UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 6-K/A
(Amendment No. 1)
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant
to Rule 13a-16 or 15d-16 under
the
Securities Exchange Act of 1934
For
the month of September 2024
Commission File Number: 001-35016
TROOPS, Inc.
Unit A, 18/F, 8 Fui Yiu Kok Street,
Tsuen Wan, New Territories,
Hong Kong
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form 40-F ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
EXPLANATORY NOTE
On
May 9, 2024, TROOPS, Inc. (the “Company”) entered into a sale and purchase agreement (the “Agreement”)
with LIANTENG LIMITED (the “Vendor”), for the purchase of the entire issued and outstanding share capital of Riches Holdings
Limited (“Riches Holdings”), a company incorporated under the laws of Cayman Islands, for the consideration of $13,400,000
(the “Consideration”). The Consideration was satisfied by the Company through the issuance of a convertible promissory
note (the “Note”) to the Vendor at the principal amount of $13,400,000. The Note was issued by the Company to the Vendor on
May 9, 2024, with a Maturity Date of May 9, 2029. Upon closing of the Agreement and the transactions contemplated thereby on
May 31, 2024, the Company currently owns the entire issued and outstanding share capital of Riches Holdings.
This
Form 6-K/A is being filed to provide the consolidated financial statements of Riches Holdings and the unaudited pro forma
financial information of the Company after giving effect to the consummation of the acquisition of Riches Holdings.
Contents
Consolidated Financial Statements and Exhibits
Exhibits
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| |
TROOPS, Inc. |
| |
|
| Date: September
26, 2024 |
By: |
/s/ Damian Thurnheer |
| |
Damian Thurnheer |
| |
President and Chief Executive Officer |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent
to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-214142) and Form F-3 (File No. 333-273175)
of our reports dated September 26, 2024, relating to the consolidated financial statements of RICHES HOLDINGS LIMITED and subsidiaries
for the years ended December 31, 2022 and 2023.
/s/ AOGB CPA Limited
AOGB CPA Limited
Hong Kong, Hong Kong
September
26, 2024
Exhibit 99.1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
| To: | The Board of Directors
and Shareholders of RICHES HOLDINGS LIMITED |
Opinion on the Consolidated Financial Statements
We
have audited the accompanying consolidated balance sheets of RICHES HOLDINGS LIMITED and its subsidiaries (collectively the
“Group”) as of December 31, 2023 and 2022, and the related consolidated statements of income and comprehensive income,
changes in shareholders’ equity, and cash flows for years ended December 31, 2023 and 2022, and the related notes (collectively
referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and the results of its operations and
its cash flows for years ended December 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States
of America.
Basis for Opinion
These
consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an
opinion on the Group’s consolidated financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted
our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the relevant
period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit
matters.
/s/ AOGB CPA Limited
Hong Kong, Hong Kong
September 26,
2024
We
have served as the Group’s auditor since 2024.
AOGB CPA Limited, Suite 2501-03, Tesbury Centre, 28 Queen’s Road
East, Admiralty, Hong Kong
Tel: 2152-2238, Website: www.aogb.com
RICHES HOLDINGS
LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2023 AND 2022
(Stated
in U.S. Dollars except share and per share data)
| | |
2023 | | |
2022 | |
| ASSETS | |
| | |
| |
| Current
assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 555,422 | | |
$ | 320,650 | |
| Accounts receivables, net | |
| 428,013 | | |
| 531,456 | |
| Prepayments, deposits and other receivables | |
| 62,443 | | |
| 23,873 | |
| Contract costs | |
| 16,479 | | |
| 99,311 | |
| Due from the former shareholder | |
| - | | |
| 966 | |
| Due from the former director | |
| - | | |
| 57,756 | |
| Due from the director | |
| 48,327 | | |
| 417,155 | |
| Due from the related companies | |
| 60,739 | | |
| 315,264 | |
| Tax recoverable | |
| 1,404 | | |
| - | |
| Total current assets | |
| 1,172,827 | | |
| 1,766,431 | |
| | |
| | | |
| | |
| Non-current
asset | |
| | | |
| | |
| Intangible asset | |
| 31,271 | | |
| 49,734 | |
| Total non-current asset | |
| 31,271 | | |
| 49,734 | |
| | |
| | | |
| | |
| Total assets | |
$ | 1,204,098 | | |
$ | 1,816,165 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDER’S EQUITY | |
| | | |
| | |
| Current
Liabilities | |
| | | |
| | |
| Accounts payables | |
$ | 752,147 | | |
$ | 761,359 | |
| Accruals and other payables | |
| 134,623 | | |
| 128,655 | |
| Contract liabilities | |
| 117,080 | | |
| 250,252 | |
| Due to the related companies | |
| 6,359 | | |
| 36,231 | |
| Due to the director | |
| - | | |
| 390,437 | |
| Due to the former director | |
| - | | |
| 51,471 | |
| Tax payable | |
| 13,804 | | |
| 22,506 | |
| Total
current liabilities | |
| 1,024,013 | | |
| 1,640,911 | |
| | |
| | | |
| | |
| Total
liabilities | |
| 1,024,013 | | |
| 1,640,911 | |
| | |
| | | |
| | |
| COMMITMENTS AND CONTINGENCIES | |
| | | |
| | |
| | |
| | | |
| | |
| SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Ordinary shares: US$ $1 par value per share, 50,000 authorized
as of December 31, 2023 and 2022; 50,000 shares issued and outstanding | |
| 50,000 | | |
| 50,000 | |
| Accumulated other comprehensive loss | |
| (23,631 | ) | |
| (8,740 | ) |
| Retained earnings | |
| 153,716 | | |
| 133,994 | |
| Total
shareholders’ equity | |
| 180,085 | | |
| 175,254 | |
| Total liabilities and shareholders’
equity | |
$ | 1,204,098 | | |
$ | 1,816,165 | |
See accompanying notes to consolidated financial
statements.
RICHES HOLDINGS
LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2023, AND 2022
(Stated
in U.S. Dollars except share and per share data)
| | |
2023 | | |
2022 | |
| Revenues | |
$ | 6,307,177 | | |
$ | 5,114,217 | |
| Cost
of services | |
| 5,640,293 | | |
| 4,273,820 | |
| Gross
Profit | |
| 666,884 | | |
| 840,397 | |
| | |
| | | |
| | |
| Operating
expenses: | |
| | | |
| | |
| General and administrative
expenses | |
| 656,911 | | |
| 831,988 | |
| Reversal of impairment
losses on accounts receivables, net | |
| (1,345 | ) | |
| (94,956 | ) |
| Written
off on accounts receivables | |
| - | | |
| 35,535 | |
| Total
operating expenses | |
| 655,566 | | |
| 772,567 | |
| | |
| | | |
| | |
| Income
from operations | |
| 11,318 | | |
| 67,830 | |
| | |
| | | |
| | |
| Other
income: | |
| | | |
| | |
| Interest income | |
| 1,878 | | |
| 301 | |
| Other
income and gains | |
| 13,420 | | |
| 52,344 | |
| Total other income | |
| 15,298 | | |
| 52,645 | |
| | |
| | | |
| | |
| Income before taxes | |
| 26,616 | | |
| 120,475 | |
| Income
taxes | |
| (6,894 | ) | |
| (3,412 | ) |
| Net
income | |
$ | 19,722 | | |
$ | 117,063 | |
| | |
| | | |
| | |
| Other Comprehensive
Loss | |
| | | |
| | |
| Foreign
currency translation adjustment | |
| (14,891 | ) | |
| (12,066 | ) |
| Total
Comprehensive Income | |
$ | 4,831 | | |
$ | 104,997 | |
| | |
| | | |
| | |
| Earnings per share – Basic and diluted | |
| 0.39 | | |
| 2.34 | |
| Basic and diluted weighted average shares
outstanding | |
| 50,000 | | |
| 50,000 | |
See accompanying notes to consolidated financial
statements.
RICHES HOLDINGS
LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2023, AND 2022
(Stated
in U.S. Dollars except share data)
| | |
| Ordinary
shares | | |
| Accumulated
other | | |
| | | |
| | |
| | |
| No. of
Shares | | |
| Amount | | |
| comprehensive
income (loss) | | |
| Retained
earnings | | |
| Total | |
| | |
| | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
| BALANCE, January 1,
2022 | |
| 50,000 | | |
| 50,000 | | |
| 3,326 | | |
| 16,931 | | |
| 70,257 | |
| Foreign currency translation
adjustment | |
| - | | |
| - | | |
| (12,066 | ) | |
| - | | |
| (12,066 | ) |
| Net
income | |
| - | | |
| - | | |
| - | | |
| 117,063 | | |
| 117,063 | |
| BALANCE, December 31,
2022 | |
| 50,000 | | |
| 50,000 | | |
| (8,740 | ) | |
| 133,994 | | |
| 175,254 | |
| Foreign currency translation
adjustment | |
| - | | |
| - | | |
| (14,891 | ) | |
| - | | |
| (14,891 | ) |
| Net
income | |
| - | | |
| - | | |
| - | | |
| 19,722 | | |
| 19,722 | |
| BALANCE, December 31,
2023 | |
| 50,000 | | |
| 50,000 | | |
| (23,631 | ) | |
| 153,716 | | |
| 180,085 | |
See accompanying notes to consolidated financial
statements.
