TD Holdings, Inc. Reports Second Quarter 2020 Financial Results

Rhea-AI Summary

TD Holdings, Inc. (Nasdaq: GLG) reported financial results for the six months ending June 30, 2020, with revenues from commodities trading reaching $5.19 million, a significant increase amid the COVID-19 pandemic. The company recorded a net loss of $4.50 million, compared to $2.87 million in the same period last year. The earnings per share improved, showing a loss of $0.15 versus $0.45 year-over-year. The company raised $66 million through convertible notes and warrants, enhancing shareholder equity to $88.8 million by June 30, 2020.

Positive

• Revenue from commodities trading increased to $5.19 million for the six months ended June 30, 2020.
• Net income from commodities trading business was $2.54 million, indicating growth.
• Significant increase in interest income to $1.73 million, up 5,216% year-over-year.

Negative

• Net loss increased to $4.50 million compared to $2.87 million for the same period in 2019.
• Operating lease income from used car leasing dropped to $0 due to COVID-19 impacts.
• Noncash amortization expenses from convertible notes and warrants totaled $6.46 million.

BEIJING, Aug. 14, 2020 /PRNewswire/ -- TD Holdings, Inc. (Nasdaq: GLG) (the "Company"), a commodities trading service and used luxurious car rental provider in China today announced its financial results for the six months ended June 30, 2020.

The Company began to operate its commodities trading service in Shenzhen, China in November 2020. In January 2019, we changed the Company's name to TD Holdings, Inc., which better represents our current focus on the new commodities trading business. The letter "T" in the name representing Chinese character for "Bronze," indicating the Company's focus on the commodities trading business, and particularly on the trading of nonferrous metals such as bronze as the main direction of the Company's business in the future.

Ms. Renmei Ouyang, the Chief Executive Officer of the Company, stated, "We are pleased to report our financial results for the six months ended June 30, 2020. We started our commodity trading business in late 2019, and we made increasing revenues from our commodity trading business for the three and six months ended June 30, 2020, even during the ongoing outbreak of the coronavirus disease 2019 (COVID-19). I believe that the commodity trading business will continue to bolster the Company's income and increase shareholder value."

Financial Highlights

In the quarter ended June 30, 2020

• Revenues from commodities trading business was $3.71 million, consisting of $1.56 million from sales of commodities products, and $2.15 million from supply chain management services for the quarter ended June 30, 2020;
• Net income from commodities trading business was $2.40 million, and basic and diluted earnings per share from commodities trading business was $0.05.
• We raised funds aggregating $30 million from issuance of convertible notes, accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the convertible notes at an exercise price of $1.80, and raised $36 million from the holders of convertible notes upon their conversion of the convertible notes and exercise of warrants. We therefore incurred noncash amortization of beneficial conversion feature of $3.4 million and amortization of relative fair value of warrants of $3.06 million;
• Net loss was $4.36 million, as compared with $1.04 million for the same period ended June 30, 2019; and
• Basic and diluted loss per share was $0.09, compared with basic and diluted loss per share of $0.14 for the same period ended June 30, 2019.
• Shareholders' equity as of June 30, 2020 was $88.8 million, compared with $5.8 million as of December 31, 2019.

In the six months ended June 30, 2020

• Revenues from commodities trading business was $5.19 million, consisting of $2.62 million from sales of commodities products, and $2.56 million from supply chain management services;
• Net income from commodities trading business was $2.54 million, and basic and diluted earnings per share from commodities trading business was $0.05.
• We raised funds aggregating $30 million from issuance of convertible notes, accompanied by warrants to purchase 20,000,000 shares of Common Stock issuable upon conversion of the convertible notes at an exercise price of $1.80, and raised $36 million from the holders of convertible notes upon their conversion of the convertible notes and exercise of warrants. We therefore incurred noncash amortization of beneficial conversion feature of $3.4 million and amortization of relative fair value of warrants of $3.06 million;
• Net loss was $4.50 million, as compared with $2.87 million for the same period ended June 30, 2019; and
• Basic and diluted loss per share was $0.15, compared with basic and diluted loss per share of $0.45 for the same period ended June 30, 2019.

Financial Results

In the quarter ended June 30, 2020

Revenues

We generate revenue from commodities trading business and used car leasing business.

Income from commodities trading business

For the three months ended June 30, 2020, the Company sold non-ferrous metals to two customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $1,563,669 from sales of commodity products. There was no such revenue for the three months ended June 30, 2019.

For the three months ended June 30, 2020, the Company earned $2,145,810 from loan recommendation services from the facilitation of a loan volume of approximately $86.0 million (RMB 604.6 million) with eight customers.

Income from used car leasing business

As affected by COVID-19, we closed our car rental facilities from the end of January to March 2020, and gradually resumed business in April 2020. However due to cautious attitude on transportation, we did not generate operating lease income for the three months ended June 30, 2020. The extent to which COVID-19 impacts our income from operating lease for the fiscal year 2020 will depend on certain future developments, including the duration and spread of the outbreak, emerging information concerning the severity of COVID-19 and the actions taken by governments and private businesses in attempting to contain the spread of COVID-19, all of which is uncertain at this point.

