Triller Group Inc. 10-Q/A

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS References in this report (the “Quarterly Report”) to “we,” “us”, “the Group” or the “Company” refer to Triller Group Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section included in our 2023 Annual Report filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview Triller Group Inc. is formed in the State of Delaware, on October 15, 2024, which was established to domicile its legal jurisdiction from British Virgin Islands to the State of Delaware. Nasdaq Listing Extension We received a delisting determination letter on October 14, 2025 and an additional delisting determination letter on November 17, 2025 from the Listing Qualifications Staff (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”), due to the our non-compliance with Nasdaq’s filing requirements set forth in Listing Rule 5250(c)(1) (the “Listing Rule”) for its failure to timely file the Form 10-K for the year ended December 31, 2024, and the Forms 10-Q for the periods ended March 31, 2025, June 30, 2025 and September 30, 2025, respectively. We requested a hearing before the Nasdaq Hearings Panel (the “Panel”) on October 21, 2025, and the hearing was held on November 25, 2025. On December 3, 2025, we received a decision letter from the Staff of Nasdaq, indicating that based on the information presented at the hearing, the Panel has determined to grant us an exception period to continue its listing on Nasdaq subject to the conditions that: (1) on or before December 24, 2025, we shall demonstrate compliance with the Listing Rule; (2) on or before February 27, 2026, we shall demonstrate compliance with the $1.00 per share minimum bid price requirement; and (3) on or before March 31, 2026, we shall file the Form 10-K for the year ended December 31, 2025. It is a requirement during the exception period that we provide prompt notification of any significant events that occur during this time that may affect our compliance with Nasdaq requirements. 49 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 D’Amelio 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, L’Oréal, 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 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 Triller’s 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 Statistica’s 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 $4.8 million and $7.7 million in the three months ended March 31, 2025 and 2024. We have incurred net losses in each year since our inception, including $53.1 million and $8.1 million for the three months ended March 31, 2025 and 2024, respectively. 50 Through our subsidiaries in Hong Kong, we are also a leading wealth management and healthcare institution based in Hong Kong servicing over 400,000 individual and corporate customers. We offer the broadest set of financial services and healthcare products in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) through a tech-led ecosystem, enabling clients to unlock the choices that best suit their needs. 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”) and 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. 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 March 31, 2025, there were around 474 financial advisors at “Focus”, organized into 9 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. We have 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. 51 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). 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. Results of Operations Comparison of the Three Months Ended March 31, 2025 and 2024: The following tables set forth our results of operations by segments presented in U.S. dollars (in thousands): For the Three Months ended March 31, 2025 Social media Sports streaming Financial services Corporate Elimination Consolidated Revenue Loans interest income — — 18 — — 18 Commission — — 4,416 — — 4,416 Recurring asset management service fees — — 347 — — 347 Advertising revenue — — — — — — SaaS fees — — — — — — Subscription fees and paid-per-view fees — — — — — — Total revenue — — 4,781 — — 4,781 Operating expenses Commission expense — — (2,521 ) — — (2,521 ) Research and development expense (1,189 ) (187 ) (45 ) (281 ) — (1,702 ) Personnel and benefit expense (3,889 ) (621 ) (75 ) (30,379 ) — (34,964 ) Legal and professional fee — — — (5,838 ) — (5,838 ) Office and operating fee, related party — — — (1,178 ) — (1,178 ) Provision for allowance for expected credit losses — — (47 ) — — (47 ) Other general and administrative expenses (4,400 ) 109 (1,689 ) 3,247 — (2,733 ) Total operating expenses (9,478 ) (699 ) (4,377 ) (34,429 ) — (48,983 ) Other income (expense) Interest income 165 — 2 — — 167 Interest expense (2,418 ) (356 ) (161 ) (1,868 ) — (4,803 ) Foreign exchange gain, net — — 1,145 — — 1,145 Bad debts written-off (5,441 ) — — — — (5,441 ) Sundry income — — 106 — — 106 Total other income (expense), net (7,694 ) (356 ) 1,092 (1,868 ) — (8,826 ) Income tax expense — — (24 ) — — (24 ) Net income (loss) (17,172 ) (1,055 ) 1,472 (36,297 ) — (53,052 ) 52 Three Months ended March 31, 2024 Financial services Corporate Elimination Consolidated Revenue Commission $ 6,723 — — $ 6,723 Asset management service fees 892 — — 892 Loans interest income 41 — — 41 Total revenue 7,656 — — 7,656 Operating expenses Commission expense (4,446 ) — — (4,446 ) Sales and marketing expense (483 ) — — (483 ) Research and development expense (458 ) — — (458 ) Personnel and benefit expense (1,848 ) (4,211 ) — (6,059 ) Legal and professional fee (625 ) — (625 ) Legal and professional fee, related party — (250 ) — (250 ) Office and operating fee, related party (573 ) (545 ) (1,118 ) Provision for allowance for expected credit losses (836 ) (155 ) — (991 ) General and administrative (486 ) (394 ) — (880 ) Total operating expenses (9,755 ) (5,555 ) — (15,310 ) Other income (expense), net Interest income 12 — — 12 Interest expense (56 ) (151 ) — (207 ) Investment loss, net — (37 ) — (37 ) Others — (136 ) — (136 ) Total other expense, net (44 ) (324 ) — (368 ) Income tax expense (38 ) — — (38 ) Net loss $ (2,181 ) (5,879 ) — (8,060 ) Revenues The following table summarizes the major operating revenues for the three months ended March 31, 2025 and 2024: Three months ended March 31, 2025 2024 Variance (US$ in thousands) $ % Business segment Social media $ — $ — — — Sports streaming — — — — Financial services 4,781 7,656 (2,875 ) (37.55 ) TOTAL $ 4,781 $ 7,656 (2,875 ) (37.55 ) Social media and Sports streaming Since October 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 our operations, consisting of two major business segments: social media and sports streaming. 53 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. No income from social media and sports streaming business segments are generated during the three months ended March 31, 2025 and 2024. The Company generated minimal operations in these two segments during the three months ended March 31, 2025. 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 $2.9 million or 37.55% from $7.7 million for the three months ended March 31, 2024 to $4.8 million for the three months ended March 31, 2025. The decrease in revenue is primarily attributed to the economic recession and outward migration in Hong Kong. Operating Expenses Commission expense The commission expense related to financial services decreased by $1.9 million, or 43.30% from $4.4 million for the three months ended March 31, 2024 to $2.5 million for the three months ended March 31, 2025. As a result of the decrease in revenue associated with the financial services, commission expense decreased correspondingly. Sales and Marketing Expense Sales and marketing expense decreased by $0.5 million or 100% from $0.5 million for the three months ended March 31, 2024 to nil for the three months ended March 31, 2025. The decrease was mainly attributed to lower spending associated with “AGBA” corporate branding. 54 Research and Development Expense Research and development expense increased by $1.2 million, or 271.62% from $0.5 million for the three months ended March 31, 2024 to $1.7 million for the three months ended March 31, 2024. The increase was primarily due to the additional expense incurred by Triller Corp. and its subsidiaries, which was acquired on October 15, 2024. Personnel and benefit expenses Personnel and benefit expenses primarily consist of personnel-related costs and benefits and stock-based compensation costs for our administrative, legal, human resources, information technology, corporate development, finance and accounting employees and executives. Three months ended March 31, 2025 2024 Variance (US$ in thousands) $ % Personnel and benefit $ 7,789 $ 4,526 3,263 72.09 Stock-based compensation 27,175 1,533 25,642 1,672.67 TOTAL $ 34,964 $ 6,059 28,905 477.06 Personnel and benefit cost increased by $3.3 million, or 72.09% from $4.5 million for the three months ended March 31, 2024 to $7.8 million for the three months ended March 31, 2025. The increase was primarily attributable to the additional headcount from the acquisition of Triller Corp. which was completed on October 15, 2024. Stock-based compensation for executive directors and employees increased by $25.6 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase was primarily due to the settlement of accrued salaries to certain executive directors and employees of the Company and the amortization of the fair value of restricted share units. The fair value of the restricted share units is recognized over the period based