TD Holdings(GLG) - 2024 Q3 - Quarterly Report

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 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 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] Unaudited Condensed Consolidated Statements of Operations 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] Unaudited Condensed Consolidated Statements of Changes in Equity 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][8] Unaudited Condensed Consolidated Statements of Cash Flows 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] - Financing activities provided $36.9 million in cash, mainly from private placement transactions[13] Notes to Unaudited Condensed Consolidated Financial Statements 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] - 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][34] - 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] - Subsequent to the reporting period, on October 4, 2024, the company received a delisting notification from Nasdaq, which it is appealing[93] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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 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][96] - 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] - Key challenges affecting results include decreasing demand from China's economic slowdown and intense competition in the commodities trading business[101] Results of Operations 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] - 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] Cash Flows and Capital Resources 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] - 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][131][133] - Net cash from financing activities was $36.9 million, primarily from the issuance of common stock in a private placement[136] Controls and Procedures 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] - 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][146] - Remedial measures include engaging an external consulting firm and plans to hire more qualified accounting personnel and implement continuous training[147][148] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and details on unregistered sales of equity securities Legal Proceedings The company reported no legal proceedings - There are no legal proceedings to report[150] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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]