TD Holdings, Inc. Reports Second Quarter 2022 Financial Results
SHENZHEN, China, Aug. 9, 2022 /PRNewswire/ -- TD Holdings, Inc. (Nasdaq: GLG) (the "Company"), a commodities trading service provider in China, today announced its financial results for the second quarter ended June 30, 2022.
Ms. Renmei Ouyang, the Chief Executive Officer of the Company, stated, "We made tremendous progress in growing and enhancing our business during the second quarter of fiscal year 2022, despite the many challenges presented by the resurgence of the COVID-19 pandemic. We continued to see increased demand for our services, highlighting the breadth and resilience of our business model against a challenging macro environment. To achieve the growth potential of our business, we will continue to expand our business by executing strategic initiatives, exploring growth opportunities, and providing high-quality products and services to our customers. We remain focused on providing invaluable services and support to best serve the demand of our customers. Specifically, we will continue to make progress and work toward on our strategic expansion, including expanding sales channels, growing our customer base, and keeping explore growth opportunities in the global gold spot trading market, digital cloud warehouse market and lightweight new materials market. In addition to our strategic expansion, we aim to manage expenses prudently and improve operating efficiency. We believe these initiatives will support us to generate new business growth and build momentum toward our growth objectives. As we look ahead to the fiscal year 2022 and beyond, we will strive to expand our capabilities to serve our customers, grow our business, and provide higher returns to our shareholders."
Financial Highlights
In the quarter ended June 30, 2022
- Total revenue was $53.68 million, consisting of $53.11 million from sales of commodity products, and $0.57 million from supply chain management services for the quarter ended June 30, 2022, a decrease of 10% from $59.84 million for the same quarter ended June 30, 2021.
- Net income was $1.43 million, compared with $0.36 million for the same quarter ended June 30, 2021.
- Basic and diluted earnings per share was $0.01, compared with $nil for the same quarter ended June 30, 2021.
In the six months ended June 30, 2022
- Total revenue was $101.84 million, consisting of $100.69 million from sales of commodity products, and $1.15 million from supply chain management services for the six months ended June 30, 2022, an increase of 14% from $89.42 million for the same period ended June 30, 2021.
- Net income was $3.02 million, as compared with net loss of $1.18 million for the same period ended June 30, 2021.
- Basic and diluted earnings per share was $0.01, compared with basic and diluted loss per share of $0.01 for the same period ended June 30, 2021.
Financial Results
In the three months ended June 30, 2022
Revenues
For the three months ended June 30, 2022, the Company sold non-ferrous metals to 22 customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $53.11 million from sales of commodity products for the three months ended June 30, 2022, compared with $59.51 million from sales of commodity products for the three months ended June 30, 2021, among which, $1.52 million was generated from the related party.
For the three months ended June 30, 2022, the Company earned revenue of $0.57 million from supply chain management services to third-party customers, compared with $0.33 million to third-party customers for the three months ended June 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 $6.22 million, or 10% to $53.24 million for the three months ended June 30, 2022, from $59.47 million for the three months ended June 30, 2021, primarily due to a decrease of $4.68 million in cost of revenue associated with commodity product sales from the third party. 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 $0.18 million or 9%, to $1.88 million for the three months ended June 30, 2022, from $2.05 million for the three months ended June 30, 2021. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. There is no big decrease for the three months ended June 30, 2022 compared with the three months ended June 30, 2021.
Interest income
Interest income was primarily generated from loans made to third parties and related parties. Interest income increased by $1.42 million or 48%, to $4.37 million for the three months ended June 30, 2022, from $2.95 million for the three months ended June 30, 2021. The increase was full due to loans made to third-party vendors for the three months ended June 30, 2022.
Amortization of relative fair value of warrants relating to service provider
For the three months ended June 30, 2022, the item represented the amortization of beneficial conversion feature of $0.32 million and relating to the convertible promissory notes.
For the three months ended June 30, 2021, no such expenses incurred.
Net income
Net income was $1.43 million for the three months ended June 30, 2022, compared with $0.36 million for the three months ended June 30, 2021.
In the six months ended June 30, 2022
Revenues
For the six months ended June 30, 2022, the Company sold non-ferrous metals to 22 third-party customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $100.69 million from sales of commodity products for the six months ended June 30, 2022, compared with $88.95 million for the six months ended June 30, 2021.
