UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT
OF 1933
TD HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
45-4077653 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
139, Xinzhou 11th Street, Futian District,
Shenzhen, Guangdong, PRC 518000
+86 (0755) 82792111
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Vcorp Services, LLC
108 W. 13th Street, Suite 100
Wilmington, De 19810
(888) 528-2677
(Name, address including zip code, and telephone
number, including area code, of agent for service)
With copies to:
Mark Li
MagStone Law, LLP
293 Eisenhower Parkway, Suite 135
Livingston, NJ 07039
Tel: (347) 934-9333
Facsimile: (347) 989-6327
Approximate date of commencement of proposed
sale to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this
Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans, check the following box. ☒
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant
to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective amendment to
a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section
8(a), may determine.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted. |
|
SUBJECT
TO COMPLETION |
DATED AUGUST 3, 2023 |
PROSPECTUS
TD Holdings, Inc.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
$1,500,000
Common Stock Issuable Upon the Conversion of
10% Convertible Note Due 2024
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.
Streeterville Capital, LLC (the “Selling
Stockholder”) may also offer common stock issuable upon the conversion of $1,500,000 principal amount of 10% convertible note due
2024 of TD Holdings, Inc. (the “Company”, “we”, “us” or “our”). We will not receive any
proceeds from the sale of our common stock by the Selling Stockholder in the offering described in this prospectus. We issued the note
to the Selling Stockholder in a transaction pursuant to a securities purchase agreement, dated March 13, 2023, by and between us and the
Selling Stockholder. We are registering these shares issuable on behalf of the Selling Stockholder, to be offered and sold by it from
time to time. The Selling Stockholder may, from time to time, sell, transfer or otherwise dispose of the shares or interests therein on
any stock exchange, market or trading facility on which the shares are traded or in private transactions at fixed prices, at market prices
prevailing at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or
at negotiated prices. The Selling Stockholder will bear all fees, discounts, concessions or commissions of broker-dealers or agents
in connection with the offering of the shares by the Selling Stockholder.
The securities may be sold by us or the Selling
Stockholder to or through underwriters or dealers, directly to purchasers or through agents designated from time to time. For additional
information on the methods of sale, see the section entitled “Plan of Distribution” on page 30. For more information of the
Selling Stockholder, see the section entitled “Selling Stockholder” on page 28.
The Selling Stockholder 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 Stockholder may sell their shares
of common stock hereunder following the effective date of this registration statement.
Our common stock is currently listed on the Nasdaq
Capital Market under the symbol “GLG.” On August 3, 2023, the last reported sale price of our Common Stock on the Nasdaq Capital
Market was $0.499 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 $78 million, based on the last sale price of our common stock
on the Nasdaq Capital Market on August 3, 2022. We have offered a total of $2,059,072.97 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.
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
two 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 risks.
You should carefully review the risks described under the heading “Risk Factors” beginning on page 9
of this prospectus, and under similar headings 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 , 2023.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement
that we filed with the Securities and Exchange Commission (the “SEC”), 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 Stockholder may offer common stock issuable upon the conversion of $1,500,000 principal amount of 10% convertible note
due 2024. 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 Stockholder has 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 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 “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 of 1933, as amended (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
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
The Commodities 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.
In order to diversify the Company’s business,
the Company has operated the Commodities Trading Business through Shenzhen Huamucheng Trading Co., Ltd. since November 2019, which was
renamed Shenzhen Baiyu Jucheng Data Technology Co., Ltd. (“Shenzhen Baiyu Jucheng”) in 2021. We initially acquired control
over Shenzhen Baiyu Jucheng via certain agreements with the previous shareholders of Shenzhen Baiyu Jucheng. On June 25, 2020, such agreements
were terminated and Shanghai Jianchi Supply Chain Co., Ltd., our wholly-owned subsidiary incorporated in China, acquired 100% equity interest
of Shenzhen Baiyu Jucheng from the previous shareholders of Shenzhen Baiyu Jucheng for nominal consideration.
