Filed pursuant to Rule 424(b)(5)
Registration No. 333-239757
Prospectus Supplement
(To Prospectus dated August 4, 2020)
TD HOLDINGS, INC.
28,000,000 Shares of Common Stock
We are offering 28,000,000
shares of our common stock, $0.001 par value per share, directly to the investors in this offering at a price of $0.35 per share pursuant
to this prospectus supplement and the accompanying prospectus.
For a more detailed description
of the shares of common stock, see the section entitled “Description of Securities We Are Offering” beginning on page S-39.
Our shares of common stock
are currently traded on the NASDAQ Capital Market under the symbol “GLG.” On July 29, 2023, the closing price of our
shares of common stock was $0.55 per share.
The aggregate market
value of our outstanding shares of common stock held by non-affiliates was approximately $70.6 million based on 156,407,446
outstanding shares of common stock, of which 128,343,446 shares are held by non-affiliates, and per share price of $0.55, which was
the last reported price on the NASDAQ Capital Market of our common stock on July 28, 2022. We have offered US$2,059,072.97 of
securities pursuant to General Instruction I.B.6. of Form S-3 during the prior 12 calendar month period that ends on and includes
the date of this prospectus supplement and we may sell up to approximately US$100 million of securities hereunder.
We have negotiated with certain
non-U.S. person investors offer and sale of our common stock. See “Plan of Distribution” beginning on page S-40 of this
prospectus supplement for more information regarding these arrangements.
Investors are purchasing securities
of a Delaware holding company rather than securities of our subsidiaries that have substantive business operations in China. The Company
is a Delaware holding company that conducts its operations and operates its business in China through its PRC subsidiaries. Such structure
involves unique risks to our investors. The Chinese government may intervene in or influence the operation of PRC subsidiaries and exercise
significant oversight and discretion over the conduct of their business or may exert more control over offerings conducted overseas by,
and/or foreign investment in, China-based issuers, which could result in a material change in our operations and/or the value of our common
stock. Further, rules and regulations in China may be changed from time to time, and any actions by the Chinese government to exert more
oversight and supervision over offerings that are conducted overseas by, and/or foreign investment in, China-based issuers could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to
significantly decline or be worthless. See “Risk Factors — Risks Related to Our Corporate Structure” and “Risk
Factors — Risks Related to Doing Business in China”.
There are significant legal
and operational risks associated with being based in or having the substantial all of our operations in China, including those changes
in the legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese
or U.S. regulations, all of which may materially and adversely affect our business, financial condition and results of operations. Any
such changes could significantly limit or completely hinder our ability to offer or continue to offer our securities to investors, and
could cause the value of our securities to significantly decline or become worthless. The PRC government has significant authority to
exert influence on the ability of a company with substantive operations in China, such as us, to conduct its business, accept foreign
investments or list on a U.S. or other foreign exchanges. For example, we face risks associated with regulatory approvals of offshore
offerings, anti-monopoly regulatory actions, oversight on cybersecurity and data privacy. As of the date of this prospectus, we do not
believe that we are subject to (a) the cybersecurity review with the Cyberspace Administration of China, or CAC, as we do not qualify
as a critical information infrastructure operator or possess a large amount of personal information in our business operations, and our
business does not involve data possessing that affects or may affect national security, implicates cybersecurity, or involves any type
of restricted industry; or (b) merger control review by China’s anti-monopoly enforcement agency due to the fact that we do not
engage in monopolistic behaviors that are subject to these statements or regulatory actions. However, since these statements and regulatory
actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing
or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, and, if any, the potential
impact such modified or new laws and regulations will have on our daily business operation, ability to accept foreign investments and
listing of our securities. In particular, as we are a holding company with substantive business operations in China, you should pay special
attention to disclosures included in our most recent annual report on Form 10-K incorporated by reference in this prospectus and risk
factors included herein, including but not limited to risk factor such as “Risk Factors — Risks Related to Our Corporate
Structure” and “Risk Factors — Risks Related to Doing Business in China”.
The PRC government has significant
oversight and discretion over the conduct of our business and may influence our operations as the government deems appropriate to further
regulatory, political and societal goals. The PRC government has recently published new policies that significantly affected certain industries,
and we cannot rule out the possibility that it will in the future release regulations or policies regarding the industry where we operate,
which could adversely affect our business, financial condition and results of operations. Furthermore, the PRC government has recently
indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign
investment in China-based companies like us. These risks could result in a material change in our operations and the value of our common
stock, or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the
value of such securities to significantly decline or become worthless. For more information on various risks related to doing business
in China, see “Risk Factors — Risks Related to Doing Business in China” in this prospectus and the “Risk
Factors” sections of our most recent annual report on Form 10-K which is incorporated by reference in this prospectus.
Pursuant to the Holding Foreign
Companies Accountable Act, or the HFCAA, if the Public Company Accounting Oversight Board, or the PCAOB, is unable to inspect an issuer’s
auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S. stock exchange. The PCAOB issued
a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public
accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken by one or more
authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken
by one or more authorities in Hong Kong. Furthermore, the PCAOB’s report identified the specific registered public accounting firms
which are subject to these determinations. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act, and on December 29, 2022, legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations
Act”) was signed into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding
Foreign Companies Accountable Act and amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on
any U.S stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the
time period for triggering the prohibition on trading. On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol
(the “SOP”) with the China Securities Regulatory Commission, or the CSRC, and the Ministry of Finance of China. The SOP, together
with two protocol agreements governing inspections and investigations (together, the “SOP Agreement”), establishes a specific,
accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and
Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect
and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board
vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms
headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections
of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties and depends on a
number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in mainland China and Hong
Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing
investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act immediately to consider the need
to issue new determinations with the HFCAA if needed.
As of the date of this prospectus,
Audit Alliance LLP, our auditor, is not subject to the determinations as to inability to inspect or investigate completely as announced
by the PCAOB on December 16, 2021. Audit Alliance, LLP is based in Singapore and is registered with PCAOB and subject to PCAOB inspection.
See “Risk Factors — Risks Related to Doing Business in China — The Holding Foreign Companies Accountable Act, recent
regulatory actions taken by the SEC and PCAOB, and proposed rule changes submitted by U.S. stock exchanges calling for additional and
more stringent criteria to be applied to China-based public companies could add uncertainties to our capital raising activities and compliance
costs.”
TD Holdings, Inc., our
holding company, or the Parent, may transfer cash to our offshore intermediary holding entities in the British Virgin Island and
Hong Kong. and their respective subsidiaries, through capital injections and intra-group loans. Our offshore intermediary holding
entities, in turn, may transfer cash to our PRC subsidiaries through capital injections and intra-group loans. Similarly, our PRC
subsidiaries may in turn transfer cash to their respective subsidiaries in the PRC through capital injections and intra-group loans.
Cash may also be transferred through our organization by way of intra-group transactions. If our wholly owned subsidiaries in the
PRC realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay
dividends or distribute earnings to our offshore intermediary holding entities, which, in turn, may transfer cash to the Parent
through dividends or other distributions. With necessary funds, the Parent may pay dividends or make other distributions to U.S.
investors and service any debt it may have incurred outside of the PRC. No assets other than cash were transferred between the
Parent and a subsidiary, no subsidiaries paid dividends or made other distributions to the Parent, and no dividends or distributions
were paid or made to U.S. investors. TD Holding Inc. and its subsidiaries currently do not have a cash management policy in place.
In 2021 and 2022, the Parent transferred cash in the amount of US$6 million and US$2.3 million, respectively, to our PRC
subsidiaries through our offshore intermediary holding entities by way of capital contribution to the PRC subsidiaries.
Under PRC laws and regulations,
we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute
earnings to the holding company and U.S. investors is also limited. We are a Delaware holding company and we may rely on dividends and
other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay
dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our PRC subsidiaries incurs
debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Under PRC laws and regulations, each of our PRC subsidiaries may pay dividends only out of its respective accumulated profits as determined
in accordance with PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of
its registered capital. At its discretion, a PRC enterprise may allocate a portion of its after-tax profits based on PRC accounting standards
to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to us as dividends. In addition,
our PRC subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us.
Investing in our securities
involves a high degree of risk. You should purchase our securities only if you can afford a complete loss of your investment. See “Risk
Factors” beginning on page S-9 of this prospectus supplement and on page 5 of the accompanying prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy
or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
| |
Per Share | | |
Total | |
Offering Price | |
$ | 0.35 | | |
| 9,800,000 | |
Proceeds, before expenses, to us | |
$ | 0.35 | | |
| 9,800,000 | |
We expect that delivery of
the shares of common stock being offered pursuant to this prospectus supplement and the accompanying prospectus will be made on or about
August 3, 2023.
The date of this prospectus supplement is July
31, 2023
TABLE OF CONTENTS
Prospectus Supplement
TABLE OF CONTENTS
You should rely only on
the information contained in this prospectus supplement and the accompanying prospectus. We have not authorized anyone else to provide
you with additional or different information to the information included in this prospectus supplement and the accompanying prospectus.
We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted.
You should not assume that the information in this prospectus supplement or the accompanying prospectus is accurate as of any date other
than the date on the front of those documents or that any document incorporated by reference is accurate as of any date other than its
filing date.
No action is being taken
in any jurisdiction outside the United States to permit a public offering of the shares of common stock or possession or distribution
of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession of this prospectus
supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform themselves about and to observe
any restrictions as to this offering and the distribution of this prospectus supplement and the accompanying prospectus applicable to
that jurisdiction.
ABOUT THIS PROSPECTUS SUPPLEMENT
On July 8, 2020, we filed
with the SEC a registration statement on Form S-3 (File No. 333-239757) utilizing a shelf registration process relating to the securities
described in this prospectus supplement, which registration statement was declared effective on August 4, 2020. Under this shelf registration
process, we may, from time to time, sell up to US$100 million in the aggregate of shares of common stock, shares of preferred stock, debt
securities, warrants, subscription rights and units.
This document is in two parts.
The first part is this prospectus supplement, which describes the specific terms of this common stock offering and also adds to and updates
information contained in the accompanying prospectus and the documents incorporated by reference into the prospectus. The second part,
the accompanying prospectus, gives more general information, some of which does not apply to this offering. You should read this entire
prospectus supplement as well as the accompanying prospectus and the documents incorporated by reference that are described under “Where
You Can Find More Information” in this prospectus supplement and the accompanying prospectus.
If the description of the
offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information contained in this
prospectus supplement. However, if any statement in one of these documents is inconsistent with a statement in another document having
a later date – for example, a document incorporated by reference in this prospectus supplement and the accompanying prospectus –
the statement in the document having the later date modifies or supersedes the earlier statement. Except as specifically stated, we are
not incorporating by reference any information submitted under Item 2.02 or Item 7.01 of any Current Report on Form 8-K into any filing
under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), into this prospectus supplement or the accompanying prospectus.
Any statement contained in
a document incorporated by reference, or deemed to be incorporated by reference, into this prospectus supplement or the accompanying prospectus
will be deemed to be modified or superseded for purposes of this prospectus supplement or the accompanying prospectus to the extent that
a statement contained herein, therein or in any other subsequently filed document which also is incorporated by reference in this prospectus
supplement or the accompanying prospectus modifies or supersedes that statement. Any such statement so modified or superseded will not
be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement or the accompanying prospectus.
We further note that the representations,
warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in
this prospectus supplement and the accompanying prospectus were made solely for the benefit of the parties to such agreement, including,
in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,
warranty or covenant to you unless you are a party to such agreement. Moreover, such representations, warranties or covenants were accurate
only as of the date when made or expressly referenced therein. Accordingly, such representations, warranties and covenants should not
be relied on as accurately representing the current state of our affairs unless you are a party to such agreement.
Unless
we have indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying prospectus
to “GLG,” the “Company,” “we,” “us” and “our” or similar terms refer to refer
to TD Holdings, Inc., a Delaware corporation and its consolidated subsidiaries and variable interest entity.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements
contained or incorporated by reference in this prospectus supplement, including the documents referred to or incorporated by
reference in this prospectus supplement or statements of our management referring to our summarizing the contents of this prospectus
supplement, include “forward-looking statements”. We have based these forward-looking statements on our current
expectations and projections about future events. Our actual results may differ materially or perhaps significantly from those
discussed herein, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as
“believe,” “expect,” “anticipate,” “intend,” “estimate,”
“plan,” “project” and other similar expressions. In addition, any statements that refer to expectations or
other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements included or
incorporated by reference in this prospectus supplement or our other filings with the Securities and Exchange Commission, or the
SEC, include, but are not necessarily limited to, those relating to:
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expand our customer base; |
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broaden our service and product offerings; |
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enhance our risk management capabilities; |
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improve our operational efficiency; |
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our ability to raise sufficient funds to expand our operations; |
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attract, retain and motivate talented employees; |
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the impact of COVID-19 on our business operations; |
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a decrease in demand for commodities trading and weakness in the commodities trading industry generally; |
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navigate an evolving regulatory environment; |
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defend ourselves against litigation, regulatory, privacy or other claims; |
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development of a liquid trading market for our securities; |
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our plan to maintain compliance with NASDAQ continue listing requirements; |
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financial market volatility and declines in financial market prices of equity securities; |
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liquidity and/or capital resources changes and the impact of any changes or limitations, including, without limitation, ability to borrow funds and/or renew or rollover existing indebtedness; and |
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ongoing or new supply chain and product distribution/logistics issues |
The foregoing does not represent
an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors with which we are
faced that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Risk Factors”
in our reports filed with the SEC or in this prospectus supplement and the accompanying prospectus for additional risks which could adversely
impact our business and financial performance.
Moreover, new risks regularly
emerge and it is not possible for our management to predict or articulate all risks we face, nor can we assess the impact of all risks
on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any
forward-looking statements. All forward-looking statements included in this prospectus supplement and the accompanying prospectus are
based on information available to us on the date of this prospectus supplement or the accompanying prospectus, as applicable. Except to
the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout
(or incorporated by reference in) this prospectus supplement and the accompanying prospectus.
You should not place undue
reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in
or suggested by the forward-looking statements we make in this supplement prospectus are reasonable, we can give no assurance that these
plans, objectives, expectations or intentions will be achieved. Important factors that could cause our actual results to differ materially
from our expectations are disclosed and described under “Risk Factors”, elsewhere in this supplement prospectus, the accompanying
prospectus, and in filings incorporated by reference.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights
selected information contained or incorporated by reference in this prospectus supplement. This summary does not contain all of the information
you should consider before investing in securities. Before making an investment decision, you should read the entire prospectus and any
supplement hereto carefully, including the risk factors section as well as the financial statements and the notes to the financial statements
incorporated herein by reference.
Our Company
We are not a Chinese operating company but
a Delaware holding company with operations conducted by our subsidiaries established in the PRC. See “Corporate Structure”
below for further information regarding our subsidiaries’ names, places of incorporation, and equity ownership. Investors are cautioned
that you are not buying shares of a China-based operating company but instead are buying shares of a Delaware holding company with operations
conducted by its subsidiaries. We are subject to legal and operational risks associated with being based in the PRC and having all of
our operations in the PRC, discussed in greater detail below.
The Chinese government may influence the operation
of our PRC subsidiaries and exercise significant oversight and discretion over the conduct of their business or may exert more supervision
over offerings conducted overseas by and/or foreign investment in China-based issuers, which could result in a material change in our
operations and/or the value of our common shares or other securities. Further, rules and regulations in China may be changed from time
to time, and any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas by and/or
foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities
to investors and cause the value of such securities to significantly decline or be worthless.
This summary highlights information contained
in the documents incorporated herein by reference. Before making an investment decision, you should read the entire prospectus, and our
other filings with the SEC, including those filings incorporated herein by reference, carefully, including the sections entitled “Risk
Factors” and “Special Note Regarding Forward-Looking Statements.”
Overview
TD Holdings, Inc. (formerly
known as Bat Group, Inc.), has become a business engaging in commodities trading business (the “Commodities Trading Business”)
and supply chain service business (the “Supply Chain Service Business”) in China since the disposition of its direct
loans, loan guarantees and financial leasing services to small-to-medium sized businesses, farmers and individuals in July 2018 and its
used luxurious car leasing business in August 2020.
The Commodities Trading Business
primarily involves purchasing non-ferrous metal products from upstream metal and mineral suppliers and then selling to downstream customers.
The Supply Chain Service Business primarily has served as a one-stop commodity supply chain service and digital intelligence supply chain
platform integrating upstream and downstream enterprises, warehouses, logistics, information, and futures trading.
Corporate Structure
TD Holdings, Inc. is not
an operating company based in the PRC, but a holding company incorporated in Delaware. Our operations are primarily conducted
through (i) our subsidiaries incorporated in China, and (ii) contractual agreements with a variable interest entity (VIE) based in
China. These contractual agreements between GLG, our subsidiaries, the VIE, and their nominee shareholders typically include
exclusive business cooperation agreements, share pledge agreements, exclusive option agreements, power of attorney, and timely
reporting agreements, as applicable. As a result of these contractual agreements, the shareholders of the VIE have effectively
transferred all their voting rights associated with their equity interest in the VIE to the primary beneficiaries of these
companies. This gives our Company or its subsidiaries the power to direct the activities that most significantly impact the economic
performance of the VIE. However, these contractual agreements may not be as effective as direct ownership in providing us with
control over the VIE, and we may incur significant costs to enforce the terms of these agreements. If the VIE or the nominee
shareholders fail to fulfill their respective obligations under these contractual agreements, our ability to enforce the contractual
agreements that effectively transferred the voting rights in the VIE to us could be limited. As of the date of this prospectus, to
the best knowledge of GLG, our directors, and management, the contractual agreements with the VIE have not been tested in a Chinese
court of law. Moreover, if we cannot maintain such effective transfer, we would not be able to continue consolidating the financial
results of these entities in our financial statements. See “Risk Factors — Risks Related to Our Corporate
Structure.”
The following diagram illustrates
our corporate structure as of the date hereof:
Cash Transfer and Dividend Payment
TD Holdings, Inc., our
holding company, or the Parent, may transfer cash to our offshore intermediary holding entities in the British Virgin Islands and
Hong Kong. and their respective subsidiaries, through capital injections and intra-group loans. Our offshore intermediary holding
entities, in turn, may transfer cash to our PRC subsidiaries through capital injections and intra-group loans. Similarly, our PRC
subsidiaries may in turn transfer cash to their respective subsidiaries in the PRC through capital injections and intra-group loans.
Cash may also be transferred through our organization by way of intra-group transactions. If our wholly owned subsidiaries in the
PRC realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay
dividends or distribute earnings to our offshore intermediary holding entities, which, in turn, may transfer cash to the Parent
through dividends or other distributions. With necessary funds, the Parent may pay dividends or make other distributions to U.S.
investors and service any debt it may have incurred outside of the PRC. No assets other than cash were transferred between the
Parent and a subsidiary, no subsidiaries paid dividends or made other distributions to the Parent, and no dividends or distributions
were paid or made to U.S. investors. TD Holding, Inc. and its subsidiaries currently do not have a cash management policy in place.
In 2021 and 2022, the Parent transferred cash in the amount of US$6.0 million and US$2.3 million, respectively, to our PRC
subsidiaries through our offshore intermediary holding entities by way of capital contribution to the PRC subsidiaries. In 2022, TD
Holdings Inc. owed TD E-Commerce an unpaid amount of $38 million.
Under PRC laws and regulations,
we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute
earnings to the holding company and U.S. investors is also limited. We are a Delaware holding company and we may rely on dividends and
other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay
dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our PRC subsidiaries incurs
debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Under PRC laws and regulations, each of our PRC subsidiaries may pay dividends only out of its respective accumulated profits as determined
in accordance with PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of
its registered capital. At its discretion, a PRC enterprise may allocate a portion of its after-tax profits based on PRC accounting standards
to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to us as dividends. In addition,
our PRC subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us.
