PART 1. FINANCIAL INFORMATION This section details the company's financial turnaround from a net loss to a net income, driven by increased interest income and reduced expenses [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited financial statements show total assets increased to **$513.8 million**, with a shift from a **$3.7 million net loss** to a **$7.8 million net income**, despite revenue decline [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased by **12.8%** to **$513.8 million**, primarily driven by a significant rise in loans receivable | Balance Sheet Highlights | Sep 30, 2024 (USD) | Dec 31, 2023 (USD) | | :--- | :--- | :--- | | **Total Current Assets** | 315,012,914 | 252,341,858 | | Loans receivable from third parties | 301,335,694 | 240,430,865 | | Cash and cash equivalents | 327,318 | 1,516,358 | | **Total Assets** | **513,760,496** | **455,285,021** | | **Total Current Liabilities** | 40,065,740 | 31,761,964 | | **Total Liabilities** | 80,248,656 | 72,139,716 | | **Total Equity** | **433,511,840** | **383,145,305** | - Total assets grew by **12.8%** from December 31, 2023, to September 30, 2024, mainly due to a **25.3%** increase in loans receivable from third parties[3](index=3&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%28LOSS%29) The company achieved a significant turnaround to **$7.8 million net income**, driven by increased interest income and reduced SG&A expenses, despite an **11% revenue decline** | Income Statement Highlights (Nine Months Ended Sep 30) | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | **Total Revenue** | 91,717,070 | 103,001,660 | | Gross Loss | (139,340) | (146,946) | | Selling, general, and administrative expenses | (7,487,247) | (14,108,225) | | Interest Income | 20,113,780 | 14,482,016 | | **Net Income (Loss)** | **7,752,844** | **(3,707,295)** | | **Net Income (Loss) attributable to Stockholders** | **8,878,549** | **(2,540,738)** | | Basic EPS | 0.47 | (1.21) | | Diluted EPS | 0.35 | (0.93) | - The company achieved a significant turnaround, posting a net income of **$7.8 million** for the first nine months of 2024, compared to a net loss of **$3.7 million** in the prior-year period. This was driven by a **39%** increase in interest income and a **47%** reduction in SG&A expenses, which offset an **11%** decline in total revenue[4](index=4&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Equity](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Total equity increased to **$433.5 million**, primarily due to **$36.9 million** from common stock issuance and **$8.9 million** in net income attributable to stockholders - Total equity increased from **$383.1 million** at the end of 2023 to **$433.5 million** as of September 30, 2024. This was primarily driven by the issuance of common stock in private placements raising **$36.9 million** and a net income of **$8.9 million** attributable to stockholders[7](index=7&type=chunk)[8](index=8&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Operating cash flow turned negative, with a **$38.4 million net use**, primarily due to increased loans receivable, partially offset by **$36.9 million** from financing activities | Cash Flow Summary (Nine Months Ended Sep 30) | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | (38,390,258) | 1,053,819 | | Net cash used in investing activities | (5,494) | (64,651,465) | | Net cash provided by financing activities | 36,900,000 | 56,004,311 | | **Net (decrease)/increase in cash** | **(1,189,040)** | **547,202** | | Cash and cash equivalents at end of period | 327,318 | 1,440,259 | - Cash from operations turned significantly negative, with a net use of **$38.4 million** in the first nine months of 2024, compared to a net provision of **$1.1 million** in the same period of 2023. This was primarily due to a **$58.7 million** increase in loans receivable from third parties[13](index=13&type=chunk) - Financing activities provided **$36.9 million** in cash, mainly from private placement transactions[13](index=13&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the company's commodity trading business, **$301.3 million** in loans receivable, a 1-for-50 reverse stock split, and a Nasdaq delisting notification - The company's primary business is commodity trading and supply chain management services, conducted through various subsidiaries in the PRC[15](index=15&type=chunk) - As of September 30, 2024, loans receivable from third parties amounted to **$301.3 million**, with an associated interest income of **$20.1 million** for the nine-month period. The company considers all loans fully collectible[33](index=33&type=chunk)[34](index=34&type=chunk) - On October 30, 2023, the company completed a 1-for-50 reverse stock split of its common stock. All share and per-share amounts have been retroactively restated[65](index=65&type=chunk) - Subsequent to the reporting period, on October 4, 2024, the company received a delisting notification from Nasdaq, which it is appealing[93](index=93&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=30&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the **11% revenue decrease** to market challenges, while net income improved dramatically to **$7.8 million** due to **47% SG&A reduction** and increased interest income [Overview](index=30&type=section&id=Overview) The company's core business involves commodities trading and supply chain management, facing challenges from China's economic slowdown and intense competition - The company operates two primary business lines: commodities trading (non-ferrous metals like aluminum, copper, silver, gold) and supply chain management services[95](index=95&type=chunk)[96](index=96&type=chunk) - For the nine months ended September 30, 2024, commodities trading generated **$91.7 million** in revenue, while supply chain management services contributed **$2,811**[97](index=97&type=chunk) - Key challenges affecting results include decreasing demand from China's economic slowdown and intense competition in the commodities trading business[101](index=101&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Net income significantly improved due to a **47% reduction in SG&A expenses** and increased interest income, despite an **11% decline in total revenue** over nine months | Performance (Three Months Ended Sep 30) | 2024 (USD) | 2023 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | 37,162,036 | 33,911,726 | +10% | | Gross Loss | (58,114) | (23,237) | +150% | | SG&A Expenses | (2,416,176) | (3,034,313) | -20% | | **Net Income** | **3,173,257** | **679,658** | **+367%** | | Performance (Nine Months Ended Sep 30) | 2024 (USD) | 2023 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | 91,717,070 | 103,001,660 | -11% | | Gross Loss | (139,340) | (146,946) | -5% | | SG&A Expenses | (7,487,247) | (14,108,225) | -47% | | **Net Income (Loss)** | **7,752,844** | **(3,707,295)** | **+309%** | - The **11%** revenue decline over nine months was mainly due to a decrease in the average unit sales price of zinc ingots and a general market slowdown[116](index=116&type=chunk) - The **47%** decrease in nine-month SG&A expenses was primarily because there was no stock-based compensation expense in 2024, compared to **$5.7 million** in 2023[122](index=122&type=chunk) [Cash Flows and Capital Resources](index=37&type=section&id=Cash%20Flows%20and%20Capital%20Resources) Working capital stood at **$275.0 million**, with operating cash flow turning negative due to increased lending, offset by **$36.9 million** from financing activities - As of September 30, 2024, the company had working capital of approximately **$275.0 million**[127](index=127&type=chunk) - Net cash used in operating activities was **$38.4 million** for the first nine months of 2024, a significant shift from a **$1.1 million** cash inflow in the same period of 2023, mainly due to increased lending to upstream industries[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - Net cash from financing activities was **$36.9 million**, primarily from the issuance of common stock in a private placement[136](index=136&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective due to material weaknesses, including insufficient accounting personnel and lack of a comprehensive policies manual - The company's principal executive and financial officers concluded that disclosure controls and procedures were not effective as of September 30, 2024[141](index=141&type=chunk) - Identified material weaknesses include a lack of sufficient financial reporting personnel with appropriate U.S. GAAP knowledge and the absence of a comprehensive accounting policies and procedures manual[145](index=145&type=chunk)[146](index=146&type=chunk) - Remedial measures include engaging an external consulting firm and plans to hire more qualified accounting personnel and implement continuous training[147](index=147&type=chunk)[148](index=148&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and details on unregistered sales of equity securities [Legal Proceedings](index=40&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings - There are no legal proceedings to report[150](index=150&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors have occurred since the last annual report - No material changes to risk factors have occurred since the last annual report[150](index=150&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company disclosed the issuance of common stock from the conversion of convertible promissory notes during 2023 and 2024 - During the nine months ended September 30, 2024, the company settled convertible promissory notes totaling **$450,000** and issued **472,341** shares of common stock in three separate transactions in February and April 2024[153](index=153&type=chunk)

PART I. FINANCIAL INFORMATION [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited financial statements show total assets increased to $505.1 million, with a net income of $4.6 million for H1 2024 [Condensed Consolidated Balance Sheets](index=2&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew to **$505.1 million** by June 30, 2024, driven by increased loans and equity from stock issuances Condensed Consolidated Balance Sheet Highlights (in USD) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$505,053,728** | **$455,285,021** | | Cash and cash equivalents | $255,700 | $1,516,358 | | Loans receivable from third parties | $290,613,451 | $240,430,865 | | Goodwill | $156,567,224 | $157,542,081 | | **Total Liabilities** | **$85,144,823** | **$72,139,716** | | Contract liabilities | $10,100,999 | $3,090,201 | | Due to related parties | $37,885,166 | $38,121,056 | | **Total Equity** | **$419,908,905** | **$383,145,305** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20(LOSS)) Despite 21% revenue drop, company achieved **$4.6 million net income** for H1 2024, driven by interest income and lower SG&A Statement of Operations Summary (in USD) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue | $54,555,034 | $69,089,934 | | Gross Loss | ($81,226) | ($123,709) | | Selling, general, and administrative expenses | ($5,071,071) | ($11,073,912) | | Interest Income | $12,759,098 | $9,357,288 | | **Net Income (Loss)** | **$4,579,587** | **($4,386,953)** | | **Net Income (Loss) Attributable to Stockholders** | **$5,339,087** | **($3,602,952)** | Earnings Per Share (EPS) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Basic EPS | $0.41 | ($1.54) | | Diluted EPS | $0.29 | ($1.42) | [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Total equity increased to **$419.9 million** by June 30, 2024, due to a **$36.9 million private placement** and net income - The company issued **30,000,000 shares** of common stock in connection with private placements, resulting in an increase of **$36.9 million** in equity[15](index=15&type=chunk) - Net income for the period contributed **$4.6 million** to equity, while foreign currency translation adjustments resulted in a decrease of **$5.3 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operations was **$34.6 million** for H1 2024, offset by **$36.9 million from financing**, leading to cash decrease Cash Flow Summary (in USD) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash from Operating Activities | ($34,598,947) | $7,181,538 | | Net cash from Investing Activities | ($668) | ($51,297,876) | | Net cash from Financing Activities | $36,900,000 | $45,909,073 | | **Net (decrease)/increase in cash** | **($1,260,658)** | **$385,724** | | **Cash at end of period** | **$255,700** | **$1,278,781** | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail commodity trading, **$290.6 million in loans receivable**, and recent equity transactions - The company's primary business is commodity trading and supply chain management services in the PRC[25](index=25&type=chunk) - Loans receivable from