Filed 2026-01-26 · Period ending 2024-12-31 · 137,800 words · SEC EDGAR
← ILLR Profile · ILLR JSON API
# Triller Group Inc. (ILLR) — 10-K
**Filed:** 2026-01-26
**Period ending:** 2024-12-31
**Accession:** 0001213900-26-007545
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1769624/000121390026007545/)
**Origin leaf:** 1d58d0bb6c0f66eb2a9ff1ab5f3d230959447f0465038f4d313c3c5f83b53449
**Words:** 137,800
---
**
UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**Washington,
D.C. 20549**
****
**FORM10-K**
****
**
ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**
****
**For
the fiscal year endedDecember 31, 2024**
****
or
****
**
TRANSITION REPORT UNDER SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934**
****
**For
the transition period fromto**
****
**Commission
file number: 001-38909**
****
**TRILLER
GROUP INC.**
(Exact
name of registrant as specified in its charter)
****
| Delaware | | 33-1473901 | |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | |
****
| 7119 West Sunset Boulevard, Suite 782 Los Angeles, CA | | N/A | |
| (Address of principal executive offices) | | (Zip Code) | |
****
**Registrants
telephone number, including area code:310-893-5090**
****
Securities
registered pursuant to Section 12(b) of the Act:
****
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | |
| Common Stocks, $0.001 par value | | ILLR | | NASDAQCapital Market | |
| Warrants, each warrant exercisable for one-quarter of one share of Common Stock for $23.00 per full share | | ILLRW | | NASDAQCapital Market | |
Securities
registered pursuant to Section 12(g) of the Act:**None.**
****
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesNo
****
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YesNo
****
Indicate
by check mark whether the registrant (1)has filed all reports required by Section13 or 15(d)of the Securities Exchange
Act of 1934 during the preceding 12months (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 90days.Yes No
****
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405
of Regulation S-T (232.405 of this chapter) during the preceding 12months (or for such shorter period that the registrant
was required to submit such files).Yes No
****
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 | | |
| Non-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 Section13(a)of the Exchange Act.
****
Indicate
by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
****
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
****
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).
****
Indicate
by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes No
****
At
June 30, 2024, the last business day of the registrants most recently completed second fiscal quarter, the aggregate market value
of the ordinary shares of the registrant held by non-affiliates of the registrant was $58,706,055.
The number of shares of the ordinary shares of the registrant outstanding
as of January 21, 2026 was 197,266,991.
DOCUMENTS
INCORPORATED BY REFERENCE
****
None.
**TRILLER
GROUP INC.**
**FORM
10-K**
**FOR
THE YEAR ENDED DECEMBER 31, 2024**
****
|
PART
I |
|
1 | |
|
Item
1. |
Business |
1 | |
|
Item
1A. |
Risk
Factors |
21 | |
|
Item
1B. |
Unresolved
Staff Comments |
91 | |
|
Item
1C. |
Cybersecurity |
91 | |
|
Item
2. |
Properties |
92 | |
|
Item
3. |
Legal
Proceedings |
93 | |
|
Item
4. |
Mine
Safety Disclosures |
96 | |
|
|
|
| |
|
PART
II |
|
97 | |
|
Item
5. |
Market
for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
97 | |
|
Item
6. |
[Reserved] |
98 | |
|
Item
7. |
Managements
Discussion and Analysis of Financial Condition and Results of Operations |
98 | |
|
Item
7A. |
Quantitative
and Qualitative Disclosures About Market Risk |
115 | |
|
Item
8. |
Financial
Statements and Supplementary Data |
115 | |
|
Item
9. |
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosures |
115 | |
|
Item
9A. |
Controls
and Procedures |
115 | |
|
Item
9B. |
Other
Information |
116 | |
|
Item
9C. |
Disclosure
Regarding Foreign Jurisdictions that Prevent Inspections |
116 | |
|
|
|
| |
|
PART
III |
|
117 | |
|
Item
10. |
Directors,
Executive Officers and Corporate Governance |
117 | |
|
Item
11. |
Executive
Compensation |
120 | |
|
Item
12. |
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
122 | |
|
Item
13. |
Certain
Relationships and Related Transactions, and Director Independence |
123 | |
|
Item
14. |
Principal
Accounting Fees and Services |
125 | |
|
|
|
| |
|
PART
IV |
|
126 | |
|
Item
15. |
Exhibits,
Financial Statement Schedules |
126 | |
|
Item
16. |
Form
10-K Summary |
126 | |
i
**FREQUENTLY
USED TERMS**
Unless
otherwise stated in this Annual Report on Form 10-K or unless the context requires otherwise, references in this annual report to:
|
|
|
B2B
means TAG International Limited, a BVI business company and wholly-ownedsubsidiary of the Company; | |
|
|
|
B2BSub
means TAG Asset Partners Limited, a BVI business company and wholly-ownedsubsidiary of B2B; | |
|
|
|
BVI
means the British Virgin Islands; | |
|
|
|
China,
mainland China, or the PRC means the Peoples Republic of China; | |
|
|
|
Convoy Global
means Convoy Global Holdings Limited, TAGs ultimate parent company; | |
|
|
|
COVID-19
means the novel coronavirus, SARS-CoV-2; | |
|
|
|
ExchangeAct
means the Securities ExchangeActof1934, as amended; | |
|
|
|
fintech
means financial services technology; | |
|
|
|
Fintech
means TAG Asia Capital Holdings Limited; | |
|
|
|
Greater Bay Area
or GBA means the geographic region comprising Macau, Guangzhou, Shenzhen, and the surrounding area; | |
|
|
|
HKCC
means HongKong Credit Corporation Limited; | |
|
|
|
HKSub
means OnePlatform International Limited, a HongKong company and wholly-ownedsubsidiary of B2BSub; | |
|
|
|
HongKong
means the HongKong Special Administrative Region of the Peoples Republic of China; | |
|
|
|
HongKong
Dollars or HK$ means the lawful currency of HongKong; | |
|
|
|
IPO
means the initial public offering of AGBA Acquisition Limited, completed on May16, 2019; | |
|
|
|
Legacy Group
means Convoy Global Holdings Limited and its subsidiaries and affiliates, which do not include AGBA or any of its subsidiaries, B2B,
B2BSub, and HKSub; | |
|
|
|
Nasdaq
means the Nasdaq Capital Market; | |
|
|
|
OIP
means OnePlatform International Property Limited; | |
|
|
|
OPH
means, as the context requires, OnePlatform Holdings Limited prior to the OPH Merger, and, B2B following the OPH Merger; | |
|
|
|
OPH Merger
means the merger of OPH with and into HKSub, with HKSub as the surviving entity, which completed on August11, 2022; | |
|
|
|
PCAOB
means the Public Company Accounting Oversight Board of the UnitedStates; | |
|
|
|
Private Placement
Units means private units held by the Sponsor, which were acquired by the Sponsor at the consummation of the IPO; | |
|
|
|
Private Warrants
means warrants sold as part of the Private Placement Unitsat the consummation of the IPO; | |
|
|
|
Public Warrants
means public warrants of the Company trading on Nasdaq; | |
|
|
|
SEC
or Securities and Exchange Commission means the Securities and Exchange Commission of the UnitedStates; | |
|
|
|
Securities Act
means the Securities Actof1933, as amended; | |
|
|
|
Sponsor
means AGBA Holding Limited; | |
|
|
|
TAG
means TAG Holdings Limited; | |
|
|
|
TAG Business
means, B2B and Fintech together, in each case including each such entitys respective subsidiaries; | |
|
|
|
ILLR Shares
means the common stock of the Company, US$0.001 par value per share; | |
|
|
|
Transfer Agent
or Continental means Continental Stock Transfer& Trust Company; | |
|
|
|
U.S.Dollars,
USD, and US$ means the legal currency of the UnitedStates; | |
|
|
|
U.S.GAAP
means the accounting principles generally accepted in the UnitedStates; and | |
|
|
|
Yorkville
means YA II PN, LTD, a Cayman Islands exempt limited partnership. | |
ii
**FORWARD
LOOKING STATEMENTS**
This
Annual Report on Form 10-K, including the information incorporated herein by reference, contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about the anticipated
benefits of the Business Combination described herein, and the financial condition, results of operations, earnings outlook, and prospects
of Company. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such
as anticipate, believe, continue, could, estimate, expect,
forecast, intend, may, might, ongoing, outlook, plan,
possible, potential, predict, project, should, strive,
would, will, and other similar words and expressions, but the absence of these words does not mean that a
statement is not forward-looking.
The
forward-looking statements are based on the current expectations of the management of the Company and its management and are inherently
subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There
can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number
of risks, uncertainties, or other assumptions that may cause actual results or performance to be materially different from those expressed
or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
|
| expectations
regarding our strategies and future financial performance, including its future business
plans or objectives, prospective performance and opportunities and competitors, revenues,
products, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash,
capital expenditures, and our ability to invest in growth initiatives and pursue acquisition
opportunities; |
|
|
| the
outcome of any legal proceedings that may be instituted against us; |
|
|
| the
risk that recent acquisitions or any proposed transactions disrupt our current plans and/or
operations, including the risk that we do not complete any such proposed transactions or
achieve the expected benefit from them; |
|
|
| the
ability to recognize the anticipated benefits of recent acquisitions or any proposed transaction,
which may be affected by, among other things, competition, our ability to grow and manage
growth profitably, and retain key employees; |
|
|
| costs
related to being a public company, acquisitions, commercial collaborations and proposed transactions; |
|
|
| limited
liquidity and trading of our common stock; |
|
|
| geopolitical
risk and changes in applicable laws or regulations; |
|
|
| the
possibility that we may be adversely affected by other economic, business, and/or competitive
factors; |
|
|
| risks
relating to the uncertainty of our projected financial information; |
|
|
| risks
related to the organic and inorganic growth of our business and the timing of expected business
milestones; |
|
|
| risk
that the COVID-19 pandemic, and local, state, federal and international responses to addressing
the pandemic may have an adverse effect on our business operations, as well as our financial
condition and results of operations; |
|
|
| litigation
and regulatory enforcement risks, including the diversion of management time and attention
and the additional costs and demands on our resources; and |
|
|
| the
inability to maintain the listing of our common stock on Nasdaq. |
|
Should
one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of the Company prove
incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
All
subsequent written and oral forward-looking statements concerning the business combination or other matters addressed in this Annual
Report on Form 10-K and attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this Annual Report on Form 10-K. Except to the extent required by applicable law or
regulation, the Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances after
the date of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.
iii
**PART
I**
**ITEM
1. BUSINESS**
****
**Overview**
****
We
are a global, artificial intelligence (**AI**) powered technology platform (**Technology Platform**)
that serves a broad constituency of Creators and Brands around the world. **Creators** include influencers, artists,
athletes, other individuals and public figures that utilize or have utilized our Technology Platform to create and publish content. Numerous
famous Creators use our Technology Platform, including influencers like Charli DAmelio and Bryce Hall and music artists like The
Weeknd. Brands are companies, products or product lines which are active on our Technology Platform and utilize or have
utilized one or more of our products or services offered through our Technology Platform (**Direct Brands**), or companies,
products or product lines whose associated data we track, report on and make available to our clients as part of one or more of our product
offerings (**Tracked Brands**, and collectively with Direct Brands, **Brands**). Brands that have utilized
or continue to utilize our platform include McDonalds, Pepsi, Walmart, LOral, Puma, Charmin and Major League Baseball.
We
help both Creators and Brands build relationships with their audiences to create awareness, drive content consumption, generate commerce
and build culture. Our Triller app is a short-form video app similar to TikTok, Instagram Reels, YouTube shorts and other video apps
that allow users to access both user generated and professionally generated content from Creators around the world. Since our inception
through September 30, 2023, we have raised more than $420 million in capital and established more than 327 million Consumer Accounts
on the Triller app and a total of 436 million Consumer Accounts on our Technology Platform. Consumer Accounts are included
when consumers create accounts on a Triller brand or owned property and also when we employ our Technology Platform to create accounts
on behalf of our Brands and Creators. We define Consumer Accounts as the total number of individual Consumer Accounts recorded in databases
across the Triller app, TrillerTV and BKFC (whether they are active or inactive on our Technology Platform) at or around the time of
measurement, that we track and that are able to benefit from the services and features offered through our Technology Platform during
the reported period. Users that simply accessed or viewed our content or partner content on our platform or any other social media platform
are not included in the total number of Consumer Accounts above. Consumer Accounts that were created prior to acquisition by us are not
included in the total number of Consumer Accounts above. Recently, we elected to take a proactive approach to the way in which we report
our Consumer Accounts, which we believe is uncommon in our industry. While we believe that many social media companies include a significant
number of bot accounts or duplicate accounts in their user metrics, we undertook a robust process to purge
as many duplicate and bot accounts as practicable with our resources and in doing so we purged in excess of 200 million Consumer Accounts
from our total user accounts metric.
Alongside
the Triller app, Triller has dramatically expanded its portfolio of offerings through organic growth and strategic acquisitions becoming
a diversified Technology Platform for the creation, distribution, measurement and monetization of digital, live and virtual content.
It also produces content under its own and third-party Brands, including trendsetting music, sports, lifestyle, fashion and entertainment
media that creates cultural moments, attracts users to Trillers offerings and drives social interaction that serves as a cultural
wellspring across digital society.
We operate within the global digital content
marketplace, which is estimated to reach $577.4 billion in 2023 according to Statisticas August 2023 report on worldwide digital
media, and we focus our efforts on the $250 billion creator economy, as forecasted in a recent Goldman Sachs report on the creator economy.
Goldman Sachs Research estimated the creator economy could reach $480 billion by 2027 in its April 2023 report titled The creator
economy could approach half-a-trillion dollars by 2027. Our revenue was $27.5 million and $54.2 million in the fiscal years ended
December 31, 2024 and 2023. We have incurred net losses in each year since our inception, including $1,138.0 million and $49.2 million
for the fiscal years ended December 31, 2024 and 2023, respectively.
Through
our subsidiaries in Hong Kong, we are also a leading wealth management and healthcare institution based in Hong Kong servicing over 400,000individual
and corporate customers.
In
addition to operating our Technology Platform, we currently operate in four market-leading businesses: our Platform Business, Distribution
Business, Healthcare Business, and Fintech Business.
1
Since
2019, we have implemented a strategy to expand and upgrade our long-standing broker-dealer business into a platform business and a distribution
business. Today, we offer unique product and service offerings:
-
B2B: tech-enabled broker management platform for advisors (**Platform Business**); and
-
B2C: market leading portfolio of wealth and health products (**Distribution Business**).
We
also have a market leadership in our healthcare business through our 4% stake in and a strategic partnership with HCMPS. It is one of
the most reputed healthcare brands in Hong Kong. It has a network of over 700 healthcare service providers.
Finally,
we are an established operator and successful investor in the FinTech industry. We have carefully built out investment positions in FinTech,
WealthTech and HealthTech businesses, applying lessons learned from our own distribution, platform and healthcare businesses.
****
**History**
On
November14, 2022, AGBA Acquisition Limited, or AAL, a British Virgin Islands company and a special purpose acquisition company,
consummated a series of transactions contemplated by the Business Combination Agreement.
Upon
the Closing of Business Combination : (i)AAL became, through an acquisition merger, the 100% owner of the issued and outstanding
securities of each of TAG International Limited, TAG Asia Capital Holdings Limited, and their collective subsidiaries; (ii)the
governing documents of AAL were amended and restated, becoming the Fifth Amended and Restated Memorandum and Articles of Association;
(iii)the number of AALs authorized ordinary shares was increased from 100million to 200million, and (iv)AALs
name changed from *AGBA Acquisition Limited* to *AGBA Group Inc.* which we sometimes also refer
to, post-Business Combination, as AGBA or the Group.
Triller
Group Inc. (**ILLR**, **Triller Group**, or the **Company**) (formerly AGBA Group
Holding Limited (**AGBA**)) was incorporated in the State of Delaware on October 15, 2024, so as to redomicile AGBAs
legal jurisdiction from British Virgin Islands to the State of Delaware.
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 amended (the **Merger
Agreement**), by and between AGBA, its wholly owned subsidiary AGBA Social Inc. (**Merger Sub**), Triller Corp.
and Bobby Sarnevesht, as sole representative of the Triller Corp. stockholders.
****
**Platform
Business**
The
Platform Business is a one-stop financial supermarket with a breadth of products and services, sourced from leading global product providers,
that is unrivaled in HongKong.
We
operate under the *OnePlatform* brand, offering a full-service platform to banks, other financial institutions, family
offices, brokers, and individual independent financial advisors to advise and serve their retail clients. Our technology-enabled platform
offers a wide range of financial products, covering life insurance, pensions, property-casualty insurance, mutual funds, money lending
and real estate agency.
The
Platform business, through B2B and its subsidiaries, is a one-stop financial supermarket with a breadth of products and services that
is unrivaled in HongKong 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 HongKong. 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.
2
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.
The
OnePlatform brand currently covers 80 insurance providers selling 1,237 products, and 48 asset management fund houses with over 930 products.
****
**Distribution
Business**
The
Distribution Business currently operates as a licensed insurance broker and a registered Mandatory Provident Fund (MPF) intermediary
in HongKong, providing financial planning and wealth management services to institutional and individual customers with its team
of over 1,500 independent financial advisors. The Distribution Business is regulated by the HongKong Insurance Authority and the
Mandatory Provident Fund Schemes Authority.
The
Distribution Businesss main sources of income are sales commission and service fee income from its infrastructure support platform.
It recognizes commission income from the insurance providers based on the sale of insurance products at predetermined insurance premium
rates according to the types of products sold.
The
financial advisors, organized under two brands of AGBA focus and AGBA perform, are the primary distribution
channels for the Distribution Business. These channels are positioned to match individuals financial needs with an appropriate
choice of insurance products. They target to bring additional revenue for the Distribution Business by serving as a matching platform
between insurance companies and consumers. Marketing activities of the Distribution Business include sales campaigns and invitations
to corporate events, at which new customers are mainly solicited through direct conversation or meetings between financial advisors and
retail customers.
As
of December 31, 2024, we currently work with 522 independent financial advisors.
****
**Healthcare
Business**
We
own a 4% minority shareholding in HCMPS Healthcare Holdings Limited (HCMPS), one of the leading healthcare management organizations
in HongKong. The Company, through one of its subsidiaries, holds 4% stake in and a strategic partnership with HCMPS.
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 HongKong. It has a network of over 700 healthcare service providersproviding
healthcare schemes for more than 120 corporate clients with over 300,000 scheme members. JFAs clients include blue chip companies
from various industry and leading insurers. Apart from HongKong, JFA is the largest operator in Macau with around 85 clinics.
JFA
has a long-standing track record of operating as a low-cost, high efficiency operation. It offers vast untapped opportunities for the
Group, both in revenue growth and cross-selling.
****
3
****
**FinTech
Business**
****
**Fintech
Investments**
Fintech
manages an ensemble of financial technology (fintech) investments and operates through its subsidiaries TAG Technologies Limited, AGBA
Group Limited (formerly known as Tandem Money HongKong Limited), and Tandem Fintech Limited, a health and wealth management platform
with a broad spectrum of services and value-addedinformation in health, insurance, investments and social sharing.
The
portfolio companies in which Fintech has invested remain growth stage businesses with modest revenues, and none has yet reached the operational
breakeven point. Therefore, the business case for all these companies relies on transformations in scale, product offering, and/or geographic
scope to drive future value creation. Fintech intends to maximize the strategic fit between these portfolio companies and the companies
forming part of the OnePlatform brand to drive additional value capture.
Fintechs
management team has strived to establish the business as a leading name in the fintech investment sector.
Fintechs
business aims to create value on three fronts:
|
|
1. |
Building long-termfintech
franchises in HongKong using business models, operations, and technologies tested in more mature markets; | |
|
|
2. |
Supporting and capturing
synergies with OnePlatform and its other business segments; and | |
|
|
3. |
Realizing financial returns
from its fintech investments. | |
**1)
Tandem**
Tandem
Money Limited (**Tandem**) is a UK based challenger bank which focuses on lending growth with high risk-adjustedyields.
It operates a digital deposit strategy to continue funding its growth, which is known as a neobank strategy.
Founded in 2013, Tandem provides an app-basedretail bank service for its customers. Through its app, customers can access retail
banking services comprising deposits, mortgages, loans and credit cards. Tandem also leverages digital wealth management to cross-selland
offers value-addedservices such as cash management across bank accounts, savings, debt management, and financial planning.
**
*Background
to the Investment in Tandem*
TAG
Technologies Limited (**TAG Technologies**) first invested in 2018 with Tandem still positioned as a neobank focused
on digital and analytics to generate user and deposit growth. The initial investment was by way of a subscription agreement with Tandem,
pursuant to which TAG Technologies agreed to subscribe for and Tandem agreed to issue 11,259,740 ordinary B shares in Tandem for a consideration
of 15million. The consideration was determined by the parties after arms length negotiations taking into account
(i)the unaudited consolidated net asset value of Tandem as at September30, 2018, which was approximately 55.7million,
and (ii)the potential in the future business development of Tandem.
We
believed that Tandems strategy in 2020 was predicated on a clear asset pivot to grow consumer loans in attractive categories such
as home improvement and specialty mortgages. In April2020, TAG Technologies entered into a further subscription agreement with
Tandem, pursuant to which TAG Technologies agreed to subscribe for and Tandem agreed to issue 49,476,049 ordinary B shares in Tandem
for a consideration of 10million. The consideration was determined by the parties after arms length negotiations
taking into account (i)the unaudited consolidated net asset value of Tandem as of October31, 2019, which was approximately
44.9million, and (ii)the potential in Tandems future business development.
In June and August2021, TAG Technologies
purchased an additional aggregate of 14,000,000 ordinary B shares of Tandem at the price of 0.15 per share, for cash consideration
of approximately US$2.9million (equivalent to approximately 2.1million). We currently owns 4.49% equity interest in
Tandem.
**
4
**
*Share
Purchase and Knowledge Transfer Agreement*
In
connection with the April2020 investment, Tandem, AGBA Group Limited (**AGBA Group**) and TAG Technologies entered
into a Share Purchase and Knowledge Transfer Agreement pursuant to which, among other things, TAG Technologies purchased the entire issued
share capital of AGBA Group, and Tandem undertook to provide certain knowledge transfer services to TAG Technologies and its affiliates.
Pursuant to the Share Purchase and Knowledge Transfer Agreement, Tandem also granted a license in certain Tandem proprietary software
and other licensed materials to be made available to TAG Technologies and its affiliates during the knowledge transfer period,
which ends on the earlier of the date sixmonths after Tandem completes a migration of its systems to a new platform, and April2,
2023. For as long as TAG Technologies is a shareholder of Tandem, each member of AGBA is granted a license to use the name Tandem
and any registered logo or trademark used by Tandem for a period of fiveyears.
Through
this investment we gained access to certain of Tandems technology and digital platform assets and knowledge transfer. These assets
provide significant costs savings for system developments such as data platforms and the core banking platform, driven by the ability
to leverage Tandems assets and test and learn experience to accelerate development of the Fintech business.
**
*Tandems
Potential Growth*
With
the increasing use of online platforms in the financial sector, our management believed that Tandem, with its technology know-howin
the consumer finance industry, has significant market potential to become a leading online retail bank for the mass market. The investment
in Tandem is also part of our wider strategy to launch digital services in HongKong and elsewhere, and Tandem is expected to be
a key technology partner.
**2)
CurrencyFair**
CurrencyFair
is an online peer-to-peer currency exchange marketplace. TAG Technologies first invested into CurrencyFair in 2018, through an investment
of approximately 6,000,000 and the merger of AGBAs then existing payments business with CurrencyFair. Since then, CurrencyFair
has continued to grow its consumer money transfer business focused on white-collarexpat customers transferring money between selected
European and Australian corridors. CurrencyFair is now a global money transfer member organization that has exchanged more than 10billion,
with offices located in Ireland, UK, Singapore, HongKong and Australia. We believe that CurrencyFairs scaling plan relies
on expanding its consumer-to-consumer(C2C) business to new US and Asia corridors, while acquiring small and medium enterprise (SME)
customers directly and through an enterprise sales model handling primarily Chinese merchant payments for cross-bordere-commercemarketplaces.
Revenue growth depends on how successfully CurrencyFair scales transfer volumes in new C2C corridors and new SME businesses based on
proposition development and customer acquisition execution.
We
intend to work closely with CurrencyFair as it builds out its Asian franchise, and intends to offer CurrencyFairs unique currency
marketplace to our customers in HongKong as well as introducing enhanced Asian currency services to CurrencyFairs international
customers. We intend for CurrencyFairs domain expertise, technology, and operational experience to be leveraged as part of a wider
strategy to improve our services to assist customers to manage their finances.
In
2021, CurrencyFair merged with Australia-basedAssembly Payments Limited, whose platform automates complex payment workflows. Following
the merger, the business re-brandedto Zai, with CurrencyFair as Zais consumer brand.
On
March18, 2022, we entered into a sale and purchase agreement with the stockholder to acquire 4,158,963shares of CurrencyFair
for a cash consideration of US$7.84million. The transaction closed in April2022, resulting in the ownership of 8.37% equity
interest in CurrencyFair.
****
**3)
Goxip**
Goxip
is a fashion media platform based in HongKong with over one million high-endfashion shoppers. Its digital marketing arm matches
key opinion leaders (KOLs) with marketers and brands for lead generation, launching and monetizing marketing campaigns. We currently
own a 3.63% equity interest in Goxip.
****
5
****
**4)
HCMPS Healthcare Holdings Limited**
HCMPS
Healthcare Holdings Limited (HCMPS) is a healthcare management organization based in HongKong. Founded in 1979, it
has over 700 network service branches providing healthcare schemes for more than 120 corporate clients with over 300,000 scheme members.
HCMPS 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 currently own a 4.00% equity interest in HCMPS.
**Trillers
Business**
We
primarily operate in the North American digital media and live entertainment industries and offer diverse products and services that
compete for consumers time and disposable income. The rise of streaming, increased legalization of sports betting, increased competition
from tech entrants, and continued viewership appeal attribute to the projected growth of live sports and digital media. This growth has
also benefited from long-term shifts in consumer behavior, particularly in millennials, who continue to seek more interactive experiences
that they can document and broadcast through social media. The film industry is also benefitting from growth in digital home viewing
and premium movie-going experiences.
The
top-earning musicians generated more of their income from touring than from any other source, according to Billboard. Our portfolio of
content is well positioned to take advantage of this trend. Our success depends on our ability to offer premium content through popular
channels of distribution that meet the changing preferences of the broad consumer market and respond to competition from an expanding
array of choices facilitated by technological developments in the delivery of digital content. Potential risks to our expansion into
digital media include costs to curate and produce Events, as well as shifting customer preferences.
We
believe our Technology Platform is at the crossroads of the entertainment, sports, and content ecosystem, and is highly responsive to
changing consumer preferences and industry trends. We have the ability to create, procure and cultivate satisfying consumer content,
leveraging the secular trends identified above.
**E-Commerce
Industry**
****
Our
market includes the global e-commerce market. A primary growth driver for global e-commerce marketing spend has been the dramatic shift
away from traditional brick-and-mortar commerce to e-commerce due to the COVID-19 pandemic, and is expected to expand due to the convenience
of online shopping and returns. To capitalize on this growth and generate revenue, we will have to continue to innovate and offer marketers
a set of capabilities across our Technology Platform that cannot be easily replicated elsewhere.
**Content
Spend (Film & TV) Industry**
****
Our
market includes linear and digital media distributors. According to Ampere Analysis, subscription OTT services increased investment in
content by 20% in 2021 to nearly $50 billion representing a growth of over 50% as compared to 2019. To capitalize on this growth and
generate revenue, streaming services are both investing in original content and acquiring licensed content. We are well positioned to
capitalize on this increasing spend through our customer traction with major movie studios, streaming platforms and content owners around
the world.
**Experiences
(Sporting Events, Concerts & Performing Arts)**
****
Sporting
events, concerts, and performing arts are core to our live Events, entertainment properties and experiences operations. Our market constituents
primarily include retail consumers, sponsors and corporate customers. The events ticket market has the potential to grow by $14.9 billion
during 2023 to 2027 and is expected to experience a CAGR of 4.5%, according to the recent Statista report Event Tickets Worldwide.
This growth is expected to be driven by the expected increasing use of mobile apps for booking tickets. The global sporting events segment,
representing the largest segment of the global ticketing segment, is expected to reach $33.7 billion in 2024 and to grow at a CAGR of
2.95% from 2024 to 2028, reaching $37.94 billion by 2028. 3.91% to $37.16 billion by 2027, largely driven by the increasing popularity
of sports and rising consumer preferences for in-person events. While less substantial than sports, the performing arts ticket segment
reached $9 billion in 2019 and is expected to grow at a CAGR of 4% to $11 billion in 2024, driven by growing demand for live art performances.
6
**Streaming
Technology and Related E-Commerce Services**
****
We
believe proliferation trends in the digital content streaming market present an opportunity for streaming infrastructure providers capable
of delivering an end-to-end solution for Creators and media rights owners who desire to launch their own content streaming services,
and monetize their user bases in new ways, without incurring the significant costs inherent in developing underlying technology. We believe
recent private company transactions in the space are an indication that the market is both underserved and ripe for further expansion.
For example, in November 2022 Disney, then the majority equity owner of BAMtech Media (now Disney Streaming Services), a streaming infrastructure
provider whose technology serves as the core streaming, account management and billing platform for Disney+, ESPN+ and Hulu, purchased
all outstanding minority interests of BAMtech Media in a transaction that valued the company at $6 billion. Similarly, a November 2022
private equity investment led by General Atlantic in streaming infrastructure services provider Amagi valued the company at $1.4 billion.
We have invested and expect to continue to invest in our streaming technology and infrastructure, including developing new ways for Creators
and media rights owners to leverage user profiles and preferences and drive monetization through advertising, pay-per-view, subscription-based
offerings and related e-commerce transactions.
**Metaverse**
****
According
to Citigroups Metaverse and Money report published in March 2022, the total addressable market for the Metaverse could
be between $8 trillion and $13 trillion by 2030, with total Metaverse users numbering around 5 billion. We believe that by investing
in our Metaverz ecosystem now, while the industry is still nascent, will provide us with a lasting competitive advantage and allow us
to shape consumer expectations.
**Media
Rights Expenditure**
****
Spending
on media rights continues to be a significant component of revenues in the sports industry, with rights values appreciating consistently
over the past decade. Market constituents include linear and digital distributors, which acquire sports media rights and broadcast sports
content. In 2021, the value of global sports media rights totaled $55.1 billion, a 1.15% increase from the previous year, according to
Sports Business Consultings Global Media Report 2022. According to the Business Research Companys report, the global sports
market as a whole is expected to reach $512 billion in 2023 and grow at a CAGR of 5.2% from 2022. The rise of streaming, increased legalization
of sports betting, increased competition from tech entrants, and continued viewership appeal attribute to the projected growth on the
rights price tags. The contract values underpinning industry revenues are locked-in long-term, offering a high degree of visibility.
**Marketing
and Licensing**
****
Our
market constituents include corporate clients seeking brand marketing or IP owners looking to license their Brands. According to Licensing
Internationals survey, global sales revenue generated from licensed merchandise and services grew to 340.8 billion in 2022, reflecting
an 8.02% increase over the $315.5 billion generated in 2021. The entertainment/character sector remains the leading market share category,
accounting for $138.1 billion, or 40.5% of the total global licensing market. The second largest sector was corporate Brands with $87.6
billion (25.7%). Sports licensing, in third place, totaled $37.3 billion with an 11% share.
**Digital
Advertising and Marketing Automation**
****
The
digital ad market is expected to surpass $300 billion by 2025, according to a 2022 report by Insider Intelligence Inc. For 2023, ad spending
across 16 media platforms is forecasted to reach $165.7 billion, according to BIA Advisory Services. Roughly half of the ad spending
is anticipated to be focused on digital media, wherein $33.5 billion is anticipated to go to mobile ad spending for smartphones. Additionally,
marketing technology and marketing automation are a growing trend. 51% of companies are currently using marketing automation and 58%
of B2B companies plan to adopt such technology. According to Sales Fusion, 77% of business owners had an increase in conversion after
using marketing automation software. Key trends in marketing automation for 2022 include personalized email automation, social media
marketing automation, chatbots, and ML and AI.
**SMS
and Artificial Intelligence Marketing**
****
SMS
marketing allows businesses to reach consumers directly through their phones. In 2022, there were 7.3 billion mobile phone users globally
and 6.9 billion smartphone users, accounting for 86.3% of the worlds population. 83% of consumers receive text messages from companies.
Click through rates for SMS marketing is 36% (as compared to 2% for email marketing messages). In 2022, global SMS marketing market was
approximately $64.4 billion and is expected to grow to $84.9 billion by 2027. AI technology can be used in SMS marketing and more broadly
across the technology marketing sphere. The global AI market was estimated to be worth $86.9 billion in 2022 and is expected to reach
$407 billion by 2027. 52% of high performing marketing teams are looking to increase their usage of artificial intelligence.
**Intellectual
Property and Other Proprietary Rights**
****
We
consider intellectual property to be very important to the operation of our business and to driving growth in our revenues, particularly
with respect to professional engagements, sponsorships, licensing rights, and media distribution agreements. Our intellectual property
includes the Triller, Triller Fight Club, TrillerFest, TrillerTV, FITE,
Cliqz, Fangage, Julius and Thuzio Brands in addition to the trademarks and copyrights
associated with our content, Events, and the rights to use the intellectual property of our commercial partners. Substantially all of
our IP and owned assets that we acquire are protected by trademarks and copyright, whether registered or unregistered.
**Trillers Technology Platform**
****
Trillers
Technology Platform is built along three core sections Triller generates and distributes influencer and sports content via the
Triller app and Triller TV, which drives engagement through the Triller app in a highly measureable manner made possible through our
Triller One suite of AI and SaaS tools, thus driving monetization and creating value for all Trillers stakeholders.
7
*Trillers
Technology Platform originated with the Triller app, a video-sharing app. The Initial Triller app was launched in 2015 as an AI music
editing tool. In 2019, upon the formation of Triller Hold Co LLC, when Triller acquired the technology underlying the current Triller
app it integrated the Initial Triller app with AI technology pursuant to its agreement with Mashtraxx Ltd. We refer to this integrated
app as the **Triller app**. The Triller app continued to integrate and update and was fully live by September
of 2021. The Triller app underwent a refinement to its scalable systems and other feature and toolset updates and additional refinements
were rolled out in July of 2023 and are live today. The Triller app leverages proprietary AI and ML technologies and enables users to
create professional-looking videos and to share those videos within the Triller app and on other social platforms such as Facebook, Instagram,
TikTok, Snapchat and Twitter in seconds. Key features of the Triller app include extensive editing, filtering and overlaying tools; AI-powered
technology to automatically synchronize video and audio with little to no manual editing; and Trillers proprietary dual camera
feature, which allows users to record videos simultaneously from the back-and front-facing cameras of their smartphones. The Triller
apps primary audience is the 18-34 year old demographic, with strong engagement from users in the United States and an established
user base in high-growth markets such as India, where we maintain a presence, including a period in August 2020 when Triller temporarily
became the number one short-form video app in the App store subsequent to TikTok being banned in 2020.
The
Triller app contains channels for the posting and consumption of short-form and long-form content, where Triller hosts content made by
celebrities, influencers and other Creators, as well as professionally-produced episodic content about music, sports, gaming, fashion
and other forms of entertainment.
Trillers
Technology Platform reflects its deep experience as content creators and forms the basis for Trillers aspiration to be a technology
company built by Creators, for Creators. Key to Trillers approach of empowering Creators and Brands is its proprietary AI and
machine learning (**ML**) technology that helps them mix and edit music and video content and distribute it to digital
platforms and enables them to understand and engage with their audiences at scale, while retaining control and authenticity of their
audience relationships. **AI** is a general term to describe the efforts of computer scientists to design and implement
computer hardware and software systems capable of learning and thinking. ML is a field of study in AI concerned with the development
and study of statistical algorithms that can effectively generalize tasks and thus performing those tasks without explicit instructions.
ML approaches have been applied to large language models (**LLMs**), computer vision, speech recognition, email filtering,
agriculture, and medicine, where it is able to achieve efficiencies without having to implement detailed specialized algorithms and systems
which would be too complex and costly to build. Creators and Brands have the ability to connect Trillers customized LLMs and Natural
Language Processing (**NLP**) technologies to real-time API-based feeds, from virtually all major social platforms,
to read, analyze, cluster, filter, and suggest or (when appropriate) send replies to their fans with deep efficiency and personal precision.
LLMs are deep learning algorithms that can recognize, summarize, translate, predict, and generate content using very large datasets.
Deep learning is a method in AI that teaches computers to process data in a way that is inspired by the human brain. Deep learning models
can recognize complex patterns in pictures, text, sounds, and other data to produce accurate insights and predictions. NLP, a branch
of AI, uses ML to process and interpret text and data. Natural language recognition and natural language generation are types of NLP.
By giving each Creator and Brand an AI-powered factory of assistants to help them identify superfans, up-and-comers, key
topics and trends to respond to (while filtering out spam, hate-speech and noise), they are better able to deepen relationships and loyalty,
optimize their scarce time and resources, and ultimately increase conversions and monetization through a mix of brand partnerships and
direct commerce.
**Trillers
Suite of Creator and Brand Offerings**
Triller
has augmented its Technology Platform through a combination of internal development and strategic acquisitions, including the additions
of the following products and services that deliver, automate or otherwise streamline SMS and social messaging, AI-powered customer engagement,
cross-platform marketing, digital streaming, content and audience management, e-commerce services, social and creator analytics and engagement
measurement:
|
|
(a) |
Fangage
serves as the entry point for Creators looking to leverage Trillers ecosystem and establish a digital presence on the internet,
across social media, e-mail and SMS. Fangage comprises a set of tools and features that allow Creators to manage and distribute their
content and maintain and grow their audiences, communicate with those audiences directly, and gather and analyze data that allows
them to streamline their monetization efforts. The Fangage offering is integrated with and incorporates services from the Triller
app, Amplify.ai, Cliqz and Julius. | |
8
|
|
(b) |
Amplify.ai
a cross-platform conversational AI engine that provides viewers with gamification, multiple engagement touchpoints, clickable links,
and tune-in reminders all in an automated, platform agnostic direct messaging experience that facilitates communications between
Creators, Brands and their respective audiences. | |
|
|
(c) |
Cliqz
enables Creators to aggregate their audiences across their social media accounts and access those audiences directly via SMS and
direct messaging, avoiding the algorithmic limitations imposed by most social media platforms that limit these Creators content
viewership and opportunities for content engagement and monetization. For example, as noted by Hootsuite in August 2023, the average
engagement rate of an organic Facebook post ranges from 2.58% down to just 1.52%. | |
|
|
(d) |
CrossHype
helps Brands and Creators reach audiences across multiple social platforms, with a particular emphasis on helping Brands create awareness
and engagement with consumers, with a common framework for measuring the effectiveness and efficacy of their marketing efforts. This
solution allows Brands and Creators to reach specific audiences within social media platforms, including highly targeted followers
of specific social media Creators, and to build retargetable audiences that grow in size and detail, accruing even more value over
time. | |
|
|
(e) |
Julius
a SaaS solution that provides strategic marketers at Brands and advertising agencies with access to a database of profiled Creators
and their associated audiences, giving them the ability to enlist Creators to develop and share captivating stories to market their
products and services. Julius provides Brands and agencies a detailed dashboard to measure engagement across all Creator-driven marketing
campaigns. Furthermore, Julius serves as a marketplace allowing e-commerce Brands to automate the process of on-boarding Creators
with per-transaction incentives for enabling e-commerce transactions. Julius is directly integrated with Trillers Fangage
solution, completing the circle between Creators and Brands. | |
|
|
(f) |
Thuzio
a solution for creating and executing premium Creator Events and experiences. Thuzio helps Brands and other enterprise customers
create Events with Creators including sports icons and speakers. Thuzio has partnered with Creators across many verticals, including
athletes such as Tiki Barber, Allen Iverson, Scottie Pippen, and Lisa Leslie, comedians such as Jerry Seinfeld, music artists such
as Ja Rule and celebrity chefs such as Marcus Samuelsson. | |
|
|
(g) |
Metaverz
enable Triller to transform live Events, which are typically only enjoyed by a few thousand people, into digital Events, including
augmented reality and virtual reality experiences, that can be experienced by millions of consumers globally. Metaverz provides an
array of ways to create digital experiences featuring Creators and Brands, containing social engagement and gamification features
as well as virtual merchandise stores that allow users to digitally purchase collectibles and memorabilia. | |
9
The
major companies that serve this market include Meta, Alphabet, ByteDance, Snap and Twitter, each of which employ a closed-garden approach
to monetization, where they are the sole purveyor of the advertising placed within or around content created by millions of Creators.
Our approach, which is differentiated from the above companies, helps our Creators distribute their content on numerous platforms, including
our own, and also focus on creating click-out opportunities to create long-standing consumer relationships and monetization across a
digital landscape that includes the web, mobile apps and messaging services. This open-garden approach stands in contrast to the closed-garden
approach of many of our competitors and we believe is a major benefit that attracts Creators and Brands to our Technology Platform.
Our
Technology Platform powers the Triller app, our suite of Creator offerings and our Events and Events-related services. Our Technology
Platform enabled more than half a billion quarterly user interactions as of September 30, 2023, including posts, messages, automated
communications, and e-commerce transactions both on our Triller branded offerings as well as on various third-party social platforms
(including but not limited to Instagram, TikTok, Facebook, YouTube, Snapchat and Twitter), across the web and via SMS messaging. Through
our Technology Platform we deliver sports and entertainment content to millions of consumers around the world and we believe that we
inspire Creators and Brands to do the same. Our Technology Platform comprises an array of business-to-business and business-to-consumer
offerings that empower Creators to establish and sustain long-lasting consumer relationships that help drive their businesses.
Our
Technology Platform generates revenue through revenue sharing and service fee arrangements. Revenue share comes from advertising, premium
content, Events, pay-per-view fees, subscription fees or merchandise sales that are transacted via our Technology Platform. Service fees
comes from Brands that utilize our platform to reach consumers via a combination of campaign fees, transaction fees or SaaS fees, including
monthly subscription fees. We also generate revenues from Triller branded Events via ticket sales, pay-per-view fees, subscription fees,
merchandise sales, brand advertising and sponsorship.
Our
AI-driven, mission-critical Technology Platform enables Brands and Creators to reach their target audiences and our messaging-based notification
services drives a continuous cycle of engagement for audiences (where they stay in the know and are kept up-to-date on
what their favorite Creators and Brands are doing), while the Creators and Brands receive real-time data, analytics and feedbackdriven
by user engagement.
We
have a host of service offerings that drive awareness, engagement and monetization. The reason we call this a Technology Platform is
because we offer a highly differentiated solution that integrates all of our service offerings into a comprehensive portfolio of services
that go well beyond a single app-based or web-based content solution to virtually every medium of content engagement (e.g. social media,
streaming, live events and virtual world experiences). We create network effects via our proprietary AI-powered technology designed to
drive optimal engagement through the best channels, increasing the return-on-investment for Creators and Brands. Furthermore, the efficiencies
gained from our AI-powered Technology Platform enable both us and our partners to operate at scale to grow via multiple channels of engagement,
which our competitors that focus on a single walled-garden ecosystems are not able to replicate.
**Our
Technology Platform**
****
Our
Technology Platform reflects our deep experience as content creators and forms the basis for our aspiration to be a technology company
built by Creators, for Creators. For all the progress and promise of the creator economy to date, we believe that Creators have historically
lacked sufficient power to truly realize their potential and capture a sufficient amount of the value they create. While it is now possible
to find and grow a large online audience, it is still too impersonal, and too elusive for many to turn their passion and expertise into
a successful career. A goal of our Technology Platform is to help rebalance the equation by enabling Creators to grow the
engagement pie while providing them with a larger slice of the revenue.
10
Key
to our approach of empowering Creators and Brands is our proprietary AI and machine learning (**ML**) technology that
helps them mix and edit music and video content and distribute it to digital platforms and enables them to understand and engage with
their audiences at scale, while retaining control and authenticity of their audience relationships. AI is a general term
to describe the efforts of computer scientists to design and implement computer hardware and software systems capable of learning and
thinking. ML is a field of study in AI concerned with the development and study of statistical algorithms that can effectively generalize
tasks and thus performing those tasks without explicit instructions. ML approaches have been applied to large language models (**LLMs**),
computer vision, speech recognition, email filtering, agriculture, and medicine, where it is able to achieve efficiencies without having
to implement detailed specialized algorithms and systems which would be too complex and costly to build. Creators and Brands have the
ability to connect our customized LLMs and Natural Language Processing (**NLP**) technologies to real-time API-based
feeds, from virtually all major social platforms, to read, analyze, cluster, filter, and suggest or (when appropriate) send replies to
their fans with deep efficiency and personal precision. LLMs are deep learning algorithms that can recognize, summarize, translate, predict,
and generate content using very large datasets. Deep learning is a method in AI that teaches computers to process data in a way that
is inspired by the human brain. Deep learning models can recognize complex patterns in pictures, text, sounds, and other data to produce
accurate insights and predictions. NLP, a branch of AI, uses ML to process and interpret text and data. Natural language recognition
and natural language generation are types of NLP. By giving each Creator and Brand an AI-powered factory of assistants
to help them identify superfans, up-and-comers, key topics and trends to respond to (while filtering out spam, hate- speech and noise),
they are better able to deepen relationships and loyalty, optimize their scarce time and resources, and ultimately increase conversions
and monetization through a mix of brand partnerships and direct commerce.
For
our LLMs, we currently use a mix of open source code for embeddings (for example, open source code such as SBERT with models from HuggingFace)
and optionally support embedding models including GPT-4 from OpenAI, PaLM from Google and other models from Cohere. Embeddings models
offer an approach to ML where high-dimensional data (data in which the number of features or variables observed are close to or larger
than the number of observations, or data points) is converted into low-dimensional data (where the number of observations far outnumbers
the number of features) while preserving relevant information. This process of dimensionality reduction helps simplify the data and make
it easier to process by ML algorithms. The appeal of embeddings is that they can capture the underlying structure and semantics of the
data. For instance, in NLP, words with similar meanings will have similar embeddings. This provides a way to quantify the similarity
between different words or entities, which is highly valuable when building complex models. We have purposefully designed our systems
to give us the flexibility to be independent of any one provider or partner. We periodically evaluate the cost, latency and quality of
models because we operate in a rapidly evolving industry. We believe we get superior performance compared to off-the-shelf
use of LLMs through (a) injecting relevant historical data into prompts (via the standard Retrieval-augmented generation
pattern) and (b) pre-and post-processing the data to better address customer-specific vernaculars, including the use of acronyms, emojis
and non-traditional spellings. We also fine-tune open source and third-party models with proprietary labeled data to improve performance
on tasks like extracting relevant profile data from content that end-users or consumers have shared in conversations with our conversation
AI systems or classifying fan engagement data as genuine versus originating from bots or spam. While unlabeled data consists of raw inputs
with no designated outcome, labeled data is carefully annotated with meaningful tags, or labels, that classify the datas elements
or outcomes. For example, in a dataset of emails, each email might be labeled as spam or not spam. These
labels then provide a clear guide from which a ML algorithm can learn. We do not believe that utilizing this approach introduces risk
of impacting our LLMs.
Our
NLP technology was developed in-house and is continuously updated via our ML models. We have incorporated some open source code in the
development of our products but our products are not dependent on any third-party software or services. We do not use any third party
software with regard to our NLP. As is customary in our industry, we used open source code (however, we do not use open source libraries)
as one part of the basic building blocks of some of our AI. We do not believe that our utilization of open source code and/or models
introduces material risk of impacting our AI products or intellectual property, however as with the usage of any open source code or
models there are risks. SeeRisk Factors Certain of our products contain third- party open source software components,
and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products.*
**
The
rapid pace of AI-innovation is fueling ever more opportunities for us to help Creators and Brands in each phase of their lifecycle, from
content creation and distribution (through the Triller app, FITE, Metaverz, Thuzio and Amplify.ai) to fan engagement (through Fangage,
Julius and Amplify.ai) and to targeted promotions and upsells (through CrossHype), across the digital platforms they use today and, we
believe, will use tomorrow. By occupying a position as their trusted intermediary connecting them with their fans across multiple platforms
and the comments, mentions, direct messages, etc. that flow across them daily, we believe we are well suited to build, deploy and refine
ever more powerful and effective models and tools in the coming years.
**The
Triller App**
****
Our
Technology Platform originated with the Triller app, a video-sharing app. The Initial Triller app was launched in 2015 as an AI music
editing tool. In 2019, upon the formation of Triller Hold Co LLC, when we acquired the technology underlying the current Triller app
we integrated the Initial Triller app with AI technology pursuant to our agreement with Mashtraxx Ltd. We refer to this integrated app
as the **Triller app**. The Triller app continued to integrate and update and was fully live by September
of 2021. The Triller app underwent a refinement to its scalable systems and other feature and toolset updates and additional refinements
were rolled out in July of 2023 and are live today. The Triller app leverages proprietary AI and ML technologies and enables users to
create professional-looking videos and to share those videos within the Triller app and on other social platforms such as Facebook, Instagram,
TikTok, Snapchat and Twitter in seconds. Key features of the Triller app include extensive editing, filtering and overlaying tools; AI-powered
technology to automatically synchronize video and audio with little to no manual editing; and our proprietary dual camera feature, which
allows users to record videos simultaneously from the back-and front-facing cameras of their smartphones. The Triller apps primary
audience is the 18-34 year old demographic, with strong engagement from users in the United States and an established user base in high-growth
markets such as India.
*
11
The
images above are examples of how the user interface of the Triller app allows users to perform various actions as depicted above.
The
Triller app contains channels for the posting and consumption of short-form and long-form content, where we host content made by celebrities,
influencers and other Creators, as well as professionally-produced episodic content about music, sports, gaming, fashion and other forms
of entertainment.
We
believe the content creation features and availability of short- and long-form content offered on the Triller app are key differentiators
that set us apart from our competitors and will continue to do so as we focus our efforts on growing our user base and deepening the
level of engagement among Creators, Brands and users who interact with our ecosystem.
**Our
Suite of Creator and Brand Offerings**
****
We
have augmented our Technology Platform through a combination of internal development and strategic acquisitions, including the additions
of products and services that deliver, automate or otherwise streamline SMS and social messaging, AI-powered customer engagement, cross-platform
marketing, digital streaming, content and audience management, e-commerce services, social and creator analytics and engagement measurement.
Fangage*
**
Fangage
serves as the entry point for Creators looking to leverage our ecosystem and establish a digital presence on the internet, across social
media, e-mail and SMS. Fangage comprises a set of tools and features that allow Creators to manage and distribute their content and maintain
and grow their audiences, communicate with those audiences directly, and gather and analyze data that allows them to streamline their
monetization efforts.
The
Fangage offering is integrated with and incorporates services from the Triller app, Amplify.ai, Cliqz and Julius.
*Amplify.ai,
Cliqz and CrossHype*
**
We
acquired Amplify.ai in December 2021 and internally developed our Cliqz and CrossHype offerings. These products provide a broad set of
features that further enable Creators to connect directly with their audiences, spotlight their content across a broad range of social
media sites, measure audience engagement with that content, and monetize their content through personalized user experiences.
*
12
Our
Amplify.ai product automates SMS and direct message marketing communications between Creators, Brands and their respective audiences
through the use of proprietary AI and NLP technologies.
Our
Cliqz product enables Creators to aggregate their audiences across their social media accounts and access those audiences directly via
SMS and direct messaging, avoiding the algorithmic limitations imposed by most social media platforms that limit these Creators
content viewership and opportunities for content engagement and monetization. For example, as noted by Hootsuite in August 2023, the
average engagement rate of an organic Facebook post ranges from 2.58% down to just 1.52%.
Our
CrossHype product helps Brands and Creators reach audiences across multiple social platforms, with a particular emphasis on helping Brands
create awareness and engagement with consumers, with a common framework for measuring the effectiveness and efficacy of their marketing
efforts. This solution allows Brands and Creators to reach specific audiences within social media platforms, including highly targeted
followers of specific social media Creators, and to build retargetable audiences that grow in size and detail, accruing even more value
over time.
Julius*
**
Julius,
which we acquired in November 2022, is a SaaS solution that provides strategic marketers at Brands and advertising agencies with access
to a database of profiled Creators and their associated audiences, giving them the ability to enlist Creators to develop and share captivating
stories to market their products and services. Julius provides Brands and agencies a detailed dashboard to measure engagement across
all Creator-driven marketing campaigns. Furthermore, Julius serves as a marketplace allowing e-commerce Brands to automate the process
of on-boarding Creators with per-transaction incentives for enabling e-commerce transactions. Julius is directly integrated with our
Fangage solution, completing the circle between Creators and Brands.
*Thuzio*
**
Thuzio,
which we acquired in October 2021, is a solution for creating and executing premium Creator Events and experiences. Thuzio helps Brands
and other enterprise customers create Events with Creators including sports icons and speakers. Thuzio has partnered with Creators across
many verticals, including athletes such as Tiki Barber, Allen Iverson, Scottie Pippen, and Lisa Leslie, comedians such as Jerry Seinfeld,
music artists such as Ja Rule and celebrity chefs such as Marcus Samuelsson.
*Metaverz*
**
Our
Metaverz offering enables us to transform live Events, which are typically only enjoyed by a few thousand people, into digital Events,
including augmented reality and virtual reality experiences, that can be experienced by millions of consumers globally. Metaverz provides
an array of ways to create digital experiences featuring Creators and Brands, containing social engagement and gamification features
as well as virtual merchandise stores that allow users to digitally purchase collectibles and memorabilia.
****
13
****
**Our
Strategic Growth Plans**
**Overall
Market Opportunities in the Greater Bay Area**
The
Greater Bay Area comprises the major urban centers of Guangdong, HongKong, and Macau and is one of the worlds largest financial
services markets, with an overall economy size of US$1.98trillion according to data from the Guangdong Provincial Office of the
Leading Group for the Development of the Guangdong-Hong Kong-Macao Greater Bay Area. This marks a new and higher level in terms of economic
aggregate, after the regions economy surpassed the thresholds of US$1.69trillion and US$1.83trillion in 2021 and 2022
respectively, solidifying its position as the most dynamic growth engine in the world. The GBA is an area of vast scale and wealth, with
the following defining characteristics according to 2023 HongKong Trade Development Council research:
|
|
|
Largest GDP in China, GDP
of US$1.98trillion in 2023 and per-capita GDP of US$22,867 in 2022; | |
|
|
|
US$1.98trillion economy,
compared with US$2.1trillion for Tokyo and US$2.3trillion for NewYork; and | |
|
|
|
Population of 86.9million,
compared with 44.4million in Tokyo and 19.5million in the NewYork Metropolitan Area. | |
HongKong
is a major financial services hub. According to 2024 HongKong Trade Development Council research, Hong Kongs stock market
was the fourth largest in Asia and the seventh largest in the world in terms of market capitalisation at the end of August 2024. Hong
Kong is the largest offshore RMB clearing centre in the world. Between January and September 2024, about 80% of global offshore RMB settlements
were processed in Hong Kong. At the end of October, there were 2,623 companies listed on theHong Kong Exchange (HKEX), with a total
market capitalisation of about US$4.5 trillion, the market capitalization of companies from mainland China listed on the Hong Kong Exchange
(HKEX) amounted to over US$3trillion in 2023. Companies from mainland China accounted for 76 percent of HKEXs market capitalization.
According to the HongKong Stock Exchange monthly market highlights, it has over 1,400 mainland China listed enterprises as at 31
December 2024.
14
Mainland
investor activity in Hong Kongs equity market has grown over the years. According to HKEX data,
|
| Average
daily turnover (ADT) on Southbound Stock Connect has grown from HK$0.9 billion in 2014 to
HK$38.3 billion in the first three quarters of 2024; | |
|
| Between
July 2023 and September 2024, Southbound Stock Connect recorded 15 consecutive months of
net buying activity, indicating growing demand from Mainland China investors; and | |
|
| Since
2018, the market capitalisation of securities portfolios held through Southbound Stock Connect
has grown from HK$789 billion to HK$3.4trillion by the end ofthe third quarter
of2024. | |
|
| In
September 2024, Mainland investors could trade a total of over 550 Hong Kong-listed securities
through Shanghai and Shenzhen Connect, nearly double the number of eligible securities at
the launch of Southbound Stock Connect in 2014. | |
According
to the 2023 China Private Wealth Report published by China Merchants Bank, the total size of Chinas individual investable assets
reached RMB278trillion (US$39trillion) in 2020, a compound annual growth rate of 7% from 2020 to 2022 and was expected to
reach RMB300trillion (US$42.2trillion) by the end of 2024. Meanwhile, in 2022, the number of Chinese HNWIs with investable
assets of RMB 10 million or more reached 3.16 million, with a CAGR of 10% from 2020 to 2022. Their investable assets totaled RMB 101
trillion, or RMB 31.83 million in average per person. The number of Chinese HNWIs and their investable assets are expected to grow at
a CAGR of about 11% and 12% respectively in the next two years.
With
China a significant strategic growth opportunity for many global and regional financial institutions, may players have opted to access
China opportunities through Hong Kong via an offshore model. Offshore investment channels through Hong Kong continues to
be an attractive way for servicing Chinese wealth given the various inbound and outbound investment channels as mentioned earlier. In
addition, Hong Kong is a popular offshore investment and service location given its high connectivity, diversified talent pool, effective
legal system, competitive tax regime, and supportive regulatory environment. The fast-growing affluent population in China, especially
in the Greater Bay Area will be the new growth driver for international asset and wealth managers in the coming years.
****
**Cross-Border
Wealth Management Connect**
On
June29, 2020, the Peoples Bank of China, the HongKong Monetary Authority (HKMA) and the Monetary Authority of Macau
jointly announced the introduction of the cross-boundarywealth management connect pilot scheme (Wealth Management Connect scheme)
in the GBA, which will allow residents in the GBA to invest in wealth management products distributed by banks across the region. The
scheme helps promote investment diversification and facilitate capital flow within the GBA, promote RMB internationalization and strengthen
HongKongs status as an offshore RMB hub.
According
to the implementation rules of the Wealth Management Connect scheme published by The Peoples Bank of China in September2021,
there will be an aggregate investment quota of RMB150billion in each of the northbound Connect and southbound
Connect schemes, with an individual investment quota up to RMB1million. Recognized investment products under the Northbound
Scheme include fixed income (primarily bonds and deposits) and equity wealth management products, along with public securities
investment funds with low or medium risk rating. Complex investment products with high volatility or leverage are currently excluded.
The scheme is expected to facilitate a total fund flow of RMB300billion (US$47billion) in the sale of investment products.
As at the end of August 2023, the amount of cross-boundary fund remittances (including Hong Kong and Macao) under Cross-boundary WMC
was RMB6.31 billion, the quota usage of which was far from the aggregate quota under the Southbound and Northbound Schemes (i.e. RMB300
billion).
According
to press release from the Hong Kong Government in November 2023, cross-boundary WMC has seen steady development since its launch. Hong
Kong banks engaging in retail banking or private banking businesses and registered with the Securities and Futures Commission (SFC) for
relevant regulated activities can participate in Cross-boundary WMC. Twenty-four eligible Hong Kong banks have commenced relevant businesses
with their respective Mainland partner banks.
15
According
to the statistics as of end-October 2023 published by the Peoples Bank of China, 62,900 individual investors in the GBA participated
in Cross-boundary WMC, including 44,600 from Hong Kong and Macao and 18,300 from the Mainland, recording a total of more than 35,000
cross-boundary fund remittances (covering Hong Kong and Macao) amounting to over RMB8.65 billion. The aggregate quota usage under the
Southbound Scheme and Northbound Scheme (covering Hong Kong and Macao) was over RMB2.33 billion and RMB250 million respectively (calculated
on a net cross-boundary remittance basis). Since the resumption of normal travel between the Mainland, Hong Kong and Macao, the Southbound
business has seen significant growth. In the first 10 months of 2023, the number of new individual investors participating in Cross-boundary
WMC exceeded 6,400, representing an increase of 70 per cent over the same period of 2022. Cross-boundary fund remittances amounted to
over RMB6.2 billion, having increased more than fivefold over the same period of 2022.
****
**Future
expansion plan to China**
In
April 2024, the China Securities Regulatory Commission (CSRC) announced five measures to support Mainland-Hong Kong connectivity. The
five measures include:
|
| Expanding
the scope of eligible ETFs under Stock Connect that more ETFs can be included in Stock Connect,
attracting more investors to participate in cross-border trading and supporting the development
of Hong Kong as an international asset management centre; | |
|
| Including
REITs into Stock Connect to enhance liquidity, offering investors more opportunities to diversify
and invest in the real estate sector; | |
|
| Supporting
the inclusion of RMB-denominated stocks into Southbound Stock Connect launched on 19 June
2023, which offers Hong Kong investors a choice of trading the shares of Hong Kong-listed
companies in either HKD or RMB; | |
|
| Optimising
mutual recognition of funds to promote the moderate relaxation of the proportion limit for
cross-border sales of mutual recognition of funds (MRF) and optimize the MRF arrangement
to better meet the needs of investors in Mainland China and Hong Kong; and | |
|
| Supporting
the listing of leading Mainland companies in Hong Kong to further strengthen communication
and coordination with relevant departments to support eligible leading Mainland companies
in listing and financing in Hong Kong. | |
With
the business opportunities brought by the Mainland-Hong Kong connectivity and Wealth Management Connect scheme, and the upcoming Insurance
Connect introduced by the China Insurance Regulatory Commission, China will be one of our focus areas with an increasing addressable
market and opportunity set.
We
intend to leverage the Groups two decades of experience operating in China. We are particularly well-positionedto capture
the emerging opportunities. Currently, we do not have any Chinese operating companies and we do not plan to use variable interest
entities, or VIEs, in the future to conduct our operations. While we have no operations in China, it is and will continue to be
part of our strategy to market and sell our products and services to Chinese customers located in mainland China from its HongKong
based operating subsidiaries through partnerships or customer referrals.
After
a 6-monthproject with a consulting firm to study our capability and competitive advantages, we identified four strategic enablers,
including (1)partnership development; (2)establishing a lead management platform; (3)establishing a service center
for our customers; and (4)digital marketing. Multiple collaboration models have been designed, with potential partners identified
for implementation. We intend for these initiatives to drive business growth through customer acquisition and cross-sellingcombined
with increased use of data analytics.
****
**Strategic
Enablers to Capture GBA Opportunities**
**
*China
B2B Partnership for Customer Acquisition*
We
intend to upsell selected customers simple insurance products through our local insurance brokerage channel, by using free insurance
protection products to attract customers, and then conducting customer behavioral analysis and product matching. Based on the analysis
of social media interaction and digital marketing, we market our international and partnership offerings to customers who demonstrate
interest and refer them to our network of financial advisors in HongKong for cross-sellingof other financial products and
investment portfolio recommendations. We intend to periodically review our referral mechanisms to ensure their continued effectiveness.
We
are currently in active discussions to establish a strategic partnership with a top asset manager (the **Potential Partner**)
in China to provide offshore insurance solutions to the Potential Partners over 20million nation-widecustomers. The
Potential Partner serves both individual affluent and high-net-worthcustomers as well as institutions. Our management believes
a strategic partnership with the Potential Partner has the potential to increase our AUM and competitiveness by expanding the types of
local and overseas investment vehicles available to it and to further penetrate its existing customer database.
****
16
****
*Service
Centre for Customer and Partner Servicing*
Leveraging
our existing China local insurance brokerage licenses, sales teams and infrastructure, we intend to build a business platform to acquire
mainland China customers through referrals and to establish new partnerships.
We
intend to transform our existing shared service center to (i)provide post-salesservices to mainland China customers who have
purchased HongKong insurance products; and (ii)institutionalize our capabilities to form B2B partnerships in mainland China.
We intend to build a lead management tool to recommend new and personalized insurance products to customers, which we intend to be a
key priority for 2025 and beyond.
**Leverage
Our Technology, Tools and Features to Continue to Attract and Engage Creators, Brands and Users and Build a Robust Ecosystem**
****
We
intend to continue leveraging our integrated global platform to maximize the growth potential of our business. The proliferation of digital
content and engagement with such content, and the convergence of live entertainment and digital technologies, have expanded use cases,
exposure and monetization opportunities for our Technology Platform and our customers. We believe that our integrated capabilities and
global reach allow us to deepen relationships with existing Brands, Creators and Users and attract new Brands, Creators, Users and partners.
We
believe that the suite of tools and features that we offer are a key differentiator as we work to grow the scope and depth of engagement
from Creators, Brands and users and continue to expand our ecosystem. We believe our Technology Platform delivers digital distribution
tools that enable Creators and Brands to control how their content reaches a broad audience through multiple social media channels. Together
with our analytical capabilities that track user engagement, we provide the opportunity for Creators and Brands to monetize content across
multiple digital platforms including Facebook, Instagram, TikTok, Snapchat, YouTube, Twitter and more, which by extension generates revenue
opportunities for us.
We
believe our investments in AI-powered tools for content development, moderation, distribution and audience management on our Technology
Platform allow us to deliver a robust solution to attract Creators and Brands. Our suite of tools allows for creative content development
and distribution, as well as targeted interaction by Brands. Sophisticated algorithms based on natural language datasets created through
engagement with hundreds of millions of users allow us to providers users with reach and measurement tools that we consider a key differentiator.
On behalf of Brands, our AI-powered tools and algorithms allow for the creation and execution of immersive brand experiences that leverage
the growing power of Creators and reach across the customer journey, from awareness to purchase to loyalty programs.
We
plan to continue to invest and learn from our experiences to build features designed to separate us from our competition, with the goal
of being the go-to platform for Creators seeking to distribute and monetize their content and for Brands to reach consumers through targeted
engagement.
17
Over
time, we believe we can play a key role in altering the creator economy so more economic return flows directly to the artists, influencers,
athletes, celebrities and every-day users creating content and less flows to the big-tech intermediaries that dominate today.
**Expand
Our Experiential Offerings in Ways That Create Revenue Opportunities, Build Our Brand and Culture and Fuel Our Ecosystem**
****
We
have observed that younger demographics are increasingly prioritizing concerts, sports, and other entertainment options over material
goods. According to a study conducted by Expedia and the Center for Generational Kinetics, LLC, 74% of Americans aged 18-65 polled place
more value on experiences than products or things. Because we deliver live and digital entertainment through our Technology Platform,
we believe we are well positioned to take advantage of these continuing secular trends and create new offerings and investment opportunities.
Other
live Events we produce are a source of content that afford us with opportunities to promote and leverage our Technology Platform and
build our brand, in addition to being revenue generative in and of themselves. We believe these Events, featuring well-known names in
music and athletics, attract individuals and businesses to our ecosystem and drive user engagement, and position us where we believe
consumer interest is trending. We believe that these Events are exciting to our users, offer sponsorship and engagement opportunities
for Brands, and provide inspiration to Creators. Combined with our suite of tools to market these Events on the Triller app, TrillerTV,
and other social media platforms, we intend to continue to seek to monetize the interest in these Events and related content.
We
also seek to position ourselves to take advantage of the growing demand for content. Through our owned and licensed entertainment and
media products, our distribution platforms and our integration with third-party platforms, we believe we are positioned at the center
of this demand. As new distribution models and technologies have broadened access and enhanced the consumer experience, premium content
values have increased. Through our Technology Platform, Events and content and distribution properties, we seek to foster value creation,
for us and both the artists and influencers that use our Technology Platform.
**Invest
in Adjacent High Growth Industry Segments**
****
Our
global Technology Platform has enabled us to enter new, fast-growing industry segments where we are able to leverage long-standing business
partnerships and relevant commercial insights to accelerate scale. Our Technology Platform allows us to identify areas of growth early
and benefit from constant technological disruption. Our existing footprint helps to facilitate organic investment in new adjacent industry
segments. We plan to execute upon these opportunities as they emerge in the future.
**Emphasize
Strategic Growth Through Mergers and Acquisitions on Our Technology Platform**
****
Our
mergers and acquisitions strategy has been focused on investing in intellectual property and acquiring capabilities for our Technology
Platform. We will continue to invest in mergers and acquisitions to complement our internal capabilities and enhance the value of our
Technology Platform. We believe that owning a highly curated intellectual property asset base and global capabilities set further enhance
the ecosystem connectivity that makes our Technology Platform the ideal home for numerous future acquisition targets that fit the profile
of our investment strategy. We also will opportunistically seek to monetize and or dispose of certain assets, if needed. We also believe
that the insights that we have gained from our position in the content ecosystem, social media landscape and e-commerce business give
us access to a vast amount of information that informs our investment activities and has the potential to provide access to proprietary
acquisition and investment opportunities.
Our
management team also has the combined experience of executing more than $50 billion in transactional value in content and technology
mergers and acquisitions. Collectively, we believe these insights and experience position us well to evaluate targets and identify synergies
and growth potential. We seek to leverage the experience and relationships of our management team, creative incentive structures to our
partners and our portfolio of assets to attract Brands and Creators to our Technology Platform. This experience, together with learnings
from our acquisitions to date and insights gained from our position in the content ecosystem, give us access to a vast amount of information
that can help us assess acquisition targets.
****
18
****
**Creating
an Ecosystem Empowered by Fintech**
****
**HongKongs
Fintech Landscape**
In
July2018, the HKMA introduced the Open API Framework to facilitate the development and wider adoption of application
programming interfaces or APIs by the banking sector. The Open API functions include product information, customer acquisition, account
information and transactions. The HKMA also launched the Faster Payment System in September2018 to facilitate real-timepayments
and fund transfers between banks and stored value facility operators with the use of a recipients mobile number or email address
as an account proxy. We believes that, with the on-goingbusiness integration with the GBA, HongKong is likely to see further
liberalization in the financial services sector in the comingyears, especially in relation to the use of financial technologies.
In
July2018, the HKMA introduced the Open API Framework to facilitate the development and wider adoption of application
programming interfaces or APIs by the banking sector. The Open API functions include product information, customer acquisition, account
information and transactions. The HKMA also launched the Faster Payment System in September2018 to facilitate real-timepayments
and fund transfers between banks and stored value facility operators with the use of a recipients mobile number or email address
as an account proxy. We believes that, with the on-goingbusiness integration with the GBA, HongKong is likely to see further
liberalization in the financial services sector in the comingyears, especially in relation to the use of financial technologies.
**Group
Synergy to be Realized Leveraging on Existing Infrastructure and Partners**
To
provide a seamless customer journey, increase customers stickiness and deepen their share wallet, Our future strategic focus intends
to create an integrated digital ecosystem by leveraging existing infrastructure, customers and partners.
We intends
to realize synergies across different business units by:
|
|
|
focusing on product portfolio
enhancements, including endowment insurance and investment fund savings plans; | |
|
|
|
leveraging the flexibility
offered by different financing options, including insurance premium financing, point-of-saleconsumer credit, personal credit
facility or mortgage financing; and | |
|
|
|
using the IFA sales team
as a large distribution channel. | |
Our
digital platform is one of its core customer acquisition engines which we intends to further equip with functionalities including a cash
management tool for customers, and a transaction platform that encompasses insurance and investment products, retail consumption, medical
appointments, content marketing and social sharing.
By
targeting customers needs at various life stages, we intends to provide a one-stopservice to customers while enhancing its
cross-sellingbusiness opportunities. Further collaboration will also be sought in the future with its local partners and overseas
fintech investments. Fintech will continue to invest in fintech developments to improve its capabilities and attract local and global
business partners.
**Our
Corporate Information**
We
were originally incorporated on October 8, 2018 in the British Virgin Islands as a special purpose acquisition company under the former
name of AGBA Acquisition Limited (AAL). In connection with the consummation of the Business Combination (as defined below),
we changed our name from AGBA Acquisition Limited to TRILLER GROUP INC.. Our principal executive office is
located at 7119 West Sunset Boulevard,Suite 782
Los Angeles,CA.
19
**Our
Corporate Information**
We
were originally incorporated on October8, 2018 in the British Virgin Islands as a special purpose acquisition company under the
former name of AGBA Acquisition Limited (**AAL**). In connection with the consummation of the Business Combination (as
defined below), on October 15, 2024, we changed our name from AGBA Acquisition Limited to Triller Group Inc.
Our headquarters in Hong Kong is located at AGBA Tower, 68 Johnston Road, Wan Chai, HongKong.
****
**Intellectual
Property**
We
own domain names and trademarks. We are currently in the process of re-branding our business and as part of this exercise, AGBA is in
the process of obtaining domain names and trademark registrations for its new brands, such as TAG, OnePlatform,,
AGBA Focus, AGBA Perform and AGBA Group, among others.
Our
intellectual property includes the Triller, Triller Fight Club, TrillerFest, TrillerTV,
FITE, Cliqz, Fangage, Julius and Thuzio Brands in addition to the
trademarks and copyrights associated with our content, Events, and the rights to use the intellectual property of our commercial partners.
Substantially all of our IP and owned assets that we acquire are protected by trademarks and copyright, whether registered or unregistered.****To protect its existing and potential, future intellectual property, we have entered into confidentiality and proprietary rights
agreements with employees, consultants, contractors and business partners; employees and contractors are also subject to invention assignment
provisions. As part of its contracting process with third parties, we use contract terms such as limited licenses, restrictions on use,
and confidentiality, as additional measures to protect its intellectual property.
****
**Facilities**
Our
headquarters in HongKong is located at AGBA Tower, 68 Johnston Road, Wan Chai, HongKong, which is situated in one of HongKongs
prime central business districts. The lease agreement for the building, between Viewbest Investments Limited (Viewbest), as landlord,
and Legacy Group, was executed on June14, 2019.
The
term of the AGBA Tower lease is sixyears, with a tentative expiry date of February28, 2026.
While
we are not the party to the AGBA Tower lease agreement, we are currently occupying space in the building.
****
**Employees**
As
of December 31, 2024, we had 288 full-time and full-time equivalent employees. None of the employees are represented by a labor union,
and we consider our employee relations to be good.
**Website
Access to Companys Reports and Disclosure Information**
Our
internet website address is https://www.agba.com, to which we regularly post copies of our press releases as well as additional information
about us. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports
filed, will be available to you free of charge through the Investors section of our website as soon as reasonably practicable after such
materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (the SEC). The SEC
maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. We include our web site address in this Annual Report on Form 10-K only as an inactive
textual reference. Information contained in our website does not constitute a part of this report or our other filings with the SEC.
