Revenue up 63% year-over-year
SHENZHEN, China, May 13, 2022 /PRNewswire/ — TD Holdings, Inc. (Nasdaq: GLG) (the “Company”), a commodities trading service provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2022, supporting the turnaround efforts made by the Company.
Ms. Renmei Ouyang, the Chief Executive Officer of the Company, stated, “Despite facing a challenging macroeconomic situation, we delivered strong financial results in the first quarter, reflecting the sustainable profitability of our business model. In the first quarter of 2022, our revenue was up 63% to $48.16 million from $29.58 million in the same period of last year, demonstrating the continued execution and progress on our strategic development. Our net income was $1.59 million in the first quarter of 2022, compared with the net loss of $1.54 million for the same period of last year, indicating that we have realized the goal of reaching break-even or even profitable. The significant increase in our financial results marks an excellent start to the year and supports our growth objectives. Looking ahead to the remainder of the year and beyond, we will continue our efforts to serve our customers, explore opportunities in the market of global gold spot trading, digital cloud warehouse as well as lightweight new materials, and drive growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics. We believe that we remain well-positioned as the industry leader while maintaining our competitive advantages to deliver long-term growth and generate long-term shareholder value.”
First Quarter 2022 Financial Highlights
Revenue from commodities trading business was $48.16 million, consisting of $47.58 million from sales of commodities products, and $0.58 million from supply chain management services for the quarter ended March 31, 2022, compared with $29.58 million for the same quarter ended March 31, 2021, representing an increase of $18.58 million or 63%.
Net income was $1.59 million, compared with the net loss of $1.54 million for the same quarter ended March 31, 2021.
Basic and diluted earnings per share was $0.01, compared with basic and diluted loss per share of $0.02 for the same quarter ended March 31, 2021.
First Quarter 2022 Financial Results
Revenues
For the three months ended March 31, 2022, the Company sold non-ferrous metals to thirteen third party customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $47.58 million from sales of commodity products for the three months ended March 31, 2022, compared with $29.44 million from sales of commodity products for the three months ended March 31, 2021.
For the three months ended March 31, 2022, the Company provided $0.58 million revenue from supply chain management services to third party customers, compared with $0.15 million to third party customers for the three months ended March 31, 2021.
Cost of revenue
Our cost of revenue primarily includes the cost of revenue associated with commodity product sales and the cost of revenue associated with management services of supply chain. Total cost of revenue increased by $18.18 million, or 62% to $47.60 million for the three months ended March 31, 2022, from $29.42 million for the three months ended March 31, 2021, primarily due to the increase in the cost of revenue associated with commodity product sales in line with our business growth and expansion.
Selling, general, and administrative expenses
Selling, general and administrative expenses increased by $0.68 million or 43%, to $2.25 million for the three months ended March 31, 2022, from $1.57 million for the three months ended March 31, 2021. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, amortizations of intangible assets and convertible notes, professional service fees and finance offering related fees. The increase was mainly attributable to (i) amortization of intangible assets of $1.03 million, and (ii) amortization of convertible notes of $0.11 million for the three months ended March 31, 2022 while there was no such issuance for the three months ended March 31, 2021.
Share-based payment for service
For the three months ended March 31, 2021, the share-based payment for service was $1.70 million. 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 engaged agent to complete the warrant waiver and exercise agreements. The Company applied Black-Scholes model and determined the fair value of the warrants to be $1.70 million. 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 three months ended March 31, 2022, no such expenses incurred.
Interest income
Interest income was primarily generated from loans made to third parties and related parties. Interest income increased by $2.29 million, or 109%, to $4.39 million for the three months ended March 31, 2022, from $2.10 million for the three months ended March 31, 2021. The increase was primarily due to loans made to third party vendors for the three months ended March 31, 2022. The increase of interest income is in accordance with the increase in sales of commodity products. For the three months ended March 31, 2022, $0.72 million was attributed to related party and $3.67 million was generated from third party vendors.
