SHENZHEN, China, Nov. 10, 2022 /PRNewswire/ -- TD Holdings, Inc. (Nasdaq: GLG) (the "Company"), a commodities trading service provider in China, today announced its financial results for the third quarter ended September 30, 2022.
Ms. Renmei Ouyang, the Chief Executive Officer of the Company, stated, "The third quarter of fiscal year 2022 was challenging, we faced dynamic macro environment and uncertainty related to the resurgence of COVID-19 in China. However, we believe that we are on track to achieving our expansion targets by executing our strategies and keeping explore growth opportunities. We expect to implement several initiatives to increase our brand awareness and extend our market presence in the commodities trading market. We will continue providing valuable services to our customers, managing expenses prudently, improving our operating efficiency, and expanding our customer acquisition channels. In the remaining of 2022, we will strive to expand our capabilities to serve our customers, grow our business, deliver long-term growth and generate long-term shareholder value."
Financial Highlights
In the quarter ended September 30, 2022
- Total revenue was $37.89 million, consisting of $37.85 million from sales of commodity products, and $0.04 million from supply chain management services for the quarter ended September 30, 2022, a decrease of 31% from $54.77 million for the same quarter ended September 30, 2021.
- Net income was $1.30 million, compared with $0.46 million for the same quarter ended September 30, 2021.
- Basic and diluted earnings per share were $0.02, compared with $0.02 for the same quarter ended September 30, 2021.
In the nine months ended September 30, 2022
- Total revenue was $139.73 million, consisting of $138.54 million from sales of commodity products, and $1.19 million from supply chain management services for the nine months ended September 30, 2022, a decrease of 3% from $144.20 million for the same period ended September 30, 2021.
- Net income was $4.32 million, as compared with net loss of $0.72 million for the same period ended September 30, 2021.
- Basic and diluted earnings per share were $0.09 and $0.08, respectively, compared with $0.04 and $0.03, respectively for the same period ended September 30, 2021.
Financial Results
In the three months ended September 30, 2022
Revenues
For the three months ended September 30, 2022, the Company sold non-ferrous metals to 25 customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $37.85 million from sales of commodity products for the three months ended September 30, 2022, compared with $52.73 million from sales of commodity products for the three months ended September 30, 2021, among which, $1.37 million was generated from the related parties.
For the three months ended September 30, 2022, the Company earned revenue of $0.04 million from supply chain management services to third-party customers, compared with $2.04 million to third-party customers for the three months ended September 30, 2021.
Cost of revenue
Cost of revenue primarily includes cost of revenue associated with commodity product sales and cost of revenue associated with management services of supply chain. Total cost of revenue decreased by $14.79 million, or 28% to $38.01 million for the three months ended September 30, 2022, from $52.80 million for the three months ended September 30, 2021, primarily due to a decrease of $13.35 million in cost of revenue associated with commodity product sales from the third parties. The decreased cost of revenue is in line with the decrease in revenue.
Selling, general, and administrative expenses
Selling, general and administrative expenses decreased by $0.27 million or 12%, to $1.95 million for the three months ended September 30, 2022, from $2.23 million for the three months ended September 30, 2021. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expenses, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. Selling, general and administrative expenses for the three months ended September 30, 2022 mainly included: (1) amortization of intangible assets of $0.95 million, (2) amortization of discount of convertible promissory notes of $0.14 million, and (3) salary of $0.51 million.
Interest income
Interest income was primarily generated from loans made to third parties and related parties. Interest income increased by $2.85 million or 158%, to $4.66 million for the three months ended September 30, 2022, from $1.81 million for the three months ended September 30, 2021. The increase was due to loans made to third-party vendors for the three months ended September 30, 2022.
Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible promissory notes
For the three months ended September 30, 2022, the item represented the amortization of beneficial conversion feature of $0.37 million and relating to the convertible promissory notes, and $0.62 million for the three months ended September 30, 2021.
Net income
Net income was $1.30 million for the three months ended September 30, 2022, compared with $0.46 million for the three months ended September 30, 2021.
In the nine months ended September 30, 2022
Revenues
For the nine months ended September 30, 2022, the Company sold non-ferrous metals to 25 third-party customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $138.54 million from sales of commodity products for the nine months ended September 30, 2022, compared with $141.68 million for the nine months ended September 30, 2021.
For the nine months ended September 30, 2022, the Company earned commodity distribution commission fees of $1.19 million from third-party vendors, compared with $2.52 million from third-party vendors for the nine months ended September 30, 2021.
Cost of revenue
Cost of revenue primarily includes cost of revenue associated with commodity product sales and cost of revenue associated with management services of supply chain. Total cost of revenue decreased by $2.83 million, or 2% to $138.85 million for the nine months ended September 30, 2022, from $141.69 million for the nine months ended September 30, 2021, primarily due to a decrease of $2.82 million in cost of revenue associated with commodity product sales. The decreased cost of revenue is in line with the decrease in sales volume.