Through Shenzhen Baiyu Jucheng’s business,
we source bulk commodity products from non-ferrous metals and mines or its designated distributors and then sell to manufacturers who
need these metals in large quantities. We also work with upstream suppliers in the sourcing of commodities.
Through Shenzhen Qianhai Baiyu Supply Chain Co.,
Ltd. (“Qianhai Baiyu”), our wholly-owned subsidiary incorporated in China, we also provide supply chain management services
to our customers. On October 26, 2020, Shenzhen Baiyu Jucheng 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 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 various
factors and strategies in order to effectively control risks and sustain business development.
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., the sole
shareholder of Tongdow Internet Technology. Pursuant to the terms of the Tongdow VIE Agreements, we obtained control of Tongdow Internet
Technology.
Our Services
Operation of Commodities Trading
Business
The Company’s
commodities trading operations via Shenzhen Baiyu Jucheng are focused on non-ferrous metal commodities such as aluminum, copper, silver,
and gold. We strive 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.
We source
bulk commodities from non-ferrous metal mines or its designated distributors and sell them to manufacturers who need these metals in large
quantities. We work with many suppliers in the sourcing of commodities, including various metal and mineral suppliers such as Xiamen
Huarui Zhongying Trading Co., Ltd., Ningbo Dajian Metal Materials Co., Ltd., Shenzhen Fuying Industrial Co., Ltd. and Qingdao Jikai New
Material Technology Co., Ltd. Potential customers include large infrastructure companies such as
Hainan Lisheng Supply Chain Management Co., Ltd., Shenzhen Jintongyuan Supply Chain Management Co., Ltd., Shenzhen Fuxinbao Supply
Chain Management Co., Ltd. and Shenzhen Jingdexuan Trading Co., Ltd.
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 the 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 sign and stamp 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. |
We use a prepaid unified
purchase and distribution model (the “Prepaid Model”) in our business, which is further detailed below.
Under the Prepaid Model,
we make advance prepayments between one to three months in advance when purchasing from the Company’s upstream suppliers. The process
involves first obtaining purchase orders from one or more downstream purchasers and entering into sales agreements with such purchasers.
After the Company receives the down payment from the downstream purchasers, it aggregates the total amount of commodities required to
fulfill the orders and enters into purchase agreements with upstream suppliers to fulfill its purchase orders. Once the upstream suppliers
have received the prepayment from the Company, they produce and deliver the commodities to the Company’s designated warehouse on
the purchase agreement. Upon receipt of the commodities in the designated warehouse, the Company is notified by the warehouse and obtains
the full payment from the downstream purchasers. After the Company pays its remaining balance to the upstream suppliers, it issues delivery
instructions to the designated warehouse on the sales agreement and has the commodities delivered to the downstream purchasers.
Through the Prepaid Model,
the Company maintains a stable distribution volume and thereby generates profit margins via purchase discounts from upstream suppliers
and mark-up pricing to downstream customers.
Warehousing Arrangement
Shenzhen Baiyu Jucheng
has entered into a certain warehousing agreement with Shanghai Quansheng pursuant to which Shenzhen Baiyu Jucheng designated Shanghai
Quansheng as its warehouse for the storage of its commodities.
Pursuant to the warehousing
agreement with Shanghai Quansheng, Shenzhen Baiyu Jucheng and Shanghai Quansheng agreed to various customary representations, warranties
and covenants, including, among other things, (1) details regarding the procedures for the storage and retrieval of the commodities, (2)
storage and penalty fees, and (3) negotiation and litigation in the event of any breach of contract.
Commodity 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 2% of the distribution order, depending
on the size of the order.
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.
RISK FACTORS
The following is a summary of certain risks
that should be carefully considered along with the other information 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. If any of the
following events actually occur, our business, operating results, prospects, or financial condition could be materially and adversely
affected. 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. Investing
in our securities involves risk. Before you decide to buy our securities, you should carefully consider the risks and uncertainties described
below, together with the risks described in our 2022 Form 10-K, and the other information contained in this prospectus and the accompanying
prospectus, including the documents incorporated by reference herein and therein. If any of these risks actually occurs, our business,
financial condition and results of operations could suffer, and you may lose all or part of your investment. Please see “Where You
Can Find More Information” and “Incorporation of Documents by Reference” for information on where you can find the documents
we have filed with or furnished to the SEC and which are incorporated into this prospectus by reference.