For the six months ended June 30, 2022, the Company earned commodity distribution commission fees of $1.15 million from 16 third-party vendors, compared with commission fees of $0.47 million from third-party vendors for the six months ended June 30, 2021.
Cost of revenue
Cost of revenue primarily includes cost of revenue associated with commodity product sales, cost of revenue associated with management services of supply chain. Total cost of revenue increased by $11.96 million, or 13% to $100.85 million for the six months ended June 30, 2022, from $88.89 million for the six months ended June 30, 2021, primarily due to an increase of $11.96 million in cost of revenue associated with commodity product sales. The increased cost of revenue is in line with the increase in sales volume.
Selling, general, and administrative expenses
Selling, general and administrative expenses increased by $0.50 million or 14%, to $4.12 million for the six months ended June 30, 2022, from $3.62 million for the six months ended June 30, 2021. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, amortizations of intangible assets and convertible promissory notes, professional service fees and finance offering related fees. The increase was mainly attributable to 1) salary and employee benefits increased by $0.62 million and, 2) amortization of convertible promissory notes increased by $0.22 million.
Interest income
Interest income was primarily generated from loans made to third parties and related parties. Interest income increased by $3.71 million or 74%, to $8.76 million for the six months ended June 30, 2022, from $5.05 million for the six months ended June 30, 2021. The increase was primarily due to loans made to third-party vendor customers, among which, $0.70 million was attributed to related parties and $8.05 million was generated from third-party vendors.
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 5 years, and volatility of 71.57% for the six months ended June 30, 2021.
For the six months ended June 30, 2022, no such expenses incurred.
Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible notes
For the six months ended June 30, 2022, the item represented the amortization of beneficial conversion feature of $0.53 million relating to the convertible promissory notes.
For the six months ended June 30, 2021, no such expenses incurred.
Net income (loss)
Net income was $3.02 million for the six months ended June 30, 2022, compared with net loss of $1.18 million for the six months ended June 30, 2021.
Six Months Ended June 30, 2022 Cash Flows
As of June 30, 2022, the Company had cash and cash equivalents of $3.93 million, as compared with $4.31 million as of December 31, 2021.
Net cash provided by operating activities was $0.47 million for the six months ended June 30, 2022, compared with net cash used in operating activities of $3.79 million for the six months ended June 30, 2021.
Net cash used in investing activities was $60.10 million for the six months ended June 30, 2022, compared with $15.81 million for the six months ended June 30, 2021.
Net cash provided by financing activities was $59.92 million for the six months ended June 30, 2022, compared with $23.10 million for the six months ended June 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:tina.xiao@ascent-ir.com
Tel: +1 917 609 0333
TD HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2022 and December 31, 2021 (Expressed in U.S. dollars, except for the number of shares) | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 3,925,416 | $ | 4,311,068 | ||||
Loans receivable from third parties | 177,575,850 | 115,301,319 | ||||||
Accounts receivable | 2,997 | - | ||||||
Prepayments | 218 | - | ||||||
Due from related parties | - | 11,358,373 | ||||||
Other current assets | 5,148,250 | 3,288,003 | ||||||
Inventories | 1,505,869 | - | ||||||
Total current assets | 188,158,600 | 134,258,763 | ||||||
Non-Current Assets | ||||||||
Plant and equipment, net | 3,809 | 2,872 | ||||||
Goodwill | 67,475,493 | 71,028,283 | ||||||
Intangible assets, net | 18,246,404 | 21,257,337 | ||||||
Right-of-use assets, net | 737,385 | 888,978 | ||||||
Total non-current assets | 86,463,091 | 93,177,470 | ||||||
