20-F: TROOPS, Inc. Reports Significant Revenue Growth in 2025

TROOPS, Inc. announced its annual results for the fiscal year ended December 31, 2025, reporting a substantial increase in revenue driven by its insurance consultancy services.

Summary

• TROOPS, Inc. reported total revenues of $17.1 million for the fiscal year ended December 31, 2025, a significant increase of 69.7% from $10.07 million in the prior year.
• The company experienced a net loss of $27.9 million for the year, an increase from a net loss of $13.4 million in 2024.
• General and administrative expenses rose sharply by 352.8% to $17.9 million in 2025, primarily due to increased legal and professional fees.
• An impairment loss of $13.4 million was recognized for property, plant, and equipment, mainly related to real estate properties in Hong Kong.
• The company ended the year with $4.02 million in cash and cash equivalents.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant increase in net loss and operating expenses, despite revenue growth, alongside substantial asset impairment and ongoing litigation risks.

Positives

• Total revenues increased by 69.7% to $17.1 million in 2025, driven by a significant rise in consultancy services for insurance products, which grew from $4.48 million in 2024 to $12.86 million in 2025.
• Advisory and referral services revenue also saw an increase, from $0.36 million in 2024 to $0.55 million in 2025.
• The company reported a positive income tax benefit of $1.5 million in 2025, compared to a tax expense in the previous year.

Negatives

• The company reported a net loss of $27.9 million for 2025, a substantial increase from the $13.4 million net loss in 2024.
• General and administrative expenses increased significantly by 352.8% to $17.9 million in 2025, largely due to a substantial rise in legal and professional fees.
• An impairment loss of $13.4 million was recorded for property, plant, and equipment, impacting the company's profitability.
• Gross profit decreased from $1.94 million in 2024 to $1.56 million in 2025, despite the revenue growth.
• The company's money lending segment saw a decrease in interest on loans revenue, from $3.31 million in 2024 to $2.17 million in 2025.

Risks

• The company is appealing an adverse judgment in a Hong Kong civil lawsuit, with potential liabilities of HK$163.4 million and HK$241.4 million; an unsuccessful appeal could lead to winding-up proceedings.
• Regulatory scrutiny of privacy and data protection laws, particularly in China, poses ongoing risks.
• The company faces intense competition in the money lending industry.
• There is a risk of failing to meet continued listing requirements on the NASDAQ Capital Market, particularly regarding the minimum bid price.
• The company's operations are subject to the economic and political policies of China and Hong Kong, which can change with little notice.
• The company is exposed to credit risks from its customers and borrowers, especially given economic conditions in Hong Kong.
• The company may be unable to secure future financing on favorable terms.
• The company's fintech services technology requires continuous development and upgrades to remain competitive.
• The company's business operations and financial condition could be materially and adversely affected by a downturn in the Hong Kong, China, or global economy.
• The company is subject to risks associated with its reliance on third-party service providers for its financial technology services.

Future Outlook

The company believes its current cash levels, combined with funds available through financing activities, will be sufficient to meet its anticipated cash needs for at least the next 12 months. However, if cash and borrowing are insufficient, it may seek to sell equity securities, debt securities, or borrow from lending institutions, though financing may not be available on acceptable terms.

Management Comments

• The company's vision is to operate as a conglomerate to build synergy within its own sustainable ecosystem thereby creating value to its shareholders.
• Management believes that the recent downturn in the economy creates demand for cashflow which provides money lending companies with a great opportunity to expand its personal loans and corporate loans business and portfolio.
• Management believes that the remaining other receivables and prepayments are collectible.
• Management believes that the remaining loan receivables are collectible.
• Management believes that the Company can sufficiently settle the claim should the Company be unable to appeal the claim.

Industry Context

StockSavvy.ai notes that TROOPS, Inc.'s significant revenue growth in consultancy services for insurance products aligns with a broader trend in the financial services sector where specialized advisory and referral services are increasingly sought after to navigate complex markets and regulatory landscapes.

Comparison to Industry Standards

• The company's revenue growth of 69.7% in 2025 is a strong indicator of performance in its insurance consultancy segment, which is a growing area within the broader financial services industry.
• However, the significant increase in net loss and general and administrative expenses, particularly legal and professional fees, suggests potential operational inefficiencies or challenges in managing growth, which may not be typical for well-established players in the industry.
• The impairment loss on property, plant, and equipment indicates a potential overvaluation or underperformance of certain assets, which is a concern when compared to industry benchmarks that emphasize efficient asset utilization.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently appealing an adverse judgment in a Hong Kong civil lawsuit (HCA 938 of 2022), with potential liabilities of HK$163,400,000 and HK$241,400,000. The appeal hearing is scheduled for February 24, 2027.
• A winding up petition was filed against the company in the Grand Court of the Cayman Islands, which has been adjourned pending the determination of the Hong Kong appeal.

Related Party Transactions

• Revenues of $6.88 million were generated from insurance referral services provided to Riches Credit Insurance Brokerage Limited in 2025.
• Trade receivables from Riches Credit Insurance Brokerage Limited amounted to $0.23 million as of December 31, 2025.
• Amount due from Oriental Pearl (Shenzhen) Entry-Exit Service Co., Ltd. was $0.10 million as of December 31, 2025.
• As of December 31, 2024, the company had an outstanding amount due to shareholder Ms. Kwok Kai Kai Clara of $1.54 million, which was nil as of December 31, 2025.

Stakeholder Impact

• Shareholders may face significant losses if the company's appeal in the Hong Kong lawsuit is unsuccessful, potentially leading to liquidation.
• The company's ability to meet NASDAQ listing requirements could impact shareholder value.
• Increased legal and professional fees and asset impairment losses negatively affect the company's financial performance, potentially impacting shareholder returns.
• The company's reliance on its subsidiaries for cash flow and potential limitations on cash transfers due to PRC governmental controls could impact its ability to pay dividends to shareholders.

Next Steps

• The company is appealing an adverse judgment in a Hong Kong civil lawsuit.
• The company will continue to monitor foreign exchange exposure and may consider hedging significant foreign exchange exposure.
• The company's management will continue to assess the recoverability of its assets and the adequacy of its provisions.

Key Dates

Recommendation

The company's significant increase in net loss, substantial rise in operating expenses (particularly legal and professional fees), asset impairment, and the critical risk associated with the ongoing Hong Kong litigation and potential winding-up proceedings outweigh the reported revenue growth. These factors indicate a deteriorating financial position and significant downside risk for investors.

Keywords

TROOPS, Inc., SEC Filing, Form 20-F, Annual Report, Financial Results, Revenue Growth, Net Loss, Insurance Consultancy, Money Lending, Property Investment, Fintech, Hong Kong, Cayman Islands, NASDAQ