third parties increased to **$290.6 million** as of June 30, 2024, from **$240.4 million** at year-end 2023. These loans carry an interest rate of **10.95%** per annum[43](index=43&type=chunk) - In June 2024, the company raised gross proceeds of **$36.9 million** by selling **30,000,000 shares** of common stock at **$1.23 per share** in a private placement[74](index=74&type=chunk) - A **1-for-50 reverse stock split** was completed on October 30, 2023. All share and per-share amounts have been retroactively restated[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) MD&A attributes revenue decline to market weakness, net income improved due to increased interest income and reduced SG&A [Results of Operations](index=26&type=section&id=Results%20of%20Operations) H1 2024 revenue fell 21% to **$54.6 million**, net income improved to **$4.6 million** due to lower SG&A and higher interest income Comparison of Results for Six Months Ended June 30 (in USD) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $54,555,034 | $69,089,934 | (21)% | | Gross Loss | ($81,226) | ($123,709) | (34)% | | SG&A Expenses | ($5,071,071) | ($11,073,912) | (54)% | | Total Other Income, Net | $12,434,235 | $8,647,927 | 44% | | **Net Income (Loss)** | **$4,579,587** | **($4,386,953)** | **204%** | - The decrease in commodity product revenue was mainly due to a lower average unit sales price for zinc ingots, which fell from **$3.32/kg** in H1 2023 to **$2.76/kg** in H1 2024[131](index=131&type=chunk) - The **54% decrease** in SG&A expenses was primarily due to the absence of **$5.7 million** in stock-based compensation expenses that were recorded in H1 2023[135](index=135&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Cash%20Flows%20and%20Capital%20Resources) Working capital was **$262.0 million**; operations used **$34.6 million cash**, offset by **$36.9 million from equity financing** - The company reported a working capital of approximately **$261.97 million** as of June 30, 2024[138](index=138&type=chunk) - Net cash used in operating activities was **$34.6 million**, a decrease of **$41.8 million** from the prior year, largely due to a **$50.8 million** increase in funds lent as loan receivables[142](index=142&type=chunk)[143](index=143&type=chunk) - Financing activities provided **$36.9 million** in cash, mainly from the issuance of **30,000 shares** of common stock in a private placement[146](index=146&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management found disclosure controls ineffective due to insufficient accounting expertise and lack of policy manual - Management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2024[151](index=151&type=chunk) - Identified material weaknesses include a lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements[153](index=153&type=chunk) - The company has engaged an external consulting firm and plans to hire more qualified accounting personnel to remediate the weaknesses[154](index=154&type=chunk)[155](index=155&type=chunk) PART II. OTHER INFORMATION [Risk Factors](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors previously disclosed in the Form 10-K filed on March 22, 2024 - There have been no material changes to the risk factors previously disclosed in the Form 10-K filed on March 22, 2024[159](index=159&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company settled **$450,000** in convertible notes by issuing **472,341 shares** of common stock in H1 2024 - During the six months ended June 30, 2024, the company settled convertible promissory notes totaling **$450,000** by issuing **160,174**, **152,620**, and **159,547 shares** of common stock on three separate occasions[161](index=161&type=chunk)

Revenue Performance - For the three months ended March 31, 2024, the Company recorded total revenues of $28,092,147, a decrease of $6,485,491 or 19% compared to $34,577,638 for the same period in 2023[112] - Revenue from sales of commodity products was $28,089,681, down by $6,481,607 or 19% from $34,571,288 in the prior year, primarily due to a decrease in the average unit sales price of zinc ingots from $3.32 per kilogram to $2.94 per kilogram[114] - The Company generated revenue of $2,466 from supply chain management services, a decline of $3,884 or 61% compared to $6,350 for the same period in 2023[112] Cost and Income - The cost of revenue decreased by $6,508,440 or 19% to $28,144,839 for the three months ended March 31, 2024, from $34,653,279 in the prior year[116] - Net income for the three months ended March 31, 2024, was $1,998,802, representing an increase of $1,547,525 or 343% from $451,277 for the same period in 2023[121] - Interest income increased by $1,820,463 or 41% to $6,269,463 for the three months ended March 31, 2024, compared to $4,449,000 in the prior year[119] Cash Flow and Working Capital - The Company reported cash inflows of $6,119,335 from operating activities for the three months ended March 31, 2024, compared to $2,767,040 in the same period of 2023[124] - As of March 31, 2024, the Company had positive working capital of approximately $224 million[122] - For the three months ended March 31, 2024, the company reported a net cash inflow from operating activities of $6,119,335, an increase of $3,352,295 from $2,767,040 for the same period in 2023[126] Loans and Financing - The balance of loan receivables was $247.05 million as of March 31, 2024, which was $55.42 million higher than the previous year[119] - The Company expects to use proceeds from equity financing as working capital to expand its commodities trading business[122] - The company did not have any cash movement for financing activities during the three months ended March 31, 2024, compared to cash raised of $42,350,000 from private placements in Q1 2023[129] Investment Activities - Net cash used in investing activities for the three months ended March 31, 2024 was $7,077,140, significantly lower than $46,689,327 for the same period in 2023[128] - Cash used in investing activities in Q1 2024 was primarily for loans disbursed to third parties totaling $32,073,939, partially offset by collections of $25,046,081 from related parties[128] Lease Commitments - As of March 31, 2024, the company had a total lease commitment of $8,534, which is due within one year[132]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 001-36055 BAIYU HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware (State or other ...