20
**ITEM
1A. RISK FACTORS**
****
**Risks
Factors Relating to the Companys HongKong Operations and Proximity to the PRC**
****
**The
business, financial condition, results of operations, and prospects of the Company may be materially and adversely affected if certain
laws and regulations of the PRC become applicable to the Company or its subsidiaries. the Company may be subject to the risks and uncertainties
associated with the evolving laws and regulations in the PRC, their interpretation and implementation, and the legal and regulatory system
in the PRC more generally, including with respect to the enforcement of laws and the possibility of changes of rules and regulations
with little or no advance notice.**
****
The
Company currently does not have operations in mainland China. Although the Company and its subsidiaries do service Chinese clients, all
sales of financial products offered by the TAG Business and its subsidiaries occur in HongKong. the Company does not sell any financial
products in mainland China, and all of the TAG Businesss customer data is maintained outside of mainland China. Accordingly, none
of the Company or its subsidiaries are regulated by any regulatory authorities in mainland China. Pursuant to the Basic Law of the HongKong
Special Administrative Region (the **Basic Law**), which is a national law of the PRC and the constitutional document
for HongKong, national laws of the PRC shall not be applied in HongKong except for those listed in AnnexIII of the
Basic Law and applied locally by promulgation or local legislation. The Basic Law expressly provides that the national laws of the PRC
which may be listed in AnnexIII of the Basic Law shall be confined to those relating to defense and foreign affairs as well as
other matters outside the autonomy of HongKong. While the National Peoples Congress of the PRC has the power to amend the
Basic Law, the Basic Law also expressly provides that no amendment to the Basic Law shall contravene the established basic policies of
the PRC regarding HongKong. As a result, national laws of the PRC not listed in AnnexIII of the Basic Law do not apply to
HongKong-basedbusinesses.
However,
the laws and regulations in the PRC are evolving, and their enactment timetable, interpretation, and implementation involve significant
uncertainties. To the extent that any PRC laws and regulations become applicable to the Company, the Company may be subject to the risks
and uncertainties associated with the evolving laws and regulations of the PRC, their interpretation and implementation, and the legal
and regulatory system in the PRC more generally, including with respect to the enforcement of laws and the possibility of changes of
rules and regulations with little or no advance notice. If certain PRC laws and regulations, including existing laws and regulations
and those enacted or promulgated in the future, were to become applicable to companies such as the Company or its subsidiaries in the
future, the application of such laws and regulations may have a material adverse impact on the business, financial condition, results
of operations, and prospects of the Company and its ability to offer securities to investors, any of which may, in turn, cause the value
of ILLRs securities to significantly decline or become worthless.
Relevant
organs of the PRC government have made recent statements or recently taken regulatory actions related to data security, anti-monopoly,
and overseas listings of mainland China businesses. For example, in addition to the PRC Data Security Law and the Measures for Cybersecurity
Review issued by the Cyberspace Administration of China which became effective on February15, 2022 (the **Measures**),
relevant PRC government agencies have recently taken anti-trustenforcement action against certain mainland China-basedbusinesses.
The management of ILLR understands that such enforcement action was taken pursuant to the PRC Anti-MonopolyLaw which applies to
monopolistic activities in domestic economic activities in mainland China and monopolistic activities outside mainland China which eliminate
or restrict market competition in mainland China. In addition, in July2021, the PRC government provided new guidance on PRC-basedcompanies
raising capital outside of the PRC, including through arrangements called variable interest entities (**VIEs**). In
light of such developments, the SEC has imposed enhanced disclosure requirements on China-basedcompanies seeking to register securities
with the SEC.
While
the Company currently does not have any operations in mainland China, there is no guarantee that the recent statements or regulatory
actions by the relevant organs of the PRC government, including statements relating to the PRC Data Security Law, the PRC Personal Information
Protection Law, and VIEs as well as the anti-monopolyenforcement actions will continue not to apply to the Company.Should
such statements or regulatory actions apply to companies such as ILLR or its subsidiaries in the future, it could have a material adverse
impact on the business, financial condition, results of operations, and prospects of ILLR, ILLRs ability to accept foreign investments,
and ILLRs ability to offer or continue to offer securities to investors on a U.S.or other international securities exchange,
any of which may, in turn, cause the value of ILLRs securities to significantly decline or become worthless. ILLR cannot predict
the extent of such impact if such events were to occur.
The
Company may also become subject to the laws and regulations of the PRC to the extent that the TAG Business commences business and customer
facing operations in mainland China as a result of any future partnership, acquisition, expansion, or organic growth.
21
**The
PRC government exerts substantial influence, discretion, oversight, and control over the manner in which companies incorporated under
the laws of PRC must conduct their business activities. The Company has offices in HongKong and has no operations in mainland China;
however, there can be no guarantee that the PRC government will not seek to intervene or influence the operations of its business or
its subsidiaries at any time.**
****
Because
(i)the Company currently does not have operations in mainland China, (ii)all sales of financial products offered by the Company
and its subsidiaries, including those to PRC citizens, occur in HongKong, and (iii)the TAG Business does not sell any financial
products in mainland China, the PRC government currently does not directly govern the manner in which the Company conducts its business
activities outside of mainland China. However, the PRC legal system is evolving quickly, and PRC laws, regulations, and rules may change
quickly with little advance notice, including with respect to HongKong-basedbusinesses. As a result, there can be no assurance
that the Company will not be subject to direct influence or discretion over its business from organs of the PRC government in the future,
due to changes in laws or other unforeseeable reasons or due to the Companys expansion or acquisition of operations in or involving
mainland China.
The
PRC government has exercised and continues to exercise substantial control over many sectors of the PRC economy, including through regulation
and/or state ownership. PRC government actions have had, and may continue to have, a significant effect on economic conditions in the
PRC and the businesses which are subject to them. If the Company became subject to the direct intervention or influence of the PRC government
at any time due to changes in laws or other unforeseeable reasons or as a result of the Companys development, expansion, or acquisition
of operations in the PRC, the Company may be required to make material changes in its operations, which may result in increased costs
necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply, or both. The Company
cannot be assured that the PRC government will not, in the future, release regulations or policies regarding other industries, which,
if applicable to the Company or its subsidiaries, may adversely affect the business, financial condition and results of operations of
the Company.
In
addition, the various segments of the Company are regulated by a number of HongKong regulators, including, the HongKong Insurance
Authority and the Mandatory Provident Fund Schemes Authority. PRC government influence or oversight over such HongKong regulators
may have an indirect but material impact on the Company, including but not limited to with respect to capital requirements, its ability
to operate certain businesses, its operations in certain jurisdictions (including the markets in which the Company or its subsidiaries
may operate in the future) and/or the implementation of certain controls and procedures in relation to risk management or cybersecurity.
Furthermore, the market prices and/or liquidity of the securities of the Company could be adversely affected as a result of anticipated
negative impacts of any such government actions, as well as negative investor sentiment towards HongKong-basedcompanies subject
to direct PRC government oversight and regulation, regardless of actual operating performance. There can be no assurance or guarantee
that the PRC government would not intervene in or influence the operations of the Company, directly or indirectly, at any time.
**The
securities of ILLR may be delisted or prohibited from being traded over-the-counter under the Holding Foreign Companies
Accountable Act (as amended by the Accelerating Holding Foreign Companies Accountable Act) if the PCAOB were unable to fully inspect
the companys auditor.**
****
The
Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted into U.S.law on December18, 2020. The HFCA Act states
that if the SEC determines that a company has filed audit reports issued by a registered public accounting firm that has not been subject
to inspection by the Public Company Accounting Oversight Board of the UnitedStates (the **PCAOB**) for three consecutiveyears
beginning in 2021, the SEC shall prohibit its securities from being traded on a national securities exchange or in the over-the-countertrading
market in the U.S.On December16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect
or investigate completely registered public accounting firms headquartered in: (i)China, and (ii)HongKong.
On
December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the
HFCA Act. On December 23, 2022 the Accelerating Holding Foreign Companies Accountable Act (AHFCA Act) was enacted, which amended the
HFCA Act by requiring the SEC to prohibit an issuers securities from trading on any U.S. stock exchanges if its auditor is not
subject to PCAOB inspections for two consecutive years instead of three. As a result, the time period before the Companys securities
may be prohibited from trading or delisted has been reduced accordingly.
22
Lack
of access to PCAOB inspections prevents the PCAOB from fully evaluating audits and quality control procedures of the accounting firms
headquartered in mainland China or HongKong. As a result, investors in companies using such auditors may be deprived of the benefits
of such PCAOB inspections. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate
PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022, and the PCAOB Board vacated its previous
determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland
China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public
accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our,
and our auditors, control. The PCAOB is continuing to demand complete access in mainland China and Hong Kong moving forward and
is already making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations
and initiate new investigations as needed. The PCAOB has indicated that it will act immediately to consider the need to issue new determinations
with the HFCA Act if needed.
WWC,
P.C. is headquartered in California and has been inspected by the PCAOB on a regular basis. The management of ILLR believes, therefore,
that WWC, P.C. is not subject to the determinations announced by the PCAOB on December16, 2021 with respect to PRC and HongKong-basedauditors.
WWC, P.C. is not included in the list of determinations announced by the PCAOB on December21, 2021 in their HFCA Act Determination
Report under PCAOB Rule6100. On August26, 2022, the China Securities Regulatory Commission, or CSRC, the Ministry of Finance
of the PRC, and PCAOB signed a Statement of Protocol, or the Protocol, governing inspections and investigations of audit firms based
in China and HongKong. Pursuant to the Protocol, the PCAOB has independent discretion to select any issuer audits for inspection
or investigation and has the unfettered ability to transfer information to the SEC.However, uncertainties still exist whether this
new framework will be fully complied with. If notwithstanding this new framework, the PCAOB was unable to fully inspect WWC, P.C. (or
any other auditor of the Company) in the future, or if PRC or American authorities further regulate auditing work of Chinese or HongKong
companies listed on the U.S.stock exchanges in a manner that would restrict WWC, P.C. (or any future auditor of the Company) from
performing work in HongKong, ILLR may be required to change its auditor. Furthermore, there can be no assurance that the SEC, Nasdaq,
or other regulatory authorities would not apply additional and more stringent criteria to ILLR in connection with audit procedures and
quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates
to the audit of ILLRs financial statements. The failure to comply with the requirement in the HFCA Act, as amended by the AHFCA
Act, that the PCAOB be permitted to inspect the issuers public accounting firm within twoyears, would subject ILLR to consequences
including the delisting of ILLR in the future if the PCAOB is unable to inspect ILLRs accounting firm (whether WWC, P.C. or another
firm) at such future time.
On
December 23, 2022, the Accelerating Holding Foreign Companies Accountable Act (**AHFCAA**) was enacted, which amended
the HFCA Act by requiring the SEC to prohibit an issuers securities from trading on any U.S. stock exchanges if its auditor is
not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, a legislation entitled Consolidated
Appropriations Act, 2023 (the **Consolidated Appropriations Act**), was signed into law by President Biden. The
Consolidated Appropriations Act contained, among other things, an identical provision to AHFCAA, which reduces the number of consecutive
non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to
two. Whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered
in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditors, control.
The PCAOB is continuing to demand complete access in mainland China and Hong Kong moving forward and is already making plans to resume
regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations
as needed. The PCAOB has indicated that it will act immediately to consider the need to issue new determinations with the HFCA Act if
needed, without having to wait another year to reassess its determinations. In the future, if there is any regulatory change or step
taken by PRC regulators that does not permit our auditor to provide audit documentations located in China or Hong Kong to the PCAOB for
inspection or investigation, or the PCAOB expands the scope of the determination so that we are subject to the HFCA Act, as the same
may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access
to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on over-the-counter
markets, may be prohibited under the HFCA Act. The recent developments would add uncertainties to our offering and we cannot assure you
whether the national securities exchange we apply for listing or regulatory authorities would apply additional and more stringent criteria
to us after considering the effectiveness of our auditors audit procedures and quality control procedures, adequacy of personnel
and training, or sufficiency of resources, geographic reach, or experience as it relates to our audit.
23
**Although
not currently subject, the Company may become subject to the PRC laws and regulations regarding offerings that are conducted overseas
and/or foreign investment inChina-basedissuers, and any failure to comply with applicable laws and obligations could have
a material and adverse effect on the business, financial condition, results of operations, and the Companys prospects of the Company
and may hinder ILLRs ability to offer or continue to offer securities to investors and cause the value of such securities to significantly
decline or be worthless.**
****
Recently,
the PRC government has initiated a series of regulatory actions and statements to regulate business operations in certain areas in China
with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-basedcompanies
listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding
the efforts in anti-monopolyenforcement. On June10, 2021, the Standing Committee of the National Peoples Congress
enacted the PRC Data Security Law, which took effect on September1, 2021. The law requires data collection to be conducted in a
legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based
on data classification and hierarchical protection system for data security.
On
July6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued a document to crack down on illegal activities in the securities market and promote the high-qualitydevelopment of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-borderoversight of law-enforcementand
judicial cooperation, to enhance supervision over China-basedcompanies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws.
On
August20, 2021, the 30 meeting of the Standing Committee of the 13 National Peoples Congress voted and passed the **Personal
Information Protection Law of the Peoples Republic of China**, or **PRC Personal Information Protection Law**,
which became effective on November1, 2021. The PRC Personal Information Protection Law applies to the processing of personal information
of natural persons within the territory of China that is carried out outside of China where (1)such processing is for the purpose
of providing products or services for natural persons within China, (2)such processing is to analyze or evaluate the behavior of
natural persons within China, or (3)there are any other circumstances stipulated by related laws and administrative regulations.
On
December24, 2021, the China Securities Regulatory Commission (**CSRC**), together with other relevant government
authorities in China issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by
Domestic Companies (Draft for Comments), and the Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies
(Draft for Comments) (**Draft Overseas Listing Regulations**). The Draft Overseas Listing Regulations requires that
a PRC domestic enterprise seeking to issue and list its shares overseas (**Overseas Issuance and Listing**) shall complete
the filing procedures of and submit the relevant information to CSRC.The Overseas Issuance and Listing includes direct and indirect
issuance and listing. Where an enterprise whose principal business activities are conducted in PRC seeks to issue and list its shares
in the name of an overseas enterprise (**Overseas Issuer**) on the basis of the equity, assets, income or other similar
rights and interests of the relevant PRC domestic enterprise, such activities shall be deemed an indirect overseas issuance and listing
(**Indirect Overseas Issuance and Listing**) under the Draft Overseas Listing Regulations.
On
December28, 2021, the Cyberspace Administration of China (**CAC**) jointly with the relevant authorities formally
published Measures for Cybersecurity Review (2021)which took effect on February15, 2022 and replaced the former Measures
for Cybersecurity Review (2020)issued on July10, 2021. Measures for Cybersecurity Review (2021)stipulates that operators
of critical information infrastructure purchasing network products and services, and online platform operator (together with the operators
of critical information infrastructure, the **CII Operators**) carrying out data processing activities that affect or
may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than one million users
personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign
country.
24
The
Company or its subsidiaries may collect and store certain data (including certain personal information) from their clients, who may be
PRC individuals, in connection with their business and operations and for *Know Your Customers* purposes (to combat
money laundering). Given that (1)the Company is incorporated in Delaware and certain of its subsidiaries are incorporated in HongKong
and are located in and conduct their operations in HongKong, (2)they have no subsidiary, VIE structure, nor any operations
in mainland China, and (3)pursuant to the Basic Law, national laws of the PRC shall not be applied in HongKong except for
those listed in AnnexIII of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other
matters outside the autonomy of HongKong), the management of the Company does not currently expect the Measures for Cybersecurity
Review (2021), the PRC Personal Information Protection Law, or the Draft Overseas Listing Regulations to impact the operations of the
TAG Business. As of date of this registration statement, the Company and its subsidiaries have conducted all non-U.S. sales activities
in HongKong and in aggregate collected and stored personal information of less than one million users in the PRC, all of the data
collected is stored in servers located in HongKong, and none of the Company or its subsidiaries have been informed by any PRC governmental
authority of any requirement that it files for a cybersecurity review or a CSRC review. Accordingly, the management of the Company does
not currently expect that the laws and regulations in the PRC on data security, data protection or cybersecurity apply to the Company
or that the oversight of the CAC will be extended to the TAG Businesss operations in HongKong, because (i)the Company
is not a CII Operator or a Network Platform Operator as defined under the relevant PRC cyberspace laws; (ii)the
Company does not harm PRC national security, public interests, or the legitimate rights and interests of citizens or organizations of
the PRC; (iii)the Company is not subject to PRC government cyberspace scrutiny; and (iv)the Company is compliant with PRC
cyberspace laws that have been issued up to the date of this registration statement.
However,
since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making
bodies will act, what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated,
if any, and whether any of these will apply to the Company, if at all. There can be no assurance that the Company will be able to comply
in all respects with any PRC regulatory requirements that may become applicable to it in the future. For example, the Companys
current practice of collecting and processing personal information may be ordered to be rectified or terminated by regulatory authorities.
In the event of a failure to comply with any applicable regulations, the Company may become subject to the consequences of such non-compliance,
including fines and other penalties, which, in turn, may have a material adverse effect on the business, operations, financial condition,
and prospects of the Company and may hinder the ability of the Company to offer or continue to offer securities to investors. Such an
impact could, in turn, cause the value of such securities to significantly decline or be worthless.
**The
Company is subject to many of the economic and political risks associated with emerging markets, particularly China, due to its operations
in HongKong. Adverse changes in HongKongs or Chinas economic, political, and social conditions as well as government
policies could adversely affect the Companys business and prospects.**
****
The
Company currently conducts certain of its business in HongKong and is considering options for expansion of its business in mainland
China. Accordingly, the Company is subject to risks and uncertainties including fluctuations in mainland Chinas GDP, unfavorable
or unpredictable treatment in relation to tax matters, expropriation of private assets, exchange controls, restrictions affecting its
ability to make cross-bordertransfer of funds, regulatory proceedings, inflation, currency fluctuations, or the absence of, or
unexpected changes in, regulations and unforeseeable operational risks. In addition, the Companys business, prospects, financial
condition, and results of operations may be significantly influenced by political, economic, and social conditions in HongKong
and China generally and by continued economic growth in China.
The
Chinese economy differs from the economies of most developed jurisdictions (such as HongKong) in many respects, including the amount
of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. Although the
PRC government has implemented measures that focus on accounting for market forces to effect economic reform and aimed at reducing the
state ownership of productive assets and establishing improved corporate governance in business enterprises, a substantial portion of
Chinas productive assets are still owned by the government. In addition, the PRC government continues to play a significant role
in regulating development through industrial policies. The PRC government also exercises significant control over Chinas economic
growth through its allocation of resources, control of payment of foreign currency-denominatedobligations, monetary policy, and
preferential treatment for particular industries or companies. Many of the economic reforms carried out by the PRC government are unprecedented
or experimental and are expected to be refined and improved over time. This refining and adjustment process may not necessarily have
a positive effect on the operations and business development of the Company.Other political, economic, and social factors may also
lead to further adjustments of the reform measures. For example, the PRC government has in the past implemented a number of measures
intended to curtail certain segments of the economy, including the real estate industry, which the government believed to be overheating.
These actions, as well as other actions and policies of the PRC government, could cause a decrease in the overall level of economic activity
in the PRC and, in turn, have an adverse impact on the business and financial condition of the Company.
25
While
the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various
sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of
resources. Some of these measures, which may benefit the overall Chinese economy, may have a negative effect on the TAG Business. For
example, the Companys financial condition and results of operations may be adversely affected by government control over capital
investments or changes in tax regulations. In addition, the PRC government has from time to time implemented certain measures, including
interest rate changes, to control the pace of economic growth. These measures may cause decreased economic activity in China, as evidenced
by the slowing of growth of the Chinese economy since 2012. In addition, COVID-19had a severe and negative impact on the Chinese
economy since the first quarter of 2020. Whether this will lead to a prolonged downturn in the Chinese economy is still unknown. In addition,
any future escalation of the ongoing trade war between the UnitedStates and China, regional or national instability, the ongoing
impact of the COVID-19pandemic, or the armed conflict between Russia and Ukraine may negatively impact the growth of the Chinese
economy. Any prolonged slowdown in the Chinese economy or adverse changes in the policies of the Chinese government or in the laws and
regulations in China could have a material adverse effect on the overall economic growth of China and may reduce the demand for the Companys
services and solutions among potential Chinese customers and materially and adversely affect its business and results of operations.
National
laws of the PRC do not apply in HongKong unless they are listed in AnnexIII of the Basic Law and applied locally by promulgation
or local legislation. National laws that may be listed in AnnexIII are currently limited under the Basic Law to those which fall
within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of HongKong. National
laws and regulations relating to data protection, cybersecurity and the anti-monopolyhave not been listed in AnnexIII and
so do not apply directly to HongKong. The laws and regulations in the PRC are evolving, and their enactment timetable, interpretation
and implementation involve significant uncertainties. To the extent any PRC laws and regulations become applicable to the Company, it
may be subject to the risks and uncertainties associated with the legal system in the PRC, including with respect to the enforcement
of laws and the possibility of changes of rules and regulations with little or no advance notice. The TAG Business may also become subject
to the laws and regulations of the PRC to the extent it commences business and customer facing operations in mainland China as a result
of any future acquisition, expansion, or organic growth.
**The
Companys potential expansion of activities in China is subject to various risks.**
****
The
Company and certain of its subsidiaries, as of the date of this registration statement, operate in HongKong. The Company has been
pursuing and will continue to pursue its growth strategy in China, particularly in the Greater Bay Area, comprising Macau, Guangzhou,
Shenzhen, and the surrounding area. Currently, the Company does not have any Chinese operating entities and does not plan to use variable
interest entities, or VIEs, in the future to conduct its operations. The management of the Company intends for such expansion
to be conducted through customer referrals and partnerships, with its actual sales activities conducted in HongKong. For instance,
the Company is currently in active discussions to establish a strategic partnership with a top asset manager (the **Potential
Partner**) in China to provide offshore insurance solutions to its over 20million customers. Accordingly, the management
of the Company expects the main source of revenue from such expansion in China to be generated from referral income.
Notwithstanding,
expansion of China-relatedactivities may expose the Company to additional risks, including:
|
|
|
Changing global environment,
including changes in U.S., Chinese, and international trade policies; | |
|
|
|
Challenges associated with
relying on local partners in markets that are not as familiar to the Company, including joint venture partners to help the Company
establish its business; | |
26
|
|
|
Difficulties managing operations
in new regions, including complying with the various regulatory and legal requirements; | |
|
|
|
Different approval or licensing
requirements; | |
|
|
|
Recruiting sufficient suitable
personnel in new markets; | |
|
|
|
Challenges in providing
services and solutions as well as support in these new markets; | |
|
|
|
Challenges in attracting
business partners and customers; | |
|
|
|
Potential adverse tax consequences; | |
|
|
|
Foreign exchange losses; | |
|
|
|
Limited protection for
intellectual property rights; | |
|
|
|
Inability to effectively
enforce contractual or legal rights; | |
|
|
|
International travel restriction
and temporary lock-downdue to COVID-19; and | |
|
|
|
Local political, regulatory,
and economic instability or wars, civil unrest, and terrorist incidents. | |
Moreover,
changes in Chinas economic, political, or social conditions or government policies could have a material adverse effect on the
Companys growth plans.If the Company is unable to effectively avoid or mitigate these risks, its ability to grow its China-relatedbusiness
will be affected, which could have a material adverse effect on its business, financial condition, results of operations, and prospects.
As
the Company further expands into the international market, it is increasingly subject to additional legal and regulatory compliance requirements,
including local licensing and periodic reporting obligations. the Company may inadvertently fail to comply with local laws and regulations,
and any such violation could subject the Company to regulatory penalties, such as revocation of licenses, which would in turn harm its
brand, reputation, business operation and financial results. Although the Company has policies and procedures in place to enhance compliance
with local laws and regulations, there can be no assurance that its employees, contractors, or agents will stay compliant with these
policies and procedures.
**The
Companys financial services revenues are highly dependent on macroeconomic conditions as well as HongKong, China, and global
market conditions. Disruptions in the global financial markets and economic conditions could adversely affect the Company and its institutional
clients and customers.**
****
Given
the certain of its business operations concentrated in HongKong, the Companys success depends on the health of the HongKong
financial industry, which is affected by changes in general economic conditions beyond the Companys control. Economic factors
such as increased interest rates, slow economic growth or recessionary conditions, changes in household debt levels, and increased unemployment
or stagnant or declining wages affect the Companys customers income and thus their ability and willingness to take loans
from the Company, invest with the Company, or engage with the Companys other financial products. Domestic and global events affect
all such macroeconomic conditions. Weak or a significant deterioration in economic conditions reduce the amount of disposable income
both individual and institutional consumers have, which in turn reduces consumer spending and their willingness to engage with the Companys
financial services. Any or all of the circumstances described above may lead to further volatility in or disruption of the credit markets
at any time and could adversely affect the Companys financial condition.
27
Changes
in the condition of HongKongs and Chinas economies generally affect the demand and supply of financial products,
which in turn will affect demand for the solutions that the Company provides. For example, a credit crisis, or prolonged downturn in
the credit markets could severely affect the Companys operating environment by, for example, causing a tightening in credit guidelines,
limited liquidity, deterioration in credit performance, or increased foreclosures. Since a significant portion of the Companys
revenue is generated from transaction-basedfees and commissions, a decrease in transaction volumes could cause a material decline
in the Companys revenues for the duration of such crisis.
Global
economies could suffer dramatic downturns as the result of a deterioration in the credit markets and related financial crisis as well
as a variety of other factors including, extreme volatility in security prices, diminished liquidity and credit availability, and ratings
downgrades or declining valuations of certain investments. In past economic downturns, governments have taken unprecedented actions to
address and rectify these extreme market and economic conditions, including by providing liquidity and stability to the financial markets.
If these actions are not successful, the return of adverse economic conditions may significantly affect the businesses of the Companys
customers, which could in turn negatively affect the Companys revenues.
In
addition, there is considerable uncertainty over the long-termeffects of the expansionary monetary and fiscal policies adopted
by central banks and financial authorities in some of the worlds leading economies, including the European Union, the UnitedStates,
and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe, and Africa. There have also been concerns
on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial
disputes, and escalations in the trade tensions between the UnitedStates and China. Starting from 2018, changes in U.S.trade
policies have occurred, including the imposition of tariffs. These types of developments, including a potential trade war, could have
a material adverse impact on the Chinese economy and in turn on the HongKong economy. On January31, 2020, the United Kingdom
ceased to be a member of the European Union (commonly referred to as **Brexit**). The effects of Brexit on worldwide
economic and market conditions remain uncertain. Brexit could adversely affect European and worldwide economic and market conditions
and could contribute to instability in global financial and foreign exchange markets. Furthermore, protests in HongKong in2019,
political instability in the Korean Peninsula, a slump in commodity prices, uncertainty over interest rates in the UnitedStates,
the outbreak and spread of the COVID-19pandemic, and the armed conflict between Russia and Ukraine have also resulted in instability
and volatility in the global financial markets. Recently, the global stock markets have experienced extreme volatility, in reaction to
the outbreak of the conflict between Russia and Ukraine and governments responses thereto. It is unclear whether these challenges
and uncertainties will be contained or resolved, and what effects they may have on the global political and economic conditions in the
long term.
**Failure
to comply with existing or future laws and regulations related to data protection or data security could lead to liabilities, administrative
penalties, or other regulatory actions, which could negatively affect the Companys operating results, business, and prospects.**
****
The
regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of personal data worldwide is rapidly
evolving and is likely to remain uncertain for the foreseeable future. Regulatory authorities in virtually every jurisdiction in which
we have implemented or are considering a number of legislative and regulatory proposals concerning personal data protection. Our management
been monitoring the evolution of this area of law and intends to take steps to ensure compliance with laws applicable to our current
operations in HongKong and potential future operations in China.
While
the our management believes that we are not currently subject to PRC laws relating to the collection, use, sharing, retention, security,
and transfer of confidential and private information, such as personal information and other data, we may be subject to such laws in
the future. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliancecould
result in penalties or other significant legal liabilities.
28
**The
PRC may prevent the cash maintained by the Company in HongKong from leaving, or the PRC could restrict deployment of such cash
for the Companys business purposes or for the payment of dividends.**
****
The
Company does not have any business operations in mainland China or maintain any cash balances in mainland China. However, if the Company
were to establish business operations or maintain cash balances in mainland China, it may become subject to the PRC governments
controls on the convertibility of Renminbi into foreign currencies and the remittance of currencies out of China to foreign entities
or investors. Under the existing PRC foreign exchange regulations, payments of current account items, including profit distributions,
interest payments and expenditures from trade-relatedtransactions, can be made in foreign currencies without prior approval from
the State Administration of Foreign Exchange (SAFE) as long as certain procedural requirements related to foreign exchange
control are met. Although generally the PRC government may not impose any restrictions on international payments or transfers on current
account, the PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions,
and there may also exist macro-prudentialcontrol in foreign exchange through position management or know-your-customer(KYC)
policies. Approval from appropriate government authorities, including SAFE, the National Development and Reform Commission (NDRC) and
the Ministry of Commerce may be required for certain transactions if Renminbi is converted into foreign currency and remitted out of
China to pay capital expenses such as the repayment of loans denominated in foreign currencies. Furthermore, foreign currency loans or
capital contributions may be subject to statutory limits and registration with competent authorities.
The
HongKong government has not issued similar laws or regulations for companies that are incorporated in or conduct businesses in
HongKong. No cash is or is currently intended by the management of the Company to be held in the PRC by the Company or any of its
subsidiaries. There is no regulatory restriction imposed by authorities in HongKong over the flow of funds among the Company and
its subsidiaries, or on any distributions or dividends of the Company to its investors as of the date of this registration statement,
and management of the Company does not expect there will be regulatory restrictions by authorities in HongKong.
The
Basic Law is the constitutional document for HongKong. Under Article112 of the Basic Law, no foreign exchange control policies
shall be applied in HongKong. The HongKong dollar shall be freely convertible, and the Government of HongKong shall
safeguard the free flow of capital within, into and out of the region. The power to amend the Basic Law lies in the National Peoples
Congress of the PRC and the ultimate power of interpretation of the Basic Law is vested in the Standing Committee of the National Peoples
Congress of the PRC.Therefore, the PRC has the power to cause a change in the Basic Law and cause capital controls to be imposed
over HongKong. If the PRC were to do so, the PRC may also restrict the ability of the Companys operating entities to remit
currency maintained in HongKong offshore to pay dividends or make other payments, or otherwise to satisfy its foreign-currency-denominatedobligations.
In such case, relevant PRC governmental authorities may limit the ability of the Company to purchase foreign currencies in the future
to settle transactions. As the PRC government may continue to strengthen its control over HongKong, this may limit the Companys
ability to utilize such currencies to fund its business activities outside of the PRC, or to pay dividends in foreign currencies.
**Risks
Factors Relating to the Business and Operations of TAG International Limited and TAG Asia Capital Limited**
**The
technologies that the Company uses may contain undetected errors, which could result in customer dissatisfaction, damage to the Companys
reputation, or loss of customers.**
Some
of the solutions that we offer are built on large stacks of data, requiring sophisticated and innovative technologies to address our
operating needs, predict operating patterns, and help make decisions in terms of business strategies and implementation plans. We aim
to make its operations and solutions more streamlined, automated, and cost-effectiveby using advanced technologies which are currently
under development. We may encounter technical obstacles, and it may discover problems that prevent such technologies from operating properly,
or at all, which could adversely affect our information infrastructure and other aspects of its business where such technologies are
applied. If our solutions do not function reliably or fail to achieve its customers expectations for performance, we may lose
existing customers or fail to attract new ones, which may damage its reputation and adversely affect its business, financial condition,
and results of operations. Material performance problems, defects, or errors in our existing or new software, applications, and solutions
may arise and may result from the interface between solutions and systems and data that it did not develop, the function of which is
beyond its control, or defects and errors that were undetected in internal testing. These types of defects and errors, and any failure
by us to identify and address them, could result in a loss of revenue or market share, diversion of development resources, harm to our
reputation and increased service and maintenance costs. Defects or errors may discourage existing or potential customers from utilizing
our solutions. Correcting these types of defects or errors could prove to be impossible or impracticable. The costs incurred in correcting
any defects or errors may be substantial and could have a material adverse effect on our business, financial condition, and results of
operations.
****
29
****
**We
rely on our business relationships with product issuers and the success of those product issuers, and the future development depends,
in part, on the growth of such product issuers and their continued collaboration.**
The
Platform Business relies, in part, on financial products provided by certain banks, insurance companies, or other companies that offer
financial products (product issuers). Our management team believes that establishment of business relationships with major product issuers
such as MassMutual Asia Limited, Prudential HongKong Limited, and Zurich International Life Limited, which facilitates our ability
to provide a wide variety of products to satisfy customers needs and enables it to negotiate favorable terms with such product
issuers, to the benefit of its customers, contributes to its current success. The long-termbusiness relationships that the Platform
Business has established with major product issuers are formed on the basis of the terms of business, broker contracts, and/or conditions
issued by the product issuer(s) setting out the terms and conditions upon which product issuer(s)are prepared to accept business
referred or introduced to them. However, there is no assurance that the Platform Business will succeed in maintaining existing and/or
establishing new, strategic relationships with product issuers. If the Platform Business cannot maintain and/or establish such relationships,
it and its subsidiaries access to similar financial products may be restricted, and their business, operations, and financial
position may, in turn, be adversely affected.
The
Platform Businesss future development depends, in part, on the growth of such product issuers, on their continued development
of new financial products, and on their continued collaboration. Failure by such product issues to continue to sell new financial products
may, in turn, limit our ability to offer such products to their customers. There can be no assurance that if any product issuer discontinued
its business or ceased to collaborate with us could find replacement products on comparable terms, or at all. If the Platform Business
cannot maintain its current pipeline of products from product issuers, it and its subsidiaries access to similar financial products
may be restricted, and their business, operations, and financial position may, in turn, be adversely affected.
**The
property agency segment of the Platform Business has historically operated on thin margins, which expose it to risk of non-profitability
and recent trends have caused the segment to be loss-making.**
The
property agency segment of the Platform Business, run by OnePlatform International Property Limited (**OIP**), has historically
operated with thin profit margins. In accordance with its contracts with property developers and agreements with its own staff, commission
income from OIPs operations is dispersed broadly among both the consultancy force and salespersons, often equaling up to 50% of
the commission. This significant split of commission income has historically resulted in marginal profit for OIP.
In
recent years, the segment has been loss-making and was supported by intercompany loans. While our management intends to generate sufficient
cash flows from the segment to repay such intercompany loans and create positive profit margins, there can be no assurance that the property
agency segment of the Platform Business will be able to generate such cash flows now or in the future. Without a change in the commission
sharing mechanism or optimization of the segments operating costs, the property agency segments ability to achieve additional
profits may be limited. There can be no assurance that OIP will be able to achieve changes in commission sharing or optimization of operating
costs to sufficient levels, or at all. In addition, given the competitive environment in which OIP operates, there also can be no guarantee
that such changes would not create a loss of engagement with property developers and salespersons. Such disruptions to the property agency
segment of the Platform Business could have negative effects on its business, financial condition, results of operations, and prospects.
****
30
**The
Company relies on third parties for various aspects of its business and the services and solutions that it offers. The Companys
business, results of operations, financial condition, and reputation may be materially and adversely affected if these third parties
do not continue to maintain or expand their relationship with the Company, or if they fail to perform in accordance with the terms of
their relevant contracts.**
We
rely on third parties for various aspects of its business and the solutions they offer. For example, we rely on computer hardware, software,
and cloud services, internet and telecommunication services, and third-partysupplied data. We expect to continue to rely on these
third parties to supplement its capabilities for a significant period, if not indefinitely. Therefore, we need all of these parties to
function in a flawless and timely manner in order to conduct its business. However, there can be no assurance that these third parties
will provide their support properly or in a cost-effectivemanner or that the third party-supplieddata we rely on will be
complete, accurate, or reliable. In the event of problems with any of these third-partyproviders, transitioning to new providers
may disrupt our business and increase costs.
If
any of the third-party service providers fail to perform properly, there can be no assurance that we would be able to find suitable replacement
suppliers on commercially reasonable terms on a timely basis, or at all. The third-party service providers may carry out their business
in an inappropriate manner or in violation of regulations or laws. Any of such occurrences could diminish our ability to operate or damage
its business reputation, or cause it regulatory or financial harm, any of which could negatively affect our business, financial condition,
and results of operations.
**A
number of our business partners are commercial banks and other financial institutions that are highly regulated, and the tightening of
laws, regulations, or standards in the financial services industry could harm its business.**
A
number of our business partners are commercial banks and other financial institutions that are highly regulated and must comply with
complex and changing government regulations and industry standards, which are subject to significant changes, in the various jurisdictions
in which they operate. Global, regional, or local regulatory developments, including those in respect of consumer protection, credit
availability, risk management, and data privacy, could adversely affect our customers or otherwise result in a reduction in the volume
and frequency of its business transactions.
Our
financial institution partners must sometimes include restrictive provisions in their contracts with service providers, with respect
to security and privacy, ongoing monitoring, risk management, and other limitations. These provisions may increase our costs, limit the
scope of the solutions we offer, or otherwise restrict customer access. In addition, our customers may have less capacity or incentive
to purchase solutions from us, may pass on their increased costs to us, or may cease to use certain of our solutions. As aspects of our
business employ a broker-basedmodel, any reduction of transactions by our partners may materially and adversely affect our business
and results of operations.
As
a result of such laws and regulations, certain of our business partners have had, or will have, to adjust their business practices in
ways that reduce their use of our solutions, and these types of changes in response to regulatory developments may adversely affect our
business, result of operations, and financial conditions.
****
**Significant
increases and decreases in the number of transactions by the Companys clients can have a material negative effect on the Companys
profitability and its ability to efficiently process and settle transactions.**
Significant
volatility in the number of client transactions and rebalancing activity may result in operational problems such as a higher incidence
of failures to deliver services and errors in processing transactions, and such volatility may also result in increased personnel and
related processing costs. We may experience adverse effects on its profitability resulting from significant reductions in product sales
and may encounter operational problems arising from unanticipated high transaction volume because we are not able to control such fluctuations.
In
addition, significant transaction volume could result in inaccurate books and records, which would expose us to disciplinary action by
governmental agencies and other relevant regulators.
**We
operate in a variety of heavily regulated industries in HongKong and globally, which expose its business activities to risks of
noncompliance with an increasing body of complex laws and regulations.**
Due
to the heavily regulated nature of the industries in which we operate, primarily the insurance, Mandatory Provident Fund (**MPF**),
asset management and money lending industries, we are required to comply with a wide array of HongKong laws and regulations that
regulate, among other things, the manner in which they conduct their businesses, which of our operating entities can provide certain
services, and the fees that they may charge. Governmental authorities and various HongKong agencies, including, among others, the
Insurance Authority, the Mandatory Provident Fund Authority, the Securities and Futures Commission, and the Inland Revenue Department,
have broad oversight and supervisory authority over us.
31
Because
of the financial services that we offer and deliver, we engage in the relevant service must be licensed in HongKong as well as
all relevant jurisdictions that require licensure and must comply with each such jurisdictions respective laws and regulations,
as well as with judicial and administrative decisions applicable to it. Presently, in HongKong, we maintain Insurance Broker Licenses,
HKSFC Licenses, and Money Lenders Licenses, in addition to their business registrations with the HongKong Companies Registry. In
addition, these companies are currently subject to a variety of, and may in the future become subject to additional, laws that are continuously
evolving and developing, including laws on advertising as well as privacy laws.
These
licensing requirements and other regulations directly impact our business and require ongoing compliance, monitoring, and internal and
external audits as they continue to evolve and may result in ever-increasingpublic scrutiny and escalating levels of enforcement
and sanctions. Subsequent changes to data protection and privacy laws, for instance, could impact how we process personal information,
and therefore limit the effectiveness of its products or services or its ability to operate or expand its business, including limiting
strategic partnerships that may involve the sharing of personal information.
Both
the scope of the laws and regulations and the intensity of the supervision to which we are subject have increased over time, in response
to financial crises as well as other factors such as technological and market changes. Regulatory enforcement and fines have also increased
across the financial services sector in HongKong and the other markets where we operate. Our management expects that its business
will remain subject to extensive regulation and supervision. These regulatory changes could result in an increase in our regulatory compliance
burden and associated costs and place restrictions on its operations. Our failure to comply with applicable licensing requirements and
relevant laws and regulations could lead to, among other things:
|
|
|
loss of its licenses and
approvals to engage in its businesses; | |
|
|
|
damage to its reputation
in the industry; | |
|
|
|
governmental investigations
and enforcement actions; | |
|
|
|
administrative fines and
penalties and litigation; | |
|
|
|
civil and criminal liability,
including class action lawsuits; | |
|
|
|
increased costs of doing
business; | |
|
|
|
diminished ability to sell
financial products; | |
|
|
|
inability to raise capital;
and | |
|
|
|
inability to execute on
its business strategy, including its growth plans. | |
As
applicable licensing requirements and laws evolve, it may be more difficult for our management to identify these developments comprehensively,
to interpret changes accurately, and to train our employees effectively with respect to these laws and regulations. These difficulties
potentially increase our exposure to the risks of noncompliance with these licensing requirements, laws, and regulations, which could
be detrimental to its business. In addition, a failure to adequately vet and supervise our clients, service providers and vendors, to
the extent they are covered by such licensing requirements, laws, and regulations, may also have these negative results.
To
resolve issues raised in examinations or other governmental actions, we or certain of our subsidiaries may be required to take various
corrective actions, including changing certain business practices, making refunds or taking other actions that could be financially or
competitively detrimental to it. Our management expects to continue to incur costs to comply with governmental regulations. In addition,
certain legislative actions and judicial decisions can give rise to the initiation of lawsuits against us for activities that it has
conducted in the past. We have been, and its management expects it to continue to be, subject to regulatory enforcement actions and private
causes of action from time to time with respect to its compliance with applicable laws and regulations.
32
Although
we have systems and procedures directed to comply with these legal and regulatory requirements, there can be no assurance that more restrictive
laws and regulations will not be adopted in the future, or that governmental bodies or courts will not interpret existing laws or regulations
in a more restrictive manner, which could render its current business practices non-compliant or which could make compliance more difficult
or expensive. Any of these, or other, changes in laws or regulations could have a detrimental effect on us and its results of operations.
****
**We
are subject to evolving regulatory requirements, and failure to comply with these regulations or to adapt to regulatory changes could
materially and adversely affect its operations, business, and prospects.**
****
Many
of our aspects, including brokerage and technology services to individual investors, banks, and insurance companies, insurance loss adjustment
services, online publication services relating to financial product information, facilitating consumer lending products for banks and
online small loan companies, managing and distributing various asset management products, and electronic certification services are subject
to supervision and regulation by various governmental authorities in Hong Kong or in other jurisdictions where we operate. As we continue
to expand its solutions and product offerings, the group may be subject to new and more complex regulatory requirements.
We
are also required to comply with applicable laws and regulations in relevant jurisdictions to protect the privacy and security of its
customers information. Legal and regulatory restrictions may delay, or possibly prevent, some of our solutions or services from
being offered, which may have a material adverse effect on its business, financial condition, and results of operations. Violation of
laws and regulations may also result in severe penalties, confiscation of illegal income, revocation of licenses and, under certain circumstances,
criminal prosecution.
For
example, the regulatory framework governing financial technology services is unclear and evolving. New laws or regulations may be promulgated,
which could impose new requirements or prohibitions that render our current operations or technologies non-compliant. In addition, due
to uncertainties and complexities of the regulatory environment, it cannot be assured that regulators will interpret laws and regulations
the same way as we do, or that we will always be in full compliance with applicable laws and regulations. To remedy any violations, we
may be required to modify its business models, solutions, and technologies in ways that render its solutions less appealing to potential
customers. We may also become subject to fines or other penalties, or, if we determine that the requirements to operate in compliance
are overly burdensome, it may elect to terminate potentially non-compliant operations. In each such case, our business, financial condition
and results of operations may be materially and adversely affected.
****
**We
may be adversely affected by the complexity, uncertainties, and changes in regulation of internet-related businesses and companies, and
any lack of requisite approvals, licenses, or permits applicable to our business may have a material adverse effect on its business and
results of operations.**
The
HongKong government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements
pertaining to, companies in the industry. These internet-relatedlaws and regulations are relatively new and evolving, and their
interpretation and enforcement involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine
what actions or omissions may be deemed to be in violation of applicable laws and regulations.
The
interpretation and application of existing HongKong laws, regulations and policies, and possible new laws, regulations, or policies,
including those relating to the internet industry, have created substantial uncertainties regarding the legality of existing and future
foreign investments in, and our businesses and activities.There can be no assurance that we have obtained all the permits or licenses
required for conducting its business or that it will be able to maintain or update its existing licenses or obtain new ones. If a government
authority considers that we were operating without the proper approvals, licenses, or permits or promulgates new laws and regulations
that require additional approvals or licenses or imposes additional restrictions on the operation of any part of its business, it may
levy fines, confiscate our income, revoke its business licenses, and/or require us to discontinue its relevant business or impose restrictions
on the affected portion of its business. Any of these actions may have a material adverse effect on our business and results of operations.
****
33
****
**Uncertainties
in the interpretation and enforcement of HongKong laws and regulations could limit the legal protections available to us and our
investors.**
HongKong
laws and regulations concerning the internet-related and financial services industries are developing and evolving. Although we
have taken measures to comply with the laws and regulations applicable to its business operations and to avoid conducting any non-compliantactivities
under these laws and regulations, governmental authorities may promulgate new laws and regulations regulating the internet-relatedand
financial services industries. There can be no assurance that our operations would not be deemed to violate any such new laws or regulations.
Moreover, developments in the internet-relatedindustries and financial services industry may lead to changes in existing laws,
regulations, and policies in HongKong, or in the interpretation and application of existing laws, regulations, and policies, which
in turn may limit or restrict us and could materially and adversely affect its business and operations.
**Risks
Factors Relating to the Business and Operations of Triller Corp.**
**Triller
has a limited operating history and has experienced fluctuations in its results of operations due to the nature of its business and a
number of factors, which makes it difficult to forecast its revenue and evaluate its business and future prospects.**
Trillers
ability to forecast its future results of operations and plan for and model future growth is limited. Triller has a limited operating
history which makes it difficult to predict its results of operations. In addition, Trillers results of operations may fluctuate
from quarter to quarter as a result of the nature of its business and a number of factors, many of which are outside of Trillers
control and may be difficult to predict. For example, Triller hosts Events under its Bareknuckle Fighting Championships (**BKFC**)
offerings which may lead to outsized revenue for one quarter compared to other quarters. Some additional factors that affect our results
include, but are not limited to:
|
|
|
the level of demand for
Trillers Technology Platform and Events; | |
|
|
|
its ability to retain existing
or add new Creators and Brands; | |
|
|
|
its ability to successfully
integrate companies and assets it has acquired and in the future may acquire into its business; | |
|
|
|
the timing and success
of new features, integrations, capabilities and enhancements by Triller to its products or by its competitors to their products; | |
|
|
|
changes in the competitive
landscape of Trillers market; | |
|
|
|
Trillers ability
to achieve widespread acceptance and use of its Technology Platform; | |
|
|
|
errors in Trillers
forecasting of the demand for its Triller app, Technology Platform offerings and Events, which could lead to lower revenue, increased
costs or both; | |
|
|
|
the amount and timing of
operating expenses and capital expenditures, as well as entry into operating leases, that Triller may incur to maintain and expand
its business and operations and to remain competitive; | |
|
|
|
the timing of expenses
and recognition of revenue; | |
|
|
|
security breaches, technical
difficulties or interruptions to its Technology Platform resulting in service level agreement credits; | |
|
|
|
adverse litigation judgments,
other dispute-related settlement payments or other litigation-related costs; | |
|
|
|
regulatory fines; | |
|
|
|
changes in, and continuing
uncertainty in relation to, the legislative or regulatory environment; | |
|
|
|
legal and regulatory compliance
costs in new and existing markets; | |
34
|
|
|
the number of new employees
added and employee turnover; | |
|
|
|
the timing of the grant
or vesting or settlement of equity awards to employees, directors or consultants; | |
|
|
|
the timing of the conversion
of Trillers outstanding convertible securities or when our outstanding debt may become due or payable; | |
|
|
|
the availability of content
for licensing for use by Creators on its Technology Platform; | |
|
|
|
pricing pressure as a result
of competition or otherwise; | |
|
|
|
costs and timing of expenses
related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization
costs and possible write-downs; and | |
|
|
|
general economic conditions
in either domestic or international markets, including geopolitical uncertainty and instability. | |
Any
one or more of the factors above may result in significant fluctuations in Trillers quarterly results of operations. You should
not rely on Trillers past results as an indicator of our future performance. The variability and unpredictability of Trillers
quarterly results of operations or other operating metrics could result in its failure to meet its expectations or those of analysts
that cover it or investors with respect to revenue or other key metrics for a particular period. If Triller fails to meet or exceed such
expectations for these or any other reasons, Triller could face costly lawsuits, including securities class action suits.
In
addition, there has been historically a high failure rate among early-stage companies. Early-stage companies face a number of risks,
including, among others, the ability to effectively implement a growth strategy, counter and respond to actions by competitors, maintain
adequate control of expenses and achieve market acceptance. Trillers future performance will depend upon a number of factors,
including its ability to successfully implement, launch, and achieve market acceptance of its Technology Platform and offerings to anticipate
and manage the risks associated therewith. Triller has encountered and expects to continue to encounter risks and uncertainties frequently
experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein. We cannot assure
you that we will successfully address any of these factors, and our failure to do so could have a material adverse effect on our business,
financial condition, results of operations and future prospects.
**Triller
has an unproven and evolving business model and the Company cannot provide any assurance that Triller will generate significant revenues
or operating profit.**
****
Trillers
current business model is unproven and evolving and the scale and profit potential, if any, is unknown at this time. Management has spent
significant time developing and refining its business model in an effort to increase revenue and gain market share. To date Trillers
efforts to create a profitable business model have not succeeded and there is no guarantee that it will achieve scale or profitability.
Triller is subject to all of the risks inherent in the creation of a new business. Its ability to achieve scale and profitability is
dependent, among other things, its ability to retain or add new users, Creators and Brands to our Technology Platform, its ability to
gain acceptance of our Technology Platform and on Trillers ability to successfully integrate companies it has acquired and in
the future may acquire into its business.
**Triller
has various financial obligations which have come due in the past six months and are coming due over the next twelve months and it may
not be able to meet its cash obligations as those amounts come due.**
****
Triller
has various financial obligations which have come due in the past six months and are coming due over the next twelve months. Triller
may not have sufficient cash on hand to satisfy these obligations or may be unable to meet its cash obligations as they become due, which
would materially harm Trillers financial condition and liquidity as well as its reputation.
35
**The
loss of a large customer could have an adverse effect on Trillers business.**
As
of December31, 2024, Triller had one customer that comprised approximately 20% of consolidated accounts receivable. As of December
31, 2023, Triller had one customer that comprised over 27% of consolidated accounts receivable. During the years ended December31,
2024 and 2023, Triller had a single customer, All Elite Wrestling, a customer of TrillerTV, which accounted for approximately 24% and
19% of Trillers consolidated revenue, respectively. Pursuant to Trillers distribution agreement with All Elite Wrestling
(**AEW**), TrillerTV holds a non-exclusive, non-transferable right to distribute certain audiovisual programs that are
owned or controlled by AEW on TrillerTVs distribution platform within the US and UK. In consideration for such rights and pursuant
to Trillers distribution agreement, TrillerTV pays AEW a fixed percentage of all net revenues generated through the distribution
of such media (which usually occur through pay-per-view sales). In addition, the distribution agreement grants TrillerTV the right to
distribute and sell certain of AEWs branded wrestling programs as a monthly subscription service via Trillers distribution
platforms outside of the United States, United Kingdom and other territories in return for a fixed percentage of all revenue collected
by TrillerTV in connection therewith. The distribution agreement automatically renews for successive one year periods and may be terminated
by either party upon the delivery of 30 days notice.
Triller
manages its exposure to credit risk by performing ongoing evaluation of its customers credit worthiness and the amount of credit
extended to them. Customers of this size may divert managements attention from other operational matters and pull resources from
other areas of the business, resulting in potential loss of revenue from other customers. The loss of, or significant curtailment of
purchases by, any one or more of Trillers larger customers could have a material adverse effect on its operating results.
**Non-compliance
with the objective and subjective criteria for the Paycheck Protection Program (PPP) loan could have a material adverse
effect on Trillers business.**
****
On
April10, 2020, Triller Inc. received a PPP Loan from First Choice Bank, in the aggregate amount of $1,556,000, pursuant to the
PPP under Division A, Title I of the CARES Act, which was enacted March27, 2020. The PPP Loan, which was in the form of a note
dated April10, 2020 issued by First Choice Bank, which matured on April13, 2022, and bore interest at a rate of 1% per annum,
payable monthly commencing on the fifth calendar day of the seventh month following the date of first disbursement. The PPP Loan permitted
prepayment by Triller at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan could only be used for payroll
costs, any payment of interest on a covered mortgage obligation, any payment on a covered rent obligation, or any covered utility incurred
during the 8-week period beginning on the date of first disbursement of this loan. Triller used the entire PPP Loan amount for what it
considered to be qualifying expenses, under the current guidance as promulgated by the U.S. Small Business Administration (the **SBA**).
Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in
the CARES Act. The PPP Loan was forgiven by the First Choice Bank on July28, 2021. In January 2025, the SBA made a final loan review
decision. After review of the documentation provided, the SBA has recalculated Triller Inc.s maximum eligible PPP loan amount
and limited forgiveness to the eligible amount to $407,251.77.
In
order to apply for the PPP Loan, Triller were required to certify, among other things, that the current economic uncertainty made the
PPP Loan request necessary to support Trillers ongoing operations. If the SBA determines that Triller were ineligible to receive
the PPP Loan or determines that Triller did not comply with requirements after receiving the PPP Loan, Triller may be required to repay
the PPP Loan in its entirety and/or be subject to additional penalties and adverse publicity, which could have a material adverse effect
on Trillers business, results of operations, and financial condition.
**If
the Companys goodwill or intangible assets become impaired, the Company may be required to record an additional significant charge
to earnings.**
****
A
significant decline in the Companys expected future cash flows, a significant adverse change in the business climate, slower economic
growth or a significant and sustained decline in the value of Trillers common stock, any or all of which could be materially impacted
by many of the risk factors discussed herein, may necessitate Trillers taking charges in the future related to the impairment
of its goodwill. Future regulatory actions could also have a material impact on assessments ofgoodwill for impairment. If Triller
were to conclude that a future write-down of itsgoodwill is necessary, Triller would record the appropriate charge, which could
have a material adverse effect on its results of operations. Triller reviews its goodwill for impairment annually and at any time upon
the occurrence of certain events or substantive changes in circumstances that indicate the carrying amount of goodwill may not be recoverable.
If such goodwill or intangible assets are deemed to be impaired, an impairment loss equal to the amount by which the carrying amount
exceeds the fair value of the assets would be recognized. Any impacts to Trillers business, including macroeconomic conditions
such as rising interest rates and fluctuations in markets, could result in impairments and significant charges to earnings.
36
**Triller
is not in compliance with the payment obligations of a significant number of its significant music licensing agreements and agreements
with other vendors and counterparties.**
****
Triller
is not in compliance with the payment obligations of a significant number of its contracts with certain of its counterparties, including
with respect to its music licenses, as a result of its inability to make certain fee payments required pursuant to such agreements or
its failure to make such payments on time. In addition to being behind on payments to music licensing counterparties, Triller is overdue
on payments to other parties and vendors, including but not limited to those providing Triller with engineering, marketing and legal
services. These amounts currently exceed Trillers cash balance and Triller currently has obligations, that could impact its ability
to obtain financing in the future. If Triller is not able to obtain sufficient financing to satisfy these obligations it may be unable
to pay its obligations when they come due. Triller also has payments due to certain of its landlords at its rented facilities. This may
further affect Trillers ability to remain solvent and pay its obligations when they come due, including under existing litigation
settlement obligations and new adverse judgments.
While
Triller is currently working with its partners and counterparties and/or negotiating the terms of these various agreements, if Triller
is unsuccessful in renegotiating these agreements or receiving waivers of the due date of payments required thereunder, its partners
and vendors could terminate these agreements and require Triller to make these fee payments in their entirety. Further, if Trillers
music licensing partners terminate Trillers agreements, it will also lose the right to include their content on Trillers
platform. Such counterparties have in the past and may in the future look to file litigation against Triller seeking such overdue payment,
which could have an adverse effect on Trillers business, financial condition, and results of operations.
**We
may in the future be adversely affected by natural disasters, the physical effects of climate change, and other catastrophic events,
andbyman-madeproblemssuch asgeo-politicalconflicts and events, including acts of war and terrorism,
that could disrupt Trillers business operations and adversely affect Trillers financial condition and results of operations.**
****
We
have been, and may in the future be, adversely affected by significant natural disasters, the physical effects of climate change, or
other catastrophic events, such as theCOVID-19pandemic, earthquakes, blizzards, tsunamis, hurricanes, droughts, fires, or
floods, or other catastrophic events, such as terrorism, the military conflict involving Russia and Ukraine and economic sanctions imposed
on Russia, extended outages of critical utilities, power loss, telecommunications failure, or any critical resource shortages affecting
us, Trillers users or partners. In the event of a natural disaster or other catastrophic event, Triller and its third-party providers
may be unable to continue operations, may endure system interruptions, any of which could result in reputational harm, delays in development
or interruptions of Trillers Technology Platform, breaches of data security, and loss of critical data, all of which could have
an adverse effect on Trillers business, financial condition, and results of operations.
In
addition, although Triller is not directly impacted by the war between Russia and Ukraine, conflict in Ukraine has further disrupted
trade, intensified problems in the global supply chain, and contributed to inflationary pressures. Financial markets around the world
experienced volatility following the recent invasion of Ukraine by Russia. In response to the invasion, the United States, United Kingdom
and EU, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals
and may implement additional sanctions or take further punitive actions in the future. The full economic and social impact of the sanctions
imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by
Russia, in addition to the ongoing military conflict between Ukraine and Russia and related sanctions, which could conceivably expand
into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to
result in disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity
in both Europe and globally, and has introduced significant uncertainty into global markets. In particular, the ongoing Russia-Ukraine
conflict and related sanctions has contributed to rapidly rising costs of living (driven largely by higher energy prices) in Europe and
other advanced economies. Further, a weak or declining economy could strain Trillers suppliers and manufacturers. As a result,
Trillers business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia and related
sanctions, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.
37
Generally,
during times of war and other major conflicts, Triller, the third parties on which Triller relies, and Trillers partners may be
vulnerable to a heightened risk of cyberattacks, including retaliatory cyberattacks, that could seriously disrupt Trillers business.
Triller has experienced an increase in attempted cyberattacks on its products, systems, and networks, which Triller believes are related
to the conflict. Triller may also face retaliatory attacks by governments, entities, or individuals who do not agree with its public
expressions of support for Ukraine and its Ukrainian team members. Any such attack could cause disruption to Trillers platform,
systems, and networks, result in security breaches or data loss, damage Trillers brand, or reduce demand for Trillers services
or advertising products. In addition, Triller may face significant costs (including legal and litigation costs) to prevent, correct,
or remediate any such breaches. Triller may also be forced to expend additional resources monitoring its platform for evidence of disinformation
or misuse in connection with the ongoing conflict.
**Unfavorablemacroeconomicconditions,
including those caused by inflation or reductions in customers spending, could limit Trillers ability to grow its business
and negatively affect its results of operations.**
****
Trillers
business is also impacted by macroeconomic factors. General business and economic conditions that could affect Trillers business,
financial condition or results of operations include fluctuations in economic growth, debt and equity capital markets, liquidity of the
global financial markets, access to Trillers liquidity within the U.S. banking system, the availability and cost of credit, investor
and consumer confidence, and the strength of the economies in which Triller, its manufacturers and its suppliers operate. Trillers
products and services may be considered discretionary items for consumers. Factors affecting the level of consumer spending for such
discretionary items include general economic conditions and other factors, such as consumer confidence in future economic conditions,
recessionary forces, rising and fluctuating interest rates, the availability and cost of consumer credit, levels of unemployment and
tax rates. In recent years, the United States and other significant economic markets have experienced cyclical downturns and worldwide
economic conditions remain uncertain. As global economic conditions continue to be volatile or economic uncertainty remains, trends in
consumer discretionary spending also remain unpredictable and subject to reductions and, therefore, Triller cannot be sure the extent
to which Triller may be affected by recessionary conditions. Unfavorable economic conditions may lead consumers to delay or reduce purchases
of Trillers products and consumer demand for its products may not grow as Triller expects. Trillers sensitivity to economic
cycles and any related fluctuation in consumer demand for its products and services could materially adversely affect Trillers
business, financial condition, and results of operations. In addition, political instability or adverse political developments could
harm Trillers business, financial condition and results of operations.
In
addition, market volatility, the high inflationary environment and economic uncertainty make it potentially very difficult for Trillers
customers, its Brands, Creators and Triller to accurately forecast and plan future business activities. During challenging economic times,
Creators, Brands and users may have difficulty gaining timely access to sufficient credit or obtaining credit on reasonable terms and
may face increased costs or other negative financial impacts, each of which could impair their ability to make timely payments to Triller
and adversely affect Trillers revenue. If that were to occur, Trillers financial results could be harmed. Further, challenging
economic conditions may impair the ability of Trillers Creators, Brands and users partners to pay for the applications and services
Triller offers, which may impact demand for its products. In addition, a weak or declining economy could also strain Trillers
suppliers and manufacturers, possibly resulting in supply disruption. Any of the foregoing could harm Trillers business and Triller
cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact Trillers
business.
38
**Trillers
financial performance in certain quarters and years may fluctuate and may not be indicative of, or comparable to, its financial performance
in subsequent financial quarters or years due to economic conditions and operational factors.**
Trillers
business is impacted geopolitical events, the overall macro-economy, Brands marketing budgets and expenditures and other factors
such as interest rates. For example, when Brands have higher marketing expenditures or budgets, which often correspond to broader economic
factors, Triller benefits from these trends. In addition, Triller may generate less revenue during reporting periods that have fewer
major public or civic engagement on social media, which would have otherwise generated marketing dollars, resulting in lower marketing
spend by Brands. Trillers intention is to continue to diversify its client base such that any one of these factors or events would
have a less significant impact on its overall revenue and operating results. If Triller is unsuccessful in diversifying its client base,
Triller would continue to be subject to significant fluctuation in its annual and quarterly results, and this may materially adversely
affect Trillers business, financial condition, and results of operations.
**Trillers
recent acquisitions have caused Triller to grow rapidly, and Triller will need to continue to make changes to operate at its current
size and scale. Triller has in the past faced and may in the future face, difficulty in integrating the operations of the businesses
acquired in its recent transactions, and Triller may never realize the anticipated benefits and cost synergies from all of these transactions.
If Triller is unable to manage its current operations or any future growth effectively, its business could be adversely affected.**
****
Trillers
recent acquisitions have caused Triller to grow rapidly, and Triller may need to continue to make changes to operate at its current size
and scale. If Triller fails to realize the anticipated benefits and cost synergies from its recent acquisitions, or if it experiences
any unanticipated or unidentified effects in connection with these transactions, including write-offs of goodwill, accelerated amortization
expenses of other intangible assets or any unanticipated disruptions with important third-party relationships, Trillers business,
financial condition and results of operations could be adversely affected. Moreover, Trillers recent acquisitions involve risks
and uncertainties including those associated with the integration of operations, financial reporting, technologies and personnel and
the potential loss of key employees, customers or strategic partners. The integration of Trillers acquired businesses has and
will require significant time and resources. For example, Triller currently manually closes the books across its various subsidiaries
and business units, and manually consolidate and roll up such subsidiary financials into Trillers consolidated financial statements.
Triller does not currently utilize a consolidated ERP system to manage the closing of Trillers books or the roll up of financials
into Trillers consolidated financials. This process creates a risk of errors, is time intensive and costly. Triller may not be
able to manage the integration of acquired businesses successfully or achieve the strategic, financial or operating objectives of the
acquisition or integration, any of which could adversely affect Trillers business, results of operations or the value of Trillers
acquisitions, and these acquisitions may not be accretive to its earnings and may negatively impact its results of operations. If Trillers
operations continue to grow, Triller will be required, among other things, to upgrade its information systems and other processes and
to obtain more space for its expanding administrative support and other personnel. Trillers continued growth could strain its
resources, and Triller could experience operating difficulties, including difficulties in hiring, training and managing an increasing
number of employees. These difficulties could result in the erosion of Trillers brand image and reputation and could have an adverse
effect on its business, financial condition, and operating results.
**If
the Company acquires, combines with or invests in other businesses, it will face risks inherent in such transactions.**
****
The
Company has in the past considered and will continue, from time to time, to consider, opportunistic strategic or transformative transactions,
which could involve acquisitions, combinations or dispositions of businesses or assets, or strategic alliances or joint ventures with
companies engaged in music entertainment, entertainment or other businesses. Any such combination could be material, be difficult to
implement, disrupt the Companys business or change its business profile, focus or strategy significantly.
The
Company entered into multiple strategic alliances in the past and later recognized related impairment losses on investments and goodwill.
The Company may incur debts in the future upon an acquisition or suffer losses related to impairment of these investments. The Company
will continue to examine the merits, risks and feasibility of potential transactions, and expect to explore additional acquisition opportunities
in the future. Such examination and exploration efforts, and any related discussions with third parties, may or may not lead to future
acquisitions and investments. The Company may not be able to complete acquiring or investing transactions that the Company initiates.
The Companys ability to grow through such acquisitions and investments will depend on many factors, including the availability
of suitable acquisition candidates at an acceptable cost, the Companys ability to reach agreement with acquisition candidates
or investee companies on commercially reasonable terms, the availability of financing to complete transactions and the Companys
ability to obtain any required governmental approvals.
39
Any
future transaction could involve numerous risks, including:
|
|
|
potential disruption of
the Companys ongoing business and distraction of management; | |
|
|
|
potential loss of Creators
and Brands (e.g. musicians, athletes, and influencers); | |
|
|
|
difficulty integrating
the acquired businesses or segregating assets to be disposed of; | |
|
|
|
exposure to unknown and/or
contingent or other liabilities, including litigation arising in connection with the acquisition, disposition and/or against any
businesses the Company may acquire; | |
|
|
|
reputational or other damages
to the Companys business as a result of a failure to consummate such a transaction for, among other reasons, failure to gain
antitrust approval; | |
|
|
|
difficulty in realizing
synergies between acquired businesses and the Companys current businesses, including the Companys ability to achieve
the customer synergies that motivated the acquisition; | |
|
|
|
acquired businesses having
different users or customers than the Companys current businesses, including resulting increased administrative burdens and
need for additional personnel; and | |
|
|
|
changing the Companys
business profile in ways that could have unintended consequences. | |
If
the Company enters into significant transactions in the future, related accounting charges may affect its business, results of operations
and financial condition, particularly in the case of any acquisitions. In addition, the financing of any significant acquisition may
result in changes in the Companys capital structure, including the incurrence of additional indebtedness, which may be substantial.
Conversely, any material disposition could reduce the Companys indebtedness or require the amendment or refinancing of the Companys
outstanding indebtedness or a portion thereof. the Company may not be successful in addressing these risks or any other problems encountered
in connection with any strategic or transformative transactions. The Company cannot assure you that if it makes any future acquisitions,
investments, strategic alliances or joint ventures or enter into any business combination that they will be completed in a timely manner,
or at all, that they will be structured or financed in a way that will enhance the Companys creditworthiness or that they will
meet the Companys strategic objectives or otherwise be successful. The Company also may not be successful in implementing appropriate
operational, financial and management systems and controls to achieve the benefits expected to result from these transactions. Failure
to effectively manage any of these transactions could result in material increases in costs or reductions in expected revenues, or both.
In addition, if any new business in which the Company invests or which it attempts to develop does not progress as planned, it may not
recover the funds and resources the Company has expended and this could have a negative impact on the Companys businesses or the
Companys company as a whole.
**Triller
is involved in lawsuits and other litigation matters that are expensive and time consuming, and, if resolved adversely, could harm Trillers
business, financial condition, or results of operations.**
****
Triller
is involved in numerous lawsuits, many of which claim statutory damages and/or seek significant changes to Trillers business operations,
and Triller anticipates that it will continue to be involved in numerous lawsuits in the future. Triller has faced, currently face, and
will continue to face additional lawsuits based on claims related to, among other things, advertising, privacy, security, content intellectual
property infringement, employment or performance of services, activities on Trillers Technology Platform, consumer protection,
or product performance or other claims related to the use of consumer hardware and software, music used on Trillers platform or
related to Trillers acquisitions. For example, Triller is currently the subject of various litigation proceedings, including a
class action lawsuit alleging unpaid wages for production workers, a lawsuit to collect all fees due by Universal Music Publishing Group
amongst other claims, a class action against one of Trillers subsidiaries over the use of consumer personal identifying information
and a lawsuit by two social media influencers claiming they are entitled to equity based on services, some of which are entering mediation
and/or settlement discussions.
There
can be no assurances that a favorable final outcome will be obtained in all Trillers cases, and defending any lawsuit is costly
and can impose a significant burden on management and employees. Any litigation to which Triller is a party may result in an onerous
or unfavorable judgment that may not be reversed upon appeal or in payments of substantial monetary damages or fines, or Triller may
decide to settle lawsuits on similarly unfavorable terms, which has occurred in the past and which could adversely affect Trillers
business, financial conditions, or results of operations.
40
If
these lawsuits are not resolved in its favor, Triller would not have enough cash on hand to meet these obligations unless it is able
to raise additional capital in an amount sufficient to satisfy them. This may affect Trillers ability to remain solvent and pay
its obligations when they come due, including under existing litigation settlement obligations and new litigation adverse judgments.
In
the past, securities class action litigation has often been brought against a company following a decline in the market price of its
securities. This risk is especially relevant for Triller because technology companies have experienced significant stock price volatility
in recent years. If Triller faces such litigation, it could result in substantial costs and a diversion of managements attention
and resources, which could harm Trillers business.
**Planned
expansion of Trillers operations into new products, services and technologies, including content categories, is inherently risky
and may subject Triller to additional business, legal, financial and competitive risks.**
****
Triller
currently focus its operations on its AI powered Technology Platform, which provides content creation and distribution (Triller app,
TrillerTV, Metaverz, Thuzio and Amplify.ai), fan engagement (Fangage, Julius and Amplify.ai) and targeted promotions and upsells (CrossHype)
products and services across the digital platforms used by Trillers Creators and Brands. Further expansion of Trillers
operations and its marketplace into additional products and services involves numerous risks and challenges, including potential new
competition, increased capital requirements and increased marketing spend to achieve customer awareness of these new products and services.
Growth into additional content, product and service areas may require changes to Trillers existing business model and cost structure
and modifications to its infrastructure and may expose Triller to new regulatory and legal risks, any of which may require expertise
in areas in which Triller has little or no experience. There is no guarantee that Triller will be able to successfully expand its products
and services into these areas.
**Improper
or illegal use of Trillers Technology Platform could seriously harm Trillers business and reputation.**
****
Triller
cannot be certain that the technologies that Triller has developed to repel spamming attacks will be able to eliminate all spam messages
from its products. Spammers attempt to use Trillers products to send targeted and untargeted spam messages to users, which may
embarrass or annoy users and make Trillers products less user friendly. Triller does not currently have procedures or processes
in place to accurately estimate the number of bots or spammers on Trillers Technology Platform, but are actively working to prevent
bots and spammers from engaging on Trillers platform. Trillers actions to combat spam may also divert significant time
and focus from improving its products. As a result of spamming activities, Trillers users may use its products less or stop using
them altogether, and result in continuing operational cost to Triller. Triller may also be subject to liability or claims related to
such spamming activity.
Similarly,
terrorists, criminals, and other bad actors may use Trillers Technology Platform to promote their goals and encourage users to
engage in terror and other illegal activities. Triller expects that as more people use its Technology Platform, these bad actors will
increasingly seek to misuse Trillers products. Although Triller invests resources to combat these activities, including by suspending
or terminating accounts Triller believes are violating its Terms of Service, it expects these bad actors will continue to seek ways to
act inappropriately and illegally on its Technology Platform. Combating these bad actors requires Trillers teams to divert significant
time and focus from improving its products. In addition, Triller may not be able to control or stop its Technology Platform from becoming
the preferred application of use by these bad actors, which may become public knowledge and seriously harm Trillers reputation
or lead to lawsuits or attention from regulators. If these activities increase on Trillers Technology Platform, Trillers
reputation, user growth and user engagement, and operational cost structure could be seriously harmed.
41
**Triller
tracks certain performance metrics with internal tools and do not independently verify such metrics. Certain of Trillers performance
metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm Trillers
reputation and negatively affect its business.**
****
Triller
calculates Consumer Accounts using internal company data that has not been independently verified. These numbers are based on what Triller
believes to be reasonable calculations for the applicable period of measurement, but there are inherent challenges in measuring Consumer
Accounts. For example, while Triller endeavors to accurately capture its Consumer Accounts, from time to time certain bot and/or duplicate
accounts are created and appear on its Technology Platform which may impact the number of Consumer Accounts. As a result, Trillers
reported Consumer Accounts may include bot and duplicative accounts, thereby overstating Trillers actual Consumer Accounts. While
Triller has recently undergone a robust process to purge as many of the duplicate and bot accounts as practical given Trillers
resources and Triller regularly monitors and reviews these figures and have put in place controls designed to prevent bot users and or
duplicates, there can be no assurance that these controls will be effective in eliminating all bot or duplicate accounts. The inclusion
of duplicate and/or bot accounts in the Consumer Accounts reported at any given time may lead to an inaccurate assessment of the total
number of Consumer Accounts on Trillers Technology Platform. If Creators, Brands and users do not perceive Trillers metrics
to be accurate representations, or if Triller discovers material inaccuracies in its metrics, Trillers reputation may be harmed
and Creators, Brands and users may be less willing to utilize Trillers Technology Platform or to allocate their budgets or resources
to Trillers products and services, which could negatively affect Trillers business and operating results. In addition,
if investors, analysts or customers do not believe Trillers reported measures, such as Consumer Accounts, are sufficient or accurately
reflect Trillers business, Triller may receive negative publicity and its operating results may be adversely impacted.
**If
Trillers efforts to attract Creators, users, consumers and Brands are not successful, Trillers revenues will be adversely
affected.**
Triller
generates revenue through Brands and consumers, with the majority of its revenue coming from Brands. To succeed, Triller must continue
to attract and retain Creators, users and consumers who have traditionally engaged with internet and social media platforms such as Instagram,
Snapchat and TikTok, as well as well as with video games, cable television,pay-per-viewandvideo-on-demandservices
for entertainment. With additional Creators and consumers, Triller will attract more Brands which will improve its revenue. Trillers
ability to attract and retain Creators and users and consumers and have them regularly engage with Trillers Technology Platform
depends in part on Trillers ability to consistently provide its Creators, users and consumers a high-quality experience. Triller
must also continue to attract and retain influential Creators such as celebrities, athletes, journalists, sports leagues and teams, media
outlets and Brands to leverage its Technology Platform to disseminate content and interact and transact with their followers, and users
and consumers. Typically, Trillers agreements with Creators may be terminated by Creators at any time. If Creators and consumers
in either category do not perceive Trillers products to be of high quality, if Triller introduces new products or features that
are not favorably received by them or if Triller fails to introduce products and features that they desire, it may not be able to attract
or retain Creators and users and consumers. Triller also cannot guarantee that it will be able to continue to identify these Creators
in the future. Additionally, throughout Trillers history, Creators from time to time have stopped participating on Trillers
Technology Platform and in Trillers Events for any number of reasons, and Triller cannot guarantee that it will be able to retain
current Creators. Additionally, many of Trillers Creators users and consumers originate fromword-of-mouthand referrals
from existing Creators users and consumers. If Trillers efforts to satisfy its existing Creators, users and consumers are not
successful, Triller may not be able to attract new Creators, users and consumers, and as a result, it may fail to attract or retain Brands
and its revenue may be affected adversely.