Our Business
Commodities Trading Business
We
have operated the Commodities Trading Business through Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”) since
November 2019, which was renamed Shenzhen Baiyu Jucheng Data Technology Co., Ltd. (“Shenzhen Baiyu Jucheng”) in 2021. On
November 22, 2019, Hao Limo Technology (Beijing) Co., Ltd. (“Hao Limo”), our indirectly wholly owned subsidiary, entered
into a series of agreements with Huamucheng and the shareholders of Huamucheng pursuant to which we obtained control of Huamucheng
(the “Huamucheng VIE Agreements”). On June 25, 2020, Hao Limo and Huamucheng entered into certain VIE termination
agreements to terminate the Huamucheng VIE Agreements. As such, Hao Limo no longer has the control rights and rights to the assets,
property and revenue of Huamucheng. At the same time, Shanghai Jianchi Supply Chain Company Limited (“Shanghai
Jianchi”), our wholly-owned subsidiary incorporated in China, acquired 100% equity interest of Huamucheng from the Huamucheng
shareholders for nominal consideration.
The
Commodity Trading Business primarily involves purchasing non-ferrous metal products, such as aluminum ingots, copper, silver, and gold,
from upstream metal and mineral suppliers and then selling to downstream customers. In connection with the Company’s commodity sales,
in order to help customers to obtain sufficient funds to purchase various metal products and also help upstream metal and mineral suppliers
to sell their metal products, the Company launched its Supply Chain Service Business in December 2019. The Company primarily generates
revenues from bulk non-ferrous commodity products, and from providing related supply chain management services in the PRC.
Through
Shenzhen Baiyu Jucheng’s business, we source bulk commodity products from non-ferrous metal and mines or its designated distributors
and then sells to manufacturers who need these metals in large quantity. We also work with upstream suppliers in the sourcing of commodities.
Supply Chain Service Business
Our Supply Chain Service Business
is conducted through Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. (“Qianhai Baiyu”), our wholly-owned subsidiary incorporated
in China. On October 26, 2020, Huamucheng entered into certain share purchase agreements to acquire 100% shares of Qianhai Baiyu. Qianhai
Baiyu is engaged in the supply chain service business and covers a full range of commodities, including non-ferrous metals, ferrous metals,
coal, metallurgical raw materials, soybean oils, oils, rubber, wood and various other types of commodities. It also has a supply chain
infrastructure, which includes processing, logistics, warehousing and terminals. Utilizing its customer base, industry experience, and
expertise in the commodity trading industry, Qianhai Baiyu serves as a one-stop commodity supply chain service and digital intelligence
supply chain platform integrating upstream and downstream enterprises, warehouses, logistics, information, and futures trading.
The acquisition of Qianhai
Baiyu has laid a solid foundation for the Company to further expand its operations in the commodity supply chain field. The Company plans
to strengthen and upgrade its supply chain services platform by introducing a systematic quantitative risk control system, which will
be based on the Qianhai Baiyu’s massive historical market data and complex data analysis models. The platform is expected to establish
a quantitative risk management system utilizing ETL data integration (Extract, Transform, Load) as its core, and then optimize trading
portfolios by incorporating a combination of various factors and strategies in order to effectively control risks and sustain business
development.
Disposition of the Used Luxury Car Leasing Business
Historically, one of our core
businesses has been the used luxury car leasing business conducted through Beijing Tianxing Kunlun Technology Co. Ltd (“Beijing
Tianxing”), an entity we controlled via certain contractual arrangements. Beijing Tianxing offers our customers the opportunity
to rent luxury pre-owned automobiles in Beijing, Shanghai, Zhejiang and Chengdu, China.
On August 28, 2020, the Company,
Vision Loyal Limited (“Vision Loyal”), HC High Summit Limited (“HC High HK”) and HC High Summit Holding Limited
(“HC High BVI”) entered into a certain share purchase agreement (the “Disposition SPA”). HC High BVI, our wholly-owned
subsidiary, is the sole shareholder of HC High HK, a company incorporated under the laws of the Hong Kong S.A.R. of the PRC. HC High HK
is the sole shareholder of Hao Limo which, via a series of contractual arrangements, controls Beijing Tianxing. Pursuant to the Disposition
SPA, HC High BVI agreed to sell HC High HK in exchange for a nominal consideration of US$1.00, based on a valuation report rendered by
an independent third party valuation firm, Beijing North Asia Asset Assessment Firm. The transaction contemplated by the Disposition SPA
is hereby referred as the Disposition.
Upon the closing of the Disposition
on August 28, 2020, Vision Loyal became the sole shareholder of HC High HK and, as a result, assumed all assets and liabilities of all
the subsidiaries and variable interest entities owned or controlled by HC High HK.
Tongdow VIE Agreements
On
October 17, 2022, Shenzhen Baiyu Jucheng entered into a set of variable interest entity agreements (the “Tongdow VIE Agreements”)
with Shenzhen Tongdow Internet Technology Co., Ltd. (“Tongdow Internet Technology”) and Shanghai zhuotaitong Industry Co.,
Ltd. (“Shanghai Zhuotaitong”), the sole shareholder of Tongdow Internet Technology. Pursuant to the terms of the Tongdow VIE
Agreements, we obtained control of Tongdow Internet Technology.
Competition
We mainly compete against
other large domestic commodity metal product trading service providers such as Xiamen International Trade Group Corp, Ltd. Currently,
the principal competitive factors in the non-ferrous metals commodities trading business are price, product availability, quantity, service,
and financing terms for purchases and sales of commodities.
Applicable Government Regulations
The following table lists
all of the licenses and permits that the Company and its subsidiaries are required to have in order to operate business and maintain its
securities program from Chinese authorities:
Name of Company |
|
License/Permit |
|
Issuing Authority |
|
Validity |
Tongdow Internet Technology |
|
Internet Content Provider License |
|
Guangdong Communications Administration |
|
October 8, 2026 |
Hainan Jianchi Import and Export Co., Ltd. |
|
Hazardous Chemicals Business Permit |
|
Yangpu Economic Development Zone Emergency Management Bureau |
|
February 6, 2024 |
There have been no instances
where the Company or its subsidiaries have had their applications for such permissions or approvals rejected. If the Company or its subsidiaries
fail to obtain or maintain such permissions or approvals, or incorrectly determine that such permissions or approvals are not necessary,
our business could suffer. In cases where a company is denied such permissions, such company would either refrain from engaging in that
particular business area, or partner with entities that can secure such permissions. The legal system in the PRC is continually evolving,
and the applicable laws, regulations, or interpretations are subject to significant uncertainties. If the relevant regulations change
abruptly, we may need to secure such permissions or approvals, which could be expensive, and may disrupt our business operations, negatively
impacting our revenue and the value of our securities.
On December 28, 2021, the
CAC jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which took effect on February 15,
2022 and replace the former Measures for Cybersecurity Review (2020). Measures for Cybersecurity Review (2021) stipulates that operators
of critical information infrastructure purchasing network products and services, and online platform operator (together with the operators
of critical information infrastructure, the “Operators”) carrying out data processing activities that affect or may affect
national security, shall conduct a cybersecurity review, any operator who controls more than one million users’ personal information
must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country. Since we are
not an Operator, nor do we control more than one million users’ personal information, we would not be required to apply for a cybersecurity
review under the Measures for Cybersecurity Review (2021). Our legal adviser, Tahota Law Firm (Beijing) has confirmed that we currently
are not subject to the cybersecurity review process.
On December 24, 2021,
the CSRC, introduced draft regulations concerning the overseas issuance and listing of securities by domestic companies. These draft
regulations were superseded by the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
(the “Trial Measures”), which came into effect on March 31, 2023. Pursuant to the Trial Measures, domestic companies
that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report
relevant information to the CSRC. Since these statements and regulatory actions by the PRC government are newly published, their
interpretation, application and enforcement of unclear and there also remains significant uncertainty as to the enactment,
interpretation and implementation of other regulatory requirements related to overseas securities offerings and other capital
markets activities; our ability to offer, or continue to offer, securities to investors would be potentially hindered and the value
of our securities might significantly decline or be worthless, by existing or future laws and regulations relating to its business
or industry or by intervene or interruption by PRC governmental authorities, if we or our subsidiaries (i) do not receive or
maintain such filings, permissions or approvals required by the PRC government, (ii) inadvertently conclude that such filings,
permissions or approvals are not required, (iii) applicable laws, regulations, or interpretations change and we are required to
obtain such filings, permissions or approvals in the future, or (iv) any intervention or interruption by PRC governmental with
little advance notice.
According to the Notice on
the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or
“the CSRC Notice,” the domestic companies that have already been listed overseas before the effective date of the Trial Measures
(namely, March 31, 2023) shall be deemed as existing issuers (the “Existing Issuers”). Existing Issuers are not required to
complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings.
On February 24, 2023, the
CSRC, together with the Ministry of Finance, National Administration of State Secrets Protection and National Archives Administration
of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing,
which were issued by the CSRC and National Administration of State Secrets Protection and National Archives Administration of China in
2009, or the “Provisions.” The revised Provisions were issued under the title the “Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies,” and came into effect on March 31,
2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding their application to cover indirect
overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, among other things, (a)
a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant
individuals or entities, including securities companies, securities service providers, and overseas regulators, any documents and materials
that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according
to law, and file with the secrecy administrative department at the same level; and (b) a domestic company that plans to, either directly
or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities, including securities
companies, securities service providers, and overseas regulators, any other documents and materials that, if leaked, will be detrimental
to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. On
or after March 31, 2023, any failure or perceived failure by our Company and our subsidiaries, to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in the relevant entities
being held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability if suspected
of committing a crime.
The Trial Measures, the revised
Provisions and any related implementing rules to be enacted may subject us to additional compliance requirements in the future.
Intracompany Cash Transfer
TD Holdings, Inc., our
holding company, or the Parent, may transfer cash to our offshore intermediary holding entities in the British Virgin Island and
Hong Kong. and their respective subsidiaries, through capital injections and intra-group loans. Our offshore intermediary holding
entities, in turn, may transfer cash to our PRC subsidiaries through capital injections and intra-group loans. Similarly, our PRC
subsidiaries may in turn transfer cash to their respective subsidiaries in the PRC through capital injections and intra-group loans.
Cash may also be transferred through our organization by way of intra-group transactions. If our wholly owned subsidiaries in the
PRC realize accumulated after-tax profits, they may, upon satisfaction of relevant statutory conditions and procedures, pay
dividends or distribute earnings to our offshore intermediary holding entities, which, in turn, may transfer cash to the Parent
through dividends or other distributions. With necessary funds, the Parent may pay dividends or make other distributions to U.S.
investors and service any debt it may have incurred outside of the PRC. No assets other than cash were transferred between the
Parent and a subsidiary, no subsidiaries paid dividends or made other distributions to the Parent, and no dividends or distributions
were paid or made to U.S. investors. TD Holding Inc. and its subsidiaries currently do not have a cash management policy in place.
In 2021 and 2022, the Parent transferred cash in the amount of US$6 million and US$2.3 million, respectively, to our PRC
subsidiaries through our offshore intermediary holding entities by way of capital contribution to the PRC subsidiaries.
Under PRC laws and regulations,
we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute
earnings to the holding company and U.S. investors is also limited. We are a Delaware holding company and we may rely on dividends and
other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay
dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our PRC subsidiaries incurs
debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Under PRC laws and regulations, each of our PRC subsidiaries may pay dividends only out of its respective accumulated profits as determined
in accordance with PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of
its registered capital. At its discretion, a PRC enterprise may allocate a portion of its after-tax profits based on PRC accounting standards
to a staff welfare and bonus fund. These reserve fund and staff welfare and bonus fund cannot be distributed to us as dividends. In addition,
our PRC subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us.
Corporate Information
TD Holdings, Inc. is a holding
company that was incorporated under the laws of the State of Delaware on December 19, 2011.
Our principal executive offices
are located at 139, Xinzhou 11th Street, Futian District, Shenzhen, Guangdong, China 518000. Our telephone number is +86 (0755) 82792111.
Our NASDAQ symbol is GLG, and we make our SEC filings available on our website, https://www.tdglg.com/home. Information contained on our
website is not part of this prospectus.
THE OFFERING
Issuer: |
|
TD Holdings, Inc. |
|
|
|
Shares of common stock offered by us pursuant to this prospectus supplement: |
|
28,000,000 |
|
|
|
Offering Price: |
|
$0.35 per share |
|
|
|
Shares of common stock outstanding before this offering: |
|
156,407,446 |
|
|
|
Shares of common stock to be outstanding immediately after this offering (1): |
|
184,407,446 |
|
|
|
Use of proceeds: |
|
We intend to use the net proceeds from this offering for working capital and other general corporate purposes. See “Use of Proceeds” on page S-36 of this prospectus supplement. |
|
|
|
Transfer agent and registrar: |
|
VStock Transfer, LLC |
|
|
|
Risk factors: |
|
Investing in our securities involves a high degree of risk. For a discussion of factors you should consider carefully before deciding to invest in our shares of common stock, see the information contained in or incorporated by reference under the heading “Risk Factors” beginning on page S-9 of this prospectus supplement, on page 5 of the accompanying prospectus, and in the other documents incorporated by reference into this prospectus supplement. |
|
|
|
NASDAQ Capital Market Symbol: |
|
GLG |
(1) |
The number of shares of our common stock to be outstanding immediately after this offering is based on 156,407,446 shares of common stock outstanding as of July 31, 2023, and excludes, as of such date, any shares of common stock issuable upon exercise of the convertible promissory notes outstanding. |
RISK FACTORS
Before you make a decision
to invest in our securities, you should consider carefully the risks described below, together with other information in this prospectus
supplement, the accompanying prospectus and the information incorporated by reference herein and therein. All the operational risks associated
with being based in and having operations in mainland China also apply to our operations in Hong Kong. With respect to the legal risks
associated with being based in and having operations in China as discussed in relevant risk factors, the laws, regulations and the discretion
of China governmental authorities discussed in this prospectus supplement are expected to apply to PRC entities and businesses, rather
than entities or businesses in Hong Kong which operate under a different set of laws from mainland China. If any of the following events
actually occur, our business, operating results, prospects or financial condition could be materially and adversely affected. This could
cause the trading price of our common stock to decline and you may lose all or part of your investment. The risks described below are
not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also significantly
impair our business operations and could result in a complete loss of your investment.
Risk Factors Related to Our Business and Industry
There is no assurance that we will be able
to manage the commodities trading business effectively.
Operating the commodities
trading business is a significant challenge and there is no assurance that we will be able to manage the integration successfully. If
we are unable to efficiently integrate these businesses, the attention of our management could be diverted from our existing operations
and the ability of the management teams at these business units to meet operational and financial expectations could be adversely impacted,
which could impair our ability to execute our business plans. Failure to successfully integrate the new commodities trading business or
to realize the expected benefits of entry into the business may have an adverse impact on our results of operations and financial condition.
Investment in our new line of business could
disrupt the Company’s ongoing business and present risks not originally contemplated.
We have deployed a
significant amount of proceeds from our financings in our new commodities business line, Shenzhen Baiyu Jucheng. New ventures are
inherently risky and may not be successful. In evaluating such endeavors, we are required to make difficult judgments regarding the
value of business strategies, opportunities, technologies and other assets, and the risks and cost of potential liabilities.
Furthermore, these investments involve certain other risks and uncertainties, including the risks involved with entering new
competitive categories or regions, the difficulty in integrating the new business, the challenges in achieving strategic objectives
and other benefits expected from our investment, the diversion of our attention and resources from our operations and other
initiatives, the potential impairment of acquired assets and liabilities and the performance of underlying products, capabilities or
technologies.
We may not be able to ensure the successful
implementation of our strategy to diversify our businesses.
We have entered into the commodities
trading business. Such initiatives involve various risks including but not limited to the investment costs in establishing a distribution
network within the PRC, leasing warehouses, offices and other working capital requirements. There is no assurance that such future plans
can be successfully implemented as the successful execution of such future plans will depend on several factors, some of which are not
within our control, such as retaining and recruiting qualified and skilled staff, and the continued demand for our products by our customers.
Failure to implement any part of our future plans or execute such plan costs effectively, may lead to a material adverse change in our
operating environment or affect our ability to respond to market or industry changes, which may, in turn, adversely affect our business
and financial results.
Our success depends substantially upon the
continued retention of our senior management.
Our future success is substantially
dependent on the continued service of certain members of our senior management, including Ms. Renmei Ouyang, our Chairwoman and Chief
Executive Officer, and Mr. Tianshi (Stanley) Yang, our Chief Financial Officer. These officers play an integral role in determining our
strategic direction and for executing our growth strategy and are important to our brand and culture. The loss of the services of any
of these executives without qualified replacement could have a material adverse effect on our business and prospects, as we may not be
able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could be viewed negatively
by investors and analysts, which could cause the price of our common stock to decline.
Our business depends on adequate supply and
availability of nonferrous metal commodities.
Our business requires nonferrous
metal commodities that are sourced from third party suppliers. We are affected by industry supply conditions, which generally involve
risks beyond our control, including costs of these materials, transportation costs and market demand. As a result, we may not be able
to obtain an adequate supply of quality nonferrous metal commodities in a timely or cost-effective manner, which would have a material
adverse effect on our business, financial condition and results of operations.
A decline in our key business sectors or a
reduction in consumer demand generally could have a material adverse effect on our business.
A large portion of our
supply chain management services revenue comes from clients in the energy, material and industrial sectors, which is intensely
competitive, very volatile, and subject to rapid changes and fluctuations in the overall economic conditions. Declines in the
overall performance of the energy, material and industrial sectors have in the past and could in the future, adversely affect the
demand for our supply chain management services and reduce our revenue and profitability from these clients. In addition, industry
changes, such as the transition of more collateral materials from physical form to digital form and changes in marketing channels,
could lessen the demand for certain of our services we currently handle. To the extent recent uncertainty in the economy or other
factors result in decreased demand for our clients’ products, we may experience a reduction in volumes of client products that
we handle which could have a material adverse effect on our supply chain management services business, financial position and
operating results.
We operate in a business that is cyclical and
where demand can be volatile, which could have a material adverse effect on our business, financial condition or results of operations.
We operate in a business that
is cyclical and where demand can be volatile, which could have a material adverse effect on our results of operations and financial condition.
The timing and magnitude of the cycles in the business in which we operate are difficult to predict. Purchase prices for the raw materials
we purchase, and selling prices for our products are volatile and beyond our control. While we attempt to respond to changing raw material
costs through adjustments to the sales price of our products, our ability to do so is limited by competitive and other market factors.
A significant reduction in selling prices for our products may have a material adverse effect on our business, financial condition and
results of operations, and adversely impact our ability to recover purchase costs from end customers. A decline in market prices for our
products between the date of the sales order and shipment of the product may impact the customer’s ability to obtain letters of
credit to cover the full sales amount. A decline in selling prices for our products coupled with customers failing to meet their contractual
obligations may also result in a net realizable value adjustment to the average cost of inventory to reflect the lower of cost or fair
market value. Additionally, changing prices could potentially impact the volume of raw materials available to us, the volume of ore and
processed metal sold by us and inventory levels. The cyclical nature of our businesses tends to reflect and be amplified by changes in
general economic conditions, both domestically and internationally.
Risk Factors Related to Our General Operations
The current geographic concentration where
we provide services creates an exposure to local economies, regional downturns or severe weather or catastrophic occurrences that may
materially adversely affect our financial condition and results of operations.
We currently conduct our commodities
trading business in Shanghai and Shenzhen. We currently hold all our commodities inventory at the warehouses we rent in Shanghai.
In addition, our
business is currently more susceptible to regional conditions than the operations of more geographically diversified competitors,
and we are vulnerable to economic downturns in those regions. Any unforeseen events or circumstances that negatively affect these
areas could materially adversely affect our revenues and profitability. These factors include, among other things, changes in
demographics and population. In addition, severe weather conditions, acts of God and other catastrophic occurrences in the area in
which we operate or from which we obtain inventory may materially adversely affect our financial condition and results of
operations. Such conditions may result in physical damage to our properties and loss of inventory. Any of these factors may disrupt
our business and materially adversely affect our financial condition and results of operations. Furthermore, there can be no
assurance that we will be able to successfully replicate our business model and achieve levels of success as we enter new geographic
markets.
Our failure to maintain a reputation of integrity
and to otherwise maintain and enhance our brand could adversely affect our business and results of operations.