Revenue Performance - For the nine months ended September 30, 2023, the company recorded revenue of $102,937,623 from commodities trading and $64,037 from commodity distribution services and other related services [111]. - Total revenue for the three months ended September 30, 2023 decreased by $3,976,829 or 10% to $33,911,726 compared to $37,888,555 for the same period in 2022 [120][122]. - Revenue from sales of commodity products for the three months ended September 30, 2023 was $33,883,096, down from $37,847,831 in 2022, reflecting a decrease of $3,964,735 or 10% [120][123]. - Total revenue for the nine months ended September 30, 2023, decreased by $36,729,406 or 26% to $103,001,660 from $139,731,066 in the same period of 2022 [133]. - Revenue from sales of commodity products was $102,937,623, down from $138,540,090, reflecting a decrease of $35,602,467 or 26% [134]. - Supply chain management services revenue dropped significantly to $64,037 from $1,190,976, a decline of $1,126,939 or 95% [135]. Cost and Expenses - The cost of revenue decreased by $4,073,374 or 11% from $38,008,337 for the three months ended September 30, 2022 to $33,934,963 for the same period in 2023 [125]. - Total cost of revenue decreased by $35,706,175 or 26% to $103,148,606, primarily due to a corresponding decrease in commodity product sales costs [136]. - Selling, general, and administrative expenses increased by $1,082,709 or 55% to $3,034,313 for the three months ended September 30, 2023, primarily due to increased amortizations of intangible assets [127]. - Selling, general, and administrative expenses increased by $8,033,135 or 132% to $14,108,225, largely due to higher amortization of intangible assets [139]. Profitability - Net income for the three months ended September 30, 2023 was $679,658, a decrease of $624,264 from $1,303,922 for the same period in 2022 [131]. - Net loss for the nine months ended September 30, 2023, was $3,707,295, a decrease of $8,030,345 from net income of $4,323,050 in the same period of 2022 [141]. Cash Flow and Financing - Cash provided by operating activities was $1,053,819, a decrease of $2,550,789 from $3,604,608 in the prior year [147]. - Cash raised from financing activities totaled $56,004,311, including $42,350,000 from private placements and $3,000,000 from convertible promissory notes [149]. - As of September 30, 2023, the company had positive working capital of $192 million [142]. - The company expects to use proceeds from equity financing to expand its commodity trading business [143]. Market and Operational Insights - The company expects competition in the commodities trading business to persist and intensify due to decreasing demand resulting from China's economic slowdown [117]. - The company has a limited operating history, having started its commodities trading business in late November 2019, which poses risks and challenges for future growth [117]. - The company sources bulk commodity products from non-ferrous metal suppliers and sells to manufacturers, with major suppliers including Xiamen Huarui Zhongying Trading Co., Ltd. and Ningbo Dajian Metal Materials Co., Ltd. [112].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) TD Holdings, Inc. reported a shift from **$3.0 million** net income to a **$4.4 million** net loss for the six months ended June 30, 2023, driven by a **32%** revenue decrease and **169%** SG&A increase, despite asset and equity growth from **$45.9 million** in financing [Unaudited Condensed Consolidated Balance Sheets](index=2&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2023, total assets increased to **$398.5 million** from **$363.1 million**, primarily due to loans receivable, while total equity rose to **$331.4 million** from **$298.0 million** driven by stock issuances Condensed Consolidated Balance Sheet Highlights (in USD) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$398,495,104** | **$363,097,798** | | Cash and cash equivalents | $1,278,781 | $893,057 | | Loans receivable from third parties | $187,216,058 | $143,174,634 | | Goodwill | $154,422,111 | $160,213,550 | | **Total Liabilities** | **$67,142,553** | **$65,123,629** | | **Total Equity** | **$331,352,551** | **$297,974,169** | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%28LOSS%29) The company experienced a **32%** revenue decline to **$69.1 million** and swung to a **$4.4 million** net loss for the six months ended June 30, 2023, compared to a **$3.0 million** net income in the prior year, exacerbated by increased operating expenses Three Months Ended June 30, (in USD) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenue | $34,512,296 | $53,683,395 | | Gross (Loss)/Profit | $(48,068) | $439,129 | | Net (Loss)/Income | $(4,838,230) | $1,425,271 | | Basic & Diluted (Loss)/Income Per Share | $(0.03) | $0.03 | Six Months Ended June 30, (in USD) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenue | $69,089,934 | $101,842,511 | | Gross (Loss)/Profit | $(123,709) | $996,067 | | Net (Loss)/Income | $(4,386,953) | $3,019,128 | | Basic & Diluted (Loss)/Income Per Share | $(0.03) | $0.07 / $0.06 | [Unaudited Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Total equity increased by approximately **$33.4 million** to **$331.4 million** as of June 30, 2023, primarily from stock issuances, partially offset by a **$4.4 million** net loss and **$14.2 million** in foreign currency translation losses - For the six months ended June 30, 2023, total equity increased by approximately **$33.4 million**. Key drivers included capital raised from stock issuances, offset by a net loss of **$4.4 million** and foreign currency translation losses of **$14.2 million**[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first six months of 2023, net cash from operations was **$7.2 million**, investing activities used **$51.3 million**, and financing activities provided **$45.9 million**, resulting in a **$1.3 million** cash balance Summary of Cash Flows for the Six Months Ended June 30, (in USD) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $7,181,538 | $469,839 | | Net Cash Used in Investing Activities | $(51,297,876) | $(60,102,346) | | Net Cash Provided by Financing Activities | $45,909,073 | $59,920,000 | | **Net