Trillers
success depends on its ability to attract Brands to its Technology Platform and provide users and consumers with engaging content, which
in part depends on Creator contributed content. If Triller or Creators, including influential Creators, such as celebrities, athletes,
journalists, sports leagues and teams, media outlets and Brands, do not continue to contribute engaging content to Trillers Technology
Platform, Trillers consumer growth, retention and engagement may decline. That, in turn, may impair Trillers ability to
maintain good relationships with Brands that utilize Trillers Technology Platform or attract new Brands, which may seriously harm
Trillers business and financial performance.
**Use
of social media by Trillers Creators, Brands and users may materially and adversely affect Trillers reputation or subject
Triller to fines or other penalties.**
****
Triller
integrates third-party social media platforms into its Technology Platform. For example, in addition to Trillers own content on
its website and Triller app, Trillers Creators can share content on social-media platforms such as Facebook, Instagram, TikTok
and Twitter. As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, Trillers
employees, Trillers network of Creators, Trillers Brands, Trillers users or third parties acting at Trillers
direction to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject Triller to
regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on Trillers
business, financial condition and results of operations.
42
In
addition, any use of social media for marketing may increase the burden on Triller to monitor compliance of such materials, and increase
the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations. For example,
in some cases, the Federal Trade Commission (**FTC**) has sought enforcement action where an endorsement has failed
to clearly and conspicuously disclose a material relationship between an influencer and an advertiser. While Triller asks Creators to
comply with FTC regulations and Trillers guidelines, Triller does not regularly monitor what its Creators post, and if Triller
were held responsible for the content of their posts, it could be forced to alter its practices, which could have material adverse effect
on Trillers business, financial condition, and results of operations.
Negative
commentary regarding us, Trillers products or Creators or Brands, Trillers users and other third parties who are affiliated
with Triller may also be posted on social media platforms and may be adverse to Trillers reputation or business. Creators with
whom Triller maintains relationships could engage in behavior or use their platform to communicate directly with Trillers users
and consumers in a manner that reflects poorly on Trillers brand and may be attributed to Triller or otherwise adversely affect
Triller. It is not possible to prevent such behavior, and the precautions Triller takes to detect this activity may not be effective
in all cases. The harm may be immediate, without affording Triller an opportunity for redress or correction.
**Triller
may not be successful in its efforts to further monetize its Technology Platform, which may harm Trillers business.**
Trillers
Technology Platform generates revenue through Brands and consumers, with most of Trillers revenue generated from Brands through
revenue sharing and service fee arrangements. When Triller enables the consumption of content by individuals in the form of Triller branded
live Events, Triller creates an ecosphere of content across its Technology Platform offerings and it also generates revenue in the form
of live-event ticket sales, pay-per-view fees, subscriptions and merchandise sales. Trillers partnerships with high-profile Creators
and Brands enable Triller to host live Events that receive massive viewership. As such, Triller is seeking to expand its relationships
with Brands, its Creator and consumer base and increase the number of hours that consumers spend on Trillers Technology Platform
and the volume of content that is published across and from Trillers Technology Platform in an effort to create additional revenue
opportunities. Triller has made, and are continuing to make, significant investments to enable users, Brands, Creators, and advertisers
to create compelling content and deliver advertising to Trillers users.
Trillers
ability to deliver more relevant content to its users and consumers and to increase its Technology Platforms value to Brands and
Creators depends on the collection of engagement data, which may be restricted or prevented by a number of factors. Consumers may decide
to opt out or restrict some of Trillers ability to collect personal data or to provide them with more relevant and sponsored content.
Creators could refuse to allow Triller to collect data regarding engagement or refuse to implement mechanisms Triller requests to ensure
compliance with Trillers legal obligations or technical requirements in some instances. If these possible scenarios occur to a
large enough extent, Triller may not be able to achieve its expected growth in revenue or gross profit. Triller may not be able to compete
effectively or adapt to any such changes or trends, which would harm Trillers ability to grow its advertising revenue and harm
its business.
Further,
Triller may not be successful in further monetizing its Technology Platform. Most of the revenue from Trillers Technology Platform
is generated from Brands through revenue sharing and service fee arrangements. Revenue share comes from advertising, premium content,
Events,pay-per-viewfees, subscription fees or merchandise sales that are transacted via Trillers Technology Platform.
As a result, Trillers financial performance and ability to grow revenue could be seriously harmed if:
|
|
|
Triller does not expand
or retain its relationships with Brands and Creators; | |
|
|
|
Trillers reputation
is harmed; | |
|
|
|
there is a decline in Trillers
available content or a decrease in the perceived quantity, quality, usefulness or relevance of the content provided by Triller and
Trillers Creators; | |
43
|
|
|
competitive developments
result in Trillers competitors possessing various competitive advantages, whether technological or otherwise; | |
|
|
|
Triller does not adjust
to changes to the industry landscape; | |
|
|
|
Triller does not continue
to invest in and strengthen Trillers Technology Platform, including Trillers suite of Creator offerings and Trillers
Events and Events-related services; | |
|
|
|
Triller fails to identify
attractive opportunities to enhance existing businesses or grow its portfolio of assets; | |
|
|
|
Triller fails to continue
to develop creative and entertaining programs and Events; | |
|
|
|
macroeconomic conditions,
including changes in corporate spending and discretionary consumer spending, divert Brand and consumer expenditures away from the
markets Triller serves; and | |
|
|
|
Triller fails to produce
and/or distribute premier Events throughout the year, including BKFC and TrillerTV programming. | |
**If
Triller is unable to maintain adequate content on its Technology Platform, its business may be harmed.**
****
Triller
may fail to attract Creators that generate sufficient content hours on its Technology Platform and for its Brands. Trillers business
model depends on its ability to connect its Brands with content Creators. If Triller is unable to grow and maintain spend from its Brands,
either through revenue sharing relationships or fee sharing arrangements, its results of operations may be harmed.
Triller
operates in a highly competitive industry, and Triller competes for Brands with other social media outlets and streaming services, as
well as traditional media, such as radio, broadcast, cable and satellite TV and satellite and internet radio. Triller may not be successful
in maintaining or improving the number of its Brand partners who utilize Trillers Technology Platform for advertising, premium
content, Events,pay-per-viewfees, subscription fees or merchandise sales that are transacted via Trillers Technology
Platform.
Trillers
competitors offer content and other platforms that may be more attractive to advertisers than Trillers Technology Platform. If
Triller is unable to increase its revenue by, among other things, continuing to improve its Technology Platforms data to further
optimize and measure its Brand partners campaigns, increase revenue from fee sharing arrangements or the completion of successful
campaigns for its Brands, Trillers business and its growth prospects may be harmed. Triller may not be able to compete effectively
or adapt to any such changes or trends, which would harm its ability to grow its advertising revenue and harm its business.
**Trillers
success and revenue growth are dependent on adding new Creators, users, consumers and Brands, effectively educating and training Trillers
existing Creators and Brands on how to make full use of Trillers Technology Platform and increasing usage of Trillers Technology
Platform by Trillers consumers.**
****
Trillers
success is dependent on regularly adding new Creators and Brands and increasing Trillers consumers usage of Trillers
platform and Triller faces competition from a variety of other domestic and foreign companies. Triller faces competition from alternative
providers of the entertainment, content, live Events and sports industries. Trillers contracts and relationships with Creators
and Brands generally do not include long-term or exclusive obligations requiring them to use Trillers platform or maintain or
increase their use of Trillers platform. Creators can also terminate their agreements with Triller for convenience.
44
Trillers
Creators and Brands typically have relationships with numerous providers and can use both Trillers platform and those of Trillers
competitors without incurring significant costs or disruption. Trillers Brands may also choose to decrease their use of revenue
sharing and service fee arrangements. Accordingly, Triller must continually work to win new Brands and Creators and retain existing Brands
and Creators, increase their usage of Trillers platform and increase Trillers users. Given the number of products on Trillers
Technology Platform, Triller may not be successful at educating and training Creators and Brands on how to use Trillers platform
and products in order for Trillers Creators and Brands to get the most benefit from Trillers Technology Platform and increase
their usage. If these efforts are unsuccessful or Creators or Brands decide not to continue to maintain or increase their usage of Trillers
Technology Platform for any other reason, or if Triller fails to attract new Creators or Brands, Trillers revenue could fail to
grow or decline, which would materially and adversely harm Trillers business, operating results and financial condition. Any increased
competition, which may not be foreseeable, or Trillers failure to adequately address any competitive factors, could result in
reduced demand for its content, live Events, or brands, which could have an adverse effect on Trillers business, financial condition,
and results of operations. Triller cannot assure you that its Creators, Brands and consumers will continue to use and increase their
spend on Trillers platform or that it will be able to attract a sufficient number of new Creators, Brands, users and consumers
to continue to grow Trillers business and revenue. If Brands representing a significant portion of Trillers business decide
to materially reduce their use of Trillers Technology Platform or cease using Trillers Technology Platform altogether,
Trillers revenue could be significantly reduced, which could have a material adverse effect on Trillers business, operating
results and financial condition.
**Triller
generates substantially all of its revenue from Brands. If the content and services provided on Trillers Technology Platform are
not relevant to Brands, fail to attract new Brands or result in a loss of Brands using Trillers Technology Platform, Trillers
growth may be adversely impacted.**
****
Triller
generates substantially all of its revenue from Brands through revenue sharing and service fee (including SaaS) arrangements. Revenue
share comes from advertising, premium content, Events,pay-per-viewfees, subscription fees or merchandise sales that are transacted
via Trillers Technology Platform. Service fees come from Brands that utilize Trillers platform to reach consumers via a
combination of campaign fees, sponsorship fees and transaction fees or SaaS fees, including monthly subscription fees. Even though Triller
also generates revenue from consumers in the form of Creator-driven live-event ticket sales,pay-per-viewfees, subscriptions
and merchandise sales, Triller still expects to continue to generate substantially all its revenue from Brands for the foreseeable future.
Most
Brands do not have long-term commitments with us, and Trillers efforts to establish long-term commitments may not succeed. Because
most Brands do not have long-term commitments with us, they may terminate their contracts and relationships with Triller and may instead
pursue relationships with competitors. Since Triller does not have long-term contractual commitments with its Brand partners, maintaining
and enhancing relationships with its Brand partners will require Triller to make substantial investments and these investments may not
be successful.
The
Brands with whom Triller partners vary from small businesses to well-known Fortune 500 companies. Due to Trillers limited operating
history, many Brands only recently started working with Trillers Technology Platform solutions and spend a relatively small portion
of their overall advertising budget with Triller In addition, some Brands may view some of Trillers Technology Platform offerings
as experimental and unproven or prefer certain of Trillers products over others.
Triller
has made, and are continuing to make, investments to enable Creators and Brands to deliver relevant content to consumers on Trillers
Technology Platform. If Triller fails to continue to innovate and improve on its Technology Platform, its business may be harmed. New
technologies, products and services are driving rapid changes in consumer behavior as consumers seek more control over when, where and
how they consume content and access communications services. These technological advancements and changes in consumer behavior and/or
Trillers failure to effectively anticipate or adapt to such changes, could reduce Trillers subscriber activations and increase
Trillers user churn rate, and could have a material adverse effect on Trillers business, results of operations, financial
condition and cash flow.
45
Moreover,
Triller relies heavily on its ability to collect and disclose data and metrics to its Brands so Triller can attract new Brands and retain
existing Brands. Any restriction or inability, whether by law, regulation, policy, or other reason, to collect and disclose data and
metrics which Trillers Brands find useful would impede Trillers ability to attract and retain Brands. Regulators around
the world are increasingly scrutinizing and regulating the collection, use, and sharing of personal data related to advertising, which
could materially impact Trillers revenue and seriously harm Trillers business. For example, the European Unions
General Data Protection Regulation (**EU GDPR**) and the United Kingdoms GDPR (**UK GDPR**)
expanded the rights of individuals to control how their personal data is collected and processed, and placed restrictions on the use
of personal data of younger minors. The processing of personal data for personalized advertising under EU GDPR and UK GDPR continues
to be under increased scrutiny from European regulators, which includes ongoing regulatory action against large technology companies
like Trillers, the outcomes of which may be uncertain and subject to appeal. The European Digital Services Act (**DSA**)
prohibits targeted advertising to minors based on the profiling of personal information in the European Union. Other European legislative
proposals and present laws and regulations may also apply to Trillers or Trillers advertisers activities and require
significant operational changes to Trillers business. For example, it is anticipated that the ePrivacy Regulation and national
implementing laws will replace the current national laws implementing the ePrivacy Directive, which could have a material impact on the
availability of data Triller relies on to improve and personalize its products and features. Outside of Europe, other laws further regulate
behavioral, interest-based, or targeted advertising, making certain online advertising activities more difficult and subject to additional
scrutiny. For example, in the United States, the California Consumer Privacy Act (**CCPA**) and the California Privacy
Rights Act of 2020 (**CPRA**) place additional requirements on the handling of personal data for us, Trillers
partners, and Trillers advertisers, such as granting California residents the right toopt-outof a companys
sharing of personal data for certain advertising purposes in exchange for money or other valuable consideration. Other states are considering
similar legislation. Moreover, individuals are also becoming increasingly aware of and resistant to the collection, use, and sharing
of personal data in connection with advertising. Individuals are becoming more aware of options related to consent and other options
toopt-outof such data processing, including through media attention about privacy and data protection.
Further,
Triller may experience media, legislative, or regulatory scrutiny of its actions or decisions regarding user privacy, encryption, content,
advertising and other issues, which may materially adversely affect Trillers reputation and Trillers relationship with
its Brands.
Triller
believes that a positive reputation concerning its Technology Platform is important in attracting and retaining Brands. In addition,
Triller may fail to respond expeditiously or appropriately to objectionable practices by Creators users, or consumers, or to otherwise
address user concerns or suffer reputational harm, which could erode confidence in Trillers Brand partners. To the extent the
content Triller produces, distribute or otherwise make available is perceived as low quality, offensive, harmful or otherwise not compelling
to consumers and Brands, Trillers ability to establish and maintain a positive reputation may be adversely impacted and Triller
may lose Brand relationships or fail to attract new Brands to its business. Similarly, other companies with similar technologies and
platforms may fail to respond expeditiously or appropriately to objectionable practices on their respective platforms and may not otherwise
address concerns from users, family members of those users, or the broader public audience. If such other companies suffer public ridicule
or reputational harm, such negative views could erode confidence in Trillers Brand partners.
**Trillers
user growth, engagement, and monetization on mobile devices depend upon effective operation with mobile operating systems, networks,
technologies, products, and standards that Triller does not control.**
****
There
is no guarantee that popular mobile devices will continue to feature Trillers products, or that mobile device users will continue
to use Trillers products rather than competing products. Triller is dependent on the interoperability of its products with popular
mobile operating systems, networks, technologies, products, and standards that Triller does not control, such as the Android and iOS
operating systems and mobile browsers. Changes, bugs, or technical issues in such systems, or changes in Trillers relationships
with mobile operating system partners, handset manufacturers, browser developers, or mobile carriers, or in the content or application
of their terms of service or policies (which they have made in the past and continue to seek to implement) that degrade Trillers
products functionality, reduce or eliminate Trillers ability to update or distribute its products, give preferential treatment
to competitive products, limit its ability to deliver, target, or measure the effectiveness of advertisements, or charge fees related
to the distribution of its products or its delivery of advertisements have in the past adversely affected, and could in the future adversely
affect, the usage of its products and monetization on mobile devices. Additionally, in order to deliver high quality mobile products,
it is important that Trillers products work well with a range of mobile technologies, products, systems, networks, and standards
that Triller does not control, and that Triller has good relationships with handset manufacturers, mobile carriers, and browser developers.
Triller may not be successful in maintaining or developing relationships with key participants in the mobile ecosystem or in developing
products that operate effectively with these technologies, products, systems, networks, or standards. In the event that it is more difficult
for Trillers users to access and use Trillers products on their mobile devices, or if Trillers users choose not
to access or use Trillers products on their mobile devices or use mobile products that do not offer access to Trillers
products, Trillers user growth and user engagement could be harmed. From time to time, Triller may also take actions regarding
the distribution of its products or the operation of its business based on what Triller believes to be in its long-term best interests.
Such actions may adversely affect Trillers users and Trillers relationships with the operators of mobile operating systems,
handset manufacturers, mobile carriers, browser developers, other business partners, or advertisers, and there is no assurance that these
actions will result in the anticipatedlong-termbenefits. In the event that Trillers users are adversely affected by
these actions or if Trillers relationships with such third parties deteriorate, Trillers user growth, engagement, and monetization
could be adversely affected and Trillers business could be harmed. Triller has in the past experienced challenges in operating
with mobile operating systems, networks, technologies, products, and standards that Triller does not control, and any such occurrences
in the future may negatively impact Trillers user growth, engagement, and monetization on mobile devices, which may in turn materially
and adversely affect Trillers business and financial results.
46
**Unfavorable
media coverage has in the past and could in the future materially adversely affect Trillers business, brand image or reputation.**
****
Triller
receives a high degree of media coverage. Unfavorable publicity and/or false media reports regarding us, Trillers privacy practices,
data security compromises or breaches, product changes, product quality, litigation or regulatory activity, including any intellectual
property proceeding, or regarding the actions of Trillers partners, Trillers Creators, Trillers Brands or consumers,
Trillers employees or other companies in Trillers industry, has in the past and could in the future adversely affect Trillers
brand image or reputation. For example, there have been news articles discussing allegations against Triller for Trillers nonpayment
of fees, including articles discussing Trillers litigation with Sony Music Entertainment and Universal Music Publishing Group,
which may adversely affect Trillers brand image or reputation. For more information, see discussion of the Sony Music Litigation
under *Description of Trillers Business Legal Proceedings.*
If
Triller fails to protect its brand image or reputation, Triller may experience material adverse effects to the size, demographics, engagement,
and loyalty of Trillers Creator and user base or Brand relationships, resulting in decreased revenue, fewer app installs (or increased
app uninstalls), or slower user growth rates. In addition, if securities analysts or investors perceive any media coverage of us, or
other companies with similar technologies and platforms, to be negative, the value of Trillers SeriesA common stock (and,
after the closing of the Merger, of Triller Common Stock) may be materially adversely affected. Any of the foregoing could materially
adversely affect Trillers business, financial condition and results of operations.
**Trillers
market is competitive and dynamic. Triller faces and will continue to face significant competition for Creators, Brands and consumers,
which could result in reduced profit margins and loss of market share.**
****
Triller
faces robust and rapidly evolving competition in all aspects of its business, including from companies that allow users to share and
discover content and/or that enable Creators and Brands to use content platforms to reach customers, such as Apple, Alphabet (including
Google and YouTube), Amazon, Snapchat, Facebook (including Instagram), ByteDance (including TikTok), ESPN+, BT Sport, Kayo Sports, Klaviyo
and Showtime, among others.
Triller
competes to attract, engage and retain users against current and potential competitors, both globally and in particular geographic regions
where it operates. These competitive risks are heightened because some of Trillers competitors have more extensive hardware, software,
and service offerings, longer histories, larger user bases, increased brand recognition, more experience in the markets in which Triller
competes and greater overall resources than Triller. These advantages enable them to devote more financial resources to technology, infrastructure,
fulfillment and marketing, which in turn enables them to offer competitive services at little or no profit or even at a loss. For example,
prominent, well-funded competitors like Apple, Google, and Amazon have a competitive advantage because they can leverage the substantially
broader product offerings in their ecosystem to gain subscribers through bundled offers and to monetize users. Additionally, Trillers
current and future competitors have engaged and will continue to engage in mergers or acquisitions with each other to combine and leverage
their broad audiences, content and capabilities.
Relatedly,
Triller competes for users based on its presence and visibility as compared with other businesses and platforms that deliver audio and
video content through the internet and connected devices. Triller faces significant competition for users from companies promoting their
own digital content online or through application stores, including large, well-funded, and seasoned participants in the digital media
market.
47
Triller
also faces increasing competition because of new or emerging technologies and changes in market conditions. Trillers current and
future competitors have introduced, and may continue to introduce, new ways of consuming or engaging with content, such as ByteDance,
that cause Trillers users, especially the younger demographic, to switch to another product, which would negatively affect Trillers
user retention, growth, and engagement. As the market foron-demandvideo on the internet and mobile and connected devices
increases, new competitors, business models and solutions are likely to emerge. Triller believes that companies with a combination of
technical expertise, brand recognition, financial resources and digital media experience pose a significant threat of developing competingon-demanddistribution
technologies.
Additionally,
Triller competes for a share of advertisers overall marketing budgets with other content providers on a variety of factors, including
perceived return on investment, effectiveness and relevance of Trillers advertising products and content offering, pricing structure,
and ability to deliver large volumes or precise types of advertisements to targeted user demographic pools. Triller also competes for
advertisers with a range of internet companies, including major internet portals, search engine companies, social media sites and mobile
applications, as well as traditional advertising channels such as terrestrial radio and television.
Most
of Trillers competitors in this market have substantially greater financial and other resources, larger research and development
staffs, and more experience and capabilities in developing, marketing and distributing products. Ongoing pricing pressure could result
in significant price erosion, reduced profit margins and loss of market share, any of which could have a material adverse effect on Trillers
business, results of operations, financial position and liquidity. Large internet companies with strong brand recognition, such as TikTok,
Facebook, Google, Amazon and Twitter, have significant numbers of sales personnel, substantial advertising inventory, proprietary advertising
technology solutions and traffic that provide a significant competitive advantage and have a significant impact on pricing for reaching
these user bases. Failure to compete successfully against Trillers current or future competitors could result in the loss of current
or potential advertisers, a reduced share of Trillers advertisers overall marketing budget, the loss of existing or potential
users, or diminished brand strength, which could adversely affect Trillers pricing and margins, lower Trillers revenue,
increase Trillers research and development and marketing expenses and prevent Triller from achieving or maintaining profitability.
Moreover,
Triller competes with other forms of entertainment and leisure activities. While Triller monitors general market conditions, significant
shifts in consumer demand that could materially alter public preferences for different forms of entertainment and leisure activities
are difficult to predict. Failure to adequately identify and adapt to these competitive pressures could have a negative impact on Trillers
business.
**Access
to certain of Trillers products depends on mobile app stores and other third parties such as data center service providers, hosted
web service providers, internet transit providers and other communications systems service providers. If third parties such as the Apple
App Store or Google Play Store adopt and enforce policies that limit, prohibit or eliminate Trillers ability to distribute or
update its applications through their stores, or increase the costs to do so, it could materially adversely affect Trillers business,
financial condition and results of operations.**
****
Trillers
products and services mainly depend on mobile application stores and the continued services and performance of other third parties such
as data center service providers, third party computer systems, internet transit providers, and other communications systems and service
providers. Trillers mobile applications are almost exclusively accessed through and depend on the Apple App Store and the Google
Play Store. While Trillers mobile applications are generally free to download from these stores, Triller offers its users the
opportunity to purchase subscriptions and certain la carte features through these applications. Triller determines the prices
at which these subscriptions and features are sold, subject to approval by Apple or Google, as relevant. Purchases of these subscriptions
and features via Trillers mobile applications are mainly processed through the in-app payment systems provided by Apple and Google.
Triller pays Apple and Google, as applicable, a meaningful share (up to 30%) of the revenue it receives from transactions processed through
in-app payment systems If the Apple App Store or the Google Play Store were to experience an outage, or if either decided to exit a market,
many of Trillers users may be unable to access Trillers apps, which could materially adversely affect Trillers business,
financial condition and results of operations. Any deterioration in Trillers relationships with these and other third-party suppliers,
vendors, and business partners, or any adverse change in the terms and conditions governing these relationships, could have a negative
impact on Trillers business, financial condition, and results of operations.
48
Furthermore,
application stores and other third party providers such as Apple and Google have broad discretion to make changes to their operating
systems or payment services or change the manner in which their mobile operating systems function and their respective terms and conditions
applicable to the distribution of Trillers Technology Platform, including the amount of, and requirement to pay, certain fees
associated with purchases required to be facilitated by such third parties through Trillers applications, and to interpret their
respective terms and conditions in ways that may limit, eliminate, or otherwise interfere with Trillers products and services,
Trillers ability to distribute its Technology Platform through their stores, Trillers ability to update its applications,
including to make bug fixes or other feature updates or upgrades, the features Triller provides, the manner in which Triller markets
its in-appproducts and services, its ability to access native functionality or other aspects of mobile devices, and its ability
to access information about its users that they collect. There can be no assurance that Apple or Google, or any other similar third party,
will not limit, delay, eliminate, or otherwise interfere with the distribution of Trillers Technology Platform, or that Triller
will not be limited or prohibited from using certain current or prospective distribution or marketing channels in the future. To the
extent any of them do so, Trillers business, financial condition and results of operations could be materially adversely affected.
In
addition, the websites and apps of Trillers competitors may rank higher than offerings from Trillers Technology Platform
and Trillers Triller app in search engines and or app stores, and/or Trillers application may be difficult to locate in
device application stores, which could draw potential users away from Trillers service and toward those of Trillers competitors.
Device application stores often offer users the ability to browse applications by various criteria, such as the number of downloads in
a given time period, the length of time since an application was released or updated, or the category in which the application is placed.
If Triller is unable to compete successfully for users against other digital media providers by maintaining and increasing its presence,
ease of use, and visibility and the amount of content streamed on Trillers Technology Platform may fail to increase or may decline
and Trillers subscription fees and advertising sales may suffer.
**In
operating its Technology Platform, Triller may fail to launch new products or features according to its timetable, and its new products
or features may not be commercially successful.**
****
In
order for Trillers integrated global platform to succeed over time, Triller will need to license, acquire or develop new products
or features that can generate additional revenue and further diversify Trillers revenue sources. A number of factors, including
technical difficulties, government approvals and licenses of intellectual property rights required for launching new products, lack of
sufficient development personnel and other resources, and adverse developments in Trillers relationship with the licensors of
Trillers new licensed products could result in delay in launching Trillers new products. Therefore, Triller cannot assure
you that it will be able to meet its timetable for new launches.
Additionally,
Trillers operations and revenues are affected by consumer tastes and entertainment trends, including consumer use of Trillers
Technology Platform and other applications such as TikTok, Instagram, Facebook, Netflix and YouTube, and various other social media apps
and short- and long- form streaming services, as well as the market demand for live sports and music Events, user-generated content generally,
and internet-based Brand engagement, each of which are unpredictable and may be affected by changes in the economic, social, cultural
and political climate or global issues such as the recent COVID-19 pandemic. Changes in consumers tastes or perceptions of Trillers
Technology Platform, content or business partners, whether as a result of the economic, social, cultural or political climate or otherwise,
could adversely affect Trillers operating results. Trillers failure to avoid a negative perception among consumers or anticipate
and respond to changes in consumer preferences, including in the form of content creation or distribution, could result in reduced demand
for Trillers services and content offerings or those of Trillers partners and owned assets across Trillers Technology
Platform, which could have an adverse effect on Trillers business, financial condition and results of operations.
There
are many factors that may adversely affect the popularity of Trillers new products. For example, Triller may fail to anticipate
and adapt to future technical trends and new business models, fail to satisfy consumer preferences and requirements, fail to effectively
plan and organize marketing and promotion activities, fail to effectively detect and prevent programming errors or defects in the products,
and fail to operate Trillers new products at acceptable costs. Triller cannot assure you that its new products will gain market
acceptance and become commercially successful. If Triller is not able to license, develop or acquire additional digital entertainment
products that are commercially successful, Trillers future revenues and profitability may decline.
49
**The
use of Automatic Content Recognition (ACR) technology to collect viewing behavior data is emerging and may not be successful.**
****
The
utilization of viewing behavior data collected using ACR technology to inform digital advertising and content delivery is an emerging
industry, and future demand and market acceptance for this type of data is uncertain. If the market for the use of this data does not
develop or develops more slowly than Triller expects, or if Triller is unable to successfully develop and monetize its Brands, Creators,
or offerings off of the viewing behavior data it collects, its growth prospects may be harmed.
**Payment
methods used on Trillers Technology Platform subject Triller to third party payment processing-related risks.**
****
Triller
accepts payments from its users through a variety of methods, including online payments with credit cards and debit cards issued by major
banks, payments made with gift cards processed by third-party providers and payment through third-party online payment platforms such
as PayPal, Stripe, Afterpay, and Apple Pay. Triller also relies on third parties to provide payment processing services. For certain
payment methods, including credit and debit cards, Triller pays interchange and other fees, which may increase over time and raise its
operating costs and lower its profit margins. Triller may also be subject to fraud and other illegal activities in connection with the
various payment methods Triller offers, including online payment options and gift cards. Transactions on Trillers Technology Platform
and mobile applications are card-not-present transactions, so they present a greater risk of fraud. Criminals are using
increasingly sophisticated methods to engage in illegal activities such as unauthorized use of credit or debit cards and bank account
information. Requirements relating to consumer authentication and fraud detection with respect to online sales are complex. Triller may
ultimately be held liable for the unauthorized use of a cardholders card number in an illegal activity and be required by card
issuers to pay charge-back fees. Charge-backs result not only in Trillers loss of fees earned with respect to the payment, but
also leave Triller liable for the underlying money transfer amount. If Trillers charge-back rate becomes excessive, card associations
also may require Triller to pay fines or refuse to process Trillers transactions. In addition, Triller may be subject to additional
fraud risk if third-party service providers or its employees fraudulently use consumer information for their own gain or facilitate the
fraudulent use of such information. Overall, Triller may have little recourse if it processes a criminally fraudulent transaction.
Triller
or a third party may experience a data security breach involving credit card information and when this occurs, affected cardholders will
often cancel their credit cards. In the case of a breach experienced by a third party, the more sizable the third partys customer
base and the greater the number of credit card accounts impacted, the more likely it is that Trillers users would be impacted
by such a breach. To the extent Trillers users are ever affected by such a breach experienced by Triller or a third party, affected
users would need to be contacted to obtain new credit card information and process any pending transactions. It is likely that Triller
would not be able to reach all affected users, and even if Triller could, some users new credit card information may not be obtained
and some pending transactions may not be processed, which could materially adversely affect Trillers business, financial condition
and results of operations. Even if Trillers users are not directly impacted by a given data security breach, they may lose confidence
in the ability of service providers to protect their personal information generally, which could cause them to stop using their credit
cards online and choose alternative payment methods that are not as convenient for Triller or restrict Trillers ability to process
payments without significant cost or user effort. Additionally, if Triller fails to adequately prevent fraudulent credit card transactions,
it may face litigation, fines, governmental enforcement action, civil liability, diminished public perception of Trillers security
measures, significantly higher credit card-related costs and substantial remediation costs, or refusal by credit card processors to continue
to process payments on Trillers behalf, any of which could materially adversely affect Trillers business, financial condition
and results of operations.
Triller
is subject to payment card association operating rules, certification requirements and various rules, regulations and requirements governing
electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for Triller to comply. As Trillers
business changes, Triller may also be subject to different rules under existing standards, which may require new assessments that involve
costs above what Triller currently pay for compliance. If Triller fails to comply with the rules or requirements of any provider of a
payment method it accepts, or if the volume of fraud in Trillers transactions limits or terminates Trillers rights to use
payment methods it currently accepts, or if a data breach occurs relating to Trillers payment systems, among other things, Triller
may be subject to fines and higher transaction fees and lose its ability to accept credit and debit card payments from its consumers,
process electronic funds transfers or facilitate other types of online payments, and its reputation and its business, financial condition
and results of operations could be materially and adversely affected.
50
The
validity, enforceability and scope of protection of intellectual property in internet-related industries are evolving, and therefore,
uncertain. Triller may have to engage in litigation or other legal proceedings to enforce and protect its intellectual property rights,
which could result in substantial costs and diversion of its resources, and have a material adverse effect on its business, financial
condition and results of operations.
**Trillers
Technology Platform depends on the reliability of the network infrastructure and related services provided by itself and third parties,
which is subject to physical, technological, security and other risks. Triller could suffer a loss of revenue and increased costs, exposure
to significant liability, reputational harm and other serious negative consequences if Triller sustains damages, cyber-attacks or other
data security breaches that disrupt its operations or result in the dissemination of proprietary or confidential information about Triller
or its customers or other third parties.**
****
The
development and operation of Trillers Technology Platform is subject to physical, technological, security and other risks which
may result in interruption in service or reduced capacity. These risks include physical damage, power loss, telecommunications failure,
capacity limitation, hardware or software failures or defects and breaches of physical and cybersecurity by computer viruses, systembreak-insor
otherwise. An increase in the volume of usage of Trillers Technology Platform could strain the capacity of the software and hardware
employed to prevent and identify such failures, breaches and attacks, which could result in slower response time or system failures.
In particular, Trillers industry has witnessed an increase in the number, intensity and sophistication of cybersecurity incidents
caused by hackers and other malicious actors such as foreign governments, criminals, hacktivists, terrorists and insider threats. Hackers
and other malicious actors may be able to penetrate Trillers network security and misappropriate or compromise Trillers
confidential, sensitive, personal or proprietary information, or that of third parties, and engage in the unauthorized use or dissemination
of such information. They may be able to create system disruptions, or cause shutdowns. Hackers and other malicious actors may be able
to develop and deploy viruses, worms, ransomware and other malicious software programs that attack Trillers products or otherwise
exploit any security vulnerabilities of Trillers systems. In addition, sophisticated hardware and operating system software
and applications that Triller procures from third parties may contain defects in design or manufacture, including bugs,
cybersecurity vulnerabilities and other problems that could unexpectedly interfere with the operation or security of its systems. For
example, in 2022, as a result of a bug introduced in the application, Triller estimated that potentially 504 accounts may have been compromised.
The
occurrence of any of these events could result in interruptions, delays or cessation in service to users of Trillers online services,
which could have a material adverse effect on Trillers business and results of operations. Triller may be required to expend significant
capital or other resources to protect against the threat of security breaches and attacks or to alleviate problems caused by such actions,
including the following:
|
|
|
expenses to rectify the
consequences of the damage, security breach or cyber-attack; | |
|
|
|
liability for stolen assets
or leaked information; | |
|
|
|
costs of repairing damage
to Trillers systems; | |
|
|
|
lost revenue and income
resulting from any system downtime caused by such breach or attack; | |
|
|
|
loss of competitive advantage
if Trillers proprietary information is obtained by competitors as a result of such breach or attack; | |
|
|
|
increased costs of cyber
security protection; | |
|
|
|
costs of incentives Triller
may be required to offer to its customers or business partners to retain their business; and | |
|
|
|
damage to Trillers
reputation. | |
51
In
addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering
into transactions that involve providing confidential information to Triller. As a result, any compromise to the security of Trillers
systems could have a material adverse effect on its business, reputation, financial condition, and operating results.
While
Triller has implemented industry-standard physical and cybersecurity measures, Trillers network may still be vulnerable to unauthorized
access, computer viruses, denial of service and other disruptive problems. Triller has experienced in the past, and may experience in
the future, security breaches or attacks. There can be no assurance that any measures implemented will not be circumvented in the future.
Trillers
business is also vulnerable to delays or interruptions due to Trillers reliance on infrastructure and related services provided
by third parties.End-usersof Trillers offerings depend on Internet Service Providers (**ISPs**) and
Trillers system infrastructure for access to the internet games and services Triller offers. Some of these services have experienced
service outages in the past and could experience service outages, delays and other difficulties due to system failures, stability or
interruption. Triller may lose Creators or consumers as a result of delays or interruption in service, including delays or interruptions
relating to high volumes of traffic or technological problems, which may prevent the use of Trillers Technology Platform for a
period of time and could materially adversely affect Trillers business, revenues, results of operations and financial condition.
In
addition to all of the foregoing, in the event that Trillers service agreements are terminated or expire with network infrastructure
providers, Triller could experience interruptions in access to Trillers Technology Platform as well as significant delays and
additional expense in arranging for or creating new facilities or re-architecting Trillers Technology Platform for deployment
on a different network infrastructure service provider, which would adversely affect Trillers business, financial condition and
results of operations.
****
**Triller
may experience losses due to subscriber fraud and theft of service.**
Subscribers
may in the future obtain access to the subscription services on Trillers Technology Platform without paying for service by unlawfully
using Trillers authorization codes, engaging in otherwise illegal activity or by submitting fraudulent credit card information.
To date, no material losses from unauthorized credit card transactions and theft of service have occurred. Triller has implemented anti-fraud
procedures in order to control losses relating to these practices, but these procedures may not be adequate to effectively limit all
of Trillers exposure in the future from fraud. If Trillers procedures are not effective, consumer fraud and theft of service
could significantly decrease Trillers revenue and have a material adverse effect on Trillers business, financial condition
and operating results.
****
**If
TV streaming develops more slowly than Triller expects, Trillers operating results and growth prospects could be harmed.**
TV
streaming is a continuously evolving, making it difficult to evaluate the prospects for Trillers TV streaming offerings. The level
of demand and market acceptance for Trillers streaming offerings are subject to a high degree of uncertainty. Triller believes
that the growth and success of its streaming offerings, such as Triller TV, and BKFC, will depend on the availability of quality content,
the quality and reliability of new devices and technology and the cost for subscribers relative to other sources of content. These technologies,
products and content offerings continue to emerge and evolve. Users, Creators or Brands may find TV streaming platforms to be less attractive
than traditional TV, which would harm Trillers business. If new technologies render the TV streaming market obsolete or Triller
is unable to successfully compete with current and new competitors and technologies, its business may be harmed. The future growth of
Trillers business depends in part on the growth of TV streaming advertising, and on advertisers increasing spend on such advertising.
52
**Changes
to Trillers existing products and apps, or the introduction of new products and brand names that Triller develops, could fail
to attract or retain Creators users, consumers or Brand partners, or generate revenue and profits.**
Trillers
ability to retain, increase and engage its Creators, consumers or Brand partners and to increase its revenue depends heavily on its ability
to continue to evolve its Technology Platform and to create successful new products and develop new brands for Triller, both independently
and in conjunction with developers or other third parties. Triller may introduce significant changes to its existing products, or acquire
or introduce new and unproven third-party products, and product extensions, including using technologies with which Triller has little
or no prior development or operating experience. Triller has also invested, and expect to continue to invest, significant resources in
growing its products to support increasing usage as well as new lines of business, new products, new product extensions and other initiatives
to generate revenue. For example, Triller acquired Julius, which operates a marketplace that connects Brands with Creators with whom
they may desire to partner. There is no guarantee that investing in new lines of business, new products, new product extensions and other
initiatives will succeed. If Trillers new or enhanced brands, products or product extensions fail to engage users, marketers,
or developers, or if Trillers business plans are unsuccessful, Triller may fail to attract or retain users or to generate sufficient
revenue, operating margin or other value to justify its investments, and its business may be materially adversely affected.
Triller
may also introduce new products, features or terms of service or policies, and seek to find new, effective ways to show its community
new and existing products and alert them to events and meaningful opportunities to connect, that users do not like, which may negatively
affect its reputation and usage of the offerings on its Technology Platform. New products may provide temporary increases in engagement
that may ultimately fail to attract and retain users such that they may not produce the long-term benefits that Triller expects.
**Trillers
ability to introduce new features, capabilities and enhancements is dependent on adequate research and development resources. If Triller
does not adequately fund its research and development efforts, or if its research and development investments do not translate into material
enhancements to us, it may not be able to compete effectively and its business, results of operations and financial condition may be
harmed.**
To
remain competitive, Triller must continue to develop new features, capabilities and enhancements to its Technology Platform, including
all of its services and technology offerings. This is particularly true as Triller further expands and diversifies its capabilities to
address additional markets. Maintaining adequate research and development resources, such as the appropriate personnel and development
technology, to meet the demands of the market is essential. The development of new features, services, or products for Trillers
Technology Platform depends on a number of factors, including Trillers ability to:
|
|
|
spend its developmentbudgetefficiently
or effectively on commercially successful and innovative technologies; | |
|
|
|
realize the expected benefits
of its strategy; | |
|
|
|
develop products that are
competitive in relation to its competitors; | |
|
|
|
develop technology in a
timely and cost-effective manner; | |
|
|
|
anticipate user, Creator
and Brand demand for an offering Triller is developing; and | |
|
|
|
fund and recoup costs incurred. | |
If
Triller is unable to develop features and capabilities internally due to certain constraints, such as employee turnover, lack of management
ability or a lack of other research and development resources, which may be exacerbated by Trillers current negative working capital
and low cash balance, Trillers business will be harmed. Moreover, research and development projects can be technically challenging
and expensive. The nature of these research and development cycles may cause Triller to experience delays between the time Triller incurs
expenses associated with research and development and the time it is able to offer compelling features, capabilities, and enhancements
and generate revenue, if any, from such investment. Additionally, anticipated demand for a feature, integration, capability or enhancement
Triller is developing could decrease after the development cycle has commenced, and Triller would nonetheless be unable to avoid substantial
costs associated with the development of any such feature, integration, capability or enhancement. If Triller expends a significant amount
of resources on research and development and its efforts do not lead to the successful introduction or improvement of features, integrations
and capabilities that are competitive, it would harm its business, results of operations, and financial condition.
53
Further,
many of Trillers competitors expend a considerably greater amount of funds on their respective research and development programs,
and those that do not may be acquired by larger companies that would allocate greater resources to Trillers competitors
research and development programs. Trillers failure to maintain adequate research and development resources or to compete effectively
with the research and development programs of Trillers competitors would give an advantage to such competitors and may harm Trillers
business, results of operations, and financial condition.
In
2021, Triller launched subscription packages to bring its collection of virtual and live Events and other content in its library to paid
subscribers. Trillers assessments are based on prior experience and market competition and may not be accurate and Triller could
be underpricing or overpricing its subscription services, which may require Triller to continue to adjust its pricing packages and incorrect
pricing could result in harm to its business. Furthermore, subscriber price sensitivity may vary by location, and as Triller expands
into different countries, its pricing packages may not enable Triller to compete effectively in these countries. In addition, if Trillers
Technology Platform or services change, then Triller may need to, or Triller may choose to, revise its pricing. Such changes to Trillers
pricing model or its ability to efficiently price its Brand services offerings, digital andin-personevent tickets, or content
library could harm its business.
****
**Triller
must increase the scale and efficiency of its technology infrastructure to support its growth.**
Trillers
technology must scale to process the potential increased usage of its Technology Platform. Triller must continue to increase the capacity
of its Technology Platform to support its high-volume strategy, to cope with increased data volumes, increased use by Creators, Brands
and users and an increasing variety of advertising formats and platforms, and to maintain a stable service infrastructure and reliable
service delivery. To the extent Triller is unable, for cost or other reasons, to effectively increase the capacity of its Technology
Platform or support emerging advertising formats or services preferred by users, consumers, Creators and Brands, its revenue will suffer.
Triller expects to continue to invest in its Technology Platform to meet increasing demand. Such investment may negatively affect its
profitability and results of operations.
****
**If
there are interruptions or performance problems associated with the technology or infrastructure of Trillers Technology Platform,
including interruptions that impact Trillers third-party service providers, users may experience service outages, new users may
be reluctant to adopt Trillers product offerings, users may leave Trillers Technology Platform, and Trillers reputation
could be harmed.**
Trillers
business and continued growth rely, in part, on the ability of existing and potential users to access Trillers Technology Platform
without interruption or degradation of performance. Trillers products and systems rely on software and hardware that is highly
technical and complex, and depend on the ability of such software and hardware to store, retrieve, process and manage immense amounts
of data. Triller has in the past and may in the future experience disruptions, outages, and other performance problems with its technology
due to factors such as infrastructure changes, introductions of new functionalities, human or software errors, capacity constraints,
or attacks by malicious third parties.
Despite
internal testing, particularly when first introduced or when new versions or enhancements are released, Trillers software may
contain serious errors or defects, security vulnerabilities, or software bugs that are difficult to detect and correct, which Triller
may be unable to successfully correct in a timely manner or at all. In some instances, Triller may not be able to identify the cause
or causes of these performance problems immediately or in short order. Triller may not be able to maintain the level of service uptime
and performance required by customers, especially during peak usage times and as Trillers user traffic and number of integrations
increase. If Trillers Technology Platform is unavailable or if users are unable to access these platforms within a reasonable
amount of time (especially during live Events), or at all, Trillers business would be harmed. Since users rely on Trillers
Technology Platform to create and share social media content and experience live event and other programming, any outage would negatively
impact Trillers brand, reputation and customer satisfaction, and could give rise to legal liability under Trillers service
level agreements with paid customers.
54
Moreover,
Triller depends on services from various third parties to maintain its infrastructure, including cloud-based infrastructure services.
Triller currently hosts its Technology Platform primarily using Amazon Web Services (**AWS**) and Google. Trillers
operations depend on protecting the virtual cloud infrastructure hosted in AWS and Google by maintaining its configuration, architecture,
features and interconnection specifications, as well as the information stored in these virtual data centers and which third-party internet
service providers transmit. If a service provider fails to provide sufficient capacity to support Triller or otherwise experiences service
outages, such failure could interrupt access to Trillers Technology Platform by users and organizations, which could adversely
affect their perception of Trillers reliability and Trillers revenue. Any disruptions in these services, including as a
result of actions outside of Trillers control, would significantly impact the continued performance of Trillers Technology
Platform. A prolonged AWS service disruption affecting Trillers Technology Platform would negatively impact Trillers ability
to serve its consumers and partners, and could damage its reputation with current and potential consumers and partners, expose Triller
to liability, cause Triller to lose consumers or partners or otherwise harm Trillers business. Triller may also incur significant
costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the AWS services
Triller use.
In
the future, these services may not be available to Triller on commercially reasonable terms, or at all. Any loss of the right to use
any of these services could result in Trillers decreased functionality until equivalent technology is either developed by Triller
or, if available from another provider, is identified, obtained, and integrated into Trillers infrastructure. Triller may also
be unable to effectively address capacity constraints, upgrade its systems as needed, and continually develop its technology and network
architecture to accommodate actual and anticipated changes in technology.
Trillers
Technology Platform, services and technologies are vulnerable to malicious attacks and security breaches. Such attacks are of ever-increasing
levels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including organized criminal
groups, and others. The techniques used to breach security safeguards evolve rapidly, and they may be difficult to detect for an extended
period of time, and the measures Triller takes to safeguard its technology may not adequately prevent such incidents.
While
Triller has taken steps to protect its confidential and personal information and that of its users and other business relationships and
have invested in information technology, there can be no assurance that Trillers efforts will prevent service interruptions or
security breaches in Trillers systems or the unauthorized or inadvertent wrongful use or disclosure of such confidential information.
Such incidents could adversely affect Trillers business operations, reputation, and client relationships. Any such breach would
require Triller to expend significant resources to mitigate the breach of security and to address matters related to any such breach,
including the payment of fines. Although Triller maintains an insurance policy that covers data security, privacy liability, and cyber-attacks,
Trillers insurance may not be adequate to cover losses arising from breaches or attacks on Trillers systems. Triller also
may be required to notify regulators about any actual or perceived personal data breach as well as the individuals who are affected by
the incident within strict time periods.
Triller
is also in the process of integrating the technology of its acquired companies. The resulting size and diversity of Trillers technology
systems, as well as the systems of third-party vendors with whom Triller contracts, increase the vulnerability of such systems to breakdowns
and security breaches. In addition, Triller relies on technology at live Events, the failure or unavailability of which, for any significant
period of time, could affect Trillers business, Trillers reputation and the success of Trillers live Events. Triller
also relies on technology to provide its digital offerings, live streaming and virtual Events, which may be vulnerable to hacking, denial
of service attacks, human error and other unanticipated problems or events that could result in interruptions in Trillers service
and unauthorized access to, or alteration of, the content and data contained on Trillers systems and those of Trillers
third- party vendors. Any significant interruption or failure of the technology upon which Triller relies, or any significant breach
of security, could result in decreased performance and increased operating costs, adversely affecting Trillers business, financial
condition and results of operations. Implementation of changes in Trillers technology may cost more or take longer than originally
expected and may require more testing than initially anticipated. Any failure to update and enhance Trillers technology in a timely
and cost-effective manner could materially adversely affect Trillers users experience with Trillers various products
and thereby negatively impact the demand for Trillers products, and could increase Trillers costs, either of which could
materially adversely affect Trillers business, financial condition and results of operations. Implementation of changes in Trillers
technology may cost more or take longer than originally expected and may require more testing than initially anticipated. Any failure
to update and enhance Trillers technology in a timely and cost-effective manner could materially adversely affect Trillers
users experience with Trillers various products and thereby negatively impact the demand for Trillers products,
and could increase Trillers costs, either of which could materially adversely affect Trillers business, financial condition
and results of operations.
55
In
addition, the delivery of Trillers products and services through Trillers Technology Platform presents the potential for
further vulnerabilities. For instance, Triller may be subject to boycotts, spam, spyware, ransomware, phishing and social engineering,
viruses, worms, malware, DDOS attacks, password attacks,man-in-the-middleattacks, cybersquatting, impersonation of employees
or officers, abuse of comments and message boards, fake reviews, doxing and swatting. While Triller has internal policies in place to
protect against these vulnerabilities, Triller can make no assurances that it will not be adversely affected should one of these events
occur. Additionally, there is an increased risk that Triller may experience cybersecurity-related events and other security challenges,
as a result of its hybrid and remote employees and service providers working fromnon-corporate-managednetworks.
Furthermore,
Trillers future success will depend on its ability to adapt to emerging technologies such as tokenization, new authentication
technologies, such as blockchain technologies, artificial intelligence, machine learning, virtual and augmented reality, and cloud technologies.
Additionally, Trillers efforts to adapt to emerging technologies may not always be successful and Triller may not make appropriate
investments in new technologies, which could materially adversely affect its business, financial condition and results of operations.
For example, the use of AI and ML is becoming increasingly prevalent in Trillers industry, and, although Triller intends to continue
developing its Technology Platforms AI and ML capabilities to meet the needs of its customers, Triller may be unable to accurately
or efficiently integrate machine learning and artificial intelligence features or functionalities of the quality or type sought by Trillers
customers or offered by Trillers competitors. These development efforts may also require significant engineering, sales, and marketing
resources, all of which could require significant capital and management investment. If Triller is unable to enhance its Technology Platform
and product offerings to keep pace with rapid technological and regulatory change, or if new technologies, including AI and ML solutions,
emerge that are able to deliver competitive products at aggressive or alternative prices, more efficiently, more conveniently or more
securely than Trillers Technology Platform, demand for Trillers Technology Platform and product offerings may decline,
and Trillers business, financial condition, and results of operations may be adversely affected.
Any
of the above circumstances or events may adversely impact the user experience, harm Trillers reputation, cause organizations to
terminate Trillers agreements, impair Trillers ability to obtain license renewals from organizations, impair Trillers
ability to grow its user base, subject Triller to financial penalties and otherwise harm Trillers business, results of operations
and financial condition.
****
**If
Triller is unable to ensure that its Technology Platform interoperates with a variety of software applications that are developed by
others, including its partners, Triller may become less competitive and its results of operations may be harmed.**
Trillers
Technology Platform must integrate with a variety of network, hardware, and software platforms, and Triller needs to continuously modify
and enhance the platform to adapt to changes in hardware, software, networking, browser, and database technologies. In particular, Triller
has developed its Technology Platform to be able to integrate with third-party applications, including the applications of its competitors
as well as its partners, through the interaction of APIs. In general, Triller relies on the providers of such software systems to allow
Triller access to their APIs to enable these integrations. Triller is typically subject to standard terms and conditions that govern
the distribution, operation, and fees of such third-party systems and platforms which are subject to modification by such providers from
time to time. Trillers business may be harmed if any provider of such platforms or systems:
|
|
|
discontinues or limits
Trillers access to its software or APIs; | |
|
|
|
modifies its terms of service
or other policies, including fees charged to, or other restrictions on Triller or other application developers; | |
|
|
|
changes how information
is accessed by Triller or Trillers users; | |
|
|
|
establishes more favorable
relationships with one or more of Trillers competitors; or | |
|
|
|
develops or otherwise favors
its own competitive offerings over Trillers. | |
56
Third-party
services and products are constantly evolving, and Triller may not be able to modify its Technology Platform apps to ensure their compatibility
with that of other third parties following development changes. In addition, some of Trillers competitors may be able to disrupt
the operation or compatibility of Trillers Technology Platform on or with their products or services or exert strong business
influence on Trillers ability to operate and terms upon which Triller do so. Should any of Trillers competitors modify
their products, standards or terms in a manner that degrades the functionality of Trillers Technology Platform or gives preferential
treatment to competitive products or services, whether to enhance their competitive position or for any other reason, the interoperability
of Trillers Technology Platform with these products could decrease and Trillers business, results of operations, and financial
condition could be harmed. If Triller is not permitted or able to integrate with these and other third-party applications in the future,
demand for Trillers Technology Platform would be harmed and Trillers business, results of operations, and financial condition
would be harmed.
Triller
has created mobile versions of its websites and the various offerings that comprise its Technology Platform to respond to the increasing
number of people who access Trillers products and services through mobile devices. If these mobile applications and websites do
not perform well, Trillers business may suffer. Triller is also dependent on third-party application stores (such as those managed
by Apple and Google) that may prevent Triller from timely updating its product offerings, building new features, integrations, and capabilities,
or charging for access. Certain of these third parties are now, and others may in the future become, competitors of us, and could stop
allowing or supporting access to the platform or the apps that comprise the platform through their products, could allow access to the
platform or such apps only at an unsustainable cost, or could make changes to the terms of access in order to make Trillers Technology
Platform and applications less desirable or harder to access, for competitive reasons. In addition, Trillers Technology Platform
and applications interoperate with servers, mobile devices, and software applications predominantly through the use of protocols, many
of which are created and maintained by third parties. Triller therefore depends on the interoperability of its applications with such
third-party services, mobile devices, and mobile operating systems, as well as cloud-enabled hardware, software, networking, browsers,
database technologies, and protocols that Triller does not control. Any changes in such technologies that degrade the functionality of
Trillers apps orgive preferential treatment to competitive services could adversely affect adoption and usage of Trillers
apps. Also, Triller may not be successful in developing or maintaining relationships with key participants in the mobile industry or
in ensuring that Trillers apps operate effectively with a range of operating systems, networks, devices, browsers, protocols and
standards. If Triller is unable to effectively anticipate and manage these risks, or if it is difficult for users to access and use Trillers
apps, Trillers business, results of operations and financial condition may be harmed.
****
**Triller
relies on software and services from other parties. Defects in, or the loss of access to, software or services from third parties could
increase Trillers costs and adversely affect the quality of Trillers business.**
Triller
relies on technologies from third parties, such as AWS and Google, to operate critical functions of its business, including cloud infrastructure
services and customer relationship management services. Trillers business would be disrupted if any of the third-party software
or services Triller utilizes and relies upon, such as AWS and Google, or functional equivalents thereof, were unavailable due to extended
outages or interruptions, or because they are no longer available on commercially reasonable terms or prices. In each case, Triller would
be required to either seek licenses to software or services from other parties and redesign the Triller app or certain aspects of Trillers
Technology Platform to function with such software or services or develop these components itself, which would result in increased costs
and could result in delays in launches and releases of new features, integrations, capabilities or enhancements until equivalent technology
can be identified, licensed, or developed, and integrated into the Triller app. Furthermore, Triller might be forced to limit the features
available in its Technology Platform. These delays and feature limitations, if they occur, could harm Trillers business, results
of operations, and financial condition.
****
57
****
**Triller
incorporates software and services from third parties into its Technology Platform, and its inability to maintain rights to such software
and services would harm its business and results of operations.**
Triller
licenses patents, software, technology and procure services from third parties that it incorporates into or integrate with its Technology
Platform. Some of the foregoing licenses and services are material and important to the functionality and operation of Trillers
Technology Platform and would be difficult to replace. For example, Triller licenses music and video editing technology from a third
party licensor which is a material component of its Technology Platform. Some of Trillers agreements with its licensors provide
for a limited term. Although Triller has taken steps to protect its rights in certain technology, and identify alternatives where applicable,
if Triller is unable to continue to license any of this intellectual property for any reason, its ability to develop and sell access
to its Technology Platform containing such technology could be harmed. Similarly, if Triller is unable to license necessary intellectual
property from third parties now, or in the future, on commercially reasonable terms or at all, Triller may be forced to acquire or develop
alternative technology, which Triller may be unable to do in a commercially feasible manner, or at all, and Triller may be required to
use alternative technology of lower quality or performance standards, which would adversely affect Trillers business, financial
condition and results of operations.
Triller
also cannot be certain that its licensors are not infringing the intellectual property rights of third parties or that its licensors
have sufficient rights to the licensed intellectual property in all jurisdictions in which Triller may sell access to its Technology
Platform. In addition, many licenses are non-exclusive, and therefore Trillers competitors may have access to the same technology
licensed to Triller.
****
**Certain
of Trillers products contain third-party open source software components, and failure to comply with the terms of the underlying
open source software licenses could restrict Trillers ability to sell its products.**
****
Certain
of Trillers products contain components that are licensed underso-calledopen source, free
or other similar licenses. Open source software is made available to the general public on anas-isbasis under
the terms of anon-negotiablelicense. Triller currently combines its proprietary software with open source software, but not
in a manner that Triller believes requires the release of the source code of its proprietary software to the public. Triller does not
plan to integrate its proprietary software with open source software in ways that would require the release of the source code of its
proprietary software to the public. Although Triller has certain processes in place to monitor and manage its use of open source software
to avoid subjecting its platform to conditions Triller does not intend, the terms of many open source licenses have not been interpreted
by U.S. or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions
or restrictions on Trillers ability to provide or distribute Trillers platform.
Trillers
use and distribution of open source software may entail greater risks than use of third-party commercial software. Open source licensors
generally do not provide support, warranties, indemnification, or other contractual protections regarding infringement claims or the
quality of the code. In addition, if Triller combines its proprietary software with open source software in a certain manner, Triller
could, under certain open source licenses, be required to release to the public or remove the source code of Trillers proprietary
software. Triller may also face claims alleging noncompliance with open source license terms or infringement or misappropriation of proprietary
software. These claims could result in litigation, require Triller to purchase a costly license or remove the software. In addition,
if the license terms for open source software that Triller uses change, it may be forced tore-engineer its solutions, incur additional
costs or discontinue the sale of its offerings ifre-engineeringcould not be accomplished on a timely basis or at all. Although
Triller monitors its use of open source software to avoid subjecting its offerings to unintended conditions, Triller cannot assure you
that its processes for monitoring and managing its use of open source software in its platform will be effective and there is a risk
that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on its ability to commercialize
its offerings. Triller cannot guarantee that it has incorporated open source software in its software in a manner that will not subject
Triller to liability or in a manner that is consistent with its current policies and procedures.
****
**The
failure to maintain or renew Trillers agreements with producers or distributors of free, freemium andpay-per-viewcontent
could adversely impact Trillers business.**
Triller
enters into long-term contracts for both the acquisition and the distribution of media content, including contracts for the acquisition
of content rights for sporting events and other programs. As these contracts expire, Triller must renew or renegotiate the contracts,
and if Triller is unable to renew them on acceptable terms, Triller may lose content rights or distribution rights. Even if these contracts
are renewed, the cost of obtaining content rights may increase (or increase at faster rates than Trillers historical experience).
Moreover, Trillers ability to renew these contracts on favorable terms may be affected by consolidation in the market for content
distribution and the entrance of new participants in the market for distribution of content on digital platforms. With respect to the
acquisition of content rights, particularly sports content rights, the impact of these long-term contracts on Trillers results
over the term of the contracts depends on a number of factors, including the strength of advertising markets, subscription levels and
rates for content, effectiveness of marketing efforts and the size of viewer audiences. There can be no assurance that revenues from
content based on these rights will exceed the cost of the rights plus the other costs of producing and distributing the content.
58
Trillers
ability to provide its subscribers with content also depends on content providers and other rights holders licensing rights, including
distribution rights, to such content and certain related elements thereof, such as the public performance of music contained within the
content Triller distributes. The license periods and the terms and conditions of such licenses vary, and Triller is currently operating
outside the terms of some of its current licenses. If the content providers and other rights holders are not or are no longer willing
or able to license Triller content upon terms acceptable to us, Trillers ability to stream content to its subscribers may be adversely
affected and/or its costs could increase. Because of these provisions as well as other actions Triller may take, content available through
its service can be withdrawn on short notice. As competition increases, Triller has seen the cost of certain programming increase.
**Trillers
business depends on its ability to send consumer engagement messages, including emails, SMS, and mobile and web notifications, and any
significant disruption in service with Trillers third-party providers or on mobile operating systems could result in a loss of
customers or less effective consumer-brand engagement, which could harm Trillers business, financial condition, and results of
operations.**
Trillers
brand, reputation, and ability to attract new customers depend on the reliable performance of Trillers technology infrastructure
and content delivery. Trillers Technology Platform engages with consumers through emails, SMS and push notifications, and Triller
depends on third-party services for delivery of such notifications. Any incident broadly affecting the interaction of third-party devices
with Trillers platform, including any delays or interruptions in these services that could cause delays to emails, SMS, or mobile
and web notifications, could adversely affect Trillers business. Similarly, cybersecurity events could result in a disruption
to such third-partys services, including regulatory investigations, reputational damage, and a loss of sales and customers, which
could in turn impact Trillers business. A prolonged disruption, cybersecurity event or any other negative event affecting a third-party
service could lead to customer dissatisfaction and could in turn damage Trillers reputation with current and potential customers,
result in a breach under Trillers agreements with its customers, and cause Triller to lose customers or otherwise harm its business,
financial condition, and results of operations.
Triller
depends in part on mobile operating systems and their respective infrastructures to send notifications through various applications that
utilize its platform. As new email, mobile devices, and mobile and web platforms are released, existing email, mobile devices, and platforms
may cease to support Trillers platform or effectively roll out updates to Trillers customers applications. Any changes
in these systems or platforms that negatively impact the functionality of Trillers platform could adversely affect Trillers
ability to interact with consumers in a timely and effective fashion, which could adversely affect Trillers ability to retain
and attract new customers. The parties that control the operating systems for mobile devices and mobile, web, and email platforms have
no obligation to test the interoperability of new mobile devices or platforms with Trillers platform, and third parties may produce
new products that are incompatible with or not optimal for the operation of Trillers platform. Additionally, in order to deliver
high-quality consumer engagement, Triller needs to ensure that its platform is designed to work effectively with a range of mobile technologies,
systems, networks, and standards. If consumers choose to use products or platforms that do not support Trillers platform, or if
Triller does not ensure its platform can work effectively with such products or platforms, Trillers business and growth could
be harmed. Triller also may not be successful in developing or maintaining relationships with key participants in the email or mobile
industries that permit such interoperability. If Triller is unable to adapt to changes in popular operating systems and platforms, it
expects that its customer retention and customer growth would be adversely affected.
59
****
**Trillers
business may be adversely affected if Trillers access to music rights is limited or delayed. The concentration of control of content
by major music licensors means that even one entity, or a small number of entities working together, may unilaterally affect Trillers
access to music and other content. Triller depends upon third-party licenses for the use of music on Trillers platform and in
Trillers content. An adverse change to, loss of, or claim that Triller does not hold necessary licenses may have an adverse effect
on its business, operating results, and financial condition.**
Music
is an important element of the overall content that Triller makes available on the Triller app. Triller relies on licensors that hold
rights to sound recordings and musical compositions, over whom Triller has no control, for the music related content Triller makes available
on the Triller app. To secure the rights to use music in Trillers content and on the Triller app, Triller enters into agreements
to obtain licenses from rights holders such as performing rights organizations, record labels, music publishers, collecting societies,
artists and songwriters, and other copyright owners (or their agents). Triller pays royalties to such parties or their agents around
the world. Triller cannot guarantee that these parties will always choose to license to Triller.
The
process of obtaining licenses involves identifying and negotiating with many rights holders, some of whom are unknown, or difficult to
identify, or for whom Triller may have conflicting ownership information, and implicates a myriad of complex and evolving legal issues
across many jurisdictions, including open questions of law as to when and whether particular licenses are needed with respect to the
use of musical compositions and sound recordings.
The
music industry is highly concentrated, which means that one or a small number of entities may, on their own, take actions that adversely
affect Trillers business. For example, the music rights licensed to Triller under Trillers agreements with major record
labels and major publishing companies are necessary for Triller to exploit the majority of music consumed on the Triller app. Trillers
business may be adversely affected if Trillers access to music is limited or delayed, or if any of the various rights to such
music are no longer licensed to us, if Trillers relationships deteriorate with one or more of these rights holders, or if they
choose not to license to Triller for any other reason. Rights holders also may attempt to take advantage of their market power by seeking
onerous financial terms from Triller. Triller may elect not to renew certain agreements with rights holders for any number of reasons,
or Triller may decide to explore different licensing schemes or economic structures with certain or all rights holders. Artists and/or
songwriters may object and may exert public or private pressure on rights holders to discontinue or to modify license terms, or Triller
may elect to discontinue use of an artist or songwriters catalog based on a number of factors, including actual or perceived reputational
damage. Additionally, there is a risk that aspiring rights holders, their agents, or legislative or regulatory bodies will create or
attempt to create new rights that could require Triller to enter into new license agreements with, and pay royalties to, newly defined
groups of rights holders, some of which may be difficult or impossible to identify.
Even
if Triller is able to secure music rights from record labels, music publishers and other copyright owners, artists and/or artist groups
may object and may exert public or private pressure on third parties to discontinue licensing rights to us, hold back content from us,
or increase royalty rates. As a result, Trillers ability to continue to license rights to music is subject to convincing a broad
range of stakeholders of the value and quality of Trillers service. In addition, Trillers music licenses from record labels,
music publishers and other copyright owners may not contemplate some of the features and content that Triller may wish to add to its
service, or new service offerings or revenue models that Triller may wish to launch. To the extent that Triller is unable to license
or continue to license a large amount of music rights or the music rights related to the music written or performed by certain popular
artists, Trillers business, operating results, and financial condition could be materially harmed.
With
respect to musical compositions, in addition to obtaining the synchronization, distribution and reproduction rights, Triller also needs
to obtain public performance or communication to the public rights, and this needs to be accomplished on a territory basis. At times,
while Triller may hold sufficient license rights for certain music in a territory such as the United States, it may be difficult to obtain
the license for the same music rights from the applicable rights holders outside of such territory.
In
the United States, public performance rights are typically obtained separately through intermediaries known as performing rights organizations
(**PROs**) which (a)issue blanket licenses with copyright users for the public performance of musical compositions
in their repertory, (b)collect royalties under those licenses, and (c)distribute such royalties to copyright owners. Triller
has, or are in some instances in the process of obtaining licenses, for public performance of musical compositions in the United States,
Canada, Mexico, Europe and other territories, through local collecting societies representing songwriters and publishers, and from certain
publishers directly, or a combination thereof. The royalty rates available to Triller from the PROs today may not be available to Triller
in the future. The royalty rates under licenses provided by American Society of Composers, Authors and Publishers (**ASCAP**)
and Broadcast Music Inc. (**BMI**) currently are governed by consent decrees, which were issued by the U.S. Department
of Justice in an effort to curb anti-competitive conduct. Removal of or changes to the terms or interpretation of these agreements could
affect Trillers ability to obtain licenses from these PROs on current and/or otherwise favorable terms, which could harm Trillers
business, operating results, and financial condition.
60
In
other parts of the world, including in Canada and Europe, Triller has or are in some instances in the process of obtaining licenses for
public performance of musical compositions through local collecting societies representing songwriters and publishers, and from certain
publishers directly, or a combination thereof. Given the licensing landscape in other territories for public performance rights, Triller
cannot guarantee that it will be able to finalize and enter into licensing agreements in such territories, or that Trillers licenses
with collecting societies and Trillers direct licenses with publishers provide full coverage for all of the musical compositions
it uses in its service in the countries in which it operates, or that Triller may enter in the future. Publishers, songwriters, and other
rights holders who choose not to be represented by major or independent publishing companies or collecting societies have, and could
in the future, adversely impact Trillers ability to secure licensing arrangements in connection with musical compositions that
such rights holders own or control, and could increase the risk of liability for copyright infringement.
Although
Triller expends significant resources to seek to comply with applicable contractual, statutory, regulatory, and judicial frameworks,
it cannot guarantee that it currently holds, or will always hold, every necessary right to use all of the music that is used on Trillers
service now or that may be used in Trillers products and services in the future, and Triller cannot assure you that Triller is
not infringing or violating any third-party intellectual property rights, or that Triller will not do so in the future. These challenges,
and others concerning the licensing of music on Trillers platform, may subject Triller to significant liability for copyright
infringement, breach of contract, or other claims.
****
**Triller
is a party to many music license agreements that are complex and impose numerous obligations upon Triller that may make it difficult
to operate Trillers business, and a breach, or perceived breach, of such agreements could adversely affect Trillers business,
operating results, and financial condition.**
Trillers
license agreements are complex and impose numerous obligations on us, including obligations to, among other things:
|
|
|
calculate and make payments
based on complex royalty structures, which requires tracking usage of content in Trillers service that may have inaccurate
or incomplete metadata necessary for such calculation; | |
|
|
|
provide periodic reports
in specified formats on the exploitation of the content; | |
|
|
|
represent that Triller
will obtain all necessary licenses and consents and pay all associated fees, royalties, and other amounts due for the licensing of
sound recordings and musical compositions; | |
|
|
|
comply with certain marketing
and advertising restrictions; | |
|
|
|
grant the licensor the
right to audit Trillers compliance with the terms of such agreements; and | |
|
|
|
comply with certain security
and technical specifications. | |
Certain
of Trillers license agreements may also contain minimum guarantees or require that Triller makes minimum guarantee or advance
payments, which are not always tied to Trillers number of users or stream counts for music used in Trillers service. Accordingly,
Trillers ability to achieve and sustain profitability and operating leverage in part depends on Trillers ability to increase
its revenue through increased sales of subscriptions on terms that maintain an adequate gross margin. Trillers license agreements
that contain minimum guarantees typically have terms of between one and three years, but Trillers users may cancel their subscriptions
at any time. Triller relies on estimates to forecast whether such minimum guarantees and advances against royalties could be recouped
against Trillers actual content costs incurred over the term of the license agreement. To the extent that Trillers estimates
underperform relative to Trillers expectations, and Trillers content costs do not exceed such minimum guarantees and advance
payments, Trillers margins may be adversely affected.
Some
of Trillers license agreements may also include so-called most-favored nations provisions, which require that certain
terms (including material financial terms) are no less favorable than those provided to any similarly situated licensor. If agreements
are amended or new agreements are entered into on more favorable terms, these most-favored nations provisions could cause Trillers
payment or other obligations to escalate substantially. Additionally, some of Trillers license agreements require consent to undertake
new business initiatives utilizing the licensed content (e.g., alternative distribution models), and without such consent, Trillers
ability to undertake new business initiatives may be limited and Trillers competitive position could be impacted.
61
****
If
Triller breaches any obligations in any of its license agreements, or if it uses content in ways that are found to exceed the scope of
such agreements, Triller could be subject to monetary penalties or claims of infringement, and its rights under such agreements could
be terminated. Furthermore, certain of Trillers licenses are currently expired by their terms, and Triller is relying on ordinary
course of dealing extensions with such licensors. Additionally, Triller is not current on payments under all of its licenses, which may
increase the risk of litigation with certain of its licensors. Triller also runs the risk of such licensors making copyright infringement
claims against us, which could have a material adverse effect on Trillers business, financial condition, and operating results.
In
the past, Triller has entered into agreements that required Triller to make substantial payments to licensors to resolve instances of
past use at the same time that Triller enters into go-forward licenses. These agreements may also include most-favored nations provisions.
If triggered, these most favored nations provisions could cause Trillers payments or other obligations under those agreements
to escalate substantially. If Triller needs to enter into additional similar agreements in the future, it could have a material adverse
effect on its business, financial condition, and operating results.
****
**Triller
faces risks, such as unforeseen costs and potential liability, in connection with content Triller produces, licenses, and distributes
through Trillers Technology Platform.**
As
a producer and distributor of content, Triller faces potential liability for negligence, copyright and trademark infringement, claims
for violation of the right of publicity or privacy, or other claims based on the nature and content of materials that Triller produces,
license, and distribute, such as content from its live Events. Triller also may face potential liability for content used in promoting
its Technology Platform and Events, including marketing materials or its community-related content. Triller may decide to remove content
from its Technology Platform, not to place certain content on its Technology Platforms, or to discontinue or alter its production of
certain types of content if Triller believes such content might not be well received by its consumers and partners or could be damaging
to its brand and business.
To
the extent Triller does not accurately anticipate costs or mitigate risks, including for content that it obtains but ultimately does
not appear on or is removed from its Technology Platforms, or if Triller become liable for content it produces, licenses or distributes,
its business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could
harm its business and reputation. Triller may not be indemnified against claims or costs of these types and Triller cannot guarantee
that it is adequately insured to indemnify Triller for all liability that may be imposed on Triller.
****
**Trillers
ability to generate revenue from discretionary consumer and corporate spending on entertainment and sports events, such as ticket sales,
corporate sponsorships and advertising, is subject to many factors, including many that are beyond Trillers control, such as general
macroeconomic conditions and catastrophic events.**
****
Trillers
business depends on discretionary consumer and corporate spending. Many factors related to discretionary consumer and corporate spending,
including economic conditions affecting disposable consumer income such as inflation, including the current persistent inflationary environment,
unemployment levels, fuel prices and prices for other goods and services, interest rates, including the current environment of rapidly
rising interest rates, changes in tax rates, tax laws that impact companies or individuals, and inflation can significantly impact Trillers
operating results. Declines in advertising, sponsorship and other Brand partnership revenue can also be caused by the economic prospects
of specific advertisers or industries, by increased competition for the leisure time of audiences and audience fragmentation, by the
growing use of new technologies causing advertisers to alter their spending priorities based on these or other factors. In addition,
Brands willingness to purchase advertising or to sponsor Trillers live Events may be adversely affected by lower audience
ratings for Trillers programming content. While consumer and corporate spending may decline at any time for reasons beyond Trillers
control, such as economic recessions or other economic conditions, natural disasters, severe weather, pandemics such as theCOVID-19pandemic,
wars, acts of terrorism, power loss, telecommunications failure or other catastrophic events, the risks associated with Trillers
businesses become more acute in periods of a slowing economy or recession, which may be accompanied by reductions in corporate sponsorship
and advertising and decreases in attendance at live entertainment and sports events, among other things. There can be no assurance that
consumer and corporate spending will not be adversely impacted by current economic conditions, or by any future deterioration in economic
conditions, thereby possibly impacting Trillers operating results and growth. A prolonged period of reduced consumer or corporate
spending, as occurred during theCOVID-19pandemic, could have an adverse effect on Trillers business, financial condition
and results of operations.