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 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.
SELLING STOCKHOLDER
On March 13, 2023, we entered into a securities
purchase agreement (the “Securities Purchase Agreement”) with Streeterville Capital, LLC (the “Selling Stockholder”),
pursuant to which the Selling Stockholder purchased a convertible note due 2024 dated March 13, 2023 (the “Note”). The Selling
Stockholder may from time to time resell the share of our common stock issuable upon conversion of $1,500,000 principal amount of the
Note.
The Note has a principal amount of $3,320,000
(the “Principal”) and bears an interest rate that equals to ten percent (10%) per annum. The purchase price for the Note is
$3,000,000 (the “Purchase Price”, and the date on which the Purchase Price is delivered by the Selling Stockholder to the
Company, the “Purchase Price Date”). The Principal and the interest payable under the Note will become due and payable twelve
(12) months from the Purchase Price Date (the “Maturity Date”), unless earlier converted or prepaid by us.
The Note has a conversion price (the “Redemption
Conversion Price”) equal to eighty percent (80%) multiplied by the lowest VWAP (the dollar volume-weighted average price for shares
of our common stock on the Nasdaq Capital Market) during the fifteen (15) trading days immediately preceding the date a redemption notice
is delivered. The Selling Stockholder has the right to redeem the Note at any time beginning on the date that is ninety (90) days from
the Purchase Price Date until the outstanding balance has been paid in full, subject to the maximum monthly redemption amount of $375,000.
Redemptions may be satisfied in cash, common stock at the Redemption Conversion Price, or any combination of the foregoing. We have the
right, but not the obligation, to prepay all or any portion of the outstanding balance under this Note prior to the Maturity Date at a
cash prepayment price equal to 125% of the outstanding balance to be prepaid. As of the date hereof, no redemption notice has been delivered.
We will not receive any proceeds from the sale
of the shares of common stock by the Selling Stockholder.
The foregoing summary descriptions of the Securities
Purchase Agreement and the Note do not purport to be complete and are qualified in their entirety by reference to the full text of such
documents, which are filed as exhibits to the registration statement of which this prospectus is a part and are incorporated by reference
herein.
As of the date hereof, the Selling Stockholder
does not hold any shares of our common stock. Atlas Sciences, LLC, an affiliate of the Selling Stockholder holds 220,772 of shares of
our common stock prior to the offering. The Selling Stockholder may from time to time offer the share of our common stock issuable upon
conversion of $1,500,000 principal amount of the Note.
Material Relationships with the Selling Stockholder
We have had the following material relationships
with the Selling Stockholder in the last three (3) years:
On January 6, 2021, the Company entered into a
securities purchase agreement with the Selling Stockholder, pursuant to which the Company issued an unsecured promissory note in the original
principal amount $1,670,000, convertible into shares of common stock, for proceeds of $1,500,000. The Company recorded a debt discount
of $170,000, which is being amortized over 12 months. On July 7, 2021, The Company settled convertible promissory note of $200,000 on
July 7, 2021, $1,590,694 on July 16, 2021, respectively, and issued 52,051 and 396,045 shares of the Company’s common stock on July
8, 2021 and July 19, 2021, respectively. As of December 31, 2021, the convertible promissory note issued on January 6, 2021 has been fully
settled.