Our business model is based
on our ability to provide customers with commodities trading that we believe will save them time and money. If we fail to build and maintain
a positive reputation, or if an event occurs that damages this reputation, it could adversely affect consumer demand and have a material
adverse effect on our business and results of operations. Even the perception of a decrease in the quality of our brand could negatively
impact results.
Complaints or negative publicity
about our business practices, marketing and advertising campaigns, compliance with applicable laws and regulations, the integrity of the
data that we provide to users, and other aspects of our business, especially on industry-specific blogs and social media websites, and
irrespective of their validity, could diminish consumer confidence in our services and adversely affect our brand. The growing use of
social media increases the speed with which information and opinions can be shared and, thus, the speed with which reputation can be affected.
If we fail to correct or mitigate misinformation or negative information, including information spread through social media or traditional
media channels, about us, the vehicles we offer, our customer experience, or any aspect of our brand, it could have a material adverse
effect on our business and results of operations.
Failure to adequately protect our intellectual
property, technology and confidential information could harm our business and operating results.
Our business depends on our
intellectual property, technology and confidential information, the protection of which is crucial to the success of our business. We
attempt to protect our intellectual property, technology and confidential information by requiring certain of our employees and consultants
to enter into confidentiality agreements and certain third parties to enter into nondisclosure agreements. In addition, these agreements
may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may
not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property,
or technology. Despite our efforts to protect our intellectual property, unauthorized parties may attempt to copy aspects of our website
features, software and functionality or obtain and use information that we consider proprietary. Changes in the law or adverse court rulings
may also negatively affect our ability to prevent others from using our technology.
We may be subject to claims asserting that
our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employees or
claims asserting ownership of what we regard as our own intellectual property.
Although we try to
ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for
us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets
or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend
against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable
intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in
substantial costs and be a distraction to management.
In addition, while we intend
to require our employees and contractors who may be involved in the conception or development of the intellectual property to execute
agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact,
conceives or develops intellectual property that we regard as our own. The assignment of intellectual property may not be self-executing
or the assignment agreement may be breached, and we may be forced to bring claims against third parties, or defend claims that they may
bring against us, to determine the ownership of what we regard as our intellectual property.
We may in the future be subject to intellectual
property disputes, which are costly to defend and could harm our business and operating results.
We may, from time to time,
face allegations that we have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties. We
may be unaware of the intellectual property rights that others may claim cover some or all of our technology or services. Patent and other
intellectual property litigation may be protracted and expensive, the results are difficult to predict and may require us to stop offering
some features, purchase licenses or modify our products and features while we develop non-infringing substitutes or may result in significant
settlement costs.
Even if these matters do not
result in litigation, are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary
to litigate or resolve them, could harm our business, our operating results and our reputation.
We may be subject to legal proceedings in the
ordinary course of our business. If the outcomes of these proceedings are adverse to us, they could have a material adverse effect on
our business, results of operations and financial condition.
We may be subject to various
litigation matters from time to time, which could have a material adverse effect on our business, results of operations and financial
condition. Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually
or through class actions, by governmental entities in civil or criminal investigations, and proceedings or by other entities. These claims
could be asserted under a variety of laws, including but not limited to consumer finance laws, consumer protection laws, intellectual
property laws, privacy laws, labor and employment laws, securities laws and employee benefit laws. These actions could expose us to adverse
publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including
but not limited to suspension or revocation of licenses to conduct business.
Failure to comply with the United States Foreign
Corrupt Practices Act could subject us to penalties and other adverse consequences.
We are subject to the United
States Foreign Corrupt Practices Act, or FCPA, which generally prohibits United States companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining business. We have implemented these policies through our Code
of Conduct. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China. While we
make every effort to comply with FCPA and our company Code of Conduct, we can make no assurance that our employees or other agents will
not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such
practices, we could suffer severe penalties and other consequences that will likely have a material adverse effect on our business, financial
condition and results of operations.
Risks Related to Our Corporate Structure
If the PRC government
deems that the contractual arrangements in relation to the VIE do not comply with PRC regulations on foreign investment, or if these regulations
or the interpretation of existing regulations change in the future, we could be subject to penalties, or be forced to relinquish our interests
in the operations of the VIE, which would materially and adversely affect our business, financial results, trading prices of our common
stock.
TD
Holdings, Inc. is not an operating company based in the PRC, but a holding company incorporated in Delaware. Our operations are primarily
conducted through (i) our subsidiaries incorporated in China, and (ii) contractual agreements with our VIE entity based in China. These
contractual agreements typically include exclusive business cooperation agreements, share pledge agreements, exclusive option agreements,
power of attorney, and timely reporting agreements, as applicable.
We
and, through us, our shareholders do not own any equity interests in the VIE.Contractual arrangements between us and the VIE and its equity
holder give us effective control over the VIE and enable us to obtain substantially all of the economic benefits arising from the VIE
as well as to consolidate the financial results of the VIE in our results of operations. Although we believe the structure we have adopted
is consistent with longstanding industry practice, the PRC government may not agree that these arrangements comply with PRC licensing,
registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future.
If
we or the VIE are found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain
any of the required permits or approvals, we could be subject to severe penalties. The relevant PRC regulatory authorities would
have broad discretion to take action in dealing with these violations or failures, including revoking the business and operating
licenses of our PRC subsidiary or the VIE, requiring us to discontinue or restrict our operations, restricting our right to collect
revenue, blocking one or more of our websites, requiring us to restructure our operations or taking other regulatory or enforcement
actions against us. The imposition of any of these measures could result in a material adverse effect on our ability to conduct all
or any portion of our business operations. In addition, it is unclear what impact the PRC government actions would have on us and on
our ability to consolidate the financial results of the VIE in our consolidated financial statements, if the PRC government
authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws, rules and regulations. If
the imposition of any of these government actions causes us to lose our right to direct the activities of the VIE or otherwise
separate from the entity and if we are not able to restructure our ownership structure and operations in a satisfactory manner, we
would no longer be able to consolidate the financial results of the VIE in our consolidated financial statements. Any of these
events would have a material adverse effect on our business, financial condition and results of operations.
The failure to comply with PRC regulations
relating to mergers and acquisitions of domestic enterprises by offshore Special Purpose Vehicle (SPV) may subject us to severe fines
or penalties and create other regulatory uncertainties regarding our corporate structure.
On August 8, 2006, Ministry
of Commerce of People’s Republic of China (“MOFCOM”), joined by the CSRC, the State-owned Assets Supervision and Administration
Commission of the State Council, the State Taxation Administration, the State Administration for Industry and Commerce, and the State
Administration of Foreign Exchange of China (“SAFE”), jointly promulgated regulations entitled the Provisions Regarding Mergers
and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), which took effect on September 8, 2006,
and as amended on June 22, 2009. This regulation, among other things, has certain provisions that require offshore SPV formed for the
purpose of acquiring PRC domestic companies and controlled directly or indirectly by PRC individuals and companies, to obtain the approval
of MOFCOM prior to engaging in such acquisitions and to obtain the approval of the CSRC prior to publicly listing their securities on
an overseas stock market. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials
that are required to be submitted for obtaining CSRC approval.
In addition, the Provisions
of Ministry of Commerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,
issued by the MOFCOM in August 2011, specify that mergers and acquisitions by foreign investors involved in “an industry related
to national security” are subject to strict review by the MOFCOM, and prohibit any activities attempting to bypass such security
review, including by structuring the transaction through a proxy or contractual control arrangement.
On March 15, 2019, the
PRC National People’s Congress enacted the Foreign Investment Law of the PRC (the “Foreign Investment Law”), which
became effective on January 1, 2020. The Foreign Investment Law has replaced the previous major laws and regulations governing
foreign investment in the PRC, including the Sino-foreign Equity Joint Ventures Enterprises Law of the PRC, the Sino-foreign
Co-operative Enterprises Law of the PRC and the Wholly Foreign-invested Enterprise Law of the PRC. According to the Foreign
Investment Law, “foreign-invested enterprises” refers to enterprises that are wholly or partly invested by foreign
investors and registered under the PRC laws within China, and “foreign investment” refers to any foreign
investor’s direct or indirect investment activities in China, including: (i) establishing foreign-invested enterprises in
China either individually or jointly with other investors; (ii) obtaining stock shares, equity shares, shares in properties or other
similar interests of Chinese domestic enterprises; (iii) investing in new projects in China either individually or jointly with
other investors; and (iv) investing through other methods provided by laws, administrative regulations or provisions prescribed by
the State Council.
On December 26, 2019, the
State Council issued Implementation Regulations for the Foreign Investment Law of the PRC (the “Implementation Rules”) which
came into effect on January 1, 2020, and replaced the Implementing Rules of the Sino-foreign Equity Joint Ventures Enterprises Law of
the PRC, the Implementing Rules of the Sino-foreign Co-operative Enterprises Law of the PRC and the Implementing Rules of the Wholly Foreign-invested
Enterprise Law of the PRC. According to the Implementation Rules, in the event of any discrepancy between the Foreign Investment Law,
the Implementation Rules and the relevant provisions on foreign investment promulgated prior to January 1, 2020, the Foreign Investment
Law and the Implementation Rules will prevail. The Implementation Rules also set forth that foreign investors that invest in sectors on
the “Negative List” in which foreign investment is restricted shall comply with special management measures with respect to,
among others, shareholding and senior management personnel qualification in the Negative List. Pursuant to the Foreign Investment Law
and the Implementation Rules, the existing foreign-invested enterprises established prior to the effective date of the Foreign Investment
Law are allowed to keep their corporate organization forms for five years from the effectiveness of the Foreign Investment Law before
such existing foreign-invested enterprises must change their organization forms and organization structures in accordance with the PRC
Company Law, the Partnership Enterprise Law of the PRC and other applicable laws.
After the Foreign Investment
Law and the Implementation Rules became effective on January 1, 2020, the provisions of the M&A Rules remained effective to the extent
they are not inconsistent with the Foreign Investment Law and the Implementation Rules. We believe that our business is not in an industry
related to national security, but we cannot preclude the possibility that the competent PRC government authorities may publish explanations
contrary to our understanding or broaden the scope of such security reviews in the future, in which case our future acquisitions and investment
in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized
or prohibited. Moreover, according to the Anti-Monopoly Law of the PRC, the State Administration for Market Regulation (“SAMR”)
shall be notified in advance of any concentration of undertaking if certain filing thresholds are triggered. We may grow our business
in part by directly acquiring complementary businesses in China. Complying with the requirements of the laws and regulations mentioned
above and other PRC regulations necessary to complete such transactions could be time-consuming, and any required approval processes,
including obtaining approval from the SAMR, may delay or inhibit our ability to complete such transactions, which could materially and
adversely affect our ability to expand our business or maintain our market share.
Regulations relating to offshore investment
activities by PRC residents may limit our ability to acquire PRC companies and could adversely affect our business.
In July 2014, SAFE
promulgated the Circular on Issues Concerning Foreign Exchange Administration over the Overseas Investment and Financing and
Roundtrip Investment by Domestic Residents via SPV, or Circular 37, which replaced Relevant Issues Concerning Foreign Exchange
Control on Domestic Residents’ Corporate Financing and Roundtrip Investment through Offshore SPV, or Circular 75. Circular 37
requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of
an offshore entity, referred to in Circular 37 as a SPV for the purpose of holding domestic or offshore assets or interests.
Circular 37 further requires amendment to a PRC resident’s registration in the event of any significant changes with respect
to the SPV, such as an increase or decrease in the capital contributed by PRC individuals, share transfer or exchange, merger,
division or other material event. Under these regulations, PRC residents’ failure to comply with specified registration
procedures may result in restrictions being imposed on the foreign exchange activities of the relevant PRC entity, including the
payment of dividends and other distributions to its offshore parent, as well as restrictions on capital inflows from the offshore
entity to the PRC entity, including restrictions on its ability to contribute additional capital to its PRC subsidiaries. Further,
failure to comply with the SAFE registration requirements could result in penalties under PRC law for evasion of foreign exchange
regulations.
In addition, different local
SAFE branches may have different views and procedures as to the interpretation and implementation of the SAFE regulations, and it may
be difficult for our ultimate shareholders or beneficial owners who are PRC residents to provide sufficient supporting documents required
by the SAFE or to complete the required registration with the SAFE in a timely manner, or at all. Any failure by any of our shareholders
who is a PRC resident, or is controlled by a PRC resident, to comply with relevant requirements under these regulations could subject
us to fines or sanctions imposed by the PRC government.
Risks Related to Ownership of our Common Stock
We currently do not meet certain of Nasdaq
Capital Market’s continued listing requirements and other Nasdaq rules. If we are unable to regain compliance, we are likely to
be delisted. Delisting could negatively affect the price of our common stock, which could make it more difficult for us to sell securities
in a future financing or for you to sell our common stock.
We are required to meet the
continued listing requirements of the Nasdaq Capital Market, or Nasdaq, and other Nasdaq rules, including those regarding director independence
and independent committee requirements, minimum stockholders’ equity, minimum share price and certain other corporate governance
requirements. If we do not meet these continued listing requirements, our common stock could be delisted.
On May 15, 2023, we received
a notification letter from Nasdaq, referred to herein as the Nasdaq Staff Deficiency Letter, indicating that our minimum bid price per
share for our common shares has been below $1.00 for a period of 30 consecutive business days and we did not satisfy the minimum bid price
requirement set forth in Nasdaq Listing Rule 5550(a)(2). The Nasdaq Staff Deficiency Letter had no immediate effect on the listing of
the Company’s common stock.
According to the Nasdaq
Listing Rules, the Company has a compliance period of 180 calendar days from the date of the Nasdaq Staff Deficiency Letter, or
until November 13, 2023, to regain compliance with Nasdaq’s minimum bid price requirement. If, at any time during this 180-day
period, the closing bid price of the Company’s common shares remains at or above $1 for a minimum of 10 consecutive business
days, Nasdaq will provide written confirmation of compliance. However, if the Company fails to regain compliance within the 180-day
period, it may be granted an additional 180 calendar days, subject to meeting the continued listing requirement for the market value
of publicly held shares and all other initial listing standards for Nasdaq, except for Nasdaq Listing Rule 5550(a)(2). In such a
case, the Company must also provide a written notice of its intention to cure this deficiency during the second compliance period,
potentially by effecting a reverse stock split if deemed necessary.
Delisting from the Nasdaq
Capital Market would cause us to pursue eligibility for trading of these securities on other markets or exchanges, or on the “pink
sheets.” In such case, our stockholders’ ability to trade, or obtain quotations of the market value of our common stock would
be severely limited because of lower trading volumes and transaction delays. These factors could contribute to lower prices and larger
spreads in the bid and ask prices of these securities. There can be no assurance that our securities, if delisted from the Nasdaq Capital
Market in the future, would be listed on a national securities exchange, a national quotation service, the over-the-counter markets
or the pink sheets. Delisting from the Nasdaq Capital Market, or even the issuance of a notice of potential delisting, would also result
in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of our securities,
decrease securities analysts’ coverage of us or diminish investor, supplier and employee confidence.
We do not expect to declare or pay dividends
in the foreseeable future.
We do not expect to declare
or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our
business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and
holders may be unable to sell their securities on favorable terms or at all.
Future issuances of our Common Stock or securities
convertible into, or exercisable or exchangeable for, our common stock (“Securities”), or the expiration of lock-up agreements
that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could cause the market price of our Common
Stock to decline and would result in the dilution of your holdings.
Future issuances of our Securities,
or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could
cause the market price of our Common Stock to decline. We cannot predict the effect, if any, of future issuances of our Securities, or
the future expirations of lock-up agreements, on the price of our Common Stock. In all events, future issuances of our Common Stock would
result in the dilution of your holdings. In addition, the perception that new issuances of our Securities could occur, or the perception
that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our Common Stock.
In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements
may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our Common Stock may become
available for resale, subject to applicable law, including without notice, which could reduce the market price for our Common Stock.
Our common stock may be thinly traded and our
stockholders may be unable to sell at or near ask prices or at all if they need to sell their shares to raise money or otherwise desire
to liquidate their shares.
Our Common Stock may be “thinly-traded”,
meaning that the number of persons interested in purchasing our Common Stock at or near bid prices at any given time may be relatively
small or non-existent. This situation may be attributable to a number of factors, including the fact that we are a small company which
is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant
to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned.
As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared
to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse
effect on share price. Broad or active public trading market for our Common Stock may not develop or be sustained.
The market price for our common
stock may be volatile and subject to wide fluctuations due to factors such as:
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the perception of U.S. investors and regulators of U.S. listed Chinese companies; |
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actual or anticipated fluctuations in our operating results; |
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changes in financial estimates by securities research analysts; |
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negative publicity, studies or reports; |
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changes in the economic performance or market valuations of other microcredit companies; |
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announcements by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments; |
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addition or departure of key personnel; |
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fluctuations of exchange rates between Renminbi and the U.S. dollar; and |
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general economic or political conditions in China. |
In addition, the securities
market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of
particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Volatility in our common stock price may subject
us to securities litigation.
The market for our common
stock may have, when compared to seasoned issuers, significant price volatility and we expect that our share price may continue to be
more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the
target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s
attention and resources.
Provisions in our by-laws and Delaware laws
might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading
price of our common stock.
Provisions of our by-laws
and Delaware laws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable,
including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent
or frustrate attempts by our stockholders to replace or remove our management. These provisions include:
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the inability of stockholders to act by written consent or to call special meetings; |
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the ability of our board of directors to make, alter or repeal our by-laws; and |
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the ability of our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval. |
In addition, we are subject
to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with an interested stockholder for a period of three years following the date on which the stockholder
became an interested stockholder, unless such transactions are approved by our board of directors. The existence of the foregoing provisions
and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock.
They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common
stock in an acquisition.
We have identified material weaknesses in
our internal control over financial reporting, and we cannot provide assurances that these weaknesses will be effectively remediated
or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure
controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic
reports in a timely manner, which may cause investors to lose confidence in our reported financial information and which may lead to
a decline in our stock price.
Our management has
identified material weaknesses in our internal control over financial reporting, which were not remediated as of the date of this
prospectus supplement. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim
financial statements will not be prevented or detected on a timely basis. While we are implementing remediation procedures, there
can be no assurance that we will be able to fully remediate our existing material weaknesses or that our internal control over
financial reporting will not suffer in the future from other material weaknesses, thus making us unable to prevent or detect on a
timely basis material misstatement in our periodic reports with the SEC. If we fail to remediate these material weaknesses or
otherwise maintain effective internal control over financial reporting in the future, the existence of one or more internal control
deficiencies could result in errors in our financial statements, and substantial costs and resources may be required to rectify
internal control deficiencies. If we cannot produce reliable financial reports, we may have difficulty in filing timely periodic
reports with the SEC, investors could lose confidence in our reported financial information, the market price of our stock could
decline significantly, we may be unable to obtain additional financing to operate and expand our business, and our business and
financial condition could be materially harmed. In addition, any failure to remediate the existing material weaknesses or a failure
to maintain effective internal control over financial reporting could negatively impact our results of operations, cash flows and
financial condition, subject us to potential litigation and regulatory inquiry and cause us to incur additional costs in future
periods relating to the implementation of remedial measures.
Matters relating to or arising
from the restatements, Audit Committee investigation and the associated material weaknesses identified in our internal control over financial
reporting, including adverse publicity, have caused us to incur significant legal, accounting and other professional fees and other costs,
have exposed us to greater risks associated with other civil litigation, regulatory proceedings and government enforcement actions, have
diverted resources and attention that would otherwise be directed toward our operations and implementation of our business strategy and
may impact our ability to attract and retain customers, employees and vendors, any of which could have a material adverse effect on our
business, financial condition and results of operations.
Risks Related to Doing Business in China
Changes in China’s economic, political
or social conditions or government policies could have a material adverse effect on our business and operations.
Substantially all of our assets and operations
are located in the PRC. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant
degree by political, economic and social conditions in the PRC generally. The Chinese economy differs from the economies of most developed
countries in many respects, including the level of government involvement, development, growth rate, management of foreign exchange and
allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises,
a substantial portion of productive assets in the PRC is still owned by the government. In addition, the Chinese government continues
to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant
regulation over the PRC’s economic growth through allocating resources, managing payment of foreign currency-denominated obligations,
setting monetary policy and providing preferential treatment to particular industries or companies.