****
62
****
**Owning
and managing certain Events for which Triller sells media and sponsorship rights and ticketing exposes Triller to greater financial risk
than market participants who are not vertically integrated. If the live Events that Triller owns and manages are not financially successful,
Trillers business could be adversely affected.**
Triller
acts as a principal by owning and managing certain live Events for which it sells media and sponsorship rights and ticketing, such as
BKFC. Organizing and operating a live event involves significant financial risks as Triller bears all or most event costs, including
a significant amount ofup-frontcosts. In addition, Triller typically books its live Events many months in advance of holding
the event and often agree to pay various third parties fixed guaranteed amounts prior to receiving any related revenue. Accordingly,
if a planned event fails to occur or there is any disruption in Trillers ability to live stream or otherwise distribute an event,
whether as a result of technical difficulties or otherwise, Triller could lose a substantial amount of theseup-frontcosts,
fail to generate anticipated revenue and be forced to issue refunds for media and sponsorship rights, advertising fees, and ticket sales.
There can be no assurance that Triller will not suffer financial harm or adverse impacts to its business operations if Triller is required
to cancel and/or reschedule any live Events. Triller could be compelled to cancel or postpone all or part of an event for many reasons,
including poor weather, issues with obtaining permits or government regulation or performers failing to participate, as well as operational
challenges caused by extraordinary incidents such as terrorist or other security incidents, mass-casualty incidents, natural disasters,
public health concerns including pandemics such as the recentCOVID-19pandemic or similar events. Such incidents have been
shown to cause a nationwide disruption of commercial and leisure activities. For example, in 2021 and 2022 Triller had to cancel a total
of four Events due to key participants contractingCOVID-19.These cancelations resulted in Trillers being unable to
recoup or avoid payment for various nonrefundable expenses Triller had paid and/or incurred in connection with such Events. Triller often
has cancellation insurance policies in place to cover a portion of its losses if it is compelled to cancel an event, but its coverage
may not be sufficient and is subject to deductibles. If the live Events that Triller owns and manages are not financially successful,
it could suffer an adverse effect on its business, financial condition and results of operations.
****
**The
failure to continue creating and partnering with those who create popular live events andpay-per-viewprogramming could adversely
impact Trillers business.**
****
The
creation, marketing and distribution of Trillers media entertainment programming, including Trillerspay-per-viewand
digital live Events, is critical to Trillers business and to Trillers ability to generate revenues. A failure to continue
developing or partnering with those who develop creative and entertaining programs and events would likely lead to a decline in the popularity
of Trillers brand of entertainment and would adversely affect Trillers ability to generate revenues and could have a material
adverse effect on Trillers business, operating results and financial condition.
****
**Triller
may pay upfront expenses when planning live Events, entering into exclusive agreements for video series, or licensing rights to distribute
and publicly perform music, and if these arrangements do not perform as Triller expects, its business, results of operations and financial
condition may be harmed.**
Triller
may payone-time,upfrontnon-recoupableor recoupable signing fees or advances to certain entertainers (e.g. musicians,
athletes, and influencers) or event venues in order to produce high-quality live and virtual entertainment, or gain exclusive ticketing
or streaming video rights. Triller may also pay upfront fees for access to song catalogs by music labels. If the party does not comply
with the terms of the contract or perform an event, such fees are refundable to Triller. Triller pay these upfront fees based on the
expectations to generate revenue on ticket sales, sponsorships, advertising andon-demandpayments by users. Triller makes
the decision to make these payments based on its assessment of the past success of the entertainers, past event data, and other financial
information. Triller includes commercial and legal protections in its contracts that include upfront fees, such as requiring certain
performance obligations, to mitigate the financial risk of making these payments. However, live and virtual Events may vary greatly fromyear-to-yearand
from event to event as a result of external factors, including event planning and budgeting commitments as well as other competing events,
streaming platform commitments, etc. If Trillers assumptions and expectations prove wrong, or a counterparty defaults, resulting
in an unsuccessful event, Trillers return on these signing fees will not be realized and Trillers business and results
of operations will be harmed.
63
Further,
Triller has in the past, and may in the future, face legal claims from Creators or vendors who did not receive advanced payout payments,
which may harm Trillers business, results of operation and financial condition. Triller has in the past, and may in the future,
also face legal claims from Creators who did not meet contractual minimums or other contractual provisions to receive payments, which
may harm Trillers business, results of operation or financial condition.
****
**Participants
and spectators in connection with Trillers live entertainment and sports Events are subject to potential injuries and accidents,
which could subject Triller to personal injury or other claims and increase Trillers expenses (for which Trillers insurance
may not provide adequate coverage), as well as reduce attendance at Trillers live entertainment and sports Events, causing a decrease
in Trillers revenue.**
****
Triller
holds numerous live Events each year. This schedule exposes Trillers performers, athletes and Trillers employees who are
involved in the production of those Events to the risk of travel and performance-related accidents, the consequences of which are not
fully covered by insurance. The physical nature of Trillers Events exposes Trillers performers and athletes to the risk
of serious injury or death. There are inherent risks to participants and spectators involved with producing, attending or participating
in live entertainment and sports events including the risk of an actual or threatened terrorist act, fire, explosion, protests, riots,
and other safety or security issues, any one of which could result in injury or death to attendees and/or damage to the facilities at
which such an event is hosted. Injuries and accidents may occur from time to time in the future, which could subject Triller to substantial
claims and liabilities for injuries. Incidents in connection with Trillers entertainment and sports Events at any of Trillers
venues or venues that Triller rents could also result in claims, reducing operating income or reducing attendance at Trillers
Events, causing a decrease in Trillers revenues. There can be no assurance that the insurance Triller maintains will be adequate
to cover any potential losses. The physical nature of many of Trillers live sports Events exposes the athletes that participate
to the risk of serious injury or death. For example, participants in BKFC do not wear any padding or gloves, which may result in increased
numbers of injuries, including, among others, maxillofacial fractures and dental avulsions. These injuries could also include concussions
or more serious injuries, and many sports leagues and organizations have been sued by athletes over alleged long-term neurocognitive
impairment arising from concussions. Although the participants in certain of Trillers live sports Events, as independent contractors,
are responsible for maintaining their own health, disability and life insurance, Triller may seek coverage under its accident insurance
policies or its general liability insurance policies, for injuries that athletes incur while competing. To the extent such injuries are
not covered by its policies, Triller may self-insure medical costs for athletes for such injuries. Liability to Triller resulting from
any death or serious injury, including concussions, sustained by athletes while competing, could adversely affect its business, financial
condition, and operating results.
Trillers
live Events will entail other risks inherent in public live events, including air and land travel interruption or accidents, the spread
of illness,injuriesresulting from building problems, equipment malfunction, terrorism or other violence, local labor strikes
and other force majeure type events. If an event Triller hosts or in which Triller participates experiences an internet
or power outage, the event may be delayed or canceled, and Trillers reputation may be harmed. These circumstances could result
in personalinjuriesor deaths, including to Trillers employees and contractors, canceled Events and other disruptions
to Trillers business or result in liability to third parties. Triller cannot guarantee its insurance policies will provide Triller
coverage for these incidents or that any coverage Triller obtain will be adequate to cover its liabilities. Moreover, if there were a
public perception that the safety or security measures are inadequate at the Events Triller hosts, whether or not that is the case, it
could result in reputational damage and a decline in future attendance at Events hosted by Triller. In addition, Triller streams a number
of live Events every year, and if an event Triller hosts or participates in experiences an internet or power outage, the event may be
delayed or canceled, and Trillers reputation may be harmed and Triller may incur additional financial expense. The occurrence
of any of these circumstances could adversely affect Trillers business, financial condition, and results of operations.
64
**A
decline in the popularity of Trillers brand of sports entertainment, including as a result of changes in the social and political
climate, could adversely affect Trillers business.**
Trillers
operations are affected by consumer tastes and entertainment trends, which are unpredictable and subject to change and may be affected
by changes in the social and political climate. Some of live event programming is created to evoke a passionate response from consumers.
For example, BKFC live Events may be negatively perceived by some parts of the public and negative events or publicity related to such
Events may result in a decline in the popularity of such events.
****
**A
determination that independent contractors are employees could expose Triller to various liabilities and additional costs.**
In
certain states, notably California and New York, legislative changes have been enacted or are contemplated that draw into question Trillers
ability to treat performers and athletes as independent contractors in those states. The impact of these initiatives on Triller is unknown.
If Triller is required to reclassify independent contractors as employees, Triller may incur additional costs and taxes which could adversely
affect Trillers business, financial condition, and results of operations.
Regulations
that govern the status and classification of independent contractors are subject to changes and divergent interpretations by various
authorities, which can create uncertainty and unpredictability for Triller. For example, in 2020 California passed a worker classification
statute (**AB 5**), which effectively narrowed the definition of an independent contractor by requiring hiring entities
to use a stricter test to determine a given workers classification. In addition, AB 5 places the burden of proof for classifying
workers as independent contractors on hiring entities and provides enforcement powers to the state and certain cities. Legislative proposals
concerning worker classification are being considered by various other states, including New York and New Jersey. Additionally, any requirement
to reclassify independent contractors as employees may require Triller to significantly alter Trillers existing business model
or operations, including suspending or ceasing operations in impacted jurisdictions, increase Trillers costs and impact Trillers
ability to add new talent and grow Trillers business. For instance, existing talent may decide not to partner with Triller and
new talent may not join given the loss of flexibility under an employment model. Any of the foregoing could have an adverse impact on
Trillers business, financial condition, and results of operations and Trillers ability to achieve or maintain profitability.
If ultimately required, workers compensation insurance for Trillers talent or other aspects of their treatment as employees
in those states could add expense to, or otherwise alter, Trillers operations, which could affect Trillers business, financial
condition and/or results of operations. Liability to Triller resulting from any death or serious injury sustained by one of Trillers
performers or athletes while performing could adversely affect Trillers business, financial condition and operating results.
****
**The
Companys insurance may not be adequate.**
Triller
plans to hold numerous live Events each year. This schedule exposes Trillers performers and Trillers employees who are
involved in the production of those Events to the risk of travel and performance-related accidents, the consequences of which may not
be fully covered by insurance. The physical nature of the Companys Events exposes the Companys performers to the risk of
serious injury or death. Although the Company has general liability insurance and umbrella insurance policies, and although the Companys
performers are responsible for obtaining their own health, disability and life insurance, the Company cannot assure you that the consequences
of any accident or injury will be fully covered by insurance. the Companys liability resulting from any accident or injury not
covered by the Companys insurance could have a material adverse effect on the Companys business, operating results and
financial condition.
****
**Triller
may be prohibited from promoting and conducting Trillers live Events if it does not comply with applicable regulations.**
In
various states in the United States, athletic commissions and other applicable regulatory agencies require Triller to comply with their
regulations, which may include obtaining promoters licenses, performers licenses, medical licenses and/or event permits in order for
Triller to promote and conduct Trillers live events. In the event that Triller fails to comply with the regulations of a particular
jurisdiction, Triller may be prohibited from promoting and conducting live events in that jurisdiction. The inability to present Trillers
live Events over an extended period of time or in a number of jurisdictions could have a material adverse effect on Trillers business,
operating results and financial condition.
****
65
****
**Labor
disputes, whether involving Trillers own employees or sports leagues, creative talent or broadcast partners may disrupt Trillers
operations and adversely affect Trillers results of operations.**
Some
of the performers and vendors Triller uses for its live Events and content production, including music and athletic talent and production
crews, may be covered by collective bargaining agreements or works councils. If the parties Triller has contracts with are unable to
reach agreements with labor unions before the expiration of their collective bargaining agreements, the individuals who were covered
by those agreements may have a right to strike or take other actions that could adversely affect Triller. Moreover, many collective bargaining
agreements are industry-wide agreements, and Triller lacks control over the negotiations and terms of the agreements. A labor dispute
involving Trillers contracted parties may result in work stoppages or disrupt Trillers operations and reduce Trillers
revenue, and resolution of disputes may increase Trillers costs.
Labor
disputes in sports leagues or associations could have an adverse impact on Trillers business, financial condition and results
of operations. In addition, any labor disputes that occur in any sports league or association for which Triller has the rights to broadcast
live games or events may preclude Triller from airing or otherwise distributing scheduled games or events, which could have a negative
effect on Trillers business, financial condition and results of operations.
****
**The
sales cycle for live events programming varies and may negatively affect Trillers ability to prepare accurate financial forecasts.**
The
sales cycle related to Trillers live Events programming and the related revenue streams, which typically ranges from a single
week to multiple months, may also cause Triller to experience a delay between increasing operating expenses and the generation of corresponding
revenue, if any. Accordingly, Triller may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that
Triller does not receive as a result of delays arising from these factors, and Trillers results of operations in future reporting
periods may be below the expectations of investors. If Triller does not address these risks successfully, Trillers results of
operations could differ materially from Trillers estimates and forecasts or the expectations of investors, causing Trillers
business to suffer.
Triller
has no assurance that the substantial time and money spent on its sales efforts will generate significant revenue. If conditions in the
marketplace, generally or with specific Brands, Creators or consumers, change negatively, it is possible that Triller will be unable
to recover any of these expenses. Trillers sales efforts involve educating Trillers Brands, Creators or consumers about
the use, technical capabilities and benefits of Trillers Technology Platform. Some of Trillers Brands, Creators or consumers
undertake an evaluation process that frequently involves not only Trillers Technology Platform but also the offerings of Trillers
competitors. As a result, it is difficult to predict when Triller will obtain new Brands, Creators or consumers and begin generating
revenue from these new Brands, Creators or consumers. Even if Trillers sales efforts result in obtaining a new Brand, Creator
or user, it may not sufficiently justify the expenses incurred to acquire the Brand, Creator or user and the related training support.
As a result, Triller may not be able to add Brands, Creators or consumers, or generate revenue, as quickly as Triller may expect, which
could harm Trillers growth prospects.
****
**A
significant slowdown in the growth of AI andAI-relatedmarkets could affect Trillers business and earnings. Even if
the market does grow, there is a possibility that Triller may not be able to grow at a similar pace.**
AI
andAI-relatedmarkets are still in their infancy in comparison to other widely used software types, it is unclear whether
AI andAI-relatedmarkets will continue to grow. The success of Trillers Technology Platform will depend on the willingness
of Creators and Brands to increase their use of AI. If Creators and Brands do not perceive the benefits of AI products and services,
then AI andAI-relatedmarkets could experience a significant slowdown in growth, which would diminish the market for Trillers
Technology Platform and have a negative effect on Trillers business, operating results, and financial condition. Additionally,
if market growth falls short of Trillers expectations Triller may not be able to adjust its Technology Platform quickly enough
to maintain and grow its operations. Even ifAI-relatedmarkets do grow, Triller may not be able to adjust its spending quickly
enough to keep pace or grow at a similar or steady pace with such growth, and Triller may misjudge market and business trends, which
would harm its business, operating results, and financial condition.
66
**AI
services and products developed by Triller may become obsolete due to fast growing technological innovations or the entry of competitors
with more financial and brand power.**
AI
is a fast growing industry and Triller must successfully adapt and manage technological advances in AI andAI-relatedmarkets,
as well as effectively compete with the emergence of additional competitors in the industry in order to maintain and grow Trillers
AI business and AI services. Thus, the success of Trillers AI services and business depends in large part on Trillers ability
to keep pace with rapid technological changes in the development and implementation of AI products and services. For example, the development
of groundbreaking technological innovations in AI, or innovations that would render AI obsolete, would harm Trillers AI related
business and make Trillers AI services less durable. Further, the entry of competitors into the AI market that have more financial
and brand power, could cause Trillers share of the market to be significantly reduced thereby negatively affecting Trillers
business, operating results, and financial condition. For example, both Google and Microsoft have announced near term AI products and
services. Any one of which may be a direct competitor with Trillers Amplify conversation AI services. There is a risk that these
or other competitors could cause significant disruptions to Trillers AI business model, and that Triller will be unprepared to
compete effectively.
****
**Failure
to attract and retain additional qualified personnel could prevent the Company from executing the Companys business strategy and
growth plans.**
****
To
execute the Companys business strategy, the Company must attract and retain highly qualified personnel, including in the areas
of AI and ML. Competition for executive officers, software developers, compliance and risk management personnel and other key employees
in the Companys industry and location is intense. The Company competes with many other companies for software developers with
high levels of experience in designing, developing, and managing cloud-based software, as well as for skilled legal and compliance and
risk operations professionals. Many of the companies with which the Company competes for experienced personnel have greater resources
than the Company does and can frequently offer such personnel substantially greater compensation than the Company can offer. If the Company
fails to identify, attract, develop and integrate new personnel, or fail to retain and motivate its current personnel, its growth prospects
would be adversely affected.
****
**The
information that Trillers AI learns may include highly confidential information. In the unlikely event of a leakage of such confidential
information, Trillers credibility may be negatively impacted, which may affect Trillers business, operating results, and
financial condition.**
Trillers
AI may come to learn sensitive and confidential information. When accumulating such information the risks of a data breach or inadvertent
disclosure of such information is of paramount concern. The information Trillers AI obtains may become released due to a hack
or data breach by third-parties as well as accidently released by Triller. Any unauthorized disclosure of such information could damage
Trillers reputation, interrupt Trillers operations, and may result in a violation of applicable laws. If such information
is released, it could cause Creators and Brands to not trust Trillers AI services and reduce the number of customers Triller attracts.
Further, if such a leak were to occur Triller may also have to cease its AI operations to install additional security measures to prevent
the further occurrence of leaks, which may be time consuming and expensive. Accordingly, if there is a leak of sensitive or confidential
information by Trillers AI, whether as a result of third-parties, or caused by us, it would seriously harm Trillers business,
operating results, and financial condition.
****
**Use
of new and emerging AI applications, such as genAI content creation, may require additional investment and costs, and pose risks to Trillers
business and could subject Triller to legal liability.**
Uncertainty
around new and emerging AI applications, such as genAI content creation, may require additional investment in the development of proprietary
datasets and ML models, development of new approaches and processes to provide attribution or remuneration to content creators and building
systems that enable creatives to have greater control over the use of their work in the development of AI, which may be costly and could
impact Trillers profit margin. Developing, testing, and deploying AI systems may also increase the cost profile of Trillers
offerings due to the nature of the computing costs involved in such systems.
67
Triller
may use generative AI tools in its business. GenAI is a broad label describing any type of AI that can produce new text, images, video,
or audio clips. Technically, this type of AI learns patterns from training data and generates new, unique outputs with similar properties.
GenAI tools producing content which can be indistinguishable from that generated by humans is a relatively novel development, with benefits,
risks, and liabilities still unknown. Recent decisions of the U.S. Copyright Office suggest that Triller would not be able to claim copyright
ownership in any source code, text, images, or other materials, which Triller develops through use of genAI tools, and the availability
of such protections in other countries is unclear. As a result, Triller could have no remedy if third parties reused those same materials,
or similar materials also generated by AI tools. Triller also face risks to any confidential or proprietary information of the Company
which it may include in any prompts or inputs into any genAI tools, as the providers of the genAI tools may use these inputs or prompts
to further train the tools. Not all providers offer an option to opt-out of such usage, and, even where Triller does opt-out, it cannot
guarantee that the opt-out will be fully effective. In addition, Triller has little or no insight into the third-party content and materials
used to train these genAI tools, or the extent of the original works which remain in the outputs. As a result, Triller may face claims
from third parties claiming infringement of their intellectual property rights, or mandatory compliance with open source software or
other license terms, with respect to software, or other materials or content Triller believed to be available for use, and not subject
to license terms or other third party proprietary rights. Triller could also be subject to claims from the providers of the genAI tools,
if Triller uses any of the generated materials in a manner inconsistent with their terms of use. Any of these claims could result in
legal proceedings and could require Triller to purchase a costly license, comply with the requirement of open source software license
terms, or limit or cease using the implicated software, or other materials or content unless and until Triller can re-engineer such software,
materials, or content to avoid infringement or change the use of, or remove, the implicated third party materials, which could reduce
or eliminate the value of its technologies and services. Any of these risks could be difficult to eliminate or manage, and, if not addressed,
could have a material adverse effect on Trillers business, results of operations, financial condition, and future prospects.
**Issues
relating to the responsible use of our technologies may result in reputational or financial harm and liability.**
As
with many new emerging technologies, AI presents risks and challenges and increases ethical and legal concerns relating to its responsible
use that could affect the adoption of AI, and thus our business. Concerns relating to the responsible use of new and evolving technologies
in our products and services may also result in reputational or financial harm and liability and may cause us to incur costs to resolve
such issues. We may not have insight into, or control over, how our customers and other third parties use or deploy the AI models that
we trained or assisted in training, or that were trained using our computing solutions, or that we otherwise make available to customers.
We do not control how others, including customers, use AI models that we develop or make available. We also cannot fully control how
users interact with our inference solution, including whether they may violate our terms of use or that of third-party models with which
we integrate. If we enable or offer AI models that draw controversy due to their perceived or actual impact on society, including, for
example, AI models that have unintended consequences, infringe intellectual property rights or rights of publicity, disseminate illegal,
inaccurate, defamatory, or harmful content, or are controversial because of their impact on human rights, privacy, cybersecurity, employment
or other social, economic or political issues, or if we are unable to develop effective internal policies and frameworks relating to
the responsible development and use of AI models, we may experience brand or reputational harm, competitive harm, financial harm, or
legal liability. Complying with multiple laws, statutes, regulations, self-regulatory frameworks, and industry standards from different
jurisdictions related to AI could increase our cost of doing business, may change the way that we operate in certain jurisdictions, or
may impede our ability to offer certain products and services in certain jurisdictions if we are unable to comply with applicable legal
requirements. Compliance with existing and proposed government regulation of AI, including in jurisdictions such as the European Union
(the **EU**), as well as under any U.S. regulation adopted in response to the Biden Administrations October 2023
executive order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (**2023 AI Order**),
may also increase the cost of related research and development and compliance, and create additional reporting or transparency requirements.
In addition, unfavorable developments with evolving laws and regulations worldwide related to AI, such as those laws that may pause or
inhibit continued development or adoption of AI, may limit global adoption, reduce demand for our products and services, increase our
costs to provide our products and services, impede our strategy, and negatively impact our long-term expectations in this area. For example,
given the adoption of the EU AI Act (the **AI Act**) in 2024, we anticipate that there will continue to be significant
developing laws and regulations with respect to AI as the AI industry continues to develop. Changes in AI-related regulation may disproportionately
impact and disadvantage us and require us to change our business practices, which may harm our results of operations. Our, our customers,
or others failure to adequately address any of the foregoing concerns or regulations relating to the responsible use of AI may
undermine public confidence in AI and slow adoption of our products and services or harm our reputation or business, financial condition,
results of operations, and prospects.
****
68
****
**Triller
may be unable to protect its patents, trademarks and other intellectual property rights, and others may allege that Triller infringes
upon their intellectual property rights.**
Triller
has invested significant resources in brands associated with its business such as Triller, Triller Fight Club,
TrillerFest, and TrillerTV in an attempt to obtain and protect its public recognition. These brands are essential
to Trillers success and competitive position. Triller has also invested significant resources in the premium content that it produces.
Trillers
intellectual property portfolio primarily consists of patents, patent applications, copyrights, registered and unregistered trademarks,
trademark applications, domain names,know-how,and trade secrets. Trillers trademarks and other intellectual property
rights are critical to Trillers success and Trillers competitive position. Trillers intellectual property rights
may be challenged and invalidated by third parties and may not be strong enough to provide meaningful commercial competitive advantage.
While Triller has been issued patents and have additional patent applications pending, there can be no assurance that Trillers
issued patents will not be limited in scope or invalidated, or that Trillers patent applications will result in issued patents.
Triller has not registered its intellectual property in all jurisdictions in which it operates or has plans to operate. If Triller fails
to maintain its intellectual property, its competitors might be able to enter the market, which would harm its business.
Moreover,
a portion of Trillers intellectual property has been acquired from one or more third parties. While Triller has conducted diligence
with respect to such acquisitions, because Triller did not participate in the development or prosecution of much of the acquired intellectual
property, Triller cannot guarantee that its diligence efforts identified and/or remedied all issues related to such intellectual property,
including potential ownership errors, potential errors during prosecution of such intellectual property, and potential encumbrances or
issues arising through the acquisition that could limit Trillers ability to enforce such intellectual property rights.
Further,
policing unauthorized use and other violations of Trillers intellectual property is difficult, particularly given Trillers
international scope, so Triller is susceptible to others infringing, diluting or misappropriating its intellectual property rights. If
Triller is unable to maintain and protect its intellectual property rights adequately, Triller may lose an important advantage in the
markets in which it competes. In particular, the laws of certain foreign countries do not protect intellectual property rights in the
same manner as do the laws of the United States and, accordingly, Trillers intellectual property is at greater risk in those countries
even where Triller takes steps to protect such intellectual property. For example, some license provisions protecting against unauthorized
use, copying, transfer, and disclosure of Trillers products, or certain aspects of Trillers Technology Platform or products
may be unenforceable under the laws of certain jurisdictions. Further, competitors, foreign governments, foreign government-backed actors,
criminals, or other third parties may gain unauthorized access to Trillers proprietary information and technology. Additionally,
certain unauthorized use of Trillers intellectual property may go undetected, or Triller may face legal or practical barriers
to enforcing its legal rights even where unauthorized use is detected. Triller has not actively monitored trademark filings by third
parties. The disclosure to, or independent development by, a competitor of any of Trillers trade secrets,know-howor
other technology not protected by a patent or other intellectual property system could materially reduce or eliminate any competitive
advantage that Triller may have over such competitor. Additionally, failure to comply with applicable procedural, documentary, fee payment,
foreign filing license and other similar requirements with the United States Patent and Trademark Office and various similar foreign
governmental agencies could result in abandonment or lapse of the affected patent, trademark or application. Accordingly, despite Trillers
efforts, Triller may be unable to prevent third parties from infringing upon, misappropriating or designing around Trillers technology
and intellectual property or claiming that Triller infringes upon or misappropriate their technology and intellectual property.
69
The
confidentiality and invention agreements Triller has entered into to protect its intellectual property rights may not have been properly
entered into on every occasion with the applicable counterparty, and Triller cannot predict whether these agreements will be adequate
to prevent infringement or misappropriation of these rights or be sufficient to ensure ownership of these rights, and such agreements
can be difficult and costly to enforce or may not provide adequate remedies if violated. Further, Triller may not have entered into such
agreements with all relevant parties. If Triller failed to enter into one of these agreements, or if the assignment language is found
to be insufficient under applicable laws, it may not have effectively granted ownership of certain technology or other intellectual property
to Triller. In such an event, there would be a risk that the applicable counterparty would not be available to (or would not be willing
to) assist Triller in perfecting its ownership of the technology or intellectual property, or the counterparty may even assert ownership
rights against Triller and make claims for fees, damages, or equitable relief with respect to such technology or intellectual property,
which may have an adverse effect on Trillers ability to utilize, perfect, or protect Trillers proprietary rights over such
technology and intellectual property. Such agreements may also be breached and trade secrets or confidential information may be willfully
or unintentionally disclosed, including by employees who may leave Trillers company and join Trillers competitors, or Trillers
competitors or other parties may learn of the information in some other way. Any such infringement of Trillers intellectual property
rights would also likely result in Trillers commitment of time and resources to protect these rights. Triller has engaged, and
continue to engage, in litigation with parties that claim or misuse some of its intellectual property. Triller is involved in certain
pending lawsuits relating primarily to the ownership of certain intellectual property rights. Similarly, Triller may infringe on others
intellectual property rights. One or more adverse judgments with respect to these intellectual property rights could have a material
adverse effect on Trillers business, operating results and financial condition.
From
time to time, in the ordinary course of Trillers business, Triller has been and may become involved in administrative processes,
including re-examination,*inter partes*review, interference, derivation opposition and/or cancellation proceedings with
respect to some of Trillers intellectual property or third-party intellectual property. Any such proceedings or other litigation
or dispute involving the scope or enforceability of Trillers intellectual property rights or any allegation that Triller infringes,
misappropriate or dilute upon the intellectual property rights of others, regardless of the merit of these claims, could be costly and
time-consuming and have in the past and may in the future lead to loss or narrowing of Trillers intellectual property. If any
infringement or other intellectual property claim made against Triller by any third party is successful, if Triller is required to indemnify
a third party with respect to a claim, or if Triller is required to, or decide to, cease use of a brand or technology, rebrand or obtainnon-infringingintellectual
property (such as through a license), it could result in harm to Trillers competitive position, delay introductions of enhancements
to Trillers platform, result in Trillers substituting inferior or more costly technologies into Trillers platform,
or harm Trillers reputation and brand, and could adversely affect Trillers business and financial condition. Triller expects
that the occurrence of infringement claims is likely to grow as the market for Trillers Technology Platform and Events grows and
as Triller introduces new and updated products and offerings. Accordingly, Trillers exposure to damages resulting from infringement
claims could increase and this could further exhaust Trillers financial and management resources.
Through
new and existing legal and illegal distribution channels, consumers have increasing options to access entertainment video. Piracy, in
particular, threatens to damage Trillers business. Furthermore, in light of the compelling consumer proposition, piracy services
are subject to rapid global growth. Trillers streaming video solutions are directly threatened by the availability and use of
pirated alternatives. The value that streaming services are willing to pay for content that Triller develops may be reduced if piracy
prevents these services from realizing adequate revenues on these acquisitions.
Lastly,
in the event of a bankruptcy, Trillers intellectual property licenses could be affected in numerous ways. A bankruptcy could result
in Triller losing intellectual property rights. In particular, the United States Bankruptcy Code definition of intellectual property
only includes trade secrets, patents and patent applications, copyrights, and mask works and does not include trademarks so in the event
of Trillers bankruptcy, Triller could lose rights to its trademarks.
****
**Triller
has been, and in the future may be, sued by third parties for alleged infringement of their proprietary rights.**
There
is considerable patent and other intellectual property development activity in Trillers market, and litigation, based on allegations
of infringement or other violations of intellectual property, is frequent in the music and social media industries. However, Triller
may not be aware if Trillers Technology Platform or technology is infringing, misappropriating, or otherwise violating third-party
intellectual property rights, and such third parties may bring claims alleging such infringement, misappropriation, or violation. Because
patent applications can take years to issue and are often afforded confidentiality for some period of time, there may currently be pending
applications, unknown to us, that later result in issued patents that could cover Trillers Technology Platform or technology and
there is also a risk that Triller could adopt a technology without knowledge of a pending patent application, which technology would
infringe a third-party patent once that patent is issued. Furthermore, it is common for individuals and groups to purchase patents and
other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like Trillers.
Trillers patent portfolio may provide little or no deterrence in a litigation with suchnon-practicingentities or other
adverse patent owners that have no relevant solution revenue as Triller would not be able to assert its patents against such entities
or individuals.
70
Trillers
use of third-party content, including music content, software, and other intellectual property rights may be subject to claims of infringement
or misappropriation. Triller cannot guarantee that its internally developed or acquired technologies and content do not or will not infringe
the intellectual property rights of others. From time to time, Trillers competitors or other third parties have in the past and
may in the future claim that Triller is infringing upon or misappropriating their intellectual property rights, and Triller may be found
to be infringing upon such rights.
Many
potential litigants, including some of Trillers competitors and patent-holding companies, have the ability to dedicate substantial
resources to assert their intellectual property rights and to defend claims that may be brought against them. Claims or litigation have
caused in the past and could in the future cause Triller to incur significant expenses and, if successfully asserted against us, could
require that Triller pays substantial damages or ongoing royalty payments, prevent Triller from offering its Technology Platform or services
or using certain technologies, force Triller to implement expensive work-arounds, or impose other unfavorable terms. In addition, Triller
may be required to license additional technology from third parties to develop and market new platform features, which may not be on
commercially reasonable terms, or at all, and would adversely affect Trillers ability to compete. Any license or settlement entered
into as the result of claims or litigation may not provide Triller with sufficient rights to practice Trillers Technology Platform.
Triller has in the past and may in the future enter into patent license agreements as a result of third-party patent assertions. In the
event that Triller does not comply with the requirements of a patent license agreement or fail to make required payments, Triller may
be subject to breach of contract claims, which may subject Triller to monetary damages and loss of rights under the license agreement.
Triller expects that the occurrence of infringement claims is likely to grow as the market for Trillers Technology Platform and
Events grows and as Triller introduces new and updated products and offerings. Accordingly, Trillers exposure to damages resulting
from infringement claims could increase and this could further exhaust Trillers financial and management resources. Further, during
the course of any litigation, Triller may make announcements regarding the results of hearings and motions, and other interim developments.
If securities analysts and investors regard these announcements as negative, the value of ILLR Shares may decline. Even if intellectual
property claims do not result in litigation or are resolved in Trillers favor, these claims, and the time and resources necessary
to resolve them, could divert the resources of Trillers management and require significant expenditures. Any of the foregoing
could prevent Triller from competing effectively and could have an adverse effect on Trillers business, financial condition, and
operating results.
Moreover,
Trillers agreements with certain partners and certain vendors include indemnification provisions under which Triller agrees to
indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement pertaining to Trillers
products and technology. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination
or expiration of the applicable agreement. Any claim of infringement by a third party, even one without merit, whether against Triller
or for which Triller is required to provide indemnification, could cause Triller to incur substantial costs defending against the claim,
could distract Trillers management from Trillers business, and could require Triller to cease use of such intellectual
property. Further, because of the substantial amount of discovery required in connection with intellectual property litigation, Triller
risks compromising Trillers confidential information during this type of litigation. Any dispute with a partner or vendor with
respect to these intellectual property indemnification obligations could have adverse effects on Trillers relationship with that
counterparty and other potential partners or vendors, and harm Trillers business and operating results. Triller may be required
to make substantial payments for legal fees, settlement fees, damages, royalties, or other fees in connection with a claimant securing
a judgment against us, Triller may be subject to an injunction or other restrictions that cause Triller to cease selling subscriptions
to Trillers platform, Triller may be subject to an injunction or other restrictions that cause Triller to rebrand or otherwise
cease using certain trademarks in specified jurisdictions, or Triller may be required to redesign any allegedly infringing portion of
Trillers platform or Triller may agree to a settlement that prevents Triller from distributing Trillers platform or a portion
thereof, any of which could adversely affect Trillers business, financial condition and results of operations. In addition, Trillers
insurance may not be adequate to indemnify Triller for all liability that may be imposed, or otherwise protect Triller from liabilities
or damages, and any such coverage may not continue to be available to Triller on acceptable terms or at all.
71
**Triller
may incur significant expenses to protect its intellectual property rights, and if Triller is unable to adequately protect its intellectual
property rights, its competitive position could be harmed.**
Triller
regards its copyrights, service marks, trademarks, trade secrets, patents and other intellectual property as critical to its success.
Triller relies on a combination of copyright and trademark laws, trade secret protection, confidentiality andnon-disclosureagreements,
and other contractual provisions to protect Trillers proprietary software, trade secrets and similar intellectual property. Triller
has patents, copyrights and trademarks in certain jurisdictions and may apply for further trademark and copyright registrations and additional
patents, which may provide such protection in relevant jurisdictions. However, Triller cannot assure you that its efforts will prove
to be sufficient or that third parties will not infringe upon or misappropriate its proprietary rights. Unauthorized use of the intellectual
property, whether owned by or licensed to us, could adversely affect Trillers business and reputation.
****
**Triller
may be subject to disputes or liabilities associated with content made available on its products and services.**
Triller
provides various products and services that enable Brands and Creators and other users to make content available on its service. For
example, Creators or users can record and distribute their content and can upload profile images. These may subject Triller to claims
of intellectual property infringement by third parties if such Brands and Creators or users do not obtain the appropriate authorizations
from rights holders. In addition to intellectual property infringement, Triller has faced and will continue to face other claims relating
to content that is published or made available through its products and services. These may include claims related to defamation, rights
of publicity and privacy, and online safety. For example, Triller is dependent on those who provide content on its service complying
with the terms and conditions of any license agreements with us, its end user license agreements, or commercial agreements Triller may
enter into with certain Brands and Creators or users, which prohibit providing content that infringes the intellectual property or proprietary
rights of third parties or is otherwise legally actionable pursuant to privacy and/or publicity rights, and other applicable laws, rules,
and regulations. However, Triller cannot guarantee that the Brands and Creators and users who provide content on its service will comply
with their obligations, and any failure of Brands and Creators and users to do so may materially impact Trillers business, operating
results, and financial condition.
Triller
and other intermediate online service providers rely primarily on two sets of laws in the U.S., to shield Triller from legal liability
with respect to user activity, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark
infringement, and other theories based on the nature and content of the materials searched, the advertisements posted, or the content
provided by Brands, Creators or users. The Digital Millennium Copyright Act (**DMCA**) provides service providers a
safe harbor from monetary damages for copyright infringement claims, provided that service providers comply with various requirements
designed to stop or discourage infringement on their platforms by their users. Section 230 of the Communications Decency Act (**CDA**)
protects providers of an interactive computer service from liability with respect to most types of content, including defamatory information,
provided over their service by others, including users. Both the DMCA safe harbor and Section 230 of the CDA face regular calls for revision,
including without limitation in a number of CDA reform bills currently being considered by legislators. Furthermore, recent litigation
involving cloud hosting companies has created uncertainty with respect to the applicability of DMCA protections to companies that host
substantial amounts of user content. For these reasons and others, now or in the future, the DMCA, CDA, and similar provisions may be
interpreted as not applying to Triller or may provide Triller with incomplete or insufficient protection from claims. Changes in any
such laws that shield Triller from liability could materially harm Trillers business, operating results, and financial condition.
In many, but not all, territories outside of the United States there are laws similar to the DMCA which exempt Triller from copyright
infringement liability that may arise due to hosting user-uploaded materials. In some countries, particularly in Europe and the APAC
region, these laws are being readjusted and new -at times burdensome -constraints are being imposed onto service providers. Although
Triller has invested and continue to invest in systems and resources, which are intended to ensure that Triller is compliant with the
requirements of U.S. and international laws relating to, among other things, materials that infringe on copyrights and contain other
objectionable content, Trillers systems may not be sufficient or Triller may unintentionally err and fail to comply with these
laws and regulations which could expose Triller to claims, judgments, monetary liabilities and other remedies, and to limitations on
Trillers business practices which could materially adversely affect Trillers business and financial results. For example,
Triller entered into a settlement agreement relating to a lawsuit for copyright infringement whereby Triller agreed to pay Wixen $10.0
million in scheduled payments through September 2024 and approximately $5.5million remains due. To date, Triller was unable to
satisfy this obligation and as a result on or about December 18, 2024, Wixen filed a Complaint against Triller, Inc. in the Superior
Court in Los Angeles, California alleging breach of contract in connection with Trillers alleged breach of the subject settlement
agreement. If Triller is not able to obtain sufficient financing to satisfy these obligations it will have a material adverse effect
on its business and Triller may have to limit operations in a manner inconsistent with its development and growth plans.
72
Given
the large volume of content that various third parties make available on Trillers Technology Platform, it is challenging for Triller
to accurately verify the legitimacy of such content and review or moderate such content to ensure that it is otherwise in compliance
with Trillers policies, so inappropriate content may be posted or activities executed before Triller is able to take protective
action, which could subject Triller to legal liability. Even if Triller complies with legal obligations to remove or disable content,
Triller may continue to allow use of its products or services by individuals or entities who others find hostile, offensive, or inappropriate.
The activities or content of Trillers Creators, Brands or users may lead Triller to experience adverse political, business and
reputational consequences, especially if such use is high profile. Conversely, actions Triller takes in response to the activities of
Trillers Creators, Brands or users, up to and including banning them from using Trillers products, services, or properties,
may harm Trillers brand and reputation. In addition to liability based on Trillers activities in the United States, Triller
may also be deemed subject to laws in other countries that may not have the same protections or that may impose more onerous obligations
on us, which may impose additional liability or expense on us, including additional theories of intermediary liability.
In
addition, Brands may not wish to associate with certain types of content and if Triller cannot reliably exclude their ads from certain
types of content, Trillers business relationships may also be negatively impacted. If Triller fails to build and maintain an effective
system to moderate the content on Trillers Technology Platform, Trillers users, Creators, or Brands may lose trust in us,
Trillers reputation may be impaired, and Trillers business may be adversely affected.
****
**Triller
is subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security,
and Trillers actual or perceived failure to comply with such obligations could harm Trillers business, including regulatory
investigations or actions; litigation; fines and penalties; disruptions of Trillers business operations; reputational harm; loss
of revenue or profits; and other adverse business consequences.**
Since
Triller processes personal information and other sensitive data such as confidential business data, trade secrets, and intellectual property,
from and about Trillers Creators, Brands, users, employees, service providers, and other third parties, Triller is subject to
general business regulations and laws, as well as regulations and laws specific to the internet, which may include laws and regulations
related to user privacy, data protection, information security, consumer protection, payment processing, taxation, intellectual property,
electronic contracts, internet access and content restrictions. Trillers handling of data is subject to a variety of laws and
regulations, including regulation by various government agencies, including the FTC, and various state, local and foreign regulators.
The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use
and storage of personal data of individuals. Any failure or perceived failure by Triller to comply with privacy or security laws, policies,
legal obligations or industry standards or any security incident that results in the unauthorized disclosure, release or transfer of
personal data or other user data may result in governmental enforcement actions, litigation, fines and penalties and/or adverse publicity,
and could cause Trillers users to lose trust in us, which could have an adverse effect on Trillers reputation and business.
Triller cannot guarantee that it has been or will be fully compliant in every jurisdiction. Litigation and regulatory proceedings are
inherently uncertain, and the laws and regulations governing issues such as privacy, payment processing, taxation and consumer protection
related to the internet continue to develop.
As
Trillers service and others like Triller gain traction in international markets, governments are increasingly looking to introduce
new or extend legacy regulations to these services. Laws and regulations concerning privacy, data protection and information security
are evolving, and changes to such laws and regulations could require Triller to change features of Trillers services, which may
in turn reduce demand for Trillers services. Trillers failure to comply with federal, state and international data privacy
laws and regulations could harm Trillers ability to successfully operate Trillers business and pursue Trillers business
goals. For example, the CCPA, among other things, requires covered companies to provide disclosures to California consumers and afford
such consumers the ability to opt-out of sales of personal data.
73
Additionally,
broad consumer privacy laws have been enacted in a number of states including California. Colorado, Connecticut, Iowa, Utah and Virginia.
For example, In April 2024, President Biden signed the bill mandating the ban or sale of TikTok, which passed both the House and Senate
with strong support as the government moved to ban the app over national security concerns. Despite TikToks efforts, including
lawsuits and appeals, the U.S. Court of Appeals upheld the ban, and the Supreme Court scheduled a review for January 2025. It is not
yet fully clear how these laws will be enforced and how certain of their requirements will be interpreted. The effects of these laws
are potentially significant and may require Triller to modify Trillers data collection or processing practices and policies and
to incur substantial costs and expenses in an effort to comply and increase Trillers potential exposure to regulatory enforcement
and/or litigation.
The
CCPA has prompted a number of proposals for new federal and state-level privacy legislation. Such proposed legislation, if enacted, may
add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources
in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs
and/or changes in business practices and policies. At the federal level, there is a significant and potentially transformative bipartisan
bill being debated.
Other
federal and state laws restrict the use and protect the privacy and security of personally identifiable information. For example, according
to the FTC, failing to take appropriate steps to keep consumers personal information secure constitutes unfair acts or practices
in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a). The FTC expects a
companys data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information
it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities. In
recent years, the FTC has paid increased attention to privacy and data security matters, and Triller expects them to continue to do so
in the future.
The
privacy of childrens personal data collected online is also becoming increasingly scrutinized both in the United States and internationally.
For example, the United Kingdoms Age Appropriate Design Code (**AADC**) and incoming Online Safety Bill, focuses
on online safety and protection of childrens privacy online. A similar law, the Californias Age-Appropriate Design Code
Act (**CAADCA**) was signed into law in California and goes into effect on July 1, 2024. The CAADCA implements into
law certain principles taken from the AADC, among other things, and imposes substantial new obligations upon companies. Passage of the
CAADCA and similar laws may further complicate compliance efforts and may increase legal risk and compliance costs for Triller and Trillers
third party partners. In the U.S., Triller may have obligations on the federal level under the Childrens Online Privacy Protection
Act (**COPPA**). Despite Trillers efforts, no assurances can be given that the measures Triller has taken to
address COPPA requirements will be sufficient to completely avoid allegations of COPPA violations, any of which could expose Triller
to significant liability, penalties, reputational harm and loss of revenue, among other things. Additionally, new laws and regulations
are being considered in various jurisdictions to require the monitoring of user content or the verification of users identities
and age such as a comprehensive new measure just signed into law in Utah.
In
addition, many foreign jurisdictions in which Triller does business, including the European Union and other jurisdictions have laws and
regulations dealing with the collection and use of personal data obtained from their residents, which are more restrictive in certain
respects than those in the U.S. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure
and security of personal data that identifies or may be used to identify an individual. Triller may be required to modify its policies,
procedures, and data processing measures in order to address requirements under these or other privacy, data protection, or cyber security
regimes, and may face claims, litigation, investigations, or other proceedings regarding them and may incur related liabilities, expenses,
costs, and operational losses.
74
Within
the European Union, legislators adopted the EU GDPR, which became effective in May 2018, and which imposes heightened obligations and
risk upon Trillers business and which may substantially increase the penalties to which Triller could be subject in the event
of any non-compliance. Under the EU GDPR, parties are either controllers, which are decision-makers that exercise overall control over
the purposes and means of data processing, whether alone or jointly with one or more other persons, or processors, who act on behalf
of, and only on the instructions of, the relevant controller. In the provision of Trillers services to its users, Triller generally
acts as a controller, which imposes significant compliance obligations on Triller under the EU GDPR. If Triller fails to satisfy these
obligations, it may be subject to investigation or administrative fines from supervisory authorities or subject to individual claims
that Triller failed to comply with the applicable provisions of EU GDPR. In addition, further to the United Kingdoms exit from
the European Union on January 31, 2020, the EU GDPR ceased to apply in the United Kingdom at the end of the transition period on December
31, 2020. In addition, Triller is also subject to data protection laws in the United Kingdom. The UK GDPR and the UK Data Protection
Act 2018 set out the United Kingdoms data protection regime, which is independent from but aligned to the European Unions
data protection regime. Non-compliance with the EU GDPR, or UK GDPR, may result in monetary penalties of up to 20 million (or 17.5
million under UK GDPR) or 4% of worldwide annual turnover, whichever is higher. Further, a wide variety of other potential enforcement
powers are available to competent supervisory authorities in respect of potential and suspected violations of the EU GDPR, or UK GDPR,
including audit and inspection rights, and powers to order temporary or permanent bans on all or some processing activities. The EU GDPR
and UK GDPR also confer a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities,
seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR and UK GDPR.
The
EU GDPR also provides that European Economic Area (**EEA**) Member States may make their own further laws and regulations
to introduce additional requirements (for example, related to the processing of special categories of personal data, as
well as personal data related to criminal offenses or convictions) which adds to the complexity of processing personal data in or from
the EEA or the United Kingdom. This may lead to greater divergence in the law that applies to the processing of personal data across
the EEA and/or United Kingdom, compliance with which could limit Trillers ability to collect and process data in the context of
Trillers EEA and/or United Kingdom operations, and/or could cause Trillers compliance costs to increase, ultimately having
an adverse impact on Trillers business and harming Trillers business and financial condition.
The
EU GDPR also regulates cross-border transfers of personal data and requires transferee countries to have protections equivalent to protections
available in the EU. The EU GDPR imposes strict rules on the transfer of personal data to countries outside the EEA, Switzerland or the
United Kingdom, including the United States, in respect of which the European Commission or the United Kingdom government has not issued
a so-called adequacy decision or adequacy regulation (known as third countries), unless the
parties to the transfer have implemented specific safeguards to protect the transferred personal data. This includes putting in place
the European Commissions Standard Contractual Clauses (**SCCs**) for transfers outside of the EEA and a similar
transfer mechanism for transfers of personal data outside of the United Kingdom, the International Data Transfer Agreement or Addendum
(**IDTA**). Under both the EU GDPR and the UK GDPR, exporters are also required to assess the risk of the data transfer
on a case-by-case basis, including conducting an analysis of the laws in the destination country. The SCCs had to be in place by December
27, 2022, whereas the IDTA must be implemented in all existing contracts by March 21, 2024. Finalizing the implementation of the updated
SCCs and IDTA, and conducting the required risk assessments, may continue to necessitate significant contractual overhaul of Trillers
data transfer arrangements with users, sub-processors and vendors. On June 28, 2021, the European Commission published its decision recognizing
the United Kingdom as having adequate laws to the protect the rights and freedoms of data subjects such that personal data may transfer
to from the EU to the United Kingdom without an approved transfer mechanism. The decision is effective for four years and its continuing
effect is dependent on United Kingdom and regulation on data privacy not diverging materially from the EU GDPR. The United Kingdom Government
also confirmed that data transfers to the EU remain free flowing.
In
addition, other European data protection laws require that affirmative opt-in consent is procured to the placement of cookies and similar
tracking technologies on users devices (other than those that are strictly necessary to provide services requested
by the user), including those used for analytics, personalization of experiences and advertising. These requirements may increase Trillers
exposure to regulatory enforcement actions, increase Trillers compliance costs and reduce demand for Trillers products.
A new regulation proposed in the EU, which would apply across the EEA, known as the ePrivacy Regulation, if and when enacted, may further
restrict the use of cookies and other online tracking technologies on which Trillers products rely, as well as increase restrictions
on the types of direct marketing campaigns that Trillers platform enables. The final version of the ePrivacy Directive is likely
to introduce regulatory enforcement powers akin to those available to supervisory authorities under the EU GDPR, including significant
administrative fines and other penalties for non-compliance. Given the delay in finalizing the ePrivacy Regulation, certain regulators
have issued guidance on the requirement to seek strict opt-in consent to all non-essential cookies and similar technologies and the requirement
to increase the standard of transparency relating to use of cookies and similar technologies. Triller is likely to need to invest significantly
in compliance with these types of new legislation in order to attract and maintain users in the EEA.
75
The
global regulatory framework governing the collection, processing, storage, use and sharing of certain information, particularly financial
and other personal data, is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations. The
proliferation of privacy and data protection laws has heightened risks and uncertainties concerning cross-border transfers of personal
data and other data, which could impose significant compliance costs and expenses on Trillers business, increase Trillers
potential exposure to regulatory enforcement and/or litigation, and have a negative effect on Trillers existing business and on
Trillers ability to attract and retain new users.
Triller
publicly posts documentation regarding its practices concerning the collection, processing, use and disclosure of data. Although Triller
endeavors to comply with its published policies and documentation, it may at times fail to do so or be alleged to have failed to do so.
Any failure or perceived failure by Triller to comply with Trillers privacy policies or any applicable privacy, security or data
protection, information security or consumer-protection related laws, regulations, orders or industry standards could expose Triller
to costly litigation, significant awards, fines or judgments, civil and/or criminal penalties or negative publicity, and could materially
and adversely affect Trillers business, financial condition and results of operations. The publication of Trillers privacy
policy and other documentation that provide promises and assurances about privacy and security can subject Triller to potential state
and federal action if they are found to be deceptive, unfair, or misrepresentative of Trillers actual practices, which could,
individually or in the aggregate, materially and adversely affect Trillers business, financial condition and results of operations.
Triller
may in the future be, subject to enforcement actions, investigations, litigation, or other inquiries regarding Trillers data privacy
and security practices. Additionally, advocacy organizations have also filed complaints with data protection authorities against advertising
technology companies, arguing that certain of these companies practices do not comply with the EU GDPR and/or the UK GDPR. It
is possible that investigations or enforcement actions will involve Trillers practices or practices similar to Trillers.
If Trillers privacy or data security measures fail to comply with current or future laws and regulations, Triller may be subject
to claims, legal proceedings or other actions by individuals or governmental authorities based on privacy or data protection regulations
and Trillers commitments to users or others, as well as negative publicity and a potential loss of business. Moreover, if future
laws and regulations limit Trillers ability to process personal data, Trillers costs could increase, and Trillers
business, results of operations and financial condition could be harmed. In addition, privacy advocates and industry groups have regularly
proposed, and may propose in the future, self-regulatory standards with which Triller must legally comply or that contractually apply
to Triller. If Triller fails to follow these security standards even if no user information is compromised, it may incur significant
fines, negative publicity and reputational damage or experience a significant increase in costs.
Because
the interpretation and application of privacy and data protection laws, regulations and standards are uncertain and quickly changing,
it is possible that these obligations may be interpreted and applied in manners that are, or are asserted to be, inconsistent with Trillers
practices. Preparing for and complying with these obligations requires significant resources. Further, adaptation of the digital advertising
marketplace requires increasingly significant collaboration between participants in the market, such as content Creators, Brands and
marketers. Failure of the industry to adapt to changes in data privacy and security obligations and user response to such changes could
negatively impact inventory, data, and demand. Triller cannot control or predict the pace or effectiveness of such adaptation, and Triller
cannot predict the impact such changes may have on its business. In addition, it may be necessary for Triller to fundamentally change
its business activities, information technologies, systems, and practices, and to those of any third parties that process personal information
on Trillers behalf.
Although
Triller endeavors to comply with all applicable data privacy and security obligations, Triller may at times fail or be perceived to have
failed to do so. For example, Trillers subsidiary, TrillerTV, is party to a class action over its use of consumer personal identifying
information from Facebook. Moreover, despite Trillers efforts, Trillers customers, personnel or third parties upon whom
Triller relies may fail to comply with such obligations, which could negatively impact Trillers business operations and compliance
posture. For example, any failure by a third-party processor to comply with applicable law, regulations, or contractual obligations could
result in adverse effects, including inability to operate Trillers business and proceedings against Triller by governmental entities
or others. Any inability, or perceived inability, to address or comply with applicable data privacy or security obligations could result
in significant consequences, including, but not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits,
inspections, and similar); litigation (including class-related claims); additional reporting requirements and/or oversight; bans on processing
personal information; and orders to destroy or not use personal information. Any of these events could have a material adverse effect
on Trillers reputation, business, or financial condition, including but not limited to: loss of customers; additional costs and
liabilities; damage Trillers reputation; reduction in sales and demand for Trillers platform; and harm Trillers
business.
76
Moreover,
as internet commerce and advertising continues to evolve, increasing regulation by federal, state and foreign regulatory authorities
becomes more likely. For example, Californias Automatic Renewal Law requires companies to adhere to enhanced disclosure requirements
when entering into automatically renewing contracts with consumers. Other states have enacted similar laws in recent years. As a result,
a wave of consumer class action lawsuits has been brought against companies that offer online products and services on a subscription
or recurring basis. Any failure, or perceived failure, by Triller to comply with any of these laws or regulations could result in damage
to Trillers reputation, lost business, and proceedings or actions against Triller by governmental entities or others, which could
impact Trillers operating results. As Triller improves its TV streaming platform, Triller may also be subject to new laws and
regulations specific to such technologies.
****
**If
Triller fails to retain existing users or add new users, or if Trillers users decrease their level of engagement with Trillers
products, Trillers revenue, financial results, and business may be significantly harmed.**
The
size of Trillers user base and Trillers users level of engagement across Trillers products are critical to
Trillers success. Trillers financial performance has been and will continue to be significantly determined by Trillers
success in adding, retaining, and engaging active users of Trillers products that deliver ad impressions. Triller has experienced,
and expect to continue to experience, fluctuations and declines in the size of Trillers active user base in one or more markets
from time to time, particularly in markets where Triller has achieved higher penetration rates. User growth and engagement are also impacted
by a number of other factors, including competitive products and services, such as TikTok, that have reduced some users engagement
with Trillers products and services, as well as global and regional business, macroeconomic, and geopolitical conditions. For
example, theCOVID-19pandemic led to increases and decreases in the size and engagement of Trillers active user base
from period to period at different points during the pandemic, and the resulting effects from the COVID-19 pandemic may continue to have
a varied impact on the size and engagement of Trillers active user base in the future. Any future declines in the size of Trillers
active user base may adversely impact Trillers ability to deliver ad impressions and, in turn, Trillers financial performance.
If
people do not perceive Trillers products to be useful, reliable, and trustworthy, Triller may not be able to attract or retain
users or otherwise maintain or increase the frequency and duration of their engagement. A number of other social networking companies
that achieved early popularity have since seen their active user bases or levels of engagement decline, in some cases precipitously.
There is no guarantee that Triller will not experience a similar erosion of Trillers active user base or engagement levels. Trillers
user engagement patterns have changed over time, and user engagement can be difficult to measure, particularly as Triller introduces
new and different products and services. Any number of factors can negatively affect user retention, growth, and engagement, including
if:
|
|
|
Trillers
products are subject to increased regulatory scrutiny or approvals, including from international privacy regulators (particularly
in the EEA/UK), or there are changes in Trillers products that are mandated or prompted by legislation, regulatory authorities,
executive actions, or litigation, including settlements or consent decrees, that adversely affect the user experience; | |
|
|
|
Triller
is unable to offer a number ofits most significant products and services, including Facebook and Instagram, in Europe, or are
otherwise limited in Trillers business operations, as a result of European regulators, courts, or legislative bodies determining
that Trillers reliance on Standard Contractual Clauses (SCCs) or other legal basesTriller reliesupon
to transfer user data from the European Union to the United States is invalid; and | |
|
|
|
there
is decreased engagement with Trillers products, or failure to accept Trillers terms of service, as part of privacy-focused
changes thatTriller has implemented or may implement in the future, whether voluntarily, in connection with the EU GDPR and/or
the UK GDPR, the European Unions ePrivacy Directive, CPRA, or other laws, regulations, or regulatory actions, or otherwise. | |
77
From
time to time, certain of these factors have negatively affected user retention, growth, and engagement to varying degrees. If Triller
is unable to maintain or increase its user base and user engagement, particularly for its significant revenue-generating Technology Platform,
its revenue and financial results may be adversely affected. Any significant decrease in user retention, growth, or engagement could
render its products less attractive to users, marketers, and developers, which is likely to have a material and adverse impact on its
ability to deliver ad impressions and, accordingly, its revenue, business, financial condition, and results of operations. As the size
of Trillers active user base fluctuates in one or more markets from time to time, Triller will become increasingly dependent on
its ability to maintain or increase levels of user engagement and monetization in order to grow revenue.
****
**Existing
federal, state, and foreign laws regulate the senders of commercial emails and text messages and changes in privacy laws could adversely
affect Trillers ability to provide its services and could impact its results from operations or result in costs and fines.**
Triller
may use a variety of direct marketing techniques to promote its business, including email marketing, telemarketing and marketing conducted
via SMS and MMS messages. In the United States, these activities are regulated by laws such as the Controlling the Assault ofNon-SolicitedPornography
and Marketing(**CAN-SPAM**)Act of 2003, the Telephone Consumer Protection Act (**TCPA**)
and various state laws and regulations governing telephone solicitation and text message marketing.
TheCAN-SPAMAct,
among other things, obligates the sender of commercial emails to provide recipients with the ability to opt out of receiving future commercial
emails from the sender. The ability of message recipients to opt out of receiving commercial emails may minimize the effectiveness of
Trillers marketing efforts. In addition, certain foreign jurisdictions, such as Australia, Canada, the United Kingdom, and the
European Union, have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws. For example,
some foreign laws prohibit sending commercial email unless the recipient has provided the sender advance consent to receive such email,
or in other words hasopted-in.A requirement that recipients opt into, or the ability of recipients to opt out
of, receiving commercial emails may minimize the effectiveness of Trillers marketing efforts. Any failure by Triller to comply
fully with theCAN-SPAMAct or other laws governing Trillers commercial email programs may subject Triller to substantial
fines and penalties.
Similarly,
the TCPA is a U.S. federal statute that protects consumers from unwanted telephone calls, faxes and text messages. TCPA violations can
result in significant financial penalties for businesses including civil forfeiture penalties or criminal fines imposed by the Federal
Communications Commission (**FCC**) and statutory damages liability through consumer lawsuits brought by private plaintiffs
or public enforcement actions brought by state attorneys general or other consumer protection authorities.
Numerous
class-action suits under federal and state laws have been filed in recent years against companies that conduct telemarketing and texting
campaigns, with many resulting in multi-million-dollar judgments or settlements. While Triller strives to comply with all laws applicable
to its marketing operations, courts, the FCC, and other enforcement authorities may disagree with Trillers interpretations of
such laws and subject Triller to penalties, statutory damages and other liability for noncompliance. Determination by a court or regulatory
agency that Trillers operations violate the TCPA or other marketing laws could require Triller to terminate some portions of Trillers
business, and could have material adverse effect on Trillers business, operating results, and financial condition. Even an unsuccessful
legal challenge of Trillers marketing activities could result in adverse publicity and could require a costly response from Triller.
Moreover,
many states have enacted telemarketing and text message marketing laws and regulations that are even more proscriptive than the TCPA
and that pose additional litigation and regulatory enforcement risks. For example, Florida, Washington, and Oklahoma have enacted statutes
that are in many respects more restrictive than the TCPA. Other U.S. states may pass similar (or possibly more burdensome) laws in the
future that may erode Trillers ability to effectively market Trillers services via telephone solicitation or text messaging
and expose Triller to currently unforeseen liability. The TCPA and other laws governing Trillers marketing activities are also
subject to frequent amendment, as well as to reinterpretation by courts and regulators, and any future amendments or interpretations
could adversely affect the continuing effectiveness of Trillers marketing efforts and could force changes in Trillers marketing
strategies. Triller may not be able to respond to such developments with adequate alternative marketing strategies and, as result, any
such developments could have an adverse effect on Trillers business, operating results, and financial condition.
****
78
****
**If
Trillers or Trillers users security measures are compromised or unauthorized access to Trillers data (including
that of Trillers users or other sensitive or confidential information) is otherwise obtained, Trillers Technology Platform
may be perceived as not being secure, Trillers users may be harmed and may curtail or cease their use of Trillers Technology
Platform, Trillers reputation may be damaged and Triller may incur significant liabilities.**
Trillers
operations involve the storage and transmission of data of users of Trillers platform, including personally identifiable information
and sensitive information of the company. Security incidents could result in unauthorized access to, loss of or unauthorized disclosure
of this information, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which could damage
Trillers reputation, impair Trillers sales and harm Trillers users and Trillers business.
Trillers
products and services involve the collection, storage, processing, and transmission of a large amount of data. Cyber-attacks and other
malicious internet-based activity continue to increase generally, and platforms that maintain data such as the data Triller maintains
have been targeted by such attacks. If Trillers security measures are compromised as a result of third-party action, employee
or user error, malfeasance, stolen or fraudulently obtainedlog-incredentials or otherwise, Trillers reputation could
be damaged, Trillers business may be harmed and Triller could incur significant liability. If third parties with whom Triller
works, such as vendors or developers, violate applicable laws, Trillers security policies or Trillers acceptable use policy,
such violations may also put Trillers users information at risk and could in turn have an adverse effect on Trillers
business. In addition, if the security measures of Trillers users are compromised, even without any actual compromise of Trillers
own systems, Triller may face negative publicity or reputational harm if Trillers users or anyone else incorrectly attributes
the blame for such security breaches to Triller or Trillers systems. Triller may be unable to anticipate or prevent techniques
used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until after an
incident has occurred. As Triller increases its user base and its brand becomes more widely known and recognized, Triller may become
more of a target for third parties seeking to compromise its security systems or gain unauthorized access to its users data. Any
failure to prevent or mitigate security breaches and improper access to or disclosure of Trillers data or user data, including
personal information, content, or payment information from users, or information from marketers, could result in the loss, modification,
disclosure, destruction, or other misuse of such data, which could harm Trillers business and reputation and diminish Trillers
competitive position. In addition, computer malware, viruses, social engineering (such as spear phishing attacks), scraping, and general
hacking continue to be prevalent in Trillers industry, have occurred on Trillers systems in the past, and will occur on
Trillers systems in the future.
Cyber-attacks,denial-of-serviceattacks,
ransomware attacks, business email compromises, computer malware, viruses, and social engineering (including phishing) are prevalent
in Trillers industry. Trillers internal computer systems and those of Trillers current and any future strategic
collaborators, vendors, and other contractors or consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized
access, natural disasters, cybersecurity threats, terrorism, war and telecommunication and electrical failures. Cyber incidents have
been increasing in sophistication and frequency and can include third parties gaining access to employee or user data using stolen or
inferred credentials, computer malware, viruses, spamming, phishing attacks, ransomware, card skimming code, and other deliberate attacks
and attempts to gain unauthorized access. The techniques used to sabotage or to obtain unauthorized access to Trillers Technology
Platform, systems, networks, or physical facilities in which data is stored or through which data is transmitted change frequently, and
Triller may be unable to implement adequate preventative measures or stop security breaches while they are occurring. Because the techniques
used by computer programmers who may attempt to penetrate and sabotage Trillers network security or Trillers website change
frequently and may not be recognized until launched against a target, Triller may be unable to anticipate these techniques. Additionally,
during the recent COVID-19 pandemic, and potentially beyond as remote work and resource access expand, there is an increased risk that
Triller may experience cybersecurity-related events such asCOVID-19themed phishing attacks, exploitation of any cybersecurity
flaws that may exist, an increase in the number cybersecurity threats or attacks, and other security challenges as a result of most of
Trillers employees and Trillers service providers continuing to work remotely fromnon-corporatemanaged networks.
Triller has previously been, and may in the future become, the target of cyber-attacks by third parties seeking unauthorized access to
Trillers or Trillers users data or to disrupt Trillers operations or ability to provide Trillers services.
79
Triller
also relies on third-party service providers and technologies to operate critical business systems to process confidential and personal
information in a variety of contexts. In addition, some of Trillers developers or other partners, such as those that help Triller
measure the effectiveness of ads, may receive or store information provided by Triller or by Trillers users through mobile or
web applications integrated with Trillers products. Triller provides limited information to such third parties based on the scope
of services provided to Triller. Trillers ability to monitor these third parties cybersecurity practices is limited. These
third-party providers and technologies may not have adequate measures in place, and could experience or cause a security incident that
compromises the confidentiality, integrity or availability of the systems or technologies they provide to Triller or the information
they process on Trillers behalf. While Triller has taken steps designed to protect the proprietary, regulated, sensitive, confidential
and personal information in Trillers control, Trillers security measures or those of the third parties on which Triller
relies may not be effective against current or future security risks and threats. If these third parties or developers fail to adopt
or adhere to adequate data security practices, or in the event of a breach of their networks, Trillers data or Trillers
users data may be improperly accessed, used, or disclosed. Additionally, Triller does not currently maintain company-wide policies
and procedures with respect to such risks, instead relying on Trillers individual business units to implement the appropriate
policies and procedures that each such business unit believes necessary. Such approach may be less effective than implementing global
policies across all business units.
If
Triller or one of Trillers trusted third parties were to experience a cyberattack leading to interruptions in Trillers
operations, it could result in a material disruption of Trillers development programs and Trillers business operations,
whether due to a loss of Trillers trade secrets or other proprietary information or other disruptions. Moreover, enforcing a claim
that a party illegally disclosed or misappropriated a trade secret are difficult, expensive, time-consuming, and the outcome is unpredictable.
In addition, effective trade secret protection may not be available in every country in which Trillers products are available
or where Triller has employees or independent contractors as some courts inside and outside the United States are less willing or unwilling
to protecttradesecrets. If any of Trillerstradesecretswere to be disclosed to or independently developed
by a competitor or other third party, Trillers competitive position would be materially and adversely harmed.These cyber-attacks
could be carried out by threat actors of all types (including but not limited to nation states, organized crime, other criminal enterprises,
individual actors and/or advanced persistent threat groups). In addition, Triller may experience intrusions on Trillers physical
premises by any of these threat actors. To the extent that any disruption or security breach were to result in a loss of, or damage to,
Trillers data or applications, or inappropriate disclosure of confidential or proprietary information, Triller could incur liability
and Trillers competitive position could be harmed. Any breach, loss, or compromise of personal data may also subject Triller to
civil fines and penalties, or claims for damages either under the EU GDPR and relevant member state law in the European Union, other
foreign laws, and other relevant state and federal privacy laws in the United States.
Many
governments have enacted laws requiring companies to notify individuals of data security incidents or unauthorized transfers involving
certain types of personal data Security compromises experienced by Trillers competitors, by Trillers users or by Triller
may lead to public disclosures, which may lead to widespread negative publicity. For example, in July 2023, the SEC adopted rules requiring
registrants to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding
their cybersecurity risk management, strategy, and governance. Any security compromise in Trillers industry, whether actual or
perceived, could harm Trillers reputation, erode user confidence in the effectiveness of Trillers security measures, negatively
impact Trillers ability to attract new users, cause existing users to elect not to renew their subscriptions or subject Triller
to third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect Trillers business
and operating results.
There
can be no assurance that any limitations of liability provisions in Trillers contracts for a security breach would be enforceable
or adequate or would otherwise protect Triller from any such liabilities or damages with respect to any particular claim. Triller also
cannot be sure that Trillers existing general liability insurance coverage and coverage for errors or omissions will continue
to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer
will not deny coverage as to any future claim. The successful assertion of one or more large claims against Triller that exceed available
insurance coverage, or the occurrence of changes in Trillers insurance policies, including premium increases or the imposition
of large deductible orco-insurancerequirements, could have a material adverse effect on Trillers business, financial
condition and operating results.
80
For
example, Trillers subsidiary, TrillerTV, is party to a class action over its use of consumer personal identifying information
from Facebook. Any such inquiries could subject Triller to substantial fines and costs, require Triller to change Trillers business
practices, divert resources and the attention of management from Trillers business, or adversely affect Trillers business.
****
**Triller
faces uncertainties associated with international markets.**
****
Trillers
production of live Events overseas subjects Triller to the risks involved in foreign travel, local regulations, including regulations
requiring Triller to obtain visas for Trillers performers, and political instability inherent in varying degrees in those markets.
In addition, the licensing of Trillers television and branded merchandise in international markets exposes Triller to some degree
of currency risk. These risks could adversely affect Trillers operating results and impair Trillers ability to pursue Trillers
business strategy as it relates to international markets.
****
**As
a result of Trillers operations in international markets, Triller is subject to risks associated with the legislative, judicial,
accounting, taxation, regulatory, political and economic risks and conditions specific to such markets.**
Triller
provides its Technology Platform in certain jurisdictions abroad through brands and businesses that it owns and operates, including Asia,
Latin America, Europe and Africa, and Triller expect to continue to expand its international presence. Triller faces, and expect to continue
to face, additional risks in the case of its existing and future international operations, including:
|
|
|
political
instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in whichTriller has
international operations or into whichTriller may expand; | |
|
|
|
more restrictive
or otherwise unfavorable government regulation of the entertainment and sports industry, which could result in increased compliance
costs or otherwise restrict the manner in whichTriller provides services and the amount of related fees charged for such services; | |
|
|
|
limitations
on the enforcement of intellectual property rights; | |
|
|
|
enhanced
difficulties of integrating any foreign acquisitions; | |
|
|
|
enhanced
difficulties in reviewing content on Trillers Technology Platform; | |
|
|
|
limitations
on the ability of foreign subsidiaries to repatriate profits or otherwise remit earnings; | |
|
|
|
adverse
tax consequences; | |
|
|
|
fluctuations
in currency exchange rates and compliance with currency controls; | |
|
|
|
less sophisticated
legal systems in some foreign countries, which could impair Trillers ability to enforce Trillers contractual rights
in those countries; | |
|
|
|
limitations
on technology infrastructure; | |
|
|
|
variability
in venue security standards and accepted practices; and | |
|
|
|
difficulties
in managing operations due to distance, language and cultural differences, including issues associated with (i)business practices
and customs that are common in certain foreign countries but might be prohibited by U.S. law and Trillers internal policies
and procedures and (ii)management and operational systems and infrastructures, including internal financial control and reporting
systems and functions, staffing and managing of foreign operations, whichTriller might not be able to do effectively or on
a cost-efficient basis. | |
81
Failure
to expand internationally and manage the complexity of international operations could harm Trillers business, financial condition,
and results of operations. In addition, Triller may be subject to additional liabilities associated with the content on its Technology
Platform due to content regulation which may vary based on its international operations.
Additionally,
if Triller fails to adequately prevent fraudulent credit card transactions, it may face litigation, fines, governmental enforcement action,
civil liability, diminished public perception of Trillers security measures, significantly higher credit card-related costs and
substantial remediation costs, or refusal by credit card processors to continue to process payments on Trillers behalf, any of
which could materially adversely affect Trillers business, financial condition and results of operations.
**Triller
is subject to extensive U.S. and foreign government regulations, and Trillers failure to comply with these regulations could adversely
affect its business.**
Trillers
operations are subject to federal, state and local laws, statutes, rules, regulations, policies, and procedures in the United States
and around the world, which are subject to change at any time, governing matters such as:
|
|
|
licensing,
permitting and zoning requirements for operation of Trillers offices, locations, venues and other facilities; | |
|
|
|
health,
safety and sanitation requirements; | |
|
|
|
the service
of food and alcoholic beverages; | |
|
|
|
working
conditions, labor, minimum wage and hour, harassment and discrimination, and other labor and employment laws and regulations; | |
|
|
|
compliance
with the U.S. Americans with Disabilities Act of 1990; | |
|
|
|
compliance
with applicable antitrust and fair competition laws; | |
|
|
|
compliance
with applicable international trade controls, such as import, export control, and economic and trade sanctions laws and regulations,
that may limit or restrict Trillers ability to do business with specific individuals or entities or in specific countries
or territories; | |
|
|
|
compliance
with anti-corruption laws, anti-money laundering and countering terrorist financing rules, currency control regulations, and statutes
prohibiting tax evasion and the aiding or abetting of tax evasion; | |
|
|
|
marketing
activities; | |
|
|
|
licensing
laws for athlete agents; | |
|
|
|
licensing
laws for the promotion and operation of boxing events; | |
|
|
|
environmental
protection regulations; | |
|
|
|
compliance
with current and future privacy and data protection laws imposing requirements for the processing and protection of personal or sensitive
information, including the EU GDPR and the EUe-PrivacyRegulation; | |
|
|
|
compliance
with cybersecurity laws imposing country-specific requirements relating to information systems and network design, security, operations,
and use; | |
|
|
|
tax laws;
and | |
|
|
|
imposition
by foreign countries of trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership
restrictions, or currency exchange controls. | |
82
Noncompliance
with these laws could subject Triller to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement
actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, reputational harm, adverse
media coverage and other collateral consequences. Multiple or repeated failures by Triller to comply with these laws and regulations
could result in increased fines or proceedings against Triller. If any subpoenas or investigations are launched, or governmental or other
sanctions are imposed, or if Triller do not prevail in any possible civil or criminal litigation, Trillers business, results of
operations and financial condition could be materially harmed. In addition, responding to any such enforcement or similar action will
likely result in a materially significant diversion of managements attention and resources and significant defense costs and other
professional fees. Enforcement actions and any imposed sanctions could further harm Trillers business, results of operations,
and financial condition. There can be no assurance that a law or regulation will not be interpreted or enforced in a manner contrary
to Trillers current understanding. In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably
impact Trillers business, which could decrease demand for Trillers services, reduce revenue, increase costs or subject
it to additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on
Triller and other promoters and producers of live events for incidents that occur at Trillers Events, particularly relating to
drugs and alcohol or the spread ofCOVID-19.