Selling, general, and administrative expenses
Selling, general and administrative expenses increased by $0.23 million or 4%, to $6.08 million for the nine months ended September 30, 2022, from $5.85 million for the nine months ended September 30, 2021. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expenses, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. Selling, general and administrative expenses mainly consisted of: (1) amortization of intangible assets of $2.97 million, (2) amortization of discount on convertible promissory notes of $0.35 million, and (3) salary of $1.35 million.
Interest income
Interest income was primarily generated from loans made to third parties and related parties. Interest income increased by $6.56 million or 96%, to $13.42 million for the nine months ended September 30, 2022, from $6.85 million for the nine months ended September 30, 2021. The increase was primarily due to a lot of growth of loans made to third-party vendors for the nine months ended September 30, 2022.
Share-based payment for service
On March 4, 2021, the Company issued 750,000 fully-vested warrants with an exercise price of $0.01, with a five-year life, to an agent who was engaged to complete the warrant waiver and exercise agreements. The Company applied Black-Scholes model and determined the fair value of the warrants to be $1,695,042. Significant estimates and assumptions used included stock price on March 4, 2021 of $2.27 per share, risk-free interest rate of one year of 0.08%, life of five years, and volatility of 71.57% for the nine months ended September 30, 2021.
On July 16, 2021, the Company issued 140,000 shares of the Company's common stock as compensation to a PR service provider for increasing the Company's visibility in the financial news community, and recognized 141,400 Share-based payment for service to profit.
For the nine months ended September 30, 2022, no such expenses were incurred.
Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible promissory notes
For the nine months ended September 30, 2022, the item represented the amortization of beneficial conversion feature of $0.90 million of three convertible promissory notes issued on March 4, 2021, October 4, 2021 and May 6, 2022.
For the nine months ended September 30, 2021, the item represented the amortization of beneficial conversion feature of $0.62 million of two convertible promissory notes issued on January 6, 2021 and March 4, 2021.
Net income (loss)
Net income was $4.32 million for the nine months ended September 30, 2022, compared with net loss of $0.72 million for the nine months ended September 30, 2021.
Nine Months Ended September 30, 2022 Cash Flows
As of September 30, 2022, the Company had cash and cash equivalents of $2.68 million, as compared with $4.31 million as of December 31, 2021.
Net cash provided by operating activities was $3.60 million for the nine months ended September 30, 2022, compared with $0.94 million for the nine months ended September 30, 2021.
Net cash used in investing activities was $63.25 million for the nine months ended September 30, 2022, compared with $62.21 million for the nine months ended September 30, 2021.
Net cash provided by financing activities was $59.89 million for the nine months ended September 30, 2022, compared with $62.13 million for the nine months ended September 30, 2021.
About TD Holdings, Inc.
TD Holdings, Inc. is a service provider currently engaging in commodities trading business and supply chain service business in China. Its commodities trading business primarily involves purchasing non-ferrous metal product from upstream metal and mineral suppliers and then selling to downstream customers. Its supply chain service business primarily has served as a one-stop commodity supply chain service and digital intelligence supply chain platform integrating upstream and downstream enterprises, warehouses, logistics, information, and futures trading. For more information, please visit http://ir.tdglg.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of TD Holdings, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: there is uncertainty about the spread of the COVID-19 virus and the impact it will have on the Company's operations, the demand for the Company's products and services, global supply chains and economic activity in general. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact:
Ascent Investor Relations LLC
Ms. Tina Xiao
Email:[email protected]
Tel: +1 917 609 0333
TD HOLDINGS, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
As of September 30, 2022 and December 31, 2021 | ||||||||
(Expressed in U.S. dollars, except for the number of shares) | ||||||||