Cost of revenue

Cost of revenue associated with commodity trading

Cost of revenue primarily consists of purchase costs of non-ferrous metal products. For the three months ended June 30, 2020, the Company purchased non-ferrous metal products of $1,570,132 from two third party suppliers, and sold non-ferrous metal products to two customers. The Company recorded cost of revenue of $1,570,132. There was no such cost for the three months ended June 30, 2019 because this was a new business launched in December 2019.

Costs associated with Operating lease

The operating lease expense mainly consisted of depreciation expenses on leasing business assets and car related expenses arising from lease of cars.

 The depreciation expenses on leasing business assets increased from $55,321 for the three months ended June 30, 2019 to $82,633 for the three months ended June 30, 2020, representing an increase of $27,312, or 49%. The Company purchased five used luxurious cars in April through June 2019, leading to an increase of depreciated months for these new cars for the three months ended June 30, 2020 as compared with the same period ended June 30, 2019. As of June 30, 2020, the Company had eleven used luxurious cars, as compared with thirteen cars as of June 30, 2019. 

In January 2019, the Company officially launched sub-lease of luxurious car business through leasing cars from both third party peer companies and individuals. The Company recorded car leasing expenses of $141,661 and $342,217 for the three months ended June 30, 2020 and 2019, respectively. The decrease was mainly caused by the Company's closure of car rental facilities from the end of January 2020 and the slowing down of the business since we resumed operations in April 2020, as affected by COVID-19.

Selling, general, and administrative expenses

Selling, general and administrative expenses decreased from $1,133,957 for the three months ended June 30, 2019 to $491,671 for the three months ended June 30, 2020, representing a decrease of $642,286, or 57%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, business tax and surcharge, professional service fees, office supplies. The decrease was mainly attributable to combined effects of a decrease of other operating expenses of $368,344 as a result of slowing down our car rental business for the three months ended June 30, 2020, and a decrease of legal and consulting expenses of $261,477, primarily as a result of a decrease in expenses incurred for the registered direct offerings in April and May 2019, including a decrease of audit related fees of $139,694, and an decrease of commission of $100,000 to a third party vendor for referral of underwriters. 

Interest income

Interest income was primarily generated from loans made to third parties and related parties. For the three months ended June 30, 2020, interest income was $1,586,552, representing an increase of $1,564,534, or 7,106% from $22,018 for the three months ended June 30, 2019. The increase was primarily due to 1) loans aggregating $79.8 million made to a customer, to whom the Company also provided loan recommendations services. For the three months ended June 30, 2020, the Company recognized interest income of $1,355,107, and 2) an increase of loans receivable from others third parties by $1.5 million, leading to an increase of interest income.

Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible notes

For the three months ended June 30, 2020, the item represented the full amortization of beneficial conversion feature of $3.4 million and amortization of relative fair value of warrants of $3.06 million relating to the convertible notes which was exercised in May 2020.

Net loss

As a result of the foregoing, net loss for the three months ended June 30, 2020 was $4,361,258, representing an increase of $3,320,033 from net loss of $1,040,325 for the three months ended June 30, 2019.

For the three months ended June 30, 2020, our net loss by segment primarily consisted of a net profit of $2.40 million in our commodity trading business, and an amortization expenses of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible notes of $6.46 million.

In the six months ended June 30, 2020

Revenues

We generate revenue from commodities trading business and used car leasing business.

Income from commodities trading business

For the six months ended June 30, 2020, the Company sold non-ferrous metals to two customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $2,617,301 from sales of commodity products. There was no such revenue for the six months ended June 30, 2019.

For the six months ended June 30, 2020, the Company earned $2,561,187 from loan recommendation services from the facilitation of a loan volume of approximately $102.4 million (RMB 720.6 million) with eight customers.

Income from used car leasing business

As affected by COVID-19, we closed our car rental facilities from the end of January to March 2020, and gradually resumed business in April 2020. However due to cautious attitude on transportation, we did not generate operating lease income for the six months ended June 30, 2020. The extent to which COVID-19 impacts our income from operating lease for the fiscal year 2020 will depend on certain future developments, including the duration and spread of the outbreak, emerging information concerning the severity of COVID-19 and the actions taken by governments and private businesses in attempting to contain the spread of COVID-19, all of which is uncertain at this point.

For the six months ended June 30, 2019, the Company generated operating lease income from used luxurious cars which are either owned by the Company or leased from third party vendors. The Company generated operating lease income of $940,894 for the six months ended June 30, 2019.

Cost of revenue

Cost of revenue associated with commodity trading

Cost of revenue primarily consists of purchase costs of non-ferrous metal products. For the six months ended June 30, 2020, the Company purchased non-ferrous metal products of $2,625,275 from two third party suppliers, and sold non-ferrous metal products to two customers. The Company recorded cost of revenue of $2,625,275. There was no such cost for the six months ended June 30, 2019 because this was a new business launched in December 2019.