On March 4, 2021, the Company entered into a securities
purchase agreement with the Selling Stockholder, pursuant to which the Company issued an unsecured promissory note in the original principal
amount of $3,320,000, convertible into shares of common stock, for proceeds of $3,000,000. The Company recorded a debt discount of $320,000,
which is being amortized over 12 months. The Company settled convertible promissory note of $300,000 on September 8, $250,000 on
October 15, 2021, $400,000 on October 26, 2021, $100,000 on October 29, 2021, $350,000 on November 1, 2021 and $400,000 on November 9,
2021, $200,000 on January 5, 2022, $175,000 on January 26, 2022, $175,000 on February 8, 2022, $200,000 on February
25, 2022, $375,000 on March 17, 2022, $500,000 on March 17, 2022, $179,819 on March 18, 2022 and $262,331.48 on June
8, 2022, respectively, and issued 97,796, 105,130, 175,070, 43,768, 153,186, 175,070, 128,932, 176,482, 188,740, 275,330, 516,244, 500,000, 179,819 and 386,691 shares
of the Company’s common stock on September 15, October 18, 2021, October 28, 2021, November 2, 2021, November 3, 2021, and November
10, 2021, January 10, 2022, January 27, 2022, February 9, 2022, March 2, 2022, March 17, 2022, March 21, 2022, March 22, 2022 and June
14, 2022, respectively. As of June 30, 2022, the convertible promissory note issued on March 4, 2021 has been fully settled.
On May 6, 2022, the Company entered into
a securities purchase agreement with the Selling Stockholder, pursuant to which the Company issued the investor a convertible promissory
note in the original principal amount of $3,320,000, convertible into shares of the Company’s common stock, for $3,000,000 in gross
proceeds. By written consent dated May 10, 2022, as permitted by Section 228 of the Delaware General Corporation Law and Section 8 of
Article II of our bylaws, the stockholders who have the authority to vote a majority of the outstanding shares of common stock approved
the following corporate actions: (i) the entry into a purchase agreement dated of May 6, 2022 by and between the Company and the investor,
pursuant to which the Company issued the note dated of May 6, 2022 to the investor; and (ii) the issuance of shares of common stock in
excess of 19.99% of the currently issued and outstanding shares of common stock of the Company upon the conversion of the note. The Company
settled convertible promissory note of $375,000 on November 16, 2022, $200,000 on January 18, 2023, $200,000 on February 3, 2023, $175,000
on February 8, 2023, $250,000 on February 15, 2023, $250,000 on March 8, 2023 and $125,000 on March 24, 2023, respectively, and issued
445,749, 235,960, 234,389, 205,090, 292,987, 279,567 and 145,660 shares of the Company’s common stock on November 17, 2022, January
19, 2023, February 6, 2023, February 8, 2023, February 15, 2023, March 15, 2023 and March 29, 2023, respectively.
On March 13, 2023, the Company entered into
a securities purchase agreement with the Selling Stockholder and issued a convertible note due 2024 (the “Note”) to the Selling
Stockholder. The Note has a principal amount of $3,320,000 (the “Principal”) and bears an interest rate that equals to ten
percent (10%) per annum. The purchase price for the Note is $3,000,000 (the “Purchase Price”, and the date on which the Purchase
Price is delivered by Streeterville Capital to the Company, the “Purchase Price Date”). The Principal and the interest payable
under the Note will become due and payable twelve (12) months from the Purchase Price Date (the “Maturity Date”), unless earlier
converted or prepaid by us. The Note has a conversion price (the “Redemption Conversion Price”) equal to eighty percent (80%)
multiplied by the lowest VWAP (the dollar volume-weighted average price for shares of our common stock on the Nasdaq Capital Market) during
the fifteen (15) trading days immediately preceding the date a redemption notice is delivered (the “Redemption Date”). In
this prospectus, we refer to all shares issued by us pursuant to conversion of the Note as “Conversion Shares.” The Investor
has the right to redeem the Note at any time beginning on the date that is ninety (90) days from the Purchase Price Date until the outstanding
balance has been paid in full, subject to the maximum monthly redemption amount of $375,000 (the “Maximum Monthly Redemption Amount”).
Redemptions may be satisfied in cash, common stock at the Redemption Conversion Price, or any combination of the foregoing. We have the
right, but not the obligation, to prepay all or any portion of the outstanding balance under this Note prior to the Maturity Date at a
cash prepayment price equal to 125% of the outstanding balance to be prepaid.