RICHES HOLDINGS
LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2023, AND 2022
(Stated
in U.S. Dollars)
| | |
2023 | | |
2022 | |
| Cash
Flows from Operating Activities: | |
| | | |
| | |
| Net income | |
$ | 19,722 | | |
$ | 117,063 | |
| Adjustments to
reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
| Amortization of intangible
asset | |
| 17,159 | | |
| 18,100 | |
| Interest income | |
| (1,878 | ) | |
| (301 | ) |
| Reversal of impairment
losses on accounts receivables | |
| (2,054 | ) | |
| (97,012 | ) |
| Impairment losses on
accounts receivables | |
| 709 | | |
| 2,056 | |
| Written off on accounts
receivables | |
| - | | |
| 35,535 | |
| Changes in operating
assets and liabilities: | |
| | | |
| | |
| Accounts receivables | |
| 104,726 | | |
| 850,617 | |
| Prepayment, deposits
and other receivables | |
| (38,681 | ) | |
| 24,464 | |
| Contract costs | |
| 82,875 | | |
| (31,058 | ) |
| Due from a related company | |
| (40,598 | ) | |
| - | |
| Accrued bonus due to
the former director | |
| (51,450 | ) | |
| 52,111 | |
| Accounts payables | |
| (9,168 | ) | |
| (733,240 | ) |
| Accruals and other payables | |
| 5,912 | | |
| 16,989 | |
| Contract liabilities | |
| (133,077 | ) | |
| 43,635 | |
| Tax recoverable | |
| (1,404 | ) | |
| - | |
| Tax
payable | |
| (8,702 | ) | |
| (3,015 | ) |
| Net
cash (used in) / provided by operating activities | |
| (55,909 | ) | |
| 295,944 | |
| | |
| | | |
| | |
| Cash
Flows from Investing Activities: | |
| | | |
| | |
| Repayment from the
former director | |
| 51,450 | | |
| 96 | |
| Advance to the director | |
| - | | |
| (244,720 | ) |
| Repayment from the
director | |
| 252,395 | | |
| 237,370 | |
| Advance to the related
companies | |
| (6,058 | ) | |
| (244,278 | ) |
| Repayment from the
related companies | |
| 301,058 | | |
| - | |
| Interest
received | |
| 1,878 | | |
| 301 | |
| Net
cash provided by / (used in) investing activities | |
| 600,723 | | |
| (251,231 | ) |
| | |
| | | |
| | |
| Cash
Flows from Financing Activities: | |
| | | |
| | |
| Advance from the director | |
| - | | |
| 191,719 | |
| Repayment to the director | |
| (266,768 | ) | |
| (140,844 | ) |
| Advance from related companies | |
| 5,024 | | |
| 8,621 | |
| Repayment to related companies | |
| (34,881 | ) | |
| (877 | ) |
| Net
cash (used in) / provided by financing activities | |
| (296,625 | ) | |
| 58,619 | |
| Effect
of Exchange Rate on Cash | |
| (13,417 | ) | |
| (6,859 | ) |
| Net
Increase in Cash | |
| 234,772 | | |
| 96,473 | |
| Cash
and cash equivalents, beginning of year | |
| 320,650 | | |
| 224,177 | |
| Cash
and cash equivalents, end of year | |
$ | 555,422 | | |
$ | 320,650 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |
| | | |
| | |
| Cash paid for income taxes | |
$ | 17,000 | | |
$ | 6,427 | |
| | |
| | | |
| | |
See accompanying notes to consolidated financial
statements.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated
in U.S. Dollars, except share)
(1) Organization and business background
Riches
Holdings Limited (the “Company”) is a limited liability company incorporated in the Cayman Islands on November 14, 2019.
The registered office address of the Company is 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand
Cayman KY1-1203, Cayman Islands.
The Company is an investment holding company. The Company’s subsidiaries are involved in the provision of advisory and referral
services, property agency services and consultancy services for insurance products in Hong Kong and provision of applications, technology
and services and application membership services in the People’s Republic of China (the “PRC”).
As of December 31, 2023, the Company’s
subsidiaries are detailed in the table as follows:
| Name |
|
Date of
Incorporation
or
Establishment |
|
Place of
Incorporation
or
Establishment |
|
Percentage
of
Ownership |
|
|
Principal Activity |
| Subsidiary: |
|
|
|
|
|
|
|
|
|
|
| Riches Advisory Limited |
|
August 17, 2017 |
|
Hong Kong |
|
|
100 |
% |
|
Provision of advisory and referral services in Hong Kong |
| Riches Property Limited |
|
October 17, 2017 |
|
Hong Kong |
|
|
100 |
% |
|
Provision of property agency services in Hong Kong |
| Riches Finance Group Limited |
|
August 17, 2017 |
|
Hong Kong |
|
|
100 |
% |
|
Provision of consultancy services for insurance products in Hong Kong |
財阜薈科技（深圳）有限公司
(Riches
Elite Technology (Shenzhen) Co., Ltd) |
|
December 3, 2018 |
|
PRC |
|
|
100 |
% |
|
Provision of applications, technology and services and application membership services in the PRC |
Group reorganization
| (a) | On
August 17, 2017, Riches Advisory Limited was incorporated with an issued share capital
of HK$10,000 divided into 10,000 shares with a par value of HK$1. Riches Advisory Limited
was substantially controlled by Mr. Wu Rui and Ms. Zhao Lizhen, who acted
in concert and held equity interests in Riches Advisory Limited directly. |
| (b) | On August 17, 2017, Riches Finance Group Limited was incorporated with an
issued share capital of HK$10,000 divided into 10,000 shares with a par value of HK$1. Riches Finance Group Limited was
substantially controlled by Mr. Wu Rui and Ms. Zhao Lizhen, who acted in concert and held equity interests in
Riches Finance Group Limited directly. On October 24, 2019, Riches Advisory Limited acquired 10,000 shares in Riches Finance
Group Limited from Mr. Wu Rui and Ms. Zhao Lizhen at a par value of HK$10,000, and Riches Finance Group Limited became a
wholly-owned subsidiary of Riches Advisory Limited. |
| (c) | On October 17, 2017,
Riches Property Limited was incorporated with an issued share capital of HK$10,000 divided
into 10,000 shares with a par value of HK$1. Riches Property Limited was substantially controlled
by Mr. Wu Rui and Ms. Zhao Lizhen, who acted in concert and held equity interests
in Riches Property Limited directly. On October 24, 2019, Riches Advisory Limited acquired
10,000 shares in Riches Property Limited from Mr. Wu Rui and Ms. Zhao Lizhen at
a par value of HK$10,000, and Riches Property Limited became a wholly-owned subsidiary of
Riches Advisory Limited. |
| (d) | On
December 3, 2018, Riches Elite Technology (Shenzhen) Co., Ltd was incorporated with an
issued share capital of RMB5,000,000, which has not yet been paid up. Riches Elite Technology
(Shenzhen) Co., Ltd was substantially controlled by Mr. Wang Junlin, who held equity
interests in Riches Elite Technology (Shenzhen) Co., Ltd directly on behalf of Mr. Wu
Rui. On January 7, 2020, Riches Advisory Limited acquired the shares in Riches Elite
Technology (Shenzhen) Co., Ltd from Mr. Wang Junlin at a consideration of HK$1, and
Riches Elite Technology (Shenzhen) Co., Ltd became a wholly-owned subsidiary of Riches Advisory
Limited. |
| (e) | On January 21, 2020,
the Company acquired 10,000 shares in Riches Advisory Limited from Mr. Wu Rui and Ms. Zhao
Lizhen at a par value of HK$10,000, and Riches Advisory Limited became a wholly-owned subsidiary
of the Company. |
RICHES HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated
in U.S. Dollars, except share)
(2) Basis of presentation and significant accounting policies
Basis of consolidation
The
accompanying consolidated financial statements of the Group are prepared
in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and include
the assets, liabilities, revenues, expenses and cash flows of all subsidiaries. All significant inter-company balances, transactions
and cash flows are eliminated on consolidation.
