TDH Holdings, Inc. Reports First Half 2021 Financial Results
TDH Holdings, Inc. (NASDAQ: PETZ) reported a significant decline in financial performance for the first half of 2021. Revenues fell by 52.46% to $0.13 million, impacted by uncompetitive pricing and the suspension of overseas E-commerce activities. The company faced a gross loss of $0.18 million and an operating loss of $1.17 million, marking a 20.23% increase in operating losses compared to the previous year. Net loss attributable to common stockholders was $0.94 million, leading to a loss per share of $0.02.
- Total cash and cash equivalents increased to $7.39 million as of June 30, 2021, up from $6.75 million at the end of 2020.
- Net cash provided by investing activities showed a significant improvement, totaling $5.81 million, compared to net cash used in investing activities of $4.48 million for the same period of the previous year.
- Revenues decreased by 52.46%, from $0.28 million in the first half of 2020 to $0.13 million in the same period of 2021.
- Gross loss widened to $0.18 million from a gross profit of $0.07 million, leading to a gross loss margin of -131%.
- Operating loss increased by 20.23% to $1.17 million, driven by decreased revenue and rising administrative expenses.
- Net cash used in operating activities surged to $4.84 million, a substantial rise from $0.81 million in the prior year.
QINGDAO, China, Dec. 10, 2021 /PRNewswire/ -- TDH Holdings, Inc. (NASDAQ: PETZ) ("TDH" or the "Company"), a PRC-based company that specializes in the development, manufacturing and sales of pet food products in China and beyond, announced today its financial results for the six months ended June 30, 2021.
First Half 2021 Unaudited Financial Highlights:
For the Six Months Ended June 30 | ||||||||||||
($ millions, except per share data) | 2021 | 2020 | % | |||||||||
Revenues | $ | 0.13 | $ | 0.28 | -52.46 | % | ||||||
Gross profit (loss) | $ | (0.18) | $ | (0.07) | 148.27 | % | ||||||
Gross profit (loss) margin | -138.46 | % | -25.0 | % | -113.46 pp | * | ||||||
Operating loss | $ | (1.17) | $ | (0.97) | 20.23 | % | ||||||
Operating loss margin | -867.74 | % | -343.10 | % | -524.64 pp | * | ||||||
Net loss attributable to common stockholders | $ | (0.94) | $ | (0.6) | -56.09 | % | ||||||
Loss per share - basic and diluted | $ | (0.02) | $ | (0.01) | -100 | % | ||||||
* pp: percentage points | ||||||||||||
- Revenues decreased by
52.46% to$0.13 million for the first half of 2020. The decrease of revenue in the six months ended June 30, 2021 was mainly due to the following facts: (1) decrease in sales orders due to our uncompetitive sales price which became less attractive to our customers; (2) suspension of our overseas E-commerce business due to the estimated gross loss; (3) The negative impact from suspension of our production and operations in November 2019 due to our default on loan repayments to financial institutions, claims from our suppliers and creditors and labor arbitration derived from our reduction in the number of employees. The COVID-19 outbreak and further spread caused disruption in our supply chain, transportation and our sales activities. As a result, we had the inability to fulfil customer orders on a timely manner and we received reduced sales orders from our customers and our sales volume decreased in six months ended June 30, 2021 as compared to the same period of 2020. - Gross loss was
$ 0.18 million for the first half of 2020, compared to gross profit of$0.07 million for the same period of the prior year. - Operating loss was
$1.17 million for the first half of 2021, compared to operating loss of$0.97 million for the same period of the prior year. The increase in operating loss was mainly due to decreased revenue and increased general and administrative expenses because of higher consulting service fees incurred during six months ended June 30, 2021. - Net loss was
$0.94 million , or loss per share of$0.02 , for the first half of 2021, compared to net loss of$0.60 million , or loss per share of$0.01 , for the same period of the prior year.