In
the United States and certain foreign jurisdictions, Triller may have direct and indirect interactions with government agencies and state-affiliated
entities in the ordinary course of Trillers business. In particular, athletic commissions and other applicable regulatory agencies
require Triller to obtain licenses for promoters, medical clearances, licenses for athletes, or permits for Events in order for Triller
to promote and conduct Trillers live Events and productions. In the event that Triller fails to comply with the regulations of
a particular jurisdiction, including the laws and regulations that apply to dealings with or involving government agencies, state-affiliated
entities and their officials (such as anti-corruption laws), whether through Trillers acts or omissions or those of third parties,
Triller may be prohibited from promoting and conducting Trillers live Events and productions in the relevant jurisdictions or
become subject to investigations or enforcement actions. Instances of noncompliance with applicable laws may result in the imposition
of fines or other penalties, including the inability to present Trillers live Events and productions in the relevant jurisdictions,
which could lead to a decline in revenue streams or have other adverse effects on Trillers business, financial condition, and
results of operations.
Triller
is required to comply with export control and economic and trade sanctions laws imposed by the United States or by other jurisdictions
where Triller has operations, maintain personnel or otherwise do business, which may restrict Trillers transactions in certain
markets, and with certain customers, business partners, and other persons and entities. As a result, Triller is not permitted to, directly
or indirectly (including through a third-party intermediary), procure goods, services or technology from, or engage in transactions with,
individuals and entities that are the target of applicable sanctions. Triller is also required to conduct Trillers business in
compliance with applicable export control requirements, including those that apply to the development and distribution of software, technology
and other items. Trillers products have in the past, and could in the future be, provided inadvertently in violation of such laws.
Any violation of export control or sanctions laws could result in fines, other civil and criminal sanctions against Triller or Trillers
employees, prohibitions on the conduct of Trillers business (e.g., loss of export privileges, debarment from doing business with
International Development Banks and similar organizations), and damage to Trillers reputation, which could have an adverse effect
on Trillers business, financial condition, and results of operations.
****
83
****
**Triller
is subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, andnon-compliancewith such laws can
subject Triller to criminal penalties or significant fines and harm Trillers business and reputation.**
Triller
is subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the
**FCPA**), the U.S. domestic bribery statute contained in 18 U.S.C. 201, U.S. Travel Act, the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (**USA PATRIOT Act**),
as amended, and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which Triller conducts activities.
Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies
and their employees and agents from promising, authorizing, making, or offering improper payments or any other thing of value to government
officials and others in the private sector. As Triller increases its international sales and business, which may include increased interactions
with officials and employees of government agencies or state-owned or -affiliated entities, Trillers risks under these laws may
increase. Noncompliance with these laws could subject Triller to investigations, sanctions, settlements, prosecution, other enforcement
actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage,
and other consequences. Any investigations, actions or sanctions could harm Trillers business, results of operations, and financial
condition.
****
In
addition, in the future Triller may use third parties to sell access to its products and services and conduct business on Trillers
behalf outside the United States. Triller or such future third-party intermediaries may have direct or indirect interactions with officials
and employees of government agencies or state-owned or -affiliated entities, and Triller can be held liable for the corrupt or other
illegal activities of such future third-party intermediaries, as well as Trillers employees, representatives, contractors, partners,
and agents, even if Triller does not explicitly authorize such activities. Triller has implemented an anti-corruption compliance program
but cannot assure you that all of its employees and agents, as well as those companies to which Triller outsources certain of its business
operations, will not take actions in violation of its policies and applicable law, for which Triller may be ultimately held responsible.
Any violation of the FCPA, other applicable anti-corruption laws, or applicable anti-money laundering laws could result in whistleblower
complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of
the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on Trillers
reputation, business, results of operations, and prospects.
****
**The
Company may be unsuccessful in its strategic acquisitions and investments, and the Company may pursue acquisitions and investments for
its strategic value in spite of the risk of lack of profitability.**
The
Company faces significant uncertainty in connection with acquisitions and investments. To the extent the Company chooses to pursue certain
investment or acquisition strategies, the Company may be unable to identify suitable targets for these deals, or to make these deals
on favorable terms. If the Company identifies suitable acquisition candidates, investments or strategic partners, its ability to realize
a return on the resources expended pursuing such deals, and to successfully implement or enter into them will depend on a variety of
factors, including its ability to obtain financing on acceptable terms, requisite government approvals, as well as the factors discussed
below. Additionally, the Company may decide to make or enter into acquisitions or investments with the understanding that such acquisitions
or investments will not be profitable, but may be of strategic value to Triller. Trillers current and future acquisitions, investments,
including existing investments accounted for under the equity method may also require that the Company makes additional capital investments
in the future, which would divert resources from other areas of the Companys business. The Company cannot provide assurances that
the anticipated strategic benefits of these deals will be realized in the long-term or at all.
The
Company may fail to identify or assess the magnitude of certain liabilities, shortcomings or other circumstances prior to acquiring a
company, making an investment or entering into a strategic business agreement and, as such, may not obtain sufficient warranties, indemnities,
insurance or other protections. This could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment,
unexpected increases in taxes, a loss of anticipated tax benefits, or other adverse effects on the Companys business, operating
results or financial condition. Additionally, some warranties and indemnities may give rise to unexpected and significant liabilities.
Future acquisitions and strategic business arrangements that The Company may pursue could result in dilutive issuances of equity securities
and the incurrence of future debt.
****
84
****
**Trillers
international sales and operations, including Trillers planned business development activities outside of the United States, subject
Triller to additional risks and challenges that can adversely affect Trillers business, results of operations and financial condition.**
As
part of its growth strategy, Triller expects to continue to expand its international operations, which may include opening additional
offices in new jurisdictions and providing its Technology Platform in additional languages andon-boardingnew Creators, Brands
and users outside the United States. Any new markets or countries into which Triller attempts to sell subscriptions to its Technology
Platform or other products may not be receptive to its business development activities. Triller currently has sales personnel and sales
and customer and product support operations in the United States, Canada, Bulgaria, the Netherlands, France, the United Kingdom, India
and Mexico. Triller believes that its ability to attract new customers to its Technology Platform and to convince existing customers
to renew or expand their use of Trillers Technology Platform is directly correlated to the level of engagement Triller achieves
with its customers in their home countries. To the extent that Triller is unable to effectively engage withnon-U.S.customers,
Triller may be unable to effectively grow in international markets.
Trillers
international operations also subject Triller to a variety of additional risks and challenges, including:
|
|
|
increased
management, travel, infrastructure and legal compliance costs associated with having operations and developing Trillers business
in multiple jurisdictions; | |
|
|
|
providing
TrillersUnified-CXMplatform and operating Trillers business across a significant distance, in different
languages, among different cultures and time zones, including the potential need to modify TrillersUnified-CXMplatform
and products to ensure that they are culturally appropriate and relevant in different countries; | |
|
|
|
compliance
withnon-U.S.data privacy, protection and security laws, rules and regulations, including data localization requirements,
and the risks and costs ofnon-compliance; | |
|
|
|
legislative
changes that may impose fines or other penalties for failure to comply with certain content removal, law enforcement cooperation
and disclosure obligations; | |
****
|
|
|
longer
payment cycles and difficulties enforcing agreements, collecting accounts receivable or satisfying revenue recognition criteria,
especially in emerging markets; | |
|
|
|
hiring,
training, motivating and retaining highly-qualified personnel, while maintaining Trillers corporate culture; | |
|
|
|
increased
financial accounting and reporting burdens and complexities; | |
|
|
|
longer
sales cycle and more time required to educate enterprises on the benefits of Trillers Technology Platform outside of the United
States; | |
|
|
|
requirements
or preferences for domestic products; | |
|
|
|
limitations
on Trillers ability to sell Trillers Technology Platform and for Trillers solution to be effective innon-U.S.markets
that have different cultural norms and related business practices thatde-emphasizethe importance of positive customer
and employee experiences; | |
|
|
|
differing
technical standards, existing or future regulatory and certification requirements and required features and functionality; | |
|
|
|
orders
restricting or blocking Trillers services in particular geographies, or other government-imposed remedies as a result of content
hosted on Trillers services. For example, legislation in Germany and India has resulted in the past, and may result in the
future, in the imposition of fines or other penalties for failure to comply with certain content removal, law enforcement cooperation,
and disclosure obligations; | |
|
|
|
political
and economic conditions and uncertainty in each country or region in whichTriller operates and general economic and political
conditions and uncertainty around the world; | |
85
|
|
|
changes
in a specific countrys or regions political or economic conditions, including in the United Kingdom as a result of
the United Kingdom exiting the European Union; | |
|
|
|
compliance
with laws and regulations fornon-U.S.operations, including anti-bribery laws, import and export control laws, tariffs,
trade barriers, economic sanctions and other regulatory or contractual limitations on Trillers ability to sell Trillers
Technology Platform and develop Trillers business in certainnon-U.S.markets, and the risks and costs ofnon-compliance; | |
|
|
|
heightened
risks of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact
Trillers financial condition and result in restatements of Trillers consolidated financial statements; | |
|
|
|
fluctuations
in currency exchange rates and related effects on Trillers results of operations; | |
|
|
|
difficulties
in repatriating or transferring funds from or converting currencies in certain countries; | |
|
|
|
communication
and integration problems related to entering new markets with different languages, cultures and political systems; | |
|
|
|
new and
different sources of competition; | |
|
|
|
differing
labor standards, including restrictions related to, and the increased cost of, terminating employees in some countries; | |
|
|
|
the need
for localized subscription agreements; | |
|
|
|
the need
for localized language support and difficulties associated with delivering support, training and documentation in languages other
than English; | |
|
|
|
increased
reliance on channel partners; | |
|
|
|
reduced protection for
intellectual property rights in certainnon-U.S.countries and practical difficulties of obtaining, maintaining, protecting
and enforcing such rights abroad; and | |
****
|
|
|
compliance with the laws
of numerous foreign taxing jurisdictions, including withholding tax obligations, and overlapping of different tax regimes. | |
Any
of these risks and challenges could adversely affect Trillers operations, reduce Trillers revenue or increase Trillers
operating costs, each of which could adversely affect Trillers ability to expand Trillers business outside of the United
States and thereby Trillers business more generally, as well as Trillers results of operations, financial condition and
growth prospects.
Global
political uncertainty also poses risks of volatility in global markets, which could negatively affect Trillers operations and
financial results. Changes in U.S. policy regarding foreign trade or manufacturing may create negative sentiment about the U.S. among
non-U.S. dealers, end customers, employees or prospective employees, all of which could adversely affect Trillers business, sales,
hiring and employee retention.
Compliance
with laws and regulations applicable to Trillers international operations substantially increases Trillers cost of doing
business. Triller may be unable to keep current with changes in government requirements as they change from time to time. Failure to
comply with these regulations could have adverse effects on Trillers business. In many foreign countries it is common for others
to engage in business practices that are prohibited by Trillers internal policies and procedures or U.S. or other regulations
applicable to Triller. Although Triller has implemented policies and procedures designed to ensure compliance with these laws and policies,
there can be no assurance that Trillers employees, contractors, partners and agents will comply with these laws and policies.
Violations of laws or Trillers policies by Trillers employees, contractors, partners or agents could result in delays in
revenue recognition, financial reporting misstatements, enforcement actions, disgorgement of profits, fines, civil and criminal penalties,
damages, injunctions, other collateral consequences and increased costs, including the costs associated with defending against such actions,
or the prohibition of the importation or exportation of Trillers Technology Platform and related services, each of which could
adversely affect Trillers business, results of operations and financial condition.
****
86
****
**Existing
and future laws and evolving attitudes about data privacy and security may impair Trillers ability to collect, use, and maintain
data points of sufficient type or quantity to develop and train Trillers artificial intelligence algorithms.**
Jurisdictions
outside of the United States, the EU, and the UK also are passing more stringent data privacy and security laws, rules and regulations
with which Triller may be obligated to comply. For example, Brazils General Data Protection Law (Lei Geral de Proteo
de Dados Pessoais) (**LGPD**) (Law No.13,709/2018), Chinas Personal Information Protection Law (**PIPL**),
and Japans Protection of Personal Information (**APPI**), impose strict requirements for processing personal
data.
Triller
continues to see jurisdictions imposing data localization laws, which require personal data, or certain subcategories of personal data,
to be stored in the jurisdiction of origin. Specifically, Russia, China and India have passed or are in the process of passing laws that
impose more stringent requirements on data privacy and which have, amongst other things, more stringent data localization requirements.
These regulations may inhibit Trillers ability to expand into those markets or prohibit Triller from continuing to offer services
and/or collaborate with partners in those markets without significant additional costs.
In
addition to Trillers legal obligations, Trillers contractual obligations relating to data privacy and security have become
increasingly stringent due to changes in data privacy and security and the expansion of Trillers service offerings. Certain data
privacy and security laws, such as the EU GDPR and the CCPA, require Trillers customers to impose specific contractual restrictions
on their service providers.
Apart
from government activity and Trillers customer contracts, privacy advocacy and other industry groups have established or may establish
new self-regulatory standards that may place additional burdens on Trillers ability to provide Trillers services globally.
Trillers customers expect Triller to meet voluntary certification and other standards established by third parties, such as TRUSTe,
the American Institute for Certified Public Accountants, or the International Standards Organization. If Triller is unable to maintain
these certifications or meet these standards, it could adversely affect Trillers ability to provide Trillers solutions
to certain customers and could harm Trillers business. Business partners and other third parties with a strong influence on how
consumers interact with Trillers products, such as Apple, Google, Facebook and Mozilla, may create new privacy controls or restrictions
on their products and platforms, limiting the effectiveness of Trillers services.
With
laws, rules, regulations and other obligations relating to data privacy and security imposing new and stringent obligations, and with
substantial uncertainty over the interpretation and application of these and other obligations, Triller may face challenges in addressing
their requirements and making necessary changes to Trillers policies and practices, and may incur significant costs and expenses
in an effort to do so. Additionally, if the third parties Triller work with, such as Trillers vendors or third-party service providers,
violate applicable laws, rules or regulations or Trillers policies, such violations also may put Trillers or Trillers
customers data at risk and could in turn have an adverse effect on Trillers business. Any failure or perceived failure
by Triller or Trillers third-party service providers to comply with Trillers applicable internal and external policies
or notices relating to data privacy or security, Trillers contractual or other obligations to customers or other third parties,
or any of Trillers other legal obligations relating to data privacy or security, may result in governmental investigations or
inquiries (which have occurred in the past and may occur in the future), enforcement actions, litigation, disputes or other claims, indemnification
requests, restrictions on providing Trillers services, claims or public statements against Triller by privacy advocacy groups
or others, adverse press and widespread negative publicity, reputational damage, significant liability or fines and the loss of the trust
of Trillers customers, any of which could have a material adverse effect on Trillers business, results of operations and
financial condition.
The
costs of compliance with, and other burdens imposed by, laws, rules, regulations and other obligations relating to data privacy and security
applicable to the businesses of Trillers customers may adversely affect Trillers customers ability and willingness
to use, collect, manage, disclose, handle, store, transmit and otherwise process information from their employees, customers and partners,
which could limit the use, effectiveness and adoption of Trillers Technology Platform and reduce overall demand. Furthermore,
the uncertain and shifting regulatory environment and trust climate may cause concerns regarding data privacy and may cause Trillers
customers or Trillers customers customers to resist providing the data necessary to allow Trillers customers to
use Trillers services effectively. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption,
effectiveness or use of Trillers applications.
****
87
****
**Unfavorable
outcomes in legal proceedings may adversely affect Trillers business and operating results.**
Trillers
results may be affected by the outcome of pending and future litigation. Unfavorable rulings in Trillers legal proceedings could
result in material liability to Triller or have a negative impact on Trillers business, results of operations, financial condition,
reputation, or relations with Trillers employees or third parties. The outcome of litigation, including class action lawsuits,
is difficult to assess or quantify. Plaintiffs in class action lawsuits may seek recovery of very large or indeterminate amounts and
the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. This may affect Trillers
ability to remain solvent and pay Trillers obligations when they come due, including under existing litigation settlement obligations
and new adverse judgments. If Triller is unable to resolve any such matters favorably, Trillers business, operating results, and
financial condition may be adversely affected.
In
addition, Triller is currently, and from time to time in the future may be, subject to various other claims, investigations, legal and
administrative cases and proceedings (whether civil or criminal), or lawsuits by governmental agencies, or claims by Trillers
current or former employees or private parties. If the results of these investigations, proceedings, claims or suits are unfavorable
to Triller or if Triller is unable to successfully defend against third-party lawsuits, Triller may be required to pay monetary damages
or may be subject to fines, penalties, injunctions, or other censure that could have an adverse effect on Trillers business, financial
condition, and results of operations. Even if Triller adequately addresses the issues raised by an investigation or proceeding or successfully
defend a third-party lawsuit or counter claim, Triller may have to devote significant financial and management resources to address these
issues, which could have an adverse effect on Trillers business, results of operations, and financial condition.
****
**Triller
may be subject to liability claims if it breaches its contracts.**
Triller
is subject to numerous obligations in its contracts with its business partners. Despite the procedures, systems and internal controls
Triller has implemented to comply with its contracts, it has breached commitments in the past and may breach these commitments in the
future, whether through a weakness in these procedures, systems, and internal controls, inability or difficulty complying with commitments,
whether due to lack of resources or capabilities or otherwise, negligence, or the willful act of an employee or contractor. Trillers
insurance policies, including errors and omissions insurance, may be inadequate to compensate it for the potentially significant losses
that may result from claims arising from breaches of Trillers contracts, disruptions in Trillers services, failures or
disruptions to Trillers infrastructure, catastrophic events and disasters or otherwise.
In
addition, such insurance may not be available to Triller in the future on economically reasonable terms, or at all. Further, Trillers
insurance may not cover all claims made against Triller and defending a suit, regardless of its merit, could be costly and divert managements
attention. For example, judgment has been entered against Triller following litigation regarding payment of fees with Universal Music
Publishing Group.
****
**The
market and sectors in which Triller participates are competitive and rapidly evolving, and if it does not compete effectively with established
companies as well as new market entrants Trillers business, results of operations, and financial condition could be harmed.**
Trillers
business model is a new category of integrating entertainment and social media with technology in a rapidly evolving market that is intensely
competitive, fragmented, and subject to rapidly changing technology, shifting customer needs, new market entrants, and frequent introductions
of new products and services. Moreover, Triller expects competition to increase in the future from established competitors and new market
entrants, including established technology and major media companies who have not previously entered the market. Trillers other
competitors fall into the following categories: live sports events andpay-per-viewprogramming, such as WWE and UFC; web content
programming platforms, such as Netflix; and social media companies with social video features, such as Instagram, Facebook, Snapchat
and TikTok. With the introduction of new technologies, the evolution of Trillers business, and new market entrants, the Company
expects competition to intensify in the future. Established companies may not only develop their own live events programming platforms
and social video sharing technology, but also acquire or establish product integration, distribution, or other cooperative relationships
with Trillers current competitors. For example, while Triller currently partners with entertainment and media companies, they
may develop and introduce products that directly or indirectly compete with the Company. New competitors or alliances among competitors
may emerge and rapidly acquire significant market share due to factors such as greater brand name recognition, a larger existing user
and/or customer base, superior product offerings, a larger or more effective sales organization, and significantly greater financial,
technical, marketing, and other resources and experience. In addition, with the recent increase in large merger and acquisition transactions
in the entertainment, social media and technology industry, there is a greater likelihood that Triller will compete with other large
entertainment and media companies in the future. Triller expects this trend to continue as companies attempt to strengthen or maintain
their market positions in an evolving industry. Companies resulting from these possible consolidations may create more compelling product
offerings and be able to offer more attractive pricing options, making it more difficult for Triller to compete effectively.
88
Many
of Trillers existing competitors have, and some of Trillers potential competitors could have, substantial competitive advantages
such as greater brand name recognition and longer operating histories, larger sales and marketing budgets and resources, broader distribution,
and established relationships with vendors, partners, and customers, greater customer experience resources, greater resources to make
acquisitions, lower labor, and development costs, larger and more mature intellectual property portfolios, and substantially greater
financial, technical and other resources. Such competitors with greater financial and operating resources may be able to respond more
quickly and effectively than the Company can to new or changing opportunities, technologies, standards, or customer requirements.
In
addition, some of Trillers larger competitors have substantially broader product offerings and leverage their relationships based
on other products or incorporate functionality into existing products to gain business in a manner that discourages users from using
the Company.
Conditions
in Trillers market could also change rapidly and significantly as a result of technological advancements, partnering by Trillers
competitors or continuing market consolidation, and it is uncertain how Trillers market will evolve. Newstart-upcompanies
that innovate and large competitors that are making significant investments in research and development may develop similar or superior
products and technologies that compete with the Company. These competitive pressures in Trillers market or Trillers failure
to compete effectively may result in price reductions, fewer customers, reduced revenue, gross profit, and gross margins, increased net
losses, and loss of market share. Any failure to meet and address these factors could harm Trillers business, results of operations,
and financial condition.
****
**Certain
metrics and estimates of market opportunity included in this registration statement may prove to be inaccurate.**
This
registration statement includes certain internal estimates of the market for Trillers Technology Platform and other opportunities.
Market opportunity estimates, whether obtained from third-party sources or developed internally, are subject to significant uncertainty
and are based on assumptions and estimates that may not prove to be accurate. The estimates, forecasts and other forward-looking information
in this registration statement relating to the size of Trillers target market, market demand and adoption, capacity to address
this demand, and pricing may prove to be inaccurate. The addressable market Triller estimates may not materialize for many years, if
ever, and even if the markets in which it competes meet the size estimates in this registration statement, Trillers business could
fail to grow at similar rates, if at all. In addition, certain of the metrics, including Total Consumer Accounts, Number of Brands and
Number of Creators, included in this registration statement are based on data Triller collects and obtain from third party APIs and Triller
is not able to independently verify the data underlying such metrics or determine if the datapoints in such metrics represent users.
Triller currently does not have systems or processes in place to accurately measure the amount of potential duplicative accounts on a
continuous basis, although Triller has in the recent past undertaken a robust process to purge as many of the duplicate and bot accounts
as practical be given Trillers resources. Although Triller is responsible for the disclosure provided in this registration statement
and believe such third-party information is reliable, Triller has not independently verified any such third-party information. As such,
the metrics Triller includes in this registration statement may prove to not be accurate.
****
89
****
**Trillers
Technology Platform and products are dependent on APIs built and owned by third parties, including social media networks, and if Triller
loses access to data provided by such APIs or the terms and conditions on which it obtains such access become less favorable, Trillers
business could suffer.**
Trillers
Technology Platform and products depend on the ability to access and integrate with third-party APIs.In particular, Triller has
developed its products to integrate with certainsocialmedianetworkAPIs and the third-party applications of other
parties. Generally, APIs and the data Triller receives from the APIs are written and controlled by the application provider. Any changes
or modifications to the APIs or the data provided could negatively impact the functionality of, or require Triller to make changes to,
Trillers platform and products, which would need to occur quickly to avoid interruptions in service for Trillers customers.
To
date, Triller has not relied on negotiated agreements to govern Trillers relationships with most data providers and, in general,
it relies on publicly available APIs. As a result, in many cases, Triller is subject to the standard terms and conditions for application
developers of such providers, which govern the distribution, operation and fees of such integrations, and which are subject to change
by such providers from time to time. Trillers business, cash flows or results of operations may be harmed if any third party provider
changes, limits or discontinues Trillers access to its APIs and data, modifies its terms of service or other policies, including
fees charged or restrictions on Triller or application developers, changes or limits how Triller can use information and other data collected
through the APIs; or experiences disruptions of its technology, services or business generally.
****
**Risk
Factors Relating to Our Shares**
****
**Our
share price has been, and could continue to be volatile.**
There
has been significant volatility in the market price and trading volume of equity securities, which may be unrelated to the financial
performance of the companies issuing the securities. These broad market fluctuations could negatively affect the market price of our
stock. The market price and volume of our ordinary shares could fluctuate, and in the past has fluctuated, more dramatically than the
stock market in general. Stockholders may not be able to resell their shares at or above the price they paid for them due to fluctuations
in the market price of our stock caused by changes in our operating performance or prospects or other factors. Some factors, in addition
to the other risk factors identified above, that could have a significant effect on our stock market price include, but are not limited
to, the following:
|
|
|
actual or anticipated fluctuations
in our operating results or future prospects; | |
|
|
|
our announcements
or our competitors announcements of new services; | |
|
|
|
the publics
reaction to our press releases, our other public announcements and our filings with the SEC; | |
|
|
|
strategic
actions by us or our competitors, such as acquisitions or restructurings; | |
|
|
|
new laws
or regulations or new interpretations of existing laws or regulations applicable to our business; | |
|
|
|
changes
in accounting standards, policies, guidance, interpretations, or principles; | |
|
|
|
changes
in our growth rates or our competitors growth rates; | |
|
|
|
developments
regarding our patents or proprietary rights or those of our competitors; | |
|
|
|
our inability
to raise additional capital as needed; | |
|
|
|
concerns
or allegations as to the safety or efficacy of our products; | |
|
|
|
changes
in financial markets or general economic conditions; | |
|
|
|
sales
of shares by us or members of our management team, our significant stockholders, or certain institutional stockholders; and | |
|
|
|
changes
in stock market analyst recommendations or earnings estimates regarding our stock, other comparable companies or our industry generally. | |
90
**Because
we do not intend to pay cash dividends, our stockholders will benefit from an investment in our common stock only if it appreciates in
value.**
We
intend to retain our future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends in
the foreseeable future. As a result, the success of an investment in our ordinary shares will depend entirely upon any future share price
appreciation. There is no guarantee that our ordinary shares will appreciate in value or even maintain the price at which our stockholders
purchased their shares.
****
**If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price
and trading volume could decline.**
The
trading market for our ordinary shares will depend on the research and reports that securities or industry analysts publish about us
or our business. We do not have any control over these analysts. There can be no assurance that analysts will cover us or provide favorable
coverage. If one or more of the analysts who cover us downgrade our stock or change their opinion of our stock, our share price would
likely decline. If one or more of these analysts cease coverage of the Company or fail to regularly publish reports on the Company, we
could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
****
**ITEM
1B. UNRESOLVED STAFF COMMENTS**
Not
applicable.
**ITEM
1C. Cybersecurity**
**Risk Management
and Strategy**
We
identify and assess material risks from cybersecurity threats to our information systems and the information residing in our information
systems by monitoring and evaluating our threat environment on an ongoing basis using various methods including, for example, using manual
and automated tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat
actors, conducting scans of the threat environment, and conducting risk assessments.
We
manage material risks from cybersecurity threats to our information systems and the information residing in our information systems through
various processes and procedures, including, depending on the environment, risk assessments, incident detection and response, vulnerability
management, disaster recovery and business continuity plans, internal controls within our accounting and financial reporting functions,
encryption of data, network security controls, access controls, physical security, asset management, systems monitoring, and employee
training. We engage third-party service providers to provide some of the resources used in our information systems and some third-party
service providers have access to information residing in our information systems. With respect to such third parties, we seek to engage
reliable, reputable service providers that maintain cybersecurity programs. Depending on the nature and extent of the services provided,
the sensitivity and quantity of information processed, and the identity of the service provider, our processes may include conducting
due diligence on the cybersecurity practices of such provider and contractually imposing cybersecurity related obligations on the provider.
91
The
development and operation of Trillers Technology Platform is subject to physical, technological, security and other risks which
may result in interruption in service or reduced capacity. These risks include physical damage, power loss, telecommunications failure,
capacity limitation, hardware or software failures or defects and breaches of physical and cybersecurity by computer viruses, systembreak-insor
otherwise. An increase in the volume of usage of Trillers Technology Platform could strain the capacity of the software and hardware
employed to prevent and identify such failures, breaches and attacks, which could result in slower response time or system failures.
In particular, Trillers industry has witnessed an increase in the number, intensity and sophistication of cybersecurity incidents
caused by hackers and other malicious actors such as foreign governments, criminals, hacktivists, terrorists and insider threats. Hackers
and other malicious actors may be able to penetrate Trillers network security and misappropriate or compromise Trillers
confidential, sensitive, personal or proprietary information, or that of third parties, and engage in the unauthorized use or dissemination
of such information. They may be able to create system disruptions, or cause shutdowns. Hackers and other malicious actors may be able
to develop and deploy viruses, worms, ransomware and other malicious software programs that attack Trillers products or otherwise
exploit any security vulnerabilities of Trillers systems. In addition, sophisticated hardware and operating system software
and applications that Triller procures from third parties may contain defects in design or manufacture, including bugs,
cybersecurity vulnerabilities and other problems that could unexpectedly interfere with the operation or security of its systems. For
example, in 2022, as a result of a bug introduced in the application, Triller estimated that potentially 504 accounts may have been compromised.
**Cybersecurity
Governance**
Our
Board of Directors holds oversight responsibility over Trillers risk management and strategy, including material risks related
to cybersecurity threats. This oversight is executed directly by our board of directors and through its committees. Our audit committee
oversees the management of Trillers major financial risk exposures, the steps management has taken to monitor and control such
exposures, and the process by which risk assessment and management is undertaken and handled, which would include cybersecurity risks,
in accordance with its charter. The audit committee holds regular meetings and receives periodic reports from management regarding risk
management, including major financial risk exposures from cybersecurity threats or incidents.
Within
management, the Group Chief Information Officer of our business units are primarily responsible for assessing and managing our material
risks from cybersecurity threats on a day-to-day basis and keep the senior executive officers informed on a regular basis of the identification,
assessment, and management of cybersecurity risks and of any cybersecurity incidents. Such management personnel have prior experience
and training in managing information systems and cybersecurity matters and participate in ongoing training programs.
As
of the date hereof, the Company has not encountered cybersecurity incidents that the Company believes to have been material to the Company
taken as a whole.
**ITEM
2. PROPERTIES**
****
Our
headquarters in HongKong is located at AGBA Tower, 68 Johnston Road, Wan Chai, HongKong, which cover approximately 40,000
square feet pursuant to an operating lease in a term of 6years that will expire in 2026.
The
lease agreement for the building, between Viewbest Investments Limited (Viewbest), as landlord, and Legacy Group, was executed on June14,
2019. While we are not the party to the AGBA Tower lease agreement, we are currently occupying space in the building. We believe our
current facility is suitable and adequate to meet our current needs. Our headquarters in Hong Kong also owns an office premise located
at One Island South, No. 2 Heung Yip Road, HongKong for rental purpose.
****
The
majority of our employees and service providers work remotely. Our registered corporate headquarters address is located in Los Angeles,
California. We have leased offices in Broomall, Pennsylvania, where we currently lease approximately 725 square feet pursuant to a lease
agreement that expires in October 2025. We have a regional presence through our employees and service providers in New York, New York;
Palo Alto, California; Winter Park, Florida; New Delhi (Noida) (India); Sofia (Bulgaria); Amsterdam (Netherlands); and Toronto (Ontario,
Canada). We also have a presence through service provider relationships in other international markets, such as France, Romania and the
United Kingdom.****
92
**ITEM
3. LEGAL PROCEEDINGS**
****
From
time to time, the Company may be subject to various legal proceedings, investigations, or claims that arise in the ordinary course of
our business activities. Except for the proceeding below, the Company is not currently a party to any other legal proceedings the outcome
of which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on its business,
financial condition, and results of operations.
****
From
time to time, the Company may be subject to various legal proceedings, investigations, or claims that arise in the ordinary course of
our business activities. Except for the proceeding below, the Company is not currently a party to any other legal proceedings the outcome
of which, if determined adversely to the Company, would individually or in the aggregate have a material adverse effect on its business,
financial condition, and results of operations.
****
**Action
Case: CACV 1116/2025 (on appeal from HCA702/2018)**
On
March27, 2018, the writ of summons was issued against AGBA and seven related companies of the former stockholder (the Defendants)
by the Plaintiff. This action alleged the infringement of certain registered trademarks currently registered under the Plaintiff. In
February2023, the Court granted leave for this action be set down for trial of 13days. This trial will take place from November
25, 2024 to December 11, 2024. On October 31, 2025, the Court granted judgement in favor of the Plantiff. On November 28, 2025, the Defendants
lodged and served the Notice of Appeal (CACV 1116/2025) to the Court of Appeal. 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 appeal or the range
of reasonably possible loss as the Court is in the process of quantifying the amount of damages.
****
**Action
Case: HCA765/2019**
On
April30, 2019, the writ of summons was issued against the Companys 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 $2million (equal to HK$17.1million).
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. On February 17, 2025, the
Company filed an amended defence to the court and the next case management conference is fixed to be heard on January 6, 2026. The
case be adjourned to July 21, 2026 for another case management conference and parties can attempt mediation to resolve the dispute before the schedule case management conference.
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.
****
**HCA
2097/2020 and HCA 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 $1.7 million. The Company previously made approximately
$0.8 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 pre-trial review is fixed to be heard
on January 29, 2026 and the 6-days trial is fixed to be heard from May 14 to 21, 2026. The case is on-going and legal counsel of the Company
will continue to handle this matter. As of December 31, 2024, the Company accrued a legal provision of approximately $0.8 million as a
liability in the consolidated balance sheets.
**Sony
Music Entertainment**
**
On
August 29, 2022, Sony Music Entertainment, Sony Music Entertainment U.S. Latin LLC, Arista Records LLC, Records Label, LLC and Zomba
Recording LLC, or collectively, the Plaintiffs, filed a complaint in the United States District Court for the Southern District of New
York captioned Sony Music Entertainment, et al. v. Triller, Inc., Case No. 1:22-cv-07380-PKC. On September 22, 2022, Plaintiffs filed
a First Amended Complaint or the Complaint, against we alleging claims for breach of contract, copyright infringement pursuant to 17
U.S.C. 1401, contributory copyright infringement, and vicarious copyright infringement. On May 16, 2023, the court entered partial
final judgment in favor of Plaintiffs on Plaintiffs breach of contract claim and ordered the Company to pay Plaintiffs $4.6 million.
Thereafter, the Company and the Plaintiffs entered into a Confidential Settlement Agreement dated July 21, 2023 to resolve Plaintiffs
remaining claims and provide for an agreed plan for payment of the judgment, pursuant to which we agreed to pay an additional sum of
money to Plaintiffs and, upon receipt by Plaintiffs of certain payments under the Agreement, Plaintiffs agreed to release claims arising
under the Content Distribution Agreement, effective September 1, 2016, between the parties and this action. On May 22, 2024, Plaintiff
filed a lawsuit against Triller Platform Co., Triller Corp., and Triller Hold Co LLC in New York for breach of settlement agreement.
Though we have not fulfilled all of our payment obligations under the Agreement to date, we maintain an ongoing dialogue with Plaintiffs
and make periodic progress payments when available. As of October 15, 2024 and December 31, 2024, we have recorded liabilities of $3.6
million for the unpaid amount owed.
93
**Sony Music Publishing Europe Limited (SOLAR)**
We have assumed the liabilities of Triller Corp,
including the legal contingency accrual stemming from the complaint filed by SOLAR in the London, United Kingdom Circuit Common Court
alleging claims of songwriter/producer music publishing rights infringement. A default judgement for 3.8 million was ruled in
SOLARs favor and SOLAR filed an action in the Superior Court of California for the County of Los Angeles for recognition of this
foreign country money judgment in the amount of $4.4 million. As of October 15, 2024 and December 31, 2024, we have included the amount
of $4.4 million as a liability in the consolidated balance sheets.
**Music
Licensing**
**
We have outstanding contractual obligations to
various record labels, music publishers and performing rights organizations (collectively, **Rightsholders**) who have
licensed to us the right to use sound recordings and musical compositions in connection with the operation of the Triller app and other
aspects of our business. As of October 15, 2024 and December 31, 2024, we have recorded liabilities in the amount of $30.0 million for
unpaid amounts owed under its music licenses. We are also involved in various legal proceedings and has received threats of litigation
from Rightsholders. We believe it may be or become liable to Rightsholders for additional amounts such as interest, penalty fees, attorneys
fees, copyright infringement damages and other amounts, but is currently unable to estimate the probability of loss associated with these
actions or the range or reasonably possible losses, if any, or the impact such losses may have on our results of operations, financial
condition or cash flows.
**Fox
Plaza Lease**
**
On August 29, 2023, Fox Plaza, LLC initiated an
action against Proxima Media, LLC and Triller Platform Co. (erroneously sued as Triller, Inc.) in Los Angeles Superior Court alleging
breach of lease against Proxima Media, LLC and breach of guaranty against Triller Platform Co. as a result of defendants alleged
failure to pay rents owed under a commercial office lease. The plaintiff seeks damages in excess of $3.5 million, plus attorneys
fees, costs of suit, and additional damages to be proven at trial. We intend to vigorously defend ourselves in this matter. A mediation
has been set for August 27, 2024. It is reasonably
possible that the potential loss may exceed our accrued liability. As of December 31, 2024, we have accrued a liability for this loss
contingency in the amount of $1.75 million, which we believe represent the best estimate of the probable loss. It is reasonably possible
that the ultimate resolution of this matter could differ from the amount accrued.
**Concentrix Daksh**
We have assumed the liabilities of Triller Corp,
including the legal contingency accrual stemming from the arbitration with Concentrix Daksh Services India Private Ltd. (Concentrix).
Concentrix alleges wrongful early termination of a services agreement and seeks damages of approximately $2.0 million in lost profits,
plus interest and fees. We have accrued approximately $2.0 million as a liability pertaining to this matter. While we intend to defend
the claim vigorously, we believe the recorded amount represents the probable loss as of December 31, 2024.
**Epic Sports & Entertainment**
We have assumed the liabilities of Triller Hold
Co LLC and Triller Fight Club LLC related to litigation with Epic Sports & Entertainment, Inc. (Epic) for alleged breach
of a settlement agreement. Epic initially claimed damages of approximately $1.8 million, and recent settlement discussions indicate a
potential settlement range of approximately $0.6 to $2.0 million. As of December 31, 2024, we have accrued a legal provision of approximately
$1.9 million as a liability in the consolidated balance sheets.
94
**Samsung
Arbitration Award**
**
In connection with the Merger Transaction, the
Company assumed the liabilities of Triller Corp, including the legal contingency accrual stemming from the arbitration with Samsung Electronics
Co., Ltd due to a breach of a commercial agreement and failure to pay the amounts owed under the contract. The U.S. District Court for
the Central District of California confirmed the award and entered a judgment of approximately $2.6 million in May 2024, accruing interest
at $368.43 per day, at a rate of 5.17% per annum until repaid. A writ of execution was issued on August 2, 2024, and a Judgment Debtor
Examination is scheduled for February 24, 2025. The Company provided financial records in December 2024 in response to a subpoena. As
of December 31, 2024, the Company accrued approximately $3.0 million as a liability in the consolidated balance sheets.
**Prem Parameswaren**
****
We have assumed potential liabilities related
to claims asserted by Prem Parameswaran, the former Chief Executive Officer of Triller Corp for alleged unpaid compensation. To avoid
litigation, the parties reached an agreement in principle for a settlement consisting of $500,000 in cash and 625,000 stock units, subject
to approval by AGBA Group Holding Limited. As of December 31, 2024, we have accrued approximately $2.4 million as a liability pertaining
to this matter, representing the probable settlement amount.
**Triller Legacy, LLC Settlement Agreement**
On July 26, 2024, Triller Hold Co, LLC and Triller
Acquisition, LLC entered into a settlement agreement with Triller Legacy, LLC (Legacy), original sellers of Triller Corp,
regarding the 2019 acquisition of Triller Corp from Legacy. We agreed to issue 3.89 million shares of Series A common stock to Legacy.
Legacy intends to sell 1.75 million shares for a minimum return of approximately $7.0 million by the end of March 31, 2025. We must compensate
Legacy for any shortfall of share sales below $7.0 million. We have the option to purchase up to 1.75 million shares from Legacy at $4.00
per share through December 31, 2024 and $4.75 per share through March 31, 2025. We can also opt to pay Legacy $7.0 million. We have included
the estimated guaranteed payment liability in its accounts payable and legal contingencies.
**Bobby Sarnevesht**
We are subject to claims asserted by Bobby Sarnevesht
for alleged breach of a merger agreement and related contracts. We dispute the claims and the matter remains unresolved. As of December
31, 2024, we have accrued approximately $3.0 million as a liability pertaining to this dispute, which represents our best estimate of
the probable loss.
**YA
II PN, Ltd.**
On November 26, 2024, the Company, Triller Corp.,
a wholly-owned subsidiary of the Company, Triller Hold Co LLC, (**Triller Hold Co**), a Delaware limited liability company
and a wholly-owned subsidiary of the Company, and Holdings Limited, a Cayman Islands limited company, (collectively as
the Defendants) were served with a summon and a notice of motion for summary judgment in lieu of compliant filed by YA
II PN, Ltd. (the **Plaintiff**), a Cayman Islands exempt limited partnership, in the Supreme Court of the State of New
York County of New York for the payment of for $35,546,302.19, plus default interest that continues to accrue, pre-judgment interest,
costs, legal fees, and expenses. The Plaintiff alleged that the defendants were in default of (i) that certain Amended and Restated Secured
Convertible Promissory Note, Number AGBA-1, dated as of June 28, 2024, delivered by the Company to the Plaintiff (as amended, the **Note**),
(ii) that certain Second Amended and Restated Standby Equity Purchase Agreement, dated as of June 28, 2024, by and among the Company,
the Plaintiff and Triller Corp. (the **SEPA**), (iii) that certain Amended and Restated Guaranty Agreement, dated as
of June 28, 2024, by and among Triller Corp., Triller Hold Co and the Plaintiff (the **Triller Guaranty**), (iv) that
certain Amended and Restated Pledge Agreement, dated June 28, 2024, by and between Triller Hold Co and the Plaintiff (the **Triller
Pledge Agreement**), (v) that certain Guaranty Agreement, dated as of June 28, 2024, by and between Convoy Global Holdings Limited,
and the Plaintiff, (vi) that certain Pledge Agreement, dated as of June 28, 2024, by and between the Company and the Plaintiff (the **Company
Guaranty**), and (vii) that certain Amended and Restated Registration Rights Agreement, dated as of June 28, 2024, by and between
the Company and the Plaintiff (the **Registration Rights Agreement**).
95
On June 20, 2025, we transferred 3,000,000 shares
of common stock of BKFC, previously pledged by Triller Hold Co LLC as collateral pursuant to the Amended and Restated Pledge Agreement,
dated June 28, 2024, between Triller Hold Co LLC and Yorkville, as partial repayment. The case does not have a trial date set. Defendants
intend to litigate the case until a resolution is reached.
On December 3, 2025, the Plaintiff filed responses
and objections (the Responses and Objections) to the Defendants first set of interrogatories dated November 3, 2025
to the Supreme Court of the State of New York County of New York (Index no.: 659314/2024). Pursuant to the Responses and Objections, the
Plaintiff stated its claims and contentions with respect to its damage resulting from the event of default that occurred under the Note
when the Defendants failed to pay all amounts due by the Maturity Date. The total amount owed under the Note, including interest, plus
costs, legal fees, and expenses incurred by Yorkville less the value of BKFCs shares is approximately $38.1 million. Yorkville
further stated that it continues to accrue additional damages with each passing day that the obligations under the Note and guaranties
remain unpaid. The case is on-going and our legal counsel will continue to handle this matter. The Company intends to defend itself vigorously.
No prediction can be made as to the outcome of the lawsuit.
**13080 Advisors LLC v. Triller Group, Inc.,
Jams Reference No. 5220008039 (Los Angeles County, California)**
On December 18, 2024, 13080 Advisors LLC (Claimant)
submitted a Notice of Arbitration and Demand for Arbitration (13080 Arbitration Demand) to JAMS to assert that Triller and
TAG Holdings Limited (collectively as Respondents) have breached their alleged duties to Claimant under the following alleged
agreements: (1) a partially executed document entitled Grant Agreement for S-8 Registered Shares dated March 14, 2024, and
(2) a partially executed document entitled Consulting Services Agreement also dated March 14, 2024. The 13080 Arbitration
Demand asserts four purported claims for relief: breach of contract, negligent misrepresentation, specific performance and declaratory
relief. On February 18, 2025, Respondents submitted to JAMS a motion to dismiss all the claims for relief asserted in the 13080 Arbitration
Demand along with a motion to strike Claimants requests for punitive damages. This motion remains pending and no arbitrator has
been appointed. The case is on-going and our legal counsel 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 reasonable possible loss, if any.
Subsequent to December 31, 2024, we are involved
in the following material legal proceedings:
**Robert E. Diamond Jr.et al. v. Triller Group,
Inc., Case No. 25-cv-00129 (PAE) (S.D.N.Y.)**
On January 7, 2025, Robert E. Diamond Jr (Diamond),
the former chairman of Trillers board of directors and Atlas Merchant Capital LLC (collectively as Plaintiffs), an
advisory services company under Diamonds control filed a lawsuit in federal district court in Manhattan, New York to allege that
Triller has failed to pay over or grant to Plaintiffs certain cash amounts and equity awards to which Plaintiffs were entitled pursuant
to various agreements between Plaintiffs and Triller. Plaintiffs claim that they are entitled to over $5.0 million in cash compensation
and over 6.0 million shares of Trillers common stock. On February 28, 2025, Triller filed a partial motion to dismiss the scope
of Plaintiffs claims. This motion is now pending before the court. The case is on-going and our legal counsel 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 reasonable possible loss, if any.
**ITEM
4. MINE SAFETY DISCLOSURES**
Not
Applicable.
****
96
****
**PART
II**
****
**ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**
Our
common stock and warrant are currently listed on Nasdaq Capital Market under the symbol ILLR and ILLRW.
****
**Holders
of Record**
As
of December 31, 2024, we had 162,166,248 shares of common stock issued and outstanding, and 4,825,000 warrants outstanding. As of December
24, 2025, there were 1,945 registered holders of record of our common stock and 207 registered holders of record of our warrants. Such
numbers do not include beneficial owners holding our securities through nominee names. The actual number of holders of our common stock
and warrants may be greater than our record holders.
****
**Dividends**
We
have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends in the immediate future. We currently
intend to retain all available funds and any future earnings to fund the development and growth of our business and to potentially repay
any indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to
pay dividends will be at the discretion of our Board, subject to compliance with covenants in current and future agreements governing
our and our subsidiaries indebtedness, and will depend on our results of operations, financial condition, capital requirements
and other factors that our board may deem relevant.
****
**Purchases
of Equity Securities by the Issuer and Affiliated Purchasers**
On
November 7, 2023, we entered into private placement binding term sheets with an institutional investor, our Chief Executive Officer,
Mr. Ng Wing Fai, and our management team pursuant to which we will receive gross proceeds of approximately $5,128,960, in consideration
of (i) 7,349,200 ordinary shares of our ordinary shares, and (ii) warrants to purchase up to 1,469,840 ordinary shares at a purchase
price of $0.70 per ordinary share and associated warrants. The Company closed the private placement on May 2, 2024.
On
January 24, 2025, we entered into a Securities Purchase Agreement with KCP Holdings Limited, a Cayman Islands exempt company for a private
placement offering of an aggregate of $14,000,000 in shares of common stock and warrants of the Company. The shares were be sold at $2.20
per share. Additionally, KCP Holdings Limited will receive a warrant to purchase an equivalent number of shares at an exercise price
of $5.00 per share. These warrants will become exercisable six months after issuance and will remain exercisable for five years.
**Recent
Sale of Unregistered Securities and Use of Proceeds**
There
have been no other unregistered sales of equity securities during the year ended December 31, 2024, which have not been previously disclosed
on a Current Report on Form 8-K.
97
**Securities
Authorized for Issuance under Equity Compensation Plans**
The
following table provides information as of December 31, 2024 with respect to the shares of the Companys ordinary shares that may
be issued under the TRILLER GROUP INC. Share Award Scheme.
|
Plan
Category | |
| Number
of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights (a) | | |
| Weighted
average
exercise
price of
outstanding
options,
warrants
and rights (b) | | |
| Number
of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))(c) | | |
|
Equity compensation plans approved by security
holders | |
| 36,985,103 | | |
| 4.92 | | |
| 24,893,022 | | |
|
Equity compensation plans not approved by security
holders | |
| | | |
| | | |
| | | |
|
Total | |
| 36,985,103 | | |
| 4.92 | | |
| 24,893,022 | | |
**Performance
Graph**
We
are a smaller reporting company, as defined by Item10(f)(1) of Regulation S-K, and therefore are not required to
provide the information required by paragraph (e) of Item201 of Regulation S-K.
**ITEM
6. [Reserved]**
****
**ITEM
7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
****
*The
following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of
our results of operations and financial condition. The discussion should be read in conjunction with our audited consolidated financial
statements included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon our current expectations,
estimates and projections, and involves numerous risks and uncertainties. Actual results may differ materially from those contained in
any forward-looking statements due to, among other considerations, the matters discussed in the sections titled Risk Factors
and Special Note Regarding Forward-Looking Statements.*
****
**Overview**
We
are a global, artificial intelligence (**AI**) powered technology platform (**Technology Platform**)
that serves a broad constituency of Creators and Brands around the world. **Creators** include influencers, artists,
athletes, other individuals and public figures that utilize or have utilized our Technology Platform to create and publish content. Numerous
famous Creators use our Technology Platform, including influencers like Charli DAmelio and Bryce Hall and music artists like The
Weeknd. Brands are companies, products or product lines which are active on our Technology Platform and utilize or have
utilized one or more of our products or services offered through our Technology Platform (**Direct Brands**), or companies,
products or product lines whose associated data we track, report on and make available to our clients as part of one or more of our product
offerings (**Tracked Brands**, and collectively with Direct Brands, **Brands**). Brands that have utilized
or continue to utilize our platform include McDonalds, Pepsi, Walmart, LOral, Puma, Charmin and Major League Baseball.
98
We help both Creators and Brands build relationships
with their audiences to create awareness, drive content consumption, generate commerce and build culture. Our Triller app is a short-form
video app similar to TikTok, Instagram Reels, YouTube shorts and other video apps that allow users to access both user generated and professionally
generated content from Creators around the world. Since our inception through September 30, 2023, we have raised more than $420 million
in capital and established more than 327 million Consumer Accounts on the Triller app and a total of 436 million Consumer Accounts on
our Technology Platform. Consumer Accounts are included when consumers create accounts on a Triller brand or owned property
and also when we employ our Technology Platform to create accounts on behalf of our Brands and Creators. We define Consumer Accounts as
the total number of individual Consumer Accounts recorded in databases across the Triller app and TrillerTV (whether they are active or
inactive on our Technology Platform) at or around the time of measurement, that we track and that are able to benefit from the services
and features offered through our Technology Platform during the reported period. Users that simply accessed or viewed our content or partner
content on our platform or any other social media platform are not included in the total number of Consumer Accounts above. Consumer Accounts
that were created prior to acquisition by us are not included in the total number of Consumer Accounts above. Recently, we elected to
take a proactive approach to the way in which we report our Consumer Accounts, which we believe is uncommon in our industry. While we
believe that many social media companies include a significant number of bot accounts or duplicate accounts
in their user metrics, we undertook a robust process to purge as many duplicate and bot accounts as practicable with our resources and
in doing so we purged in excess of 200 million Consumer Accounts from our total user accounts metric.
Alongside
the Triller app, Triller has dramatically expanded its portfolio of offerings through organic growth and strategic acquisitions becoming
a diversified Technology Platform for the creation, distribution, measurement and monetization of digital, live and virtual content.
It also produces content under its own and third-party Brands, including trendsetting music, sports, lifestyle, fashion and entertainment
media that creates cultural moments, attracts users to Trillers offerings and drives social interaction that serves as a cultural
wellspring across digital society.
We operate within the global digital content marketplace,
which is estimated to reach $577.4 billion in 2023 according to Statisticas August 2023 report on worldwide digital media, and
we focus our efforts on the $250 billion creator economy, as forecasted in a recent Goldman Sachs report on the creator economy. Goldman
Sachs Research estimated the creator economy could reach $480 billion by 2027 in its April 2023 report titled The creator economy
could approach half-a-trillion dollars by 2027. Our revenue was $27.5 million and $54.2 million in the fiscal years ended December
31, 2024 and 2023. We have incurred net losses in each year since our inception, including $1,138.0 million and $49.2 million for the
fiscal years ended December 31, 2024 and 2023, respectively.
Through
our subsidiaries in Hong Kong, we are also a leading wealth management and healthcare institution based in Hong Kong servicing over 400,000individual
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.
In
addition to operating our Technology Platform, we currently operate in four market-leading businesses: our Platform Business, Distribution
Business, Healthcare Business, and Fintech Business (collectively as Financial Services Business).
Since
2019, we have implemented a strategy to expand and upgrade our long-standing broker-dealer business into a platform business and a distribution
business. Today, we offer unique product and service offerings:
-
B2B: tech-enabled broker management platform for advisors (**Platform Business**); and
-
B2C: market leading portfolio of wealth and health products (**Distribution Business**).
We
also have a market leadership in our healthcare business through our 4% stake in and a strategic partnership with HCMPS. It is one of
the most reputed healthcare brands in Hong Kong. It has a network of over 700 healthcare service providers.
Finally,
we are an established operator and successful investor in the FinTech industry. We have carefully built out investment positions in FinTech,
WealthTech and HealthTech businesses, applying lessons learned from our own distribution, platform and healthcare businesses.
99
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 December 31, 2024, there were around 1,231 financial
advisors at Focus, organized into 26 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.
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 year ended December 31, 2024, the Company
made $22.4 million from commission in the financial services business. The revenue attributed to the Company during 2024 only captured
an insignificant portion of the revenues actually generated by the financial advisors currently associated with Focus.
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.
**Key Factors
Affecting Our Results of Operations and Future Performance**
We
believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors
as described below, each of which presents growth opportunities for our business. These factors also pose important challenges that we
must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address these
challenges is subject to various risks and uncertainties, including those described in Part I, Item 1A of this Form 10-K.
****
100
****
**Results
of Operations**
**
*Comparison
of the Years Ended December31, 2024 and 2023:*
The following
tables set forth our results of operations by segment for the years ended December 31, 2024 and 2023 presented in U.S. dollars (in thousands):
|
| |
For the year ended December 31, 2024 | | |
|
| |
Social
media | | |
Sports streaming | | |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Revenue | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Loans interest income | |
| | | |
| | | |
| 151 | | |
| | | |
| | | |
| 151 | | |
|
Commission | |
| | | |
| | | |
| 20,348 | | |
| | | |
| | | |
| 20,348 | | |
|
Recurring asset management service fees | |
| | | |
| | | |
| 1,887 | | |
| | | |
| | | |
| 1,887 | | |
|
Advertising revenue | |
| 275 | | |
| 1 | | |
| | | |
| | | |
| | | |
| 276 | | |
|
SaaS fees | |
| 707 | | |
| | | |
| | | |
| | | |
| | | |
| 707 | | |
|
Subscription fees and paid-per-view fees | |
| 19 | | |
| 4,088 | | |
| | | |
| | | |
| | | |
| 4,107 | | |
|
Total revenue | |
| 1,001 | | |
| 4,089 | | |
| 22,386 | | |
| | | |
| | | |
| 27,476 | | |
|
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating expenses for social media and streaming platform | |
| (522 | ) | |
| (3,491 | ) | |
| | | |
| | | |
| | | |
| (4,013 | ) | |
|
Commission expense | |
| | | |
| | | |
| (10,531 | ) | |
| | | |
| | | |
| (10,531 | ) | |
|
Sales and marketing expenses | |
| (921 | ) | |
| (426 | ) | |
| (219 | ) | |
| | | |
| | | |
| (1,566 | ) | |
|
Research and development expenses | |
| (1,193 | ) | |
| (135 | ) | |
| (1,853 | ) | |
| | | |
| | | |
| (3,181 | ) | |
|
Personnel and benefit expenses | |
| (2,091 | ) | |
| (86 | ) | |
| (38,106 | ) | |
| (44,603 | ) | |
| | | |
| (84,886 | ) | |
|
Legal and professional fee | |
| (3,048 | ) | |
| (70 | ) | |
| (2,321 | ) | |
| (16,931 | ) | |
| | | |
| (22,370 | ) | |
|
Legal and professional fee, related party | |
| | | |
| | | |
| | | |
| (949 | ) | |
| | | |
| (949 | ) | |
|
Office and operating fee, related party | |
| | | |
| | | |
| (4,303 | ) | |
| | | |
| | | |
| (4,303 | ) | |
|
Provision for allowance for expected credit losses | |
| 5 | | |
| (10 | ) | |
| (2,544 | ) | |
| | | |
| | | |
| (2,549 | ) | |
|
Other general and administrative expenses | |
| (1,659 | ) | |
| (109 | ) | |
| (4,287 | ) | |
| (253 | ) | |
| | | |
| (6,308 | ) | |
|
Total operating expenses | |
| (9,429 | ) | |
| (4,327 | ) | |
| (64,164 | ) | |
| (62,736 | ) | |
| | | |
| (140,656 | ) | |
|
Other income (expense), net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Interest income | |
| 6 | | |
| | | |
| 19 | | |
| 765 | | |
| (339 | ) | |
| 451 | | |
|
Interest expense | |
| (2,581 | ) | |
| (132 | ) | |
| (785 | ) | |
| (4,778 | ) | |
| 339 | | |
| (7,937 | ) | |
|
Foreign exchange (loss) gain, net | |
| | | |
| 16 | | |
| (717 | ) | |
| | | |
| | | |
| (701 | ) | |
|
Impairment on property and equipment | |
| | | |
| | | |
| (104 | ) | |
| | | |
| | | |
| (104 | ) | |
|
Impairment on intangible assets | |
| (621 | ) | |
| (210 | ) | |
| (369 | ) | |
| | | |
| | | |
| (1,200 | ) | |
|
Impairment on goodwill | |
| (1,000,002 | ) | |
| (5,776 | ) | |
| | | |
| | | |
| | | |
| (1,005,778 | ) | |
|
Impairment on right-of-use assets | |
| | | |
| | | |
| (1,664 | ) | |
| | | |
| | | |
| (1,664 | ) | |
|
Investment loss, net | |
| | | |
| | | |
| (15,971 | ) | |
| | | |
| | | |
| (15,971 | ) | |
|
Change in fair value of convertible debts | |
| 4,447 | | |
| | | |
| | | |
| | | |
| | | |
| 4,447 | | |
|
Change in fair value of warrant liabilities | |
| | | |
| | | |
| | | |
| 3,463 | | |
| | | |
| 3,463 | | |
|
Sundry income | |
| 31 | | |
| 6 | | |
| 101 | | |
| | | |
| | | |
| 138 | | |
|
Total other expense, net | |
| (998,720 | ) | |
| (6,096 | ) | |
| (19,490 | ) | |
| (550 | ) | |
| | | |
| (1,024,856 | ) | |
|
Income tax expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net loss | |
| (1,007,148 | ) | |
| (6,334 | ) | |
| (61,268 | ) | |
| (63,286 | ) | |
| | | |
| (1,138,036 | ) | |
101
|
| |
Year ended December 31, 2023 | | |
|
| |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Revenue | |
| | |
| | |
| | |
| | |
|
Commission | |
| 50,069 | | |
| | | |
| | | |
| 50,069 | | |
|
Asset management service fees | |
| 3,963 | | |
| | | |
| | | |
| 3,963 | | |
|
Loans interest income | |
| 157 | | |
| | | |
| | | |
| 157 | | |
|
Total revenue | |
| 54,189 | | |
| | | |
| | | |
| 54,189 | | |
|
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
|
Commission expense | |
| (37,288 | ) | |
| | | |
| | | |
| (37,288 | ) | |
|
Sales and marketing expenses | |
| (2,496 | ) | |
| (1,213 | ) | |
| | | |
| (3,709 | ) | |
|
Research and development expenses | |
| (949 | ) | |
| (3,608 | ) | |
| | | |
| (4,557 | ) | |
|
Personnel and benefit expenses | |
| (128 | ) | |
| (27,090 | ) | |
| | | |
| (27,218 | ) | |
|
Legal and professional fee | |
| (11,767 | ) | |
| (1,834 | ) | |
| | | |
| (13,601 | ) | |
|
Legal and professional fee, related party | |
| | | |
| (333 | ) | |
| | | |
| (333 | ) | |
|
Office and operating fee, related party | |
| | | |
| (6,040 | ) | |
| | | |
| (6,040 | ) | |
|
Provision for allowance for expected credit losses | |
| (1,004 | ) | |
| (73 | ) | |
| | | |
| (1,077 | ) | |
|
General and administrative | |
| (5,085 | ) | |
| 1,658 | | |
| | | |
| (3,427 | ) | |
|
Total operating expenses | |
| (58,717 | ) | |
| (38,533 | ) | |
| | | |
| (97,250 | ) | |
|
Other income (expense), net | |
| | | |
| | | |
| | | |
| | | |
|
Interest income | |
| 39 | | |
| 345 | | |
| | | |
| 384 | | |
|
Interest expense | |
| (388 | ) | |
| (396 | ) | |
| | | |
| (784 | ) | |
|
Others | |
| 6,715 | | |
| (12,173 | ) | |
| | | |
| (5,458 | ) | |
|
Total other income (expense), net | |
| 6,366 | | |
| (12,224 | ) | |
| | | |
| (5,858 | ) | |
|
Income tax expense | |
| (280 | ) | |
| (7 | ) | |
| | | |
| (287 | ) | |
|
Net income (loss) | |
| 1,558 | | |
| (50,764 | ) | |
| | | |
| (49,206 | ) | |
****
**Revenues**
The following
table summarizes the major operating revenues for the years ended December 31, 2024 and 2023:
|
| |
Yearsended December 31, | | |
| | |
| | |
|
| |
2024 | | |
2023 | | |
Variance | | |
|
| |
(US$ in thousands) | | |
$ | | |
% | | |
|
Business segment | |
| | |
| | |
| | |
| | |
|
Social media | |
$ | 1,001 | | |
$ | | | |
| 1,001 | | |
| N/A | | |
|
Sports streaming | |
| 4,089 | | |
| | | |
| 4,089 | | |
| N/A | | |
|
Financial services | |
| 22,386 | | |
| 54,189 | | |
| (31,803 | ) | |
| (58.69 | ) | |
|
TOTAL | |
$ | 27,476 | | |
$ | 54,189 | | |
| (26,713 | ) | |
| (49.30 | ) | |
*Social media and Sports streaming*
On October 15, 2024, we completed the merger
transaction pursuant to the merger agreement, through which we acquired all of the equity interests of Triller Corp. Following the acquisition,
Triller Corp.s operations have been consolidated into the Group, consisting of two major business segments: social media and sports
streaming.
102
For the post-acquisition period from October 16,
2024 to December 31, 2024, these segments contributed revenues of approximately $1.0 million and $4.1 million, respectively, or aggregate
18.53% of the Groups total revenue.
Social
media business segment mainly comprises of revenues from the provision of advertising services and SaaS services. The technology platform
integrated from Triller Corp. provides brands a variety of advertising services including AI-powered conversations and the augmentation
and execution of advertising campaigns. In additions, the SaaS platform provides our customers a detailed dashboard to measure all creator
driven marketing campaigns as well as a marketplace allowing e-commerce brands to automate the process of on-boarding creators with per-transaction
incentives for enabling e-commerce transactions. Revenue from the SaaS platform subscriptions is recognized ratably over the life of
a subscription.
Sports
streaming business segment mainly comprises of revenues from subscriptions for streaming services and pay-per-view (PPV)
services for premium content and events. The technology platform provides streaming services that acquires content licensing from various
sport and entertainment franchises to provide a content rich environment for both subscription based and pay-per-view consumption both
across a variety of platforms including mobile phones, tablets, PCs, streaming devices, set-top-boxes and connected TVs. Revenue from
streaming subscriptions is recognized ratably over the life of a subscription and revenue from streaming pay-per-view events is recognized
at the time the event airs.
*Financial
services*
Financial services business segment mainly comprises of commission
income, recurring assets management service income, and interest income. Income from financial services decreased by $31.8 million or
58.69% from $54.2 million for the year ended December 31, 2023 to $22.4 million for the year ended December 31, 2024. The decrease in
revenue is primarily attributed to the economic recession and outward migration in Hong Kong.
****
**Operating Expenses**
****
**Operating expenses for social media and streaming platform**
****
For the post-acquisition period from October 16,
2024 to December 31, 2024, the aggregate operating expenses for social media and streaming platform was $4.0 million, or 2.85% of the
Groups operating expenses. The operating expenses for social media primarily consisted of expenses related to talent and influencers
for brand activations. The operating expenses for streaming platform are related to license fees, event rights fees, revenue sharing costs,
production costs, and influencer costs, among others.
**Commission expense**
****
The commission expense related to financial services
decreased $26.8 million, or 71.76% from $37.3 million for the year ended December 31, 2023 to $10.5 million for the year ended December
31, 2024. As a result of the decrease in revenue associated with the financial services, commission expense decreased correspondingly.
****
103
****
**Sales
and marketing expenses**
**
*Social media and Sports streaming*
Sales and marketing expenses of social media
and sports streaming segments primarily consist of marketing costs related to talent and influencers that are not directly tied to revenue-generating
activity. These costs represent expenditure incurred to attract users to the Triller app. For the post-acquisition period from October
16, 2024 to December 31, 2024, aggregate sales and marketing expenses for these segments totaled $1.3 million, representing 86.02% of
the Groups total sales and marketing expenses.
**
*Financial
services and Corporate*
Sales and marketing expenses of financial services
and corporate segment primarily consist of brand promotion and spending on marketing programs to launch the insurance and investments
products distributed by our consultants. The aggregate sales and marketing expenses for these segments decreased $3.5 million, or 94.11%
from $3.7 million for the year ended December 31, 2023 to $0.2 million for the year ended December 31, 2024. The decrease was mainly
attributed to lower spending associated with AGBA corporate branding and associated product campaigns for celebrating the
successful listing.
****
**Research
and development expenses**
****
*Social media and Sports streaming*
Research and development expenses of social media
and sports streaming segments primarily consist of personnel costs and related expenses, internet hosting costs, as well as third party
tools and labor. For the post-acquisition period from October 16, 2024 to December 31, 2024, aggregate research and development expenses
for these segments totaled $1.3 million, representing 41.75% of the Groups total research and development expenses.
*Financial services and Corporate*
**
Research
and development expenses of financial services and corporate segment primarily include personnel-related costs attributable to our IT
team, technology contractors, server facilities expenses, telecommunications expenses, software and hardware expenses to support and
maintain the technology platform infrastructure for financial services. The aggregate research and development expenses for these segments
decreased $2.7 million, or 59.34% from $4.5 million for the year ended December 31, 2023 to $1.8 million for the year ended December
31, 2024. The decrease was mainly attributed to decreased in headcounts
****
**Personnel
and benefit expenses**
Personnel
and benefit expenses primarily consist of personnel-related costs and benefits and stock-based compensation costs for our administrative,
legal, human resources, information technology, corporate development, finance and accounting employees and executives.
**
*Social media and Sports streaming*
For the post-acquisition period from October
16, 2024 to December 31, 2024, aggregate personnel and benefit expenses for social media and sports streaming segments totaled $2.2 million,
representing 2.56% of the Groups total personnel and benefit expenses.
**
*Financial
services and Corporate*
**
|
| |
Yearsended December 31, | | |
| | |
| | |
|
| |
2024 | | |
2023 | | |
Variance | | |
|
| |
(US$ in thousands) | | |
$ | | |
% | | |
|
Personnel and benefit | |
$ | 14,964 | | |
$ | 23,926 | | |
| (8,962 | ) | |
| (37.46 | ) | |
|
Stock-based compensation | |
| 67,745 | | |
| 3,292 | | |
| 64,453 | | |
| 1,957.87 | | |
|
TOTAL | |
$ | 82,709 | | |
$ | 27,218 | | |
| 55,491 | | |
| 203.88 | | |
**
104
Personnel and benefit cost for these segments decreased by $9.0 million,
or 37.46% from $23.9 million for the year ended December 31, 2023 to $15.0 million for the year ended December 31, 2024. The decrease
was mainly attributed to the decreased headcount.
Stock-based compensation for executive directors and employees increased
by $64.4 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily due
to the settlement of accrued salaries to certain executive directors and employees of the Company and the amortization of the fair value
of restricted share units. 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 fee**
Legal and professional fees mainly consisted of
certain professional consulting services in legal, audit, accounting and taxation, and others.
*Social media and Sports streaming*
For the post-acquisition period from October 16,
2024 to December 31, 2024, the legal and professional fee for social media and sports streaming segments totaled $3.1 million, representing
13.97% of the Groups total legal and professional fee.
*Financial services and Corporate*
****
|
| |
Yearsended December 31, | | |
| | |
| | |
|
| |
2024 | | |
2023 | | |
Variance | | |
|
| |
(US$ in thousands) | | |
$ | | |
% | | |
|
Legal and professional fees | |
$ | 9,223 | | |
$ | 5,090 | | |
| 4,082 | | |
| 80.20 | | |
|
Stock-based compensation | |
| 10,029 | | |
| 8,511 | | |
| 1,569 | | |
| 18.43 | | |
|
TOTAL | |
$ | 19,252 | | |
$ | 13,601 | | |
| 5,600 | | |
| 41.17 | | |
****
Legal and professional fees increased by $4.1 million, or 80.20%, for
the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was primarily attributed to the increase
in the US legal counsel fees and the consulting fees incurred during the year.
Consulting fees under stock-based compensation increased by $1.6 million
or 18.43% for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was mainly attributed to
the increase in corporate strategic consultancy and business marketing service rendered by certain third party consultants.
**Legal and professional fee, related party**
Legal and professional fee, related party increased by US$0.6 million
from $0.9 million for the year ended December 31, 2024 to $0.3 million for the year ended December 31, 2023. The increase was primarily
from the advisory services rendered by a related company which owned by the former Chairman of the Company whom resigned in December 2024.
105
**Provision for allowance for expected credit losses**
****
In accordance with Accounting Standards Codification
(ASC) Topic 326 *Credit Losses Measurement of Credit Losses on Financial Instruments*(ASC Topic326),
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, prepayments and others receivable
which is recorded as a liability to offset the receivables. For the years ended December 31, 2024 and 2023, the aggregated provision for
allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, and other receivables was $2.5 million
and $1.1 million, respectively.
****
**Other
general and administrative expenses**
**
*Social media and Sports streaming*
Other general and administrative expenses of
social media and sports streaming segments primarily consist of professional service fees, business process outsourcing costs, music
licensing, and insurance premiums. For the post-acquisition period from October 16, 2024 to December 31, 2024, aggregate other general
and administrative expenses for these segments totaled $1.8 million, representing 28.03% of the Groups total other general and
administrative expenses.
**
*Financial
services and Corporate*
Other general and administrative expenses of financial
services and corporate segments primarily consist of rent and facilities expenses allocated based upon total direct costs, depreciation
and amortization expenses, allowance for expected credit losses, professional services fees, allocated overhead expenses, and other corporate
expenses that are not allocated to the above expense categories. The aggregate other general and administrative expenses for these segments
increased $1.1 million, or 32.48% from $3.4 million for the year ended December 31, 2023 to $4.5 million for the year ended December 31,
2024.
**Other
Income (Expense), net**
The following
table summarizes the other income (expense), net for the years ended December 31, 2024 and 2023:
|
| |
Yearsended December 31, | | |
| | |
| | |
|
Other income (expense), net | |
2024 | | |
2023 | | |
Variance | | |
|
| |
(US$ in thousands) | | |
$ | | |
% | | |
|
Business segment | |
| | |
| | |
| | |
| | |
|
Social media | |
$ | (998,720 | ) | |
$ | | | |
| 998,720 | | |
| N/A | | |
|
Sports streaming | |
| (6,096 | ) | |
| | | |
| 6,096 | | |
| N/A | | |
|
Financial services | |
| (19,490 | ) | |
| 6,366 | | |
| (25,856 | ) | |
| (406.16 | ) | |
|
Corporate | |
| (550 | ) | |
| (12,224 | ) | |
| (11,674 | ) | |
| (95.50 | ) | |
|
TOTAL | |
$ | (1,024,856 | ) | |
$ | (5,858 | ) | |
| 1,018,998 | | |
| 17,394.98 | | |
Other income (expense), net consist of interest
income, change in fair value of convertible debts, change in fair value of warrant liabilities, sundry income and offset by interest expense,
impairment on property and equipment, impairment on intangible assets, impairment on goodwill, impairment on right-of-use assets, and
investment loss, net.
106
*Social media and Sports streaming*
For the post-acquisition period from October 16,
2024 to December 31, 2024, aggregate other expense, net for these segments totaled $1,004.8 million, representing 98.04% of the Groups
total other expense, net, primarily comprised of impairment on goodwill of $1,005.8 million, impairment on intangible assets of $0.8 million,
and offset by positive change in fair value of convertible debts of $4.4 million.
**
*Financial services and Corporate*
For the years ended December 31, 2024 and 2023,
the aggregate other expense, net for financial services and corporate segments was $20.0 million and $5.9 million, respectively, an increase
of $14.2 million or 242.10%. The increase was mainly attributed to the impairment on property and equipment, impairment on intangible
assets, impairment on right-of-use assets, and investment loss of $0.1 million, $0.4 million, $1.7 million and $16.0 million, respectively
and offset by the change in fair value of warrant liabilities of $3.5 million.
****
**Net
Loss**
Net loss increased by $1,088.8million, or
2,212.80% for the year ended December 31, 2024, as compared to December 31, 2023. The increase was primarily due to the increase in operating
expenses of $43.4 million and increase in other expense, net of $1,019.0 million.
**Liquidity
and Capital Resources**
****
**Sources
of Liquidity**
We have a history of operating losses and negative
operating cash flows. For the year ended December 31, 2024, we reported a net loss of $1,138.0 million and reported a negative operating
cash flow of $29.0 million. As of December 31, 2024, our cash balance was $3.1 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, we continually monitor our capital structure and operating plans and evaluates various potential
funding alternatives that may be needed in order to finance our business development activities, general and administrative expenses,
and growth strategy. These alternatives include external borrowings, raising funds through public equity, or tapping debt markets. 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 consolidated financial statements attached to this Form 10-K do not include any adjustments that might result from
the outcome of these uncertainties.
107
**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 2025 will be to fund capital expenditures for the repayment of debts and obligation and
the businesses operations.
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 consolidated financial statements provided with this Form 10-K. However, these forecasts
involve risks and uncertainties, and actual results could vary materially. Our management has based this estimate on assumptions that
may prove to be wrong, and we could deplete our capital resources sooner than we expect. See *Liquidity and Going Concern*
below.
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 financing. 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.
****
**Cash Flows**
As of December 31, 2024, we had cash and cash
equivalents totaling $3.1 million, and $14.2 million in restricted cash.
As
of December 31, 2023, we had cash and cash equivalents totaling $1.9 million, and $16.8 million in restricted cash.