September 30, | December 31, | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2,684,644 | $ | 4,311,068 | ||||
Loans receivable from third parties | 171,909,479 | 115,301,319 | ||||||
Prepayments | 5,294 | - | ||||||
Due from related parties | 301,624 | 11,358,373 | ||||||
Other current assets | 4,873,054 | 3,288,003 | ||||||
Inventories | 469,486 | - | ||||||
Total current assets | 180,243,581 | 134,258,763 | ||||||
Non-Current Assets | ||||||||
Plant and equipment, net | 3,524 | 2,872 | ||||||
Goodwill | 63,784,194 | 71,028,283 | ||||||
Intangible assets, net | 16,327,667 | 21,257,337 | ||||||
Right-of-use assets, net | 622,930 | 888,978 | ||||||
Total non-current assets | 80,738,315 | 93,177,470 | ||||||
Total Assets | $ | 260,981,896 | $ | 227,436,233 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,073,122 | $ | 3,337,758 | ||||
Bank borrowings | 985,943 | 1,129,288 | ||||||
Third party loans payable | 445,852 | 476,779 | ||||||
Contract liabilities | - | 5,221,874 | ||||||
Due to related parties | - | 21,174 | ||||||
Income tax payable | 10,549,449 | 8,441,531 | ||||||
Lease liabilities | 295,402 | 310,665 | ||||||
Other current liabilities | 5,161,205 | 4,297,793 | ||||||
Convertible promissory notes | 4,458,881 | 3,562,158 | ||||||
Total current liabilities | 22,969,854 | 26,799,020 | ||||||
Non-Current Liabilities | ||||||||
Deferred tax liabilities | 3,189,289 | 4,178,238 | ||||||
Lease liabilities | 346,456 | 586,620 | ||||||
Total non-current liabilities | 3,535,745 | 4,764,858 | ||||||
Total liabilities | 26,505,599 | 31,563,878 | ||||||
Commitments and Contingencies (Note 16) | ||||||||
Equity | ||||||||
Common stock (par value $0.001 per share, 600,000,000 shares authorized; | 55,403 | 27,635 | ||||||
Additional paid-in capital | 285,648,331 | 224,900,948 | ||||||
Statutory surplus reserve | 1,477,768 | 1,477,768 | ||||||
Accumulated deficit | (37,877,553) | (42,200,603) | ||||||
Accumulated other comprehensive (loss) income | (14,827,652) | 11,666,607 | ||||||
Total Equity | 234,476,297 | 195,872,355 | ||||||
Total Liabilities and Equity | $ | 260,981,896 | $ | 227,436,233 | ||||
* Retrospectively restated due to five for one reverse stock split, see Note 12 - Reverse stock split of common stock. | ||||||||
TD HOLDINGS, INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||||||
COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
(Expressed in U.S. dollars, except for the number of shares) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues | ||||||||||||||||
- Sales of commodity products – third parties | $ | 37,847,831 | $ | 51,364,489 | $ | 138,540,090 | $ | 118,387,337 | ||||||||
- Sales of commodity products – related parties | - | 1,365,823 | - | 23,292,454 | ||||||||||||
- Supply chain management services - third parties | 40,724 | 2,043,494 | 1,190,976 | 2,515,919 | ||||||||||||
Total Revenues | 37,888,555 | 54,773,806 | 139,731,066 | 144,195,710 | ||||||||||||
Cost of revenue | ||||||||||||||||
- Commodity product sales - third parties | (38,008,016) | (51,358,653) | (138,848,770) | (118,323,668) | ||||||||||||
- Commodity product sales - related parties | - | (1,429,486) | - | (23,347,003) | ||||||||||||
- Supply chain management services - third parties | (321) | (11,913) | (6,011) | (15,555) | ||||||||||||
Total cost of revenue | (38,008,337) | (52,800,052) | (138,854,781) | (141,686,226) | ||||||||||||
Gross profit | (119,782) | 1,973,754 | 876,285 | 2,509,484 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general, and administrative expenses | (1,951,604) | (2,226,398) | (6,075,090) | (5,851,131) | ||||||||||||
Share-based payment for service | - | (141,400) | - | (1,836,442) | ||||||||||||
Total operating expenses | (1,951,604) | (2,367,798) | (6,075,090) | (7,687,573) | ||||||||||||
Other income (expenses), net | ||||||||||||||||
Interest income | 4,659,595 | 1,809,398 | 13,416,254 | 6,854,491 | ||||||||||||
Interest expenses | (149,308) | 100,294 | (388,750) | (182,954) | ||||||||||||
Amortization of beneficial conversion feature | (365,125) | (619,025) | (898,783) | (619,025) | ||||||||||||
Other income (expense), net | 104,961 | 251,014 | (21,283) | (135,344) | ||||||||||||
Total other income, net | 4,250,123 | 1,541,681 | 12,107,438 | 5,917,168 | ||||||||||||
Net income before income taxes | 2,178,737 | 1,147,637 | 6,908,633 | 739,079 | ||||||||||||
Income tax expenses | (874,815) | (690,022) | (2,585,583) | (1,461,884) | ||||||||||||
Net income (loss) | $ | 1,303,922 | $ | 457,615 | $ | 4,323,050 | $ | (722,805) | ||||||||
Comprehensive Income (Loss) | ||||||||||||||||
Net income (loss) | $ | 1,303,922 | $ | 457,615 | $ | 4,323,050 | $ | (722,805) | ||||||||