While the Chinese economy
has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy.
Any adverse changes in economic conditions in the PRC, in the policies of the Chinese government or in the laws and regulations in the
PRC could have a material adverse effect on the overall economic growth of the PRC. Such developments could adversely affect our business
and operating results, lead to a reduction in demand for our services and adversely affect our competitive position. The Chinese government
has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit
the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may
be adversely affected by government management over capital investments or changes in tax regulations. In addition, in the past the Chinese
government has implemented certain measures, including interest rate adjustment, to adjust the pace of economic growth. These measures
may cause decreased economic activity in the PRC, which may adversely affect our business and operating results.
A severe or prolonged downturn in the global
or Chinese economy could materially and adversely affect our business and our financial condition.
Although the Chinese economy
has grown steadily in the past decade, there is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal
policies adopted by the People’s Bank of China and financial authorities of some of the world’s leading economies, including
the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa, which have
resulted in volatility in oil and other markets. There have also been concerns on the relationship among China and other Asian countries,
which may result in or intensify potential conflicts in relation to territorial disputes. Economic conditions in China are sensitive to
global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic
growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business,
results of operations and financial condition.
Uncertainties with respect to the PRC legal
system could adversely affect us.
The PRC legal system is a
civil law system based on written statutes, which is unlike the common law system, prior court decisions under the civil law system may
be cited for reference.
In 1979, the PRC government
began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The overall effect of legislation
over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However,
the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects
of economic activities in the PRC. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties.
Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual
terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or
tort claims. In addition, these regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts
to extract payments or benefits from us.
Furthermore, the PRC legal
system is based in part on government policies and internal rules, some of which may be amended from time to time. As a result, we may
not be aware of our violation of any of these policies and rules until sometime after the violation.
Fluctuations in exchange rates could have a
material and adverse effect on our results of operations and the value of your investment.
The value of the Renminbi
against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions
and the foreign exchange policy adopted by the PRC government. It is difficult to predict how long such appreciation of Renminbi against
the U.S. dollar may last and when and how the relationship between the Renminbi and the U.S. dollar may change again. All of our
revenues and substantially all of our costs are denominated in Renminbi. We are a Delaware holding company and we may rely on dividends
and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary
to pay dividends and other cash distributions to our shareholders and service any debt we may incur. Any significant revaluation of Renminbi
may materially and adversely affect our results of operations and financial position reported in Renminbi when translated into U.S. dollars,
and the value of, and any dividends payable on, the common stock in U.S. dollars. To the extent that we need to convert U.S. dollars into
Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount
we would receive. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends
on our common stock or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect
on the U.S. dollar amount.
U.S. regulatory bodies may be limited in their
ability to conduct investigations or inspections of our operations in China.
Any disclosure of
documents or information located in China by foreign agencies may be subject to jurisdiction constraints and must comply with
China’s state secrecy laws, which broadly define the scope of “state secrets” to include matters involving
economic interests and technologies. There is no guarantee that requests from U.S. federal or state regulators or agencies to
investigate or inspect our operations will be honored by us, by entities who provide services to us or with whom we associate,
without violating PRC legal requirements, especially as those entities are located in China. Furthermore, under the current PRC
laws, an on-site inspection of our facilities by any of these regulators may be limited or prohibited.
The PRC government’s significant oversight
and discretion over our business operation could result in a material adverse change in our operations and the value of our common stock.
We conduct our business primarily
through our PRC subsidiaries. Our operations in China are governed by PRC laws and regulations. The PRC government has significant oversight
and discretion over the conduct of our business, and it may influence our operations, which could result in a material adverse change
in our operation, and our shares of stock may decline in value or become worthless. Also, the PRC government has recently indicated an
intent to exert more oversight and supervision over offerings that are conducted overseas and foreign investment in China-based issuers.
Any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. In addition,
implementation of industry-wide regulations directly targeting our industry or our operations could cause the value of our securities
to significantly decline. Therefore, investors of our company and our business face PRC regulatory uncertainty that may materially and
adversely affect our business and operations and the value of our shares.
The PRC government has the ability to exert
substantial supervision over any offering or listing of securities conducted overseas and/or foreign investment in China-based issuers,
and, as a result, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the
value of such securities to significantly decline or be worthless.
The PRC government recently
initiated a series of regulatory actions and statements to regulate business operations in China, including cracking down on illegal activities
in the securities market, enhancing supervision over China-based companies listed overseas using the variable interest entity structure,
adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
On
February 17, 2023, the CSRC released the Trial Administrative Measures for Administration of Overseas Securities Offerings and
Listings by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March
31, 2023. Pursuant to the Trial Measures, subsequent securities offerings of an issuer in the same overseas market where it has
previously offered and listed securities shall be filed with the CSRC within
three (3) working days after the offering is completed, which may subject us to additional compliance requirements in the future,
and we cannot assure you that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis,
or at all. If a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major
content in its filing documents, such domestic company may be subject to administrative penalties by the CSRC, such as order to
rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other
directly liable persons may also be subject to administrative penalties, such as warnings and fines.
As of the date of this prospectus,
none of the Company, our PRC subsidiaries, have received any filing or compliance requirements from CSRC for the listing at Nasdaq and
all of its overseas offerings. As the Trial Measures were only enacted recently, there remains uncertainty as to the interpretation and
implementation of the Trial Measures and the supporting guidelines, including but not limited to the interpretation of the concept “substance
over form”, as well as other PRC regulatory requirements related to overseas securities offerings and other capital markets activities;
thus, we cannot assure you that the relevant Chinese regulatory authorities, including the CSRC, would reach the same conclusion as us.
On February 24, 2023, the
CSRC and other PRC governmental authorities jointly issued the revised Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies (the “Revised Confidentiality Provisions”), which came into
effect on March 31, 2023. According to the Revised Confidentiality Provisions, Chinese companies that directly or indirectly conduct overseas
offerings and listings, shall strictly abide by the laws and regulations on confidentiality when providing or publicly disclosing, either
directly or through their overseas listed entities, materials to securities services providers. In the event such materials contain state
secrets or working secrets of government agencies, the Chinese companies shall first obtain approval from authorities, and file with the
secrecy administrative department at the same level with the approving authority; in the event that such materials, if divulged, will
jeopardize national security or public interest, the Chinese companies shall comply with procedures stipulated by national regulations.
The Chinese companies shall also provide a written statement of the specific sensitive information provided when providing materials to
securities service providers, and such written statements shall be retained for inspection. As the Revised Confidentiality Provisions
were recently promulgated and has not taken effect, their interpretation and implementation remain substantially uncertain.
If the CSRC or other PRC governmental
authorities later promulgate new rules or interpretations requiring that we obtain their approval for future offerings or listings outside
of mainland China or for foreign investments in our securities, we may be unable to obtain such approvals in a timely manner, or at all.
Any such circumstance could significantly or completely limit our ability to raise capital through securities offerings, hinder our ability
to execute strategic plans in a timely manner or at all, and could cause the value of our securities to significantly decline.
The Holding Foreign Companies Accountable Act,
recent regulatory actions taken by the SEC and PCAOB, and proposed rule changes submitted by U.S. stock exchanges calling for additional
and more stringent criteria to be applied to China-based public companies could add uncertainties to our capital raising activities and
compliance costs.
Pursuant to the Holding
Foreign Companies Accountable Act, or the HFCAA, if the Public Company Accounting Oversight Board, or the PCAOB, is unable to
inspect an issuer’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a U.S.
stock exchange. The PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or
investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of
China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region
and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. Furthermore, the PCAOB’s
report identified the specific registered public accounting firms which are subject to these determinations. On June 22, 2021, the
U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, legislation entitled
“Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by
President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on any U.S stock
exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time
period for triggering the prohibition on trading. On August 26, 2022, the PCAOB announced that it had signed a Statement of Protocol
(the “SOP”) with the CSRC and the Ministry of Finance of China. The SOP, together with two protocol agreements governing
inspections and investigations (together, the “SOP Agreement”), establishes a specific, accountable framework to make
possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required
under U.S. law. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate
PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated
its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms
headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue to be able to satisfactorily conduct
inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainties
and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in
mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as
to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated that it will act
immediately to consider the need to issue new determinations with the HFCAA if needed.
Audit Alliance LLP is based
in Singapore and is registered with PCAOB and subject to PCAOB inspection. As of the date of this prospectus, Audit Alliance LLP, our
auditor, is based not subject to the determinations as to inability to inspect or investigate completely as announced by the PCAOB on
December 16, 2021. However, we cannot assure you whether Nasdaq or regulatory authorities would not apply additional and more stringent
criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of
personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.
We are subject to a variety of laws and regulations
regarding cybersecurity and data protection, and any failure to comply with applicable laws and regulations, including improper use or
appropriation of personal information provided directly or indirectly by our customers or end users, could have a material adverse effect
on our business, financial condition and results of operations.
In China, regulatory
authorities have implemented and may implement further legislative and regulatory proposals concerning cybersecurity, information
security, privacy, and data protection. New laws and regulations may be introduced, or existing ones may be interpreted or applied
in ways that are uncertain or change over time. Non-compliance with these regulations could result in penalties or significant legal
liabilities. On November 7, 2016, the Standing Committee of the National People’s Congress of the PRC issued the Cyber
Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law,
network operators must not collect users’ personal information without their consent and may only collect users’
personal information necessary to the provision of services. Providers are also obliged to provide security maintenance for their
products and services and shall comply with provisions regarding the protection of personal information as stipulated under the
relevant laws and regulations. The Civil Code of the PRC (issued by the National People’s Congress of the PRC on May 28,
2020 and effective from January 1, 2021) provides the main legal basis for privacy and personal information infringement claims
under PRC civil law.
PRC regulators, including
the CAC, the Ministry of Industry and Information Technology, and the Ministry of Public Security, have been increasingly focused on regulation
in areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly evolving. For instance,
various PRC regulatory bodies, including the CAC, the Ministry of Public Security and the State Administration for Market Regulation,
or the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In
addition, certain internet platforms in mainland China have reportedly been subject to heightened regulatory scrutiny in relation to cybersecurity
matters.
In April 2020, the PRC
government promulgated the Cybersecurity Review Measures (the “2020 Cybersecurity Review Measures”), which came into
effect on June 1, 2020. In July 2021, the CAC and other related authorities released a draft amendment to the 2020
Cybersecurity Review Measures for public comments. On December 28, 2021, the PRC government promulgated amended Cybersecurity
Review Measures (the “2022 Cybersecurity Review Measures”), which came into effect and replaced the 2020 Cybersecurity
Review Measures on February 15, 2022. Compared with the 2020 Cybersecurity Review Measures, the 2022 Cybersecurity Review
Measures contain the following key changes: (i) internet platform operators who are engaged in data processing are also subject
to the regulatory scope; (ii) the CSRC is included as one of the regulatory authorities for purposes of jointly establishing
the state cybersecurity review mechanism; (iii) internet platform operators holding personal information of more than one
million users and seeking to have their securities list on a stock exchange in a foreign country shall file for cybersecurity review
with the Cybersecurity Review Office; (iv) the risks of core data, material data or large amounts of personal information being
stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical
information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used
maliciously by foreign governments and any cybersecurity risk after a company’s listing on a stock exchange shall be
collectively taken into consideration during the cybersecurity review process; and (v) critical information infrastructure
operators and internet platform operators covered by the 2022 Cybersecurity Review Measures shall take measures to prevent and
mitigate cybersecurity risks in accordance with the requirements therein. According to the 2022 Cybersecurity Review Measures,
(i) critical information infrastructure operators that purchase network products and services and internet platform operators
that conduct data processing activities shall be subject to cybersecurity review in accordance with the 2022 Cybersecurity Review
Measures if such activities affect or may affect national security; and (ii) internet platform operators holding personal
information of more than one million users and seeking to have their securities list on a stock exchange in a foreign country shall
file for cybersecurity review with the Cybersecurity Review Office. Under the Regulation on Protecting the Security of Critical
Information Infrastructure promulgated by the State Council on July 30, 2021, effective September 1, 2021, “critical
information infrastructure” is defined as important network facilities and information systems in important industries and
fields, such as public telecommunication and information services, energy, transportation, water conservancy, finance, public
services, e-government and national defense, science, technology and industry, as well as other important network
facilities and information systems that, in case of destruction, loss of function or leak of data, may severely damage national
security, the national economy and the people’s livelihood and public interests. And the PRC competent authorities shall be
responsible for organizing the determination of critical information infrastructure in the industry and field concerned according to
the determination rules, and inform the critical information infrastructure operators of the determination results in a timely
manner and notify the public security department under the State Council of the same. As of the date of this prospectus, neither we
nor any of our PRC subsidiaries has been informed by any PRC governmental authority that we or any of our PRC subsidiaries is a
“critical information infrastructure operator.” Based on the opinion of our PRC legal adviser, Tahota Law Firm
(Beijing), according to its interpretation of the currently in-effect PRC laws and regulations, we believe that neither we nor any
of our PRC subsidiaries qualify as a critical information infrastructure operator. As of the date of this prospectus, we have not
conducted any data processing activities that affected or may affect national security, nor do we hold personal information of more
than one million users.
On November 14, 2021,
the CAC released the draft Administrative Regulation on Network Data Security for public comments through December 13, 2021 (the
“Draft Regulation on Network Data Security”). Under the Draft Regulation on Network Data Security, (i) data processors,
i.e., individuals and organizations who can decide on the purpose and method of their data processing activities at their own discretion,
that process personal information of more than one million individuals shall apply for cybersecurity review before listing in a foreign
country; (ii) foreign-listed data processors shall carry out annual data security evaluation and submit the evaluation report to
the municipal cyberspace administration authority; and (iii) where the data processor undergoes merger, reorganization and subdivision
that involves important data and personal information of more than one million individuals, the recipient of the data shall report the
transaction to the in-charge authority at the municipal level.
As of the date of this
prospectus, neither we nor any of our PRC subsidiaries has been required by any PRC governmental authority to apply for
cybersecurity review, nor have we or any of our PRC subsidiaries received any inquiry, notice, warning, sanction in such respect or
been denied permission from any PRC regulatory authority to list on U.S. exchanges. Based on the opinion of our PRC legal adviser,
Tahota Law Firm (Beijing), according to its interpretation of the currently in-effect PRC laws and regulations, we believe
that neither we nor any of our PRC subsidiaries are subject to the cybersecurity review, by the CAC under the 2022 Cybersecurity
Review Measures with respect to the offering of our securities or the business operations of our PRC subsidiaries, because neither
we nor any of our PRC subsidiaries qualifies as a critical information infrastructure operator or has conducted any data processing
activities that affect or may affect national security or holds personal information of more than one million users. However, as PRC
governmental authorities have significant discretion in interpreting and implementing statutory provisions and there remains
significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations if the PRC
regulatory authorities take a position contrary to ours, we cannot assure you that we or any of our PRC subsidiaries will not be
deemed to be subject to PRC cybersecurity review requirements under the 2022 Cybersecurity Review Measures or the Draft
Administrative Regulations (if enacted) as a critical information infrastructure operator or an internet platform operator that is
engaged in data processing activities that affect or may affect national security or holds personal information of more than one
million users, nor can we assure you that we or our PRC subsidiaries would be able to pass such review. If we or any of our PRC
subsidiaries fails to receive any requisite permission or approval from the CAC for the business operations of our PRC subsidiaries,
or the waiver for such permission or approval, in a timely manner, or at all, or inadvertently concludes that such permission or
approval is not required, or if applicable laws, regulations or interpretations change and obligate us to obtain such permission or
approvals in the future, we or our PRC subsidiaries may be subject to fines, suspension of business, website closure, revocation of
business licenses or other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a
material adverse effect on our business, financial condition or results of operations. In addition, we could become subject to
enhanced cybersecurity review or investigations launched by PRC regulators in the future pursuant to new laws, regulations or
policies. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with
applicable laws and regulations may result in fines, suspension of business, website closure, revocation of business licenses or
other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a material adverse effect
on our business, financial condition or results of operations.
On June 10, 2021,
the Standing Committee of the National People’s Congress of the PRC, promulgated the PRC Data Security Law, which became
effective in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals
carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of
data in economic and social development and the degree of harm it will cause to national security, public interests or the rights
and interests of individuals or organizations when such data is tampered with, destroyed, leaked or illegally acquired or used. The
PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security
and imposes export restrictions on certain data and information. On August 20, 2021, the Standing Committee of the National
People’s Congress promulgated the Personal Information Protection Law, effective November 1, 2021. The Personal
Information Protection Law clarifies the definition of personal information, which excludes information that has been anonymized,
and the required procedures for personal information processing, the obligations of personal information processors, and
individuals’ personal information rights and interests. The Personal Information Protection Law provides that, among other
things, (i) the processing of personal information is only permissible under certain circumstances, such as prior consent from
the subject individual, fulfillment of contractual and legal obligations, furtherance of public interests or other circumstances
prescribed by laws and regulations; (ii) the collection of personal information should be conducted in a disciplined manner
with as little impact on individuals’ rights and interests as possible; and (iii) excessive collection of personal
information is prohibited. In particular, the Personal Information Protection Law provides that personal information processors
should ensure the transparency and fairness of automated decision-making based on personal information, refrain from offering
unreasonably differentiated transaction terms to different individuals and, when sending commercial promotions or information
updates to individuals selected through automated decision-making, simultaneously offer such individuals an option not based on such
individuals’ specific characteristics or a more convenient way for such individuals to turn off such promotions.
On July 7, 2022, the
CAC promulgated the Measures for the Security Assessment of Outbound Data Transfer, or the Data Transfer Measures, which became effective
on September 1, 2022, pursuant to which, to provide data abroad under any of the following circumstances, a data processor shall
apply to the national cyberspace administration for the security assessment of the outbound data transfer through the local provincial
cyberspace administration: (i) the data processor provides important data abroad; (ii) the critical information infrastructure
operator or the data processor that has processed the personal information of over one million people provides personal information abroad;
(iii) the data processor that has provided the personal information of over 100,000 people or the sensitive personal information
of over 10,000 people cumulatively since January 1 of the previous year provides personal information abroad; and (iv) any other
circumstance where an application for the security assessment of outbound data transfer is required by the national cyberspace administration.
As of the date of this prospectus, the data collected and generated in our business does not have a bearing on national security, economic
operation, social stability, public health and security, among others, and thus may not be classified as important data by the authorities,
and, neither we nor any of our PRC subsidiaries have ever provided any personal information collected and generated in the operations
within the territory of the PRC to overseas recipients. Given the abovementioned facts and as advised by our PRC legal counsel, Tahota
Law Firm (Beijing), according to its interpretation of the currently in-effect PRC laws and regulations, we do not believe that
we or any of our PRC subsidiaries is engaged in any activity that is subject to security assessment as outlined in the Data Transfer Measures.
However, as PRC governmental authorities have significant discretion in interpreting and implementing statutory provisions and there remains
significant uncertainty in the interpretation and enforcement of relevant PRC data security laws and regulations if the PRC regulatory
authorities take a position contrary to ours, we cannot assure you that the activities we or any of our PRC subsidiaries engaging in will
not be deemed to be subject to PRC security assessment as stipulated in the Data Transfer Measures in the future, nor can we assure you
that we or our PRC subsidiaries would be able to pass such assessment. The promulgation of the above-mentioned laws and regulations indicates
heightened regulatory scrutiny from PRC regulatory authorities in areas such as data security and personal information protection.
As uncertainties remain
regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we or our PRC subsidiaries
will be able to comply with such regulations in all respects, and we or our PRC subsidiaries may be ordered to rectify or terminate
any actions that are deemed illegal by regulatory authorities. In addition, while our PRC subsidiaries take various measures to
comply with all applicable data privacy and protection laws and regulations, there is no guarantee that our current security
measures, operation and those of our third-party service providers may always be adequate for the protection of our users, employee
or company data against security breaches, cyberattacks or other unauthorized access, which could result in loss or misuse of such
data, interruptions to our service system, diminished user experience, loss of user confidence and trust and impairment of our
technology infrastructure and harm our reputation and business, resulting in fines, penalties and potential lawsuits.
