TD Holdings, Inc. Reports First Quarter 2020 Financial Results
BEIJING, June 27, 2020 /PRNewswire/ -- TD Holdings, Inc. (Nasdaq: GLG) (the "Company"), a used luxurious car rental and commodities trading service provider in China today announced its financial results for the three months ended March 31, 2020.
The Company started to operate its current used luxurious car leasing business in China, after it disposed its direct loans, loan guarantees and financial leasing services in July 2018, and began to operate commodities trading business in China in November 2019. In January 2020, we changed the Company's name to TD Holdings, Inc., which better represents our current focus on the new commodities trading business. The letter "T" in the name representing the Chinese character for "Bronze," indicating the Company's focus on the commodities trading business, and particularly on the trading of nonferrous metals such as bronze as the main direction of the Company's business in the future.
Mrs. Renmei Ouyang, the Chief Executive Officer of the Company, stated, "We are pleased to report our financial results for the three months ended March 31, 2020. We started our commodity trading business in late 2019, and we have increased our revenues from the commodities trading business despite of the outbreak of COVID-19. I believe that the commodity trading business will continue to bolster the Company's income and increase shareholder value."
First Quarter 2020 Financial Highlights
- Income from commodities trading business was $1.47 million, consisting of $1.05 million from sales of commodities products, and $0.42 million from supply chain management services;
- Net loss was $0.14 million, compared with net loss of $1.83 million for the three months ended March 31, 2019.
- Basic and diluted loss per share was $0.01, compared with basic and diluted loss per share of $0.35 for the three months ended March 31, 2019.
- Shareholders' equity as of March 31, 2020 was $7.3 million, compared with $5.80 million as of December 31, 2019.
First Quarter 2020 Financial Results
We generate revenue from our commodities trading business and used car leasing business.
Income from commodities trading business
In December 2019, we commenced our commodities trading business and we generated revenues from sales of commodity products and revenue from supply chain management consulting services. There was no such revenue for the three months ended March 31, 2019.
For the three months ended March 31, 2020, the Company sold non-ferrous metals to two customers at fixed prices, and earned revenues when the product ownership was transferred to its customers. The Company earned revenues of $1,053,632 from sales of commodity products.
We also launched supply chain management services to refer loans and distribute commodity products for our customers. For the three months ended March 31, 2020, we earned $415,377 from loan recommendation services from the facilitation of a loan volume of approximately $17.6 million (RMB 123.0 million) with six customers.
Income from used car leasing business
The Company commenced its business of leasing services of used luxurious cars in May 2018. As of March 31, 2020 and 2019, the Company had eleven and eight used luxurious cars, respectively. The lease term is generally within one month. The operating lease income is recognized on a straight-line basis over the scheduled lease term.
As affected by COVID-19, we closed our car rental facilities from the end of January to March 2020, and gradually resumed business in April 2020. As a result, we generated minimal operating lease income for the three months ended March 31, 2020. The extent to which COVID-19 impacts our income from operating lease for the fiscal year 2020 will depend on certain future developments, including the duration and spread of the outbreak, emerging information concerning the severity of COVID-19 and the actions taken by governments and private businesses in attempting to contain the spread of COVID-19, all of which is uncertain at this point.
For the three months ended March 31, 2019, the Company generated operating lease income from used luxurious cars which are either owned by the Company or leased from third party vendors. The Company generated operating lease income of $399,999 for the three months ended March 31, 2019.
Cost of revenue
Our cost of revenue primarily includes cost of revenue associated with commodity product sales, cost of revenue associated with management services of supply chain and cost of operating lease. Total cost of revenue increased by $917,523 or 386% from $237,651 for the three months ended March 31, 2019 to $1,155,174 for the three months ended March 31, 2020, primarily due to an increase of $1,055,143 in cost of revenue associated with commodity product sales which was just launched in December 2019, against a decrease of $138,337 in cost of operating lease as affected by COVID-19.
Cost of revenue associated with commodity trading
Cost of revenue primarily consists of purchase costs of non-ferrous metal products. For the three months ended March 31, 2020, the Company purchased non-ferrous metal products of $1,055,143 from Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. ("Shenzhen Baiyu"), a related party controlled by the legal representative of Huamucheng, and sold non-ferrous metal products to two customers. The Company recorded cost of revenue of $1,055,143. There was no such cost for the three months ended March 31, 2019 because this was a new business launched in December 2019.
Costs associated with Operating lease
The operating lease expense mainly consisted of depreciation expenses on leasing business assets and car related expenses arising from lease of cars.
The depreciation expenses on leasing business assets increased from $46,858 for the three months ended March 31, 2019 to $79,578 for the three months ended March 31, 2020, representing an increase of $32,720, or 70%. The increase was mainly caused by the Company's continuous investments in used luxurious cars. As of March 31, 2020, the Company had eleven used luxurious cars compared to eight cars as of March 31, 2019.
In the three months ended March 31, 2019, the Company officially launched the luxurious car sub-lease business through leasing cars from both third party peer companies and individuals. The Company recorded car leasing expenses of $19,736 and $190,793 for the three months ended March 31, 2020 and 2019, respectively. The decrease was mainly caused by the Company's closure of car rental facilities from the end of January 2020 to March 2020, as affected by COVID-19.
Selling, general, and administrative expenses
Selling, general and administrative expenses decreased from $1,906,319 for the three months ended March 31, 2019 to $425,115 for the three months ended March 31, 2020, representing a decrease of $1,481,204, or 78%. Selling, general and administrative expenses primarily consisted of salary and employee benefits, office rental expense, business tax and surcharge, professional service fees, office supplies. The decrease was mainly attributable to combined effects of a decrease of other operating expenses of $358,518 as a result of closures of our car rental facilities for the three months ended March 31, 2020, and a decrease of legal and consulting expenses of $1,220,923 as a result of 1) issuance of 502,391 restricted shares as compensation for $884,208 due to certain service providers for the three months ended March 31, 2019, while there were no such issuance for the three months ended March 31, 2020, and 2) a decrease in expenses incurred for the registered direct offerings in April and May 2019, including audit related fees of $156,659, and commission of $100,000 to a third party vendor for referral of underwriters.
Our net loss for the three months ended March 31, 2020 was $139,972, representing a decrease of $1,689,854 from net loss of $1,829,826 for the three months ended March 31, 2019.
First Quarter 2020 Cash Flows
As of March 31, 2020, the Company had cash and cash equivalents of $27,101, as compared with $2.45 million as of December 31, 2019.
Net cash used in operating activities was $0.16 million for the three months ended March 31, 2020, as compared with $0.76 million for the same period of 2019.
Net cash used in investing activities was $3.42 million for the three months ended March 31, 2020, compared to $1.0 million for the same period of 2019.
Net cash provided by financing activities was $1.06 million for the three months ended March 31, 2020, compared to $0.59 million for the same period of 2019.
About TD Holdings, Inc.
TD Holdings, Inc. (Nasdaq: GLG) is a used luxurious car rental and commodities trading service provider in China. The used luxurious car business is conducted under the brand name "BatCar" by the Company's VIE entity, Tianxing Kunlun Technology Co. Ltd, from its headquarters in Beijing. The commodities trading business is conducted under the brand name "Huamucheng." For more information please visit https://www.imbatcar.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of TD Holdings, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: there is uncertainty about the spread of the COVID-19 virus and the impact it will have on the Company's operations, the demand for the Company's products and services, global supply chains and economic activity in general. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.