Amortization of beneficial conversion feature and relative fair value of warrants relating to convertible promissory notes
For the three months ended March 31, 2022, the item represented the amortization of the beneficial conversion feature of $0.21 million of the three convertible promissory notes issued on January 6, 2021, March 4, 2021 and October 4, 2021.
Net Income(loss)
Net income was $1.59 million for the three months ended March 31, 2022, compared with the net loss of $1.54 million for the three months ended March 31, 2021.
First Quarter 2022 Cash Flows
As of March 31, 2022, the Company had cash and cash equivalents of $3.57 million, as compared with $5.64 million as of the same period of 2021.
Net cash provided by operating activities was $3.75 million for the three months ended March 31, 2022, as compared with net cash used in operating activities of $4.22 million for the same period of 2021.
Net cash used in investing activities was $50.00 million for the three months ended March 31, 2022, compared with $25.06 million for the same period of 2021.
Net cash provided by financing activities was $45.50 million for the three months ended March 31, 2022, compared with $32.15 million for the same period of 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. 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 March 31, 2022 and December 31, 2021
(Expressed in U.S. dollars, except for the number of shares)
March 31,
December 31,
2022
2021
ASSETS
Current Assets
Cash and cash equivalents
$
3,574,342
$
4,311,068
Loans receivable from third parties
175,999,505
115,301,319
Accounts receivable
55,004
–
Prepayments
1,892,498
–
Due from related parties
–
11,358,373
Other current assets
4,950,447
3,288,003
Inventories
133,857
–
Total current assets
186,605,653
134,258,763
Non-Current Assets
Plant and equipment, net
4,704
2,872
Goodwill
71,335,973
71,028,283
Intangible assets, net
20,319,879
21,257,337
Right-of-use assets, net
864,671
888,978
Total non-current assets
92,525,227
93,177,470
Total Assets
$
279,130,880
$
227,436,233
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable
$
3,236,098
$
3,337,758
Bank borrowings
1,134,180
1,129,288
Third party loans payable
485,370
476,779
Contract liabilities
7,145,609
5,221,874
Due to related parties
–
21,174
Income tax payable
9,564,169
8,441,531
Lease liabilities
337,372
310,665
Other current liabilities
4,809,745
4,297,793
Convertible promissory notes
2,244,675
3,562,158
Total current liabilities
28,957,218
26,799,020
Non-Current Liabilities
Deferred tax liabilities
3,986,521
4,178,238
Lease liabilities
534,913
586,620
Total non-current liabilities
4,521,434
4,764,858
Total liabilities
33,478,652
31,563,878
Commitments and Contingencies (Note 16)
Equity
Common stock (par value $0.001 per share,
600,000,000 shares authorized; 213,001,894 and
138,174,150 shares issued and outstanding at March
31, 2022 and December 31, 2021, respectively)
213,002
138,174
Additional paid-in capital
272,020,401
224,790,409
Statutory surplus reserve
1,477,768
1,477,768
Accumulated deficit
(40,606,746)
(42,200,603)
Accumulated other comprehensive income
12,547,803
11,666,607
Total Equity
245,652,228
195,872,355
Total Liabilities and Equity
$
279,130,880
$
227,436,233
TD HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended March 31, 2022 and 2021
(Expressed in U.S. dollars, except for the number of shares)
For the Three Months
Ended
March 31,
2022
2021
Revenues
- Sales of commodity products – third parties
$
47,583,965
$
9,033,467
- Sales of commodity products – related parties
–
20,403,015
- Supply chain management services – third parties
575,151
145,775
Total revenue
48,159,116
29,582,257
Cost of revenues
- Commodity product sales-third parties
(47,590,576)
(9,032,412)
- Commodity product sales-related parties
–
(20,386,181)
- Supply chain management services-third parties
(11,602)
(1,050)
Total operating costs
(47,602,178)
(29,419,643)
Gross profit
556,938
162,614