First Half 2021 Financial Results
Revenues
Historically, the Company generated its revenues from product sales, mainly including sales for pet chews, dried pet snacks and wet canned pet foods in overseas markets, domestic markets and through its e-commerce platform. Revenue consists of the invoiced value for the sales, net of value-added tax ("VAT"), business tax, and applicable local government levies. Due to the sharp rise in market price of raw materials, the lack of operational efficiency of our production facilities and our inability to make bank loan repayments upon maturity, we suspended our production and normal business operations and we were involved in certain legal proceedings since November 2019. The COVID-19 outbreak further disrupted our business activities. These factors led to the continuous decrease in our revenue for the six months ended June 30, 2021 as compared to the same period of 2020. For the first half of 2021, total revenues decreased by
For the Six Months Ended June 30, | ||||||||||||||||||||||||
2021 | 2020 | Y/Y Change | ||||||||||||||||||||||
Revenues | % of | Revenues | % of | Amount | % | |||||||||||||||||||
Overseas | $ | - | - | % | $ | 61 | 21.60 | % | $ | (61) | -100.00 | % | ||||||||||||
Domestic | 115 | 85.82 | % | 222 | 78.40 | % | (106) | -48.20 | % | |||||||||||||||
E-commerce | 19 | 14.18 | % | - | - | % | 19 | 100.00 | % | |||||||||||||||
less: sales tax and additional | - | % | - | - | % | - | - | % | ||||||||||||||||
Total | $ | 134 | 100.00 | % | $ | 283 | 100.00 | % | $ | (148) | -52.46 | % | ||||||||||||
Overseas sales decreased by
Cost of revenues
Cost of revenues consists primarily of raw materials, labor and factory overhead expenses necessary to manufacture finished goods. Our cost of revenues, decreased by
Gross loss and gross loss margin
Gross loss was
Operating expense
Operating expense consists of selling expense and general and administrative expense.
Selling expense decreased by
General and administrative expense increased by
As a result, total operating expenses increased by
Operating loss
Loss from operations was
Other income, net
Total net other income increased by approximately
Net loss and loss per share
Net loss was
Financial Conditions
As of June 30, 2021, the Company had cash, cash equivalents and restricted cash of
Net cash used in operating activities was
Recent sales of securities
On December 2, 2020, the Company entered into stock subscription agreements, pursuant to which the Company agreed to sell 9,100,000 shares to a group of investors for an aggregate purchase of
On September 30, 2021, the Company and certain investors entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell to the investors an aggregate of 10,000,000 of its common shares and warrants exercisable for an aggregate of 20,000,000 of its common shares. The common share purchase price is
On November 3, 2021, the Company and certain investors entered into a securities purchase agreement in connection with a registered direct offering, pursuant to which the Company agreed to sell to the investors an aggregate of 15,000,000 of its common shares and warrants exercisable for an aggregate of 30,000,000 of its common shares. The common share purchase price is
Notice
Rounding amounts and percentages: Certain amounts and percentages included in this press release have been rounded for ease of presentation. Percentage figures included in this press release have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this press release may vary from those obtained by performing the same calculations using the figures in the financial statements. In addition, certain other amounts that appear in this press release may not sum due to rounding.
About TDH Holdings, Inc.
Founded in April 2002, TDH Holdings, Inc. (the "Company") (NASDAQ: PETZ), is a developer, manufacturer and distributer of a variety of pet food products under multiple brands that are sold in China, Asia and Europe. More information about the Company can be found at www.tiandihui.com.