Increase/(Decrease) in Cash** | **$385,724** | **$(385,652)** | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) Notes detail the company's PRC operations via a VIE, a rise in loans receivable to **$187.2 million**, **$154.4 million** goodwill, significant equity financing including a **$42.35 million** private placement, and a Nasdaq delisting warning - The company primarily conducts commodity trading and supply chain management services in the PRC through its subsidiaries and Shenzhen Tongdow Internet Technology Co., Ltd., a variable interest entity (VIE)[20](index=20&type=chunk)[23](index=23&type=chunk) - Loans receivable from third parties increased to **$187.2 million** as of June 30, 2023, from **$143.2 million** at year-end 2022. The company recognized **$9.4 million** in interest income from these loans in the first six months of 2023[35](index=35&type=chunk) - In January 2023, the company raised gross proceeds of **$42.35 million** by selling **35 million** shares of common stock in a private placement. In June 2023, it issued **11 million** shares to service providers, recording **$5.7 million** in stock-based compensation[63](index=63&type=chunk)[70](index=70&type=chunk) - On May 15, 2023, the company received a notification from Nasdaq for its common stock's bid price falling below the **$1.00** minimum requirement for 30 consecutive business days[88](index=88&type=chunk) - Subsequent to the quarter end, on July 31, 2023, the company sold **28 million** shares of common stock for gross proceeds of **$9.8 million**[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the **32%** revenue decline and shift to a **$4.4 million** net loss to COVID-19, RMB depreciation, and a **$5.7 million** stock-based compensation charge, asserting going concern due to substantial equity financing [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For the first half of 2023, total revenue decreased by **32%** to **$69.1 million**, resulting in a gross loss and a **$4.4 million** net loss, primarily due to a **169%** surge in SG&A expenses driven by **$5.7 million** in stock-based compensation Comparison of Results for the Six Months Ended June 30, | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $69,089,934 | $101,842,511 | (32)% | | Gross (Loss)/Profit | $(123,709) | $996,067 | (112)% | | SG&A Expenses | $(11,073,912) | $(4,123,486) | 169% | | Net (Loss)/Income | $(4,386,953) | $3,019,128 | (245)% | - The decrease in revenue from commodity product sales was attributed to the impact of COVID-19 and the depreciation of RMB against USD[125](index=125&type=chunk) - The **169%** increase in SG&A expenses was mainly due to (i) **$5.7 million** in stock-based compensation expenses and (ii) a **$2.04 million** increase in amortization of intangible assets[130](index=130&type=chunk) [Cash Flows and Capital Resources](index=29&type=section&id=Cash%20Flows%20and%20Capital%20Resources) The company generated **$7.2 million** in cash from operations despite a net loss, with **$45.9 million** from financing activities, including a **$42.35 million** private placement, supporting management's going concern assessment - The company incurred a net loss of **$4.4 million** but had a cash inflow from operations of **$7.2 million** for the six months ended June 30, 2023[133](index=133&type=chunk) - Cash from financing activities was mainly from a **$42.35 million** private placement, a **$559,073** ATM transaction, and a **$3.0 million** convertible note issuance[133](index=133&type=chunk)[139](index=139&type=chunk) - Management believes that based on recent capital market activities, the company will continue as a going concern for the following 12 months[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is marked as not applicable - This section is marked as 'Not applicable'[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of June 30, 2023, due to material weaknesses including insufficient U.S. GAAP experience among accounting staff and inadequate formal financial reporting procedures - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2023[146](index=146&type=chunk) - Material weaknesses were identified, including a lack of U.S. GAAP knowledge among accounting staff, insufficient formal procedures for revenue recognition and related party transactions, and inadequate written accounting policies[147](index=147&type=chunk)[148](index=148&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reported no legal proceedings during the period - None[152](index=152&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=ITEM%201A.%20RISK%20FACTORS) Key risks include potential non-compliance of the VIE structure, Nasdaq delisting risk due to sub-**$1.00** bid price, PRC regulatory uncertainty on overseas listings and data, and HFCAA implications despite PCAOB-inspected auditor - The company's reliance on a VIE structure in the PRC poses a risk, as PRC authorities could deem the arrangements non-compliant, leading to severe penalties or loss of control over the VIE's operations[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - On May 15, 2023, the company received a Nasdaq deficiency letter for its stock price falling below the **$1.00** minimum bid requirement. It has until November 13, 2023, to regain compliance to avoid potential delisting[157](index=157&type=chunk)[159](index=159&type=chunk) - The PRC government's significant oversight and evolving regulations on overseas listings, cybersecurity (2022 Cybersecurity Review Measures), and data protection (Data Security Law) create substantial uncertainty and could materially impact operations[166](index=166&type=chunk)[180](index=180&type=chunk)[184](index=184&type=chunk) - While the PCAOB can currently inspect auditors in China, the situation remains uncertain. The company's auditor, Audit Alliance LLP, is based in Singapore and is registered with and subject to PCAOB inspection[174](index=174&type=chunk)[175](index=175&type=chunk) [Item 6. Exhibits](index=41&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits, including CEO and CFO certifications required by Sarbanes-Oxley Act and Inline XBRL financial data documents - The report includes required certifications from the CEO and CFO under Rules 13a-14(a) and Section 906 of the Sarbanes-Oxley Act[201](index=201&type=chunk) - Interactive data files (Inline XBRL) are included as exhibits 101 and 104[201](index=201&type=chunk)