on the derived service period (usually the vesting period), on a straight-line basis. Legal and professional fee Legal and professional fees mainly consisted of certain professional consulting services in legal, audit, accounting and taxation, and others. Three months ended March 31, 2025 2024 Variance (US$ in thousands) $ % Legal and professional fee $ 4,262 $ 660 3,602 545.76 Stock-based compensation 1,576 215 1,361 633.02 TOTAL $ 5,838 $ 875 4,963 567.20 Legal and professional fees increased by $3.6 million, or 545.76%, from $0.7 million for three months ended March 31, 2024, to $4.3 million for three months ended March 31, 2025. The increase was primarily attributable to the additional legal and professional fees incurred by Triller Corp. and its subsidiaries, which was acquired on October 15, 2024. Consulting fees under stock-based compensation increased by $1.4 million or 633.02% for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase was mainly attributable to the increase in corporate strategic consultancy and business marketing service rendered by certain third party consultants. 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 three months ended March 31, 2025 and 2024, the aggregated provision for allowance for expected credit losses on accounts receivable, loans receivable, notes receivable, and other receivables was $0.05 million and $1.0 million, respectively. 55 Other general and administrative expenses 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. 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, and other corporate expenses that are not allocated to the above expense categories. The aggregate other general and administrative expenses increased by $1.9 million, or 210.57% from $0.9 million for the three months ended March 31, 2024 to $2.7 million for the three months ended March 31, 2025. The increase was primarily attributable to the additional expenses incurred by Triller Corp. and its subsidiaries, which was acquired on October 15, 2024. Other Income (Expense), net Other income (expense), net consist of interest income, foreign exchange gain, net, sundry income and offset by interest expense, bad debts written-off, written-off of accounts payable and other current liabilities, and investment loss, net. For the three months ended March 31, 2025 and 2024, the aggregate other expense, net increased by $8.5 million or 2,298.37%. The increase was mainly attributable to the increase in interest expense of $4.6 million, and bad debts written-off of $5.4 million, offset by the increase in foreign exchange gain, net of $1.1 million. Net Loss Net loss increased by $45.0 million, or 558.23% for the three months ended March 31, 2025, as compared to March 31, 2024. The increase was primarily due to the sale decline and increase in operating expenses of $33.7 million and increase in other expense, net of $8.5 million. Liquidity and Capital Resources Sources of Liquidity We have a history of operating losses and negative operating cash flows. For the three months ended March 31, 2025, we reported a net loss of $53.1 million and reported a negative operating cash flow of $16.2 million. As of March 31, 2025, our cash balance was $2.1 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. 56 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. 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. 57 Cash Flows As of March 31, 2025, we had cash and cash equivalents totaling $2.1 million, and $12.8 million in restricted cash. As of December 31, 2024, we had cash and cash equivalents totaling $3.1 million, and $14.2 million in restricted cash. Comparison of the three months ended March 31, 2025 and 2024 The following table summarizes our cash flows for the periods presented: Three months ended March 31, 2025 2024 (US$ in thousands) Net cash used in operating activities $ (16,178 ) $ (6,857 ) Net cash provided by investing activities 1,527 2,167 Net cash provided by financing activities 11,728 3,501 Effect on exchange rate change on cash and cash equivalents 585 239 Net change in cash, cash equivalents and restricted cash (2,338 ) (950 ) Cash, cash equivalents and restricted cash, at the beginning 17,261 18,678 Cash, cash equivalents and restricted cash, at the end $ 14,923 $ 17,728 Representing as: Cash and cash equivalents 2,130 2,139 Restricted cash – fund held in escrow 12,793 15,589 $ 14,923 $ 17,728 Working Capital Deficit The working capital deficit as of March 31, 2025 and December 31, 2024 was amounted to approximately $294.3 million and $271.6 million, respectively, an increase of $22.7 million or 8.36%. The increase was mainly attributable to the increase in current liabilities related to the acquisition of Triller Corp. and its subsidiaries, which completed on October 15, 2024. 