Use of estimates and assumptions
The
preparation of consolidated financial statements in conformity with
US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the audited consolidated financial statements and the reported
amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available
when the calculations are made; however, actual results could differ materially from those estimates.
Foreign currency translation
The Group’s
reporting currency is the U.S. dollar (“US$”). The functional currencies of its Hong Kong subsidiaries are the
Hong Kong dollar (“HK$”). The functional currency of its PRC subsidiaries is the RMB. Results
of operations and cash flows are translated at the average exchange rates during the period, and assets and liabilities are
translated at the exchange rate at the end of the period. Capital accounts are translated at their historical exchange rates when
the capital transaction occurred. Translation adjustments resulting from this process are included in accumulated other
comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in
a currency other than the functional currency are included in the results of operations as incurred.
| | |
For the year
ended December 31, | |
| | |
2023 | | |
2022 | |
| Period Ended RMB: US$ exchange rate | |
| 7.1 | | |
| 6.9 | |
| Period Average RMB: US$ exchange rate | |
| 7.1 | | |
| 6.7 | |
| Period Ended HK$: US$ exchange rate | |
| 7.8 | | |
| 7.8 | |
| Period Average HK$: US$ exchange rate | |
| 7.8 | | |
| 7.8 | |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis
of presentation and significant accounting policies (cont.)
Fair value measurement
The accounting standards
regarding fair value (“FV”) of financial instruments and related FV measurements defines financial instruments and requires
disclosure of the fair value of financial instruments held by the Group.
The accounting standards define fair value, establish
a three-level valuation hierarchy for disclosures of FV measurements and enhance disclosure requirements for FV measures. The three levels
are defined as follow:
· Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
· Level
2 inputs to the valuation methodology include quoted prices, other than those included in Level 1 for similar assets and liabilities
in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full
term of the financial instruments.
· Level
3 inputs to the valuation methodology are unobservable and significant to the FV.
The
Group’s financial instruments primarily consist of cash and
cash equivalents, accounts receivable, deposits and other receivables, amount due from the related parties, accounts payable, accruals
and other payables, and amount due to the related parties. As of the balance sheet dates, the estimated fair value of these financial
instruments were not materially different from their carrying values as presented due to the short maturities of these instruments.
The Group’s
non-financial assets, such as property and equipment would be measured at fair value only if they were determined to be impaired.
Cash and cash equivalents
Cash
and cash equivalents represent cash on hand and at banks which are unrestricted as to withdrawal or use,
with original maturities of three months or less when purchased to be cash and cash equivalents.
Accounts receivable, net
Accounts
receivable are trade receivables from customers. The trade receivables are without customer collateral and interest is not
accrued on past due accounts. The Group estimates the allowance for doubtful accounts receivable based on historical collection
activity, current business environment and forecasts of future macroeconomic conditions that may affect the customers’ ability
of payment according to ASC 326. The accounts receivable was segmented into groups based on certain credit risk characteristics, and
the Group determined expected loss rates for each group based on historical loss experience adjusted for judgments about the effects
of relevant observable data including default rates, lifetime for debt recovery, current and future economic conditions. Net
reversal of $1,345 and $94,956 was required as of December 31, 2023 and 2022. The accounts receivable is required to be written
off when a determination is made that it is uncollectible.
Prepayments,
deposits and other receivables
Prepayments, deposits
and other receivables primarily include prepaid expenses, rental deposit, utilities deposit and other receivables. Management reviews
the composition of deposits and other receivables and determines if an allowance for doubtful accounts is needed. No allowance was required
as of December 31, 2023, or 2022.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis
of presentation and significant accounting policies (cont.)
Intangible assets
In accordance with ASC 985-20, all costs incurred
to establish the technological feasibility of a computer software product to be sold, leased, or otherwise marketed are research and development
costs. Those costs shall be charged to expense when incurred. Costs of producing product masters incurred subsequent to establishing technological
feasibility shall be capitalized. Separately identifiable intangible assets that have determinable lives continue to be amortized over
their estimated useful lives using the straight-line method as follows:
| Category | |
Estimated useful lives |
| Software | |
5 years |
Impairment of long-lived assets
The Group reviews long-lived assets, including
definitive-lived intangible asset, for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s
carrying value, then the asset is deemed to be impaired and written down to its fair value. No impairments of long-lived assets were recognized
during the years ended December 31, 2023 and 2022.
Accruals and other
payables
Accruals and other
payables primarily include accrued staff costs and benefits as well as other accrued expenses and other payables.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis
of presentation and significant accounting policies (cont.)
Contract liabilities
Advances received from customers related to unsatisfied
performance obligations are recorded as contract liabilities (advance from customers), which will be recognized as revenues upon the satisfaction
of performance obligations through the transfer of related promised goods and services to customers.
Related parties
We follow ASC 850, Related Party Disclosures,
for the identification of related parties and disclosure of related party transactions.
The details of related
party transactions during the years ended December 31, 2023 and 2022 and balances as of December 31, 2023 and 2022 are
set out in Note 8.
Revenue recognition
The Group
follows ASC Topic 606, Revenue from Contracts with Customers, and all subsequent ASUs that modified ASC 606. In accordance
with ASC 606, revenues are recognized when control of the promised goods or services is transferred to the Group’s customers, in
an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. In determining
when and how much revenue is recognized from contracts with customers, the Group performs the following five-step analysis:
1. Identify
the contract(s) with a customer;
2. Identify
the performance obligations in the contract;
3. Determine
the transaction price;
4. Allocate
the transaction price to the performance obligations in the contract; and
5. Recognize
revenue when (or as) the entity satisfies a performance obligation.
A contract contains a promise (or promises) to
transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction
price is the amount of consideration a company expects to be entitled from a customer in exchange for providing the goods or services.
The unit of account
for revenue recognition is a performance obligation (a good or service). A contract may contain one or more performance obligations. Performance
obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good
or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct
in the context of the contract. Otherwise, performance obligations are combined with other promised goods or services until the Group
identifies a bundle of goods or services that is distinct. Promises in contracts which do not result in the transfer of a good or service
are not performance obligations, as well as those promises that are administrative in nature, or are immaterial in the context of the
contract. The Group has addressed whether various goods and services promised to the customer represent distinct performance obligations.
The Group applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification
as distinct performance obligations.
The transaction price is allocated to each performance
obligation in the contract on the basis of the relative stand-alone selling prices of the promised goods or services. The individual standalone
selling price of a good or service that has not previously been sold on a stand-alone basis, or has a highly variable selling price, is
determined based on the residual portion of the transaction price after allocating the transaction price to goods and/or services with
observable stand-alone selling price. A discount or variable consideration is allocated to one or more, but not all, of the performance
obligations if it relates specifically to those performance obligations.
Transaction price
is the amount of consideration in the contract to which the Group expects to be entitled in exchange for transferring the promised
goods or services. The transaction price may be fixed or variable and is adjusted for time value of money if the contract includes a significant
financing component. Consideration payable to a customer is deducted from the transaction price if the Group does not receive a separate
identifiable benefit from the customer. When consideration is variable, if applicable, the estimated amount is included in the transaction
price to the extent that it is highly probable that a significant reversal of the cumulative revenue will not occur when the uncertainty
associated with the variable consideration is resolved.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis
of presentation and significant accounting policies (cont.)
Revenue may be recognized
at a point in time or over time following the satisfaction of the performance obligations. If a performance obligation is satisfied over
time, revenue is recognized based on the percentage of completion reflecting the progress towards complete satisfaction of that performance
obligation. Revenues are recognized at a point in time or over time depending on the terms and conditions of the agreement, in
an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services.
The Group
currently generates its revenue from the following main sources:
Advisory and referral services
The Group provides services in relation to the application
of migration, education and visa renewal to its customers. Revenue is recognized at a point in time when relevant applications are approved.
Consultancy services for insurance products
The Group provides consultancy services primarily in relation
to insurance referral to insurance brokers. Revenue is recognized at a point in time when the cool-off period ends, and the consultancy
and referral services are considered complete.
Property agency services
The Group provides property agency services to its customers.
It consists primarily of introduction of property buyers. Revenue is recognized at a point in time when the agency services are successfully
rendered, evidenced by the completion of the underlying transactions.
Application membership services
Customers
can register as members via the online platform of the Group. By becoming members of the Group, customers are entitled a certain percentage
of commission when they have successful referrals in terms of advisory and referral services, consultancy services for insurance
products, and property agency services. Revenue is recognized over time by reference to the whole contracted membership period.
Applications,
technology & services
Revenue from the provision of applications and technology
support services to its customers is recognized at a point in time i.e. when the services are provided.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis of presentation and significant accounting policies (cont.)
General and administrative expenses
General and administrative expenses consist of
salaries and benefit for administrative personnel and management, utilities, and expenses related to general operations.