Revenue Performance - For the three months ended March 31, 2023, the Company recorded total revenues of $34,577,638, a decrease of $13,581,478 or 28% compared to $48,159,116 for the same period in 2022[112]. - Revenue from sales of commodity products was $34,571,288, down $13,012,677 or 27% from $47,583,965 in the prior year, primarily due to COVID-19 and the depreciation of RMB against USD[115]. - Revenue from supply chain management services significantly decreased to $6,350, down 99% from $575,151 in the same period of 2022[104]. Cost and Expenses - The cost of revenue decreased by $12,948,899 or 27% to $34,653,279 for the three months ended March 31, 2023, compared to $47,602,178 in 2022[117]. - Selling, general, and administrative expenses increased by $495,354 or 22% to $2,743,061 for the three months ended March 31, 2023, primarily due to increased amortization of intangible assets[120]. Net Income and Cash Flow - Net income for the three months ended March 31, 2023 was $451,277, a decrease of $1,142,580 or 72% from $1,593,857 in the same period of 2022[122]. - The Company reported cash inflows of $2,767,040 from operating activities for the three months ended March 31, 2023, compared to $3,752,768 in 2022[126]. - For the three months ended March 31, 2023, the company reported a net cash inflow from operating activities of $2,767,040, a decrease of 26.3% from $3,752,768 in the same period of 2022[128]. - The net profit for the three months ended March 31, 2023 was $451,277, down 71.5% from $1,593,857 for the same period in 2022[128]. Investing and Financing Activities - Net cash used in investing activities was $46,689,327 for the three months ended March 31, 2023, a decrease of 6.6% from $50,003,288 in the same period of 2022[130]. - Cash raised from financing activities included $42,350,000 from private placements and $3,000,000 from unsecured senior convertible promissory notes[124]. - Cash raised from financing activities included $42,350,000 from private placements by issuing 35,000,000 shares of common stock during the three months ended March 31, 2023[131]. - The cash used in investing activities for the three months ended March 31, 2023 was primarily for loans disbursed to third parties amounting to $46,678,620[130]. Working Capital and Obligations - As of March 31, 2023, the Company had positive working capital of approximately $174 million[123]. - As of March 31, 2023, the company had contractual obligations for operating leases totaling $179,105, with $112,600 due within one year[134]. Other Financial Information - The company had no off-balance sheet arrangements as of March 31, 2023[132]. - The company incurred non-cash adjustments including amortization of intangible assets totaling $2,049,732 for the three months ended March 31, 2023[128]. - A significant increase of $447,960 in prepayments was noted due to advance purchases to remain competitive in the market[129]. - The company does not anticipate that climate change will materially impact its financial condition or results of operations[136].

Financial Performance - Total revenue decreased by $44,298,941 or 22%, from $201,134,242 in 2021 to $156,835,301 in 2022, primarily due to decreased demand and the impact of COVID-19[203] - Revenue from sales of commodity products was $155,443,398 in 2022, down from $173,904,016 in 2021, representing a decrease of $18,460,618 or 11%[201] - Supply chain management services revenue decreased by $1,788,324 or 56%, from $3,180,227 in 2021 to $1,391,903 in 2022[201] - The cost of revenue decreased by $42,328,585 or 21%, from $198,125,629 in 2021 to $155,797,044 in 2022[206] - Gross profit for 2022 was $1,038,257, down from $3,008,613 in 2021, indicating a decline of $1,970,356 or 65%[201] - Net income for 2022 was $4,253,537, compared to a net loss of $940,357 in 2021, representing an increase of $5,193,894 or 552%[201] Cash Flow and Investments - The Company reported cash inflows of $4,335,359 from operating activities for the year ended December 31, 2022, a decrease of $3,698,651 from $8,034,010 in 2021[218] - Net cash used in investing activities for the year ended December 31, 2022 was $125,537,746, compared to $71,520,955 in 2021[220] - The Company raised a total of $117.42 million from private placements and convertible promissory notes during the year ended December 31, 2022[214] - The Company paid $96,638,468 for the acquisition of Tongdow Internet Technology as part of its investing activities[220] Financing Activities - The company settled convertible promissory notes totaling $1,250,000 between December 30, 2022, and March 2, 2023, issuing a total of 1,487,000 shares of common stock[195] - The company entered into a securities purchase agreement on January 9, 2023, selling 35,000,000 shares at $1.21 per share, generating gross proceeds of $42.35 million[196] Internal Controls and Governance - The Company’s disclosure controls and procedures were deemed ineffective as of December 31, 2022, impacting timely reporting[225] - Internal controls are designed to ensure reliable financial reporting and compliance with U.S. GAAP[226] - Management assessed that internal control over financial reporting was not effective as of December 31, 2022, based on COSO 2013 criteria[230] - The company identified material weaknesses in internal controls, including insufficient U.S. GAAP knowledge among accounting staff and inadequate supervisory review[231] - Management plans to implement additional written policies and procedures for accounting and financial reporting in 2023 to improve the financial statement closing process[234] - A new accounting manager has been appointed to enhance the internal review process and improve compliance with U.S. GAAP[236] - The company will establish an internal audit function to assist the Audit Committee with compliance requirements and improve overall internal control[234] - Management intends to provide ongoing training for financial and accounting staff to enhance their understanding of U.S. GAAP and internal controls[235] - The