58 Cash Flows from Operating Activities Net cash used in operating activities was $16.2 million and $6.9 million for the three months ended March 31, 2025 and 2024, respectively. Net cash used in operating activities for the three months ended March 31, 2025 was primarily the result of the net loss of $53.1 million, decrease in escrow liabilities of $1.4 million, decrease in operating lease liabilities of $0.5 million, increase in accounts receivable of $1.5 million, increase in loans receivable of $1.3 million, and increase in deposits, prepayments, and other receivables of $0.2 million. These amounts were partially offset by the increase in accounts payable and other current liabilities of $3.0 million, increase in other current liabilities, related parties of $0.6 million, and non-cash adjustments consisting of stock-based compensation expense of $28.8 million, interest income on loans receivable of $0.2 million, interest expense on borrowings of $4.8 million, net foreign exchange gain of $1.1 million, and bad debts written-off of $5.4 million. Net cash used in operating activities for the three months ended March 31, 2024 was primarily the result of the net loss of $8.1 million, an increase in deposits, prepayments, and others receivable of $0.2 million, decrease in accounts payable and other current liabilities of $1.7 million, decrease in escrow liabilities of $1.2 million, decrease in lease liabilities of $0.5 million, and decrease in income tax payable of $0.2 million. These amounts were partially offset by the decrease in accounts receivable of $1.2 million, and non-cash adjustments consisting of stock-based compensation expense of $1.7 million, lease expense of $0.6 million, depreciation and amortization of $0.02 million, interest income on notes receivable of $0.01 million, interest expense on borrowings of $0.2 million, net foreign exchange loss of $0.2 million, net investment loss of US$0.04 million, and allowance for expected credit losses of $1.0 million. Cash Flows from Investing Activities Net cash provided by investing activities for the three months ended March 31, 2025 of $1.5 million was primarily due to proceeds from the disposal of assets held for sale. Net cash provided by investing activities for the three months ended March 31, 2024 of $2.2 million was primarily due to proceeds from sale of long-term investments and proceeds from disposal of property and equipment. Cash Flows from Financing Activities Net cash provided by financing activities for the three months ended March 31, 2025 of $11.7 million was primarily due to proceeds from borrowings advanced by a related party. Net cash provided by financing activities for the three months ended March 31, 2024 of $3.5 million was primarily due to advances from the stockholder. Liquidity and Going Concern Our unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The management of the Company estimates that currently available cash will not be able to provide sufficient funds to meet the Company’s planned obligations for the next 12 months from the date that these unaudited condensed consolidated financial statements were made available to be issued. 59 For the three months ended March 31, 2025, we reported a net loss of approximately $53.1 million. With a significant decrease in our revenues, described in the paragraph below, we had an accumulated deficit of approximately $1,256.7 million as of March 31, 2025. However, coupled with the economic recession in Hong Kong, we reported a sales decline with total revenue of approximately $4.8 million for the three months ended March 31, 2025, resulting with an operating loss of approximately $44.2 million. These circumstances give rise to substantial doubt that we will continue as a going concern and these unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to continue as a going concern is dependent on the management’s ability to successfully implement its plans. Our management team believes that we will be able to continue to grow our revenue base and control our expenditures. In parallel, our management team will continually monitor our capital structure and operating plans and 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. Capital Commitments Details of capital commitments are disclosed in Note 17 in the accompanying unaudited condensed 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. Critical Accounting Policies, Judgements and Estimates The preparation of financial statements in conformity with GAAP requires us to make judgments, estimates, and assumptions in the preparation of our unaudited condensed consolidated financial statements. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as reported in our 2024 Annual Report on Form 10-K. 60 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.