Regulatory uncertainties
relating to, or failure to comply with, anti-monopoly and competition laws could adversely affect our business, financial condition, or
operating results.
The
PRC anti-monopoly enforcement agencies have in recent years strengthened enforcement under the PRC Anti-monopoly Law, including levying
significant fines, with respect to concentration of undertakings and cartel activity, mergers and acquisitions, as well as abusive behavior
by companies with market dominance. In March 2018, the SAMR was formed as a new governmental agency to take over, among other things,
the anti-monopoly enforcement functions from the relevant departments under the MOFCOM, the National Development and Reform Commission
of the PRC, and State Administration of Industry and Commerce of the PRC. The SAMR issued a new set of guidelines with respect to merger
control review in September 2018, and issued the Notice on Anti-monopoly Enforcement Authorization on December 28, 2018, which grants
authorizations to the SAMR’s provincial branches to enforce anti-monopoly laws within their respective jurisdictions. The SAMR has
imposed several administrative penalties on various companies for failing to duly make filings as to their transactions subject to merger
control review by the SAMR. The scope of the companies that were penalized is broad, and covers a variety of different industries.
Significant
regulatory uncertainty existed as to whether prior filing of notification of concentration is required for business concentration involving
variable interest entities prior to 2020. In November 2020, the Anti-monopoly Bureau of SAMR released the draft Guidelines on Anti-monopoly
Issues in Platform Economy, or the Platform Economy Anti-monopoly Guidelines, for public comment and in February 2021, adopted the Platform
Economy Anti-monopoly Guidelines, which for the first time specified that, any concentration made between the variable interest entities
shall be regulated by the Anti-monopoly Law. In addition, the Platform Economy Anti-monopoly Guidelines set out detailed standards and
rules in respect of the definition of relevant markets, typical types of cartel activities and abusive behaviors by online platform operators
with market dominance, which provide further guidelines for enforcement of anti-monopoly laws against online platform operators. For instance,
online platform operators that use technological advantages, such as data and algorithms, to eliminate or restrict competition or impose
price restrictions or exclusivity requirements on users may be deemed to be abusing dominant market position.
Prior
to the effectiveness of the Platform Economy Anti-monopoly Guidelines, the SAMR has already fined certain companies that acquired businesses
using variable interest entities without obtaining merger control approval or without prior filing of notification of concentration, indicating
its increased scrutiny over historical cases of concentration of undertakings involving companies using variable interest entities and
heightened enforcement efforts over past failure to file prior notification of concentration of undertakings for such transactions. Since
2020, the SAMR has fined companies that acquired or merged with or cooperated with onshore or offshore entities, including those operated
through variable interest entities, for failure to file prior notification before conducting the mergers or cooperation transactions.
Although
we do not believe we were legally required to make a merger control review filing or obtain merger control approval in relation to the
historical merger, there can be no assurance that regulators will agree with us, particularly, in light of the enforcement actions since
2020. In addition, as there were few cases where companies using variable interest entities were investigated for failure to make filings
in connection with concentration of undertakings prior to 2020, we did not file prior notification of concentration of undertakings for
our historical transactions. There can also be no assurance that regulators will not initiate other anti-monopoly enquiry or investigation
into, or take enforcement actions against, the historical merger or require us to submit filings in relation to such historical transactions.
We may be subject to penalty in connection with any such enquiry or investigation, if we are determined by the SAMR to have failed to
make the requisite filings, including fines up to RMB500,000 per case, and in extreme cases where any such transaction is determined by
the SAMR to have constituted concentration of undertakings under the applicable PRC anti-monopoly law, we may be ordered to terminate
the contemplated concentration, to dispose of our equity or asset within a prescribed period, or to transfer our business within a prescribed
time or to take any other necessary measures to return to the pre-concentration status. We may also be subject to claims from our competitors
or users, which could adversely affect our business and operations. Furthermore, any new requirements or restrictions, or proposed requirements
or restrictions, could result in adverse publicity or fines against us.
On
June 24, 2022, the Decision of the Standing Committee of the National People’s Congress to Amend the Anti-Monopoly Law of the PRC
was adopted and became effective on August 1, 2022, which stipulates that the State Council’s anti-monopoly enforcement agency may
order business operators to cease illegal concentration, to dispose of shares, assets or businesses within a defined period of time, or
to take other necessary measures to restore to the state before the concentration. The enforcement agency may also impose upon a business
operator (i) a fine up to ten percent of the business operator’s sales revenue in the past year, if the concentration of undertakings
has or may have an effect of excluding or limiting competition, or (ii) a fine up to RMB5 million if the concentration of undertakings
does not have the effect of excluding or limiting competition. Stricter anti-monopoly and anti-unfair competition enforcement by the PRC
regulatory authorities, especially enforcement actions focused on platform economy, may, among other things, prohibit us from future acquisitions,
divestitures or combinations our plans to make, impose fines or penalties, require divestiture of certain of our assets, or impose other
restrictions that limit or require us to modify its operations, including limitations on our contractual relationships or restrictions
on our pricing or revenue models, which could materially and adversely affect our business, financial condition, results of operations
and future prospects.
Furthermore,
as we continue to navigate the evolving legislative environment and varied local implementation practices of anti-monopoly and
competition laws and regulations in the PRC, we have attended and may continue to be required to attend administrative guidance
meetings or other communications with regulators from time to time. We may continue to receive greater scrutiny and attention from
regulators and more frequent and stringent investigations or reviews by regulators, which will increase our compliance costs. It
could also be time-consuming to comply with the relevant regulations described above to complete future transactions and carry out
our business operations. Heightened regulatory inquiries, investigations and other governmental actions and approval requirements
from governmental authorities such as the SAMR may be uncertain and could delay or inhibit our ability to complete these
transactions and carry out our business operations, which could affect our ability to expand its business, maintain its market share
or otherwise achieve the goals of our acquisition strategy, divert significant management time and attention and our financial
resources, bring negative publicity, subject us to liabilities or administrative penalties, and/or materially and adversely affect
our financial conditions, operations and business prospects.
Certain judgments obtained against us by our
shareholders may not be enforceable.
TD Holdings, Inc. is a Delaware
holding company and substantially all of our assets are located outside of the United States. Substantially all of our current operations
are conducted through our PRC subsidiaries in China. In addition of our current directors and officers are nationals and residents of
countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result,
it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event
that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful
in bringing an action of this kind, the laws of China may render you unable to enforce a judgment against our assets or the assets of
our directors and officers.
There is uncertainty as to
whether the judgment of United States courts will be directly enforced in Hong Kong, as the United States and Hong Kong do not have a
treaty or other arrangements providing for reciprocal recognition and enforcement of judgments of courts of the United States in civil
and commercial matters. However, a foreign judgment may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court
since the judgment may be regarded as creating a debt between the parties to it, provided that the foreign judgment, among other things,
is a final judgment conclusive upon the merits of the claim and is for a liquidated amount in a civil matter and not in respect of taxes,
fines, penalties, or similar charges. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud;
(b) the proceedings in which the judgment was obtained were opposed to natural justice; (c) its enforcement or recognition would be contrary
to the public policy of Hong Kong; (d) the court of the United States was not jurisdictionally competent; or (e) the judgment was in conflict
with a prior Hong Kong judgment.
General Risk Factors
Our business, results of operations and financial
condition may be adversely affected by global public health epidemics, including the strain of coronavirus known as COVID-19.
Our business could be adversely
affected by the effects of health pandemics or epidemics, the evolution of which continues to be uncertain. We have taken temporary precautionary
measures intended to help minimize the risk of the virus to our employees, our customers, which could negatively impact our business.
As a result of COVID-19, we incurred increased costs for our operations, performed our operations remotely and experienced difficulty
in recruiting personnel.
In addition, with the extended
Chinese business shutdowns that resulted from the outbreak of COVID-19, we may experience delays or the inability to service our customers
on a timely basis in our commodities trading business. The disruptions to our supply chain and business operations, or to our suppliers’
or customers’ supply chains and business operations, could include disruptions from the closure of our interruptions in the supply
of commodities, personnel absences, and delivery and storage of commodities, any of which could have adverse ripple effects on our commodities
trading business. If we need to close any of our facilities or a critical number of our employees become too ill to work, our ability
to provide our products and services to our customers could be materially adversely affected in a rapid manner.
The elimination of monetary liability against
our directors, officers and employees under our certificate of incorporation and the existence of indemnification of our directors, officers
and employees under Delaware law may result in substantial expenditures by us and may discourage lawsuits against our directors, officers
and employees.
Our certificate of incorporation
contains provisions which eliminate the liability of our directors for monetary damages to us and our stockholders to the maximum extent
permitted under the corporate laws of Delaware. We may also provide contractual indemnification obligations under agreements with our
directors, officers and employees. These indemnification obligations could result in our incurring substantial expenditures to cover the
cost of settlement or damage awards against directors, officers and employees, which we may be unable to recoup. These provisions and
resultant costs may also discourage us from bringing a lawsuit against directors, officers and employees for breach of their fiduciary
duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees
even though such actions, if successful, might otherwise benefit the Company and our shareholders.
We expect that we will require additional debt
and equity capital to pursue our business objectives and respond to business opportunities, challenges and/or unforeseen circumstances.
If such capital is not available to us, or is not available on favorable terms, our business, operating results and financial condition
may be harmed.
We expect that we will require
additional capital to pursue our business objectives and respond to business opportunities, challenges and/or unforeseen circumstances,
including to increase our marketing expenditures in order to improve our brand awareness, build our non-ferrous metal inventory, develop
new customers, enhance our operating infrastructure and acquire complementary technologies. Accordingly, we may need to engage in equity,
debt or other types of financings to secure additional funds. Additional funds may not be available when we need them on terms that are
acceptable to us, or at all. In addition, any debt financing that we secure in the future could involve restrictive covenants which may
make it more difficult for us to obtain additional capital and to pursue business opportunities.
Volatility in the credit
markets may also have an adverse effect on our ability to obtain debt financing. If we raise additional funds through further
issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity
securities we issue could have rights, preferences and privileges superior to those of our Common Stock. If we are unable to obtain
adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business
objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our
business, operating results, financial condition and prospects could be adversely affected.
Increasing scrutiny and changing expectations
from investors, lenders, customers, and other market participants with respect to our Environmental, Social and Governance (“ESG”)
policies and activities may impose additional costs on us or expose us to additional risks.
Companies across all industries
and around the globe are facing increasing scrutiny relating to their ESG policies, initiatives and activities by investors, lenders,
customers, and other market participants. In the U.S., amongst other regulatory efforts, in March 2021, the SEC announced the creation
of a Climate and ESG Task Force in the Division of Enforcement and in March 2022, the SEC proposed rules that would require public companies
to disclose certain climate-related information in periodic filings with the SEC. Our disclosures on these matters or a failure to satisfy
evolving stakeholder expectations for ESG practices and reporting may potentially harm our reputation and impact employee retention and
access to capital. In addition, our failure, or perceived failure, to pursue or fulfill our goals, targets, and objectives or to satisfy
various reporting standards within the timelines we announce, or at all, could expose us to government enforcement actions and private
litigation.
We expect regulatory requirements
related to ESG matters to continue to expand globally and increase our costs of compliance. Our ability to achieve any goal or objective,
including with respect to environmental and diversity initiatives and compliance with ESG reporting standards, is subject to numerous
risks, many of which are outside of our control. Examples of such risks include the availability and cost of technologies and products
that meet sustainability, evolving regulatory requirements affecting ESG standards or disclosures, our ability to recruit, develop, and
retain diverse talent in our labor markets, and our ability to develop reporting processes and controls that comply with evolving standards
for identifying, measuring and reporting ESG metrics. As ESG best-practices, reporting standards, and disclosure requirements continue
to develop, we may incur increasing costs related to maintaining or achieving our ESG goals in addition to ESG monitoring and reporting.
We risk damage to our brand and reputation, impacts to our ability to secure government contracts, or limited access to capital markets
and loans if we fail to adapt to, or comply with, investor, lender, customer or other stakeholder expectations and standards and potential
government regulation with respect to ESG matters, including in areas such as diversity and inclusion, environmental stewardship, support
for local communities and corporate governance and transparency.
Our business could be negatively impacted by
the inflationary pressures which may decrease our operating margins and increase working capital investments required to operate our business.
The U.S. economy has
experienced rising inflation in 2022. A sustained increase in inflation may continue to increase our costs for labor, services, and
materials. Further our customers face inflationary pressures and resulting impacts, such as the tight labor market and supply chain
disruptions. The rate and scope of these various inflationary factors may increase our operating costs and capital expenditures
materially, which may not be readily recoverable in the prices of our services and may have an adverse effect on our costs,
operating margins, results of operations and financial condition. Additionally, Federal Reserve policies to combat inflationary
pressures, including the significant increases in prevailing interest rates that occurred during 2022 as a result of the 425
aggregate basis point increase in the federal funds rate, and the associated macroeconomic impact on slowdown in economic growth,
could negatively impact our business.
Our information systems or data, or those of
our service providers or customers or users could be subject to cyber-attacks or other security incidents, which could result in data
breaches, intellectual property theft, claims, litigation, regulatory investigations, significant liability, reputational damage and other
adverse consequences.
We have continued to expand
our information technology systems as our operations grow. While we maintain information technology measures designed to protect us against
intellectual property theft, data breaches, sabotage and other external or internal cyber-attacks or misappropriation, our systems and
those of our service providers are potentially vulnerable to malware, ransomware, viruses, denial-of-service attacks, phishing attacks,
social engineering, computer hacking, unauthorized access, exploitation of bugs, defects and vulnerabilities, breakdowns, damage, interruptions,
system malfunctions, power outages, terrorism, acts of vandalism, security breaches, security incidents, inadvertent or intentional actions
by employees or other third parties, and other cyber-attacks. To the extent any security incident results in unauthorized access or damage
to or acquisition, use, corruption, loss, destruction, alteration or dissemination of our data, it could disrupt our business, harm our
reputation, compel us to comply with applicable data breach notification laws, subject us to time consuming, distracting and expensive
litigation, regulatory investigation and oversight, mandatory corrective action, require us to verify the correctness of database contents,
or otherwise subject us to liability under laws, regulations and contractual obligations, including those that protect the privacy and
security of personal information. This could result in increased costs to us and result in significant legal and financial exposure and/or
reputational harm.
We also rely on service providers,
and similar incidents relating to their information technology systems could also have a material adverse effect on our business. Our
service providers, including our workforce management software provider, may be subject to ransomware and other security incidents, and
we cannot guarantee that our or our service providers’ systems have not been breached or that they do not contain exploitable defects,
bugs, or vulnerabilities that could result in a security incident, or other disruption to, our or our service providers’ systems.
Our ability to monitor our service providers’ security measures is limited, and, in any event, malicious third parties may be able
to circumvent those security measures.
USE OF PROCEEDS
We estimate that the net proceeds
from this offering will be approximately $9.7 million, after deducting the estimated offering expenses payable by us.
We intend to use the net proceeds
from this offering for the expansion of our commodities trading and supply chain management business, working capital and other general
corporate purposes.
The amounts and timing of
our use of proceeds will vary depending on a number of factors, including the amount of cash generated or used by our operations, and
the rate of growth, if any, of our business. As a result, we will retain broad discretion in the allocation of the net proceeds of this
offering. In addition, while we have not entered into any agreements, commitments or understandings relating to any significant transaction
as of the date of this prospectus supplement, we may use a portion of the net proceeds to pursue acquisitions, joint ventures and other
strategic transactions.
DILUTION
If you invest in our common
stock, your interest will be diluted immediately to the extent of the difference between the public offering price per share and the adjusted
net tangible book value per share of our common stock after this offering.
Our net tangible book value
on March 31, 2023 was approximately $132,185,053, or $0.8451 per share. “Net tangible book value” is total assets minus total
liabilities, excluding goodwill and intangible assets. “Net tangible book value per share” is net tangible book value divided
by the total number of shares outstanding.
After giving effect to the
sale of our common stock in the aggregate amount of $9.8 million in this offering at an offering price of $0.35 per share, and after deducting
estimated offering expenses payable by us in connection with this offering, our as adjusted net tangible book value as of March 31, 2023
would have been approximately $141,890,053, or approximately $0.7694 per common stock. This represents an immediate decrease in net tangible
book value of $0.0757 per share to our existing stockholders and an immediate increase in net tangible book value of $0.4194 per share
to investors participating in this offering. The following table illustrates this dilution per share to investors participating in this
offering:
Assumed offering price per share | |
$ | 0.35 | |
Net tangible book value per share as of March 31, 2023 | |
$ | 0.8451 | |
Dilution per share attributable to new investors | |
$ | (0.4194 | ) |
| |
| | |
Net tangible book value per share after giving effect to this offering | |
$ | 0.7694 | |
| |
| | |
Decrease per share to existing investors | |
$ | 0.0757 | |
The above discussion and table
are based on 156,407,446 shares outstanding as of July 31, 2023, and excludes, as of such date, any shares of common stock issuable
upon exercise of the convertible promissory notes outstanding.
To the extent that the holder
of any our outstanding convertible promissory note elects to convert all or a portion of the note to shares of our common stock pursuant
to the terms of such note, or we issue additional common stock in the future, there may be further dilution.
CAPITALIZATION
The
following table sets forth our capitalization as of March 31, 2023 presented on:
|
● |
on an as adjusted basis to give effect to the issuance and sale of 28,000,000 shares of common stock at the offering price of $0.35 per share, after deducting the estimated offering expenses payable by us. |
You should read this table
together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated
financial statements and note included in the information incorporated by reference into this prospectus supplement and the accompanying
prospectus.
| |
As of March 31, 2023 | |
| |
Actual | | |
As adjusted (unaudited) | |
Cash and cash equivalents | |
$ | 1,981,012 | | |
$ | 11,686,012 | |
Total Current Liabilities | |
| 24,746,002 | | |
| 24,746,002 | |
Shareholders’ Equity: | |
| | | |
| | |
Common Stock, par value $ 0.001 per share, 600,000,000 shares authorized, 144,841,328 shares issued and outstanding as of March 31, 2023 | |
| 144,841 | | |
| 172,841 | |
Additional paid-in capital | |
| 390,154,966 | | |
| 399,831,966 | |
Statutory surplus reserve | |
| 2,602,667 | | |
| 2,602,667 | |
Accumulated deficit | |
| (37,950,132 | ) | |
| (37,950,132 | ) |
Accumulated other comprehensive loss | |
| (5,939,107 | ) | |
| (5,939,107 | ) |
Total Shareholders’ Equity | |
| 349,013,235 | | |
| 358,718,235 | |
Total Capitalization | |
$ | 373,759,237 | | |
$ | 383,464,237 | |
DESCRIPTION OF SECURITIES WE ARE OFFERING
We are offering
28,000,000 shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus. The material terms and
provisions of our common stock are described under the caption “Description of Capital Stock” beginning on page 10 of
the accompanying prospectus.
DIVIDEND POLICY
We did not declare or pay
any dividend in 2022 and 2023 and do not plan to do so in the foreseeable future. Although we intend to retain our earnings, if any, to
finance the growth of our business, our board of directors will have the discretion to declare and pay dividends in the future, subject
to applicable PRC regulations and restrictions as described below. Payment of dividends in the future will depend upon our earnings, capital
requirements, and other factors, which our board of directors may deem relevant.
In addition, due to various
restrictions under PRC laws on the distribution of dividends by wholly foreign-owned enterprise, we may not be able to pay dividends to
our stockholders. The Foreign Investment Law, promulgated on March 15, 2019 and became effective on January 1, 2020, and the Implementation
Regulations for the Foreign Investment Law, promulgated on December 26, 2019 and became effective on January 1, 2020, are the key regulations
governing distribution of dividends of foreign-invested enterprises. According to the applicable regulations, a wholly foreign-owned enterprise
in China, or a WFOE, may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC accounting standards
and regulations. In addition, a WFOE is required to allocate at least 10% of its accumulated after-tax profits each year, if any, to statutory
reserve funds unless its reserves have reached 50% of the registered capital of the enterprises. These reserves are not distributable
as cash dividends. The proportional ratio for withdrawal of rewards and welfare funds for employees will be determined at the discretion
of the WFOE. Profits of a WFOE will not be distributed before the losses thereof before the previous accounting years have been made up.