Audit Committee includes independent directors who evaluate the performance of the independent auditor and oversee internal accounting controls[248] - The Audit Committee is responsible for overseeing internal accounting control and corporate governance functions, ensuring compliance with SEC and NASDAQ standards[248] Related Party Transactions - Related party transactions were conducted without adequate control, highlighting a need for improved procedures and documentation[232] - The company has established control processes for significant payments and maintaining documentation for non-routine transactions[236] Director and Officer Compliance - No Director Nominee has been subject to bankruptcy petitions or criminal proceedings in the past ten years[256] - No Director Nominee has been found to have violated any Federal or State securities law, with no subsequent reversals[256] - No Director Nominee has faced sanctions or orders from self-regulatory organizations that have not been reversed[256] Other Financial Information - For the year ended December 31, 2022, interest income was $17,035,200, an increase of $6,955,424, or 69% from $10,079,776 in 2021[212] - As of December 31, 2022, the Company had positive working capital of approximately $87 million[213] - The Company recognized $324,000 in share-based payment for service related to a settlement agreement on December 16, 2022[210] - The Company issued 750,000 fully-vested warrants valued at $1,695,042 on March 4, 2021, with an exercise price of $0.01[210] - As of December 31, 2022, the Company had a lease obligation totaling $188,650, with a monthly rental fee of approximately $8,202[222] - The Company appointed a new accounting manager to enhance the internal review process[236] - Additional written policies and procedures for accounting and financial reporting have been established to improve the financial statement closing process[236] - A control process for assessing the accounting implications of significant non-routine payments has been implemented[236] - Training for financial and accounting staff has been provided to enhance understanding of U.S. GAAP and internal controls[237] - Heung Ming (Henry) Wong is identified as an "audit committee financial expert" under SEC regulations[249] - The company plans to retain additional independent directors to support corporate governance and compliance efforts[234]

Revenue Performance - For the three months ended September 30, 2022, total revenue decreased by $16,885,251 or 31% to $37,888,555 from $54,773,806 for the same period in 2021[126]. - Revenue from commodity trading was $37,847,831, a decrease of $13,516,658 or 26% compared to $51,364,489 in the prior year[124]. - Revenue from supply chain management services dropped by 98% to $40,724 from $2,043,494 in the same period last year[124]. - Total revenue for the nine months ended September 30, 2022, was $139,731,066, a decrease of $4,464,644 or 3% from $144,195,710 in the same period of 2021[139]. - Revenue from sales of commodity products was $138,540,090 for the nine months ended September 30, 2022, compared to $141,679,791 for the same period in 2021, reflecting a decrease of $3,139,701 or 2%[140]. Income and Profitability - Net income for the three months ended September 30, 2022 was $1,303,922, an increase of $846,307 or 185% from $457,615 in the same period last year[136]. - Net income for the nine months ended September 30, 2022, was $4,323,050, an increase of $5,045,855 from a net loss of $722,805 in the same period of 2021[149]. - Gross profit decreased by $1,633,199 or 65%, from $2,509,484 for the nine months ended September 30, 2021, to $876,285 for the same period in 2022[139]. Costs and Expenses - The cost of revenue decreased by $14,791,715 or 28% to $38,008,337 from $52,800,052 for the three months ended September 30, 2021[131]. - Total cost of revenue decreased by $2,831,445 or 2%, from $141,686,226 for the nine months ended September 30, 2021, to $138,854,781 for the same period in 2022[142]. - Selling, general, and administrative expenses increased by $223,959 or 4%, from $5,851,131 for the nine months ended September 30, 2021, to $6,075,090 for the same period in 2022[145]. Interest Income - Interest income increased by $2,850,197 or 158% to $4,659,595 for the three months ended September 30, 2022, compared to $1,809,398 in the prior year[135]. - Interest income increased by $6,561,763 or 96%, reaching $13,416,254 for the nine months ended September 30, 2022, compared to $6,854,491 in 2021[147]. Operational Challenges - The company faced challenges due to COVID-19 and the depreciation of RMB against USD, impacting revenue generation[127]. - Operations in Shanghai were temporarily affected for about two weeks due to COVID-19 lockdown measures, resulting in a decrease in revenue during that period[161]. - The economic impact of the prolonged pandemic remains uncertain and could materially affect future financial performance[162]. Future Outlook and Investments - The company aims to expand its business in existing and new markets, requiring significant capital investment[123]. - The company has a limited operating history since starting its commodities trading business in late November 2019, which poses risks for future growth[122]. Financial Position - Cash inflows from operating activities were $3,604,608 for the nine months ended September 30, 2022, an increase of $2,662,677 from $941,931 in 2021[156]. - The company reported positive working capital of approximately $157 million as of September 30, 2022[152]. - The company raised a total of $59.9 million through private placements and convertible promissory notes during the nine months ended September 30, 2022[152]. Lease Obligations - The company had three lease arrangements with a total contractual obligation of approximately $676,418, with lease terms due in August 2023 and December 2024[164][166]. - Monthly rental fee for the leases is approximately $29,409[164]. - The company does not have any off-balance sheet arrangements as of September 30, 2022[163]. Competitive Landscape - The company operates in a competitive environment with major competitors including Xiamen International Trade and Yijian Shares[119].