Costs associated with Operating lease

The operating lease expense mainly consisted of depreciation expenses on leasing business assets and car related expenses arising from lease of cars.

The depreciation expenses on leasing business assets increased from $102,179 for the six months ended June 30, 2019 to $162,211 for the six months ended June 30, 2020, representing an increase of $60,032, or 59%. The Company purchased five used luxurious cars in April through June 2019, leading to an increase of depreciated months for these new cars for the six months ended June 30, 2020 as compared with the same period ended June 30, 2019. As of June 30, 2020, the Company had eleven used luxurious cars, as compared with thirteen cars as of June 30, 2019.

In January 2019, the Company officially launched sub-lease of luxurious car business through leasing cars from both third party peer companies and individuals. The Company recorded car leasing expenses of $161,397 and $533,010 for the six months ended June 30, 2020 and 2019, respectively. The decrease was mainly caused by the Company's closure of car rental facilities from the end of January 2020 and the Company slowed down the business since we resumed operations in April 2020, as affected by COVID-19.

Selling, general, and administrative expenses

Selling, general and administrative expenses decreased from $3,040,276 for the six months ended June 30, 2019 to $916,786 for the six months ended June 30, 2020, representing a decrease of $2,123,490, or 70%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, business tax and surcharge, professional service fees, office supplies. The decrease was mainly attributable to combined effects of a decrease of other operating expenses of $726,862 as a result of slowing down our car rental business for the six months ended June 30, 2020, and a decrease of legal and consulting expenses of $1,482,400, primarily as a result of 1) issuance of 502,391 restricted shares as compensation of $884,208 to certain service providers for the three months ended March 31, 2019, while no such issuance was made for the three months ended March 31, 2020, and 2) a decrease in expenses incurred for the registered direct offerings in April and May 2019, including an increase of audit related fees of $296,353, an increase of commission of $100,000 to a third party vendor for referral of underwriters. 

Interest income

Interest income was primarily generated from loans made to third parties and related parties. For the six months ended June 30, 2020, interest income was $1,726,564, representing an increase of $1,694,083, or 5,216% from $32,486 for the six months ended June 30, 2019. The increase was primarily due to 1) loans aggregating $79.8 million made to a customer, to whom the Company also provided loan recommendations services. For the three months ended June 30, 2020, the Company recognized interest income of $1,355,107, and 2) an increase of loans receivable from others third parties by $1.5 million, leading to an increase of interest income.

Amortization of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible notes

For the six months ended June 30, 2020, the item represented the full amortization of beneficial conversion feature of $3.4 million and amortization of relative fair value of warrants of $3.06 million relating to the convertible notes which was exercised in May 2020.

Net loss

As a result of the foregoing, net loss for the six months ended June 30, 2020 was $4,501,230, representing an increase of $1,631,079 from net loss of $2,870,151 for the six months ended June 30, 2019.

For the six months ended June 30, 2020, our net loss by segment primarily consisted of a net profit of $2.54 million in our commodities trading business, and an amortization expenses of beneficial conversion feature and relative fair value of warrants relating to issuance of convertible notes of $6.46 million.

Six Months Ended June 30, 2020 Cash Flows

As of June 30, 2020, the Company had cash and cash equivalents of $1.49 millions, as compared with $1.30 million as of December 31, 2019.

Net cash used in operating activities was $2.60 million for the six months ended June 30, 2020, as compared with $1.74 million for the same period of 2019.

Net cash used in investing activities was $78.97 million for the six months ended June 30, 2020, compared to $5.10 million for the same period of 2019.

Net cash provided by financing activities was $80.24 million for the six months ended June 30, 2020, compared to $6.72 million for the same period of 2019.

About TD Holdings, Inc.

TD Holdings, Inc. (Nasdaq: GLG) is a commodities trading and used luxurious car rental service provider in China. The commodities trading business is conducted under the brand name "Huamucheng" by the Company's wholly-owned subsidiary, Shenzhen Huamucheng Trading Co., Ltd in Shenzhen. The used luxurious car business is conducted under the brand name "BatCar" by the Company's VIE entity, Tianxing Kunlun Technology Co. Ltd, from its headquarters in Beijing. 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.

 

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SOURCE TD Holdings, Inc.

FAQ

What were TD Holdings' revenues for the second quarter of 2020?

TD Holdings reported revenues of $3.71 million from its commodities trading business for the quarter ended June 30, 2020.

What was the net loss for TD Holdings in the first half of 2020?

The net loss for TD Holdings in the first half of 2020 was $4.50 million.

How much did TD Holdings raise from convertible notes in 2020?

TD Holdings raised $30 million from the issuance of convertible notes and $36 million from the conversion of these notes.

What was the earnings per share (EPS) for TD Holdings for the second quarter of 2020?

The basic and diluted loss per share for TD Holdings in the second quarter of 2020 was $0.09.

What segments contributed to revenue for TD Holdings in 2020?

TD Holdings generated revenue from commodities trading and used car leasing, with significant contributions from commodities trading.