Any undistributed profit for the previous accounting years may be distributed together with the distributable profit for the current accounting
year. If we or our subsidiaries and affiliates are unable to receive all of the revenues from our operations through the current contractual
arrangements, we may be unable to pay dividends on our common stock.
PLAN OF DISTRIBUTION
We have not engaged a placement
agent to act as our placement agent in connection with this offering of our common stock pursuant to this prospectus supplement and the
accompanying prospectus. We are entering into securities purchase agreements directly with investors in connection with this offering,
and we will only sell to investors who have entered into securities purchase agreements.
We expect to deliver the shares
of common stock being offered pursuant to this prospectus supplement on or about August 3, 2023, subject to customary closing conditions.
We estimate our total expenses
associated with the offering will be approximately $95,000.
The following table shows
per share and total cash placement agent’s fees we will pay to the placement agent in connection with the sale of the shares of
common stock pursuant to this prospectus supplement and the accompanying prospectus assuming the purchase of all of the shares of common
stock offered hereby:
| |
Per Share | | |
Total | |
Offering price | |
$ | 0.35 | | |
$ | 9,800,000 | |
Proceeds, before expenses, to us | |
$ | 0.35 | | |
$ | 9,800,000 | |
After deducting certain fees
and our estimated offering expenses, we expect the net proceeds from this offering to be approximately $9.71 million.
Transfer Agent and Registrar
The transfer agent and registrar
for our common stock is V Stock Transfer, LLC located at 18 Lafayette Place, Woodmere, NY 11598. Our transfer agent’s phone number
is (212)828-8436.
Listing
Our shares of common stock
are quoted on the NASDAQ Capital Market under the trading symbol “GLG.”
LEGAL MATTERS
Certain legal matters governed
by the laws of the State of Delaware with respect to the validity of the offered securities will be passed upon for us by MagStone Law,
LLP.
EXPERTS
The consolidated financial
statements of our Company appearing in our annual report on Form 10-K for the fiscal years ended December 31, 2022 and 2021 have been
audited by Audit Alliance LLP, independent registered public accounting firm, as set forth in the reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports
given on the authority of such firms as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference
into this prospectus supplement the filed documents listed below, except as superseded, supplemented or modified by this prospectus supplement:
| ● | our
Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with
the SEC on March 10, 2023; |
| ● | our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the
SEC on May 12, 2023; |
| ● | the
description of the Common Stock, US$0.001 par value per share, contained in the Registrant’s
registration statement on Form 8-A (File No. 001-36055) filed with the Commission on August
12, 2013, pursuant to Section 12(b) of the Exchange Act and all amendments or reports filed
by us for the purpose of updating those descriptions. |
We
also incorporate by reference all additional documents that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act that are filed after the filing date of the registration statement of which this prospectus supplement is a part and prior
to effectiveness of that registration statement. We are not, however, incorporating, in each case, any documents or information
that we are deemed to “furnish” and not file in accordance with SEC rules.
You may obtain a copy of these
filings, without charge, by writing or calling us at:
TD Holdings, Inc.
139, Xinzhou 11th Street, Futian District
Shenzhen, Guangdong, PRC 518000
+86 (0755) 82792111
Attn: Investor Relations
You should rely only on the
information incorporated by reference or provided in this prospectus supplement or the accompanying prospectus. We have not authorized
anyone else to provide you with different information. You should not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the front page of those documents.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES LAW VIOLATIONS
Under Section 145 of the Delaware
General Corporation Law, the Company has broad powers to indemnify its directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act. The Company’s Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted by Delaware law. The Bylaws require the Company to advance litigation expenses in the case
of stockholder derivative actions or other actions, against an undertaking by the directors and officers to repay such advances if it
is ultimately determined that the directors and officers are not entitled to indemnification. The Bylaws further provide that rights conferred
under such Bylaws shall not be deemed to be exclusive of any other right such persons may have or acquire under any agreement, vote of
stockholders or disinterested directors, or otherwise. The Company believes that indemnification under its Bylaws covers at least negligence
and gross negligence.
In addition, our certificate
of incorporation contains provisions which states that the Company shall, to the fullest extent permitted by Section 145 of the General
Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have
power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered
by said section. The Company shall advance expenses to the fullest extent permitted by said section. Such right to indemnification and
advancement of expenses shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person. The indemnification and advancement of expenses provided for herein
shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, vote of stockholder or disinterested directors or otherwise.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers or controlling persons, we have been advised
that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration
statement with the SEC under the Securities Act with respect to the shares of common stock offered by this prospectus supplement. This
prospectus supplement is part of that registration statement and does not contain all the information included in the registration statement.
We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC
maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. The SEC’s Internet site can be found at http://www.sec.gov.
For further information with
respect to our shares of common stock and us, you should refer to the registration statement, its exhibits and the material incorporated
by reference therein. Portions of the exhibits have been omitted as permitted by the rules and regulations of the SEC. Statements made
in this prospectus supplement and the accompanying prospectus as to the contents of any contract, agreement or other document referred
to are not necessarily complete. In each instance, we refer you to the copy of the contracts or other documents filed as an exhibit to
the registration statement, and these statements are hereby qualified in their entirety by reference to the contract or document.
PROSPECTUS
TD Holdings, Inc.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
TD Holdings, Inc.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
9,860,000 Shares of Common Stock Offered by
Selling Stockholders
We may offer to the public from time to time in
one or more series or issuances of common stock, preferred stock, debt securities, warrants to purchase our common stock, preferred stock
or debt securities, debt securities consisting of debentures, notes or other evidences of indebtedness, units consisting of a combination
of the foregoing securities, or any combination of these securities
Selling stockholders may also offer up to an aggregate
of 9,860,000 shares of Common Stock, including 2,760,000 shares underlying Warrants (the “Warrants”) currently held by certain
selling stockholders as follows: (a) 1,680,000 shares of Common Stock issuable upon exercise of the Company’s common stock purchase
warrants first issued on April 11, 2019, and later amended on May 23, 2019 and August 30, 2019 (the “April Warrants”); and
(b) 1,080,000 shares of Common Stock issuable upon exercise of the Company’s common stock purchase warrants issued on May 20, 2019
(the “May Warrants”), of TD Holdings, Inc. (the “Company”, “we”, “us” or “our”).
Each selling stockholder is referred to herein as a “Selling Stockholder” and collectively as the “Selling Stockholders.”
Each of the April Warrants is exercisable for one share of Common Stock at an exercise price of $2.20 per share, and each of the May Warrants
is exercisable for one share of Common Stock at an exercise price of $1.32 per share.
This prospectus also covers any additional shares
of Common Stock that may become issuable upon any anti-dilution adjustment pursuant to the terms of the Warrants issued to the Selling
Stockholders by reason of stock splits, stock dividends, and other events described therein.
The securities may be sold by us or the Selling
Stockholders to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. The Selling
Stockholders identified in this prospectus, or their respective transferees, pledgees, donees or other successors-in-interest, may offer
the Warrants issuable from time to time upon exercise of the Warrants, through public or private transactions at prevailing market prices,
at prices related to prevailing market prices or at privately negotiated prices. For additional information on the methods of sale, see
the section entitled “Plan of Distribution” on page 7. For a list of the Selling Stockholders, see the section entitled “Selling
Stockholders” on page 5.
The Selling Stockholders may sell any, all or
none of the securities offered by this prospectus, and we do not know when or in what amount the Selling Stockholders may sell their shares
of Common Stock hereunder following the effective date of this registration statement.
We are registering the Warrants on behalf of the
Selling Stockholders, to be offered and sold by them from time to time. While we will not receive any proceeds from the sale of the shares
of Common Stock underlying the Warrants, we may receive up to $2.20 per share upon the cash exercise of each of the April Warrants and
up to $1.32 per share upon the cash exercise of each of the May Warrants. However, we cannot predict when and in what amounts or if the
Warrants will be exercised, and it is possible that the Warrants may expire and never be exercised, in which case we would not receive
any cash proceeds. We have agreed to bear all of the expenses incurred in connection with the registration of the Warrants. The Selling
Stockholders will pay or assume discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses,
if any, incurred for the sale the Warrants.
Our Common Stock is currently listed on the Nasdaq
Capital Market under the symbol “GLG.” On July 29, 2020, the last reported sale price of our Common Stock on the Nasdaq Capital
Market was $2.89 per share. The applicable prospectus supplement will contain information, where applicable, as to other listings, if
any, on the Nasdaq Capital Market or other securities exchange of the securities covered by the prospectus supplement.
The aggregate market value of our outstanding
voting and nonvoting common equity held by non-affiliates is approximately $176.61 million. We have not offered any securities pursuant
to General Instruction I.B.6 of Form S-3 during the prior 12-month calendar period that ends on, and includes, the date of this prospectus.
If any underwriters are involved in the sale of
the securities with respect to which this prospectus is being delivered, the names of such underwriters and any applicable discounts or
commissions and over-allotment options will be set forth in the applicable prospectus supplement. This prospectus also describes the general
manner in which the Warrants may be offered and sold. If necessary, the specific manner in which the Warrants may be offered and sold
will be described in a supplement to this prospectus.
Investing in our Common Stock involves risks.
You should carefully review the risks described under the heading “Risk Factors” beginning on page 5 and in the documents
which are incorporated by reference herein before you invest in our securities.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is August 4, 2020.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement
that we filed with the Securities and Exchange Commission, or the Commission, using a “shelf” registration process. Under
this shelf registration process, we may offer to sell any of the securities, or any combination of the securities, described in this prospectus,
in each case in one or more offerings, up to a total amount of $100,000,000 and the Selling Stockholders may offer from time to time up
to an aggregate of 9,860,000 shares of Common Stock, including 2,760,000 shares of Common Stock issuable upon the exercise of the Warrants.
You should rely only on the information contained in this prospectus and the related exhibits, any prospectus supplement or amendment
thereto and the documents incorporated by reference, or to which we have referred you, before making your investment decision. Neither
we nor the Selling Stockholders have authorized anyone to provide you with different information. If anyone provides you with different
or inconsistent information, you should not rely on it. This prospectus, any prospectus supplement or amendments thereto do not constitute
an offer to sell, or a solicitation of an offer to purchase, the Common Stock offered by this prospectus, any prospectus supplement or
amendments thereto in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation of
an offer in such jurisdiction. You should not assume that the information contained in this prospectus, any prospectus supplement or amendments
thereto, as well as information we have previously filed with the U.S. Securities and Exchange Commission (the “SEC”), is
accurate as of any date other than the date on the front cover of the applicable document.
If necessary, the specific manner in which the
securities may be offered and sold will be described in a supplement to this prospectus, which supplement may also add, update or change
any of the information contained in this prospectus. To the extent there is a conflict between the information contained in this prospectus
and the prospectus supplement, you should rely on the information in the prospectus supplement, provided that if any statement in one
of these documents is inconsistent with a statement in another document having a later date-for example, a document incorporated by reference
in this prospectus or any prospectus supplement-the statement in the document having the later date modifies or supersedes the earlier
statement.
Neither the delivery of this prospectus nor any
distribution of Common Stock pursuant to this prospectus shall, under any circumstances, create any implication that there has been no
change in the information set forth or incorporated by reference into this prospectus or in our affairs since the date of this prospectus.
Our business, financial condition, results of operations and prospects may have changed since such date.
When used herein, unless the context requires
otherwise, references to the “TD Holdings,” “Company,” “we,” “our” and “us”
refer to TD Holdings, Inc., a Delaware corporation.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, the applicable prospectus supplement
or amendment and the information incorporated by reference in this prospectus contain various forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”),
which represent our expectations or beliefs concerning future events. Forward-looking statements include statements that are predictive
in nature, which depend upon or refer to future events or conditions, and/or which include words such as “believes,” “plans,”
“intends,” “anticipates,” “estimates,” “expects,” “may,” “will”
or similar expressions. In addition, any statements concerning future financial performance, ongoing strategies or prospects, and possible
future actions, which may be provided by our management, are also forward-looking statements. Forward-looking statements are based on
current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our company, economic
and market factors, and the industry in which we do business, among other things. These statements are not guarantees of future performance,
and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events,
or otherwise, except as required by law. Actual events and results may differ materially from those expressed or forecasted in forward-looking
statements due to a number of factors. Factors that could cause our actual performance, future results and actions to differ materially
from any forward-looking statements include, but are not limited to, those discussed under the heading “Risk Factors” in any
of our filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The forward-looking statements in
this prospectus, the applicable prospectus supplement or any amendments thereto and the information incorporated by reference in this
prospectus represent our views as of the date such statements are made. These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date such statements are made.
OUR COMPANY
This summary highlights information contained
in the documents incorporated herein by reference. Before making an investment decision, you should read the entire prospectus, and our
other filings with the SEC, including those filings incorporated herein by reference, carefully, including the sections entitled “Risk
Factors” and “Special Note Regarding Forward-Looking Statements.”
Overview
TD Holdings, Inc., (formerly known as Bat Group,
Inc.) has become a used luxurious car leasing business as well as a commodities trading business operating in China since the disposition
of its direct loans, loan guarantees and financial leasing services to small-to-medium sized businesses, farmers and individuals (the
“Micro-lending Business”) in July 2018. Our current operations consist of leasing of luxurious pre-owned automobiles and operation
of a non-ferrous metal commodities trading business.
The Company operates a luxurious car business
that is conducted under the brand name “Batcar” through the Company’s VIE entity, Beijing Tianxing Kunlun Technology
Co. Ltd (“Beijing Tianxing”), from its headquarters in Beijing. The Company also conducts a commodities trading business via
its other VIE entity, Shenzhen Huamucheng Trading Co., Ltd. (“Huamucheng”).
Our Business
Used Luxurious Car Leasing Business
During the twelve months ended December 31, 2019,
the Company, through Beijing Tianxing, offers our customers the opportunity to rent luxurious pre-owned automobiles in Beijing, Shanghai,
Zhejiang and Chengdu, China. Currently the Company has eleven used luxurious cars with net book value of approximately US$ 2.43 million.
To determine the model of vehicles to be purchased, we collect data related to customers’ demands and preferences through sales
and online promotions. Our professional procurement personnel will then compare models of vehicles offered by different sellers. The decision
to purchase a specific vehicle is based on a number of considerations including
time of delivery, vehicle condition, vehicle safety feature, mileage, repairing and maintenance history, accidents history, market scarcity,
and etc. For the years ended December 31, 2019 and 2018, the Company earned income from operating lease of $1,830,148 and $488,062, respectively.
Commodities Trading Business
In order to diversify the Company’s business, on
November 22, 2019, the Company’s indirectly wholly owned subsidiary
Hao Limo Technology (Beijing) Co., Ltd. (“Hao Limo”) entered into a series of agreements (the “Huamucheng VIE
Agreements”) with Huamucheng and the
shareholders of Huamucheng who collectively hold 100% of Huamucheng.
Through Huamucheng’s VIE structure, the
Company launched its commodities trading operations. Huamucheng focuses on trading of non-ferrous metal commodities such as aluminum,
copper, silver, and gold, and is striving to become an emerging platform in the non-ferrous metal e-commerce industry by offering all
participants in the non-ferrous metal e-commerce industry a seamless, one-stop transaction experience. In connection with the commodity
trading business, the Company primarily generates revenues from sales of commodities products and providing of supply chain management
services such as loan recommendation and distribution services to customers in the PRC.
In December 2019, the
Company generated revenue of $100,427 from commodities trading business and $562,586
from supply chain management services (including loan recommendation service fee of $323,623 and distribution service fee
of $238,963), respectively.
Our Services
Used Luxurious Car Leasing Business
Renting Service
We rent our luxurious cars to both our individual
and corporate customers from our stores in Beijing, Shanghai, Zhejiang and Chengdu. The rental price varies based on the rental term which
ranges from one day to one month; the longer the rental term, the cheaper the price. The daily rental price is the highest, while the
average weekly rental prices and average monthly rental prices are 10% to 20% and 20% to 30% cheaper, respectively, than that of the daily
rental price.
Customers can confirm the time and place for vehicle
delivery and rental term via SMS messages, phone calls or face-to-face communication with our sales personnel, as well as through our
website and WeChat Applet. Our sales personnel will then deliver the vehicle to the customers as designated. The customer, before signing
the car rental agreement, will inspect the vehicle in person and pay the rent along with the deposit with their credit card, Wechat Pay
or Alipay. The customer is responsible for the gas, toll, and any other expenses related to the use of the vehicle during the rental term.
Our operations for our luxury vehicle leasing
business consists of the following 7 steps:
| 1) | Pre-lease Preparation: Our
asset management personnel are regularly scheduled to conduct comprehensive inspections, repairs, maintenance, and cleaning of the vehicles. |
| 2) | Lease Preparation: Our sales
personnel will introduce to the customer in detail information regarding our car rental conditions, price, distance and time limit, required
procedures, the main contents of the rental contract terms, other rental instructions, and related services. |
| 3) | Paperwork Preparation: Individual
customers are required to provide their original identification card, driver’s license, and house or land ownership certificate.
Corporate customers are required to provide their company’s business license, enterprise organization code certificate, and the
legal person’s power of attorney and driver’s license. |
| 4) | Signing the Contract: Before
signing the contract, our personnel will repeat to the customer material terms of the rental contract. After filling in the vehicle’s
information and other rental terms, the customer will be required to enter their personal information and sign the contract. |
| 5) | Rent and Deposit Prepayment:
The prepayment of rental fees and the deposit must be paid by the customer prior to renting the vehicle. The amount of the prepayment
is determined by the rental duration and price of the vehicle. |
| 6) | Delivery Inspection: When the
vehicle is delivered to the customer, the sales personnel will hand over the vehicle key, instructions, and other accessories such as
data cables and mobile phone holders. The sales personnel will then guide the customer through a thorough vehicle inspection including
the exterior, steering system, braking system, lubrication system, coolant, tires, and lights. After the vehicle inspection is completed,
the customer will be asked to fill in an inspection form, of which both the customer and the sales department will retain a copy. |
| 7) | Guidance on Operating the Luxury
Vehicle: The sales personnel will explain the operation of the luxury vehicle to the customer according to its performance and characteristics
so as to mitigate any damage caused by mishandling. Customers will also be reminded to keep their communications open at all times during
the rental period. |
Car Pooling Service with Peer Companies
In addition to directly renting to customers,
we also rent to other auto rental companies in a similar fashion but at a discounted rate. We and our peer companies have formed a vehicle
pool consisting of all available pre-owned vehicles. In the scenario where a customer places a rental order with a company which does
not currently have the requested vehicle in stock, another company in the vehicle pool possessing the requested vehicle will rent it to
the company at a discounted price upon its request.
Commodities Trading Business
Business Model
We source bulk commodity from non-ferrous metal
mines or its designated distributors and sell to manufactures who need these metals in large quantities. We work with many upstream suppliers
in the sourcing of commodities. Suppliers we source from include various metal and mineral suppliers such as Kunsteel Group, Baosteel
Group, Aluminum Corporate of China Limited, Yunnan Benyuan, Yunnan Tin, and Shanghai Copper. Potential customers include large infrastructure
companies such as China National Electricity, Datang Power, China Aluminum Foshan International Trade, Tooke Investment (China), CSSC
International Trade Co., Ltd., Shenye Group, and Keliyuan.
The Company has entered into a Warehousing Agreement
with Foshan Nanchu to designate it as the Company’s warehouse. The Company’s criteria for choosing its warehouse is based
primarily on the convenience of its location for transportation, which is highly conducive to the transportation of non-ferrous metal
commodities, and secondarily based on its storage price.