Safe Harbor Statement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may", "will", "intend", "should", "believe", "expect", "anticipate", "project", "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Specifically, the Company's statements regarding, among others, its growth and business outlook, the Company's ability to execute on its business plan, secure necessary capital to sustain and maintain its operations, its ability to resume its operations at the previous levels, its ability to successfully resolve various legal proceedings in which it is involved, are forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the pet food industry in China; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
For more information, please contact:
Feng Zhang, CFO
Email: zhangfeng@tdhpet.com
Phone: +86 183-1102-1983
Index to Unaudited Condensed Consolidated Interim Financial Statements |
Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020 |
Consolidated Statements of Operations and Comprehensive Loss For The Six Months Ended June 30, 2021 and 2020 (Unaudited) |
Consolidated Statements of Cash Flows For The Six Months Ended June 30, 2021 and 2020 (Unaudited) |
TDH HOLDINGS, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 5,975,713 | $ | 6,566,549 | ||||
Restricted cash | 1,417,059 | 182,515 | ||||||
Short-term investments | 4,469,764 | 3,138,578 | ||||||
Accounts receivable, net | 18,200 | 168,499 | ||||||
Advances to suppliers, net | 55,816 | 41,088 | ||||||
Inventories, net | 148,840 | 247,245 | ||||||
Prepayments and other current assets, net | 92,156 | 172,481 | ||||||
Total current assets | 12,177,548 | 10,516,955 | ||||||
NON-CURRENT ASSETS: | ||||||||
Property, plant and equipment, net | 1,171,158 | 6,636,995 | ||||||
Land use rights, net | 186,202 | 1,009,005 | ||||||
Operating lease right-of-use assets | 14,439 | 19,103 | ||||||
Operating lease right-of-use assets - related parties | 257,112 | 270,852 | ||||||
Total non-current assets | 1,628,911 | 7,935,955 | ||||||
Total assets | $ | 13,806,459 | $ | 18,452,910 | ||||
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 3,224,177 | $ | 3,209,763 | ||||
Accounts payable - related parties | 126,122 | 124,715 | ||||||
Advances from customers | 113,865 | 90,834 | ||||||
Bank overdrafts | 78,320 | 78,320 | ||||||
Short-term loans | 5,373,598 | 8,391,323 | ||||||
Short-term loans - related parties | 993,840 | 985,883 | ||||||
Taxes payable | 62,598 | 60,729 | ||||||
Due to related parties | 42,491 | 42,021 | ||||||
Operating lease liabilities, current | 10,296 | 9,913 | ||||||
Operating lease liabilities - related parties, current | 223,251 | 195,231 | ||||||
Other current liabilities | 2,473,798 | 5,882,164 | ||||||
Total current liabilities | 12,722,356 | 19,070,896 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Operating lease liabilities - related party, non-current | 260,108 | 274,794 | ||||||
Total liabilities | 12,982,464 | 19,345,690 | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Common stock ( | 54,950 | 45,850 | ||||||
Additional paid-in capital | 24,684,470 | 21,963,570 | ||||||
Statutory reserves | 160,014 | 160,014 | ||||||
Accumulated deficit | (23,792,092) | (22,849,319) | ||||||
Accumulated other comprehensive loss | (283,347) | (212,895) | ||||||
Total stockholders' equity (deficit) | 823,995 | (892,780) | ||||||
Total liabilities and stockholders' equity (deficit) | $ | 13,806,459 | $ | 18,452,910 | ||||
TDH HOLDINGS, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||
(Unaudited) | ||||||||
For The | For The | |||||||
Net revenues | $ | 134,312 | $ | 282,532 | ||||
Cost of revenues | 309,597 | 353,135 | ||||||
Gross loss | (175,285) | (70,603) | ||||||
Operating expenses: | ||||||||
Selling expense | 38,580 | 63,577 | ||||||
General and administrative expense | 951,615 | 835,177 | ||||||
Total operating expenses | 990,195 | 898,754 | ||||||
Loss from operations | (1,165,480) | (969,357) | ||||||
Interest expense | (568,918) | (569,831) | ||||||
Other income | 40,648 | 62,547 | ||||||
Investment income | 1,617,467 | 879,520 | ||||||
Other expenses | (24,053) | (6,744) | ||||||
Loss from judicial auction of property, plant and equipment and land use rights | (964,266) | - | ||||||
Gain from forgiveness of interest payable | 121,829 | - | ||||||
Total other income | 222,707 | 365,492 | ||||||
Loss before income tax expense | (942,773) | (603,865) | ||||||
Income tax expense | - | 143 | ||||||
Net loss | (942,773) | (604,008) | ||||||
Less: Net loss attributable to noncontrolling interest | - | - | ||||||
