TD Holdings(GLG) - 2022 Q2 - Quarterly Report

PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS 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 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 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 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] - Net income for the six-month period was $3,019,128[14] - A significant foreign currency translation adjustment of $(12,677,381) negatively impacted equity[14] Unaudited Condensed Consolidated Statements of Cash Flows 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 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] - 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][45] - 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] - 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][109][111] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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] - 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] Cash Flows and Capital Resources 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][149] 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 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] - 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][167] PART II. OTHER INFORMATION ITEM 1A. RISK FACTORS 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] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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] - 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]