Our inventory management procedure involves (1)
an Application for Storage, (2) Storage of the Commodities, (3) an Application for Shipment, and (4) Shipment of Commodities, which are
further described below.
|
1) |
Application for Storage |
|
○ |
The upstream suppliers apply for storage with the Company’s leased warehouse center upon the sale of commodities to the Company. The application requires information including the commodities’ production company, brand, specifications, weight, quantity, and storage time. |
|
2) |
Storage of the Commodities |
|
○ |
Upon the arrival of the commodities at the warehouse, the warehouse checks and accepts the commodities according to the delivery instructions provided by the transportation company, ensuring that the delivery instructions, storage application, and the delivered commodities are all consistent. |
|
○ |
Upon acceptance, the warehouse scans and places the commodities into sorted storage. The warehouse then issues a certificate of inspection, which includes information such as the brand name, specifications, weight, quantity, packaging information, arrival time, storage location and other information of the received commodities. The certificate of inspection is then signed and stamped by the delivery driver, the warehouse manager, and the warehouse. Four copies of the certificate of inspection are made, two of which are provided to the transportation company and the supplier. |
|
3) |
Application for Shipment |
|
○ |
The downstream customers apply for shipment with the warehouse upon the purchase of Commodities from the Company. The application requires information including the production company, brand, specifications, weight, quantity, delivery time, and storage location number. |
|
○ |
The downstream customers also fill in a delivery entrustment letter, including the name of the delivery company, the name of the delivery person, his or her ID number, the delivery vehicle’s license plate number, the time, quantity, and information regarding the warehouse for delivery. |
|
4) |
Shipment of Commodities |
|
○ |
The warehouse prepares the commodities in advance according to the pick-up time and the Application for Shipment. |
|
○ |
Upon arrival of the pick-up driver at the warehouse, the Company reviews the identity of the pick-up driver according to the delivery entrustment letter. |
|
○ |
Upon completing the loading of the commodities for shipment, the warehouse issues a certificate of sale, which includes information such as the brand name, specifications, weight, quantity, delivery time, and storage location number. The pick-up driver, warehouse manager, and the warehouse signs and stamps the certificate of sale. Four copies of the certificate of sale are made, two of which are provided to the transportation company and the customer. |
Distribution Services
We offer a distribution service to bulk suppliers
of precious metals by acting as a sales intermediary, procuring small to medium-sized buyers through our own professional sales team
and channels and distributing to them the bulk precious metals of the suppliers. Upon the execution of a purchase order from our sourced
buyers, we charge the suppliers with a commission fee ranging from 1% to 1.5% of the distribution order, depending on the size of the
order. In December 2019, the Company generated revenue of $238,963 from its distribution
services.
Loan Recommendation and Referral Services
We offer to our downstream customers who require
additional funding for the purchase of precious metals recommendations and referrals to third-party licensed financial institutions and
small credit providers while assuming no credit risks ourselves. When our recommendation and referrals are accepted and our downstream
customers proceed with the loan, we charge our downstream customers between 2% to 5% of the loan principal as our referral fee. In December
2019, the Company generated revenue of $323,623 from its loan recommendation services.
About
THE SECONDARY Offering
The secondary offering of this prospectus relates
to the offer and resale by the Selling Stockholders of an aggregate of 9,860,000 shares of Common Stock , including 2,760,000 shares of
Common Stock issuable upon the exercise of the Warrants. All of the shares of Common Stock, including the shares of Common Stock underlying
the Warrants, when sold, will be sold by the Selling Stockholders. The Selling Stockholders may sell the shares of Common Stock from time
to time at prevailing market prices or at privately negotiated prices.
Common Stock Offered by the Selling Stockholders, including Common Stock underlying Warrants: |
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9,860,000 shares of common stock. |
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Common Stock Outstanding at July 29, 2020: |
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68,677,088 (1) |
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Use of Proceeds: |
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While we will not receive any proceeds from the sale of the shares of Common Stock as well as the shares of Common Stock underlying the Warrants offered by this prospectus by the Selling Stockholders, we may receive cash proceeds of up to $4,830,000 from the cash exercise of the Warrants, as each of the April Warrants have an exercise price of $2.20 per share and each of the May Warrants have an exercise price of $1.32 per share and collectively, such Warrants are exercisable into an aggregate of 2,760,000 shares of our Common Stock. |
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Risk Factors: |
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An investment in the Common Stock offered under this prospectus is highly speculative and involves substantial risk. Please carefully consider the “Risk Factors” section on page 5 and other information in this prospectus for a discussion of risks. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial may also impair our business and operations. |
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Nasdaq Symbol: |
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GLG |
(1) |
The number of shares of our Common Stock outstanding prior to and that will be outstanding after this offering excludes all Warrants outstanding or issuable in connection with this offering. |
RISK FACTORS
An investment in our Common Stock involves significant
risks. You should carefully consider the risk factors contained in any prospectus supplement and in our filings with the SEC, as well
as all of the information contained in this prospectus and the related exhibits, any prospectus supplement or amendments thereto, and
the documents incorporated by reference herein or therein, before you decide to invest in our Common Stock. Our business, prospects, financial
condition and results of operations may be materially and adversely affected as a result of any of such risks. The value of our Common
Stock could decline as a result of any of these risks. You could lose all or part of your investment in our Common Stock. Some of our
statements in sections entitled “Risk Factors” are forward-looking statements. The risks and uncertainties that we
have described are not the only ones that we face. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also affect our business, prospects, financial condition and results of operations.
SELLING STOCKHOLDERS
The table below lists the Selling Stockholders
and other information regarding the “beneficial ownership” of the shares of Common Stock by the Selling Stockholders. In accordance
with Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), “beneficial ownership”
includes any shares of Common Stock as to which the Selling Stockholders have sole or shared voting power or investment power and any
shares of Common Stock that the Selling Stockholders have the right to acquire within sixty (60) days (including shares of Common Stock
issuable upon exercise of warrants to purchase shares of Common Stock that are currently exercisable or exercisable within sixty (60)
days).
The second column indicates the number of shares
of Common Stock beneficially owned by the Selling Stockholders, based on their respective ownership as of July 29, 2020. The second column
also assumes the exercise of all of the Warrants held by the Selling Stockholders as of July 29, 2020, without regard to any limitations
on exercise described in this prospectus or in the Warrants.
The third column lists the shares of Common Stock
being offered by this prospectus by the Selling Stockholders.
This prospectus covers the resale of all of the
shares of Common Stock, including the shares of Common Stock issuable upon exercise of the Warrants that are held by the Selling Stockholders.
The Selling Stockholders can offer all, some or none of their shares of Common Stock, thus we have no way of determining the number of
the shares of Common Stock, including the shares of Common Stock underlying Warrants that will be held after this offering. Therefore,
the fourth and fifth columns assume that the Selling Stockholders will sell all of the shares of Common Stock, including the shares of
Common Stock issuable upon exercise of the Warrants which are covered by this prospectus. See “Plan of Distribution.”
| |
Number of Shares of Common Stock Owned Prior to Offering | | |
Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | | |
Number of Shares of Common Stock Owned After Offering | | |
Percentage Beneficially Owned After Offering | |
Hudson Bay Master Fund Ltd. (1)(2) | |
| 920,000 | | |
| 920,000 | | |
| 0 | | |
| * | % |
Anson Investments Master Fund LP (1)(3) | |
| 920,000 | | |
| 920,000 | | |
| 0 | | |
| * | |
Intracoastal Capital LLC (1)(4) | |
| 920,000 | | |
| 920,000 | | |
| 0 | | |
| * | |
Qianying Yuan (5) |
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2,500,000 |
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2,500,000 |
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0 |
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* |
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Guotao Deng (6) |
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3,100,000 |
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3,100,000 |
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0 |
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* |
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Shanchun Wang (7) |
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1,500,000 |
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1,500,000 |
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0 |
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* |
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TOTAL |
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9,860,000 |
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9,860,000 |
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0 |
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* |
% |
(1) |
Includes shares of Common Stock owned by the Selling Stockholders upon full exercise of all Warrants to purchase shares of Common Stock that are held by the Selling Stockholders. The April Warrants are each exercisable for one share of our Common Stock at an exercise price of $2.20 per share and the May Warrants are each exercisable for one share of Common Stock at an exercise price of $1.32 per share. |
(2) |
Hudson Bay Capital Management LP, the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities. |
(3) |
Anson Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments Master Fund LP (“Anson”), hold voting and dispositive power over the Common Shares held by Anson. Bruce Winson is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these Common Shares except to the extent of their pecuniary interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands. |
(4) |
Mitchell P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the securities reported herein that are held by Intracoastal. |
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(5) |
The address of the selling shareholder is 120 Jianmin St, Taohong Town, Longhui County, Hunan, PRC |
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(5) |
The address of the selling shareholder is 13 Guihua Road, Futian District, Shenzhen, Guangzhou, PRC |
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(5) |
The address of the selling shareholder is Rm. 3D-1603 New World Center Apartment, Chong Wen Men Wai Blvd, Beijing, PRC |
Material Relationships with Selling Stockholders
We have had the following material relationships
with the Selling Stockholders in the last three (3) years:
Registered Direct Offering
On April 11, 2019, the Company and certain institutional
investors entered into a securities purchase agreement, pursuant to which the Company agreed to sell to such investors an aggregate of
1,680,000 shares of common stock in a registered direct offering and warrants to purchase up to approximately 1,680,000 shares of the
Company’s Common Stock in a concurrent private placement, for gross proceeds of approximately $3.7 million. The warrants will be
exercisable immediately following the date of issuance and have an exercise price of $2.20. The warrants will expire 5 years from the
earlier of the date on which the shares of Common Stock issuable upon exercise of the warrants may be sold pursuant to an effective registration
statement or may be exercised on a cashless basis and be immediately sold pursuant to Rule 144. The purchase price for each share of Common
Stock and the corresponding warrant is $2.20. Each warrant is subject to anti-dilution provisions to reflect stock dividends and splits
or other similar transactions, but not as a result of future securities offerings at lower prices. The warrants contain a mandatory exercise
right for the Company to force exercise of the warrants if the Company’s common stock trades at or above $6.60 for 20 consecutive
trading days provided, among other things, that the shares issuable upon exercise of the warrants are registered or could be sold pursuant
to Rule 144 and the daily trading volume exceeds 200,000 shares per trading day on each trading day in a period of 20 consecutive trading
days prior to the applicable date.
On May 20, 2019, the Company and certain institutional
investors entered into a securities purchase agreement, pursuant to which the Company agreed to sell to such investors an aggregate of
1,440,000 shares of common stock in a registered direct offering and warrants to purchase up to approximately 1,080,000 shares of the
Company’s Common Stock in a concurrent private placement, for gross proceeds of approximately $1.5 million. The warrants will be
exercisable after 6 months of the date of issuance and have an exercise price of $1.32. The warrants will expire 5.5 years from the date
of issuance. Each warrant is subject to anti-dilution provisions to reflect stock dividends and splits or other similar transactions,
but not as a result of future securities offerings at lower prices. The warrants contain a mandatory exercise right for the Company to
force exercise of the warrants if the Company’s common stock trades at or above $3.96 for 20 consecutive trading days provided,
among other things, that the shares issuable upon exercise of the warrants are registered or could be sold pursuant to Rule 144 and the
daily trading volume exceeds 200,000 shares per trading day on each trading day in a period of 20 consecutive trading days prior to the
applicable date.
In addition, with the registered direct offering
and warrants to purchase up to approximately 1,080,000 shares on May 20, 2019, the Company agreed to reduce the exercise of the warrants
issued on April 15, 2019 from $2.20 to $1.32 (“Replacement Warrants”). However,
the Company’s issuance of the Replacement Warrants had resulted in noncompliance of Nasdaq Listing Rules 5635(d)(1) and 5635(d)(2),
subjecting the Company to a potential delisting from the Nasdaq Capital Market in the event the deficiency is not cured.
On August
30, 2019, the Company and the Purchasers entered into an amendment and exchange agreement (the “Exchange Agreement”), pursuant
to which the Company shall issue to the Purchasers exchange warrants (the “Exchange Warrants”) to purchase up to 1,680,000
shares of Common Stock with an exercise price of $2.20 in exchange for the cancellation and termination of the Replacement Warrants.
Private
Placement
On January 22, 2020, the Company entered into
certain securities purchase agreements (the “SPAs”) with certain “non-U.S. Persons” (the “Purchasers”)
as defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to which the Company
agreed to sell an aggregate of 15,000,000 shares of its common stock, par value $0.001 per share (“Common Stock”), at a per
share purchase price of $0.90 (the “Offering”), subject to various conditions to closing.
On March 23, 2020, the transaction contemplated
by the SPAs closed since all the closing conditions of the SPAs have been satisfied and the Company issued 15,000,000 shares of Common
Stock (the “Shares”) to the Purchasers pursuant to the SPAs.
On January 22, 2020, the Company also entered
into certain securities purchase agreements (the “Note SPAs”) with certain “non-U.S. Persons (the “Holders”)
as defined in Regulation S of the Securities Act, pursuant to which the Company agreed to sell unsecured senior convertible promissory
notes in the aggregate principal amount of $30,000,000 (the “Notes”) with a maturity date of 12 months, an interest rate of
7.5% per annum, and a conversion price of $1.50, accompanied by warrants (the “Warrants”) to purchase 100% shares of Common
Stock issuable upon conversion of the Notes at an exercise price of $1.80.
On March 23, 2020, the transaction contemplated
by the Note SPAs closed since all the closing conditions of the Note SPAs have been satisfied since all the closing conditions of the
Note SPAs have been satisfied and the Company issued the Notes and Warrants to the Holders pursuant to the Note SPAs dated January 22,
2020.
USE OF PROCEEDS
Except as otherwise provided in the applicable
prospectus supplement relating to a specific offering, we intend to use the net proceeds from the sale of securities by us under this
prospectus for working capital and other general corporate purposes. Additional information on the use of net proceeds from the sale of
securities by us under this prospectus may be set forth in the prospectus supplement relating to the specific offering.
We will not receive any of the proceeds from the
sale of any securities offered pursuant to this prospectus by any Selling Stockholder. The Selling Stockholders will receive all of the
proceeds from the sale of shares of Common Stock under the secondary offering of this prospectus. To the extent that we receive proceeds
from the exercise of the April Warrants and May Warrants, we will use those proceeds to pay for the expenses of this offering and for
working capital and other general corporate purposes. The Selling Stockholders will pay any agent’s commissions and expenses they
incur for brokerage, accounting, tax or legal services or any other expenses that they incur in disposing of the shares of Common Stock.
We will bear all other costs, fees and expenses incurred in effecting the registration of the shares of Common Stock covered by this prospectus
and any prospectus supplement. These may include, without limitation, all registration and filing fees, SEC filing fees and expenses of
compliance with state securities or “blue sky” laws.
See “Plan of Distribution” elsewhere
in this prospectus for more information.
PLAN OF DISTRIBUTION
We may sell the securities offered through this
prospectus (i) to or through underwriters or dealers, (ii) directly to purchasers, including our affiliates, (iii) through agents, or
(iv) through a combination of any these methods. The securities may be distributed at a fixed price or prices, which may be changed, market
prices prevailing at the time of sale, prices related to the prevailing market prices, or negotiated prices. The prospectus supplement
will include the following information:
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the terms of the offering; |
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the names of any underwriters or agents; |
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the name or names of any managing underwriter or underwriters; |
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the purchase price of the securities; |
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any over-allotment options under which underwriters may purchase additional securities from us; |
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the net proceeds from the sale of the securities; |
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any delayed delivery arrangements; |
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any underwriting discounts, commissions and other items constituting underwriters’ compensation; |
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any initial public offering price; |
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any discounts or concessions allowed or reallowed or paid to dealers; |
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any commissions paid to agents; and |
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any securities exchange or market on which the securities may be listed. |
Sale through Underwriters or Dealers
Only underwriters named in the prospectus supplement
are underwriters of the securities offered by the prospectus supplement. If underwriters are used in the sale, the underwriters will acquire
the securities for their own account, including through underwriting, purchase, security lending or repurchase agreements with us. The
underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions. Underwriters
may sell the securities in order to facilitate transactions in any of our other securities (described in this prospectus or otherwise),
including other public or private transactions and short sales. Underwriters may offer securities to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless otherwise
indicated in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all the offered securities if they purchase any of them. The underwriters may change
from time to time any public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
If dealers are used in the sale of securities
offered through this prospectus, we will sell the securities to them as principals. They may then resell those securities to the public
at varying prices determined by the dealers at the time of resale. The prospectus supplement will include the names of the dealers and
the terms of the transaction.
We will provide in the applicable prospectus supplement
any compensation we will pay to underwriters, dealers or agents in connection with the offering of the securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers.
Direct Sales and Sales through Agents
We may sell the securities offered through this
prospectus directly. In this case, no underwriters or agents would be involved. Such securities may also be sold through agents designated
from time to time. The prospectus supplement will name any agent involved in the offer or sale of the offered securities and will describe
any commissions payable to the agent. Unless otherwise indicated in the prospectus supplement, any agent will agree to use its reasonable
best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional
investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any sale of those securities.
The terms of any such sales will be described in the prospectus supplement.
Delayed Delivery Contracts
If the prospectus supplement indicates, we may
authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities at the public offering
price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The
contracts would be subject only to those conditions described in the prospectus supplement. The applicable prospectus supplement will
describe the commission payable for solicitation of those contracts.
Market Making, Stabilization and Other Transactions
Unless the applicable prospectus supplement states
otherwise, other than our common stock all securities we offer under this prospectus will be a new issue and will have no established
trading market. We may elect to list offered securities on an exchange or in the over-the-counter market. Any underwriters that we use
in the sale of offered securities may make a market in such securities, but may discontinue such market making at any time without notice.
Therefore, we cannot assure you that the securities will have a liquid trading market.
Any underwriter may also engage in stabilizing
transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Securities Exchange Act. Stabilizing
transactions involve bids to purchase the underlying security in the open market for the purpose of pegging, fixing or maintaining the
price of the securities. Syndicate covering transactions involve purchases of the securities in the open market after the distribution
has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim
a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the securities to be higher than it would be in the absence of the transactions. The underwriters may, if they commence
these transactions, discontinue them at any time.
Selling Shareholders’ Plan of Distribution
The Selling Stockholders and any of their respective
pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on any trading
market, stock exchange or other trading facility on which the securities are traded or in private transactions. These sales may be at
fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling securities:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
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an exchange distribution in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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settlement of short sales; |
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in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security; |
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through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
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a combination of any such methods of sale; or |
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any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell securities
under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders
may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders
(or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except
as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission
in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities
covered hereby, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also
sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers
that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers
or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other
financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers
or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale
of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. We are requesting
that each Selling Stockholder inform us that it does not have any written or oral agreement or understanding, directly or indirectly,
with any person to distribute the securities. We will pay certain fees and expenses incurred by us incident to the registration of the
securities.
Because the Selling Stockholders may be deemed
to be an “underwriter” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act, including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. We are requesting that each Selling
Stockholder confirm that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities
by the Selling Stockholder.
We intend to keep this prospectus effective until
the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard
to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current
public information requirement under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities
have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities
will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in
certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the
Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities
with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.
In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, which may limit the timing of purchases and sales of the Common Stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and are informing the Selling Stockholders of the
need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172
under the Securities Act).
DESCRIPTION OF CAPITAL STOCK
General
The following description of our capital stock
(which includes a description of securities we may offer pursuant to the registration statement of which this prospectus, as the same
may be supplemented, forms a part) does not purport to be complete and is subject to and qualified in its entirety by our certificate
of incorporation, our bylaws and by the applicable provisions of Delaware law.
Our authorized capital stock consists of 110,000,000
shares, par value $0.001 per share, consisting of 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. The following
description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our amended certificate
of incorporation and bylaws, which have been filed previously with the SEC, and applicable provisions of Delaware law.
We, directly or through agents, dealers or underwriters
designated from time to time, may offer, issue and sell, together or separately, up to $100,000,000 in the aggregate of:
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common stock; |
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preferred stock; |
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secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities; |
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warrants to purchase our securities; |
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rights to purchase our securities; or |
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units comprised of, or other combinations of, the foregoing securities. |
We may issue the debt securities as exchangeable
for or convertible into shares of common stock, preferred stock or other securities. The preferred stock may also be exchangeable for
and/or convertible into shares of common stock, another series of preferred stock or other securities. The debt securities, the preferred
stock, the common stock and the warrants are collectively referred to in this prospectus as the “securities.” When a particular
series of securities is offered, a supplement to this prospectus will be delivered with this prospectus, which will set forth the terms
of the offering and sale of the offered securities.