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 the Selling Stockholder. The Selling Stockholder will receive all of the
proceeds from the sale of shares of common stock under the secondary offering of this prospectus. The Selling Stockholder will pay any
agent’s commissions and expenses it incurs for brokerage, accounting, tax or legal services or any other expenses that it incurs
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 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 Stockholder’ Plan of Distribution
The Selling Stockholder and any of its respective
pledgees, assignees and successors-in-interest may, from time to time, sell any or all of its 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 Stockholder 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 Stockholder 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 Stockholder may also sell securities
under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholder
may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholder
(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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder 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 Stockholder or any other
person. We will make copies of this prospectus available to the Selling Stockholder and are informing the Selling Stockholder 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 650,000,000
shares, par value $0.001 per share, consisting of 600,000,000 shares of common stock and 50,000,000 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 August 1, 2023, there were 156,407,446 shares
of our common stock issued and outstanding, held of record by approximately 268 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 50,000,000 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 defense 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 MagStone Law, LLP. 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
Audit Alliance LLP, independent registered public
accounting firm, has audited the consolidated financial statements of TD Holdings, Inc. included in our Annual Report on Form 10-K for
the year ended December 31, 2022, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in
the registration statement. Such financial statements are incorporated by reference in reliance on Audit Alliance LLP’s report,
given on their authority as experts in accounting and auditing.
The consolidated financial statements of TD Holdings,
Inc. as of December 31, 2022 and 2021, and for the years then ended, have been incorporated by reference herein and in the registration
statement in reliance upon the report of Audit Alliance LLP, incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
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, 2022, filed with the SEC on March 10, 2023; |
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Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 12, 2023; |
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Our Current Reports on
Form 8-K filed with the SEC on January 10, 2023, March
14, 2023, May 16, 2023, May 26, 2023, and July 31, 2023; 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 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.
139, Xinzhou 11th Street, Futian District,
Shenzhen, Guangdong, PRC 518000
+86 (0755) 82792111
Copies of these filings are also available on
our website at www.tdglg.com. For other ways to obtain a copy of these filings, please refer to “Where You Can Find
More Information” above.
TD Holdings, Inc.
$100,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Rights
Units
$1,500,000
Common Stock Issuable Upon the Conversion of
10% Convertible Note Due 2024
PROSPECTUS
, 2023
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an estimate, subject to future
contingencies, of the expenses to be incurred by us in connection with the issuance and distribution of the securities being registered:
SEC registration fee | |
$ | 11,185.3 | |
Legal fees and expenses | |
| | (1) |
Accounting fees and expenses | |
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Miscellaneous fees and expenses | |
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Total | |
$ | | (1) |
| (1) | These fees are calculated based on the securities offered and
the number of issuances and accordingly cannot be estimated at this time. |
Item 15. Indemnification of Officers and Directors.
Section 145 of the DGCL (“Section 145”)
provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right
of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or
is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding,
had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, were
or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that
such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such
action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s
best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is
adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably
incurred.
Section 145 further authorizes a corporation to
purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against
any liability asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not
the corporation would otherwise have the power to indemnify him under Section 145.
Our bylaws provide that we must indemnify our
directors and officers to the fullest extent permitted by the DGCL and must also pay expenses incurred in defending any such proceeding
in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so
advanced if it should be determined ultimately that such person is not entitled to be indemnified.
We have entered into indemnification agreements
with certain of our executive officers and directors pursuant to which we have agreed to indemnify such persons against all expenses and
liabilities incurred or paid by such person in connection with any proceeding arising from the fact that such person is or was an officer
or director of our company, and to advance expenses as incurred by or on behalf of such person in connection therewith.
The indemnification rights set forth above shall
not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our certificate
of incorporation, as amended, our bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
We maintain standard policies of insurance that
provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful
act and (2) to us with respect to indemnification payments that we may make to such directors and officers.
See “Item 17. Undertakings” for a
description of the SEC’s position regarding such indemnification provisions.
Item 16. Exhibits.
The list of exhibits in the Exhibit Index to this registration statement
is incorporated herein by reference.
Item 17. Undertakings.