*Comparison
of the year ended December 31, 2024 and 2023*
The following
table summarizes our cash flows for the years presented:
|
| |
Year ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
| |
(US$ in thousands) | | |
|
Net cash used in operating activities | |
| (29,037 | ) | |
| (42,283 | ) | |
|
Net cash provided by investing activities | |
| 3,740 | | |
| 10,792 | | |
|
Net cash provided by (used in) financing activities | |
| 24,046 | | |
| (1,040 | ) | |
|
Effect on exchange rate change on cash and cash equivalents | |
| (166 | ) | |
| (85 | ) | |
|
Net change in cash, cash equivalents and restricted cash | |
| (1,417 | ) | |
| (32,616 | ) | |
|
Cash, cash equivalents and restricted cash, at the beginning | |
| 18,678 | | |
| 51,294 | | |
|
Cash, cash equivalents and restricted cash, at the end | |
| 17,261 | | |
| 18,678 | | |
|
Representing as:- | |
| | | |
| | | |
|
Cash and cash equivalents | |
| 3,065 | | |
| 1,861 | | |
|
Restricted cash fund held in escrow | |
| 14,196 | | |
| 16,817 | | |
|
| |
| 17,261 | | |
| 18,678 | | |
108
The following
table sets forth a summary of our working capital:
|
| |
Yearsended December 31, | | |
| | |
| | |
|
| |
2024 | | |
2023 | | |
Variance | | |
|
| |
(US$ in thousands) | | |
$ | | |
% | | |
|
Total Current Assets | |
$ | 24,089 | | |
$ | 25,619 | | |
| (1,530 | ) | |
| (5.97 | ) | |
|
Total Current Liabilities | |
| 295,738 | | |
| 47,840 | | |
| 247,898 | | |
| 518.18 | | |
|
Working Capital Deficit | |
| (271,649 | ) | |
| (22,221 | ) | |
| 249,428 | | |
| 1,122.49 | | |
****
**Working
Capital Deficit**
The working capital deficit as of December 31,
2024 amounted to approximately $271.6million, as compared to approximately $22.2million as of December31, 2023, an increase
of $249.4 million or 1,122.49%. The increase was mainly attributed to the increase in current liabilities related to the acquisition of
Triller Corp. during the year.
****
**Cash
Flows from Operating Activities**
****
Net cash used in operating activities was $29.0million
for the year ended December 31, 2024, as compared to net cash used in operating activities of $42.3million for the year ended December
31, 2023.
Net cash used in operating activities for the
year ended December 31, 2024 was primarily the result of a net loss of $1,138.0million, a decrease in escrow liabilities of $2.6
million, operating lease liabilities of $1.9 million, and income tax payable of $0.3 million. These amounts were partially offset by the
decrease in accounts receivable of $2.5 million, increase in accounts payable and accrued liabilities of $4.1 million, and non-cash adjustments
consisting of stock-based compensation of $77.8 million, lease expense of $2.6 million, depreciation and amortization of $0.3 million,
interest expense on borrowings of $7.9 million, impairment on goodwill of $1,005.8 million, impairment on intangible assets of $1.2 million,
impairment on right-of-use assets of $1.7 million, investment loss, net of $16.0 million, provision for allowance for expected credit
losses of $2.5 million, change in fair value of warrant liabilities of $(3.5) million, change in fair value of convertible debts of $(4.4)
million, and impairment on property and equipment of $0.1 million.
Net
cash used in operating activities for the year ended December 31, 2023 was primarily the result of the net loss of $49.2 million, an
increase in accounts receivable of $1.2 million, increase in deposits, prepayments, and others receivable of $2.5 million, decrease in
escrow liabilities of $12.7 million, and decrease in lease liabilities of $1.1 million. These amounts were partially offset by the increase
in accounts payable and accrued liabilities of $6.9 million, increase in income tax payable of $0.5 million, and non-cash adjustments
consisting of share-based compensation expense of $11.2 million, non-cash lease expense of $1.5 million, depreciation of property and
equipment of $0.3 million, interest income on notes receivable of $0.03 million, interest expense on borrowings of $0.8 million, net
foreign exchange gain of $0.9 million, net investment loss of $6.9 million, allowance for credit losses on financial instruments of $1.1
million, gain on disposal of property and equipment of $0.7 million, loss on settlement of forward share purchase agreement of $0.4 million,
and reversal of over-accruals in prior year of $3.6 million.
****
109
****
**Cash
Flows from Investing Activities**
****
Net cash provided by investing activities for
the year ended December 31, 2024 of $3.7 million was primarily due to proceeds from sale of long-term investments of $2.5 million and
cash from acquisition of Triller Corp. of $1.2 million.
Net
cash provided by investing activities for the year ended December 31, 2023 of $10.8 million was primarily due to proceeds from sale of
investments of $4.0 million, dividend received from long-term investments of $1.7 million, proceeds from sale of property and equipment
of $6.1 million, offset by the purchase of notes receivable of $0.6 million, purchase of long-term investments of $0.3 million, and purchase
of property and equipment of $0.1 million.
****
**Cash
Flows from Financing Activities**
Net cash provided by financing activities for
the year ended December 31, 2024 of $24.0 million was primarily due to advances from stock holder of $15.6 million, proceeds from
convertible debts of $28.7 million, and proceeds from borrowings of $7.4 million, offset by the repayments of convertible debts of $23.9
million, and repayments of borrowings of $3.9 million.
Net
cash used in financing activities for the year ended December 31, 2023 of US$1.04 million was primarily due to advances from stockholder of US$9.34 million, proceeds from borrowings of US$7.75 million, proceeds from private placement of US$1.85 million, offset by
the settlement of forward share purchase agreement of US$13.95 million, and repayments of borrowings of US$6.03 million.
**Liquidity
and Going Concern**
Our
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 Companys planned obligations for the next 12 months from the date
that these consolidated financial statements were made available to be issued.
For the year ended December31, 2024, we
reported a net loss of approximately $1,138.0 million. With a significant increase in our operating costs, described in the paragraph
below, we had an accumulated deficit of approximately $1,203.6million as of December 31, 2024.
However, coupled with the economic recession and
migration outflow in Hong Kong, we reported significant sales decline with annual revenue of approximately $27.5 million during 2024 (2023:
$54.2 million), and resulting with an operating loss of approximately $113.2 million (2023: $43.1 million). These circumstances give rise
to substantial doubt that we will continue as a going concern and these consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
110
Our
ability to continue as a going concern is dependent on the managements 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 search for potential funding alternatives in order to finance
our business development activities and operating expenses. These alternatives may include borrowings, raising funds through public equity
or debt markets. However, we cannot predict the exact amount or timing of the alternatives, or guarantee those alternatives will be favorable
to our stockholders. Any failure to obtain financing when required will have a material adverse impact on our business, operation and
financial result.
With
these funding initiatives, our management believes that we would be able to strengthen our financial position, improve our liquidity,
and enhance our ability to navigate the challenging market conditions.
****
**Material
Cash Requirements**
We reported a net loss during the year ended December
31, 2024. However, we expect to generate profitable operating results within the foreseeable future, after getting access to the collective
sales capabilities force of the sale channels associated with our financial services business. As a result, management expects our net
cash position to expand in 2025. As of December 31, 2024, we had an accumulated deficit of $1,203.6 million. Our material cash requirements
are highly dependent upon additional financial support associated with our business operations for the next 12 to 18 months.
****
**Capital
commitments**
****
Details of capital commitments are disclosed in
Note 25 in the accompanying consolidated financial statements.
**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.
111
**Critical
Accounting Policies, Judgements and Estimates**
Our
audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States
of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date
of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in
the audited consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described
in Note 2 Summary of significant accounting policies of our audited consolidated financial statements included
under Item 8 of Part II in this Annual Report, certain accounting policies are deemed critical, as they require our managements
highest degree of judgment, estimates and assumptions. While our management believes our judgments, estimates and assumptions are reasonable,
they are based on information presently available and actual results may differ significantly from those estimates under different assumptions
and conditions.
Critical accounting policies
When reading our consolidated financial statements,
you should consider our selection of critical accounting policies, including revenue recognition, and long-term
investments, net, of which the details are set out in our audited consolidated financial statements.
Critical accounting estimates
You should also consider the judgment and other
uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial
statements.
|
| Business
Combinations |
|
We include the results of operations of businesses acquired as of the date of acquisition. Fair values of
the assets acquired and liabilities assumed are determined based on the estimated fair values as of the respective date of acquisition.
The excess purchase price over the fair values of identifiable assets and liabilities acquired is recorded as goodwill. Determining the
fair value of assets acquired and liabilities assumed requires management to use significant judgments and estimates including the selection
of valuation methodologies, estimates of future revenue and cash flows, discount rates, and comparison to peer companies. Estimates of
fair value are based on assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result,
actual results may differ from estimates. Certain information that is indeterminable at the time of the acquisition becomes subject to
a subsequent measurement period, which is generally limited to one year. During the measurement period, which may be up to one year from
the acquisition date, adjustments to the value of the assets acquired and liabilities assumed may be recorded with a corresponding offset
to goodwill. At the conclusion of the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations
and comprehensive loss.
112
Transaction costs associated with business combinations are expensed as incurred and are generally included in
general and administrative expenses in the consolidated statements of operations and comprehensive loss.
|
|
Impairment of long-lived assets | |
We review long-lived assets, including property
and equipment, intangible assets and ROU assets, 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 measured by a comparison of the carrying amount
of an asset to the undiscounted future pre-tax cash flows expected to be generated by the asset. If such assets are considered to be impaired,
the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair
value is generally determined by discounting the cash flows expected to be generated by the asset (asset group), when the market prices
are not readily available. The adjusted carrying amount of the asset is the new cost basis and is depreciated over the assets remaining
useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities.
|
|
Impairment of intangible assets | |
Intangible assets with definite lives are stated at cost less accumulated
amortization. Amortization is calculated on a straight-line basis over their estimated useful lives.
Intangible assets with definite lives are reviewed
for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances
arise, an estimate of future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the
assets carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured
based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of carrying value or
net realizable value.
|
|
Impairment on goodwill | |
Goodwill represents the excess of the purchase
price over the fair value of assets acquired and liabilities assumed. We review goodwill for impairment at least annually at the reporting
unit level or when a triggering event occurs that indicates that the fair value of the reporting unit may be below its carrying amount.
We perform annual impairment test of goodwill
in the fourth quarter of each fiscal year. First, we assess qualitative factors to determine whether a quantitative impairment test is
necessary. If that qualitative assessment indicates that it is more likely than not that goodwill is impaired, we perform a quantitative
test to compare the fair value of the reporting unit with the carrying amount, including goodwill, of the reporting unit. If the qualitative
assessment indicates that it is not more likely than not that goodwill is impaired, no further testing is necessary. The goodwill impairment
loss, if any, represents the excess of the carrying amount of the reporting unit over the fair value of the reporting unit.
113
|
| Warrant liabilities |
|
We account for warrants
as either equity-classified or liability-classified instruments based on an assessment of the warrants 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 our own common stock and whether the warrant holders could potentially require
net cash settlement in a circumstance outside of our 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.
*Equity-classified*
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. Warrants classified as equity instruments are initially recognized at fair value and are not subsequently remeasured.
We account for its (i) Public Warrants and (ii) Replacement Warrants of Triller Group Warrants as equity.
*Liability-classified*
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 estimated fair value of the
warrants are recognized as a non-cash gain or loss on the consolidated statements of operations and comprehensive loss. We account for
its (i) SPAC Private Warrants, (ii) Common Warrants, and (iii) Warrants Class A of Triller Group 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 consolidated statements of operations and comprehensive
loss. Transaction costs allocated to warrants that are presented as a liability are immediately expensed in the consolidated statements
of operations and comprehensive loss.
114
**ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
As
a smaller reporting company, we are not required to make disclosures under this Item.
****
**ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**
Our
financial statements and the notes thereto begin on page F-1 of this Annual Report.
****
**ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**
None.
**ITEM
9A. CONTROLS AND PROCEDURES**
****
**Evaluation
of Disclosure Controls and Procedures**
Our
management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated, as of the end of
the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures. Based on this evaluation
of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term 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), means controls and other procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported
within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the
Exchange Act 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. Management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies
its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
**Managements
Report on Internal Controls Over Financial Reporting**
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act). Our internal control over financial reporting includes policies and procedures designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting
purposes in accordance with generally accepted accounting principles.
As
of December 31, 2024, our management assessed the effectiveness of our internal control over financial reporting using the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
115
Based on this assessment, our management
identified a material weakness related to the Companys failure to properly evaluate and apply consolidation accounting
standards to the investment in Bare Knuckle Fighting Championship (BKFC), whereby BKFC
should be classified as investment at cost less impairment in the Companys consolidated financial statements for the acquisition by the Company on October 15,
2024. While the Company held a majority equity interest in BKFC throughout 2024, it lost control over BKFC and no longer
possessed the power to direct the activities or key decisions that most significantly impacted BKFCs economic performance
during 2024, as required for consolidation under ASC 810, Consolidation.
The material weakness arose because the
Company lacked accounting personnel with the appropriate level of knowledge and experience to perform an assessment on complex
accounting transactions to ensure that the accounting treatment was appropriately evaluated and accurately reflected in the
consolidated financial statements. Specifically, the Company initially consolidated the results of BKFC in its consolidated
financial statements without considering that the Company no longer exercised significant influence over BKFC. As a result, the
investment in BKFC should be accounted for as an investment measured at cost less impairment under ASC 321, as of the
Acquisition Date, rather than consolidating BKFC as a subsidiary in its consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a material misstatement of the Companys annual or quarterly
financial statements will not be prevented or detected on a timely basis. Accordingly, management concluded that the Companys internal
control over financial reporting was not effective as of December 31, 2024.
Management has initiated remediation efforts
to address this material weakness, including:
|
| Engaging external subject matter experts to assist with complex
accounting determinations. |
|
|
| Implementing additional training for finance and accounting
personnel. |
|
|
| Strengthening documentation and review procedures within
the financial statement close process. |
|
Management believes these measures, once fully implemented and tested, will remediate the
identified material weakness. The Company will continue to monitor the effectiveness of these controls and will report on progress in
future filings.
Additionally,
our independent registered public accounting firm will not be required to report on the effectiveness of our internal control over financial
reporting pursuant to Section404 until we are no longer an emerging growth company as defined in the JOBS Act.
**Inherent
limitations on effectiveness of controls**
Internal
control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for
advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization,
and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject
to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented
by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process
and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.
**Changes
in Internal Control over Financial Reporting**
There
have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting other than the matter disclosed above.
****
**ITEM
9B. OTHER INFORMATION**
None.
****
**ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**
Not applicable.
116
**PART
III**
****
**ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**
The
following table sets forth information about our directors and executive officers as of the date of this annual report.
|
Name |
|
Age |
|
Position | |
|
Mr.Ng Wing Fai |
|
58 |
|
Chief Executive Officer and Director | |
|
Mr. Shu Pei Huang, Desmond |
|
52 |
|
Acting Chief Financial Officer | |
|
Mr.Mark Carbeck |
|
54 |
|
Chief Financial Officer, Triller Corp | |
|
Mr.Brian Chan |
|
58 |
|
Independent Director(1)(2)(3) | |
|
Mr.Thomas Ng |
|
70 |
|
Independent Director(1)(2)(3) | |
|
Mr.Felix Yun Pun Wong |
|
60 |
|
Independent Director(1)(2)(3) | |
Note:
|
(1) | Member
of the Audit Committee |
|
|
(2) | Member
of the Remuneration Committee |
|
|
(3) | Member
of the Nomination Committee |
|
****
**Mr.Ng
Wing Fai:** Mr.Ng has been served as Group Chief Executive Officer, the Chairman of the board of AGBA and as an executive
director of the board of AGBA, since November2022. Prior to joining AGBA, Mr.Ng was the Managing Partner and Founding Partner
of Primus Pacific Partners, an Asian private equity fund with a focus on financial services. He was also previously the Managing Director
of Fubon Financial Holding, the largest financial conglomerate in Taiwan, where he oversaw its overall strategy, capital markets, merger
and acquisition activities and major change programs. He has previously served as the Managing Director and Head of theAsia-PacificFinancial
Institutions Group at Salomon Smith Barney. Mr.Ng graduated from the University of Cambridge and obtained a masters degree
in business administration from Harvard University in 1994.
****
**Mr.Shu
Pei Huang, Desmond:**Mr.Shu Pei Huang, Desmond currently serves as the Acting Group Chief Financial Officer (Principal
Financial Officer) since November2022. He was also a director of OnePlatform Holdings Limited prior to the OnePlatform Holdings
Limited merger. Prior to joining AGBA, Mr.Shu was the Vice President of Primus Holdings (H.K.) Ltd, an Asia investment holding
company with a focus on the financial services industry. Prior to that, he was the corporate development manager ofDRB-HICOMBerhad,
one of the largest diverse conglomerates in Malaysia with business across banking, insurance, automobile, and services. Mr.Shu
has over 20years of experience in the investment banking and financial services industry and has gainedall-roundexperience
through working with MIMB Investment Bank, SIBB Investment Bank, and KPMG Corporate Services. Mr.Shu graduated from University
of Kentucky with a Bachelor of Business Administration in Finance and Bachelor of Science in Accounting; Master of Science in Finance
from Golden Gate University, USA.
****
**Mr.Mark
Carbeck:**Mr. Carbeck has served as Chief Financial Officer of Triller Corp since August 2024, having previously served as Trillers Senior Vice
President of Finance and Investor Relations from February 2023. Prior to joining us, Mr. Carbeck served as Chief Corporate and Strategy
Officer at Eros Media World Plc, where he managed corporate finance, M&A, investor relations and capital markets functions, from April
2014 until July 2022. Mr. Carbeck previously served as a Director in Citigroups investment banking division in London, where he led the
media and internet franchises for Europe and the MENA regions within the technology, media and telecom division, from January 2008 until
October 2012. Mr. Carbeck holds a B.A. in history from the University of Chicago.
117
****
**Brian
Chan:**Mr.Chan has been serving as a member of the board of directors of AGBA as an independent director since November2022
and will continue to serve as an independent director of Delaware Parent upon the consummation of the Merger. Mr.Chan has over
23years of experience handling litigations for civil claims, intellectual property rights protection and enforcement. Since September2007
to present, Mr.Chan has been a Senior Partner at Chan, Tang& Kwok Solicitors, a member of the International Trademark
Attorneys Association. From September1995 to August2007 he was an Associate at Baker& McKenzie, Associate at Stephenson
Harwood& Lo, Partner at Stevenson, Wong& Co., Solicitors and Consultant at Benny Kong& Peter Tang. Additionally,
Mr.Chan has acted as a Counsel to various HongKong and cross-bordermergers and acquisitions and commercial matters
since August1999. Mr.Chan is also a frequent speaker on legal issues for intellectual property rights for the HongKong
Productivity council. Mr.Chan graduated with a Bachelor of Laws Degree and passed the Solicitors Finals of the Law Society
of England and Wales in 1993.
****
**Thomas
Ng:**Mr.Ng has been serving as a member of the board of directors of AGBA as an independent director since November2022
and will continue to serve as an independent director of Delaware Parent upon the consummation of the Merger. Thomas Ng has 30years
of broad experience engaging in the fields of Education, Media, Retailing Marketing and Finance. He is a pioneer of IT in education and
he was the author of Digital English Lab, one of the first series of digital books in HongKong. Since September2018,
he has been the Chief Executive Officer of e-chat, an IPFS block chain social media focused company. From March2017 to April2018,
Mr.Ng was the Chief Financial Officer of Duofu Holdings Group Co. Limited. In February2016, Mr.Ng founded Shang Finance
Limited and was the Chief Executive Officer until February2017. From March2015 to November2015, Mr.Ng was the
Chief Financial Officer of World Unionpay Group Shares Limited. In August2003, Mr.Ng established Fuji (HongKong) Co.
Ltd. and was the Chief Executive Officer until December2014. Mr.Ng obtained a Certificate of Education majoring in English
from the University of HongKong in 2000.
****
**Felix
Yun Pun Wong**Mr.Wong has been serving as a member of the board of directors of AGBA as an independent director since
November2022 and will continue to serve as an independent director of Delaware Parent upon the consummation of the Merger. Mr.Wong
currently acts as the Chief Financial Officer of Inception Growth Acquisition Limited, a publicly listed special purpose acquisition
corporation (NASDAQ:IGTA). He has acted in this capacity since April9, 2021. He hasyears of executive experience with
multiple leadership positions and a track record in helping private companies enter the public market. He has been the principal of Ascent
Partners Advisory Service Limited, a finance advisory firm, since March2020. From November2017 to December2020, Mr.Wong
held the position of Chief Financial Officer at Tottenham AcquisitionI Limited, a publicly listed special purpose acquisition corporation,
which merged with Clene Nanomedicine Inc. (NASDAQ:CLNN) in December2020. From August2015 to September2017, he
served as Chief Financial Officer at Raytron Technologies Limited, a leading Chinese national high-techenterprise. His main responsibilities
in these rules have included overseeing the financial functions of the firms, assisting in establishing corporate ventures for investment,
and working on deal origination of new businesses in the corporate groups. Prior to these efforts, he was Chief Financial Officer and
Executive Director of Tsing Capital from January2012 to July2015, where he managed four funds with a total investment amount
of US$600million and focused on environmental and clean technology investments. Mr.Wong also served as senior director and
chief financial officer of Spring Capital, a US$250million fund, from October2008 until June2011. Additionally, Mr.Wong
was the chief financial officer of Natixis Private Equity Asia from November2006 till October2008 and an associate director
of JAFCO Asia from March2002 to October2006. Mr.Wong was a finance manager for Icon Medialab from July2000 to
December2001, a senior finance manager of Nielsen from August1998 to July2000, Planning-FreeShopper from April1992
to August1998, and an auditor at PricewaterhouseCoopers from August1989 until March2000. Mr.Wong earned his Masters
of Business degree in 2003 from Curtin University in Australia and a Professional Diploma in Company Secretaryship and Administration
from the HongKong Polytechnic University in 1989.
****
**Board
Committees of the Company**
****
**Audit
Committee**
The
Audit Committee has been established in accordance with Section3(a)(58)(A)of the ExchangeAct. The principal functions
of the Audit Committee of the Company will include, among other things:
|
|
|
appointing, compensating,
retaining, replacing, and overseeing the work of the independent registered public accounting firm engaged by the Company; | |
|
|
|
pre-approvingall
audit and permitted non-auditservices to be provided by the independent registered public accounting firm engaged by the Company,
and establishing pre-approvalpolicies and procedures; | |
|
|
|
reviewing and discussing
with the independent auditors regarding all relationships the auditors have with the Company in order to evaluate their continued
independence; | |
|
|
|
setting clear hiring policies
for employees or former employees of the independent registered public accounting firm, including but not limited to, as required
by applicable laws and regulations; | |
|
|
|
setting clear policies
for audit partner rotation in compliance with applicable laws and regulations; | |
|
|
|
obtaining and reviewing
a report, at least annually, from the independent registered public accounting firm describing (i)the independent registered
public accounting firms internal quality-controlprocedures, (ii)any material issues raised by the most recent
internal quality-controlreview, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities within the preceding fiveyears respecting one or more independent audits carried out by the firm and any steps
taken to deal with such issues, and (iii)all relationships between the independent registered public accounting firm and the
Company to assess the independent registered public accounting firms independence; | |
118
|
|
|
reviewing and approving
any related party transaction required to be disclosed pursuant to SEC regulations prior to the Company entering into such transaction;
and | |
|
|
|
reviewing with management,
the independent registered public accounting firm, and the Companys legal advisors, as appropriate, of any legal, regulatory
or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published
reports that raise material issues regarding the financial statements or accounting policies of the Company and any significant changes
in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC, or other regulatory authorities. | |
The
Audit Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong each of whom qualifies as an independent director
according to the rules and regulations of the SEC and Nasdaq with respect to Audit Committee membership. We have also determined that
Mr. Felix Yun Pun Wong qualifies as an audit committee financial expert. The chair of our Audit Committee is Mr. Felix
Yun Pun Wong.
In
addition, all of the Audit Committee members meet the requirements for financial literacy under applicable SEC and Nasdaq rules. The
board of directors of the Company has adopted a new written charter for the Audit Committee, which is available on the Companys
website after adoption. The reference to the website address of the Company in this annual report does not include or incorporate by
reference the information on the AGBAs website into this annual report.
**Remuneration
Committee**
The
principal functions of the Remuneration Committee of the Company include, among other things:
|
|
|
reviewing and approving
on an annual basis the corporate goals and objectives relevant to the compensation of our executive officers, evaluating their performance
in light of such goals and objectives and determining, and approving the remuneration of our executive officers based on such evaluation; | |
|
|
|
reviewing, evaluating,
and recommending changes, if appropriate, to the remuneration of our non-employee directors; | |
|
|
|
administering the Companys
equity compensation plans and agreements with the Company executive officers and directors; | |
|
|
|
reviewing and approving
policies and procedures relating to perquisites and expense accounts of the executive officers of the Company; | |
|
|
|
assisting management in
complying with registration statement and annual report disclosure requirements; | |
|
|
|
if required, producing
a report on executive compensation to be included in the Companys annual proxy statement; and | |
|
|
|
reviewing and approving
the Companys overall compensation philosophy. | |
Our
Remuneration Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong. The board of directors has adopted a new
written charter for the Remuneration Committee, which will be available on the Companys website after adoption. The reference
to the Company website address in this annual report does not include or incorporate by reference the information on the Companys
website into this annual report.
****
119
****
**Nomination
Committee**
The
principal functions of the Nomination Committee of Company include, among other things:
|
|
|
considering qualified candidates
for positions on the board of directors of the Company; | |
|
|
|
creating and maintaining
an evaluation process to ensure that all directors to be nominated to the board of directors during the annual shareholders
meeting are appropriately qualified in accordance with the companys organizational documents and applicable law and regulations; | |
|
|
|
making recommendations
to the board of directors regarding candidates to fill vacancies on the board; | |
|
|
|
making recommendations
to the board, regarding the size and composition of the board; and | |
|
|
|
reviewing the membership
of the various committees of the board of directors and making recommendations for future appointments. | |
Trillers
Nomination Committee consists of Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun Wong. Trillers board of directors has adopted
a new written charter for the Nomination Committee, which is available on the Companys website after adoption. The reference to
the Trillers website address in this annual report does not include or incorporate by reference the information on Trillers
website into this annual report.
****
**Family
Relationships**
No
family relationships exist among any of our directors or executive officers.
****
**Code
of Ethics**
The
Companys board of directors has adopted a Code of Ethics applicable to its directors, executive officers, and team members that
complies with the rules and regulations of Nasdaq and the SEC.The Code of Ethics is available on Trillers website. In addition,
Triller intends to post on the Corporate Governance section of Trillers website all disclosures that are required by law or Nasdaq
listing standards concerning any amendments to, or waivers from, any provision of the Code of Ethics. The reference to Trillers
website address in this annual report does not include or incorporate by reference the information on the Companys website into
this annual report.
**Section
16(a) Beneficial Ownership Reporting Compliance**
Section
16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and persons
who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of our shares of ordinary share and other equity securities. These executive
officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with copies of all Section 16(a)
forms filed by such reporting persons.
Based
solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that, during
2024, our directors, executive officers, and ten percent stockholders complied with all Section 16(a) filing requirements.
**ITEM
11. EXECUTIVE COMPENSATION**
This
section provides an overview of our executive compensation programs.
We
are considered an emerging growth company within the meaning of the Securities Act for purposes of the SECs executive
compensation disclosure rules. Accordingly, our reporting obligations with respect to our named executive officers extend
only to the individuals who serve as the principal executive officer and the next two most highly compensated executive officers as of
the end of the prior fiscal year, as well as up to two additional individuals for whom disclosure would have been provided based on their
compensation levels but for the fact that the individual was not serving as an executive officer at the end of the prior fiscal year.
120
The
Named Executive Officers for 2024 fiscal year are Mr. Ng Wing Fai (Chief Executive Officer), Mr. Shu Pei Huang Desmond (Acting Chief
Financial Officer), Ms. Wong Suet Fai Almond (Chief Operating Officer), and Mr. Jeroen Nieuwkoop (Chief Strategy Officer).
**Summary
Compensation Table**
The
following table summarizes information concerning the compensation awarded to, earned by and paid to the named executive officers and
directors for services rendered to us for the years ended December 31, 2024 and 2023.
|
NameandPrincipalPosition | |
Fiscal
Year | | |
Salary
($) | | |
Bonus
($) | | |
Equity
Awards ($)(2) | | |
AllOther
Compensation ($) | | |
Total
($) | | |
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Robert E. Diamond,
Jr.(3) | |
| 2024 | | |
| 948,920 | | |
| - | | |
| 17,590,125 | | |
| - | | |
| 18,539,045 | | |
|
Chairman of the Board | |
| 2023 | | |
| 286,110 | | |
| - | | |
| - | | |
| - | | |
| 286,110 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Bobby
Sarnevesht(4) | |
| 2024 | | |
| 100,000 | | |
| - | | |
| 5,823,688 | | |
| - | | |
| 5,923,688 | | |
|
Vice
Chairman and Executive Director | |
| 2023 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
NG Wing Fai | |
| 2024 | | |
| 1,536,093 | | |
| - | | |
| 17,823,306 | | |
| - | | |
| 19,359,399 | | |
|
Chief Executive Officer
and Executive Director | |
| 2023 | | |
| 1,367,305 | | |
| - | | |
| 268,323 | | |
| - | | |
| 1,635,628 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
SHU Pei Huang, Desmond | |
| 2024 | | |
| 352,604 | | |
| - | | |
| 2,025,108 | | |
| - | | |
| 2,377,712 | | |
|
Acting Chief Financial Officer | |
| 2023 | | |
| 351,455 | | |
| - | | |
| 139,734 | | |
| - | | |
| 491,189 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
WONG Suet Fai, Almond | |
| 2024 | | |
| 453,623 | | |
| - | | |
| 2,071,449 | | |
| - | | |
| 2,525,072 | | |
|
Chief Operating Officer | |
| 2023 | | |
| 479,624 | | |
| - | | |
| 139,734 | | |
| 321 | | |
| 619,679 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Jeroen Nieuwkoop | |
| 2024 | | |
| 484,555 | | |
| - | | |
| 2,863,345 | | |
| - | | |
| 3,347,900 | | |
|
Chief Strategy Officer | |
| 2023 | | |
| 457,433 | | |
| - | | |
| 139,734 | | |
| - | | |
| 597,167 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Richard Kong(5) | |
| 2024 | | |
| 156,309 | | |
| - | | |
| 77,970 | | |
| 333 | | |
| 234,612 | | |
|
Deputy Chief Financial Officer
and Company Secretary | |
| 2023 | | |
| 309,949 | | |
| - | | |
| 27,218 | | |
| 641 | | |
| 337,808 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Brian Chan(6) | |
| 2024 | | |
| 46,154 | | |
| - | | |
| 339,423 | | |
| - | | |
| 385,577 | | |
|
Independent Director | |
| 2023 | | |
| 46,154 | | |
| - | | |
| - | | |
| - | | |
| 46,154 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Thomas Ng(6) | |
| 2024 | | |
| 46,154 | | |
| - | | |
| 339,423 | | |
| - | | |
| 385,577 | | |
|
Independent Director | |
| 2023 | | |
| 46,154 | | |
| - | | |
| - | | |
| - | | |
| 46,154 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Felix Yun Pun Wong(6) | |
| 2024 | | |
| 46,154 | | |
| - | | |
| 339,423 | | |
| - | | |
| 385,577 | | |
|
Independent Director | |
| 2023 | | |
| 46,154 | | |
| - | | |
| - | | |
| - | | |
| 46,154 | | |
|
(1) |
Represents
all amounts earned as salary during the applicable fiscal year. For fiscal year 2024, the salary amounts have been converted to U.S.
Dollars (USD) from Hong Kong Dollars (HKD) using the exchange rate of USD1 to HKD7.8 as of December 31, 2024. | |
|
(2) |
For the
fiscal year of 2024, these share awards were granted in 2022 to 2024 and vested in 2023 and 2024. | |
|
(3) |
Resigned
on December 12, 2024. | |
|
(4) |
Appointed
on October 15, 2024 and resigned on May 27, 2025. | |
|
(5) |
Resigned
on June 30, 2024. | |
|
(6) |
Directors
began receiving cash fees under our director compensation program following the Closing. | |
**
*Executive
Compensation*
Following
the Closing of the Business Combination, we have deployed an executive compensation program that is consistent with our existing compensation
policies and philosophies, which are designed to align compensation with business objectives and the creation of stockolder value, while
enabling us to attract, motivate, and retain individuals who contribute to long-term success. We also note that decisions on the executive
compensation program will be made by the Remuneration Committee. The following discussion is based on the present expectations as to
the executive compensation program to be adopted by the Remuneration Committee. The executive compensation program actually adopted will
depend on the judgment of the members of the Remuneration Committee and may differ from that set forth in the following discussion. We
anticipate, however, that compensation for the Named Executive Officers will reflect their current compensation in both form and amount.
121
*Employment
Agreements*
Pursuant
to the Business Combination Agreement, we entered into employment agreements with each of the Named Executive Officers and directors.
The
Named Executive Officers base salaries is set pursuant to the employment agreements. We anticipate that the salaries of the Named
Executive Officers will be reviewed annually by the Remuneration Committee based upon advice and counsel of its advisors.
**
*Equity-Based
Awards*
We
have granted the equity-based awards to reward past or long-term performance of the Named Executive Officers and other high-performing
employees. We believe that providing a meaningful portion of the total compensation package in the form of equity-based awards will align
the incentives of our executive officers with the interests of our stockholders and serve to motivate and retain the individual executives.
By extending the same incentives to all of our employees, we believe that we will be able to reward exceptional employees for their contributions
to AGBA and promote continued loyalty. Equity-based awards will be awarded under the Share Award Scheme.
*Other
Compensation*
We
continue to maintain various employee benefit plans, including health and retirement plans, comparable to those already in place in which
the Named Executive Officers will participate.
****
**ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**
The
following table sets forth certain information regarding the actual ownership of the Companys common stock as of December 24,
2025. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company
believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated
as beneficially owned. Subject to the paragraph above, the percentage ownership of issued shares is based on 197,267,897 shares of common
stock of Triller Group. Except as disclosed otherwise, the business address for each of the following entities or individuals is c/o
Triller Group Inc., 7119 West Sunset Boulevard, Suite 782, Los Angeles, CA 90046.
|
| |
Common
Stock | | |
Series
A-1
Preferred Stock | | |
Series
B
Preferred Stock | | |
| | |
|
Name
of Beneficial Owner | |
Number
of Shares Beneficially Owned | | |
% | | |
Number
of Shares Beneficially Owned | | |
% | | |
Number
of Shares Beneficially Owned | | |
% | | |
Percentageof
Voting
Power | | |
|
Greater than 5% stockholders: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
TAG
Holdings Limited(1) | |
| 26,868,938 | | |
| 13.6 | % | |
| - | | |
| | | |
| - | | |
| | | |
| 5.2 | % | |
|
Eagle
Legacy Limited(2) | |
| 4,028,840 | | |
| 2.0 | % | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
Oceana
Glory Limited(3) | |
| 4,028,840 | | |
| 2.0 | % | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
Tsai
Ming Hsing, Richard(4) | |
| 1,572,696 | | |
| 1.0 | % | |
| 11,801,804 | | |
| 100 | % | |
| - | | |
| | | |
| 2.5 | % | |
|
Green
Nature Limited(5) | |
| - | | |
| | | |
| - | | |
| | | |
| 30,851 | | |
| 100 | % | |
| 59.6 | % | |
|
Ryan
Kavanaugh(6) | |
| 9,253,130 | | |
| 4.7 | % | |
| | | |
| | | |
| - | | |
| | | |
| 1.8 | % | |
|
Named
Executive Officers and Directors: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Ng
Wing Fai(7) | |
| 7,723,865 | | |
| 3.9 | % | |
| - | | |
| | | |
| - | | |
| | | |
| 1.5 | % | |
|
Shu
Pei Huang, Desmond(8) | |
| 1,013,809 | | |
| * | | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
Bobby
Sarnevesht(9) | |
| 11,724,329 | | |
| 5.9 | % | |
| - | | |
| | | |
| - | | |
| | | |
| 2.3 | % | |
|
Mark
Carbeck | |
| - | | |
| | | |
| - | | |
| | | |
| - | | |
| | | |
| - | | |
|
Brian
Chan | |
| 77,460 | | |
| * | | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
Thomas
Ng | |
| 77,460 | | |
| * | | |
| - | | |
| | | |
| - | | |
| | | |
| - | | |
|
Felix
Yun Pun Wong | |
| 77,460 | | |
| * | | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
Roger
C. Kennedy (10) | |
| 12,727,272 | | |
| 6.5 | % | |
| - | | |
| | | |
| - | | |
| | | |
| * | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
All current
executive officers and directors as a group (7 persons) | |
| 20,694,383 | | |
| 10.5 | % | |
| - | | |
| | | |
| - | | |
| | | |
| 4.0 | % | |
|
* |
Less than 1% | |
122
|
(1) |
TAG Holdings Limited (TAG)
has undertaken not to make any such distribution to its ultimate beneficial shareholders. Nothing in this undertaking, however, shall
prevent TAG, subject to compliance with applicable law, from pledging or encumbering its Triller Group Common Stock or selling or
otherwise disposing of any or all of the Triller Group Common Stock to any other person or persons for value consideration. TAGs
mailing address is AGBA Tower, 68 Johnston Road, Wan Chai, Hong Kong. | |
|
(2) |
Eagle Legacy Limited is
an ultimate beneficial shareholder of TAG. Shares held by Eagle Legacy Limited are beneficially owned and controlled by Mr. Tsai
Ming Hsing, Richard. The Tsai family is the lead shareholder of the Fubon Group of Taiwan, a leading conglomerate with diverse businesses
including Asia-wide banking operations, insurance business, multimedia technology and telecommunications. | |
|
(3) |
Oceana Glory Limited is
an ultimate beneficial shareholder of TAG. Shares held by Oceana Glory Limited are beneficially owned and controlled by Mr. Tsai
Ming Hsing, Richard. The Tsai family is the lead shareholder of the Fubon Group of Taiwan, a leading conglomerate with diverse businesses
including Asia-wide banking operations, insurance business, multimedia technology and telecommunications. | |
|
(4) |
1,572,696 shares of Triller
Group Common Stock are held by Total Formation Inc. 11,801,804 shares of Triller Group Series A-1 Preferred Stock are convertible
into 11,801,804 shares of Triller Group Common Stock. The 11,801,804 shares of Triller Group Series A-1 Preferred Stock are held
as follows: 8,109,015 shares held by Total Formation Inc., 2,584,952 shares held by Castle Lion Investments Limited, and 1,107,837
shares held by Fubon Financial Holding Venture Capital Co. Mr. Tsai Ming Hsing, Richard controls Total Formation Inc., Castle Lion
Investments Limited and Fubon Financial Holding Venture Capital Co. | |
|
(5) |
Green Nature Limited (GNL)
is a British Virgin Islands company. Each share of Triller Group Series B Preferred Stock is entitled to 10,000 votes. GNL has voting
power over such securities but disclaims any pecuniary interest therein. Mr. Tsai Ming
Hsing, Richard controls GNL and may be deemed a beneficial owner of such securities with voting and dispositive control over such
securities. Mr. Tsai disclaims any beneficial ownership of such securities (including voting and dispositive control over such securities). | |
|
(6) |
Consists of 3,497,635 shares
of Triller Group Common Stock owned of record by Ms. Peterson in her capacity as trustee of the R. Kavanaugh trust, 2,035,395 shares
of Triller Group Common Stock owned of record by Share Loan Holding Vehicle LLC, and 3,720,100 shares of Triller Group Common Stock
owned of record by Proxima Media LLC. Ms. Kristine Peterson, as the trustee of the aforementioned trust and managing member of the
aforementioned limited liability companies, may be deemed to exercise investment control over such shares. Ms. Peterson disclaims
beneficial ownership of such shares except to the extent of her pecuniary interest therein. | |
|
(7) |
Consists of (i) 7,336,655
shares of Triller Group Common Stock and (ii) 387,210 shares of Triller Group Common Stock underlying 774,420 Triller Group Warrants
excisable within 60 days. | |
|
(8) |
Consists of (i) 997,899
shares of Triller Group Common Stock and (ii) 15,910 shares of Triller Group Common Stock underlying 38,210 Triller Group Warrants
excisable within 60 days. | |
|
(9) |
Mr. Sarnevesht is the trustee
of BAS Living Trust and therefore may be deemed to exercise investment control over such shares. Julia Hashemieh, the mother of Bobby
Sarnevesht, is the trustee of the AS Trust and therefore may be deemed to exercise control over such shares. | |
****
|
(10) | The
principal business address of Roger C. Kennedy is 71 Fort Street, 3rd Floor, George Town, Grand Cayman, KY1-1111, Cayman Islands. |
|
**ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**
****
**Related
Party Transaction Policy**
On
November 10, 2022, our Board adopted a written policy regarding the review and approval or disapproval by our Audit Committee of transactions
between us, or any of our subsidiaries, and any related person (defined to include our executive officers, directors or director nominees,
any stockholder beneficially owning in excess of 5% of our ordinary shares or securities exchangeable for our ordinary share, and any
immediate family member of any of the foregoing persons) (the Related Person Transaction Policy). In reviewing related
person transactions, our Audit Committee considers all relevant facts and circumstances, including the extent of the related persons
direct or indirect interest in the transaction. Any member of the Audit Committee who is a related person with respect to a transaction
under review will not be permitted to participate in the deliberations or to vote on the transaction.
123
Certain
related person transactions described below were consummated prior to our adoption of the formal, written policy described above, and,
accordingly, the foregoing policies and procedures were not followed with respect to these transactions. However, we believe that the
terms obtained and consideration that we paid or received, as applicable, in connection with the transactions described below were comparable
to terms available or amounts that would be paid or received, as applicable, in arms-length transactions at such time.
****
**Administrative
Services Agreements**
**
*TAG
Financial Holdings Service Agreements*
On
June 24, 2021, each of OnePlatform Wealth Management Limited (OWM), OnePlatform International Property Limited (OIP),
OnePlatform Asset Management Limited (OAM), and HongKong Credit Corporation Limited (HKCC) entered
into separate, but substantially similar, Service Agreements with TAG Financial Holdings Limited (TAG Financial Holdings),
a member of the Legacy Group. As the members of the Legacy Group presently share office space in the AGBA Tower (see *Information
about AGBAProperty* for additional information about the office space used by AGBA), TAG Financial Holdings,
pursuant to these four agreements, agreed to provide certain premises and administrative services to each of OWM, OIP, OAM, and HKCC.With
respect to premises services, TAG Financial Holdings agreed to pay for, among other things, building management fees, government rates
and rent, office rent, and lease-relatedinterest and depreciation for OWM, OIP, OAM, and HKCC, subject to reimbursement. With respect
to administrative services, TAG Financial Holdings agreed to pay for, among other things, office consumables, cleaning fees, A/C, electricity,
and water for OWM, OIP, OAM, and HKCC, subject to reimbursement. The service fees are charged in accordance with a standard formula included
in each of the contracts, corresponding to their office space occupancy and employee headcount respectively.
Pursuant
to these service agreements and their predecessor arrangements, AGBA, collectively, paid TAG Financial Holdings US$6,039,520 and US$3,190,064
for theyears ended December 31, 2023 and 2022, respectively, for premises and administrative expenses.
The
management of AGBA anticipates that these Service Agreements will continue after the Business Combination and until either party thereto
provides one month written notice of termination, to ensure continued smooth operation on a stand-alone basis.
**OnePlatform
Asset Management Limited**
**
*Fund
Asset Management Service*
JFA
Capital is a closed-endedinvestment vehicle incorporated in the Cayman Islands and a member of the Legacy Group. Upon its incorporation
JFA Capital engaged a third-partyfund manager who, in turn, engaged OnePlatform Asset Management (OAM) as a sub-manager.
On May7, 2018, JFA Capital and OAM agreed for JFA Capital to terminate its existing management arrangement and appoint OAM as its
sole manager. OAM is licensed by the HongKong Securities and Futures Commission under type 1 (Dealing in securities), type 4 (Advising
on securities), and type 9 (asset management). OAM is also a professional investor as defined under the Securities and
Futures Ordinance of HongKong.
OAM,
accordingly, provides management of JFA Capitals portfolio assets for a management fee and a performance fee, as dictated by the
management agreement. For theyears ended December 31, 2024 and 2023, JFA Capital paid OAM US$906,468 and US$900,993, respectively.
The arrangement is non-exclusive, and OAM is permitted to invest in or advise other investment funds. OAM is also permitted to delegate
its functions, powers, and duties to any person, subject to remaining liable for the actions of its delegate. The term of this management
arrangement is indefinite, subject to 90days notice by either party, and the management of AGBA anticipates that OAM will
continue to provide fund management services to JFA Capital following the Business Combination.
124
In
addition to JFA Capital, OAM also provides management services for other funds, including NSD Capital, a third-partyCayman-incorporatedfund.
For theyears ended December 31, 2024 and 2023, NSD Capital paid OAM US$69,571 and US$69,150, respectively, for management services.
The management of AGBA anticipate that OAM will continue to provide fund management services to NSD Capital following the Business Combination.
**Director
Independence**
Our
board of directors has undertaken a review of the independence of each director. Mr. Brian Chan, Mr. Thomas Ng, and Mr. Felix Yun Pun
Wong are all non-employee directors, all of whom our Board has determined to be independent pursuant to Nasdaq rules. All of the members
of our Audit Committee, Nomination Committee and Remuneration Committee are independent pursuant to Nasdaq rules.
**ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
****
**Public
Accounting Fees**
The
following table sets forth fees billed by our auditors during the last two fiscal years for services rendered for the audit of our annual
financial statements and the review of our quarterly financial statements, services by our auditors that are reasonably related to the
performance of the audit or review of our financial statements and that are not reported as audit fees, services rendered in connection
with tax compliance, tax advice and tax planning, and all other fees for services rendered.
The
following table shows the aggregate fees from our current principal accounting firm, WWC, P.C. for the fiscal years as shown.
|
(US Dollars) | |
Years Ended December 31, | | |
|
Category | |
2023 | | |
2024 | | |
|
WWC, P.C.: | |
| | |
| | |
|
Audit Fees | |
$ | 625,000 | | |
| 1,200,000 | | |
|
Audit Related Fees | |
| | | |
| | | |
|
Tax Fees | |
| | | |
| | | |
|
All Other Fees | |
| | | |
| | | |
|
| |
$ | 625,000 | | |
| 1,200,000 | | |
Audit
fees for the fiscal years ended December 31, 2024 and 2023 rendered by WWC, P.C. relate to professional services rendered for the audit
of our consolidated financial statements, quarterly reviews, and issuance of consents.
125
**PART
IV**
****
**ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**
|
(a) |
Financial Statements: | |
|
|
(1) |
The financial statements
required to be included in this Annual Report on Form 10-K are included in Item 8 herein. | |
|
|
(2) |
All supplemental schedules
have been omitted since the information is either included in the financial statements or the notes thereto or they are not required
or are not applicable. | |
|
|
(3) |
See attached Exhibit Index of this Annual Report on
Form 10-K | |
|
(b) |
Exhibits | |
The
following documents are filed as exhibits to this annual report, including those exhibits incorporated herein by reference to one of
our prior filings under the Securities Act or the ExchangeAct.
|
ExhibitNo. |
|
Description | |
|
2.1 |
|
Amended
and Restated Merger Agreement dated August 30, 2024 by, among others, AGBA Group Holding Limited and Triller Corp. (incorporated
by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by AGBA on September 3, 2024) | |
|
2.2 |
|
Amendment
No. 1 to Amended and Restated Merger Agreement (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed
by Trilleron October 21, 2024) | |
|
3.1 |
|
Certificate
of Domestication of AGBA Group Holding Limited (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed
by Trilleron October 21, 2024) | |
|
3.2 |
|
Certificate
of Incorporation of Triller Group Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by Trilleron
October 21, 2024) | |
|
3.3 |
|
Bylaws
of Triller Group Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed by Trilleron October
21, 2024) | |
|
4.1 |
|
Description of Registrants Securities* | |
|
10.1 |
|
Triller
Group Inc. 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Triller Groups 8-K filed with the SEC
on October 21, 2024) | |
|
21.1 |
|
Subsidiaries of the Registrant* | |
|
24.1 |
|
Power
of Attorney (included on signature page) | |
|
31.1 |
|
Certification
of Chief Executive Officer Pursuant to Securities Exchange Act Rule13a-14(a), as Adopted Pursuant to Section302 of the
Sarbanes-Oxley Act of 2002.* | |
|
31.2 |
|
Certification
of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.* | |
|
32.1 |
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
|
32.2 |
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
|
97.1 |
|
Clawback Policy (incorporated by reference to Exhibit 97.1 to Triller Groups 10-K filed with the SEC on March 28, 2024) | |
|
101.INS |
|
Inline XBRL Instance Document. | |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. | |
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase
Document. | |
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase
Document. | |
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. | |
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase
Document. | |
|
104 |
|
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101). | |
|
* | Filed herewith |
|
|
** | Furnished herewith |
|
**ITEM16.
FORM 10-K SUMMARY**
None.
126
**SIGNATURES**
Pursuant
to the requirements of Section13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
TRILLER GROUP INC. | |
|
|
|
| |
|
Dated: January 26, 2026 |
By: |
/s/ Wing Fai
NG | |
|
|
Name: |
Wing Fai NG | |
|
|
Title: |
Group Chief Executive Officer
(Principal Executive Officer) | |
|
|
TRILLER GROUP INC. | |
|
|
|
| |
|
Dated: January 26, 2026 |
By: |
/s/ Shu Pei
Huang, Desmond | |
|
|
Name: |
Shu Pei Huang, Desmond | |
|
|
Title: |
Acting Group Chief Financial Officer
(Principal Accounting and Financial Officer) | |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
|
Name |
|
Position |
|
Date | |
|
|
|
|
|
| |
|
/s/
Wing Fai NG |
|
Group Chief Executive Officer (Principal executive
officer) |
|
January 26, 2026 | |
|
Wing
Fai NG |
|
and Executive Director |
|
| |
|
|
|
|
|
| |
|
/s/
Brian Chan |
|
Independent Director |
|
January 26, 2026 | |
|
Brian
Chan |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Thomas Ng |
|
Independent Director |
|
January 26, 2026 | |
|
Thomas
Ng |
|
|
|
| |
|
|
|
|
|
| |
|
/s/
Felix Yun Pun Wong |
|
Independent Director |
|
January 26, 2026 | |
|
Felix
Yun Pun Wong |
|
|
|
| |
127
**TRILLER GROUP
INC. AND ITS SUBSIDIARIES**
**(Formerly
AGBA Group Holding Limited)**
****
**INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS**
| | Page | |
| | | |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 1171 ) | F-2 | |
| Consolidated Balance Sheets | F-3 | |
| Consolidated Statements of Operations and Comprehensive Loss | F-4 | |
| Consolidated Statements of Changes in Stockholders (Deficit) Equity | F-5 F-6 | |
| Consolidated Statements of Cash Flows | F-7 | |
| Notes to Consolidated Financial Statements | F-8 F-74 | |
F-1
****
****
****
**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
|
To: |
The Board of Directors and
Stockholders of | |
|
|
Triller Group Inc. (formerly
AGBA Group Holding Limited) | |
**Opinion
on the Consolidated Financial Statements**
We have audited the accompanying consolidated balance sheets of Triller
Group Inc. (formerly AGBA Group Holding Limited) and its subsidiaries (collectively the Company) as of December 31, 2024
and 2023, and the related consolidated statements of operations and comprehensive loss, changes in stockholders (deficit) equity,
and cash flows for each of the years in the two-year period ended December 31, 2024, 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 financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows
in each of the years for the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the
United States of America.
**Substantial
Doubt about the Companys Ability to Continue as a Going Concern**
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the consolidated financial statements, the Company incurred substantial losses during the year ended December 31, 2024.
For the year ended December 31, 2024, the Company recorded net loss. As of December 31, 2024, the Company had a working capital deficit
and net cash outflows from operating activities. These conditions raise substantial doubt about the Companys ability to continue
as a going concern. Managements plans in regard to these matters are also described in Note 3. The consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
**Basis
for Opinion**
****
These
consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion
on the Companys 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 Company 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 audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company 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 Companys 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.
*
****
WWC,
P.C.
Certified
Public Accountants
PCAOB
ID No. 1171
We
have served as the Companys auditor since 2022.
San
Mateo, California
January 26, 2026
F-2
**TRILLER
GROUP INC. AND ITS SUBSIDIARIES**
**(FORMERLY
AGBA GROUP HOLDING LIMITED)**
**CONSOLIDATED
BALANCE SHEETS**
**(Currency
expressed in thousands of United States Dollars, except for share and per share data, or otherwise noted)**
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
ASSETS | |
| | |
| | |
|
Current assets: | |
| | |
| | |
|
Cash and cash equivalents | |
$ | 3,065 | | |
$ | 1,861 | | |
|
Restricted cash | |
| 14,196 | | |
| 16,817 | | |
|
Accounts receivable, net | |
| 2,873 | | |
| 2,971 | | |
|
Accounts receivable, net, related parties | |
| | | |
| 1,094 | | |
|
Loans and notes receivables, net | |
| 92 | | |
| 1,106 | | |
|
Deposit, prepayments, and other receivables, net | |
| 1,860 | | |
| 1,770 | | |
|
Assets held for sale | |
| 2,003 | | |
| | | |
|
Total current assets | |
| 24,089 | | |
| 25,619 | | |
|
| |
| | | |
| | | |
|
Non-current assets: | |
| | | |
| | | |
|
Rental deposit, net | |
| | | |
| 961 | | |
|
Loans receivables, net | |
| 1,034 | | |
| 1,055 | | |
|
Long-term investments, net | |
| 24,930 | | |
| 25,202 | | |
|
Long-term investments, net, related party | |
| 525 | | |
| 523 | | |
|
Property and equipment, net | |
| | | |
| 1,721 | | |
|
Right-of-use asset, net | |
| | | |
| 11,508 | | |
|
Intangible assets, net | |
| | | |
| | | |
|
Total non-current assets | |
| 26,489 | | |
| 40,970 | | |
|
| |
| | | |
| | | |
|
TOTAL ASSETS | |
$ | 50,578 | | |
$ | 66,589 | | |
|
| |
| | | |
| | | |
|
LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY | |
| | | |
| | | |
|
Current liabilities: | |
| | | |
| | | |
|
Accounts payable and other current liabilities | |
$ | 149,901 | | |
$ | 19,754 | | |
|
Other current liabilities, related parties | |
| 1,251 | | |
| | | |
|
Escrow liabilities | |
| 14,196 | | |
| 16,817 | | |
|
Borrowings | |
| 12,707 | | |
| 1,805 | | |
|
Borrowings, related party | |
| 29,181 | | |
| 5,000 | | |
|
Convertible debts, net | |
| 32,552 | | |
| | | |
|
Convertible debts, related party | |
| 53,106 | | |
| | | |
|
Amount due to stockholder | |
| | | |
| 2,906 | | |
|
Income tax payable | |
| | | |
| 329 | | |
|
Warrant liabilities | |
| 977 | | |
| | | |
|
Operating lease liabilities, current | |
| 1,867 | | |
| 1,229 | | |
|
Total current liabilities | |
| 295,738 | | |
| 47,840 | | |
|
| |
| | | |
| | | |
|
Non-current liabilities: | |
| | | |
| | | |
|
Operating lease liabilities, non-current | |
| 807 | | |
| 10,646 | | |
|
Total non-current liabilities | |
| 807 | | |
| 10,646 | | |
|
| |
| | | |
| | | |
|
TOTAL LIABILITIES | |
| 296,545 | | |
| 58,486 | | |
|
| |
| | | |
| | | |
|
Commitments and contingencies (Note 25) | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Stockholders (deficit) equity*: | |
| | | |
| | | |
|
Preferred stock, $0.001 par value, 100,000,000 shares authorized | |
| | | |
| | | |
|
Series A-1 preferred stock, $0.001 par value, 50,000,000 and nil shares authorized, 11,801,804 shares and nil issued and outstanding as of December 31, 2024 and 2023, respectively | |
| 12 | | |
| | | |
|
Series B preferred stock, $0.001 par value, 50,000,000 and nil shares authorized, 30,851 shares and nil issued and outstanding as of December 31, 2024 and 2023, respectively | |
| | ** | |
| | | |
|
Common stock, $0.001 par value; 150,000,000,000 and 484,125,000 shares authorized, 138,143,817 and 33,240,991 shares issued and outstanding as of December 31, 2024 and 2023, respectively# | |
| 138 | | |
| 33 | | |
|
Series A-1 preferred stock to be issued | |
| 12 | | |
| | | |
|
Common stock to be issued# | |
| 15 | | |
| 2 | | |
|
Common stock held in escrow | |
| 24 | | |
| | | |
|
Additional paid-in capital | |
| 958,017 | | |
| 74,142 | | |
|
Accumulated other comprehensive loss | |
| (548 | ) | |
| (473 | ) | |
|
Accumulated deficit | |
| (1,203,637 | ) | |
| (65,601 | ) | |
|
Total stockholders (deficit) equity | |
| (245,967 | ) | |
| 8,103 | | |
|
TOTAL LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY | |
$ | 50,578 | | |
$ | 66,589 | | |
| # | Giving retroactive effect to the forward stock split and reverse stock split (see Note 19) | |
| * | Giving retroactive effect to the AGBA Domestication completed on October 15, 2024 (see Note 1) | |
| ** | Less than $1,000 | |
See
accompanying notes to consolidated financial statements.
F-3
**TRILLER
GROUP INC. AND ITS SUBSIDIARIES**
**(FORMERLY
AGBA GROUP HOLDING LIMITED)**
**CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**
**(Currency expressed in
thousands of United States Dollars, except for share and per share data, or otherwise noted)**
****
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Revenues | |
| | |
| | |
|
Loan interest income | |
$ | 151 | | |
$ | 157 | | |
|
Commissions | |
| 20,348 | | |
| 50,069 | | |
|
Recurring asset management service fees | |
| 1,887 | | |
| 2,993 | | |
|
Recurring asset management service fees, related parties | |
| | | |
| 970 | | |
|
Advertising revenue | |
| 276 | | |
| | | |
|
SaaS fees | |
| 707 | | |
| | | |
|
Subscription fee and paid-per-view
fees | |
| 4,107 | | |
| | | |
|
Total revenues | |
| 27,476 | | |
| 54,189 | | |
|
| |
| | | |
| | | |
|
Operating expenses | |
| | | |
| | | |
|
Operating expense for social media and streaming platform | |
| (4,013 | ) | |
| | | |
|
Commission expense | |
| (10,531 | ) | |
| (37,288 | ) | |
|
Sales and marketing expense | |
| (1,566 | ) | |
| (3,709 | ) | |
|
Research and development expense | |
| (3,181 | ) | |
| (4,557 | ) | |
|
Personnel and benefit expense | |
| (84,886 | ) | |
| (27,218 | ) | |
|
Legal and professional fee | |
| (22,370 | ) | |
| (13,601 | ) | |
|
Legal and professional fee, related party | |
| (949 | ) | |
| (333 | ) | |
|
Office and operating fee, related party | |
| (4,303 | ) | |
| (6,040 | ) | |
|
Provision for allowance for expected credit losses | |
| (2,549 | ) | |
| (1,077 | ) | |
|
Other general and administrative expenses | |
| (6,308 | ) | |
| (3,427 | ) | |
|
Total operating expenses | |
| (140,656 | ) | |
| (97,250 | ) | |
|
| |
| | | |
| | | |
|
Loss from operations | |
| (113,180 | ) | |
| (43,061 | ) | |
|
| |
| | | |
| | | |
|
Other income (expense) | |
| | | |
| | | |
|
Interest income | |
| 451 | | |
| 384 | | |
|
Interest expense | |
| (7,937 | ) | |
| (784 | ) | |
|
Foreign exchange (loss) gain, net | |
| (701 | ) | |
| 909 | | |
|
Impairment on property and equipment | |
| (104 | ) | |
| | | |
|
Impairment on intangible assets | |
| (1,200 | ) | |
| | | |
|
Impairment on goodwill | |
| (1,005,778 | ) | |
| | | |
|
Impairment on right-of-use assets | |
| (1,664 | ) | |
| | | |
|
Investment loss, net | |
| (15,971 | ) | |
| (6,879 | ) | |
|
Change in fair value of convertible debts | |
| 4,447 | | |
| | | |
|
Change in fair value of warrant liabilities | |
| 3,463 | | |
| 5 | | |
|
Change in fair value of forward share purchase liability | |
| | | |
| (82 | ) | |
|
Loss on settlement of forward share purchase agreement | |
| | | |
| (379 | ) | |
|
Sundry income | |
| 138 | | |
| 968 | | |
|
Total other expense, net | |
| (1,024,856 | ) | |
| (5,858 | ) | |
|
| |
| | | |
| | | |
|
Loss before income tax expense | |
| (1,138,036 | ) | |
| (48,919 | ) | |
|
Income tax expense | |
| | | |
| (287 | ) | |
|
| |
| | | |
| | | |
|
Net loss | |
| (1,138,036 | ) | |
| (49,206 | ) | |
|
| |
| | | |
| | | |
|
Comprehensive loss | |
| | | |
| | | |
|
Net loss | |
$ | (1,138,036 | ) | |
$ | (49,206 | ) | |
|
Other comprehensive loss | |
| | | |
| | | |
|
Foreign currency translation adjustment | |
| (75 | ) | |
| (88 | ) | |
|
Comprehensive loss | |
$ | (1,138,111 | ) | |
$ | (49,294 | ) | |
|
| |
| | | |
| | | |
|
Weighted average number of common stock outstanding# | |
| | | |
| | | |
|
- Basic and diluted | |
| 62,956,073 | | |
| 31,596,610 | | |
|
| |
| | | |
| | | |
|
Net loss per share# | |
| | | |
| | | |
|
- Basic and diluted | |
$ | (18.08 | ) | |
$ | (1.56 | ) | |
| # | Giving retroactive effect to the forward stock split and reverse stock split (see Note 19) | |
See
accompanying notes to consolidated financial statements.
F-4
**TRILLER
GROUP INC. AND ITS SUBSIDIARIES**
**(FORMERLY
AGBA GROUP HOLDING LIMITED)**
**CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS (DEFICIT) EQUITY***
**(Currency expressed in thousands of United States
Dollars, except for share and per share data, or otherwise noted)**
|
| |
For the year ended December 31, 2024 | | |
|
| |
| |
Series A-1 preferred stock | | |
Series B preferred stock | | |
Common stock | | |
Series A-1 preferred stock to be issued | | |
Common stock to be issued | | |
Common stock held in escrow | | |
Additional | | |
Accumulated other | | |
| | |
Total
stockholders | | |
|
| |
Note | |
No. of share | | |
Amount | | |
No. of share | | |
Amount | | |
No. of share# | | |
Amount | | |
No. of share | | |
Amount | | |
No. of share# | | |
Amount | | |
No. of share | | |
Amount | | |
paid-in capital | | |
comprehensive loss | | |
Accumulated deficit | | |
(deficit)
equity | | |
|
Balance as of January 1, 2024 | |
| |
| | | |
$ | | | |
| | | |
$ | | | |
| 33,240,991 | | |
$ | 33 | | |
| | | |
$ | | | |
| 2,350,081 | | |
$ | 2 | | |
| | | |
$ | | | |
$ | 74,142 | | |
$ | (473 | ) | |
$ | (65,601 | ) | |
$ | 8,103 | | |
|
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Issuance of common stock to settle finder fee | |
(19)(a)(iv) | |
| | | |
| | | |
| | | |
| | | |
| 484,125 | | |
| 1 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 402 | | |
| | | |
| | | |
| 403 | | |
|
Issuance of common stock and warrants for private placement | |
(19)(a)(v) | |
| | | |
| | | |
| | | |
| | | |
| 3,557,932 | | |
| 3 | | |
| | | |
| | | |
| (2,139,252 | ) | |
| (2 | ) | |
| | | |
| | | |
| (490 | ) | |
| | | |
| | | |
| (489 | ) | |
|
Issuance of common stock to independent directors | |
(19)(a)(viii) | |
| | | |
| | | |
| | | |
| | | |
| 290,475 | | |
| | ** | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 1,018 | | |
| | | |
| | | |
| 1,018 | | |
|
Stock-based compensation to consultants | |
(19)(a)(iii),(d)(i) | |
| | | |
| | | |
| | | |
| | | |
| 3,157,068 | | |
| 3 | | |
| | | |
| | | |
| 9,682,500 | | |
| 10 | | |
| | | |
| | | |
| 10,347 | | |
| | | |
| | | |
| 10,360 | | |
|
Stock-based compensation to directors, officers, and employees | |
(19)(a)(i), (a)(ii), (a)(vii),(d)(ii) | |
| | | |
| | | |
| | | |
| | | |
| 9,553,558 | | |
| 10 | | |
| | | |
| | | |
| 5,129,382 | | |
| 5 | | |
| | | |
| | | |
| 67,103 | | |
| | | |
| | | |
| 67,118 | | |
|
Shares issued for Investment H | |
(19)(a)(vi) | |
| | | |
| | | |
| | | |
| | | |
| 3,558,319 | | |
| 4 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 18,453 | | |
| | | |
| | | |
| 18,457 | | |
|
Issuance of common stock for commitment fee | |
(19)(a)(ix) | |
| | | |
| | | |
| | | |
| | | |
| 480,426 | | |
| | ** | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 1,441 | | |
| | | |
| | | |
| 1,441 | | |
|
Issuance of Series A-1, Series B preferred stocks and common stocks, replacement warrants and Series A-1 preferred stocks to be issued in related to the Merger Transaction | |
(19)(a)(x),(b),(c),(e) | |
| 11,801,804 | | |
| 12 | | |
| 30,851 | | |
| | ** | |
| 83,468,631 | | |
| 84 | | |
| 11,801,804 | | |
| 12 | | |
| | | |
| | | |
| 24,206,246 | | |
| 24 | | |
| 785,601 | | |
| | | |
| | | |
| 785,733 | | |
|
Settlement of payables with common stock held in escrow | |
(19)(a)(xi),(e) | |
| | | |
| | | |
| | | |
| | | |
| 183,815 | | |
| | ** | |
| | | |
| | | |
| | | |
| | | |
| (183,815 | ) | |
| | ** | |
| | | |
| | | |
| | | |
| | | |
|
Fractional shares from forward and reverse splits | |
(19)(a)(xii) | |
| | | |
| | | |
| | | |
| | | |
| 168,477 | | |
| | ** | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | ** | |
|
Foreign currency translation adjustment | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (75 | ) | |
| | | |
| (75 | ) | |
|
Net loss for the year | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (1,138,036 | ) | |
| (1,138,036 | ) | |
|
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Balance as of December 31, 2024 | |
| |
| 11,801,804 | | |
$ | 12 | | |
| 30,851 | | |
$ | | ** | |
| 138,143,817 | | |
$ | 138 | | |
| 11,801,804 | | |
$ | 12 | | |
| 15,022,711 | | |
$ | 15 | | |
| 24,022,431 | | |
$ | 24 | | |
$ | 958,017 | | |
$ | (548 | ) | |
$ | (1,203,637 | ) | |
$ | (245,967 | ) | |
| # | Giving retroactive effect to the forward stock split and reverse stock split (see Note 19) | |
| * | Giving retroactive effect to the AGBA Domestication completed on October 15, 2024 (see Note 1) | |
| ** | Less than $1,000 | |
F-5
|
| |
For
the year ended December 31, 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 | |
| 28,261,757 | | |
$ | 28 | | |
| 806,068 | | |
$ | 1 | | |
$ | 43,902 | | |
$ | (385 | ) | |
$ | (16,395 | ) | |
$ | 27,151 | | |
|
Issuance
of common stocks to settle finder fee | |
| 1,052,446 | | |
| 1 | | |
| | | |
| | | |
| 3,999 | | |
| | | |
| | | |
| 4,000 | | |
|
Issuance of holdback shares | |
| 806,068 | | |
| 1 | | |
| (806,068 | ) | |
| (1 | ) | |
| | | |
| | | |
| | | |
| | | |
|
Issuance
of common stock for private placement | |
| | | |
| | | |
| 1,279,688 | | |
| 1 | | |
| 1,849 | | |
| | | |
| | | |
| 1,850 | | |
|
Issuance
of commons stock for commitment fee | |
| 290,475 | | |
| | | |
| | | |
| | | |
| 276 | | |
| | | |
| | | |
| 276 | | |
|
Stock-based
compensation | |
| 2,830,245 | | |
| 3 | | |
| 1,070,393 | | |
| 1 | | |
| 11,523 | | |
| | | |
| | | |
| 11,527 | | |
|
Forgiveness
of amount due to the stockholder | |
| | | |
| | | |
| | | |
| | | |
| 12,593 | | |
| | | |
| | | |
| 12,593 | | |
|
Foreign
currency translation adjustment | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (88 | ) | |
| | | |
| (88 | ) | |
|
Net
loss for the year | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (49,206 | ) | |
| (49,206 | ) | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Balance
as of December 31, 2023 | |
| 33,240,991 | | |
$ | 33 | | |
| 2,350,081 | | |
$ | 2 | | |
$ | 74,142 | | |
$ | (473 | ) | |
$ | (65,601 | ) | |
$ | 8,103 | | |
|
|
# |
Giving retroactive effect
to the forward stock split and reverse stock split (see Note 19) | |
See
accompanying notes to consolidated financial statements.
F-6
**TRILLER
GROUP INC. AND ITS SUBSIDIARIES**
**(FORMERLY
AGBA GROUP HOLDING LIMITED)**
**CONSOLIDATED
STATEMENTS OF CASH FLOWS**
**(Currency expressed in thousands of United States
Dollars, except for share and per share data, or otherwise noted)**
****
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Cash flows from operating activities: | |
| | |
| | |
|
Net loss | |
$ | (1,138,036 | ) | |
$ | (49,206 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
|
Stock-based compensation | |
| 77,774 | | |
| 11,235 | | |
|
Lease expense | |
| 2,574 | | |
| 1,496 | | |
|
Depreciation and amortization | |
| 267 | | |
| 261 | | |
|
Interest income | |
| (437 | ) | |
| (34 | ) | |
|
Interest expense on borrowings | |
| 7,937 | | |
| 784 | | |
|
Foreign exchange loss (gain), net | |
| 701 | | |
| (909 | ) | |
|
Impairment on property and equipment | |
| 104 | | |
| | | |
|
Impairment on goodwill | |
| 1,005,778 | | |
| | | |
|
Impairment on intangible assets | |
| 1,200 | | |
| | | |
|
Impairment on right-of-use assets | |
| 1,664 | | |
| | | |
|
Investment loss, net | |
| 15,971 | | |
| 6,879 | | |
|
Allowance for expected credit losses | |
| 2,549 | | |
| 1,077 | | |
|
Change in fair value of warrant liabilities | |
| (3,463 | ) | |
| (5 | ) | |
|
Change in fair value of forward share purchase liability | |
| | | |
| 82 | | |
|
Change in fair value of convertible debts | |
| (4,447 | ) | |
| | | |
|
Loss (gain) on disposal of property and equipment | |
| 57 | | |
| (665 | ) | |
|
Loss on settlement of forward share purchase agreement | |
| | | |
| 379 | | |
|
Reversal of annual bonus accrued in prior year | |
| | | |
| (3,595 | ) | |
|
| |
| | | |
| | | |
|
Change in operating assets and liabilities: | |
| | | |
| | | |
|
Accounts receivable | |
| 2,456 | | |
| (1,187 | ) | |
|
Loans receivable | |
| (89 | ) | |
| (16 | ) | |
|
Deposits, prepayments, and other receivables | |
| (782 | ) | |
| (2,495 | ) | |
|
Accounts payable and other current liabilities | |
| 2,828 | | |
| 6,894 | | |
|
Accounts payable and other current liabilities, related parties | |
| 1,251 | | |
| | | |
|
Escrow liabilities | |
| (2,621 | ) | |
| (12,671 | ) | |
|
Operating lease liabilities | |
| (1,944 | ) | |
| (1,130 | ) | |
|
Income tax payable | |
| (329 | ) | |
| 543 | | |
|
Net cash used in operating activities | |
| (29,037 | ) | |
| (42,283 | ) | |
|
| |
| | | |
| | | |
|
Cash flows from investing activities: | |
| | | |
| | | |
|
Proceeds from sale of long-term investments | |
| 2,565 | | |
| 3,977 | | |
|
Cash from acquisition of subsidiaries | |
| 1,175 | | |
| | | |
|
Purchase of notes receivable | |
| | | |
| (589 | ) | |
|
Purchase of long-term investments | |
| | | |
| (288 | ) | |
|
Dividend received from long-term investments | |
| | | |
| 1,670 | | |
|
Proceeds from sale of property and equipment | |
| | | |
| 6,127 | | |
|
Purchase of property and equipment | |
| | | |
| (105 | ) | |
|
Net cash provided by investing activities | |
| 3,740 | | |
| 10,792 | | |
|
| |
| | | |
| | | |
|
Cash flows from financing activities: | |
| | | |
| | | |
|
Advances from stockholder | |
| 15,637 | | |
| 9,343 | | |
|
Proceeds from convertible debts | |
| 28,728 | | |
| | | |
|
Repayments of convertible debts | |
| (23,860 | ) | |
| | | |
|
Settlement of forward share purchase agreement | |
| | | |
| (13,953 | ) | |
|
Proceeds from borrowings | |
| 7,433 | | |
| 7,747 | | |
|
Repayments of borrowings | |
| (3,892 | ) | |
| (6,027 | ) | |
|
Proceeds from private placement | |
| | | |
| 1,850 | | |
|
Net cash provided by (used in) financing activities | |
| 24,046 | | |
| (1,040 | ) | |
|
| |
| | | |
| | | |
|
Effect on exchange rate change on cash, cash equivalents and restricted cash | |
| (166 | ) | |
| (85 | ) | |
|
| |
| | | |
| | | |
|
Net change in cash, cash equivalent and restricted cash | |
| (1,417 | ) | |
| (32,616 | ) | |
|
Beginning of year | |
| 18,678 | | |
| 51,294 | | |
|
| |
| | | |
| | | |
|
End of year | |
$ | 17,261 | | |
$ | 18,678 | | |
|
| |
| | | |
| | | |
|
Supplemental cash flow information: | |
| | | |
| | | |
|
Cash received from income tax refund | |
$ | | | |
$ | 427 | | |
|
Cash paid for income taxes | |
$ | 315 | | |
$ | 172 | | |
|
Cash received from interest | |
$ | 451 | | |
$ | 349 | | |
|
Cash paid for interest | |
$ | 223 | | |
$ | 784 | | |
|
| |
| | | |
| | | |
|
Supplemental disclosure of non-cash investing and financing activities: | |
| | | |
| | | |
|
Initial recognition of operating lease liabilities related to right-of-use asset | |
$ | | | |
$ | 12,513 | | |
|
Forgiveness of amount due to stockholder | |
$ | | | |
$ | 12,593 | | |
|
Issuance of common stocks to settle finder fee | |
$ | 403 | | |
$ | 4,000 | | |
|
Remeasurement of operating lease right-of-use assets and lease liabilities | |
$ | 8,030 | | |
$ | | | |
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Reconciliation to amounts on consolidated balance sheets: | |
| | |
| | |
|
Cash and cash equivalents | |
$ | 3,065 | | |
$ | 1,861 | | |
|
Restricted cash | |
| 14,196 | | |
| 16,817 | | |
|
Total cash, cash equivalents and restricted cash | |
$ | 17,261 | | |
$ | 18,678 | | |
See
accompanying notes to consolidated financial statements.