Foreign currency translation adjustments | (13,816,878) | (605,379) | (26,494,259) | 1,457,191 | ||||||||||||
Comprehensive income (loss) | $ | (12,512,956) | $ | (147,764) | $ | (22,171,209) | $ | 734,386 | ||||||||
Income (Loss) per share - basic and diluted | ||||||||||||||||
Income (loss) per share- basic | $ | 0.02 | $ | 0.02 | $ | 0.09 | $ | (0.04) | ||||||||
Income (loss) per share- diluted | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | (0.03) | ||||||||
Weighted Average Shares Outstanding-Basic | 55,158,053 | 20,418,262 | 45,911,817 | 19,481,266 | ||||||||||||
Weighted Average Shares Outstanding-Diluted | 61,207,271 | 21,724,389 | 51,961,035 | 20,787,393 | ||||||||||||
TD HOLDINGS, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Expressed in U.S. dollar) | ||||||||
For the | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 4,323,050 | $ | (722,805) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation of property and equipment | 4,503 | 331 | ||||||
Amortization of right of use assets | 248,475 | - | ||||||
Amortization of intangible assets | 2,967,735 | 2,905,932 | ||||||
Amortization of discount on convertible promissory notes | 354,333 | 354,000 | ||||||
Monitoring fee relating to convertible promissory notes | 157,276 | - | ||||||
Interest expense for convertible promissory notes | 341,482 | 300,108 | ||||||
Standstill fee relating to convertible promissory notes | - | 356,934 | ||||||
Deferred tax liabilities | (604,813) | (617,582) | ||||||
Share-based payment for service | - | 1,836,442 | ||||||
Amortization of beneficial conversion feature relating to issuance of convertible | 898,783 | 619,025 | ||||||
Changes in operating assets and liabilities: | ||||||||
Other current assets | 74,164 | 1,268,574 | ||||||
Inventories | (504,519) | - | ||||||
Prepayments | (5,689) | - | ||||||
Due from related parties | (517,471) | (385,132) | ||||||
Due from third parties | (1,239,339) | (1,589,463) | ||||||
Accounts payable | (2,067,808) | - | ||||||
Contract liabilities | (5,039,217) | (1,028,785) | ||||||
Due to related parties | (20,433) | (5,497,309) | ||||||
Income tax payable | 3,190,730 | 2,070,616 | ||||||
Other current liabilities | 1,202,550 | 607,774 | ||||||
Lease liabilities | (178,203) | - | ||||||
Due to third party loans payable | 19,019 | 463,271 | ||||||
Net Cash Provided by Operating Activities | 3,604,608 | 941,931 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of intangible assets | - | (5,100,306) | ||||||
Purchases of plant and equipment | (5,449) | (2,603) | ||||||
Purchases of operating lease assets | (58,617) | - | ||||||
Final payment of acquisition of a subsidiary | - | (15,532,750) | ||||||
Payment made on loans to related parties | (301,624) | - | ||||||
Payment made on loans to third parties | (77,227,957) | (99,030,244) | ||||||
Collection of loans from third parties | 3,758,759 | 13,463,633 | ||||||
Collection of loans from related parties | 10,637,336 | 44,399,732 | ||||||
Investments in other investing activities | (51,192) | (410,536) | ||||||
Net Cash Used in by Investing Activities | (63,248,744) | (62,213,074) | ||||||
Cash Flows from Financing Activities: | ||||||||
Repayments of borrowings to related parties | - | (1,896,122) | ||||||
Payments of borrowings to the third parties | (30,272) | (556,397) | ||||||
Proceeds from issuance of common stock under ATM | - | 2,192,989 | ||||||
Proceeds from issuance of common stock under private placement transactions | 56,920,000 | 57,877,941 | ||||||
Proceeds from convertible promissory notes | 3,000,000 | 4,500,000 | ||||||
Proceeds from exercise of warrants | - | 7,500 | ||||||
Net Cash Provided by Financing Activities | 59,889,728 | 62,125,911 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (1,872,016) | 736,609 | ||||||
Net (decrease) increase in cash and cash equivalents | (1,626,424) | 1,591,377 | ||||||
Cash at beginning of period | 4,311,068 | 2,700,013 | ||||||
Cash at end of period | $ | 2,684,644 | $ | 4,291,390 | ||||
Supplemental Cash Flow Information | ||||||||
Cash paid for interest expense | $ | 63,752 | $ | - | ||||
Cash paid for income tax | $ | 1,712 | $ | 75,416 | ||||
Supplemental disclosure of Non-cash investing and financing activities | ||||||||
Right-of-use assets obtained in exchange for operating lease obligations | $ | 58,617 | $ | - | ||||
Issuance of common stocks in connection with conversion of convertible promissory | $ | 3,855,150 | $ | - | ||||
Issuance of common stocks in connection with warrant cashless exercise in March | $ | - | $ | 1,439,826 | ||||
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SOURCE TD Holdings, Inc.