[PART 1. FINANCIAL INFORMATION](index=2&type=section&id=PART%201.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents TD Holdings, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows [Unaudited Condensed Consolidated Balance Sheets](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2022, shows total assets increased to **$274.6 million**, driven by higher loans receivable, while total equity rose to **$246.4 million** Condensed Consolidated Balance Sheet Highlights (in USD) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$274,621,691** | **$227,436,233** | | Cash and cash equivalents | $3,925,416 | $4,311,068 | | Loans receivable from third parties | $177,575,850 | $115,301,319 | | Goodwill | $67,475,493 | $71,028,283 | | **Total Liabilities** | **$28,257,438** | **$31,563,878** | | **Total Equity** | **$246,364,253** | **$195,872,355** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2022, total revenue increased by **14%** to **$101.8 million**, resulting in a net income of **$3.0 million** compared to a prior-year loss Statement of Operations Summary (Six Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $101,842,511 | $89,421,904 | | Gross Profit | $996,067 | $535,730 | | Total other income, net | $7,857,315 | $4,375,487 | | Net Income (Loss) | $3,019,128 | $(1,180,420) | | EPS - Basic & Diluted | $0.01 | $(0.01) | Statement of Operations Summary (Three Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $53,683,395 | $59,839,647 | | Gross Profit | $439,129 | $373,116 | | Net Income | $1,425,271 | $357,856 | [Unaudited Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to **$246.4 million** as of June 30, 2022, primarily due to common stock issuances and net income, partially offset by currency adjustments - Equity increased mainly due to the issuance of **122,100,000 common shares** in private placements, contributing **$56.9 million**[14](index=14&type=chunk) - Net income for the six-month period was **$3,019,128**[14](index=14&type=chunk) - A significant foreign currency translation adjustment of **$(12,677,381)** negatively impacted equity[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2022, operating activities provided **$0.47 million** cash, while investing activities used **$60.1 million**, and financing activities provided **$59.9 million** Cash Flow Summary (Six Months Ended June 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from Operating Activities | $469,839 | $(3,789,382) | | Net cash used in Investing Activities | $(60,102,346) | $(15,810,972) | | Net cash from Financing Activities | $59,920,000 | $23,096,801 | | **Net (decrease)/increase in cash** | **$(385,652)** | **$4,196,502** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's business, accounting policies, and financial items, including increased loans receivable, convertible notes, and Nasdaq listing compliance risks - The company's business consists of commodity trading and providing supply chain management services in the PRC[24](index=24&type=chunk) - Loans receivable from third parties increased to **$177.6 million** as of June 30, 2022, from **$115.3 million** at year-end 2021, carrying an interest rate of **10.95% per annum**[44](index=44&type=chunk)[45](index=45&type=chunk) - In May 2022, the company raised **$11.42 million** by selling **57.1 million shares** at **$0.20 per share** in a private placement[70](index=70&type=chunk) - The company received a Nasdaq notice for failing to meet the minimum bid price requirement and approved a reverse stock split to regain compliance[99](index=99&type=chunk)[109](index=109&type=chunk)[111](index=111&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=30&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial performance, highlighting revenue growth to **$101.8 million** and a shift to **$3.0 million** net income for the first half of 2022 [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2022, total revenue increased **14%** to **$101.8 million**, and net income reached **$3.0 million**, driven by commodity market conditions and interest income Financial Performance (Three Months Ended June 30) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $53,683,395 | $59,839,647 | (10)% | | Gross Profit | $439,129 | $373,116 | 18% | | Net Income | $1,425,271 | $357,856 | 298% | Financial Performance (Six Months Ended June 30) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $101,842,511 | $89,421,904 | 14% | | Gross Profit | $996,067 | $535,730 | 86% | | Net Income (Loss) | $3,019,128 | $(1,180,420) | 356% | - The increase in revenue for the first half of 2022 is attributed to a prosperous bulk market, rising commodity prices, and a strategic focus on the Hainan region[137](index=137&type=chunk) - Interest income for the six months ended June 30, 2022, increased by **74%** to **$8.8 million**, primarily from loans to third-party vendors[144](index=144&type=chunk) [Cash Flows and Capital Resources](index=38&type=section&id=Cash%20Flows%20and%20Capital%20Resources) The company's operations are financed through various sources, with **$0.47 million** cash from operations and **$59.9 million** from financing activities in the first half of 2022 - During the first six months of 2022, the company raised a total of **$59.92 million** in gross proceeds from private placements and the sale of convertible promissory notes[148](index=148&type=chunk)[149](index=149&type=chunk) Summary of Cash Flows (Six Months Ended June 30) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $469,839 | $(3,789,382) | | Net Cash Used in Investing Activities | $(60,102,346) | $(15,810,972) | | Net Cash Provided by Financing Activities | $59,920,000 | $23,096,801 | [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2022, due to identified material weaknesses in accounting and internal policies - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were not effective as of June 30, 2022[165](index=165&type=chunk) - Material weaknesses identified include: lack of formal procedures for revenue recognition, inadequate control over related party transactions, absence of an accountant with adequate U.S. GAAP knowledge, and insufficient written policies for accounting and financial reporting[166](index=166&type=chunk)[167](index=167&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K filed on March 16, 2022 - There have been no material changes to the risk factors disclosed in the annual report on Form 10-K filed on March 16, 2022[171](index=171&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=42&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details unregistered equity sales, including a **$3.0 million** convertible note and **$11.42 million** from common stock sales in May 2022 - On May 6, 2022, the company issued an unsecured convertible promissory note and received proceeds of **$3,000,000**[172](index=172&type=chunk) - On May 27, 2022, the company agreed to sell **57,100,000 shares** of Common Stock at **$0.20 per share**, receiving proceeds of **$11,420,000** in June 2022[173](index=173&type=chunk)