Income taxes
The Group
accounts for income taxes pursuant to ASC Topic 740, Income Taxes. Income taxes are provided on an asset and liability approach
for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based
on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is
calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. ASC Topic 740 also requires
the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and
the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry-forwards.
ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred
tax assets. Realization of deferred tax assets, including those related to the net operating loss carry-forwards, are dependent upon future
earnings, if any, of which the timing and amount are uncertain.
The Group
follows ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions,
it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized
in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax
positions.
Deferred taxes are accounted for using the asset
and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities
in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax. Deferred tax liabilities
are recognized for all future taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that
taxable income will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax
rates that are expected to apply to the period when the asset is realized or the liability is settled.
Deferred taxes are charged or credited in the
income statement, except when it is related to items credited or charged directly to equity. Net deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the net deferred tax assets
will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The Group’s
policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component
of income tax expense.
Comprehensive income (loss)
The Group
presents comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income. ASC Topic 220 states that
all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the
consolidated financial statements. The components of comprehensive income (loss) were the net income for the years and the foreign
currency translation adjustments.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(2) Basis
of presentation and significant accounting policies (cont.)
Earnings per share
Basic earnings per
share is computed by dividing the net income attributable to the ordinary shareholders by the weighted average number of shares of ordinary
share outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator
is increased to include the number of additional ordinary shares that would have been outstanding if the potential ordinary shares had
been issued and if the additional ordinary shares were dilutive. There were no potentially dilutive securities that were in-the-money
that were outstanding during the years ended December 31, 2023 and 2022.
Commitments and contingencies
In the normal course of business, we are subject
to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government
investigations and tax matters. We recognize a liability for such contingency if it determines it is probable that a loss has occurred,
and a reasonable estimate of the loss can be made. We may consider many factors in making these assessments including historical and the
specific facts and circumstances of each matter.
Adoption of new accounting standard
Effective
January 1, 2023, the Group adopted ASU 2021-08, Business Combinations
(Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize
and measure contract assets and contract liabilities acquired in a business combination in accordance with ASU 2014-09, Revenue from Contracts
with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts
consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard was
effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption
of this standard did not have an impact on the consolidated financial statements.
Recent accounting pronouncements
In
November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”,
which requires public entities to disclose expanded information about their reportable segment(s)’ significant expenses and other
segment items on an interim and annual basis. The ASU is effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The ASU is required to be applied retrospectively
to all prior periods presented in the financial statements once adopted. The Group
is evaluating the disclosure requirements related to the new standard.
In
December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which
requires public entities to disclose specific tax rate reconciliation categories, as well as income taxes paid disaggregated by jurisdiction,
amongst other disclosure enhancements. The ASU is effective for financial statements issued for annual periods beginning after December 15,
2024, with early adoption permitted. The ASU can be adopted on a prospective or retrospective basis. The Group
is evaluating the disclosure requirements related to the new standard.
The
Group has considered all other recently issued accounting pronouncements
and does not believe that the adoption of such pronouncements will have a material impact on the consolidated financial statements.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(3) Accounts receivables, net
Accounts receivables,
net consisted of the following as of December 31, 2023 and 2022:
| | |
2023 | | |
2022 | |
| Accounts receivables | |
$ | 428,722 | | |
$ | 533,512 | |
| Less: allowance for expected credit losses | |
| (709 | ) | |
| (2,056 | ) |
| Total accounts receivables, net | |
$ | 428,013 | | |
$ | 531,456 | |
The
movement of allowance for expected credit loss is as follows:
| Balance at December 31, 2021 |
$ | 97,004 | |
| Decrease in allowance for expected credit losses |
| (94,956 | ) |
| Foreign exchange difference |
| 8 | |
| Balance at December 31, 2022 |
| 2,056 | |
| Decrease in allowance for expected credit losses |
| (1,345 | ) |
| Foreign exchange difference |
| (2 | ) |
| Balance at December 31, 2023 |
$ | 709 | |
(4) Prepayments, deposits and other receivables
Prepayments, deposits
and other receivables consisted of the following as of December 31, 2023 and 2022:
| | |
2023 | | |
2022 | |
| Prepayments | |
$ | 31,229 | | |
$ | 8,796 | |
| Deposits | |
| 15,711 | | |
| 14,813 | |
| Other receivables | |
| 15,503 | | |
| 264 | |
| Prepayments, deposits and other receivables | |
$ | 62,443 | | |
$ | 23,873 | |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(5) Intangible
asset, net
As of December 31,
2023 and 2022, intangible asset, net consisted of the following:
| | |
2023 | | |
2022 | |
| Software | |
$ | 85,284 | | |
$ | 87,767 | |
| Less： Accumulated amortization | |
| (54,013 | ) | |
| (38,033 | ) |
| Intangible asset, net | |
$ | 31,271 | | |
$ | 49,734 | |
Amortization expense
expected for the next two years is as follows:
| 2024 |
$ | 17,159 | |
| 2025 |
| 14,112 | |
| Total |
$ | 31,271 | |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(6) Accruals
and other payables
Accruals and other
payables consisted of the following as of December 31, 2023 and 2022:
| | |
2023 | | |
2022 | |
| Accrued professional fees | |
$ | 12,802 | | |
$ | 43,545 | |
| Accrued staff costs and staff benefits | |
| 113,554 | | |
| 83,830 | |
| Others | |
| 8,267 | | |
| 1,280 | |
| Accruals and other payables | |
$ | 134,623 | | |
$ | 128,655 | |
(7) Contract
liabilities
Contract
liabilities consisted of the following:
| | |
2023 | | |
2022 | |
| Balance at beginning of year | |
$ | 250,252 | | |
$ | 206,883 | |
| Additions | |
| 57,009 | | |
| 222,231 | |
| Recognized to revenue during the year | |
| (190,086 | ) | |
| (178,596 | ) |
| Exchange adjustment | |
| (95 | ) | |
| (266 | ) |
| Balance at end of year | |
$ | 117,080 | | |
$ | 250,252 | |
(8) Related
party transactions
The following is
a list of related parties which the Group has balances and transactions with:
| Wu Rui |
|
(1) Controlling
shareholder of the Company as at December 31, 2023 and 2022, exited on January 18, 2024
(2) Director
of the Company |
| Zhao Lizhen |
|
(1) Former
shareholder of the Company (13%), exited on December 5, 2023
(2) Former
director of the Company, resigned on August 31, 2023 |
| Qian Xiaoni |
|
Former shareholder of the
Company (2%), exited on December 5, 2023 |
| Riches Credit Insurance Brokerage Limited |
|
Principally owned (90%) by the Company’s controlling shareholder, Wu Rui |
| Riches Consultancy (Macau) Limited |
|
(1) Principally
owned (80%) by the Company’s controlling shareholder, Wu Rui
(2) Common
director, Wu Rui |
| 東方之珠（深圳）出入境服務有限公司 (formerly known as 深圳市海及婭健康管理諮詢有限公司) (Oriental Pearl (Shenzhen) Immigration Service Co., Ltd.(formerly known as Shenzhen Hygeia Health Management Consulting Co., Ltd.)) |
|
(1) Principally
owned (75%) by the Company’s controlling shareholder, Wu Rui
(2) Common
director, Wu Rui |
| 深圳市天材教育諮詢有限公司(Shenzhen Talent Capacity Education Consulting Co., Ltd.) |
|
(1) Owned
by the Company’s controlling shareholder, Wu Rui
(2) Common
director, Wu Rui |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
a. Accounts
receivable from related party
As of December 31, 2023 and 2022, the balance of accounts
receivables from related party was as follows:
| | |
2023 | | |
2022 | |
| Riches Credit Insurance Brokerage Limited | |
$ | 40,598 | | |
$ | - | |
The balances represented the
accounts receivable from related party for the insurance referral service rendered by the Group. For details, please refer to “f.