(a) | The undersigned registrant hereby undertakes: |
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(1) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
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To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
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(ii) |
To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
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(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; |
provided, however, that the undertakings set forth
in paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of this registration statement.
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(2) |
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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(3) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
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(4) |
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
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(i) |
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this registration statement as of the date the filed prospectus was deemed part of and included in this registration statement; and |
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(ii) |
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
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(5) |
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
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(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
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(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
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(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
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(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
|
|
(c) |
To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act. |
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized in the City
of Shenzhen, Guangdong Province, People’s Republic of China, on August 3, 2023.
|
TD HOLDINGS, INC. |
|
|
|
|
By: |
/s/ Renmei Ouyang |
|
|
Renmei Ouyang |
|
|
Chief Executive Officer |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose individual signature appears below hereby authorizes and appoints Renmei Ouyang and Tianshi (Stanley) Yang, and each of them, with
full power of substitution and resubstitution and full power to act without the other, as his true and lawful attorney-in-fact and agent
to act in his or her name, place and stead, and to execute in the name and on behalf of each person, individually and in each capacity
stated below, and to file any and all amendments to this registration statement, any related registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, and any or all pre- or post-effective amendments thereto, and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming that said attorneys-in-fact and agents, and each of them, or any substitute or substitutes for each of them,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, as amended, the following persons in the capacities and on the dates indicated have signed this registration statement below.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Renmei Ouyang |
|
Chief Executive Officer and Chairwoman of the Board |
|
|
Renmei Ouyang |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Tianshi (Stanley) Yang |
|
Chief Financial Officer and Director |
|
|
Tianshi (Stanley) Yang |
|
(Principal Financial Officer and Principal Accounting Officer) |
|
|
|
|
|
|
|
/s/ Xiangjun Wang |
|
Director |
|
|
Xiangjun Wang |
|
|
|
|
|
|
|
|
|
/s/ Heung Ming (Henry) Wong |
|
Director |
|
|
Heung Ming (Henry) Wong |
|
|
|
|
|
|
|
|
|
/s/ Donghong Xiong |
|
Director |
|
|
Donghong Xiong |
|
|
|
|
|
|
|
|
|
EXHIBIT INDEX
Exhibit No. |
|
Description of Exhibit |
3.1 |
|
Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the draft registration statement on Form DRS filed on February 14, 2013 |
|
|
|
3.2 |
|
Bylaws of Registrant, incorporated herein by reference to Exhibit 3.2 of the draft registration statement on Form DRS filed on February 14, 2013 |
|
|
|
3.5 |
|
Certificate of Amendment of the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.5 of the registration statement on Form S-1/A filed on July 16, 2013 |
|
|
|
3.6 |
|
Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on January 16, 2019 |
|
|
|
3.7 |
|
Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on June 7, 2019 |
|
|
|
3.8 |
|
Certificate of Amendment to the Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on March 12, 2020 |
|
|
|
3.9 |
|
Certificate of Amendment to Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on April 21, 2021 |
|
|
|
3.10 |
|
Certificate of Amendment to Certificate of Incorporation of Registrant, incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on August 17, 2022 |
|
|
|
4.5+ |
|
Form of Indenture |
|
|
|
4.6** |
|
Form of Debt Securities |
|
|
|
4.7** |
|
Form of Warrant Agreement, if any, including form of Warrant |
|
|
|
4.8** |
|
Form of Preferred Stock Certificate of Designation |
|
|
|
4.9** |
|
Form of Right Certificate |
|
|
|
5.1* |
|
Opinion of MagStone Law, LLP |
|
|
|
10.1 |
|
Securities Purchase Agreement, dated March 13, 2023, by and between the Company and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 14, 2023) |
|
|
|
10.2 |
|
Convertible Promissory Note, dated March 13, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 14, 2023) |
|
|
|
21.1* |
|
List of Subsidiaries |
|
|
|
23.1* |
|
Consent of Audit Alliance LLP |
|
|
|
23.3* |
|
Consent of MagStone Law, LLP (included in Exhibit 5.1) |
|
|
|
24.1* |
|
Powers of Attorney (included in the signature pages to the registration statement) |
|
|
|
107* |
|
Filing Fee Table |
** |
To be filed by amendment or as an exhibit to a filing with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934 and incorporated by reference in connection with the offering of securities to the extent required for any such offering. |
II-5
Exhibit 5.1
www.magstonelaw.com
August 3, 2023
TD Holdings, Inc.