Total Assets | $ | 274,621,691 | $ | 227,436,233 | ||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 3,058,260 | $ | 3,337,758 | ||||
Bank borrowings | 1,072,802 | 1,129,288 | ||||||
Third party loans payable | 465,344 | 476,779 | ||||||
Contract liabilities | 5,184 | 5,221,874 | ||||||
Due to related parties | - | 21,174 | ||||||
Income tax payable | 10,068,891 | 8,441,531 | ||||||
Lease liabilities | 316,978 | 310,665 | ||||||
Other current liabilities | 4,864,492 | 4,297,793 | ||||||
Convertible promissory notes | 4,397,325 | 3,562,158 | ||||||
Total current liabilities | 24,249,276 | 26,799,020 | ||||||
Non-Current Liabilities | ||||||||
Deferred tax liabilities | 3,572,320 | 4,178,238 | ||||||
Lease liabilities | 435,842 | 586,620 | ||||||
Total non-current liabilities | 4,008,162 | 4,764,858 | ||||||
Total liabilities | 28,257,438 | 31,563,878 | ||||||
Commitments and Contingencies (Note 16) | ||||||||
Equity | ||||||||
Common stock (par value $0.001 per share, 600,000,000 shares authorized; | 273,680 | 138,174 | ||||||
Additional paid-in capital | 284,805,054 | 224,790,409 | ||||||
Statutory surplus reserve | 1,477,768 | 1,477,768 | ||||||
Accumulated deficit | (39,181,475) | (42,200,603) | ||||||
Accumulated other comprehensive (loss)/income | (1,010,774) | 11,666,607 | ||||||
Total Equity | 246,364,253 | 195,872,355 | ||||||
Total Liabilities and Equity | $ | 274,621,691 | $ | 227,436,233 | ||||
TD HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND (Expressed in U.S. dollars, except for the number of shares) | ||||||||||||||||
For the Three Months | For the Six Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues | ||||||||||||||||
- Sales of commodity products – third parties | $ | 53,108,294 | $ | 57,989,381 | $ | 100,692,259 | $ | 67,022,848 | ||||||||
- Sales of commodity products – related parties | - | 1,523,616 | - | 21,926,631 | ||||||||||||
- Supply chain management services – third | 575,101 | 326,650 | 1,150,252 | 472,425 | ||||||||||||
Total Revenue | 53,683,395 | 59,839,647 | 101,842,511 | 89,421,904 | ||||||||||||
Cost of revenue | ||||||||||||||||
- Commodity product sales-third parties | (53,250,178) | (57,932,603) | (100,840,754) | (66,965,015) | ||||||||||||
- Commodity product sales-related parties | - | (1,531,336) | - | (21,917,517) | ||||||||||||
- Supply chain management services – third | 5,912 | (2,592) | (5,690) | (3,642) | ||||||||||||
Total cost of revenue | (53,244,266) | (59,466,531) | (100,846,444) | (88,886,174) | ||||||||||||
Gross profit | 439,129 | 373,116 | 996,067 | 535,730 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling, general, and administrative expenses | (1,875,779) | (2,054,354) | (4,123,486) | (3,624,733) | ||||||||||||
Share-based payment for service | - | - | - | (1,695,042) | ||||||||||||
Total operating expenses | (1,875,779) | (2,054,354) | (4,123,486) | (5,319,775) | ||||||||||||
Other income (expenses), net | ||||||||||||||||
Interest income | 4,366,318 | 2,946,236 | 8,756,659 | 5,045,093 | ||||||||||||
Interest expenses | (129,116) | (155,825) | (239,442) | (283,248) | ||||||||||||
Amortization of beneficial conversion feature | (320,291) | - | (533,658) | - | ||||||||||||
Other income (expenses), net | (221,953) | (379,924) | (126,244) | (386,358) | ||||||||||||
Total other income, net | 3,694,958 | 2,410,487 | 7,857,315 | 4,375,487 | ||||||||||||
Net income (loss) before income taxes | 2,258,308 | 729,249 | 4,729,896 | (408,558) | ||||||||||||
Income tax expenses | (833,037) | (371,393) | (1,710,768) | (771,862) | ||||||||||||
Net income (loss) | $ | 1,425,271 | $ | 357,856 | $ | 3,019,128 | $ | (1,180,420) | ||||||||
Comprehensive Income (Loss) | ||||||||||||||||
Net income (loss) | $ | 1,425,271 | $ | 357,856 | $ | 3,019,128 | $ | (1,180,420) | ||||||||
Foreign currency translation adjustments | (13,558,577) | 2,706,148 | (12,677,381) | 2,062,570 | ||||||||||||
Comprehensive income (loss) | $ | (12,133,306) | $ | 3,064,004 | $ | (9,658,253) | $ | 882,150 | ||||||||
Income (Loss) per share - basic and diluted | ||||||||||||||||
Income (loss) per share – Basic | $ | 0.01 | $ | 0.00 | $ | 0.01 | $ | (0.01) | ||||||||