F-7
**TRILLER
GROUP INC. AND ITS SUBSIDIARIES**
**(FORMERLY
AGBA GROUP HOLDING LIMITED)**
**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
**FOR
THE YEARS ENDED DECEMBER 31, 2024 AND 2023**
**(Currency expressed in
thousands of United States Dollars, except for share and per share data, or otherwise noted)**
****
**NOTE
1 DESCRIPTION OF BUSINESS**
Organization*
Triller Group Inc. (ILLR, Triller, or the
Company) (formerly AGBA Group Holding Limited (AGBA)) was formed in the State of Delaware on October 15, 2024,
to domicile the Companys legal jurisdiction from British Virgin Islands to the State of Delaware. ILLR and its subsidiaries are
hereinafter referred to as the Company.
*Merger
Transaction*
On October 15, 2024 (the Acquisition Date), the Company
consummated the merger transaction with Triller Corp., a Delaware corporation (Triller Corp.), 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 Corp. and Bobby Sarnevesht, as sole
representative of the Triller Corp. stockholders. Pursuant to the Merger Agreement, on the Acquisition Date, (a) AGBA domesticated to
the United States as a Delaware corporation and changed its name to Triller Group Inc. (the AGBA Domestication), pursuant
to which, among other things, all ordinary shares, par value $0.001 per share, of AGBA were automatically converted into the same number
of shares of Triller Group Inc. common stock, as defined below, and (b) after giving effect to the AGBA Domestication, Merger Sub merged
into Triller Corp., with Triller Corp. being the surviving corporation and a wholly owned subsidiary of Triller Group as of the Acquisition
Date (such transaction referred herein as the Merger Transaction).
The
AGBA Domestication has been treated as a corporate restructuring and thus the current capital structure has been retroactively presented
in prior periods as if such structure existed as of the beginning of the first period presented in the accompanying consolidated financial
statements. The Merger Transaction was accounted for using the acquisition method of accounting for business combinations (see Note 4).
*Business
Operation*
Upon
the completion of the Merger Transaction, the Company has become a company who operates a global, artificial intelligence (AI)
powered technology platform (Technology Platform) that serves a broad constituency of creators and brands around the world.
Creators include influencers, artists, athletes and public figures that utilize Trillers Technology Platform to
create and publish content. Brands are companies, products or product lines which are active on Trillers Technology
Platform and utilize or have utilized one or more of Trillers products or services offered through Trillers Technology
Platform, or companies, products or product lines whose associated data Triller tracks, report on and make available to Trillers
clients as part of one or more of Trillers product offerings.
Also,
the Company remains the operation of a wealth and health platform which 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.
F-8
The
accompanying consolidated financial statements reflect the activities of each of the subsidiaries as of December 31, 2024:
| Name | | | Background | | Ownership | |
| TAG Asia Capital | | | British Virgin Islands company | | 100% | |
| Holdings Limited | | | Incorporated on October 26, 2015 | | | |
| | | | Investment holding | | | |
| OnePlatform Wealth | | | HongKong company | | 99.89% | |
| Management Limited | | | Incorporated on February5, 2003 | | | |
| | | | Provision of insurance and mandatory provident fund schemes brokerage services | | | |
| | | | | | | |
| OnePlatform Asset | | | HongKong company | | 100% | |
| Management Limited | | | Incorporated on November 24, 1999 | | | |
| | | | Licensed by the Securities and Futures Commission of HongKong | | | |
| | | | Provision of investment advisory, funds dealing, introducing broker, and asset management services | | | |
| Kerberos (Nominee) | | | HongKong company | | 100% | |
| Limited | | | Incorporated on April 20, 2007 | | | |
| | | | Provision of escrow services | | | |
| | | | | | | |
| OnePlatform
Credit | | | HongKong company | | 100% | |
| Limited | | | Incorporated on August 6, 1982 | | | |
| | | | Registered under the HongKong Money Lenders Ordinance | | | |
| | | | Provision of money lending services | | | |
| | | | | | | |
| HongKong Credit | | | HongKong company | | 100% | |
| Corporation Limited | | | Incorporated on March 16, 1982 | | | |
| | | | Registered under the HongKong Money Lenders Ordinance | | | |
| | | | Provision of money lending services | | | |
F-9
| TAG Technologies | | | British Virgin Islands company | | 100% | |
| Limited | | | Incorporated on October 23, 2015 | | | |
| | | | Investment in financial technology business | | | |
| | | | | | | |
| AGBA Group Limited | | | HongKong company | | 100% | |
| | | | Incorporated on November 28, 2019 | | | |
| | | | Operating as cost center for the Company | | | |
| | | | | | | |
| Triller Hold Co LLC | | | Delaware limited liability company | | 100% | |
| | | | Incorporated on October 8, 2019 | | | |
| | | | Provision of advertising subscription and paid-per-view services | | | |
| | | | | | | |
| Truverse, Inc. | | | Delaware
corporation | | 100% | |
| | | | Incorporated on December 13, 2021 | | | |
| | | | Provision of advertising and SaaS services | | | |
| | | | | | | |
| Juliusworks LLC | | | Delaware
limited liability company | | 100% | |
| | | | Incorporated on November 11, 2022 | | | |
| | | | Provision of SaaS services | | | |
| | | | | | | |
| Flipps Media Inc. | | | Delaware
corporation | | 100% | |
| | | | Incorporated on June 14, 2013 | | | |
| | | | Provision of advertising subscription and paid-per-view services | | | |
The Company has not included the names of particular
subsidiaries because the unnamed subsidiaries would not have constituted significant subsidiaries as of December 31, 2024.
F-10
**NOTE
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
These
accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this
note and elsewhere in the accompanying consolidated financial statements and notes.
|
| Basis of Presentation | |
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States (U.S. GAAP). References to Triller or the Company prior to October 15, 2024 refer
to AGBA and its consolidated subsidiaries prior to the Merger Transaction, while such references on or after October 15, 2024 refer to
the combined company as a result of the Merger Transaction, including Triller Corp. and its subsidiaries.
Certain prior year amounts have been reclassified for consistency with
the current year presentation. These reclassification had no effect on the reported results of operations.
|
| Principles of Consolidation | |
The accompanying consolidated financial statements
include the financial statements of the Company and its subsidiaries. A subsidiary is an entity (including a structured entity), directly
or indirectly, controlled by the Company. The consolidated 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 the Company and its subsidiaries
are eliminated upon consolidation.
|
| Emerging Growth Company | |
The Company is an emerging growth company,
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the JOBS Act),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public
accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote
on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Companys consolidated financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
F-11
|
| Use of Estimates and Assumptions | |
The
preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the years presented. Significant
accounting estimates reflected in the Companys consolidated financial statements include the useful lives of property and
equipment, impairment on long-lived assets, allowance for expected credit losses, stock-based compensation, estimates made in
connection with acquisition purchase price allocations, earn-out liabilities, fair value measurement of convertible debts, warrant
liabilities, provision for contingent liabilities, long-term investments, revenue recognition, impairment on goodwill, right-of-use asset and intangible assets, income tax
provision, deferred taxes and uncertain tax position.
The
inputs into the managements judgments and estimates consider the geopolitical tension, inflationary and high interest rate environment
and other macroeconomic factors on the Companys critical and significant accounting estimates. Actual results could differ from
these estimates.
|
| Business
Combination | |
The
Company includes the results of operations of businesses acquired as of the date of acquisition. Fair values of the assets acquired and
liabilities assumed are determined based on the estimated fair values as of the respective date of acquisition. The excess purchase price
over the fair values of identifiable assets and liabilities acquired is recorded as goodwill. Determining the fair value of assets acquired
and liabilities assumed requires management to use significant judgments and estimates including the selection of valuation methodologies,
estimates of future revenue and cash flows, discount rates, and comparison to peer companies. Estimates of fair value are based on assumptions
the Company believes to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ
from estimates. Certain information that is indeterminable at the time of the acquisition becomes subject to a subsequent measurement
period, which is generally limited to one year. During the measurement period, which may be up to one year from the acquisition date,
adjustments to the value of the assets acquired and liabilities assumed may be recorded with a corresponding offset to goodwill. At the
conclusion of the measurement period, any subsequent adjustments are reflected in the consolidated statements of operations and comprehensive
loss.
Transaction
costs associated with business combinations are expensed as incurred and are generally included in general and administrative expenses
in the consolidated statements of operations and comprehensive loss.
|
| 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 consolidated statements of operations and comprehensive loss.
The reporting currency of the Company is US$ and the accompanying consolidated
financial statements have been expressed in US$. In addition, some of the Companys subsidiaries are operating in Hong Kong, which
maintain their books and record in their local currency, Hong Kong dollars (HK$), 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$, in accordance with Accounting Standards
Codification (ASC) Topic 830-30, *Translation of Financial Statement*, using the exchange rate on the balance sheet
date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation
of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive loss within the
consolidated statements of changes in stockholders (deficit) equity.
F-12
Translation
of amounts from HK$ into US$ has been made at the following exchange rates for the years ended December 31, 2024 and 2023:
|
| |
December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Year-end
HK$:US$ exchange rate | |
| 0.1288 | | |
| 0.1281 | | |
|
Annual
average HK$:US$ exchange rate | |
| 0.1282 | | |
| 0.1277 | | |
|
| Segment Reporting | |
ASC
Topic 280, *Segment Reporting*, establishes standards for reporting information about operating segments on a basis consistent with
the Companys internal organizational structure as well as information about geographical areas, business segments and major customers
in financial statements for details on the Companys business segments.
The Company uses the management approach to determine reportable operating
segments. The management approach considers the internal organization and reporting used by the Companys chief operating decision
maker (CODM) for making decisions, allocating resources and assessing performance. The Companys CODM has been identified
as the Chief Executive Officer (CEO), who reviews consolidated results when making decisions about allocating resources
and assessing performance of the Company. Based on managements assessment, the Company determined that it has three reportable
segments, which are Social Media, Sports streaming and Financial Services.
|
| 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 the United States of
America and Hong Kong. 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 Companys 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.
F-13
|
| Accounts Receivable, net | |
Accounts
receivable, net are recorded at the invoiced amount less any allowance for expected credit losses to reserve for potentially uncollectible
receivables.
Accounts
receivable, net are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms.
The Companys payment terms of accounts receivable vary by the
types of services offered. The normal settlement terms of accounts receivable from insurance companies in the provision of brokerage agency
services and customers for advertising services, are within 30 days up on the execution of the insurance policies and advertising campaigns.
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.
For
certain services and customers, the Company requires payment before services are delivered to the customers. Changes in the allowance
for expected credit losses are recorded in general and administrative expense in the consolidated statement of operations and comprehensive
loss. To determine the amount of the allowance, the Company estimates all expected credits losses based on historical experience, current
conditions and reasonable and supportable forecasts.
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.
For the year ended December 31, 2024 and 2023, the company evaluated
the probable losses on account receivables and recorded a provision for allowance for expected credit losses of $0.9 million and $0.2 million,
respectively.
|
| Loans and Notes Receivable, net | |
Loans
receivable, net are related to residential mortgage loans that are carried at unpaid principal 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.
Notes
receivable, net are related to a convertible loan note instrument with Investment A which bears a fixed interest rate of 8% per annum
with maturity in April 2024. The Company sold all its convertible loan notes on Investment A to an independent third party on April 30,
2024 for a consideration of approximately $0.4 million.
For the years ended December 31, 2024 and
2023, the Company evaluated the probable losses on loans and notes receivable and recorded a provision for allowance for expected
credit losses of approximately $0.2 million and $0.07 million, respectively.
F-14
|
| Allowance for Expected Credit Losses | |
In
accordance with ASC Topic 326, *Credit Losses Measurement of Credit Losses on Financial Instruments* (ASC
Topic 326), the Company utilizes the current expected credit losses (CECL) model to determine an allowance that
reflects its best estimate of the lifetime expected credit losses on accounts receivable, loans receivable, notes receivable, and deposits,
prepayments 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 lifetime expected credit losses.
Accounts receivable, loans and notes receivable, and deposits, prepayments, 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 years ended December 31, 2024 and 2023, the aggregated provision
for allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, deposits and other receivables was
approximately $2.5 million and $1.1 million, respectively.
|
| Rental Deposit | |
Rental deposit represents the deposit paid for the office leases under
the long-term lease, less the allowance for expected credit losses, which is presented under the non-current assets of the consolidated
balance sheet based on the expected collection date. The rental deposits is classified to current assets when the lease contract is expected
to be expired less than a year.
| | Assets Held For Sale | |
The Company classifies long-lived assets as held
for sale in the period in which the criteria are met, in accordance with ASC 360, Property, Plant and Equipment. The Company ceases depreciation
on long-lived assets (or disposal groups) classified as held for sale and measures them at the lower of carrying value or estimated fair
value less cost to sell.
As of December 31, 2024, the carrying value of 2 premises was approximately
$2.0 million and recorded as assets held for sale in the consolidated balance sheets. These assets were subsequently sold in 2025.
| | Deposits, Prepayments and other Receivable, net | |
Deposits, prepayments and other receivables, net
primarily consist of prepayments of professional service fees such as consulting services and business insurance. These advances are unsecured
and reviewed periodically to determine whether their carrying value has become impaired.
As of December 31, 2024 and 2023, the
Company evaluated the probable losses on deposits, prepayments and other receivables and recognized a provision for allowance for
expected credit losses of approximately $1.4 million and $0.8 million, respectively.
|
| Long-Term Investments, net | |
The Company invests in equity securities with
readily determinable fair values and equity securities that do not have readily determinable fair values.
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 stated 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.
At each reporting period, the Company makes a
qualitative assessment considering impairment indicators to evaluate whether the investment is impaired.
F-15
|
| Property and Equipment, net | |
Property
and equipment, net are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated
on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking
into account their estimated residual values, if any:
| | | Expected useful life | |
| Building | | Shorterof50yearsorleaseterm | |
| Leasehold improvement | | 3 years | |
| Furniture, fixtures and equipment | | 3 to 5 years | |
| Computer equipment | | 3 years | |
| Motor vehicles | | 3 years | |
Expenditures
for repairs and maintenance are expensed as incurred. When assets have been 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.
Property
and equipment are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When
required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined
based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the
carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the
difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value
using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.
For the years ended December 31, 2024 and 2023, the Company recorded
impairment on property and equipment of approximately $0.1 million and nil, respectively in the consolidated statements of operations
and comprehensive loss.
|
| Intangible Assets, net |
|
Intangible
assets with definite lives are stated at cost less accumulated amortization. Amortization is calculated on a straight-line basis over
their estimated useful lives.
| | | Expected useful life | |
| Trademarks and trade names | | 5 years | |
| Customer relationships business enterprises | | 2 years | |
| Customer relationships consumer subscriptions | | 2 years | |
| Software | | 5 years | |
Intangible assets with definite lives are reviewed
for impairment whenever events or circumstances indicate their carrying value may not be recoverable. When such events or circumstances
arise, an estimate of future undiscounted cash flows produced by the asset, or the appropriate grouping of assets, is compared to the
assets carrying value to determine if impairment exists. If the asset is determined to be impaired, the impairment loss is measured
based on the excess of its carrying value over its fair value. Assets to be disposed of are reported at the lower of carrying value or
net realizable value.
For the years ended December 31, 2024 and 2023, the Company recorded
impairment on intangible assets of approximately $1.2 million and nil, respectively in the consolidated statements of operations and comprehensive
loss.
F-16
|
| Goodwill | |
Goodwill
represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. The Company reviews goodwill
for impairment at least annually at the reporting unit level or when a triggering event occurs that indicates that the fair value of
the reporting unit may be below its carrying amount.
The
Company performs its annual impairment test of goodwill in the fourth quarter of each fiscal year. First, the Company assesses qualitative
factors to determine whether a quantitative impairment test is necessary. If that qualitative assessment indicates that it is more likely
than not that goodwill is impaired, the Company performs a quantitative test to compare the fair value of the reporting unit with the
carrying amount, including goodwill, of the reporting unit. If the qualitative assessment indicates that it is not more likely than not
that goodwill is impaired, no further testing is necessary. The goodwill impairment loss, if any, represents the excess of the carrying
amount of the reporting unit over the fair value of the reporting unit.
The Companys goodwill was derived
from the Merger Transaction during the year ended December 31, 2024. For the years ended December 31, 2024 and 2023, the Company recorded
impairment on goodwill of approximately $1,005.8 million and nil, respectively in the consolidated statements of operations and comprehensive
loss.
|
| Accounts Payable | |
Accounts
payable primarily consists of (i) commission payable to the Companys financial advisors for the sale of investment funds, investment
products, or insurance products, accruals for payments of professional services fees and other operating payables and (ii) payable to
the suppliers related to talent and influencers for brand activations and live-event. The carrying amount approximates fair value because
of the short-term maturity.
|
| Borrowings | |
Borrowings are initially recognized at fair value, net of upfront fees incurred. Borrowings are subsequently
measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the effective interest method.
|
| Convertible Debts, net | |
The Company accounts for certain convertible debts, 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 debts is expected to be outstanding as additional
non-cash interest expenses.
F-17
****
Certain of the Companys convertible debts are accounted for
under the fair value option election in ASC 825 due to difference in its features. Under the fair value option election, the financial
instrument is initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring
basis at each reporting period date. The estimated fair value adjustment is presented within other income (expense) in the consolidated
statements of operations and comprehensive loss. The Company classifies its convertible debts that are being valued under the fair value
option election as Level 3 due to the lack of relevant observable market data over fair value inputs, such as the probability weighting
of the various scenarios that can impact settlement of the arrangement.
|
| Warrants | |
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants
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 Companys own common
stock and whether the warrant holders could potentially require net cash settlement in a circumstance outside of the Companys
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.
*Equity-classified*
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. Warrants classified as equity
instruments are initially recognized at fair value and are not subsequently remeasured. The Company accounts for its (i) Public Warrants
and (ii) Replacement Warrants of Triller Group Warrants as equity.
*Liability-classified*
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 estimated fair value of the warrants are recognized as a non-cash gain or loss on the
consolidated statements of operations and comprehensive loss. The Company accounts for its (i) SPAC Private Warrants, (ii) Common Warrants,
and (iii) Warrants Class A of Triller Group 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 consolidated statements of operations and comprehensive
loss. Transaction costs allocated to warrants that are presented as a liability are immediately expensed in the consolidated statements
of operations and comprehensive loss.
F-18
****
|
| Revenue Recognition | |
The
Company receives most 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 Topic 606).
ASC
Topic 606 provided the following overview of how revenue is recognized from the Companys 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).
F-19
Certain
portion of the Companys 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 Companys revenue recognition policies are in compliance with ASC Topic 606, as follows:
|
(a) | Social
Media and Sports Streaming |
|
|
|
(i) | Advertising
Revenue: The Companys technology platform provides
brands a variety of advertising services including AI-powered conversations and the augmentation
and execution of advertising campaigns. Advertising revenue is generated from advertisements,
either displayed on a device-specific application, browser or as part of an event. Brand
sponsorship revenue is generally recognized as advertisements are viewed, if on a device-specific
application or browser or when events occur with participation of the sponsor. Revenue from
brand sponsorship agreements for which consideration is a fixed fee is allocated
evenly to each event in a series of events over the applicable contractual service period
as the advertisements are displayed, which is typically over a period of less than one year. |
|
|
|
(ii) |
Subscription Fees: The
Companys technology platform provides streaming services that acquires content licensing from various sport and entertainment
franchises to provide a content rich environment for both subscription based and pay-per-view consumption both across a variety of
platforms including mobile phones, tablets, PCs, streaming devices, set-top-boxes and connected TVs. Subscriptions for streaming
services are through third party streaming service providers, examples include All Elite Wrestling (AEW) in the case
of Triller TV. Revenue from streaming subscriptions is recognized ratably over the life of a subscription. | |
|
|
|
| |
|
|
(iii) |
Pay-per-view Fees: Unlike subscription fees, the Companys technology platform, via its streaming service provides pay-per-view services for premium content and events. Revenue from streaming pay-per-view events is recognized at the time the event airs. | |
|
|
(iv) |
SaaS Fees: The Companys technology
platform provides data, analytics and other marketing services to brands and advertising agencies with access to a data base of
profiled Brands and Creators and their associated audiences, giving them the ability to enlist Creators to develop and share
captivating stories to market their products and services. SaaS platform provides customers a detailed dashboard to measure all
creator driven marketing campaigns as well as a marketplace allowing e-commerce brands to automate the process of on-boarding
creators with per-transaction incentives for enabling e-commerce transactions. Revenue from SaaS platform subscriptions is
recognized ratably over the life of a subscription. | |
In
arrangements where another party is involved in providing specified services to a customer, such as a distributor of the Companys
content for subscription and pay-per-view programming, the Company evaluates whether the Company is the principal or agent in the arrangement.
In this evaluation, the Company considers if the Company obtains control of the specified goods or services before they are transferred
to the customer, as well as other indicators such as the party primarily responsible for fulfillment and discretion in establishing price.
For revenue arrangements where the Company is not the principal, the Company recognizes revenue on a net basis. The Company has revenue-share
arrangements where the Company is the principal, such as serving as the provider of content for subscription and pay-per-view programming.
Costs associated with revenue-share arrangements are recognized as part of expenses. The Company determined that it was the principal
for all subscription and pay-per-view arrangements and no revenue was recognized on an agent net basis for the period presented.
The Company generally expenses sales commissions when incurred because
the amortization period would have been one year or less. These costs are recorded within operating expense for social media and streaming
platform in the consolidated statements of operations and comprehensive loss.
F-20
|
(b) | Financial Services |
|
|
(i) | Commissions: The Company earns commissions from
the sale of investment products to customers, who are insurance companies and fund houses. 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 by customer, 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 commission price. Therefore, commissions are recorded at 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 insured and is compensated in the form of commission 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 Companys 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 consolidated statements of operations and comprehensive loss. | |
****
F-21
|
During the December 31, 2023, 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. |
|
|
(ii) | 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 asset management 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). |
|
|
(iii) | Loan 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 consolidated statement of operations. 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*
The Company has disaggregated its revenue from
contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams disaggregated
by nature and geographic location:
|
| |
Fortheyearsended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
At a point in time | |
| | |
| | |
|
Paid-per-view fees | |
$ | 3,278 | | |
$ | | | |
|
Commissions | |
| 20,348 | | |
| 50,069 | | |
|
Total revenue from the transfer of goods and services at a point in time | |
| 23,626 | | |
| 50,069 | | |
|
| |
| | | |
| | | |
|
Over time | |
| | | |
| | | |
|
Advertising revenue | |
| 276 | | |
| | | |
|
SaaS fees | |
| 707 | | |
| | | |
|
Subscription fees | |
| 829 | | |
| | | |
|
Recurring asset management service fees | |
| 1,887 | | |
| 3,963 | | |
|
Loan interest income | |
| 151 | | |
| 157 | | |
|
Total revenue from the transfer of goods and services over time | |
| 3,850 | | |
| 4,120 | | |
|
Total revenue | |
$ | 27,476 | | |
$ | 54,189 | | |
F-22
|
|
Fortheyearsended December 31, | | |
|
By geography: | |
2024 | | |
2023 | | |
|
Hong Kong | |
$ | 22,386 | | |
$ | 54,189 | | |
|
United States | |
| 3,470 | | |
| | | |
|
Others | |
| 1,620 | | |
| | | |
|
Total | |
$ | 27,476 | | |
$ | 54,189 | | |
*Contract
Balances*
The following table provides information about
contract liabilities from the Companys contracts with customers:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Contract liabilities, included in other current liabilities | |
$ | 1,683 | | |
$ | | | |
Receivables relate to customer contracts
for which the performance obligation has been satisfied and payment is expected to be received in the next twelve months.
The Company reviews the status of the then-outstanding
accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection
experience, current information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance
for doubtful accounts. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts
are no longer collectible.
F-23
For the years ended December 31, 2024 and 2023, there were no revenues recognized relating to performance
obligations satisfied or partially satisfied in prior periods.
|
| Rental Income | |
Rental
income represents monthly rental received from the Companys tenants. The Company recognizes rental income on a straight-line basis
over the lease term in accordance with the lease agreement.
|
| Operating
Expense For Social Media and Streaming Platform | |
Operating expense for social media and streaming platform related to
the social media application primarily consists of expenses related to talent and influencers for brand activations. The live-event portion
of cost of revenues relate to license fees, event rights fees, revenue sharing costs, production costs, and influencer costs, among others.
|
| Sales and Marketing Expense | |
Sales and marketing expenses include the costs
of advertising, promotions, seminars, and other programs. In accordance with ASC Topic 720-35, *Advertising Costs*, advertising costs
are expensed as incurred.
|
| Comprehensive Loss | |
ASC Topic 220, *Comprehensive Income*, establishes standards for
reporting and display of comprehensive income, its components and accumulated balances. Comprehensive (loss) income as defined includes
all changes in equity during a period from non-owner sources. Accumulated other comprehensive (loss) income, as presented in the accompanying
consolidated statements of changes in stockholders (deficit) equity, consists of changes in unrealized gains and losses on foreign
currency translation. This comprehensive (loss) income 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.
F-24
|
| Income Taxes | |
Income taxes are determined in accordance with
the provisions of ASC Topic 740, *Income Taxes* (ASC Topic 740). Under this method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the 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 Topic 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 Topic 740, tax positions must initially be recognized in the 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 50% likelihood of being realized upon ultimate settlement with
the tax authority assuming full knowledge of the position and relevant facts.
For the years ended December 31, 2024 and 2023,
the Company did not have any interest and penalties associated with tax positions. As of December 31, 2024 and 2023, the Company did not
have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign
jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax
authorities.
|
| Stock-Based Compensation | |
The Company accounts for stock-based compensation
in accordance with the fair value recognition provision of ASC Topic 718, *Stock Compensation*. The Company grants share awards,
including common stock and restricted share units, to eligible participants. Stock-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 stock on the date of grant. Stock-based
compensation expense is recognized over the requisite service period for time-vesting awards and, for awards with a performance condition,
over the requisite service period if the performance condition is probable of achievement. 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.
|
| Net Loss Per Share | |
In accordance with ASC 260, *Earnings Per Share*,
basic net earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary stockholders by the weighted average
number of unrestricted common stock outstanding during the year using the two-class method. Under the two-class method, net income (loss)
is allocated between common stock and other participating securities based on dividends declared (or accumulated) and participating rights
in undistributed earnings as if all the earnings for the reporting period had been distributed. The Companys holdback shares are
participating securities because they are entitled to non-forfeitable dividends.
Basic loss per common stock is computed by dividing
net loss by the weighted-average number of common stock outstanding during the period. Diluted loss per share is computed by dividing
net loss by the sum of the weighted average number of common stock outstanding and of potential dilutive securities (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 stock 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 loss per share.
F-25
|
| 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 Companys 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 Companys leases is not readily determinable, the present
value is calculated using the Companys incremental borrowing rate, which is estimated to approximate the interest rate on a collateralized
basis with similar terms.
Some of the Companys lease agreements contain
lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company has elected
the practical expedient to combine fixed payments for non-lease components with lease payments and account for them together as a single
lease component which increases the amount of ROU assets and lease liabilities.
Leases with a term of twelve months or less upon
the commencement date are considered short-term leases, are not included on the 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* for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20, 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 section 8251015, 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 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
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 statements of operations are presented, and such other information deemed necessary to
an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of
the periods for which statements of operations 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.
F-26
|
| Commitments and Contingencies |
|
The Company follows the ASC Topic 450-20, *Contingencies,*
to report accounting for contingencies. Certain conditions may exist as of the date the 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 Companys 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 Companys financial position, results
of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys
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 Topic 820-10), with respect to financial assets and liabilities that are measured
at fair value. ASC Topic 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 managements 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 Companys financial instruments: cash
and cash equivalents, restricted cash, accounts receivable, loans receivable, deposits, prepayments and other receivables, accounts payable
and accrued liabilities, escrow liabilities, borrowings, and amounts due to stockholder 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.
The Company measures warrant liabilities, certain convertible debts
for which the fair value option has been elected at fair value on a recurring basis.
F-27
The following table presents information about
the Companys financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2024 and
2023 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
|
| |
As of December 31, | | |
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 | |
$ | 1 | | |
$ | 1 | | |
$ | | | |
$ | | | |
|
| |
| | | |
| | | |
| | | |
| | | |
|
Liabilities: | |
| | | |
| | | |
| | | |
| | | |
|
Warrant liabilities | |
$ | 977 | | |
$ | | | |
$ | | | |
$ | 977 | | |
|
Convertible debts for which the fair
value option has been elected (a) | |
| 53,106 | | |
| | | |
| | | |
| 53,106 | | |
|
Total | |
$ | 54,083 | | |
$ | | | |
$ | | | |
$ | 54,083 | | |
|
| |
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 | |
$ | 1 | | |
$ | 1 | | |
$ | | | |
$ | | | |
The following table presents changes in Level
3 liabilities measured at fair value for the year ended December 31, 2024:
|
| |
Warrant liabilities | | |
Convertible debts | | |
|
Balance as of December 31, 2023 | |
$ | | | |
$ | | | |
|
Additions from new issuance during the year | |
| 4,440 | | |
| 5,378 | | |
|
Addition from acquisition of subsidiaries | |
| | | |
| 54,059 | | |
|
Settlement | |
| | | |
| (1,884 | ) | |
|
Fair value measurement adjustments | |
| (3,463 | ) | |
| (4,447 | ) | |
|
Balance as of December 31, 2024 | |
$ | 977 | | |
$ | 53,106 | | |
Note:
|
(a) | Certain of the Companys convertible debts are accounted for
under the fair value option election in ASC 825. Under the fair value option election, the financial instrument is initially measured
at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period
date. The estimated fair value adjustment is presented within other income (expense) in the consolidated statements of operations and
comprehensive loss. The Company classifies its convertible debts that are being valued under the fair value option election as Level 3
due to the lack of relevant observable market data over fair value inputs, such as the probability weighting of the various scenarios
that can impact settlement of the arrangement. |
|
F-28
|
The estimated fair value of the convertible debts as of December 31,
2024 was computed using the models and assumptions shown below. A net gain from fair value movements of approximately $4.4 million for
the year ended December 31, 2024 is included in consolidated statements of operations and comprehensive loss. |
|
|
The significant inputs in the valuation models as of December
31, 2024, are as follows: |
|
|
Inputs | |
Convertible debts A | | |
Convertible debts B | | |
|
Valuation method | |
| Binomial Tree Model | | |
| Binomial Tree Model | | |
|
Conversion price | |
$ | 8.36 | | |
$ | 12.00 | | |
|
Fair value of conversion units | |
| 11.06 | | |
| 15.15 | | |
|
Expected term (years) | |
| 1.16 | | |
| 0.04 | | |
|
Volatility | |
| 198.02 | % | |
| 112.77 | % | |
|
Discount rate | |
| 15.00 | % | |
| 15.00 | % | |
|
Risk free rate | |
| 4.29 | % | |
| 4.24 | % | |
|
| Recently Issued Accounting Pronouncements | |
From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board (FASB) or other standard setting bodies and adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that
are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
In November 2023, the FASB amended guidance in
ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures*(ASU 2023-07). The revised
guidance requires that a public entity disclose significant segment expenses regularly reviewed by the chief operating decisionmaker (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. Effective January 1, 2024, the Company retroactively adopted ASU
2023-07 which resulted in additional disclosures for significant segment expenses reviewed by the Companys CODM (refer to Note
5).
F-29
*Recently issued accounting standards not yet
adopted*
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 Companys 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
consolidated financial statements.
In March 2024, the FASB issued ASU 2024-01,*Compensation
Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards*, which adds an illustrative example
aimed at clarifying the scope application of a profit interest award in accordance with Topic 718. The update will be effective for annual
periods beginning after December 15, 2024, and interim periods within those annual periods. The new standard is not expected to have an
impact on the Companys financial position or results of operations.
In March 2024, the FASB issued ASU 2024-02, Codification
Improvements Amendments to Remove References to the Concepts Statements. This update contains amendments to the Codification
that remove references to various FASB Concepts Statements. These changes remove references to various Concepts Statements and the amendments
apply to all reporting entities within the scope of the affected accounting guidance. The amendments in this Update are effective for
public business entities for fiscal years beginning after December 15, 2024. Early application of the amendments in this Update is permitted
for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). The Company
believes the future adoption of this ASU is not expected to have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03,
Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation
of Income Statement Expenses, which requires incremental disclosures about specific expense categories, including but not limited to,
purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The amendments are effective for fiscal
years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption
is permitted and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to
determine its impact on the Companys disclosures.
In January 2025, the FASB issued ASU 2025-01 Income
Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03
on November 4, 2024. ASU 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning
after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB
was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred
to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have
concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather
than in an annual reporting period. The FASBs intent in the basis for conclusions of ASU 2024-03 is clear that all public business
entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and
interim reporting periods within annual reporting periods beginning after December 15, 2027. Management is currently evaluating this ASU
to determine its impact on the Companys disclosures.
In July 2025, the FASB issued 2025-05 to improve the measurement of
credit losses for accounts receivable and contract assets. The guidance provides a practical expedient for all entities to assume that
current conditions as of the balance sheet date remain unchanged for the remaining life of the assets. The update aims to reduce the cost
and complexity of estimating credit losses while maintaining decision-useful information for financial statement users. ASU 2025-05 is
effective for fiscal years beginning after December 15, 2025. Management is currently evaluating the impact that the adoption of this
update may have on its financial statements
Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the
consolidated balance sheets, statements of operations and comprehensive loss and cash
flows.
F-30
**NOTE 3
LIQUIDITY AND GOING CONCERN**
The accompanying 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 year ended December 31, 2024, the Company reported net loss
of approximately $1,138.0 million and net cash outflows from operating activities of approximately $29.0 million. As of December 31, 2024,
the Company had a working capital deficit of approximately $271.6 million and a stockholders deficit of approximately $246.0 million.
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 consolidated financial statements are issued. The ability to continue as a going concern
is dependent on the Companys ability to successfully implement its current operating plan and fund-raising plan. 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.
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 Companys business, operation and financial result. These conditions and the uncertainty regarding the Companys
ability to successfully implement its plans raise substantial doubt about the Companys ability to continue as a going concern.
**NOTE 4
BUSINESS COMBINATION**
As discussed in Note 1, the Company consummated
the Merger Transaction pursuant to the Merger Agreement on October 15, 2024, whereby the Company acquired all the equity interest of Triller
Corp..
In connection with the Merger Transaction, the
following transactions occurred on the Acquisition Date:
|
(a) | All of the outstanding shares of Triller Corp. Series A Common Stock and Triller Series B Common Stock
were converted into an aggregate of 83,468,631 shares of Triller Group common stock, par value $0.001 per share. | |
| | (b) | All of the outstanding shares of Triller Corp. Series A-1 Preferred Stock were (i) converted into an aggregate 11,801,804 shares of Triller Group preferred stock, par value $0.001 per share which is issued on October 15, 2024; and (ii) 11,807,332 shares of common stock to be issued subsequently in March 2025. | |
|
(c) | All of the outstanding warrants of Triller Corp. were cancelled and
replaced by the issuance of warrants to purchase 14,811,260 shares of the Triller Group common stock (the Replacement Warrants). |
|
F-31
|
(d) | All of the existing Triller Corp. restricted stock units (Triller
Corp. RSUs) were converted into 17,004,025 Triller Group restricted stock units (Triller Group RSUs), and the reserve
for an aggregate of 17,604,025 shares of Triller Group Common Stock (the Contingent Shares), for future issuance upon the
vesting of the Triller Group RSUs. | |
|
(e) | The Company issued 24,206,246 shares of Triller Group Common Stock (the Reserved
Shares) that were deposited into an escrow account in the name of Triller Group, acting as escrow agent, to be used to settle any
matters solely in connection with claims that relate to the affairs of Triller Corp. prior to the Closing Date (including, without limitation,
any current and/or future litigation matters, Triller Corp.s debt, accrued interest, accounts payable, investments in Triller Corp.s
subsidiaries). The shares will be allotted to the Triller Corp.s stockholders six years from October 15, 2024. | |
The acquisition was accounted for using the acquisition
method of accounting in accordance with ASC 805, *Business Combinations*(ASC 805).The Company, formerly AGBA,
was determined to be the accounting acquirer. In identifying the accounting acquirer, management considered the structure of the transaction
and other actions contemplated by the Merger Agreement, relative outstanding share ownership and market values, the composition of the
combined companys board of directors, the relative size of AGBA and Triller Corp, and the designation of certain senior management
positions of the combined company.
In accordance with ASC 805, the Company recorded the acquisition based
on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities
assumed based on their respective fair values as of the Acquisition Date. The excess of the value of consideration transferred over the
aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over
their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but
will be tested for impairment at least annually or more frequently when certain indicators are present. Determining the fair value of
assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation
methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies.
F-32
Managements purchase price allocation is preliminary
and subject to change pending finalization of consideration and intangible asset fair value valuation, tax attributes and tax related
liabilities. In accordance with ASC 805, if the Company identifies changes to acquired deferred tax asset (DTA) valuation
allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained
about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment,
and the Company will record the offset to goodwill. The Company records all other changes to DTA valuation allowances and liabilities
related to uncertain tax positions in current period income tax expense.
The Company incurred approximately $2.7million in acquisition-related
costs associated with the acquisition. These costs and expenses primarily include fees associated with financial, legal, and accounting
advisors. These costs were recorded in operating expenses on the consolidated statements of operations and comprehensive loss.
The purchase consideration and estimated fair
value assessment of the assets acquired and liabilities assumed is as follows:
|
| |
Amount | | |
|
Consideration: | |
| | |
|
Triller Group common stock issued, at a fair value of $5.60 per share | |
$ | 467,424 | | |
|
Triller Group common stock issued held in escrow account, at a fair value of $5.60 per share | |
| 135,555 | | |
|
Triller Group Series A-1 preferred stock, at a fair value of $5.60 per share | |
| 132,181 | | |
|
Triller Group Replacement warrants at fair value (a) | |
| 50,573 | | |
|
Total consideration | |
$ | 785,733 | | |
|
| |
| | | |
|
Fair value of assets acquired: | |
| | | |
|
Cash and cash equivalents | |
$ | 1,175 | | |
|
Accounts receivable, net | |
| 2,178 | | |
|
Other current assets | |
| 253 | | |
|
Intangible assets | |
| 911 | | |
|
Amounts attributable to assets acquired | |
| 4,517 | | |
|
| |
| | | |
|
Fair value of liabilities assumed: | |
| | | |
|
Accounts payable, accrued expenses and other current liabilities | |
| 122,002 | | |
|
Earn-out liability | |
| 5,000 | | |
|
Related party advances | |
| 30,401 | | |
|
Borrowings | |
| 13,100 | | |
|
Convertible debts | |
| 54,059 | | |
|
Amounts attributable to liabilities assumed | |
| 224,562 | | |
|
Net assets acquired, liabilities assumed | |
$ | (220,045 | ) | |
|
Goodwill | |
| 1,005,778 | | |
Note:
|
(a) | Valuation analysis relied upon the usage of market data and
the Black-Scholes Model in order to determine the fair value of the Replacement Warrants. Market data, including risk-free rates, stock
price, and volatility was obtained from the S&P Global Market Intelligence database. Replacement Warrants that were out-of-the-money
were valued utilizing the Black-Scholes Model and the full contractual term to expiration of the relevant Replacement Warrants. Replacement
Warrants that were significantly in-the-money were valued using intrinsic value. |
|
F-33
The following table summarizes the components
of the acquired intangible assets and estimated useful lives:
| | | Intangible Assets | | | Estimated Useful Life | | |
| Trademarks and trade names | | $ | 240 | | | | 5 years | | |
| Customer relationships business enterprises | | | 436 | | | | 2 years | | |
| Customer relationships consumer subscriptions | | | 235 | | | | 2 years | | |
| Total intangible assets acquired | | $ | 911 | | | | | | |
The intangible assets are amortized on a straight-line
basis, which approximates the pattern in which the economic benefits are consumed, over their estimated useful lives.
The primary reason for the Merger was for Triller Corp to become a
publicly traded entity and for AGBA to diversify revenue through Triller Corps short form social video app, AI driven content creation,
SaaS offerings and TrillerTV streaming services. Goodwill resulting from the acquisition was primarily attributable to acquired workforce,
an increase in development capabilities, increased offerings to clients, and enhanced opportunities for growth and innovation. The acquired
intangible assets and goodwill resulting from the Merger Transaction are not amortizable for tax purposes.
For the year ended December 31, 2024, the Company
provided full impairment on goodwill and intangible assets in the consolidated statements of operations and comprehensive loss as the
Company suffered continuous losses resulting from lower revenues and increased costs.
*Unaudited Pro Forma Information*
The following table provides unaudited pro forma
information as if Triller Corp had merged with the Company as of January 1, 2023. The unaudited pro forma information reflects adjustments
for additional amortization resulting from the fair value adjustments to the assets acquired and liabilities assumed, adjustments for
alignment of accounting policies, and transaction expenses as if the Merger occurred on January 1, 2023. The pro forma results do not
include any anticipated cost synergies or other effects of the integrated merged companies. Accordingly, pro forma amounts are not necessarily
indicative of the results that would have occurred had the Merger Transaction been completed on the dates indicated, nor is it indicative
of the future operating results of the combined company.
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Pro forma revenue | |
$ | 63,281 | | |
$ | 99,734 | | |
|
Pro forma net loss | |
$ | 234,440 | | |
$ | 347,963 | | |
F-34
**NOTE 5
SEGMENT INFORMATION**
By assessing the qualitative and quantitative
criteria established by ASC Topic 280, *Segment Reporting*, management has determined that the Company has four reportable
segments, which include the Companys social media, sports streaming, sports content, and financial services segments. The Companys
reportable segments reflect how the Companys operations are managed, how the Companys Chief Executive Officer, who is the
Chief Operating Decision Maker (CODM), allocates resources and evaluates performance, and how the Companys internal
financial reporting is structured.
For the year ended December 31, 2024, the Companies
reportable segments comprised of the following:
|
1. Social media |
|
The Social media segment consists of the Companys operations
related to its social media platform and related services for content creation and distribution | |
|
|
|
| |
|
2. Sports streaming |
|
The online streaming segment consists of the Companys operations
related to its online streaming service. | |
|
|
|
| |
|
3. Financial services |
|
The Financial services segment consists of revenues and costs incurred
from the sale of investment products, offer asset management services and money lending services. | |
The Companys reportable segments are strategic
business units that offer different products and services. They are managed separately because each business unit requires different technology
and marketing strategies.
The following tables present the summary information
by segment for the years ended December 31, 2024 and 2023. The segment expenses
regularly reviewed by the CODM are presented in the Operating expenses
section of the table below. Other segment items for each reportable segment
include Other income (expense), net disclosed in the table
below.
|
| |
For the year ended December 31, 2024 | | |
|
| |
Social media | | |
Sports streaming | | |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Revenue | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Loans interest income | |
| | | |
| | | |
| 151 | | |
| | | |
| | | |
| 151 | | |
|
Commission | |
| | | |
| | | |
| 20,348 | | |
| | | |
| | | |
| 20,348 | | |
|
Recurring asset management service fees | |
| | | |
| | | |
| 1,887 | | |
| | | |
| | | |
| 1,887 | | |
|
Advertising revenue | |
| 275 | | |
| 1 | | |
| | | |
| | | |
| | | |
| 276 | | |
|
SaaS fees | |
| 707 | | |
| | | |
| | | |
| | | |
| | | |
| 707 | | |
|
Subscription fees and paid-per-view fees | |
| 19 | | |
| 4,088 | | |
| | | |
| | | |
| | | |
| 4,107 | | |
|
Total revenue | |
| 1,001 | | |
| 4,089 | | |
| 22,386 | | |
| | | |
| | | |
| 27,476 | | |
|
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Operating expenses for social media and streaming platform | |
| (522 | ) | |
| (3,491 | ) | |
| | | |
| | | |
| | | |
| (4,013 | ) | |
|
Commission expense | |
| | | |
| | | |
| (10,531 | ) | |
| | | |
| | | |
| (10,531 | ) | |
|
Sales and marketing expenses | |
| (921 | ) | |
| (426 | ) | |
| (219 | ) | |
| | | |
| | | |
| (1,566 | ) | |
|
Research and development expenses | |
| (1,193 | ) | |
| (135 | ) | |
| (1,853 | ) | |
| | | |
| | | |
| (3,181 | ) | |
|
Personnel and benefit expenses | |
| (2,091 | ) | |
| (86 | ) | |
| (38,106 | ) | |
| (44,603 | ) | |
| | | |
| (84,886 | ) | |
|
Legal and professional fee | |
| (3,048 | ) | |
| (70 | ) | |
| (2,321 | ) | |
| (16,931 | ) | |
| | | |
| (22,370 | ) | |
|
Legal and professional fee, related party | |
| | | |
| | | |
| | | |
| (949 | ) | |
| | | |
| (949 | ) | |
|
Office and operating fee, related party | |
| | | |
| | | |
| (4,303 | ) | |
| | | |
| | | |
| (4,303 | ) | |
|
Provision for allowance for expected credit losses | |
| 5 | | |
| (10 | ) | |
| (2,544 | ) | |
| | | |
| | | |
| (2,549 | ) | |
|
Other general and administrative expenses | |
| (1,659 | ) | |
| (109 | ) | |
| (4,287 | ) | |
| (253 | ) | |
| | | |
| (6,308 | ) | |
|
Total operating expenses | |
| (9,429 | ) | |
| (4,327 | ) | |
| (64,164 | ) | |
| (62,736 | ) | |
| | | |
| (140,656 | ) | |
|
Other income (expense), net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Interest income | |
| 6 | | |
| | | |
| 19 | | |
| 765 | | |
| (339 | ) | |
| 451 | | |
|
Interest expense | |
| (2,581 | ) | |
| (132 | ) | |
| (785 | ) | |
| (4,778 | ) | |
| 339 | | |
| (7,937 | ) | |
|
Foreign exchange (loss) gain, net | |
| | | |
| 16 | | |
| (717 | ) | |
| | | |
| | | |
| (701 | ) | |
|
Impairment on property and equipment | |
| | | |
| | | |
| (104 | ) | |
| | | |
| | | |
| (104 | ) | |
|
Impairment on intangible assets | |
| (621 | ) | |
| (210 | ) | |
| (369 | ) | |
| | | |
| | | |
| (1,200 | ) | |
|
Impairment on goodwill | |
| (1,000,002 | ) | |
| (5,776 | ) | |
| | | |
| | | |
| | | |
| (1,005,778 | ) | |
|
Impairment on right-of-use assets | |
| | | |
| | | |
| (1,664 | ) | |
| | | |
| | | |
| (1,664 | ) | |
|
Investment loss, net | |
| | | |
| | | |
| (15,971 | ) | |
| | | |
| | | |
| (15,971 | ) | |
|
Change in fair value of convertible debts | |
| 4,447 | | |
| | | |
| | | |
| | | |
| | | |
| 4,447 | | |
|
Change in fair value of warrant liabilities | |
| | | |
| | | |
| | | |
| 3,463 | | |
| | | |
| 3,463 | | |
|
Sundry income | |
| 31 | | |
| 6 | | |
| 101 | | |
| | | |
| | | |
| 138 | | |
|
Total other expense, net | |
| (998,720 | ) | |
| (6,096 | ) | |
| (19,490 | ) | |
| (550 | ) | |
| | | |
| (1,024,856 | ) | |
|
Income tax expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net loss | |
| (1,007,148 | ) | |
| (6,334 | ) | |
| (61,268 | ) | |
| (63,286 | ) | |
| | | |
| (1,138,036 | ) | |
F-35
|
| |
For the year ended December 31, 2023 | | |
|
| |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Revenue | |
| | |
| | |
| | |
| | |
|
Commission | |
| 50,069 | | |
| | | |
| | | |
| 50,069 | | |
|
Asset management service fees | |
| 3,963 | | |
| | | |
| | | |
| 3,963 | | |
|
Loans interest income | |
| 157 | | |
| | | |
| | | |
| 157 | | |
|
Total revenue | |
| 54,189 | | |
| | | |
| | | |
| 54,189 | | |
|
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
|
Commission expense | |
| (37,288 | ) | |
| | | |
| | | |
| (37,288 | ) | |
|
Sales and marketing expenses | |
| (2,496 | ) | |
| (1,213 | ) | |
| | | |
| (3,709 | ) | |
|
Research and development expenses | |
| (949 | ) | |
| (3,608 | ) | |
| | | |
| (4,557 | ) | |
|
Personnel and benefit expenses | |
| (128 | ) | |
| (27,090 | ) | |
| | | |
| (27,218 | ) | |
|
General and administrative | |
| (17,856 | ) | |
| (6,622 | ) | |
| | | |
| (24,478 | ) | |
|
Total operating expenses | |
| (58,717 | ) | |
| (38,533 | ) | |
| | | |
| (97,250 | ) | |
|
Other income (expense), net | |
| | | |
| | | |
| | | |
| | | |
|
Interest income | |
| 39 | | |
| 345 | | |
| | | |
| 384 | | |
|
Interest expense | |
| (388 | ) | |
| (396 | ) | |
| | | |
| (784 | ) | |
|
Others | |
| 6,715 | | |
| (12,173 | ) | |
| | | |
| (5,458 | ) | |
|
Total other income (expense), net | |
| 6,366 | | |
| (12,224 | ) | |
| | | |
| (5,858 | ) | |
|
Income tax expense | |
| (280 | ) | |
| (7 | ) | |
| | | |
| (287 | ) | |
|
Net income (loss) | |
| 1,558 | | |
| (50,764 | ) | |
| | | |
| (49,206 | ) | |
The following tables present a summary of the
Companys assets by reportable segment as of December 31, 2024 and 2023:
|
| |
As of December 31, 2024 | | |
|
| |
Social media | | |
Sports streaming | | |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Long-term investments, net | |
| | | |
| | | |
| 25,455 | | |
| | | |
| | | |
| 25,455 | | |
|
Other assets | |
| 7,506 | | |
| 5,614 | | |
| 18,121 | | |
| 37,514 | | |
| (43,632 | ) | |
| 25,123 | | |
|
Total assets | |
| 7,506 | | |
| 5,614 | | |
| 43,576 | |
| 37,514 | | |
| (43,632 | ) | |
| 50,578 | | |
|
| |
As of December 31, 2023 | | |
|
| |
Financial services | | |
Corporate | | |
Elimination | | |
Consolidated | | |
|
Long-term investments, net | |
| 25,725 | | |
| | | |
| | | |
| 25,725 | | |
|
Other assets | |
| 13,788 | | |
| 27,076 | | |
| | | |
| 40,864 | | |
|
Total assets | |
| 39,513 | | |
| 27,076 | | |
| | | |
| 66,589 | | |
The Company had capital expenditures of approximately $0.2 million
and nil under the social media segment and other reportable segments for the year ended December 31, 2024, respectively.
The Company had no capital expenditures by reportable
segment for the year ended December 31, 2023.
The Companys major customers and operations
are based in Hong Kong and the United States.
The social media and sports streaming segments were acquired during
2024. No such segments during 2023.
F-36
**NOTE 6
RESTRICTED CASH**
As of December 31, 2024 and 2023, the Company
has approximately $14.2 million and $16.8 million fund held in escrow, respectively. Fund held in escrow primarily comprised of escrow
funds held in bank accounts on behalf of the Companys customers. The Company is currently acted 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. Upon receiving escrow funds, the Company records a corresponding
escrow liability.
**NOTE 7
ACCOUNTS RECEIVABLE, NET**
Accounts receivable,
net consisted of the following:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Accounts receivable | |
$ | 3,388 | | |
$ | 3,283 | | |
|
Accounts receivable related parties | |
| 1,100 | | |
| 1,094 | | |
|
Less: allowance for expected credit losses | |
| (1,615 | ) | |
| (312 | ) | |
|
Accounts receivable, net | |
$ | 2,873 | | |
$ | 4,065 | | |
The accounts receivable due from related parties
represented the management service rendered to the portfolio assets of related companies, which are controlled by stockholder,
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.
The following table presents the activity in the
allowance for expected credit losses:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance at beginning of year | |
$ | 312 | | |
$ | 94 | | |
|
Additions from acquisition of subsidiaries | |
| 386 | | |
| | | |
|
Additions | |
| 914 | | |
| 217 | | |
|
Foreign translation adjustment | |
| 3 | | |
| 1 | | |
|
Balance at end of year | |
$ | 1,615 | | |
$ | 312 | | |
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 years ended December 31, 2024 and 2023, the Company has assessed
the probable loss and made a provision for allowance for expected credit losses of approximately $0.9 million and $0.2 million on accounts
receivable, respectively.
F-37
**NOTE
8 LOANS AND NOTES RECEIVABLE, NET**
|
(a) | Loans Receivables, net | |
The Companys loans receivable, net was
as follows:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Residential mortgage loans | |
$ | 1,164 | | |
$ | 1,605 | | |
|
Less: allowance for expected credit losses | |
| (38 | ) | |
| (1 | ) | |
|
Loans receivable, net | |
$ | 1,126 | | |
$ | 1,604 | | |
|
| |
| | | |
| | | |
|
Classifying as: | |
| | | |
| | | |
|
Current portion | |
$ | 92 | | |
$ | 549 | | |
|
Non-current portion | |
| 1,034 | | |
| 1,055 | | |
|
Loans receivable, net | |
$ | 1,126 | | |
$ | 1,604 | | |
The interest rates on loans issued ranged between 10.00% and 10.50%
(2023: 9.00% to 10.50%) per annum for the year ended December 31, 2024. Mortgage loans are secured by collateral in the pledge of the
underlying residential properties owned by the borrowers. As of December 31, 2024, the net carrying amount of the loans receivable was
approximately $1.1 million which included an interest receivable of approximately $0.06 million.
Mortgage loans are made to either business or
individual customers in Hong Kong for a period of 1 to 25 years, which are fully collateralized and closely monitored for counterparty
creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of December 31, 2024 and 2023.
The following table presents the activity in the
allowance for expected credit losses:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance at beginning of year | |
$ | 1 | | |
$ | | | |
|
Additions | |
| 36 | | |
| 1 | | |
|
Foreign translation adjustment | |
| 1 | | |
| | | |
|
Balance at end of year | |
$ | 38 | | |
$ | 1 | | |
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 customers 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.
F-38
For the years ended December 31, 2024 and 2023,
the Company has assessed the probable loss and made an allowance for expected credit losses of approximately $36,000 and $1,000 on loans
receivable, respectively.
|
(b) | Notes Receivables, 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 approximately $1.7 million notes, in batches, which are payable
on or before January 31, 2024 and bears a fixed interest rate of 8% per annum. The Company sold all its convertible loan notes on Investment
A to an independent third party on April 30, 2024 for a consideration of approximately $0.4 million.
As of December 31, 2023, the net carrying amount of the notes receivable
was approximately $0.6 million, which including an interest receivable of approximately $0.03 million.
The following table presents the activity in the
allowance for expected credit losses:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance at beginning of year | |
$ | 70 | | |
$ | | | |
|
Additions | |
| 155 | | |
| 70 | | |
|
Disposal | |
| (227 | ) | |
| | | |
|
Foreign translation adjustment | |
| 2 | | |
| | | |
|
Balance at end of year | |
$ | | | |
$ | 70 | | |
In accordance with ASC Topic 326, the Company accounts for its allowance
for expected credit losses on notes receivable using the CECL model. Periodic changes to the allowance for expected credit losses are
recognized in the consolidated statements of operations and comprehensive loss. For the year ended December 31, 2024 and 2023, the Company
has evaluated the probable losses on the notes receivable and made an allowance for expected credit losses of approximately $0.16 million
and $0.07 million, respectively.
**NOTE 9
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES, NET**
Deposits, prepayments
and other receivables, net consisted of the following:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Deposits | |
$ | 1,528 | | |
$ | 711 | | |
|
Prepayments | |
| 354 | | |
| 1,027 | | |
|
Other receivables | |
| 2,275 | | |
| 850 | | |
|
| |
| 4,157 | | |
| 2,588 | | |
|
Less: allowance for expected credit losses | |
| (2,297 | ) | |
| (818 | ) | |
|
Deposit, prepayments and other receivable, net | |
$ | 1,860 | | |
$ | 1,770 | | |
****
The following table presents the activity
in the allowance for expected credit losses:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance at beginning of year | |
$ | 818 | | |
$ | 42 | | |
|
Additions from acquisition of subsidiaries | |
| 6 | | |
| | | |
|
Additions | |
| 1,444 | | |
| 774 | | |
|
Foreign translation adjustment | |
| 29 | | |
| 2 | | |
|
Balance at end of year | |
$ | 2,297 | | |
$ | 818 | | |
For the years ended December 31, 2024 and
2023, the Company has assessed the probable loss and made a provision for allowance for expected credit losses of approximately $1.4
million and $0.8 million on deposits and other receivables, respectively.
F-39
**NOTE 10
LONG-TERM INVESTMENTS, NET**
Long-term investments, net consisted of the following:
|
|
|
As of December 31, |
| |
|
|
|
Ownership interest |
|
|
2024 |
|
|
Ownership interest |
|
|
2023 |
| |
|
Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Investment C |
|
|
0.00 |
%* |
|
|
1 |
|
|
|
0.00 |
%* |
|
|
1 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Investment A |
|
|
8.37 |
% |
|
|
5,479 |
|
|
|
8.37 |
% |
|
|
5,827 |
| |
|
Investment B |
|
|
3.63 |
% |
|
|
255 |
|
|
|
3.63 |
% |
|
|
342 |
| |
|
Investment D |
|
|
4.49 |
% |
|
|
16,621 |
|
|
|
4.47 |
% |
|
|
16,880 |
| |
|
Investment E, related party |
|
|
4.00 |
% |
|
|
525 |
|
|
|
4.00 |
% |
|
|
523 |
| |
|
Investment F (a) |
|
|
|
|
|
|
|
|
|
|
4.00 |
% |
|
|
2,152 |
| |
|
Investment G (b) |
|
|
56.93 |
% |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Investment H (c) |
|
|
3.76 |
% |
|
|
2,574 |
|
|
|
|
|
|
|
|
| |
|
Net carrying value |
|
|
|
|
|
$ |
25,455 |
|
|
|
|
|
|
$ |
25,725 |
| |
|
* | Less than 0.001% |
|
**
*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.
*Investments in Non-Marketable Equity Securities*
Investments in non-marketable equity securities
consist of investments in limited liability companies in which the Companys interests are deemed minor and long-term, strategic
investments in companies that are in various stages of development. 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.
Management assesses each of these investments
on an individual basis, subject to a periodic impairment review and considers qualitative and quantitative factors including the investees
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.
Notes:
|
(a) | On February 5, 2024, the Company entered into a purchase and sale agreement
with an independent third party to sell all of its equity interest in Investment F for a purchase price of approximately $2.15 million
and the transaction was completed on February 19, 2024. | |
F-40
|
(b) | In connection with the Merger Transaction, the Company held a 56.93%
equity interest in Bare Knuckle Fighting Championships, Inc. (BKFC) as of December 31, 2024. BKFC is a licensed combat sports
platform that stages live and streaming bareknuckle fighting events featuring established professionals in boxing, mixed martial arts,
kickboxing and Muay Thai. Notwithstanding the Companys majority equity ownership, the Company determined that it did not have a
controlling financial interest and significant influence in BKFC, as it lacked the power to direct the activities that most significantly
impact BKFCs economic performance. Based on an evaluation of BKFCs governance structure, contractual arrangements, and actual
operating practices, strategic, operational, and financing decisions are all directed by BKFCs founder, and BKFC operates independently
of the Company. Accordingly, the Company accounted for its investment in BKFC as a non-marketable equity security measured at cost less
impairment in accordance with ASC 321, Investments Equity Securities. | |
| | (c) | In September 2024, the Company subscribed 285,353
Class C Units of Investment H, a Nevada limited liability private company, representing a 3.79% equity interest of Investment H as of
transfer date, for a non-cash consideration of approximately $18.5 million. The consideration was payable by the issuance of 3.56 million
shares of ordinary shares of AGBA at the current market value of 5.18 per share. Accordingly, the Company accounted for its investment
in Investment H as a non-marketable equity security measured at cost less impairment in accordance with ASC 321, Investments
Equity Securities. (see Note 19(a)(vi))
Subsequently, the Company agreed to transfer all its
equity interest in Investment H to a consulting firm for partial settlement of consultancy services (see Note 26(vii)). | |
The following table presents the movement of non-marketable
equity securities as of December 31, 2024 and 2023:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance at beginning of year | |
$ | 25,725 | | |
$ | 34,590 | | |
|
Additions | |
| 18,457 | | |
| 289 | | |
|
Disposal | |
| (2,152 | ) | |
| | | |
|
Adjustments: | |
| | | |
| | | |
|
Downward adjustments | |
| (15,971 | ) | |
| (10,093 | ) | |
|
Foreign exchange adjustment | |
| (604 | ) | |
| 939 | | |
|
Balance at end of year | |
$ | 25,455 | | |
$ | 25,725 | | |
Cumulative unrealized gains and losses, included
in the carrying value of the Companys non-marketable equity securities:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Downward adjustments (including impairment) | |
$ | (53,318 | ) | |
$ | (37,347 | ) | |
|
Upward adjustments | |
| 6,209 | | |
| 6,209 | | |
|
Total | |
$ | (47,109 | ) | |
$ | (31,138 | ) | |
Investment loss, net is recorded as other expense
in the Companys consolidated statements of operations and comprehensive loss and consisted of the following:
|
| |
For the years ended
December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Marketable equity securities: | |
| | | |
| | | |
|
Realized gain from sale of Investment C | |
$ | | | |
$ | 1,544 | | |
|
| |
| | | |
| | | |
|
Non-marketable equity securities: | |
| | | |
| | | |
|
Unrealized losses (including impairment) Investment F | |
| | | |
| (9,922 | ) | |
|
Unrealized losses (including impairment) Investment B | |
| (88 | ) | |
| (171 | ) | |
|
Unrealized losses (including impairment) Investment H | |
| (15,883 | ) | |
| | | |
|
Dividend income | |
| | | |
| 1,670 | | |
|
Investment loss, net | |
$ | (15,971 | ) | |
$ | (6,879 | ) | |
****
During
the year ended December 31, 2024, the Company recognized investment loss of approximately $16.0 million, primarily related to Investment
H. The fair value of Investment H was determined based on recent financing rounds of the investee. The Company evaluated differences
in rights and preferences of the securities transacted compared to those held by Company, as well as the timing, volume, and nature of
the transactions. Based on this evaluation, the Company concluded that the financing rounds provided observable evidence of fair value
under current market conditions.
****
F-41
**NOTE 11
GOODWILL**
****
The following table presents the change in the carrying amount of Goodwill:
****
|
| |
Social media | | |
Sports streaming | | |
Total | | |
|
Balance at beginning of year: | |
| | |
| | |
| | |
|
Goodwill | |
$ | | | |
$ | | | |
$ | | | |
|
Accumulated impairment losses | |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
|
Change in carrying amounts during the year | |
| | | |
| | | |
| | | |
|
Addition | |
| 1,000,002 | | |
| 5,776 | | |
| 1,005,778 | | |
|
Impairment losses | |
| (1,000,002 | ) | |
| (5,776 | ) | |
| (1,005,778 | ) | |
|
| |
| | | |
| | | |
| | | |
|
| |
| | | |
| | | |
| | | |
|
Balance at end of year: | |
| | | |
| | | |
| | | |
|
Goodwill | |
| 1,000,002 | | |
| 5,776 | | |
| 1,005,778 | | |
|
Accumulated impairment losses | |
| (1,000,002 | ) | |
| (5,776 | ) | |
| (1,005,778 | ) | |
|
| |
$ | | | |
$ | | | |
$ | | | |
The Company consummated the Merger Transaction pursuant to the Merger
Agreement on October 15, 2024, whereby the Company acquired all the equity interest of Triller Corp. (see Note 4). This Merger Transaction
gave rise to the Company recognizing approximately $1,005.8million in goodwill as the difference between the consideration of approximately
$785.7million and the net liabilities of approximately $220.1 million of Triller Corp. as of the acquisition date. Goodwill is assigned
to each of the two reporting units social media and sports streaming. The carrying value of the reporting unit is determined by
assigning the assets and liabilities, including the existing goodwill, to the reporting unit.
As of December 31, 2024, the Company performed
a qualitative and quantitative annual assessment for goodwill impairment. Based on its qualitative analysis, which considered the reporting
unit results, projections and industry specific considerations, the Company performed a further revision of the estimates of the fair
value of both reporting units. The Company estimates fair value using a discounted cash flow model, which calculates the present value
of future expected cash flows of its reporting units with a market-based discount rate. As part of this analysis, the Company also considered
the potential impacts of the sensitivity of estimates and assumptions. The material assumptions used for the goodwill annual impairment
test were forecasted revenue growth rates, forecasted cash flows from operations, weighted average cost of capital rate and long-term
growth rate that reflect the risk inherent in the future cash flows. The Company considered historical rates and current market conditions
when determining the discount and growth rates to use in its analyses. The Company applies assumptions that marketplace participants would
consider in determining the fair value of its reporting unit.
As a result of the impairment assessment, the Company concluded it
is uncertain whether it will generate economic benefit in the foreseeable future and that the fair value of each reporting unit is below
its carrying value, primarily caused by adverse macroeconomic conditions affecting the Company. The Company recorded impairment loss on
goodwill of approximately $1,005.8 million for the fiscal year ended December 31, 2024.
****
F-42
****
**NOTE
12 INTANGIBLE ASSETS, NET**
Intangible assets,
net consisted of the following:
|
| |
Social media | | |
Sports
streaming | | |
Financial
services | | |
| | |
|
| |
Trademarks and trade names | | |
Customer relationships business enterprises | | |
Customer relationships consumer subscriptions | | |
Software | | |
Total | | |
|
At cost: | |
$ | 240 | | |
$ | 436 | | |
$ | 235 | | |
$ | 464 | | |
$ | 1,375 | | |
|
Less: Accumulated amortization | |
| (10 | ) | |
| (45 | ) | |
| (25 | ) | |
| (95 | ) | |
| (175 | ) | |
|
Less: Accumulated impairment losses | |
| (230 | ) | |
| (391 | ) | |
| (210 | ) | |
| (369 | ) | |
| (1,200 | ) | |
|
Intangible assets, net | |
$ | | | |
$ | | | |
$ | | | |
$ | | | |
$ | | | |
The software was purchased from a system vendor
in Hong Kong and amortized on a straight-line basis over its estimated useful lives. The Company also acquired other intangible assets
in the Merger Transaction (see Note 4). These intangible assets are recognized at their estimated fair values as of the acquisition date:
|
(i) | Trademarks and trade names: Fair value was determined using the relief-from-royalty method by applying
a royalty rate to forecasted revenue under the trade name. Significant assumptions included forecasted revenues, royalty rates derived
from comparable licensing arrangements and discount rates reflecting the risk of the cash flows. | |
|
(ii) | Customer relationships business enterprises: Fair value was
determined using incremental profit method, which measured present values of the cash flows with the existing customers in place over
the period of time. Significant assumptions included projected revenues attributable to existing customers, retention rates, and discount
rates consistent with the risk profile of the assets. | |
|
(iii) | Customer relationships consumer subscriptions: Fair value was determined using cost approach.
This method estimates the fair value based on the expected cost to recreate the existing subscriber base and relies on assumptions regarding
the average acquisition cost per-subscriber. | |
Amortization expense for the year ended December
31, 2024 was approximately $0.17 million on a straight-line basis over the estimated useful lives of the assets.
****
As of December 31, 2024, the Company considered there is uncertainty
on future profit generation and performed impairment assessment on intangible assets and other non-current assets. Fair value is determined
primarily using a discounted cash flow model that uses the estimated cash flows associated with the asset groups under review, discounted
at a rate commensurate with the risk involved (see Note 11). The Company concluded the carrying amount derived from the anticipated undiscounted
cash flows from the asset groups is less than its carrying amount, primarily caused by adverse macroeconomic conditions affecting the Company.
During the year ended December 31, 2024, the Company recorded impairment loss on intangible assets of approximately $1.2 million in the
other expense, net in the consolidated statements of operations and comprehensive loss.
****
**NOTE 13
PROPERTY AND EQUIPMENT, NET**
Property and
equipment, net consisted of the following:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
As cost: | |
| | |
| | |
|
Building | |
$ | | | |
$ | 1,886 | | |
|
Furniture, fixtures and equipment | |
| 40 | | |
| 40 | | |
|
Computer equipment | |
| 243 | | |
| 243 | | |
|
Motor vehicles | |
| | | |
| 109 | | |
|
| |
| 283 | | |
| 2,278 | | |
|
Less: accumulated depreciation and impairment | |
| (283 | ) | |
| (557 | ) | |
|
Property and equipment, net | |
$ | | | |
$ | 1,721 | | |
Depreciation expense for the years ended December 31, 2024 and 2023
was approximately $0.1 million and $0.3 million, respectively. During the year ended December 31, 2024, the Company recorded a full impairment
charge of approximately $0.1 million on property and equipment due to uncertainty of future revenue generation in Hong Kong.
On October 31, 2024, the Company entered into
a preliminary sales and purchase agreement with an independent third party to sell an office premise with a cash consideration of approximately
$1.6 million. The transaction completed in February 2025. As of December 31, 2024, the carrying value of the office premises was approximately
$2.0 million and recorded as assets held for sale in the consolidated balance sheet.
**NOTE 14 ACCOUNTS PAYABLE AND OTHER
CURRENT LIABILITIES**
Accounts payable and other current liabilities consisted of the followings:
****
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Accounts payable | |
$ | 53,752 | | |
$ | 5,937 | | |
|
Provision for potential litigation expense | |
| 22,962 | | |
| 832 | | |
|
Music contingencies | |
| 23,793 | | |
| - | | |
|
Accrued professional expenses | |
| 28,627 | | |
| 10,471 | | |
|
Redemption liability | |
| 7,298 | | |
| - | | |
|
Loan interest payable | |
| 3,489 | | |
| 9 | | |
|
Loan interest payable related party | |
| 1,251 | | |
| - | | |
|
Accrued payroll | |
| 2,636 | | |
| 1,071 | | |
|
Other accrued liabilities | |
| 7,344 | | |
| 1,434 | | |
|
Total | |
$ | 151,152 | | |
$ | 19,754 | | |
F-43
**NOTE 15
BORROWINGS**
****
The borrowings
consisted of the followings:
****
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Mortgage borrowings (a) | |
$ | 868 | | |
$ | 1,805 | | |
|
Short-term loans (b) | |
| 11,642 | | |
| | | |
|
Short-term loans, related parties (c) | |
| 29,181 | | |
| 5,000 | | |
|
Factoring loan (d) | |
| 197 | | |
| | | |
|
Total | |
$ | 41,888 | | |
$ | 6,805 | | |
Notes:
|
(a) | Mortgage Borrowings | |
In February 2023, the Company obtained a mortgage loan of approximately
$1.8 million (equivalent to HK$14.0 million) from a finance company in Hong Kong, which bears an average interest rate at 13.75% per annum
and becomes repayable in February 2024. The loan was pledged by a fixed charge on an office premise owned by the Company. As of December
31, 2024, the carrying value of the loan is approximately $0.9 million. On October 31, 2024, the Company entered into a preliminary sales
and purchase agreement with an independent third party to sell the office premises with a cash consideration of approximately $1.6 million.
The transaction is completed in February 2025.
In July 2024, the Company partially settled approximately $0.8 million,
including approximately $0.02 million interest expense (equivalent to principal and interest of approximately HK$6.0 million and HK$0.15
million, respectively). The remaining principal and accrued interest are settled in February and June 2025.
| (b) | Short-term Loans | |
****
In connection with the Merger Transaction, the Company assumed the
liabilities of Triller Corp, which includes the short-term notes assumed at an aggregate principal amount of $11.0 million issued to various
lenders (collectively, the Short-term Loans). The Short-term loans mature at various dates within the next twelve months
and are included as current liabilities in the accompanying consolidated balance sheets. The Company incurred approximately $2.0 million
in interest expense and made aggregate payments of approximately $4.1 million toward the various short-term loans during the year ended
December 31, 2024. As of December 31, 2024, the aggregate outstanding principal and accrued interest was approximately $14.5 million.
On November 27, 2024, the Company also obtained a short-term loan of
approximately $0.6 million from an independent third party in Hong Kong with a fixed interest rate of 6% per annum, repayable on December
31, 2024. The loan is unsecured and the fixed interest rate will increase to 15% per annum if there is any default on repayment.
As of the date of issuance of these consolidated financial statements,
the Company has not repaid the amount due and considered default of settlement.
| (c) | Short-term Loans, Related Parties | |
****
In September 2023, the Company obtained short-term loans of approximately
$5.0 million from Giant Wisdom Ventures Limited, a company controlled by its controlling stockholder, which bears interest at a fixed
rate of 12% per annum, repayable in October 2023. The borrowing is secured by a lien on the partial equity interest in Investment D owned
by the Company.
In connection with the Merger Transaction,
the Company assumed the liabilities of Triller Corp, which includes the borrowing entered with DeSilva 2000 Living Trust, a company
controlled by the director of its subsidiaries, for a principal of approximately $0.2 million with a fixed interest rate of 1.85%
per annum.
In October 2024, the Company entered a loan
facility agreement with TAG Holdings Limited, its stockholder and immediate holding company, for borrowings up to
$30.0 million. The loan is unsecured, repayable on demand and bears interest at a fixed rate of 6% per annum. As of December 31,
2024, the outstanding loan balance was approximately $18.4 million.
On October 16, 2024, Triller Corp. entered a short-term loan agreement
with Giant Wisdom Ventures Limited, a company controlled by its controlling stockholder, for a principal of approximately $5.0 million with
a fixed interest rate of 18% per annum. The loan is guaranteed by Triller Group and is collateralized by 5,000,000 shares of BKFC common
stock. Both principal and accrued interest are due on January 16, 2025.In the event of a default, the interest rate increases to
21% per annum. As of December 31, 2024, the aggregate outstanding principal and accrued interest was approximately $5.2 million.
In November and December 2024, the Company obtained aggregate short-term
loans of approximately $0.5 million from the Companys Chief Operating Officer with a fixed interest rate of 6% per annum, repayable
on December 31, 2024. The loans are unsecured and the fixed interest rate will increase to 15% per annum if there is any default on repayment.
****
|
(d) | Factoring loan | |
In connection with the Merger Transaction, the Company assumed the
liabilities of Triller Corp.s subsidiary, Flipps Media Inc. (Flipps), which included certain sale of future receipts
agreements (the Agreements) entered with certain third-party financing companies in October 2024. Pursuant to the Agreements,
Flipps sold its future receipts of approximately $0.6 million for a principal amount of approximately $0.4 million. Flipps recorded a
debt discount of approximately $0.03 million for the loan origination fees. The debt discount was amortized over the term of the loans
with a range of four to twelve-month periods. The agreed weekly payment was approximately $0.03 million. As of December 31, 2024, the
outstanding principal balance, net of debt discount, was approximately $0.2 million.
F-44
**NOTE 16 CONVERTIBLE DEBTS, NET**
****
|
(i) | TFI Note |
|
In connection with the Merger Transaction,
the Company assumed the liabilities of Triller Corp, which includes convertible notes issued to Total Formation Inc.