Related Party Transactions” below.
b. Amount
due from the related companies
As of December 31, 2023 and 2022, the balances
of amount due from the related companies were as follows:
| | |
2023 | | |
2022 | |
| Oriental Pearl (Shenzhen) Immigration Service Co., Ltd. | |
$ | - | | |
$ | 74,163 | |
| Shenzhen Talent Capacity Education Consulting Co., Ltd. | |
| 14,083 | | |
| 240,742 | |
| Riches Consultancy (Macau) Limited | |
| - | | |
| 359 | |
| Riches Credit Insurance Brokerage Limited | |
| 6,058 | | |
| - | |
| Total amount due from the related companies | |
$ | 20,141 | | |
$ | 315,264 | |
The balances of amount
due from related parties were unsecured, interest-free and repayable on demand.
c. Accounts
payable to related party
As of December 31,
2023 and 2022, no balances of accounts payable to related party.
d. Amount
due to the related companies
As of December 31, 2023 and 2022, the balances
of amount due to the related companies were as follows:
| | |
2023 | | |
2022 | |
| Oriental Pearl (Shenzhen) Immigration Service Co., Ltd. | |
$ | 5,024 | | |
$ | - | |
| Shenzhen Talent Capacity Education Consulting Co., Ltd. | |
| 1,335 | | |
| 8,621 | |
| Riches Consultancy (Macau) Limited | |
| - | | |
| 27,610 | |
| Total amount due to the related companies | |
$ | 6,359 | | |
$ | 36,231 | |
The balances of amount due to the related parties
were unsecured, interest-free and repayable on demand.
e. Amount
due from/to the director, the former director and the former shareholder
The balance of amount due
from/to the director, the former director and the former shareholder were unsecured, interest-free and repayable on demand.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
f. Related
party transactions
The following are
the related party transactions for the years ended December 31, 2023 and 2022.
| |
| | |
2023 | | |
2022 | |
| Sales to related party |
| | | |
| | | |
| | |
| Riches Credit Insurance Brokerage Limited |
| (1 | ) | |
$ | 40,591 | | |
$ | - | |
| Rental expenses |
| | | |
| | | |
| | |
| Oriental Pearl (Shenzhen) Immigration Service Co., Ltd. |
| (2 | ) | |
| - | | |
| - | |
| Shenzhen Talent Capacity Education Consulting Co., Ltd. |
| (2 | ) | |
| - | | |
| - | |
| Staff costs |
| | | |
| | | |
| | |
| Oriental Pearl (Shenzhen) Immigration Service Co., Ltd. |
| (3 | ) | |
| - | | |
| - | |
| Shenzhen Talent Capacity Education Consulting Co., Ltd. |
| (3 | ) | |
| - | | |
| - | |
| (1) | For the year ended December 31, 2023, the Group has provided insurance referral services to Riches Credit Insurance Brokerage
Limited, and has charged service fee on the basis of that. |
| (2) | For the years ended December 31, 2023 and 2022, the Group has used the office premises rented by Oriental Pearl (Shenzhen)
Immigration Service Co., Ltd. and Shenzhen Talent Capacity Education Consulting Co., Ltd. located in Shenzhen. The rent
of the office premises for the years ended December 31, 2023 and 2022 totaled RMB689,488(equivalent to US$97,496) and
RMB454,174(equivalent to US$67,521), respectively. Approximately half of the office premises was used by the Group while the
remaining half used by Oriental Pearl (Shenzhen) Immigration Service Co., Ltd. and Shenzhen Talent Capacity Education
Consulting Co., Ltd. It has been agreed that the Group can use the office premises free of charge. |
| (3) | For the years ended December 31, 2023 and 2022, the Group has borrowed several finance personnel of Oriental Pearl (Shenzhen)
Immigration Service Co., Ltd. and Shenzhen Talent Capacity Education Consulting Co., Ltd. to assist with its finance and
accounting affairs. The annual salaries of the borrowed finance personnel for the years ended December 31, 2023 and 2022 totaled
RMB172,208 (equivalent to US$24,350) and RMB68,478(equivalent to US$10,180), respectively. Approximately half of the time of the
finance personnel was taken up by the Group. It has been agreed that the abovementioned arrangement was free of charge. |
(9) Shareholders’
equity
Ordinary share
The Company
was incorporated in the Cayman Islands on November 14, 2019 with authorized share capital of US$50,000 divided into 50,000
shares with a par value of US$1 each. As of December 31, 2023 and 2022, 50,000 ordinary shares were issued and outstanding.
RICHES HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(10) Income
taxes
Cayman Islands
The Company was
incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of the Cayman Islands. The Company
mainly conducts its operating business through its subsidiaries in Hong Kong and PRC. Additionally, the Cayman Islands does
not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
On March 21, 2018, the HK SAR Legislative
Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits
tax rates regime. The Bill was signed into law on March 28, 2018 and was gazetted on the following day. Under the two-tiered profits
tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million
will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed
at a flat rate of 16.5%.
PRC
The Company’s
PRC operating subsidiary is governed by the income tax laws of the PRC and the income tax provisions in respect to operations in the PRC
is calculated at the applicable tax rate on the taxable income for the periods based on existing legislation, interpretations and practices
in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), Chinese enterprises are subject to an
income tax rate of 25% after appropriate tax adjustments. According to the provisions of Ministry of Finance and State Taxation
Administration Announcement [2022] No. 13, the PRC subsidiary of the Group enjoys preferential income tax policies for the small
and low profit enterprises for both years. The net tax loss attributable to those PRC entities, if any, can only be carried forward for
a maximum period of five years, through 2028.
The
following table reconciles the Hong Kong statutory rates to the Group’s
effective tax rate for the years ended December 31, 2023 and 2022.
| | |
2023 | | |
2022 | |
| HK SAR Profits Tax at 16.5% | |
| 16.5 | % | |
| 16.5 | % |
| Difference under two-tiered profits tax rate regime | |
| (65.8 | ) | |
| 0.0 | |
| Effect of preferential tax rate granted to the PRC subsidiary | |
| 2.8 | | |
| (13.2 | ) |
| Income not subject to tax | |
| (1.4 | ) | |
| (5.7 | ) |
| Tax effect on non-deductible expenses | |
| 1.7 | | |
| 6.4 | |
| Tax effect on temporary differences not recognized | |
| (0.9 | ) | |
| (13.0 | ) |
| Tax effect on tax loss not recognized | |
| 112.5 | | |
| 42.7 | |
| Tax effect on utilization of tax losses | |
| (38.1 | ) | |
| (30.9 | ) |
| Tax concession | |
| (1.4 | ) | |
| 0.0 | |
| Effective income tax rate | |
| 25.9 | % | |
| 2.8 | % |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(11) Segment
reporting
ASC 280, “Segment
Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Group’s
internal organizational structure as well as information about geographical areas, business segments and major customers in financial
statements for details on the Group’s business segments. The Group uses the “management approach” in determining reportable
operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating
decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments.
Management, including the chief operating decision maker, reviews operation results by the revenue of different products or services.
Based on management’s assessment, the Group determined it has four operating segments.
