TD Holdings(GLG) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company presents unaudited financial statements showing significant asset growth alongside a widening net loss from continuing operations Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total current assets | $2,570,708 | $1,572,038 | | Total noncurrent assets | $5,463,331 | $1,639,542 | | Total Assets | $8,034,039 | $3,211,580 | | Total Liabilities | $2,581,343 | $409,357 | | Total Equity | $5,452,696 | $2,802,223 | Condensed Consolidated Statements of Operations Summary (Unaudited) | Account | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Income from operating lease | $940,894 | $96,721 | | Total operating expenses | $3,771,783 | $1,052,275 | | Net loss from continuing operations | $(2,870,151) | $(955,259) | | Net income from discontinued operations | $0 | $10,072,629 | | Net (loss) income | $(2,870,151) | $9,117,370 | | Loss per share - basic and diluted | $(0.45) | $2.16 | Condensed Consolidated Statements of Cash Flows Summary (Unaudited) | Account | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,744,246) | $(28,617) | | Net Cash Used in by Investing Activities | $(5,101,686) | $(3,232,333) | | Net Cash Provided by Financing Activities | $6,716,633 | $3,265,370 | | Net (Decrease) Increase in Cash | $(176,930) | $3,088 | Notes to Unaudited Condensed Consolidated Financial Statements This section details the business shift to car leasing, VIE structure risks, liquidity issues, and recent financing activities - The company's primary business is now operating leasing of used luxurious cars in China, following the disposal of its micro-lending business[23] - The company operates in China through a Variable Interest Entity (VIE), which poses risks related to the enforceability of VIE agreements under PRC law[21][42][96] - As of June 30, 2019, the company had a cash balance of $1.3 million and negative working capital of $10,635, indicating liquidity challenges[91] - The company received two notifications from Nasdaq for non-compliance with listing rules regarding shareholder approval and minimum bid price[167][168] - In April and May 2019, the company completed two registered direct offerings, raising aggregate gross proceeds of approximately $5.2 million[114][115] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, highlighting revenue growth from car leasing offset by rising expenses and net losses Results of Operations This section compares financial performance, showing significant revenue growth from an expanded car fleet offset by sharply higher operating costs Q2 2019 vs Q2 2018 Performance | Metric | Q2 2019 | Q2 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Income from operating lease | $540,895 | $96,721 | 459% | | Total operating expenses | $1,531,495 | $489,848 | 213% | | Net loss from continuing operations | $(1,040,325) | $(392,832) | 165% | H1 2019 vs H1 2018 Performance | Metric | H1 2019 | H1 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Income from operating lease | $940,894 | $96,721 | 873% | | Total operating expenses | $3,771,783 | $1,052,275 | 258% | | Net loss from continuing operations | $(2,870,151) | $(955,259) | 200% | - The increase in SG&A expenses in H1 2019 was primarily due to higher promotion, car-related, legal, and consulting fees, including $1.28M in share-based compensation[190] Cash Flows and Capital Resources The company's liquidity relies on recent capital raises amid negative operating cash flow and significant investment activities - The company raised approximately $3.7 million in April 2019 and $1.5 million in May 2019 through registered direct offerings to finance operations[194] - Investing activities in H1 2019 included $1.9 million for purchasing used cars, $1.1 million in equity investments, $1.0 million in financial products, and $1.1 million in loans[200] Summary of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,744,246) | $(201,373) | | Net Cash Used in Investing Activities | $(5,101,686) | $(3,232,333) | | Net Cash Provided by Financing Activities | $6,716,633 | $3,265,370 | PART II. OTHER INFORMATION Item 1. Legal Proceedings This section outlines the resolution and settlement of several major legal actions, including class actions and derivative suits - The 2014 Class Action lawsuit was settled, with the company paying $245,000 in cash and issuing 950,000 shares[213][215] - The 2015 Derivative Action was settled and dismissed in July 2019, with the company agreeing to adopt certain corporate governance reforms[219][220] - The 2018 court matter with Shanghai Nonobank was dismissed in its entirety as against the company in July 2019[228][229] Item 1A. Risk Factors The company highlights material risks from non-compliance with Nasdaq listing rules, which could lead to delisting - The company received a notification from Nasdaq for non-compliance with Listing Rule 5635(d) for repricing warrants without shareholder approval[231] - The company received a second notification from Nasdaq for failing to meet the minimum bid price requirement of $1.00 per share[234] - If the company is unable to regain compliance with Nasdaq's listing requirements, its common stock could be delisted, adversely affecting its market price[237] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details proceeds from registered direct offerings and concurrent private placements of warrants in April and May 2019 - In April 2019, the company sold 1,680,000 shares of common stock and issued warrants, raising gross proceeds of approximately $3.7 million[238] - In May 2019, the company sold 1,440,000 shares of common stock and issued warrants, raising gross proceeds of approximately $1.5 million[242] - The warrants issued in both financings were offered in private placements, exempt from registration requirements under the Securities Act[238][242]