(TFI), stockholder of the Company and company controlled by its controlling stockholder, with a total principal balance of approximately $35.3 million and fair value of
approximately $46.3 million (the TFI Note) as of the Acquisition Date. The TFI Note bears 15% annual interest and
payable on demand by TFI at any time on or after August 1, 2024. The Company may prepay any amount owed under the note in whole or
in part at any time without penalty or premium, plus unpaid accrued interest as of the date of such repayment. In the event that the
Company fails to pay any amount due under this note when due or if the Company commences any case, proceeding, or other action
relating to bankruptcy, insolvency, or reorganization, these events will constitute an event of default. An event of default will
result in TFI having the option, by written notice to the Company, to declare the entire principal amount, together with all accrued
but unpaid interest, payable immediately. If any amount payable under this TFI Note is not paid when due, such overdue amount shall
bear interest at the default rate of 16% from the date of suchnon-paymentuntil such amount is paid in full.
As of December 31, 2024, the TFI Note was reported at a fair value
of approximately $46.3 million and is included in convertible debts under current liabilities in the consolidated balance sheets. For
the period from the Acquisition date through December 31, 2024, the Company recognized a gain of approximately $5.8 million on the change
in fair value of convertible debts in the accompanying consolidated statements of operations and comprehensive loss. As of the date of
issuance of these consolidated financial statements, the Company has not repaid the amount due and considered default of settlement.
|
(ii) | Exchangeable Note |
|
On October 16, 2024, the Company issued an exchangeable note of approximately
$5.4 million to Giant Wisdom Ventures Limited which bears interest at a fixed rate of 15% per annum and mature on January 16, 2025. The
note is secured by a pledge of 5,000,000 shares of common stock of BKFC owned by the Company. As of December 31, 2024, the fair value
of the note is approximately $6.8 million. As of the date of issuance of these consolidated financial statements, the Company has not
repaid the amount due and considered default of settlement.
|
(iii) | Convertible Promissory Note - Yorkville |
|
On April 25, 2024, the Company entered into an amended and restated
standby equity purchase agreement (the First A&R SEPA) with YA II PN, LTD (Yorkville), a Cayman Islands
exempt limited partnership, and Triller Corp.
In connection with the A&R SEPA, Yorkville agreed to an advance
to the Triller Corp in the form of convertible promissory notes in a principal amount up to approximately $8.51 million (the First
Pre-Paid Advance). The First Pre-Paid Advance amounted to 94.0% of the principal amount to be drawn down. Interest shall accrue
on the outstanding balance at an annual rate of 5%, subject to an increase to 18% upon an event of default as described in the agreement.
The maturity date is 12 months after its issuance date.
On June 28, 2024, the Company, Triller Corp and Yorkville entered into
the Second A&R SEPA to modify the First A&R SEPA dated April 25, 2024. Pursuant to the Second A&R SEPA, Yorkville provides
to the Company financing in the principal amount of $25 million (the Second Pre-Paid Advance) in the form of an additional
convertible promissory note, subject to the same terms in interest charge and maturity under the First Pre-Paid Advance. The Second Pre-Paid
Advance is amounted to 94.0% of the principal amount to be drawn down. Pursuant to the Amended and Restated Pledge Agreement dated June
28, 2024 (the Triller Pledge Agreement), 3,000,000 shares of common stocks of BKFC held by Triller Corp. were pledged as
collateral.
Yorkville may convert the First Pre-Paid Advance and Second Pre-Paid
Advance into the common shares at any time after the Merger at a fixed conversion price equal to (i) the principal amount and interests,
divided by (ii) the determination of the lower of (a) 100% of the volume weighted average price (VWAP) during the ten trading
days preceding the closing date of the Merger (the Fixed Price), or (b) 92.5% of the lowest daily VWAP during the 10 consecutive
trading days immediately preceding the conversion date or other date of determination (the Variable Price), provided that
the Variable Price shall not be lower than the Floor Price. The Floor Price, solely with respect to the Variable Price,
shall be equal to (i) a price equal to 40% of the average of the VWAPs during the ten (10) trading days immediately preceding the closing
date of the Merger, and (ii) from and after the date of effectiveness of the initial registration statement, 40% of the VWAP of the trading
day immediately prior to the date of effectiveness of the initial registration statement, if such price is lower than the price in part
(i) of this sentence.
F-45
On July 2, 2024, the Company received approximately $23.35 million,
net of approximately $0.15 million legal and professional fee as direct issuance costs incurred in arranging the Second A&R SEPA,
from Yorkville. As of December 31, 2024, the Company issued convertible promissory notes in an aggregate of approximately $33.51 million
to Yorkville.
On June 20, 2025, Yorkville effected a foreclosure under the Triller
Pledge Agreement. Consequently, the Company transferred 3,000,000 shares of common stock of BKFC, previously pledged by Triller Corp.
as collateral, to Yorkville in June 2025. (see Note 26(xi))
*Common Warrants to Yorkville*
Also, pursuant to the First A&R SEPA and 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 25% of the principal amount of the aggregated pre-paid advances divided by a price equal to the Fixed Price, each such Common
Warrant with an exercise price equal to the Fixed Price. On June 28, 2024, the Company issued 1,431,561 common warrants to Yorkville at
a fixed exercise price of $5.85 per share (see Note 17).
The Company analyzed the conversion feature of the agreement for derivative
accounting consideration under ASC 815 and determined that the embedded conversion features should be classified as a derivative because
the exercise price of these convertible notes are subject to a variable conversion rate. The Company has determined that the conversion
feature is not considered to be solely indexed to the Companys own shares and is therefore not afforded equity treatment.
The Company recorded amortization of debt discount and direct issuance
costs and accrued interest of convertible promissory notes payable in interest expense in the consolidated statements of operations and
comprehensive loss of approximately $2.2 million and $0.9 million for the year ended December 31, 2024, respectively.
On November 26, 2024, Yorkville initiated litigation
against Triller, Triller Corp., Triller Hold Co LLC, and Convoy Global Holdings Limited (Defendants) by filing a motion
for summary judgment in lieu of a complaint pursuant to NY CPLR 3213 (the Motion), seeking a judgment finding Defendants
liable for all amounts allegedly owed under the convertible promissory note, including interest, plus costs, legal fees, and expenses
incurred by Yorkville (see Note 25). As of the date of issuance of these consolidated financial statements, the Company has not repaid
the amount due and considered default of settlement.
**NOTE 17
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), Class
A warrants (AGBA Class A Warrants), and common warrants (AGBA Common Warrants) (collectively, 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. An equitable adjustment with a combined ratio of 0.5:1 applied to
the number of AGBA Ordinary Shares issuable on the exercise of each AGBA Warrants and the warrant price. Upon the closing, all warrants
issued by AGBA and Triller Corp. were assigned to and assumed by Triller Group (Triller Group Warrants). Accordingly, as
of the close of business acquisition on October 15, 2024, each AGBA Public Warrant became one Triller Group Warrant which entitles the
holder thereof to purchase 0.25 shares of Triller Group Common Stock at an adjusted exercise price of $23.00 per whole share (provided,
however, warrants are not exercisable for fractional shares, only whole shares; thereby a warrant holder would need to hold four warrants
to yield one share). Each AGBA Class A Warrant and each AGBA Common Warrant became one Triller Group Warrant which entitles the holder
thereof to purchase 0.5 shares of Triller Group Common Stock at an adjusted exercise price of two times of the original exercise price
per whole share (provided, however, warrants are not exercisable for fractional shares, only whole shares; thereby a warrant holder would
need to hold two warrants to yield one share). AGBA Public Warrants started trading on a post-adjustment basis as Triller Group Warrants
on October 16, 2024 under the new ticker symbol ILLRW. All the warrants and their exercise prices are retroactively restated
in effect to the forward stock split and reverse stock split (see Note 19).
The Company has issued different classes of warrants,
as follows:
*Equity Classified Warrants*
|
(a) | 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 $23.00 per full share, subject to adjustment as discussed herein.
Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares. This means that only
an even number of warrants may be exercised at any given time by a warrant holder.
Once the 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 $0.01 per warrant; |
|
F-46
|
| upon a minimum of 30 days prior written notice of redemption, |
|
|
| if, and only if, the last sales price of the common stock equals
or exceeds $16.50 per share for any 20 trading days within a 30 trading day period ending three business days before the Company send
the notice of redemption, and |
|
|
| 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 stock
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 its option
to require all holders to exercise their warrants on a cashless basis will depend on a variety of factors including the
price of its common stock at the time the warrants are called for redemption, the Companys 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 (deficit) equity on the consolidated balance
sheets without subsequent fair value re-measurement.
As of December 31, 2024 and 2023, there were 4,600,000
public warrants of Triller Group Warrants outstanding.
|
(b) | Replacement Warrants | |
On October 15, 2024, pursuant to the Merger Agreement, the Company
issued 14,811,260 Triller Group Replacement Warrants to replace Triller Corp. warrants. Each replacement warrant entitles the holder thereof
to purchase one share of common stock at a price ranges from approximately $0.03 to $26.70 per full share, subject to adjustment as discussed
herein.
The replacement warrants may be exercised in full or in part during
the exercise period from the issue date to 2035. The holders will have the option to exercise warrants on a cashless exercise.
In such event, each holder would pay the exercise price by surrendering the whole warrants for that number of shares equal to the quotient
obtained by dividing (x) the product of the number of shares 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 volume average reported last sale price of the shares for the 10 trading days prior to the exercise date.
As of December 31, 2024 and 2023, there were 14,811,260 and nil replacement
warrants of Replacement Warrants outstanding, respectively.
F-47
*Liability Classified Warrants*
|
(a) | Warrant - Class A | |
On May 2, 2024, the Company issued 3,557,932 shares
of common stock and the associated warrants to purchase up to 734,920 shares of common stock at a purchase price of $1.45 per share under
the private placement, to an institutional investor, a director, officers and employees of the Company. The subscribers in private placement
will receive one Warrant Class A for every five shares of common stock subscribed. Each Warrant Class A entitles the holder
to purchase 0.5 share of common stock at an exercise price of $2.00 per share and shall be exercised with more than $500,000 per tranche.
The warrants will be exercisable six months after the issuance date for a period of five years after the exercise date.
As of December 31, 2024 and 2023, there were
1,469,840 and nil Warrants - Class A of Triller Group Warrants outstanding, respectively, with aggregate value of approximately $1.0
million and nil, respectively.****
****
|
(b) | Common Warrants | |
On June 28, 2024, the Company issued 1,431,561
common warrants to Yorkville, in connection with the Second A&R SEPA (see Note 16). Each common warrant entitles the holder to purchase
1 share of common stock with an exercise price of $5.85 per share.
As of December 31, 2024 and 2023, there were 1,431,561 and nil common
warrants of Triller Group Warrants outstanding, respectively.
The Company has accounted for and presented Warrant
Class A and Common Warrants as liabilities on the 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.
The key inputs into the Binominal pricing model
were as follows at their measurement dates:
|
| |
| | |
|
| |
As of December 31, 2024 | | |
|
| |
Common Warrants | | |
Warrants Class A | | |
|
Input | |
| | |
| | |
|
Share price | |
$ | 2.38 | | |
$ | 2.38 | | |
|
Risk-free interest rate | |
| 4.38 | % | |
| 4.37 | % | |
|
Volatility | |
| 52.67 | % | |
| 52.71 | % | |
|
Exercise price | |
$ | 5.85 | | |
$ | 2.00 | | |
|
Warrant remaining life (years) | |
| 4.49 | | |
| 4.84 | | |
****
F-48
**NOTE 18 OPERATING LEASES**
The Company has entered into a commercial operating
lease with an independent third party for the use of an office in Hong Kong. The lease has an original term exceeding 1 year, but not
more than 3 years with an option to renew a further term of 3 years. The operating leases are included in Right-of-use asset, net
on the consolidated balance sheets and represents the Companys right to use the underlying assets during the lease term. The Companys
obligation to make lease payments are included in Operating lease liabilities on the consolidated balance sheets.
Supplemental balance sheet information related
to the operating lease was as follows:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Operating lease: | |
| | |
| | |
|
Right-of-use asset | |
$ | 12,626 | | |
$ | 12,512 | | |
|
Less: accumulated amortization and impairment | |
| (12,626 | ) | |
| (1,004 | ) | |
|
Right-of-use asset, net | |
$ | | | |
$ | 11,508 | | |
|
| |
| | | |
| | | |
|
Lease liabilities: | |
| | | |
| | | |
|
Current lease liabilities | |
$ | 1,867 | | |
$ | 1,229 | | |
|
Non-current lease liabilities | |
| 807 | | |
| 10,646 | | |
|
Total lease liabilities | |
$ | 2,674 | | |
$ | 11,875 | | |
Operating lease expense for the years ended December 31, 2024 and 2023
was approximately $2.6 million and $1.5 million, respectively.
F-49
In December 2024, the Company assessed that due to change of operation
strategy in its financing service business, the Company believes that the right-of-use asset may not generate economic benefits in the
foreseeable future. The Company considered it is reasonably certain not to exercise the renewal option and remeasured the right-of-use
assets and corresponding lease liabilities as of the effective date of modification. The Company recorded a reduction in operating right-of-use
assets and lease liabilities of approximately $8 million for the year ended December 31, 2024. Consequently, the Company recorded impairment
on right-of-use asset of approximately $1.7 million during the year ended December 31, 2024.
Other supplemental information about the Companys operating
lease as of December 31, 2024 and 2023 are as follow:
| | | As of December 31, | | |
| | | 2024 | | | 2023 | | |
| Weighted average discount rate | | | 5.25 | % | | | 6.58 | % | |
| Weighted average remaining lease term (years) | | | 1.42 | | | | 5.42 | | |
Maturities of operating lease liabilities as of
December 31, 2024 were as follows:
|
For the year ending December 31, | |
Operating lease | | |
|
2025 | |
$ | 1,952 | | |
|
2026 | |
| 814 | | |
|
Total minimum lease payments | |
| 2,766 | | |
|
Less: imputed interest | |
| (92 | ) | |
|
Total operating lease liabilities | |
$ | 2,674 | | |
**NOTE 19
STOCKHOLDERS (DEFICIT) EQUITY**
|
(a) | Common Stock | |
To date, the Companys common stock is currently traded on the
Expert Market of Over-the-Counter Markets Group under the symbol ILLR, which was previously traded on the Nasdaq Capital
Market under the symbol AGBA or ILLR.
As of December 31, 2023, the Company has authorized
shares of 1,000,000,000 common stocks with a par value of $0.001 per share.
On September 19, 2024, the stockholders of the
Company approved the amendment to the Companys Fifth Amended and Restated Memorandum and Articles of Association to increase the
number ofauthorized common stock of the Company from 1,000,000,000 shares to 1,500,000,000 shares.
On October 1, 2024, the Company effected a 1.9365-to-1
forward stock split (the Forward Split), resulting in an increase in the total number of authorized common stocks from 1,500,000,000
to 2,904,753,145, an increase in the outstanding ordinary shares from 97,736,035 shares to 189,265,804 shares and a reduction of par value
from $0.001 to $0.000516395 per share.
Further, on October 15, 2024, immediately prior
to the completion of the redomiciliation and Merger Transaction, the Company 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 stock options, warrants, and
common warrants in accordance with their respective terms. The Reverse Split did not change the par value of the Companys common
stock or the authorized number of shares. All fractional shares were rounded up to the nearest whole share with respect to outstanding
shares of common stock.
All share and warrant numbers and per share amounts
are retroactively presented in this Form 10-K to reflect the impact of the Forward Split and the Reverse Split as if they had taken effect
on January 1, 2023.
On October 15, 2024, the Company changed its legal
jurisdiction from British Virgin Islands to the State of Delaware.
As of December 31, 2024 and to date, the Company has authorized share
capital of 150,000,000,000 common stocks with a par value of $0.001 per share. As of December 31, 2023, the number of authorized common
stock has been retroactively adjusted to 484,125,000 to reflect the impact of Forward Split and Reverse Split.
F-50
As of December 31, 2024, the Company has 138,143,817
shares of common stock issued and outstanding with below movement:
| (i) | 167,586 shares of common stock to the directors and officers of the
Company under the Share Award Scheme (the Scheme), whose shares were vested in 2023. | |
| (ii) | 8,079,002 shares of common stock to a director, officers and employees
of the Company to compensate for the contributions of their services and performance. | |
| (iii) | 3,157,068 shares of common stock to certain consultants to compensate their services rendered which included 636,899 shares issued to a related company owned by the former Chairman of the Company for advisory services. As of December 31, 2024, the unrecognized deferred equity compensation amounting to approximately $6.4 million was recorded and will be amortized over the remaining service period. | |
| (iv) | 484,125 shares of common stock to Apex Twinkle Limited to partially settle the finder fee payable. | |
| (v) | 3,557,932 shares of common stock and the associated warrants to purchase 734,920 shares of common stock at a purchase price of $1.45 per share under the private placement, to an institutional investor, a director, officers and employees of the Company, on May 2, 2024. Among 3,557,932 shares of common stock, in December 2023, the Company received gross proceeds of approximately $1.9 million from an institutional investor in exchange of 1,279,688 shares of common stock and settled the accrued salaries of approximately $1.2 million with an aggregate of 859,564 shares of common stock to a director, officers and employees of the Company. The remaining 1,418,680 shares of common stock were issued to a director of the Company. | |
| (vi) | 3,558,319 shares of common stock to stockholder of Investment H in
September 2024 with the aggregate fair value of approximately $18.5 million, at the market value of $2.51 per share in exchange of 285,353
of Class C units of Investment H, equal to 3.79% of its equity interest as of transfer date. (see Note 10(c)) | |
| (vii) | 1,306,970 shares of common stock to the directors and officers for
the settlement of the accrued salaries and salaries incurred during the year. | |
| (viii) | 290,475 shares of common stock to the independent directors of the Company under the 2024 Equity Incentive Plan. | |
F-51
| (ix) | 480,426 shares of common stock to Yorkville as a commitment fee pursuant
to A&R SEPA. (see Note 16(iii)) | |
| (x) | 83,468,631 shares of common stock to the Triller Corp stockholders in connection with the Merger Transaction. (see Note 4) | |
| (xi) | 183,815 shares of common stock for settlement of claims that related to the affairs of Triller Corp. prior to the Closing date with common stock held in escrow. (see Note 4) | |
| (xii) | 168,477 fractional shares of common stock resulting from rounding up to whole shares upon the effectiveness of Reverse Split. | |
There were 138,143,817 and 33,240,991 shares of
common stock issued and outstanding, as of December 31, 2024 and 2023, respectively.
To the date of the accompanying consolidated financial statements issued,
there were 197,266,991 shares of common stock issued and outstanding. The subsequent issuance of substantial number of common stocks is
listed from (i) to (vii) in Note 26.
For the years ended December 31, 2024 and
2023, the Company recorded approximately $77.8 million and $11.2 million stock-based compensation expense, respectively which is
included in the personnel and benefit expense and legal and professional fee in the consolidated statements of operations and comprehensive loss.
|
(b) | 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 Companys 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.
As of December 31, 2024 and to date, the Company has authorized a total
of 100,000,000 shares of preferred stock with a par value of $0.001 per share. Of this amount the Company has authorized 50,000,000 shares
and 50,000,000 shares to two classes of preferred stock, Series A-1 Preferred Stock and Series B Preferred Stock, respectively.
A description of each class of preferred stock
is listed below:
*Series A-1 Preferred Stock*
The Company designated up to 11,803,398 shares
as Series A-1 Preferred Stock, with a par value of $0.001 per share. Each share of Series A-1 Preferred Stock shall be convertible, at
the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and non-assessable shares of common stock.
In connection with the Merger Transaction, 11,801,804 shares of Series
A-1 Preferred Stock are issued to the holders of Triller Corp. preferred stock and 11,801,804 shares of Series A-1 Preferred Stock are
to be issued to dom Ventures Limited.
There were 11,801,804 and nil shares of Series
A-1 Preferred Stock issued and outstanding as of December 31, 2024 and 2023, respectively.
*Series B Preferred Stock*
The Company designated up to 35,000 shares of
Series B Preferred Stock, with a par value of $0.001 per share. Each share of Series B Preferred Stock shall be entitled to 10,000 votes
for each share of Series B Preferred Stock held by such holder.
In connection with the Merger Transaction, the
Company issued an aggregate of 30,851 shares of super voting Series B preferred stock of the Company (the Super Voting Shares)
to Green Nature Limited (GNL), a company controlled by the controlling stockholder of the Company, with each Super Voting
Share entitled to 10,000 votes on all matters.
There were 30,851 and nil shares of Series B Preferred
Stock issued and outstanding as of December 31, 2024 and 2023, respectively.
F-52
|
(c) | Preferred
Stock To Be Issued |
|
There were
11,801,804 shares of Series A-1 preferred stock to be issued in connection with the Merger Transaction which were subsequently
settled with 11,807,332 common stocks in March 2025 (see Note 4).
|
(d) | Common
Stock To Be Issued |
|
As of December 31 ,2024, the Company has committed
to issue common stocks as compensation for services:
| (i) | 9,682,500 common stocks to a consultant under a consulting agreement. | |
| (ii) | 5,340,211 common stocks to directors, officers and employees under equity incentive plans for their service and performance | |
There were 15,022,711 and 2,350,081 shares of common
stock to be issued, as of December 31, 2024 and 2023, respectively.
|
(e) | Common
Stock Held In Escrow |
|
There were 24,206,246
shares of common stock deposited into an escrow account in the name of the Company, acting as escrow agent, in connection with the Merger
Transaction (see Note 4).
During the year ended December 31, 2024, 183,815 shares of common stock
held in escrow are transferred out to settle claims that relate to the affairs of Triller Corp. prior to the Closing date.
There were 24,022,431 and nil shares
of common stock held in escrow issued and outstanding as of December 31, 2024 and 2023, respectively.
|
(f) | Forgiveness
of Amount Due to Stockholder |
|
During the years ended December 31, 2024 and 2023, stockholder
of the Company agreed to forgive a debt of nil and approximately $12.6 million , in aggregate, respectively representing certain amounts
due to it and treat as additional paid-in capital.
|
(g) | 2023 Share Award Scheme (the Share Award Scheme) |
|
Pursuant to the Share Award Scheme, the Company
filed S-8 registration statement to register up to 5,652,352 shares of common stock on February 24, 2023.
The fair value of the common stock granted during
the period is measured based on the closing price of the Companys 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 stock-based compensation expense in the consolidated
statements of operations and comprehensive loss.
As of December 31, 2024, 14,556 shares of common
stock are available to issue under the Share Award Scheme.
F-53
*Restricted Share Units (RSUs)*
In December 2022, the Company approved and granted
2,420,625 shares of common stock as RSUs to employees and consultants as additional compensation under the Scheme. These RSUs typically
will be vested over one to four years period from 2023 to 2026.
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 10% forfeitures.
On January 22, 2024 and June 18, 2024, the Company
issued 161,775 and 5,811 shares of common stock, respectively, to the directors and officers of the Company under the Scheme, whose shares
were vested in 2023.
During the year ended December 31, 2024 and
2023, the Company recorded approximately $0.8 million and $1.9 million stock-based compensation expense, respectively which is included in the
personnel and benefit expenses in the consolidated statements of operations and comprehensive loss.
As of December 31, 2024, total unrecognized compensation remaining
to be recognized in future periods for RSUs totaled approximately $0.5 million. They are expected to be recognized over the weighted average
period of 0.89 years.
A summary of the activities for the Companys
RSUs as of December 31, 2024 and 2023 is as follow:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
| |
Number of RSUs | | |
Weighted Average Grant Price | | |
Number of RSUs | | |
Weighted Average Grant Price | | |
|
| |
| | |
| | |
| | |
| | |
|
Outstanding, beginning of year | |
| 634,072 | | |
$ | 5.09 | | |
| 2,420,625 | | |
$ | 5.09 | | |
|
Granted | |
| | | |
$ | | | |
| (167,770 | ) | |
$ | | | |
|
Vested | |
| (95,525 | ) | |
$ | 5.09 | | |
| (1,618,783 | ) | |
$ | 5.09 | |
|
Forfeited | |
| (149,864 | ) | |
$ | 5.09 | | |
| | | |
$ | | | |
|
Outstanding, end of year | |
| 388,683 | | |
$ | 5.09 | | |
| 634,072 | | |
$ | 5.09 | | |
|
(h) | 2024 Equity Incentive Plan | |
Pursuant to the 2024 Equity Incentive Plan (the
2024 Plan), the Company filed S-8 registration statement to register 7,746,000 and 30,998,400 shares of common stock on
August 29, 2024 and November 27, 2024, respectively.
The fair value of the common stock granted during
the period is measured based on the closing price of the Companys 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 stock-based compensation expense in the consolidated
statements of operations and comprehensive loss.
As of December 31, 2024, 24,508,411 shares of
common stock are available to issue under the 2024 Plan.
****
*RSUs previously held by Triller Corp. (Triller
RSUs)*
In connection with the Merger Transaction, the
Company approved the conversion of all RSUs under Triller Corp. into 17,004,025 shares of common stocks of the Company as RSUs to certain
employees, and the reservation of an aggregate of 17,004,025 shares of common stocks for future issuance upon the vesting of the RSUs.
Triller RSUs typically will be vested over one to three years period from 2025 to 2027.
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.
During the year ended December 31, 2024 and 2023,
the Company recorded approximately $20.3 million and nil stock-based compensation expense, respectively which is included in the personnel
and benefit expenses in the consolidated statements of operations and comprehensive loss.
As of December 31, 2024, total unrecognized compensation
remaining to be recognized in future periods for RSUs totaled approximately $74.9 million. They are expected to be recognized over the
weighted average period of 1.29 years.
F-54
A summary of the activities for the Triller RSUs
as of December 31, 2024 and 2023 is as follow:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
| |
Number of RSUs | | |
Weighted Average Grant Price | | |
Number of RSUs | | |
Weighted Average Grant Price | | |
|
| |
| | |
| | |
| | |
| | |
|
Outstanding, beginning of year | |
| | | |
$ | | | |
| | | |
$ | | | |
|
Granted | |
| 17,004,025 | | |
$ | 5.60 | | |
| | | |
$ | | | |
|
Outstanding, end of year | |
| 17,004,025 | | |
$ | 5.60 | | |
| | | |
$ | | | |
*Share Incentive (the Incentive Scheme)*
During the year ended December 31, 2024, an aggregate
of 16,266,600 shares were granted to the former chairman, directors and officers of the Company and vested upon closing of the Merger
Transaction. Among these, 4,841,250 were vested monthly in equal instalments over next two years from the Closing Date.
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 issued 6,584,100 shares of common
stock to the directors and officers of the Company, whose shares were vested in 2024.
During the year ended December 31, 2024 and 2023,
the Company recorded approximately $40.8 million and nil stock-based compensation expense, respectively which is included in the personnel
and benefit expenses in the consolidated statements of operations and comprehensive loss.
As of December 31, 2024, total unrecognized compensation
remaining to be recognized in future periods for Incentive Scheme totaled approximately $11.3 million. They are expected to be recognized
over the weighted average period of 0.96 years.
A summary of the activities for the Incentive
Plan as of December 31, 2024 and 2023 is as follow:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
| |
Number of Shares | | |
Weighted Average Grant Price | | |
Number of Shares | | |
Weighted Average Grant Price | | |
|
| |
| | |
| | |
| | |
| | |
|
Outstanding, beginning of year | |
| | | |
$ | | | |
| | | |
$ | | | |
|
Granted | |
| 16,266,600 | | |
$ | 3.68 | | |
| | | |
$ | | | |
|
Vested | |
| (11,828,788 | ) | |
$ | 3.68 | | |
| | | |
$ | | | |
|
Outstanding, end of year | |
| 4,437,812 | | |
$ | 3.68 | | |
| | | |
$ | | | |
**NOTE 20 OPERATING EXPENSES**
*Personnel and Benefit Expense*
Personnel and benefit expense mainly consisted of salaries and bonus
paid and payable to the employees, a portion of which was settled by the issuance of common stock of the Company.
During the years ended December 31, 2024 and 2023, the Company recorded
approximately $84.9 million and $27.2 million personnel and benefit expense, of which approximately $67.7 million and $3.3 million was
stock-based related, respectively.
*Other General and Administrative Expenses*
The Company incurred different types of expenditures under other general
and administrative expenses. They primarily consist of depreciation and amortization, allowance for expected credit losses, legal and
professional fees, and management fee expenses which are allocated for certain corporate office expenses.
During the years ended December 31, 2024 and 2023, the Company recorded
approximately $36.5 million and $24.5 million other general and administrative expenses, respectively.
F-55
****
**NOTE 21 NET LOSS PER SHARE**
As the Company reported a net loss for the years
ended December 31, 2024 and 2023, it was required by ASC 260 to use basic weighted-average shares outstanding when calculating diluted
net loss per share for the years ended December 31, 2024 and 2023, as the potential dilutive securities are anti-dilutive.
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Numerator: | |
| | |
| | |
|
Net loss | |
$ | (1,138,036 | ) | |
$ | (49,206 | ) | |
|
| |
| | | |
| | | |
|
Denominator: | |
| | | |
| | | |
|
Weighted average shares outstanding | |
| | | |
| | | |
|
- Basic and diluted | |
| 62,956,073 | | |
| 31,596,610 | | |
|
| |
| | | |
| | | |
|
Net loss per share | |
| | | |
| | | |
|
- Basic and diluted | |
$ | (18.08 | ) | |
$ | (1.56 | ) | |
For the years ended December 31, 2024 and 2023,
diluted weighted average common stock outstanding is equal to basic weighted average common stock, due to the Companys net loss position.
Hence, no common stock equivalents were included in the computation of diluted net loss per share since such inclusion would have been
antidilutive.
**NOTE 22 INCOME TAX EXPENSE**
The provision for income tax expense consisted
of the following:
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
U.S. | |
$ | | | |
$ | | | |
|
Other than U.S. | |
| | | |
| 287 | | |
|
Income tax expense | |
$ | | | |
$ | 287 | | |
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Current tax | |
$ | | | |
$ | 332 | | |
|
Deferred tax | |
| | | |
| (45 | ) | |
|
Income tax expense | |
$ | | | |
$ | 287 | | |
F-56
The Companys subsidiaries mainly operate
in Hong Kong and the U.S. that are subject to taxes in the jurisdictions in which they operate, as follows:
****
*British Virgin
Islands*
The Companys subsidiaries are incorporated
in the British Virgin Islands and is not subject to taxation. In addition, upon payments of dividends by these entities to their stockholders,
no British Virgin Islands withholding tax will be imposed.
*Hong Kong*
The Companys subsidiaries operating in
Hong Kong are subject to the Hong Kong Profits Tax at the income tax rates ranging from 8.25% to 16.5% on the assessable income arising
in Hong Kong during its tax year.
For the years ended December 31, 2024 and 2023,
Hong Kong profits tax is calculated in accordance with the two-tiered profits tax rates regime. The applicable tax rate for the first
HK$ 2 million of assessable profits is 8.25% and assessable profits above HK$ 2 million will continue to be subject to the rate of 16.5%
for corporations in Hong Kong, effective from the year of assessment 2018/2019.
*United States of America*
Upon the domiciliation from the British Virgin
Islands to the State of Delaware, the Company is subject to the federal income tax rate of 21%.
The reconciliation of income tax rate to the effective
income tax rate based on loss before income tax expense for the years ended December 31, 2024 and 2023 are as follows:
|
| |
For
the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
| |
| | |
| | |
|
Loss before income
taxes | |
$ | (1,138,036 | ) | |
$ | (48,919 | ) | |
|
Statutory
income tax rate | |
| 16.5 | % | |
| 16.5 | % | |
|
Income tax expense at statutory
rate | |
| (187,776 | ) | |
| (8,072 | ) | |
|
Income not subject to taxes | |
| (7,641 | ) | |
| (2,563 | ) | |
|
Non-deductible items: | |
| | | |
| | | |
|
- Share based compensation | |
| 12,833 | | |
| 1,854 | | |
|
- Investment loss | |
| 2,635 | | |
| 1,135 | | |
|
- Others (a) | |
| 178,777 | | |
| | | |
|
Effect of difference tax jurisdiction | |
| (309 | ) | |
| | | |
|
Under provision of prior years | |
| | | |
| 221 | | |
|
Change in valuation allowance | |
| 1,481 | | |
| 7,733 | | |
|
Tax
holiday | |
| | | |
| (21 | ) | |
|
Income
tax expense | |
$ | | | |
$ | 287 | | |
Note:
|
(a) | For the year ended December 31, 2024, other non-deductible
expenses mainly consisted of impairment loss on goodwill and other non-current assets. |
|
F-57
The following
table sets forth the significant components of the deferred tax assets of the Company as of December 31, 2024 and 2023:
|
| |
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Deferred tax assets, net: | |
| | | |
| | | |
|
Net operating loss carryforwards | |
$ | 10,446 | | |
$ | 8,909 | | |
|
Less: valuation allowance | |
| (10,446 | ) | |
| (8,909 | ) | |
|
Deferred tax assets, net: | |
$ | | | |
$ | | | |
The movement
of valuation allowance is as follows:
|
| |
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Balance as of beginning of the year | |
$ | (8,909 | ) | |
$ | (5,461 | ) | |
|
Additions | |
| (1,537 | ) | |
| (3,448 | ) | |
|
Balance as of end of the year | |
$ | (10,446 | ) | |
$ | (8,909 | ) | |
As of December 31, 2024 and 2023, the
operations incurred approximately $61.5 million and $54.0 million, respectively of cumulative net operating losses, which can be carried forward
to offset future taxable income. Net operating loss can be carried forward indefinitely but cannot be carried back to prior years.
There are no group relief provisions for losses or transfers of assets under Hong Kong tax regime. Each company within a corporate
group is taxed as a separate entity. The Company has provided for a full valuation allowance against the deferred tax assets on the
expected future tax benefits from the net operating loss carryforwards as the management believes that it is more likely that not
all of these assets will be realized in the future. The valuation allowance is reviewed annually.
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 December 31, 2024 and 2023, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31,
2024 and 2023 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from
December 31, 2024.
F-58
**NOTE 23
RELATED PARTY BALANCES AND TRANSACTIONS**
The table below sets forth major related parties
of the Company and their relationships with the Company.
| Name | | Relationship with the Company | |
| Mr. Tsai Ming Hsing, Richard (Mr. Tsai) | | Controlling stockholder of the Company | |
| Mr. Ng Wing Fai (Mr. Ng) | | Chief Executive Officer and Executive Director of the Company | |
| Mr. Robert E. Diamond, Jr. (Diamond) | | Former chairman of the Company (resigned on December 12, 2024) | |
| Ms. Wong Suet Fai Almond | | Chief Operating Officer of the Company | |
| TAG Holdings Limited | | Stockholder and immediate holding company of the Company | |
| TAG Financial Holdings Limited | | Company controlled by Mr. Tsai | |
| Convoy Financial Services Limited | | Company controlled by Mr. Tsai | |
| Convoy Global Holdings Limited | | Company controlled by Mr. Tsai | |
| Giant Wisdom Ventures Limited | | Company controlled by Mr. Tsai | |
| Green Nature Limited | | Company controlled by Mr. Tsai | |
| Total Formation Inc. | | Stockholder of the Company and company controlled by Mr. Tsai | |
| JFA Capital | | Investment private funds controlled by Mr. Tsai | |
| NSD Capital | | Investment private funds controlled by Mr.
Tsai | |
| Atlas Merchant Capital LLC | | Company controlled by Diamond | |
| DeSilva 2000 Living Trust | | Company controlled by director of subsidiaries of the Company | |
| HCMPS Healthcare Holdings Limited | | Company with common director Mr. Ng | |
In support of the Companys 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 stockholder. Amounts
represent advances or amounts paid in satisfaction of liabilities.
|
(i) | Related party balances | |
Related party balances consisted of the following:
|
| |
| |
As of December 31, | | |
|
| |
| |
2024 | | |
2023 | | |
|
| |
| |
| | |
| | |
|
Balance with related parties: | |
| |
| | |
| | |
|
Accounts receivable | |
(a) | |
$ | | | |
$ | 1,094 | | |
|
Other current liabilities | |
(b) | |
$ | 1,251 | | |
$ | | | |
|
Borrowings | |
(c) | |
$ | 29,181 | | |
$ | 5,000 | | |
|
Amount due to stockholder | |
(d) | |
$ | | | |
$ | 2,906 | | |
|
Long-term investment Investment E | |
(e) | |
$ | 525 | | |
$ | 523 | | |
|
Convertible debts | |
(f) | |
$ | 53,106 | | |
$ | | | |
|
(a) | Accounts receivable due from related parties represented the management service rendered to two individual close-ended investment private funds registered in the Cayman Islands, which are controlled by the controlling stockholder of the Company. | |
| (b) | Other current liabilities due to related parties represented the interest
payable accrued on the short-term borrowings from four related parties (see Note 15(c)). | |
| (c) | Borrowings consisted of short-term loans obtained from the Companys Chief Operating Officer, TAG Holdings Limited, Giant Wisdom Ventures Limited and DeSilva 2000 Living Trust. The amounts were secured, interest-bearing and repayable on demand (see Note 15(c)). | |
F-59
| (d) | Amount due to stockholder are those nontrade payables arising from transactions between the Company and TAG Holdings Limited, such as advances made by TAG Holdings Limited on behalf of the Company, advances made by the Company on behalf of TAG Holdings Limited, and allocated shared expenses paid by TAG Holdings Limited. During the years ended December 31, 2024 and 2023, amounts due to stockholder of nil and $12.6 million, respectively, were forgiven (see Note 19(f)). | |
|
(e) | In May 2021, the Company purchased 4% equity interest in HCMPS Healthcare Holdings Limited, which has common director with the Company, based on
historical cost. |
|
| (f) | The convertible debts obtained from Total Formation Inc. and Giant
Wisdom Ventures Limited. (see Note 16). | |
|
(ii) | Transactions with related parties | |
In the ordinary course of business, during the
years ended December 31, 2024 and 2023, the Company involved with transactions, either at cost or current market prices and on the normal
commercial terms among related parties. The following table provides the transactions with these parties for the periods as presented
(for the portion of such period that they were considered related):
|
| |
| |
For the years ended December 31, | | |
|
| |
| |
2024 | | |
2023 | | |
|
| |
| |
| | |
| | |
|
Asset management service income | |
(g) | |
$ | - | | |
$ | 970 | | |
|
Office rental and operating fees | |
(h) | |
$ | 4,303 | | |
$ | 6,040 | | |
|
Legal and professional fees | |
(i) | |
$ | 949 | | |
$ | 333 | | |
|
Interest expense | |
(j) | |
$ | 1,024 | | |
$ | - | | |
| (g) | Under the management agreements, the Company shall provide management service to the portfolio assets held by two individual close-ended investment private funds in the Cayman Islands, which are controlled by the controlling stockholder of the 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. | |
|
(h) | Pursuant to the service agreement, the Company agreed to pay the office and administrative expenses to
TAG Holdings Limited and Convoy Financial Services Limited for the use of office premises, including, among other things, building management fees, government rates and rent,
office rent, and lease-related interest and depreciation that were actually incurred. | |
|
(i) | On September 19, 2023, the Company entered into an advisory services agreement with Atlas Merchant Capital LLC, a company controlled by its former chairman, for a monthly fee of approximately $0.8 million. The service will be terminated by either party upon 90 days prior written notice. | |
|
(j) | The
interest expense incurred for borrowings from four related parties (see Note 15(c)). |
|
Apart from the transactions and balances detailed
above and elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related
party transactions during the years presented.
F-60
**NOTE 24
RISK AND UNCERTAINTIES**
The Company
is exposed to the following concentrations of risk:
|
(a) | Major customers | |
For the years ended December 31, 2024 and 2023,
the customers who accounted for 10% or more of the Companys revenues and its outstanding receivable balances at year-end dates,
are presented as follows:
|
| |
For the year ended December 31, 2024 | | |
As of December 31, 2024 | | |
|
Customer | |
Revenues | | |
Percentage of revenues | | |
Accounts receivable | | |
|
Customer A | |
$ | 4,726 | | |
| 17 | % | |
$ | 141 | | |
|
Customer B | |
$ | 3,841 | | |
| 14 | % | |
$ | | | |
|
| |
For the year ended
December 31,
2023 | | |
As of
December 31,
2023 | | |
|
Customer | |
Revenues | | |
Percentage of
revenues | | |
Accounts receivable | | |
|
Customer A | |
$ | 14,452 | | |
| 27 | % | |
$ | 1,092 | | |
|
Customer B | |
$ | 5,961 | | |
| 11 | % | |
$ | 61 | | |
|
Customer C | |
$ | 5,923 | | |
| 11 | % | |
$ | 2 | | |
|
(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. As of December 31, 2024, the Company maintained a total of approximately $17.26 million at financial institutions, consisting
of approximately $15.86 million held in Hong Kong, including a cash balance of approximately $1.66 million and escrow funds of approximately
$14.20 million, of which approximately $15.86 million was subject to credit risk, and approximately $1.40 million in cash held in the
United States. These balances are protected by the Hong Kong Deposit Protection Board, which provides coverage up to a limit of HK$0.8
million (approximately $0.1 million) if the bank with which an individual/a company hold its eligible deposit fails, effective from October
1, 2024, and the Federal Deposit Insurance Corporation (FDIC) in the United States. While management considers these financial
institutions to be of high credit quality, it continuously monitors their creditworthiness.
F-61
For accounts receivable and loans 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 Companys
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.
****
|
(c) | Economic and political risk | |
The Companys major operations are conducted
in Hong Kong and the United States of America. Accordingly, the political, economic, and legal environments in Hong Kong and the United
States of America, as well as the general state of their economies may influence the Companys business, financial condition, and
results of operations.
In February 2022, the Russian Federation and Belarus
commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have
instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on
the world economy are not determinable as of the date of these consolidated financial statements. The specific impact on the Companys
financial condition, results of operations, and cash flows is also not determinable as of the date of these consolidated financial statements.
|
(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.
For the years ended December 31, 2024 and 2023,
the Company recorded the foreign exchange loss of approximately $0.70 million and foreign exchange gain of approximately $0.91 million,
respectively, mainly attributable from the long-term investments which are mostly denominated in Sterling.
|
(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 Companys 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 Companys 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.
F-62
**NOTE 25
COMMITMENTS AND CONTINGENCIES**
*Contractual Commitments*
*Sale and Purchase Agreement with Sony Life
Singapore*
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 SGD2.5 million (equivalent to approximately $1.88 million). 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 SGD0.25 million
(equivalent to approximately $0.19 million) 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 SGD0.15 million (equivalent
to approximately $0.11 million) as the extension fee and indemnification fee in July 2024. On October 3, 2024 and January 30, 2025, the
Company and SLS entered into the sixth and seventh supplementary agreements, respectively to extend the closing date of the transaction
to February 28, 2025.
Subsequently on March 14, 2025, SLS issued a termination notice to
terminate the agreement due to the Companys failure to complete the transaction. On April 21, 2025, the Company and SLS entered
into a settlement agreement under which the Company is obligated to pay SLS a settlement amount of SGD 1.85 million (equivalent to approximately
$1.4 million) on or before August 31, 2025. In addition, SLS has claimed further damages of SGD 0.1 million (equivalent to approximately
$0.07 million) arising from the Companys breach of its obligations under the agreement. Both the settlement amount and the additional
damages claim bear interest at a rate of 5.33% per annum, accruing from March 5, 2025, until the date of full payment.
*Legal Matters and Other Contingencies*
From time to time, the Company is party to various
claims and legal proceedings incident to the operation of its business. For example, the Company is currently involved in proceedings
brought by music companies relating to the payment of royalties for music used on its platform, employment and related matters, consumer
class actions and suits alleging, among other things, violations of state consumer protection or privacy laws, and contractual disputes
over representations and warranties and post-closing obligations associated with business acquisitions.
In addition, third parties have from time to time
claimed, and others may claim in the future, that the Company has infringed their intellectual property rights. The Company is subject
to intellectual property disputes, including patent infringement claims, and management expects that it will continue to be subject to
intellectual property infringement claims as its services expand in scope and complexity. The Company is not presently involved in any
patent infringement and other intellectual property-related lawsuits. The Company may also become more vulnerable to third-party claims
as laws such as the Digital Millennium Copyright Act are interpreted by the courts, and the Company becomes subject to laws in jurisdictions
where the underlying laws with respect to the potential liability of online intermediaries are either unclear or less favorable. Management
believes that additional lawsuits alleging that the Company has violated patent, copyright or trademark laws may be filed against it.
Intellectual property claims, whether meritorious or not, are time consuming and often costly to resolve, could require expensive changes
in the Companys methods of doing business or the goods it sells, or could require the Company to enter into costly royalty or licensing
agreements.
F-63
The Company is also subject to consumer claims
or lawsuits relating to alleged violations of consumer protection or privacy rights and statutes, some of which could involve potentially
substantial claims for damages, including statutory or punitive damages. Consumer and privacy-related claims or lawsuits, whether meritorious
or not, could be time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs
of doing business through adverse judgment or settlement, or require the Company to change its business practices, sometimes in expensive
ways.
The Company is also subject to, or in the future
may become subject to, a variety of regulatory inquiries, audits, and investigations across the jurisdictions where it conducts business,
including, for example, inquiries related to consumer protection, employment matters and/or hiring practices, marketing practices, tax,
unclaimed property and privacy rules and regulations. Any regulatory actions against the Company, whether meritorious or not, could be
time consuming, result in costly litigation, damage awards, fines and penalties, injunctive relief or increased costs of doing business
through adverse judgment or settlement, require the Company to change its business practices in expensive ways, require significant amounts
of management time, result in the diversion of significant operational resources, materially damage its brand or reputation, or otherwise
harm its business.
Legal expenses related to defense, negotiations,
settlements, rulings and advice of outside legal counsel are expensed as incurred.
The Company establishes an accrued liability
for loss contingencies related to legal and regulatory matters when the loss is both probable and reasonably estimable. Those accruals
represent managements best estimate of probable losses and, in such cases, there may be an exposure to loss in excess of the amounts
accrued. For certain of the matters described above, there are inherent and significant uncertainties based on, among other factors,
the stage of the proceedings, developments in the applicable facts of law, or the lack of a specific damage claim.
The Companys accrued liabilities for loss
contingencies related to legal and regulatory matters may change in the future as a result of new developments, including, but not limited
to, the occurrence of new legal matters, changes in the law or regulatory environment, adverse or favorable rulings, newly discovered
facts relevant to the matter, or changes in the strategy for the matter. Regardless of the outcome, litigation and other regulatory matters
can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.
The following describes material legal proceedings in which the Company is involved as
of December 31, 2024:
|
(i) | Action Case: CACV 1116/2025 (on appeal from HCA702/2018) |
|
On March 27, 2018, the writ of summons was issued
against the Company and seven related companies of the former shareholder (the Defendants) 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. On October 31, 2025, the Court
granted judgement in favor of the Plaintiff. On November 28, 2025, the Defendants lodged and served the Notice of Appeal (CACV 1116/2025)
to the Court of Appeal. 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 appeal or the range of reasonably possible loss as the Court is in the process of quantifying
the amount of damages.
F-64
|
(ii) | Action Case: HCA765/2019 |
|
On April 30, 2019, the writ of summons was issued
against the Companys 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 $2.6 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. On February
17, 2025, the Company filed an amended defence to the court and the next case management conference is fixed to be heard on January 6,
2026. The case be adjourned to July 21, 2026 for another case management conference and parties can attempt mediation to resolve the dispute
before the schedule case management conference. 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.
|
(iii) | 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 $1.7 million. The Company previously
made approximately $0.8 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 pre-trial review
is fixed to be heard on January 29, 2026 and the 6-days trial is fixed to be heard from May 14 to 21, 2026. The case is on-going and legal
counsel of the Company will continue to handle this matter. As of December 31, 2024, the Company accrued a legal provision of approximately
$0.8 million as a liability in the consolidated balance sheets.
|
(iv) | Sony Music Entertainment |
|
**
In connection with the Merger Transaction, the
Company assumed the liabilities of Triller Corp, including the legal contingency accrual stemming from the litigation with Sony Music
Entertainment (Sony) alleging claims for breach of contract, copyright infringement, contributory copyright infringement,
and vicarious copyright infringement. The court entered judgement pursuant to stipulation in the amount of approximately $3.6 million
requiring Triller Corp to make monthly payments through May 21, 2025. Triller Corp defaulted on the payments and judgement was entered
against Triller Corp on August 27, 2024 for the full amount due. As of December 31, 2024 , approximately $3.6 million is included as a
liability in the consolidated balance sheets.
**
|
(v) | Sony Music Publishing Europe Limited (SOLAR) |
|
In connection with the Merger Transaction,
the Company assumed the liabilities of Triller Corp, including the legal contingency accrual stemming from the complaint filed by
SOLAR in the London, United Kingdom Circuit Common Court alleging claims of songwriter/producer music publishing rights
infringement. A default judgement for 3.8 million was ruled in SOLARs favor and SOLAR filed an action in the Superior
Court of California for the County of Los Angeles for recognition of this foreign country money judgment in the amount of approximately $4.4
million. As of December 31, 2024, this amount is included as a liability in the consolidated balance sheets.
F-65
|
(vi) | Music Licensing |
|
Triller Corp has outstanding contractual obligations to various record
labels, music publishers and performing rights organizations (collectively, Rightsholders) who have licensed to Triller
Corp the right to use sound recordings and musical compositions in connection with the operation of the Triller app and other aspects
of the Companys business. As of December 31, 2024, the Company has recorded liabilities in the amount of approximately $30.0 million
for unpaid amounts owed under its music licenses. Triller Corp is also involved in various legal proceedings and has received threats
of litigation from Rightsholders. Triller Corp believes it may be or become liable to Rightsholders for additional amounts such as interest,
penalty fees, attorneys fees, copyright infringement damages and other amounts, but is currently unable to estimate the probability
of loss associated with these actions or the range or reasonably possible losses, if any, or the impact such losses may have on the Companys
results of operations, financial condition or cash flows.
|
(vii) | Fox Plaza Lease |
|
In connection with the Merger Transaction, the Company assumed the
liabilities of Triller Corp, including the legal contingency accrual stemming from the ongoing litigation with Fox Plaza, LLC due to an
alleged breach of a commercial office lease agreement as a result of an alleged failure to pay rents under the agreement. The plaintiff
seeks damages in excess of approximately $3.5 million, plus attorneys fees, costs of suit, and additional damages to be proven
at trial. Triller Corp intends to vigorously defend itself in this matter. The Company has accrued approximately $1.8 million as a liability
pertaining to this claim on the consolidated balance sheets. It is reasonably possible that the potential loss may exceed the accrued
liability amount.
|
(viii) |
Concentrix
Daksh | |
In connection with the Merger Transaction, the
Company assumed the liabilities of Triller Corp, including the legal contingency accrual stemming from the arbitration with Concentrix
Daksh Services India Private Ltd. (Concentrix). Concentrix alleges wrongful early termination of a services agreement and
seeks damages of approximately $2.0 million in lost profits, plus interest and fees. The Company has accrued approximately $2.0 million
as a liability pertaining to this matter. While the Company intends to defend the claim vigorously, management believes the recorded
amount represents the probable loss as of December 31, 2024.
|
(ix) |
Epic
Sports & Entertainment | |
In connection with the Merger Transaction, the
Company assumed the liabilities of Triller Hold Co LLC and Triller Fight Club LLC related to litigation with Epic Sports & Entertainment,
Inc. (Epic) for alleged breach of a settlement agreement. Epic initially claimed damages of approximately $1.8 million,
and recent settlement discussions indicate a potential settlement range of approximately $0.6 to $2.0 million. As of December 31, 2024,
the Company accrued a legal provision of approximately $1.9 million as a liability in the consolidated balance sheets.
F-66
|
(x) | Samsung Arbitration Award |
|
In connection with the Merger Transaction, the
Company assumed the liabilities of Triller Corp, including the legal contingency accrual stemming from the arbitration with Samsung Electronics
Co., Ltd due to a breach of a commercial agreement and failure to pay the amounts owed under the contract. The U.S. District Court for
the Central District of California confirmed the award and entered a judgment of approximately $2.6 million in May 2024, accruing interest
at $368.43 per day, at a rate of 5.17% per annum until repaid. A writ of execution was issued on August 2, 2024, and a Judgment Debtor
Examination is scheduled for February 24, 2025. The Company provided financial records in December 2024 in response to a subpoena. As
of December 31, 2024, the Company accrued approximately $3.0 million as a liability in the consolidated balance sheets.
|
(xi) |
Prem Parameswaren | |
In connection with the Merger Transaction, the
Company assumed potential liabilities related to claims asserted by Prem Parameswaran, the former Chief Executive Officer of Triller
Corp for alleged unpaid compensation. To avoid litigation, the parties reached an agreement in principle for a settlement consisting
of $500,000 in cash and 625,000 stock units, subject to approval by AGBA Group Holding Limited. As of December 31, 2024, the Company
has accrued approximately $2.4 million as a liability pertaining to this matter, representing the probable settlement amount.
|
(xii) | Triller Legacy, LLC Settlement Agreement |
|
On July 26, 2024, Triller Hold Co, LLC and Triller Acquisition, LLC
entered into a settlement agreement with Triller Legacy, LLC (Legacy), original sellers of Triller Corp, regarding the 2019
acquisition of Triller Corp from Legacy. The Company agreed to issue 3.89 million shares of Series A common stock to Legacy. Legacy intends
to sell 1.75 million shares for a minimum return of approximately $7.0 million by the end of March 31, 2025. The Company must compensate
Legacy for any shortfall of share sales below $7.0 million. The Company has the option to purchase up to 1.75 million shares from Legacy
at $4.00 per share through December 31, 2024 and $4.75 per share through March 31, 2025. The Company can also opt to pay Legacy $7.0 million.
The Company has included the estimated guaranteed payment liability in its accounts payable and legal contingencies.
|
(xiii) |
Bobby
Sarnevesht | |
The
Company is subject to claims asserted by Bobby Sarnevesht for alleged breach of a merger agreement and related contracts. The Company
disputes the claims and the matter remains unresolved. As of December 31, 2024, the Company has accrued approximately $3.0 million as
a liability pertaining to this dispute, which represents managements best estimate of the probable loss.
|
(xiv) | YA II PN, LTD. v. Triller Group Inc.; Triller Corp.; Triller
Hold Co LLC; Convoy Global Holdings Limited, Index No. 659314/2024 in the New York Supreme Court, Commercial Division |
|
On November 26, 2024, Yorkville
(Plaintiff) initiated litigation against the Company, Triller Corp., Triller Hold Co LLC, and Convoy Global Holdings
Limited (Defendants) by filing a motion for summary judgment in lieu of a complaint pursuant to NY CPLR 3213 (the
Motion), seeking a judgment finding Defendants liable for all amounts allegedly owed under the convertible promissory
note (the Note), dated June 28, 2024, including interest, plus costs, legal fees, and expenses incurred by Yorkville
in enforcing the Notes terms. On February 24, 2025, Defendants filed their opposition to the Motion, arguing that the Motion
should be denied because Plaintiffs reliance on CPLR 3213 was improper and because, even if Plaintiffs reliance on
CPLR 3213 were proper, triable disputes of fact preclude summary judgment in Plaintiffs favor. On March 7, 2025, Plaintiff
filed a reply in support of the Motion. On May 19, 2025, Yorkvilles initial motion for summary judgment in lieu of complaint,
seeking immediate payment, was denied by the Supreme Court of the State of New York, New York County. The court determined that
Yorkvilles right to payment depended on a detailed analysis of obligations under multiple intertwined documents, including
the Yorkville Convertible Promissory Note, Second A&R SEPA, Registration Rights Agreement, and Pledge Agreements, thus
converting the case to a plenary action. Yorkville filed a notice of appeal on May 28, 2025 and a new motion for summary judgment on
July 1, 2025, asserting the Yorkville Convertible Promissory Notes maturity date of June 28, 2025 (the Maturity
Date).
F-67
On June 20, 2025, the Company transferred 3,000,000
shares of common stock of BKFC, previously pledged by Triller Hold Co LLC as collateral pursuant to the Amended and Restated Pledge Agreement,
dated June 28, 2024, between Triller Hold Co LLC and Yorkville, as partial repayment. The case does not have a trial date set. Defendants
intend to litigate the case until a resolution is reached.
On December 3, 2025, the Plaintiff filed responses and objections (the
Responses and Objections) to the Defendants first set of interrogatories dated November 3, 2025 to the Supreme Court
of the State of New York County of New York (Index no.: 659314/2024). Pursuant to the Responses and Objections, the Plaintiff stated its
claims and contentions with respect to its damage resulting from the event of default that occurred under the Note when the Defendants
failed to pay all amounts due by the Maturity Date. The total amount owed under the Note, including interest, plus costs, legal fees,
and expenses incurred by Yorkville less the value of BKFCs shares is approximately $38.1 million. Yorkville further stated that
it continues to accrue additional damages with each passing day that the obligations under the Note and guaranties remain unpaid. 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 reasonable possible loss, if any.
|
(xv) | 13080 Advisors LLC v. Triller Group, Inc., Jams Reference
No. 5220008039 (Los Angeles County, California) |
|
On December 18, 2024, 13080 Advisors LLC (Claimant)
submitted a Notice of Arbitration and Demand for Arbitration (13080 Arbitration Demand) to JAMS to assert that Triller and
TAG Holdings Limited (collectively as Respondents) have breached their alleged duties to Claimant under the following alleged
agreements: (1) a partially executed document entitled Grant Agreement for S-8 Registered Shares dated March 14, 2024, and
(2) a partially executed document entitled Consulting Services Agreement also dated March 14, 2024. The 13080 Arbitration
Demand asserts four purported claims for relief: breach of contract, negligent misrepresentation, specific performance and declaratory
relief. On February 18, 2025, Respondents submitted to JAMS a motion to dismiss all the claims for relief asserted in the 13080 Arbitration
Demand along with a motion to strike Claimants requests for punitive damages. This motion remains pending and no arbitrator has
been appointed. 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 reasonable possible loss, if any.
|
(xvi) |
Wixen Music Publishing | |
On December 18, 2024, Wixen Music Publishing,
Inc. ("Wixen") filed a Complaint in Los Angeles Superior Court against a subsidiary of Triller Hold Co LLC ("the subsidiary")
for breach of a settlement agreement originally executed to resolve prior federal copyright infringement claims. In September 2022, Wixen
and the subsidiary entered into a settlement agreement whereby the subsidiary agreed to pay Wixen a total of $10.0 million in scheduled
payment through September 2024 to resolve claims of unauthorized use of musical compositions. The complaint alleged that the subsidiary
defaulted on its payment obligations and owed $5.5 million under the revised payment schedule. The case is on-going and legal counsel
of Triller Hold Co LLC will continue to handle this matter. As of December 31, 2024, approximately $5.5 million is included as a liability
in the consolidated balance sheets.
Subsequent to December 31, 2024, the Company is
involved in the following material legal proceedings:
*Robert E. Diamond Jr.et al. v. Triller Group,
Inc., Case No. 25-cv-00129 (PAE) (S.D.N.Y.)*
On January 7, 2025, Robert E. Diamond Jr (Diamond),
the former chairman of Trillers board of directors and Atlas Merchant Capital LLC (collectively as Plaintiffs), an
advisory services company under Diamonds control filed a lawsuit in federal district court in Manhattan, New York to allege that
Triller has failed to pay over or grant to Plaintiffs certain cash amounts and equity awards to which Plaintiffs were entitled pursuant
to various agreements between Plaintiffs and Triller. Plaintiffs claim that they are entitled to over $5.0 million in cash compensation
and over 6.0 million shares of Trillers common stock. On February 28, 2025, Triller filed a partial motion to dismiss the scope
of Plaintiffs claims. This motion is now pending before the court. 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 reasonable possible loss, if any.
F-68
**NOTE 26
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 consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after
December 31, 2024, up to the date that the audited consolidated financial statements were available to be issued.
|
(i) | In January and April 2025, the Company issued an aggregate
of 603,839 shares of common stock to the directors and officers of the Company under the Share Award Scheme, whose shares were vested
in 2023. |
|
|
(ii) | In January and April 2025, the Company issued an aggregate
of 823,642 shares of common stock to the employees of the Company to compensate for the contributions of their services and performance,
at a price range from $1.072 to $2.532 per share. |
|
| (iii) | In February and March 2025, the Company issued an aggregate of 348,745 shares of common stock to certain consultants to compensate for their services rendered, at a price range from $1.00 to $1.872 per share. | |
| (iv) | In March 2025, the Company issued 155,000 shares of common stock at a price of $2.529 per shares to the Chief Operating Officer of the Company for loan settlement. | |
| (v) | In March 2025, the Company issued 11,807,332 shares of common stock to Giant Wisdom Ventures Limited, a company controlled by its controlling stockholder, in relation to the Merger Transaction (see Note 4(b)). | |
| (vi) | In April 2025, the Company issued an aggregate 304,478 shares of common stock to the employees of Triller Corp. under the share award scheme of Triller Corp. | |
| (vii) | In March 2025, the Company entered into a Settlement and Release Agreement with 13080 Advisors LLC (13080) to dismiss the arbitration against the Company. The Company agreed to issue a total of 9,682,500 shares of common stock in three installments and pay a consideration of $2.04 million on or before December 31, 2025. As part of the payment, the Company transferred 285,353 units of Investment H in exchange for reducing 1,350,000 shares of common stock. | |
| | | |
| | In April 2025, the Company issued 3,227,500 shares of common stock to 13080 Advisors LLC as the first installment. | |
| (viii) | On April 11, 2025, the Company entered into a Convertible Note Purchase Agreement (NPA) with an independent third party pursuant to which the Company (i) issues a convertible note in the principal amount of approximately $10.0 million (the Note), (ii) issues a warrant to purchase 10,000,000 shares of the Companys common stock at an exercise price of $1.00 per share (the Warrant), (iii) executes and delivers a registration rights agreement, and (iv) executes and delivers a termination agreement to terminate a securities purchase agreement dated January 24, 2025. The Note matures in two years after its date of issuance with an interest rate of U.S. Prime Rate plus 2% per annum payable at maturity. The Note will be convertible into the Companys common stock at a 20% discount to the 5-day daily dollar volume weighted average price of the common stock of the Company. The Warrant will be exercisable in a year after the Companys next qualified equity financing with a term of five years. | |
F-69
|
(ix) |
On April 17, 2025, the Company received a written notice (the Notice) from Nasdaq, notifying that the Company failed to comply with Nasdaq Listing Rule 5250(c)(1) as the Company failed to timely file its Annual Report on Form 10-K for the year ended December 31, 2024. The Notice had no immediate effect but, before June 16, 2025, the Company was required to submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rule. If Nasdaq accepts the Companys plan, Nasdaq will grant the Company up to 180 calendar days from the filing due date to regain compliance. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. On August 19, 2025, Nasdaq accepted the Companys plan to regain the compliance by October 13, 2025. | |
|
(x) |
On May 20, 2025, the Company received a written notice (the Notice) from Nasdaq, notifying that the Company failed to comply with Nasdaq Listing Rule 5250(c)(1) as the Company failed to timely file its quarterly report on Form 10-Q for the period ended March 31, 2025. The Notice had no immediate effect but, before June 16, 2025, the Company was required to submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rule. If Nasdaq accepts the Companys plan, Nasdaq will grant the Company up to 180 calendar days from the filing due date to regain compliance. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. On August 19, 2025, Nasdaq accepted the Companys plan to regain the compliance by October 13, 2025. | |
| (xi) | On June 20, 2025, Yorkville effected a foreclosure under the Triller
Pledge Agreement. This action was undertaken by Yorkville following its allegations of various events of default by the Company under
the terms of the Yorkville Convertible Promissory Note, dated June 28, 2024, and other related transaction documents, including the Second
A&R SEPA. Yorkville had previously sought to accelerate payment of all amounts due under the Yorkville Convertible Promissory Note.
Although the Company has not received a formal notice of foreclosure from Yorkville, the Company became aware through a transfer agent
statement that 3,000,000 shares of common stock of BKFC, previously pledged by Triller Hold Co LLC as collateral, were transferred to
Yorkville on June 20, 2025. These 3,000,000 shares represented a 17.66% ownership interest in BKFC as specifically pledged to Yorkville
as of June 20, 2025. As a direct result of this transfer, the Companys beneficial ownership in BKFC became 38.13%, based on BKFCs
total outstanding shares. Following this change in ownership, the majority stockholders of BKFC approved amendments to BKFCs certificate
of incorporation and its Stockholders Agreement, which included the removal of the Companys board designation rights. These amendments
became effective on July 1, 2025. | |
| (xii) | On June 30, 2025, the Company received a written notice (the Notice) from Nasdaq, notifying that the Company had publicly traded under $1.00 per share for a period of 30 consecutive trading days or more, which failed to comply with Nasdaq Listing Rule 5550(a)(2) and Nasdaq Listing Rule 5810(c)(3)(A). The Notice had no immediate effect but, before December 29, 2025, the Company was required to regain compliance by trading at least $1.00 per share for a minimum of 10 consecutive trading days. Otherwise, after the date, subject to other requirements and conditions, the Company may proceed to delisting procedures. As of the date of the consolidated financial statements, the Company is still consecutively trading under $1.00, directors of the Company are investigating actions, where appropriate, to regain the compliance, by December 29, 2025. | |
F-70
|
(xiii) | On June 30, 2025, the Company and Green Ventures entered into Amendment No. 5 to the Green Ventures Note, in which Green Ventures agreed to (i) amend certain terms and conditions of the Green Ventures Note, including reducing the interest rates for the Green Ventures Note to 8%, reducing the rate of the default interest rate to 11%, extending the maturity date to June 6, 2026 and (ii) waive all existing events of default under the Green Ventures Note (collectively, the Requested Amendments and Waivers). As consideration for granting the Requested Amendments and Waivers, Triller has agreed to provide additional collateral to secure the outstanding obligations under the Green Ventures Note, and to procure its affiliate, TAG Technologies, to guarantee the due and punctual performance and payment obligations under the Green Ventures Note. |
|
|
(xiv) |
On October 14, 2025, the Company received a delisting determination letter (the Determination Letter) from Nasdaq indicating that, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the Panel), the Companys common stock would be subject to suspension and delisting from the Nasdaq Capital Market at the opening of business on October 23, 2025 due to the Companys non-compliance with Nasdaqs filing requirements set forth in Listing Rule 5250(c)(1) (the Listing Rule) for its failure to timely file its Form 10-K for the year ended December 31, 2024, and its Forms 10-Q for the periods ended March 31, 2025 and June 30, 2025, respectively. The Company has requested to appeal the delisting determination and will attend the hearing to demonstrate its ability to regain and sustain long-term compliance.
On November 17, 2025, the Company received an additional delisting determination letter (the Additional Determination Letter) from Nasdaq indicating that since it failed to timely file its Form 10-Q for the period ended September 30, 2025, this serves as an additional basis for delisting.
Following a hearing held on November 25, 2025, the Panel has granted the Company an exception period subject to the Company satisfying the following conditions: | |
|
| File 2024 Form 10-K and delinquent Forms 10-Q for the quarters
ended March 31, June 30, and September 30, 2025 on or before December 24, 2025; |
|
|
| Regain compliance with the $1.00 minimum bid-price requirement
on or before February 27, 2026; and |
|
|
| File its 2025 Form 10-K on or before March 31, 2026. |
|
|
(xv) |
On December 26, 2025, the Company received a determination letter from the Panel confirming the suspension trading on the Nasdaq Stock Market effective at the opening of the market on December 30, 2025 and delisting of the Companys securities. This decision stems from the Company not having been able to file two periodic reports by a deadline of December 24, 2025 set by the Panel. | |
**NOTE 27
PARENT ONLY FINANCIAL INFORMATION**
The Company performed a test on the restricted
net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 5-04 and concluded that
it was applicable for the Company to disclose the financial statements for Triller Group Inc., the parent company.
The Company did not have significant capital and
other commitments, long-term obligations, or guarantees as of December 31, 2024 and 2023. Certain information and footnote disclosures
generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted.
F-71
The following presents condensed parent
company only financial information of Triller Group Inc.
**Condensed balance sheets**
|
|
As of December 31, | | |
|
| |
2024 | | |
2023 | | |
|
ASSETS | |
| | |
| | |
|
Current assets: | |
| | | |
| | | |
|
Cash and cash equivalents | |
$ | 3 | | |
$ | 130 | | |
|
Amounts due from stockholder | |
| | | |
| 133 | | |
|
Amounts due from subsidiaries | |
| 66,088 | | |
| 909 | | |
|
Promissory notes receivable, related party | |
| 33,949 | | |
| | | |
|
Prepayments | |
| 155 | | |
| 453 | | |
|
Total current assets | |
| 100,195 | | |
| 1,625 | | |
|
| |
| | | |
| | | |
|
Non-current assets: | |
| | | |
| | | |
|
Investments in subsidiaries | |
| 785,733 | | |
| | | |
|
Total non-current assets | |
| 785,733 | | |
| | | |
|
| |
| | | |
| | | |
|
TOTAL ASSETS | |
$ | 885,928 | | |
$ | 1,625 | | |
|
| |
| | | |
| | | |
|
LIABILITIES AND STOCKHOLDERS EQUITY | |
| | | |
| | | |
|
Current liabilities: | |
| | | |
| | | |
|
Other payable and accrued liabilities | |
$ | 8,930 | | |
$ | 3,739 | | |
|
Borrowings | |
| 32,552 | | |
| | | |
|
Borrowings, related party | |
| 18,443 | | |
| | | |
|
Warrant liabilities | |
| 977 | | |
| | | |
|
Total current liabilities | |
| 60,902 | | |
| 3,739 | | |
|
| |
| | | |
| | | |
|
TOTAL LIABILITIES | |
| 60,902 | | |
| 3,739 | | |
|
| |
| | | |
| | | |
|
Commitments and contingencies (Note 25) | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Stockholders equity (deficit)*: | |
| | | |
| | | |
|
Preferred stock, $0.001 par value, 100,000,000 shares authorized | |
| | | |
| | | |
|
Series A-1 preferred stock, $0.001 par value, 50,000,000 and nil shares authorized, 11,801,804 shares and nil issued and outstanding as of December 31, 2024 and 2023, respectively | |
| 12 | | |
| | | |
|
Series B preferred stock, $0.001 par value, 50,000,000 and nil shares authorized, 30,851 shares and nil issued and outstanding as of December 31, 2024 and 2023, respectively | |
| | ** | |
| | | |
|
Common stock, $0.001 par value; 150,000,000,000 and 484,125,000 shares authorized, 138,143,817 and 33,240,991 shares issued and outstanding as of December 31, 2024 and 2023, respectively# | |
| 138 | | |
| 69 | | |
|
Series A-1 preferred stock to be issued | |
| 12 | | |
| | | |
|
Common stock to be issued# | |
| 15 | | |
| 5 | | |
|
Common stock held in escrow | |
| 24 | | |
| | | |
|
Additional paid-in capital | |
| 909,806 | | |
| 19,507 | | |
|
Accumulated deficit | |
| (84,981 | ) | |
| (21,695 | ) | |
|
Total stockholders equity (deficit) | |
| 825,026 | | |
| (2,114 | ) | |
|
| |
| | | |
| | | |
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) | |
$ | 885,928 | | |
$ | 1,625 | | |
| | # | Giving retroactive effect to the forward stock split and reverse stock split (see Note 19) | |
| | * | Giving retroactive effect to the AGBA Domestication completed on October 15, 2024 (see Note 1) | |
| | ** | Less than $1,000 | |
F-72
**Condensed Statements of Operations**
|
|
For the years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Operating cost and expenses: | |
| | |
| | |
|
Stock-based compensation expense | |
$ | (51,671 | ) | |
$ | (9,933 | ) | |
|
Other general and administrative expenses | |
| (11,066 | ) | |
| (3,764 | ) | |
|
Total operating cost and expenses | |
| (62,737 | ) | |
| (13,697 | ) | |
|
| |
| | | |
| | | |
|
Loss from operations | |
| (62,737 | ) | |
| (13,697 | ) | |
|
| |
| | | |
| | | |
|
Other income (expense): | |
| | | |
| | | |
|
Interest income | |
| 765 | | |
| | | |
|
Interest expense | |
| (4,546 | ) | |
| | | |
|
Interest expense, related party | |
| (231 | ) | |
| | | |
|
Change in fair value of warrant liabilities | |
| 3,463 | | |
| 4 | | |
|
Change in fair value of forward share purchase liability | |
| | | |
| (82 | ) | |
|
Loss on settlement of forward share purchase agreement | |
| | | |
| (379 | ) | |
|
Sundry income | |
| | | |
| 344 | | |
|
Total other income (expense), net | |
| (549 | ) | |
| (113 | ) | |
|
| |
| | | |
| | | |
|
Loss before income taxes | |
| (63,286 | ) | |
| (13,810 | ) | |
|
| |
| | | |
| | | |
|
Income tax expense | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
NET LOSS | |
$ | (63,286 | ) | |
$ | (13,810 | ) | |
F-73
**Condensed Statement of Cash Flows**
|
|
Years ended December 31, | | |
|
| |
2024 | | |
2023 | | |
|
Cash flows from operating activities: | |
| | | |
| | | |
|
Net loss | |
$ | (63,286 | ) | |
$ | (13,810 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | | |
|
Stock-based compensation expense | |
| 51,671 | | |
| 9,933 | | |
|
Change in fair value of warrant liabilities | |
| (3,463 | ) | |
| (4 | ) | |
|
Change in fair value of forward share purchase liability | |
| | | |
| 82 | | |
|
Loss on settlement of forward share purchase agreement | |
| | | |
| 379 | | |
|
Interest income from promissory note receivable, related party | |
| (765 | ) | |
| | | |
|
Interest expenses on borrowings | |
| 4,777 | | |
| | | |
|
| |
| | | |
| | | |
|
Change in operating assets and liabilities: | |
| | | |
| | | |
|
Prepayments | |
| 658 | | |
| (17 | ) | |
|
Other payables and accrued liabilities | |
| 6,399 | | |
| 1,161 | | |
|
Net cash used in operating activities | |
| (4,009 | ) | |
| (2,276 | ) | |
|
| |
| | | |
| | | |
|
Cash flows from investing activities: | |
| | | |
| | | |
|
Issuance of promissory notes receivable, related party | |
| (15,465 | ) | |
| | | |
|
Net cash used in investing activities | |
| (15,465 | ) | |
| | | |
|
| |
| | | |
| | | |
|
Cash flows from financing activities: | |
| | | |
| | | |
|
Advances to related companies | |
| (4,003 | ) | |
| (934 | ) | |
|
Proceeds from convertible promissory note payables | |
| 23,350 | | |
| | | |
|
Settlement of forward share purchase agreement | |
| | | |
| (13,953 | ) | |
|
Proceeds from private placement | |
| | | |
| 1,850 | | |
|
Net cash provided by (used in) financing activities | |
| 19,347 | | |
| (13,037 | ) | |
|
| |
| | | |
| | | |
|
Net change in cash and cash equivalents | |
| (127 | ) | |
| (15,313 | ) | |
|
| |
| | | |
| | | |
|
BEGINNING OF YEAR | |
| 130 | | |
| 15,443 | | |
|
| |
| | | |
| | | |
|
END OF YEAR | |
$ | 3 | | |
$ | 130 | | |
F-74