The following table
presents revenue by services categories for the year ended December 31, 2023:
| | |
Advisory
and
referral
services | | |
Consultancy
services for
insurance
products | | |
Property
agency
services | | |
Application
membership
services | | |
Applications,
Technology
& Services | | |
Corporate
unallocated | | |
Consolidated | |
| Revenue | |
$ | 352,957 | | |
$ | 5,820,758 | | |
$ | 55,280 | | |
$ | 40,092 | | |
$ | 38,090 | | |
$ | - | | |
$ | 6,307,177 | |
| Gross profit | |
| 132,828 | | |
| 493,995 | | |
| 8,974 | | |
| 14,420 | | |
| 16,667 | | |
| - | | |
| 666,884 | |
| Operating expenses | |
| (269,221 | ) | |
| (283,146 | ) | |
| (61,843 | ) | |
| (4,737 | ) | |
| (36,619 | ) | |
| - | | |
| (655,566 | ) |
| Operating (loss) profit | |
| (136,393 | ) | |
| 210,849 | | |
| (52,869 | ) | |
| 9,683 | | |
| (19,952 | ) | |
| - | | |
| 11,318 | |
| Other income | |
| 13,108 | | |
| 1,290 | | |
| - | | |
| - | | |
| 900 | | |
| - | | |
| 15,298 | |
| (Loss) profit before provision for income taxes | |
| (123,285 | ) | |
| 212,139 | | |
| (52,869 | ) | |
| 9,683 | | |
| (19,052 | ) | |
| - | | |
| 26,616 | |
| Income tax expense | |
| - | | |
| (6,894 | ) | |
| - | | |
| - | | |
| | | |
| - | | |
| (6,894 | ) |
| Net (loss) profit | |
| (123,285 | ) | |
| 205,245 | | |
| (52,869 | ) | |
| 9,683 | | |
| (19,052 | ) | |
| - | | |
| 19,722 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As of December 31, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Identifiable long-lived assets | |
| - | | |
| - | | |
| - | | |
| 31,271 | | |
| | | |
| - | | |
| 31,271 | |
| Total
non-current assets | |
| - | | |
| - | | |
| - | | |
| 31,271 | | |
| | | |
| - | | |
| 31,271 | |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
The following table
presents revenue by services categories for the year ended December 31, 2022:
| | |
Advisory
and
referral
services | | |
Consultancy
services for
insurance
products | | |
Property
agency
services | | |
Application
membership
services | | |
Applications,
Technology
& Services | | |
Corporate
unallocated | | |
Consolidated | |
| Revenue | |
$ | 338,511 | | |
$ | 4,400,214 | | |
$ | 276,035 | | |
$ | 35,328 | | |
$ | 64,129 | | |
$ | - | | |
$ | 5,114,217 | |
| Gross profit | |
| 175,653 | | |
| 531,419 | | |
| 68,250 | | |
| 6,878 | | |
| 58,197 | | |
| - | | |
| 840,397 | |
| Operating expenses | |
| (239,955 | ) | |
| (303,656 | ) | |
| (153,174 | ) | |
| (1,874 | ) | |
| (34,150 | ) | |
| (39,758 | ) | |
| (772,567 | ) |
| Operating (loss) profit | |
| (64,302 | ) | |
| 227,763 | | |
| (84,924 | ) | |
| 5,004 | | |
| 24,047 | | |
| (39,758 | ) | |
| 67,830 | |
| Other income | |
| 17,970 | | |
| 15,949 | | |
| 13,418 | | |
| - | | |
| 5,308 | | |
| - | | |
| 52,645 | |
| (Loss) profit before provision for income taxes | |
| (46,332 | ) | |
| 243,712 | | |
| (71,506 | ) | |
| 5,004 | | |
| 29,355 | | |
| (39,758 | ) | |
| 120,475 | |
| Income tax expense | |
| - | | |
| - | | |
| - | | |
| (497 | ) | |
| (2,915 | ) | |
| - | | |
| (3,412 | ) |
| Net (loss) profit | |
| (46,332 | ) | |
| 243,712 | | |
| (71,506 | ) | |
| 4,507 | | |
| 26,440 | | |
| (39,758 | ) | |
| 117,063 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As of December 31, 2022 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Identifiable long-lived assets | |
| - | | |
| - | | |
| - | | |
| 49,734 | | |
| | | |
| - | | |
| 49,734 | |
| Total
non-current assets | |
| - | | |
| - | | |
| - | | |
| 49,734 | | |
| | | |
| - | | |
| 49,734 | |
The Group’s
revenue from customers by geographic area were as below:
| | |
2023 | | |
2022 | |
| PRC | |
$ | 78,182 | | |
$ | 99,457 | |
| Hong Kong | |
| 6,228,995 | | |
| 5,014,760 | |
| Total | |
$ | 6,307,177 | | |
$ | 5,114,217 | |
(12) Risks
and uncertainties
Customer concentration risk
For the year ended December 31,
2023 and 2022, customers accounting for more than 10% of total revenue were as below:
| | |
2023 | | |
2022 | |
| Customer | |
Amount | | |
% of total
revenue | | |
Amount | | |
% of total
revenue | |
| Ever Fountain Global Wealth Management Limited | |
$ | 2,856,820 | | |
| 45 | % | |
$ | 1,839,290 | | |
| 36 | % |
| 華港咨詢有限公司 (Fargo Consulting Limited) | |
| 1,260,134 | | |
| 20 | % | |
| - | | |
| - | |
| Flower Seasons Management Limited | |
| 1,081,662 | | |
| 17 | % | |
| 1,871,213 | | |
| 37 | % |
| Total | |
$ | 5,198,616 | | |
| 82 | % | |
$ | 3,710,503 | | |
| 73 | % |
Any decrease in sales to these major customers may negatively impact
the Group’s operations and cash flows if the Group fails to increase its sales to other customers.
Supplier concentration risk
For the year ended December 31,
2023 and 2022, there were no suppliers accounting for more than 10% of total purchase.
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
(12) Risks
and uncertainties(cont.)
Credit risk
Credit risk is the potential financial
loss to the Group resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations
to the Group, as and when they fall due. As the Group does not hold any collateral, the maximum exposure to credit risk is the carrying
amounts of accounts and other receivables (exclude prepayments), cash and cash equivalents and amount due from related parties presented
on the consolidated balance sheets. The Group has no other financial assets which carry significant exposure to credit risk.
| Accounts receivables |
| |
| In order to minimize the
credit risk, the management of the Group has delegated a team
responsible for determination of credit limits and credit approvals. Other monitoring procedures are in place to ensure that
follow-up action is taken to recover overdue debts. Internal credit rating has been given to each category of debtors after
considering aging, historical observed default rates, repayment history and past due status of the accounts receivables. Estimated
loss rates are based on probability of default and loss given default with reference to an external credit report and are adjusted
for reasonable and supportable forward-looking information that is available without undue costs or effort while credit-impaired
trade balances were assessed individually. In this regard, the directors consider that the Group’s
credit risk is significantly reduced. The net reversal of loss allowance for accounts receivables for the years ended
December 31, 2023 and 2022 are $1,345 and $94,956 respectively. |
| |
| Bank balances |
| |
| The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies. The Group is exposed to concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings. |
|
Deposit and other receivables |
| |
|
The
Group assessed the impairment for its other receivables individually
based on internal credit rating and ageing of these debtors which, in the opinion of the directors, have no significant increase in credit
risk since initial recognition. Based on the impairment assessment performed by the Group,
the directors consider the loss allowance for other receivables as of December 31, 2023 and 2022 was insignificant and accordingly
no allowance for credit losses was provided.
Amount due from related parties
With
respect to the amount due from related parties, the Group has made periodic individual assessment on recoverability based on historical
settlement records and adjusts for forward-looking information. In view of the strong financial capability of these related parties and
considered the future prospects of the industry these counterparties operate, the Group consider their probability of default and exposure
of default are low, and accordingly, no impairment was recognized in respect of the amounts due from related parties. |
RICHES HOLDINGS
LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
(Stated in
U.S. Dollars, except share)
Interest rate risk
Fluctuations in market interest rates
may negatively affect our financial condition and results of operations. The Group is exposed to floating interest rate risk on
its variable-rate cash deposit, and to fair value interest rate risk on its fixed-rate cash deposits. The risk due to changes in interest
rates is not material. The Group has not used any derivative financial instruments to manage our interest risk exposure.
The Group considered that its exposure to cash flow interest rate risk
is low as the financial impact arising from the changes of market interest rate is insignificant, therefore, no sensitivity analysis is
presented.
| Foreign currency risk |
| |
| Foreign currency risk is the risk that the holding of foreign currency assets and liabilities will affect the Group’s financial position as a result of a change in foreign currency exchange rates. |
| |
|
Majority of the Group’s transactions are denominated in HK$ and with few transactions denominated in RMB. The Group is
subject to foreign exchange rate risk arising from the assets and liabilities which are denominated in currency other than the
functional currency of the relevant group entity. The Group
currently does not have a foreign currency hedging policy to eliminate the currency exposures. However, the directors monitor the
related foreign currency exposure closely and will consider hedging significant foreign currency exposures should the need
arise.
In
the opinion of the Group, the currency risk of $ is considered
insignificant as HK$ is pegged to $ and therefore no sensitivity analysis is presented. |
Liquidity risk
Liquidity risk is the risk that the Group
will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or
another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
(13) Subsequent
event
The Group
evaluates subsequent events that have occurred after the balance sheet date but before the consolidated financial statements are issued.
Unless as disclosed below, there are not any material subsequent events that require disclosure in these consolidated financial statements.
On
January 18, 2024, as part of the reorganization, LIANTENG Limited, a corporation duly organized and existing under the laws of
British Virgin Islands, acquired all the shares of Riches Holdings Limited, from Mr. Wu Rui. Subsequent to the transaction,
LIANTENG Limited entered into a sale and purchase agreement dated May 9, 2024 with TROOPS, Inc., a company incorporated
under the laws of Cayman Islands. In accordance with the agreement terms, TROOPS, Inc. has agreed to purchase all the shares of
Riches Holdings Limited from LIANTENG Limited, with the consideration satisfied by TROOPS, Inc. through the issuance of a
convertible note at a par value of US$13,400,000. As of May 31, 2024, the completion of the agreement between LIANTENG Limited
and TROOPS, Inc. has taken place.
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On May 9, 2024, TROOPS, Inc. (the “Company”, the “Registrant”,
the “Purchaser”), entered into a Sale and Purchase Agreement with LIANTENG Limited (“LIANTENG”, the “Vendor”)
for the purchase and sale of Riches Holdings Limited (“RHL”, the “Target Company”) (the “Agreement”).
Pursuant to the Agreement, the Company acquired all of the issued and outstanding capital stock of RHL, a private company incorporated
in the Cayman Islands, from its sole legal and beneficial owner – LIANTENG at a consideration of US$13.4 million, which shall be
satisfied by the Company through the issuance of a convertible note (the “Acquisition”).
There were no significant accounting policy differences or other items
which required adjustment in the accompanying unaudited pro forma condensed combined financial statements.