Net Loss attributable to TDH Holdings, Inc. | (942,773) | (604,008) | ||||||
Comprehensive loss | ||||||||
Net loss | $ | (942,773) | $ | (604,008) | ||||
Other comprehensive income (loss) | ||||||||
Foreign currency translation adjustment | (70,452) | 94,340 | ||||||
Total comprehensive loss | $ | (1,013,225) | $ | (509,668) | ||||
Less: Comprehensive loss attributable to noncontrolling interest | - | (8) | ||||||
Comprehensive loss attributable to TDH Holdings, Inc. | $ | (1,013,225) | $ | (509,660) | ||||
Loss per common share attributable to TDH Holdings, Inc. | ||||||||
Basic | $ | (0.02) | $ | (0.01) | ||||
Diluted | $ | (0.02) | $ | (0.01) | ||||
Weighted average common shares outstanding | ||||||||
Basic | 50,582,279 | 45,849,995 | ||||||
Diluted | 50,582,279 | 45,849,995 | ||||||
TDH HOLDINGS, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
For The | For The | |||||||
June 30, | June 30, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (942,773) | $ | (604,008) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 201,104 | 183,812 | ||||||
Fair value change of short-term investments | (1,617,467) | (879,520) | ||||||
Loss on sale of property, plant and equipment | 16,837 | - | ||||||
Loss on judicial auction of property, plant and equipment in relation to litigations | 834,817 | - | ||||||
Loss on judicial auction of land use rights in relation to litigations | 129,449 | - | ||||||
Gain on disposal of subsidiaries | (39,330) | - | ||||||
Non-cash lease expense | 21,625 | 17,577 | ||||||
Gain from forgiveness of interest payable | (121,829) | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 151,852 | (32,902) | ||||||
Inventories, net | 100,962 | 233,518 | ||||||
Operating lease liabilities | 271 | 8,179 | ||||||
Operating lease liabilities – related parties | 8,015 | - | ||||||
Advances to suppliers, net | (14,232) | (43,882) | ||||||
Prepayments and other current assets, net | 155,102 | (54,763) | ||||||
Accounts payable | (20,606) | (280,293) | ||||||
Interest payable | 356,820 | 518,559 | ||||||
Interest payable – related parties | 24,543 | - | ||||||
Taxes payable | 1,293 | 143 | ||||||
Advances from customers | 21,957 | 31,752 | ||||||
Other current liabilities | (4,105,300) | 90,675 | ||||||
NET CASH USED IN OPERATING ACTIVITIES | $ | (4,836,890) | $ | (811,153) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payments to acquire property, plant and equipment | (10,999) | (9,244) | ||||||
Proceeds from sale of property, plant and equipment | 16,495 | - | ||||||
Proceeds from auction of property, plant and equipment | 4,434,580 | - | ||||||
Proceeds from auction of land use rights | 687,760 | - | ||||||
Purchase of short-term investments | (2,281,766) | (4,500,000) | ||||||
Proceeds from sale of short-term investments | 2,967,756 | 26,826 | ||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | $ | 5,813,826 | $ | (4,482,418) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common shares | 2,730,000 | - | ||||||
Proceeds from short-term loans | - | 104,798 | ||||||
Repayments of short-term loans | (3,086,132) | (4,149) | ||||||
Proceeds from short-term loans - related parties | - | 49,350 | ||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | $ | (356,132) | $ | 149,999 | ||||
Effects on changes in foreign exchange rate | 22,904 | 9,389 | ||||||
Net change in cash, cash equivalents, and restricted cash | 643,708 | (5,134,183) | ||||||
Cash, cash equivalents, and restricted cash - beginning of the period | 6,749,064 | 6,504,578 | ||||||
Cash, cash equivalents, and restricted cash - end of the period | $ | 7,392,772 | $ | 1,370,395 | ||||
Supplemental cash flow information | ||||||||
Interest paid | $ | 203,550 | $ | 37,640 | ||||
Non-cash investing and financing activities | ||||||||
Liabilities assumed in connection with purchase of property, plant and equipment | $ | - | $ | 7,023 | ||||
Liabilities assumed in connection with purchase of short – term investments | $ | - | $ | 65,422 | ||||
Notes payable reclassified to short-term loans | $ | - | $ | 899,693 | ||||
Liabilities settled with sale of property, plant and equipment | $ | 53,193 | $ | 347,107 | ||||
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated | ||||||||
Cash and cash equivalents | $ | 5,975,713 | $ | 499,276 | ||||
Restricted cash | $ | 1,417,059 | $ | 871,119 | ||||
Total cash, cash equivalents, and restricted cash | $ | 7,392,772 | $ | 1,370,395 | ||||
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SOURCE TDH Holdings, Inc.
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