Income (loss) per share – Diluted | $ | 0.01 | $ | 0.00 | $ | 0.01 | $ | (0.01) | ||||||||
Weighted Average Shares Outstanding-Basic | 213,595,841 | 96,821,039 | 206,060,364 | 95,025,014 | ||||||||||||
Weighted Average Shares Outstanding-Diluted | 242,849,487 | 102,312,155 | 235,314,010 | 100,516,130 | ||||||||||||
TD HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in U.S. dollar) | ||||||||
For the Six Months Ended | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income(loss) | $ | 3,019,128 | $ | (1,180,420) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Amortization of intangible assets | 2,016,116 | 1,895,871 | ||||||
Depreciation of plant and equipment | 3,851 | 130 | ||||||
Amortization of discount on convertible promissory notes | 219,333 | 163,333 | ||||||
Amortization of right of use assets | 170,084 | - | ||||||
Amortization of beneficial conversion feature relating to issuance of convertible | 533,658 | - | ||||||
Monitoring fee relating to convertible promissory notes | 105,760 | - | ||||||
Share-based payment for service | - | 1,695,042 | ||||||
Standstill fee relating to convertible promissory notes | - | 356,934 | ||||||
Interest expense for convertible promissory notes | 206,567 | 199,093 | ||||||
Deferred tax liabilities | (410,877) | (411,736) | ||||||
Changes in operating assets and liabilities: | ||||||||
Other current assets | 37,371 | 601,683 | ||||||
Escrow account receivable | (3,103) | (2,520) | ||||||
Inventories | (1,558,802) | (882,764) | ||||||
Prepayments | (226) | (5,108,162) | ||||||
Contract liabilities | (5,129,684) | 1,677,349 | ||||||
Accounts payable | (116,501) | 2,297,940 | ||||||
Due to related parties | (20,822) | (5,518,273) | ||||||
Due from third parties | (1,022,489) | - | ||||||
Due from related parties | (331,761) | (457,032) | ||||||
Income tax payable | 2,121,985 | 1,175,327 | ||||||
Other current liabilities | 721,712 | (291,177) | ||||||
Lease liabilities | (104,310) | - | ||||||
Due to third party loans payable | 12,849 | - | ||||||
Net cash provided by (used in) operating activities | 469,839 | (3,789,382) | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchases of intangible assets | - | (5,100,490) | ||||||
Purchases of plant and equipment | (4,936) | (2,332) | ||||||
Purchases of operating lease assets | (58,617) | - | ||||||
Final payment of acquisition of a subsidiary | - | (15,533,312) | ||||||
Payment made on loan to related parties | - | (7,174,955) | ||||||
Payment made on loans to third parties | (80,502,961) | (45,057,871) | ||||||
Collection of loans from related parties | 10,839,631 | 43,687,593 | ||||||
Collection of loans from third parties | 10,069,408 | 13,370,395 | ||||||
Investments in other investing activities | (444,871) | - | ||||||
Net cash used in investing activities | (60,102,346) | (15,810,972) | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of common stock under ATM transaction | - | 2,192,989 | ||||||
Proceeds from issuance of common stock under private placement transactions | 56,920,000 | 24,450,000 | ||||||
Proceeds from exercise of warrants | - | 7,500 | ||||||
Proceeds from issuance of convertible promissory notes | 3,000,000 | 4,500,000 | ||||||
Proceeds from borrowings from third parties | - | 1,993,828 | ||||||
Repayments made on loans to related parties | - | (550,930) | ||||||
Payments made on loans to third parties | - | (9,496,586) | ||||||
Net cash provided by financing activities | 59,920,000 | 23,096,801 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (673,145) | 700,055 | ||||||
Net increase/(decrease) in cash and cash equivalents | (385,652) | 4,196,502 | ||||||
Cash at beginning of period | 4,311,068 | 2,700,013 | ||||||
Cash at end of period | $ | 3,925,416 | $ | 6,896,515 | ||||
Supplemental Cash Flow Information | ||||||||
Cash paid for interest expense | $ | 43,310 | $ | - | ||||
Cash paid for income tax | $ | 1,744 | $ | 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 | $ | 3,230,150 | $ | - | ||||
Issuance of common stocks in connection with warrant cashless exercise in March | $ | - | $ | 1,439,826 | ||||
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SOURCE TD Holdings, Inc.