BAIYU (BYU) - 2020 Q1 - Quarterly Report

Part I. Financial Information Financial Statements For Q1 2020, TD Holdings, Inc. reported a significant revenue increase driven by new commodity trading, a narrowed net loss, and growth in total assets and equity Unaudited Condensed Consolidated Balance Sheets Total assets increased to $12.61 million by March 31, 2020, driven by loans and related party receivables, while total equity rose to $7.26 million due to common stock issuance | Balance Sheet Highlights | March 31, 2020 (USD) | December 31, 2019 (USD) | | :--- | :--- | :--- | | Total Assets | $12,614,181 | $11,388,400 | | Cash | $27,101 | $2,446,683 | | Loans receivable from third parties (Current) | $3,735,799 | $1,955,697 | | Due from related parties | $4,823,038 | $3,310,883 | | Total Liabilities | $5,358,867 | $5,587,538 | | Total Equity | $7,255,314 | $5,800,862 | - The company issued 17 million new shares of common stock during the quarter, increasing the total shares issued and outstanding from 11,585,111 to 28,585,111[7] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2020 total revenue surged to $1.48 million due to new commodity segments, with gross profit increasing and net loss significantly narrowing to $139,972 | Income Statement Highlights | Q1 2020 (USD) | Q1 2019 (USD) | | :--- | :--- | :--- | | Total Revenue | $1,483,060 | $399,999 | | Revenue from sales of commodity products | $1,053,632 | $0 | | Revenue from supply chain management services | $415,377 | $0 | | Income from operating leases | $14,051 | $399,999 | | Gross Profit | $327,886 | $162,348 | | Selling, general, and administrative expenses | ($425,115) | ($1,906,319) | | Net Loss | ($139,972) | ($1,829,826) | | Net loss per share – basic and diluted | ($0.01) | ($0.35) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $156,559 in Q1 2020, but a $2.42 million net decrease in cash resulted from increased investing outflows | Cash Flow Summary | Q1 2020 (USD) | Q1 2019 (USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($156,559) | ($758,633) | | Net Cash Used in Investing Activities | ($3,424,968) | ($999,481) | | Net Cash Provided by Financing Activities | $1,063,773 | $592,724 | | Net decrease in cash | ($2,419,582) | ($1,143,421) | | Cash at end of period | $27,101 | $340,695 | - Significant non-cash financing activities included the issuance of common stock for private placements totaling $15.1 million, with proceeds collected subsequent to the quarter-end[12] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's structure, accounting policies, significant capital transactions, and segment reporting for its two VIE-operated business lines - The company conducts its business through two Variable Interest Entities (VIEs): Beijing Tianxing (used luxury car leasing) and Huamucheng (commodity trading and supply chain management)[14] - In Q1 2020, the company entered into agreements to sell 15,000,000 shares of common stock and $30,000,000 in convertible promissory notes with warrants, with proceeds received in April 2020[64][65] - The company now reports two operating segments: 'Commodity Trading and Supply Chain Management Services' and 'Used Car Leasing'. For Q1 2020, the commodity segment generated $1.47 million in revenue, while the car leasing segment generated only $14,051[98][99] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A highlights the COVID-19 impact on car leasing, the new commodity trading business driving 271% revenue growth, and a 92% reduction in net loss - The company's business is now split into two main lines: used luxury car leasing and commodities trading. The car leasing business was severely impacted by COVID-19 closures in Q1 2020[120][121] - The commodities trading business, started in late 2019 through the Huamucheng VIE, involves purchasing and selling non-ferrous metals and providing supply chain management services[127][128] | Performance vs. Prior Year | Q1 2020 (USD) | Q1 2019 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,483,060 | $399,999 | +271% | | Income from operating leases | $14,051 | $399,999 | -96% | | Gross Profit | $327,886 | $162,348 | +102% | | SG&A Expenses | ($425,115) | ($1,906,319) | -78% | | Net Loss | ($139,972) | ($1,829,826) | -92% | - Subsequent to the quarter end, the company raised approximately $79.5 million in proceeds from equity financing transactions, expected to fund commodity trading expansion[154][155] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[165] Controls and Procedures Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were not effective as of March 31, 2020. No material changes were made to the internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were not effective as of the end of the period covered by this report[166] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[168] Part II. Other Information Legal Proceedings Updates on legal matters include the settlement of the 2015 Derivative Action, withdrawal of the Sorghum appeal, and a new lawsuit against Harrison Fund - The 2015 shareholder derivative action was settled and dismissed in July 2019[169][170] - In the 2017 arbitration with Sorghum, the arbitration award in favor of the company was vacated, and the company withdrew its appeal in November 2019[171][173] - In April 2020, the company filed a lawsuit against Harrison Fund, LLC to recover a $1,000,000 investment made in May 2019[175][176] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K filed on May 29, 2020 - The company states that there have been no material changes to the risk factors disclosed in its annual report on Form 10-K for the year ended December 31, 2019[176] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2020, the company agreed to sell $30 million in convertible notes and warrants, leading to the issuance of 40 million common shares in April 2020 - On January 22, 2020, the company agreed to sell $30 million in convertible notes and warrants to purchase 20 million shares of common stock[177] - The notes have a 12-month maturity, a 7.5% interest rate, and a conversion price of $1.50 per share. The warrants have a five-year term and an exercise price of $1.80 per share[178][179] - In April 2020, the holders converted the notes and exercised the warrants, leading to the issuance of 40 million shares of common stock on May 18, 2020[180] Exhibits This section lists the exhibits filed with the report, including certificates of incorporation, forms of warrants, various agreements, and officer certifications