TD Holdings, Inc. Reports Third Quarter 2022 Financial Results

SHENZHEN, China, Nov. 11, 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:tina.xiao@ascent-ir.com 
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,
2022



December 31,
2021


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;
        55,403,026 and 27,634,830 shares issued and outstanding as of September 30,
        2022 and December 31, 2021, respectively)*



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
September 30,



For the Nine Months Ended
September 30,




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
        relating to issuance of convertible promissory
        notes



(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
Nine Months Ended
September 30,




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
         promissory notes



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
   notes


$

3,855,150



$

-


Issuance of common stocks in connection with warrant cashless exercise in March
   2021


$

-



$

1,439,826


 

 

View original content:https://www.prnewswire.com/news-releases/td-holdings-inc-reports-third-quarter-2022-financial-results-301674078.html


Source: TD Holdings, Inc. Related Stocks: NASDAQ:GLG
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