The accompanying unaudited pro forma condensed combined statement of
financial position as at December 31, 2023 gives effect to the Acquisition as if it had been consummated on December 31, 2023;
and the accompanying unaudited pro forma condensed combined statement of operations for the year ended December 31, 2023 gives effect
to the Acquisition as if it had been consummated on January 1, 2023.
The
unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial
statements of RHL (included herein) as well as those of the Company. The historical consolidated financial statements referred to
above for the Company were included in its Annual Report on Form 20-F/A for the year ended December 31, 2023. The
historical consolidated financial statements referred to above for RHL were included in the Company’s Form 6-K as filed
in this report.
The accompanying unaudited pro forma condensed combined financial information
and the historical consolidated financial information presented herein should be read in conjunction with the historical consolidated
financial statements and notes thereto for the Company.
The
unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as
amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”
Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting
for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction
effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). These pro forma adjustments
were presented in separate columns after the presentation of the combined historical information of the Company and its subsidiaries
and the Target Company and its subsidiaries. The Company has elected not to present Management’s Adjustments and will only be presenting
Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed
combined financial information does not reflect future events that may occur after the Acquisition. The unaudited pro forma condensed
combined financial information is provided for informational purposes only and is not necessarily indicative of a true picture of the
financial position and the results of operations of the combined companies following the completion of the Acquisition. The pro forma
adjustments are subject to change and are based upon currently available information and certain assumptions that the Company believes
are reasonable.
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2023
(In thousands of U.S. dollars except share and per share
data)
| | |
Registrant and its
subsidiaries
historical | | |
RHL and its
subsidiaries
historical | | |
Transaction
Accounting
Adjustments | | |
Notes | |
Other Transaction
Accounting
Adjustments | | |
Notes | |
Pro forma
combined | |
| ASSETS | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Current
assets | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Cash and cash equivalents | |
$ | 3,113 | | |
$ | 555 | | |
| - | | |
| |
| (124 | ) | |
(c) | |
$ | 3,544 | |
| Accounts receivable, net | |
| 2 | | |
| 428 | | |
| - | | |
| |
| - | | |
| |
| 430 | |
| Loans receivable, net | |
| 7,195 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 7,195 | |
| Interest receivable | |
| 41 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 41 | |
| Other receivables, prepayments and deposits, net | |
| 319 | | |
| 63 | | |
| - | | |
| |
| 109 | | |
(d) | |
| 491 | |
| Contract costs | |
| - | | |
| 17 | | |
| - | | |
| |
| - | | |
| |
| 17 | |
| Due from the director | |
| - | | |
| 48 | | |
| - | | |
| |
| (48 | ) | |
(d) | |
| - | |
| Due from the related companies | |
| - | | |
| 61 | | |
| - | | |
| |
| (61 | ) | |
(d) | |
| - | |
| Tax recoverable | |
| - | | |
| 1 | | |
| - | | |
| |
| - | | |
| |
| 1 | |
| Total current assets | |
| 10,670 | | |
| 1,173 | | |
| - | | |
| |
| (124 | ) | |
| |
| 11,719 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Non-current
assets | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Plant and equipment, net | |
| 46,773 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 46,773 | |
| Operating lease right-of-use assets, net | |
| 4 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 4 | |
| Intangible assets, net | |
| 29 | | |
| 31 | | |
| 1,408 | | |
(a) | |
| - | | |
| |
| 1,468 | |
| Long-term loans receivable, net | |
| 12,484 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 12,484 | |
| Goodwill | |
| 385 | | |
| - | | |
| 12,044 | | |
(a) | |
| - | | |
| |
| 12,429 | |
| Total non-current assets | |
| 59,675 | | |
| 31 | | |
| 13,452 | | |
| |
| - | | |
| |
| 73,158 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Total assets | |
$ | 70,345 | | |
$ | 1,204 | | |
| 13,452 | | |
| |
| (124 | ) | |
| |
$ | 84,877 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| LIABILITIES AND SHAREHOLDER’S EQUITY | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Current
liabilities | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Amount due to a shareholder | |
$ | 1,923 | | |
$ | - | | |
| - | | |
| |
| - | | |
| |
$ | 1,923 | |
| Other payables and accrued liabilities | |
| 2,278 | | |
| 135 | | |
| - | | |
| |
| 6 | | |
(d) | |
| 2,419 | |
| Operating lease liability, current | |
| 4 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 4 | |
| Customer deposits | |
| 5 | | |
| - | | |
| - | | |
| |
| - | | |
| |
| 5 | |
| Tax payable | |
| 513 | | |
| 14 | | |
| - | | |
| |
| - | | |
| |
| 527 | |
| Accounts payables | |
| - | | |
| 752 | | |
| - | | |
| |
| - | | |
| |
| 752 | |
| Contract liabilities | |
| - | | |
| 117 | | |
| - | | |
| |
| - | | |
| |
| 117 | |
| Due to the related companies | |
| - | | |
| 6 | | |
| - | | |
| |
| (6 | ) | |
(d) | |
| - | |
| Financial liabilities at fair value through profit or loss | |
| - | | |
| - | | |
| 13,400 | | |
(b) | |
| - | | |
| |
| 13,400 | |
| Total current liabilities | |
| 4,723 | | |
| 1,024 | | |
| 13,400 | | |
| |
| - | | |
| |
| 19,147 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| NON-CURRENT LIABILITIES | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Non-current Deferred tax liabilities | |
| 5,043 | | |
| - | | |
| 232 | | |
(a) | |
| - | | |
| |
| 5,275 | |
| | |
| 5,043 | | |
| - | | |
| 232 | | |
| |
| - | | |
| |
| 5,275 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Total
liabilities | |
| 9,766 | | |
| 1,024 | | |
| 13,632 | | |
| |
| - | | |
| |
| 24,422 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| COMMITMENTS AND CONTIGNECIES | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| SHAREHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Share capital | |
| 406 | | |
| 50 | | |
| (50 | ) | |
(a) | |
| - | | |
| |
| 406 | |
| Additional paid-in-capital | |
| 135,768 | | |
| - | | |
| | | |
| |
| | | |
| |
| 135,768 | |
| Retained (deficit) earnings | |
| (75,598 | ) | |
| 154 | | |
| (154 | ) | |
(a) | |
| (124 | ) | |
(c) | |
| (75,722 | ) |
| Accumulated other comprehensive income (expense) | |
| 3 | | |
| (24 | ) | |
| 24 | | |
(a) | |
| - | | |
| |
| 3 | |
| Total equity | |
| 60,579 | | |
| 180 | | |
| (180 | ) | |
| |
| (124 | ) | |
| |
| 60,455 | |
| Total
liabilities and shareholders’ equity | |
$ | 70,345 | | |
$ | 1,204 | | |
| 13,452 | | |
| |
| (124 | ) | |
| |
$ | 84,877 | |
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
(In thousands of U.S. dollars except share and per share
data)
| | |
Registrant
historical | | |
RHL and its
subsidiaries
historical | | |
Transaction
Accounting
Adjustments | | |
Note | |
Other Transaction
Accounting
Adjustments | | |
Note | |
Pro forma
combined | |
| REVENUES | |
$ | 3,569 | | |
$ | 6,307 | | |
| | | |
| |
| | | |
| |
$ | 9,876 | |
| COST OF REVENUES | |
| 2,793 | | |
| 5,640 | | |
| | | |
| |
| | | |
| |
| 8,433 | |
| GROSS PROFIT | |
| 776 | | |
| 667 | | |
| | | |
| |
| | | |
| |
| 1,443 | |
| OPERATING EXPENSES: | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| General and administrative expenses | |
| 2,754 | | |
| 656 | | |
| 141 | | |
(e) | |
| 124 | | |
(c) | |
| 3,675 | |
| Impairment (reversal) loss of accounts receivables, net | |
| - | | |
| (1 | ) | |
| | | |
| |
| | | |
| |
| (1 | ) |
| Impairment (reversal) loss of loan and interest receivable | |
| (49 | ) | |
| - | | |
| | | |
| |
| | | |
| |
| (49 | ) |
| Impairment (reversal) loss of other receivables, prepayments and deposits | |
| (127 | ) | |
| - | | |
| | | |
| |
| | | |
| |
| (127 | ) |
| Total operating expenses | |
| 2,578 | | |
| 655 | | |
| 141 | | |
| |
| 124 | | |
| |
| 3,498 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| OPERATING (LOSS)/PROFIT | |
| (1,802 | ) | |
| 12 | | |
| (141 | ) | |
| |
| (124 | ) | |
| |
| (2,055 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| OTHER (EXPENSE)/INCOME: | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Interest income | |
| 14 | | |
| 2 | | |
| | | |
| |
| | | |
| |
| 16 | |
| Interest expense | |
| (62 | ) | |
| - | | |
| | | |
| |
| | | |
| |
| (62 | ) |
| Other (expense)/income, net | |
| (9 | ) | |
| 13 | | |
| | | |
| |
| | | |
| |
| 4 | |
| Total other (expense)/income, net | |
| (57 | ) | |
| 15 | | |
| - | | |
| |
| - | | |
| |
| (42 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| (LOSS)/PROFIT BEFORE PROVISION FOR INCOME TAXES | |
| (1,859 | ) | |
| 27 | | |
| (141 | ) | |
| |
| (124 | ) | |
| |
| (2,097 | ) |
| INCOME TAX BENEFIT (EXPENSE) | |
| 140 | | |
| (7 | ) | |
| 23 | | |
(e) | |
| | | |
| |
| 156 | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| NET (LOSS)/PROFIT | |
| (1,719 | ) | |
| 20 | | |
| (118 | ) | |
| |
| (124 | ) | |
| |
| (1,941 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| OTHER COMPREHENSIVE (LOSS)/INCOME: | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Foreign currency translation adjustment | |
| - | | |
| (15 | ) | |
| | | |
| |
| | | |
| |
| (15 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| COMPREHENSIVE (LOSS)/INCOME | |
| (1,719 | ) | |
| 5 | | |
| (118 | ) | |
| |
| (124 | ) | |
| |
| (1,956 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| LOSS PER SHARE: | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Basic | |
| (0.02 | ) | |
| | | |
| | | |
| |
| | | |
| |
| (0.02 | ) |
| Diluted | |
| (0.02 | ) | |
| | | |
| | | |
| |
| | | |
| |
| (0.02 | ) |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES: | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | |
| Basic | |
| 101,597,998 | | |
| | | |
| | | |
| |
| | | |
| |
| 101,597,998 | |
| Diluted | |
| 101,597,998 | | |
| | | |
| | | |
| |
| | | |
| |
| 101,597,998 | |
Source:
The financial information of the Registrant and its subsidiaries (collectively the “Group”) is extracted from the
audited consolidated financial statement of the Group for the year December 31, 2023 as set out in the Annual Report on
Form 20-F/A, dated August 23, 2024; the financial information of RHL and its subsidiaries is extracted from the Company’s
Form 6-K as filed in this report.