Operating expenses
Selling, general, and administrative expenses
(2,247,707)
(1,570,379)
Share-based payment for service
–
(1,695,042)
Total operating expenses
(2,247,707)
(3,265,421)
Net Operating Loss
(1,690,769)
(3,102,807)
Other income(expenses), net
Interest income
4,390,341
2,098,857
Interest expenses
(110,326)
(127,423)
Amortization of beneficial conversion feature relating to
issuance of convertible promissory notes
(213,367)
–
Other income (expenses), net
95,709
(6,434)
Total other income, net
4,162,357
1,965,000
Net income (loss) before income taxes
2,471,588
(1,137,807)
Income tax expenses
(877,731)
(400,469)
Net income (loss)
1,593,857
(1,538,276)
Comprehensive Income (loss)
Net income (loss)
1,593,857
(1,538,276)
Foreign currency translation adjustments
881,196
(643,578)
Comprehensive Income (loss)
$
2,475,053
$
(2,181,854)
Earnings (loss) per share – basic and diluted
Continuing Operation- Earnings (loss) per share – basic
$
0.01
$
(0.02)
Continuing Operation- Earnings (loss) per share –diluted
$
0.01
$
(0.02)
Weighted Average Shares Outstanding-Basic
198,441,160
93,209,034
Weighted Average Shares Outstanding- Diluted
213,552,950
95,764,295
TD HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2022 and 2021
(Expressed in U.S. dollar)
For the Three Months
Ended
March 31,
2022
2021
Cash Flows from Operating Activities:
Net income (loss)
$
1,593,857
(1,538,276)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation of plant and equipment
3,217
–
Amortization of intangible assets
1,029,186
883,938
Amortization of right of use assets
76,983
–
Amortization of discount on convertible promissory notes
111,000
40,833
Interest expense for convertible promissory notes
93,285
69,417
Amortization of beneficial conversion feature of convertible promissory
notes
213,367
–
Monitoring fee relating to convertible promissory notes
69,685
–
Deferred tax liabilities
(209,744)
(205,458)
Share-based payment for service
–
1,695,042
Changes in operating assets and liabilities:
Escrow account receivable
(54,985)
–
Inventories
(133,810)
–
Other current assets
(29,775)
(696,357)
Prepayments
(1,891,842)
(8,170,226)
Contract liabilities
1,900,456
5,501,254
Due to related parties
(21,259)
641,386
Due from third parties
(481,816)
Due from related parties
28,897
(2,943,162)
Accounts payable
(116,078)
–
Income tax payable
1,085,694
530,511
Other current liabilities
499,661
(24,417)
Lease liabilities
(19,734)
–
Due to third party loans payable
6,523
–
Net cash provided by (used in) operating activities
3,752,768
(4,215,515)
Cash Flows from Investing Activities:
Purchases of plant and equipment
(5,039)
–
Purchases of operating lease assets
(58,617)
–
Purchases of intangible assets
–
(5,090,323)
Loans made to related parties
–
(18,662,034)
Loans made to third parties
(60,177,853)
(1,307,835)
Collection of loans from related parties
11,066,822
–
Investments in other investing activities
(828,601)
–
Net cash used in investing activities
(50,003,288)
(25,060,192)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock under ATM transaction
–
2,192,988
Proceeds from issuance of common stock under private placement
transactions
45,500,000
24,450,000
Proceeds from convertible promissory notes
–
4,500,000
Proceeds from borrowings from related parties
–
1,196,697
Repayment made on loans from third parties
–
(185,103)
Net cash provided by financing activities
45,500,000
32,154,582
Effect of exchange rate changes on cash and cash equivalents
13,794
57,113
Net (decrease)/increase in cash and cash equivalents
(736,726)
2,935,988
Cash and cash equivalents at beginning of period
4,311,068
2,700,013
Cash and cash equivalents at end of period
$
3,574,342
$
5,636,001
Supplemental Cash Flow Information
Cash paid for interest expenses
$
22,109
$
–
Cash paid for income taxes
$
1,781
$
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
$
1,804,820
$
–
Issuance of common stocks in connection with warrant cashless exercise in
March 2021
$
–
$
1,439,826
