for this action be set down for trial of 13 days, and the trial will commence on November 25, 2024. Legal counsel of the Company will continue to handle in this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA765/2019 On April 30, 2019, the writ of summons was issued against the Company’s subsidiary, three related companies and the former directors, shareholders and financial consultant by the Plaintiff. This action alleged the deceit and misrepresentation from an inducement of the fund subscription and claimed for compensatory damage of approximately $2 million (equal to HK$17.1 million). On April 18, 2024, the court made an order that the plaintiff shall set the case down for trial on or before July 6, 2024 for a 7 days trial before a judge and there shall be a pre-trial review before the trial judge on a date 12 weeks before the trial. The plaintiff and the defendants agreed on a time extension until August 8, 2024 to set the case down for trial. On August 9, 2024, the Court made an order that the case be adjourned to January 14, 2025 for another case management conference. The case is on-going and parties have yet to attempt mediation. Legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably possible loss, if any.
Action Case: HCA2097 and 2098/2020 On December 15, 2020, the writs of summons were issued against the Company and the former consultant by the Plaintiff. This action alleged the misrepresentation and conspiracy causing the loss from the investment in corporate bond and claimed for compensatory damage of approximately $1.67 million (equal to HK$13 million). The Company previously made $0.84 million as contingency loss for the year ended December 31, 2021. Parties participated in a mediation held on March 25, 2022 and negotiated for settlement through without prejudice correspondence, no settlement was reached. The case is on-going and legal counsel of the Company will continue to handle this matter. At this stage in the proceedings, it is unable to determine the probability of the outcome of the matter or the range of reasonably potential loss, if any.
ITEM 1A. RISK FACTORS.
As smaller reporting company we are not required to make disclosures under this Item.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed herewith. |
| ** | Furnished. |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Triller Group Inc. | ||
| Date: November 14, 2024 | By: | /s/ Ng Wing Fai |
| Name: | Ng Wing Fai | |
| Title: | Chief Executive Officer and Director | |
| (Principal Executive Officer) | ||
| Date: November 14, 2024 | By: | /s/ Shu Pei Huang, Desmond |
| Name: | Shu Pei Huang, Desmond | |
| Title: | Acting Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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