TROOPS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Description of Transaction and Basis of Presentation
The
unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial
statements of RHL (included herein) as well as those of the Company. The historical consolidated financial statements referred to
above for the Company were included in its Annual Report on Form 20-F/A for the year ended December 31, 2023. The
historical consolidated financial statements referred to above for RHL were included in the Company’s Form 6-K as filed
in this report.
The unaudited pro forma condensed combined statement of financial
position reflects the Acquisition as if the Acquisition had been consummated on December 31, 2023; and the unaudited pro forma
condensed combined statement of operations reflects the Acquisition as if it had been consummated on January 1, 2023.
Pro Forma Adjustments
The following pro forma adjustments are included in the unaudited pro
forma condensed combined financial statements:
| (a) |
The Acquisition is considered as a business combination and is accounted
for using the acquisition method in accordance with ASC 805 “Business Combinations” as the directors of the Company believe
that the Target Group acquired constitutes a business in accordance with ASC 805.
Upon completion of the Acquisition, the Group would hold 100% of the
Target Company’s equity interest and obtain control over the Target Company. Accordingly, the Target Company would become a subsidiary
of the Company. The pro forma condensed combined statement of financial position illustrates the financial outcome as if the Acquisition
has been completed on December 31, 2023.
For the purpose of preparing the unaudited pro forma financial
information, the directors of the Company had assumed that with the exception of intangible assets (details set out below), the pro
forma fair value of the identifiable assets and liabilities of the Target Group as at December 31, 2023 are the same as their
respective carrying amounts as at December 31, 2023. |
| |
|
| |
The Group has applied the acquisition method in
accordance with ASC 805 to account for the Acquisition as if the Acquisition had been completed on December 31, 2023 and the
calculation of pro forma goodwill is as follows: |
| | |
US$ ('000) | |
| Fair value of total consideration | |
| 13,400 | |
| Less: | |
| | |
| Net assets of the Target Group as at
December 31, 2023 | |
| 180 | |
| Fair value adjustment of intangible assets (note i) | |
| 1,408 | |
| Deferred tax liabilities (note ii) | |
| (232 | ) |
| Fair value of identifiable net assets acquired | |
| 1,356 | |
| | |
| | |
| Pro forma goodwill (note iii) | |
| 12,044 | |
| |
Note i: The pro forma fair value adjustments in relation to intangible
assets mainly arise from the recognition, on a pro forma basis, of customer relationship under the Target Group, with an expected useful life of 10 years. The pro forma fair values
of the intangible assets are based on estimation by the directors of the Company with reference to the valuation carried out by an independent
qualified professional valuer not connected with the Group.
The Acquisition will enable the Group to expand the consultancy and
referral services portfolio, which will enable the Group to gain access to new business market and expand its business portfolio in an
efficient manner and is therefore an effective way to achieve the Group’s business strategies. |
| |
|
| |
Note ii: The deferred tax liabilities relating to the pro forma fair value adjustments of intangible assets amounted to US$232,000, which is calculated at the HK SAR Profits Tax rate of 16.5%. |
| |
|
| |
Note iii: The consideration paid for the Acquisition effectively included
amounts in relation to the benefit of expected revenue growth, future market development and the assembled workforce of Target Group,
which is expected to facilitate strategic cooperation and create synergy between the Group and the Target Group, and in turn strengthen
the Group’s continuous profitability. These benefits are not recognized separately from goodwill because they do not meet the recognition
criteria for identifiable intangible assets.
For the purpose of the unaudited pro forma financial information,
the Company’s management has performed an impairment assessment on the provisional goodwill arising from the Acquisition in
accordance with ASC 350-20-35 and concluded that there would have been no impairment of the goodwill if the Acquisition had been
completed on December 31, 2023 for the purpose of unaudited pro forma condensed combined financial statements.
The management of the Group first assess qualitative factors to determine
whether it is necessary to perform the quantitative goodwill impairment test. If determined to be necessary, the quantitative impairment
test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any).
However, should there be any adverse changes to the business of the
Target Group, including but not limited to, any subsequent adverse changes in the operation, impairment may be required to be recognized
against provisional goodwill in accordance with ASC 350-20-35 and the Group’s accounting policies.
The directors of the Group confirmed that they will adopt consistent
approach to assess impairment of goodwill in subsequent reporting periods in accordance with the requirements of ASC 350-20-35 and will
disclose in the Group’s annual report the basis and assumptions adopted by the directors of the Group in the impairment assessment
in accordance with the disclosure requirements in ASC 350-20-35.
The pro forma fair values of the identifiable assets and liabilities
and goodwill, if any, in relation to the Acquisition are subject to change upon the completion of purchase price allocation based on audited
figures of the Target Group at the actual date of completion, which may be substantially different from their estimated amounts used in
the preparation of this unaudited pro forma financial information.
|
| (b) |
The adjustment represents settlement of all outstanding considerations
owing by the Group as at December 31, 2023. Pursuant to the formal share transfer agreement dated May 9, 2024 entered into between the
Purchaser and the Vendor in relation to the Acquisition, the total consideration shall be US$13,400,000 and shall be paid through the
issuance of a convertible note at a par value and a fair value of US$13,400,000.
The convertible note is a hybrid financial instrument embedded with
the conversion right held by the holder and the redemption option held by the Group. The Group has elected to initially and subsequently
measure the hybrid financial instrument in its entirety at fair value in accordance with ASC 825-10-15-3 to ASC 825-10-15-5. |
| (c) |
The adjustment represents the estimated transaction costs, including legal and professional fees of approximately US$124,000 incurred directly attributable to the Acquisition and settled by cash. |
| |
|
| (d) |
The amounts due from/to director/shareholder/related companies of the
Target Group would be classified as other receivables/other payables in the unaudited pro forma financial information as at December 31,
2023. |
| |
|
| (e) |
The adjustment represents the amortization and the accompanying tax impact of the acquired intangible assets of the Target Company. |
| |
|
| (f) |
Other than the above adjustments, no adjustments have
been made to reflect any trading results or other transactions entered into subsequent to December 31, 2023. Unless otherwise
stated, the adjustments above do not have a recurring effect. |
TROOPS (NASDAQ:TROO)
과거 데이터 주식 차트
부터 10월(10) 2024 으로 11월(11) 2024
TROOPS (NASDAQ:TROO)
과거 데이터 주식 차트
부터 11월(11) 2023 으로 11월(11) 2024