Common Stock
As of July 23, 2020, there were 68,963,229
shares of our common stock issued and outstanding, held of record by approximately 276 stockholders. The outstanding shares of
common stock are fully paid and non-assessable. The holders of common stock are entitled to one vote for each share held of record
on all matters submitted to a vote of the stockholders. The common stock has no cumulative voting rights, including with respect to
the election of directors.
Subject to preferential rights with respect to
any outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by our board
of directors out of funds legally available therefore. Pursuant to Section 281 of Delaware General Corporation Law, in the event of our
dissolution, the holders of common stock are entitled to the remaining assets after payment of all liabilities of the company.
Our common stock has no preemptive or conversion
rights or other subscription rights.
Preferred Stock
Our certificate of incorporation, as amended,
empowers our board of directors, without action by our shareholders, to issue up to 10,000,000 shares of preferred stock from time to
time in one or more series, which preferred stock may be offered by this prospectus and supplements thereto. As of the date of this prospectus,
no shares of preferred stock were designated or issued and outstanding. Our board may fix the rights, preferences, privileges and restrictions
of our authorized but undesignated preferred shares, including:
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dividend rights and preferences over dividends on our common stock or any series of preferred stock; |
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the dividend rate (and whether dividends are cumulative); |
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conversion rights, if any; |
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voting rights; |
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rights and terms of redemption (including sinking fund provisions, if any); |
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redemption price and liquidation preferences of any wholly unissued series of any preferred stock and the designation thereof of any of them; and |
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to increase or decrease the number of shares of any series subsequent to the issue of shares of that series but not below the number of shares then outstanding. |
You should refer to the prospectus supplement
relating to the series of preferred stock being offered for the specific terms of that series, including:
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title of the series and the number of shares in the series; |
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the price at which the preferred stock will be offered; |
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the dividend rate or rates or method of calculating the rates, the dates on which the dividends will be payable, whether or not dividends will be cumulative or noncumulative and, if cumulative, the dates from which dividends on the preferred stock being offered will cumulate; |
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the voting rights, if any, of the holders of shares of the preferred stock being offered; |
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the provisions for a sinking fund, if any, and the provisions for redemption, if applicable, of the preferred stock being offered, including any restrictions on the foregoing as a result of arrearage in the payment of dividends or sinking fund installments; |
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the liquidation preference per share; |
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the terms and conditions, if applicable, upon which the preferred stock being offered will be convertible into our common stock, including the conversion price, or the manner of calculating the conversion price, and the conversion period; |
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the terms and conditions, if applicable, upon which the preferred stock being offered will be exchangeable for debt securities, including the exchange price, or the manner of calculating the exchange price, and the exchange period; |
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any listing of the preferred stock being offered on any securities exchange; |
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a discussion of any material federal income tax considerations applicable to the preferred stock being offered; |
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any preemptive rights; |
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the relative ranking and preferences of the preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs; |
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any limitations on the issuance of any class or series of preferred stock ranking senior or equal to the series of preferred stock being offered as to dividend rights and rights upon liquidation, dissolution or the winding up of our affairs; and |
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any additional rights, preferences, qualifications, limitations and restrictions of the series. |
Upon issuance, the shares of preferred stock will
be fully paid and nonassessable, which means that its holders will have paid their purchase price in full and we may not require them
to pay additional funds.
Any preferred stock terms selected by our board
of directors could decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect
the rights and power, including voting rights, of the holders of our common stock without any further vote or action by the stockholders.
The rights of holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued by us in the future. The issuance of preferred stock could also have the effect of delaying or preventing a change
in control of our company or make removal of management more difficult.
Debt Securities
As used in this prospectus, the term “debt
securities” means the debentures, notes, bonds and other evidences of indebtedness that we may issue from time to time. The debt
securities will either be senior debt securities, senior subordinated debt or subordinated debt securities. We may also issue convertible
debt securities. Debt securities issued under an indenture (which we refer to herein as an Indenture) will be entered into between us
and a trustee to be named therein. It is likely that convertible debt securities will not be issued under an Indenture.
The Indenture or forms of Indentures, if any,
will be filed as exhibits to the registration statement of which this prospectus is a part. The statements and descriptions in this prospectus
or in any prospectus supplement regarding provisions of the Indentures and debt securities are summaries thereof, do not purport to be
complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Indentures (and any amendments
or supplements we may enter into from time to time which are permitted under each Indenture) and the debt securities, including the definitions
therein of certain terms.
General
Unless otherwise specified in a prospectus supplement,
the debt securities will be direct secured or unsecured obligations of our company. The senior debt securities will rank equally with
any of our other unsecured senior and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right of
payment to any senior indebtedness.
We may issue debt securities from time to time
in one or more series, in each case with the same or various maturities, at par or at a discount. Unless indicated in a prospectus supplement,
we may issue additional debt securities of a particular series without the consent of the holders of the debt securities of such series
outstanding at the time of the issuance. Any such additional debt securities, together with all other outstanding debt securities of that
series, will constitute a single series of debt securities under the applicable Indenture and will be equal in ranking.
Should an indenture relate to unsecured indebtedness,
in the event of a bankruptcy or other liquidation event involving a distribution of assets to satisfy our outstanding indebtedness or
an event of default under a loan agreement relating to secured indebtedness of our company or its subsidiaries, the holders of such secured
indebtedness, if any, would be entitled to receive payment of principal and interest prior to payments on the senior indebtedness issued
under an Indenture.
Prospectus Supplement
Each prospectus supplement will describe the terms
relating to the specific series of debt securities being offered. These terms will include some or all of the following:
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the title of debt securities and whether they are subordinated, senior subordinated or senior debt securities; |
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any limit on the aggregate principal amount of debt securities of such series; |
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the percentage of the principal amount at which the debt securities of any series will be issued; |
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the ability to issue additional debt securities of the same series; |
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the purchase price for the debt securities and the denominations of the debt securities; |
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the specific designation of the series of debt securities being offered; |
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the maturity date or dates of the debt securities and the date or dates upon which the debt securities are payable and the rate or rates at which the debt securities of the series shall bear interest, if any, which may be fixed or variable, or the method by which such rate shall be determined; |
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the basis for calculating interest if other than 360-day year or twelve 30-day months; |
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the date or dates from which any interest will accrue or the method by which such date or dates will be determined; |
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the duration of any deferral period, including the maximum consecutive period during which interest payment periods may be extended; |
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whether the amount of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference to any index, formula or other method, such as one or more currencies, commodities, equity indices or other indices, and the manner of determining the amount of such payments; |
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the dates on which we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest payable on any interest payment date; |
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the place or places where the principal of (and premium, if any) and interest on the debt securities will be payable, where any securities may be surrendered for registration of transfer, exchange or conversion, as applicable, and notices and demands may be delivered to or upon us pursuant to the applicable Indenture; |
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the rate or rates of amortization of the debt securities; |
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if we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part, pursuant to optional redemption provisions, and the other terms and conditions of any such provisions; |
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our obligation or discretion, if any, to redeem, repay or purchase debt securities by making periodic payments to a sinking fund or through an analogous provision or at the option of holders of the debt securities, and the period or periods within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant to such obligation, and the other terms and conditions of such obligation; |
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the terms and conditions, if any, regarding the option or mandatory conversion or exchange of debt securities; |
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the period or periods within which, the price or prices at which and the terms and conditions upon which any debt securities of the series may be redeemed, in whole or in part at our option and, if other than by a board resolution, the manner in which any election by us to redeem the debt securities shall be evidenced; |
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any restriction or condition on the transferability of the debt securities of a particular series; |
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the portion, or methods of determining the portion, of the principal amount of the debt securities which we must pay upon the acceleration of the maturity of the debt securities in connection with any event of default if other than the full principal amount; |
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the currency or currencies in which the debt securities will be denominated and in which principal, any premium and any interest will or may be payable or a description of any units based on or relating to a currency or currencies in which the debt securities will be denominated; |
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provisions, if any, granting special rights to holders of the debt securities upon the occurrence of specified events; |
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any deletions from, modifications of or additions to the events of default or our covenants with respect to the applicable series of debt securities, and whether or not such events of default or covenants are consistent with those contained in the applicable Indenture; |
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any limitation on our ability to incur debt, redeem stock, sell our assets or other restrictions; |
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the application, if any, of the terms of the applicable Indenture relating to defeasance and covenant defeasance (which terms are described below) to the debt securities; |
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what subordination provisions will apply to the debt securities; |
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the terms, if any, upon which the holders may convert or exchange the debt securities into or for our common stock, preferred stock or other securities or property; |
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whether we are issuing the debt securities in whole or in part in global form; |
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any change in the right of the trustee or the requisite holders of debt securities to declare the principal amount thereof due and payable because of an event of default; |
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the depositary for global or certificated debt securities, if any; |
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any material federal income tax consequences applicable to the debt securities, including any debt securities denominated and made payable, as described in the prospectus supplements, in foreign currencies, or units based on or related to foreign currencies; |
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any right we may have to satisfy, discharge and defease our obligations under the debt securities, or terminate or eliminate restrictive covenants or events of default in the Indentures, by depositing money or U.S. government obligations with the trustee of the Indentures; |
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the names of any trustees, depositories, authenticating or paying agents, transfer agents or registrars or other agents with respect to the debt securities; |
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to whom any interest on any debt security shall be payable, if other than the person in whose name the security is registered, on the record date for such interest, the extent to which, or the manner in which, any interest payable on a temporary global debt security will be paid if other than in the manner provided in the applicable Indenture; |
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if the principal of or any premium or interest on any debt securities is to be payable in one or more currencies or currency units other than as stated, the currency, currencies or currency units in which it shall be paid and the periods within and terms and conditions upon which such election is to be made and the amounts payable (or the manner in which such amount shall be determined); |
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the portion of the principal amount of any debt securities which shall be payable upon declaration of acceleration of the maturity of the debt securities pursuant to the applicable Indenture if other than the entire principal amount; |
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if the principal amount payable at the stated maturity of any debt security of the series will not be determinable as of any one or more dates prior to the stated maturity, the amount which shall be deemed to be the principal amount of such debt securities as of any such date for any purpose, including the principal amount thereof which shall be due and payable upon any maturity other than the stated maturity or which shall be deemed to be outstanding as of any date prior to the stated maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined); and |
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any other specific terms of the debt securities, including any modifications to the events of default under the debt securities and any other terms which may be required by or advisable under applicable laws or regulations. |
Unless otherwise specified in the applicable prospectus
supplement, the debt securities will not be listed on any securities exchange. Holders of the debt securities may present registered debt
securities for exchange or transfer in the manner described in the applicable prospectus supplement. Except as limited by the applicable
Indenture, we will provide these services without charge, other than any tax or other governmental charge payable in connection with the
exchange or transfer.
Debt securities may bear interest at a fixed rate
or a variable rate as specified in the prospectus supplement. In addition, if specified in the prospectus supplement, we may sell debt
securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate, or at a discount
below their stated principal amount. We will describe in the applicable prospectus supplement any special federal income tax considerations
applicable to these discounted debt securities.
We may issue debt securities with the principal
amount payable on any principal payment date, or the amount of interest payable on any interest payment date, to be determined by referring
to one or more currency exchange rates, commodity prices, equity indices or other factors. Holders of such debt securities may receive
a principal amount on any principal payment date, or interest payments on any interest payment date, that are greater or less than the
amount of principal or interest otherwise payable on such dates, depending upon the value on such dates of applicable currency, commodity,
equity index or other factors. The applicable prospectus supplement will contain information as to how we will determine the amount of
principal or interest payable on any date, as well as the currencies, commodities, equity indices or other factors to which the amount
payable on that date relates and certain additional tax considerations.
Warrants
We may issue warrants for the purchase of our
common stock, preferred stock or debt securities or any combination thereof. Warrants may be issued independently or together with our
common stock, preferred stock or debt securities and may be attached to or separate from any offered securities. To the extent warrants
that we issue are to be publicly-traded, each series of such warrants will be issued under a separate warrant agreement to be entered
into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with such
warrants. The warrant agent will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners
of warrants.
We will file as exhibits to the registration statement
of which this prospectus is a part, or will incorporate by reference from a current report on Form 8-K that we file with the SEC, forms
of the warrant and warrant agreement, if any. The prospectus supplement relating to any warrants that we may offer will contain the specific
terms of the warrants and a description of the material provisions of the applicable warrant agreement, if any. These terms may include
the following:
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the title of the warrants; |
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the price or prices at which the warrants will be issued; |
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the designation, amount and terms of the securities or other rights for which the warrants are exercisable; |
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the designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants issued with each other security; |
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the aggregate number of warrants; |
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any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants; |
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the price or prices at which the securities or other rights purchasable upon exercise of the warrants may be purchased; |
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if applicable, the date on and after which the warrants and the securities or other rights purchasable upon exercise of the warrants will be separately transferable; |
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a discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants; |
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the date on which the right to exercise the warrants will commence, and the date on which the right will expire; |
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the maximum or minimum number of warrants that may be exercised at any time; |
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information with respect to book-entry procedures, if any; and |
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any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
Exercise of Warrants. Each warrant will entitle
the holder of warrants to purchase the amount of securities or other rights, at the exercise price stated or determinable in the prospectus
supplement for the warrants. Warrants may be exercised at any time up to the close of business on the expiration date shown in the applicable
prospectus supplement, unless otherwise specified in such prospectus supplement. After the close of business on the expiration date, if
applicable, unexercised warrants will become void. Warrants may be exercised in the manner described in the applicable prospectus supplement.
When the warrant holder makes the payment and properly completes and signs the warrant certificate at the corporate trust office of the
warrant agent, if any, or any other office indicated in the prospectus supplement, we will, as soon as possible, forward the securities
or other rights that the warrant holder has purchased. If the warrant holder exercises less than all of the warrants represented by the
warrant certificate, we will issue a new warrant certificate for the remaining warrants.
Rights
We may issue rights to purchase our securities.
The rights may or may not be transferable by the persons purchasing or receiving the rights. In connection with any rights offering, we
may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters
or other persons would purchase any offered securities remaining unsubscribed for after such rights offering. Each series of rights will
be issued under a separate rights agent agreement to be entered into between us and one or more banks, trust companies or other financial
institutions, as rights agent, that we will name in the applicable prospectus supplement. The rights agent will act solely as our agent
in connection with the rights and will not assume any obligation or relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights.
The prospectus supplement relating to any rights
that we offer will include specific terms relating to the offering, including, among other matters:
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the date of determining the security holders entitled to the rights distribution; |
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the aggregate number of rights issued and the aggregate amount of securities purchasable upon exercise of the rights; |
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the exercise price; |
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the conditions to completion of the rights offering; |
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the date on which the right to exercise the rights will commence and the date on which the rights will expire; and |
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any applicable federal income tax considerations. |
Each right would entitle the holder of the rights
to purchase for cash the principal amount of securities at the exercise price set forth in the applicable prospectus supplement. Rights
may be exercised at any time up to the close of business on the expiration date for the rights provided in the applicable prospectus supplement.
After the close of business on the expiration date, all unexercised rights will become void.
If less than all of the rights issued in any rights
offering are exercised, we may offer any unsubscribed securities directly to persons other than our security holders, to or through agents,
underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements, as described in the applicable
prospectus supplement.
Units
We may issue units consisting of any
combination of the other types of securities offered under this prospectus in one or more series. We may evidence each series of
units by unit certificates that we may issue under a separate agreement. We may enter into unit agreements with a unit agent. Each
unit agent, if any, may be a bank or trust company that we select. We will indicate the name and address of the unit agent, if any,
in the applicable prospectus supplement relating to a particular series of units. Specific unit agreements, if any, will contain
additional important terms and provisions. We will file as an exhibit to the registration statement of which this prospectus is a
part, or will incorporate by reference from a current report that we file with the SEC, the form of unit and the form of each unit
agreement, if any, relating to units offered under this prospectus.
If we offer any units, certain terms of that series
of units will be described in the applicable prospectus supplement, including, without limitation, the following, as applicable
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the title of the series of units; |
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identification and description of the separate constituent securities comprising the units; |
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the price or prices at which the units will be issued; |
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the date, if any, on and after which the constituent securities comprising the units will be separately transferable; |
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a discussion of certain United States federal income tax considerations applicable to the units; and |
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any other material terms of the units and their constituent securities. |
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITY
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions,
the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the issuance of the securities
offered hereby will be passed upon for us by Hunter Taubman Fischer & Li LLC of New York, New York. Additional legal matters may be
passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
The financial statements of the Company as of
December 31, 2019 and for the fiscal year ended December 31, 2019 incorporated by reference in this prospectus and the registration statement
have been so incorporated in reliance on the report of Friedman LLP, an independent registered public accounting firm, incorporated herein
by reference, given on the authority of said firm as experts in auditing and accounting.
The financial statements of the Company as of
December 31, 2018 and for the fiscal year ended December 31, 2018 incorporated by reference in this prospectus and the registration statement
have been so incorporated in reliance on the report of BDO China Shu Lun Pan Certified Public Accountants LLP, an independent registered
public accounting firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration
statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s rules, this prospectus and any prospectus supplement,
which form a part of the registration statement, do not contain all the information that is included in the registration statement. You
will find additional information about us in the registration statement and its exhibits. Any statements made in this prospectus or any
prospectus supplement concerning legal documents are not necessarily complete and you should read the documents that are filed as exhibits
to the registration statement or otherwise filed with the SEC for a more complete understanding of the document or matter.
You can read our SEC filings, including the registration
statement, over the internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at
prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.
We are subject to the information reporting requirements
of the Exchange Act, and we file reports, proxy statements and other information with the SEC. These reports, proxy statements and other
information will be available for inspection and copying at the public reference room and website of the SEC referred to above. We also
maintain a website at www.summitwireless.com, at which you may access these materials free of charge as soon as reasonably practicable
after they are electronically filed with, or furnished to, the SEC. However, the information contained in or accessible through our website
is not part of this prospectus or the registration statement of which this prospectus forms a part, and investors should not rely on such
information in making a decision to purchase our Common Stock in this offering.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC permits us to “incorporate by reference”
into this prospectus the information contained in documents that we file with the SEC, which means that we can disclose important information
to you by referring you to those documents. Information that is incorporated by reference is considered to be part of this prospectus
and you should read it with the same care that you read this prospectus. Information that we file later with the SEC will automatically
update and supersede the information that is either contained, or incorporated by reference, in this prospectus, and will be considered
to be a part of this prospectus from the date those documents are filed. We have filed with the SEC and incorporate by reference in this
prospectus, except as superseded, supplemented or modified by this prospectus, the documents listed below:
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Our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on May 29, 2020; |
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Our Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed with the SEC on June 26, 2020; |
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Our Current Reports on Form 8-K, filed with the SEC on January 10, 2020, January 22, 2020, February 5, 2020, March 2, 2020, March 12, 2020, March 23, 2020, March 27, 2020, May 15, 2020, June 15, 2020, June 30, 2020 and July 28, 2020; and |
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Our Registration Statement on Form 8-A, filed with the SEC on August 12, 2013, including any amendments or reports filed for the purpose of updating the description of our common stock therein. |
We also incorporate by reference into this prospectus
additional documents that we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
but before the completion or termination of this offering (excluding any information not deemed “filed” with the SEC). Any
statement contained in a previously filed document is deemed to be modified or superseded for purposes of this prospectus to the extent
that a statement contained in this prospectus or in a subsequently filed document incorporated by reference herein modifies or supersedes
the statement, and any statement contained in this prospectus is deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in a subsequently filed document incorporated by reference herein modifies or supersedes the statement.
We will provide, without charge, to each person
to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein, including exhibits. Requests should be directed to:
TD Holdings, Inc.
Room 104, No. 33 Section D,
No. 6 Middle Xierqi Road,
Haidian District, Beijing, China
+86 (010) 59441080
Copies of these filings are also available on
our website at www.ir.imbatcar.com. For other ways to obtain a copy of these filings, please refer to “Where You Can Find
More Information” above.
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