139, Xinzhou 11th Street, Futian District
Shenzhen, Guangdong, PRC 518000
Re: TD Holdings, Inc. Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as securities
counsel for TD Holdings, Inc., a Delaware corporation (the “Company”), in connection with the preparation and filing
by the Company of a registration statement on Form S-3 (the “Prospectus”) to which this opinion letter has been filed
as an exhibit (the “Registration Statement”), relating to (A) the offer and sale by the Company from time to time,
pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), of up to an aggregate amount
of $100,000,000 of: (i) shares of common stock, $0.001 par value per share (the “Common Stock”), (ii) shares of preferred
stock, $0.001 par value per share (the “Preferred Stock”), (iii) debt securities of the Company (the “Debt
Securities”), in one or more series, (iv) warrants to purchase Common Stock, Preferred Stock or Debt Securities (the “Warrants”),
(v) subscription rights to purchase Common Stock or Preferred Stock (the “Rights”), and (vi) units consisting of one
or more of the foregoing (the “Units”), and (B) the offer and sale from time to time by a holder of certain shares
of Common Stock issuable upon the conversion of $1,500,000 principal amount of 10% convertible note due 2024. The Common Stock, Preferred
Stock, Debt Securities, Warrants, Rights and Units are collectively referred to herein as the “Securities.” Such Securities
may be offered and sold from time to time pursuant to Rule 415 under the Securities Act, at which time it is contemplated that the Prospectus
included in the Registration Statement will be supplemented by one or more supplements (each, a “Prospectus Supplement”).
In rendering our opinions
set forth below, we have reviewed such corporate documents and records of the Company, such certificates of public officials and such
other matters as we have deemed necessary or appropriate for purposes of this opinion letter. As to facts material to the opinions expressed
herein, we have relied upon oral and written statements and representations of officers and other representatives of the Company. We have
not independently verified or investigated, nor do we assume any responsibility for, the factual accuracy or completeness of such factual
statements. We also have assumed (a) the authenticity of all documents submitted to us as originals; (b) the conformity to the originals
of all documents submitted to us as copies; (c) the genuineness of all signatures; (d) the legal capacity of natural persons; and (e)
the truth, accuracy and completeness of the information, factual matters, representations and warranties contained in all of such documents.
Based upon such examination,
and subject to the further assumptions, qualifications and limitations contained herein, it is our opinion that:
1. The Common Stock and Preferred
Stock to be sold by the Company (including any Common Stock or Preferred Stock duly issued upon (i) the exercise of any duly issued Warrants
exercisable for Common Stock or Preferred Stock, (ii) the exercise of any duly issued Rights exercisable for Common Stock or Preferred
Stock, (iii) the exchange or conversion of Debt Securities which are exchangeable or convertible into Common Stock or Preferred Stock
or (iv) any Common Stock or Preferred Stock which are included within Units), upon issuance and delivery of certificates (or book-entry
notation if uncertificated) for such Common Stock or Preferred Stock against payment therefor of such lawful consideration as the Company’s
Board of Directors (the “Board”) (or a duly authorized committee thereof) may determine, will be validly issued, fully
paid and non-assessable.
2. The Debt Securities, upon
issuance and delivery of certificates of indebtedness or notes (or book-entry notation if uncertificated) evidencing such Debt Securities
against payment therefor of such lawful consideration as the Board (or a duly authorized committee thereof) may determine, will be validly
issued and will constitute valid and legally binding obligations of the Company.
3. The Warrants, upon their
issuance and delivery of certificates (or book-entry notation if uncertificated) for such Warrants against payment therefor of such lawful
consideration as the Board (or a duly authorized committee thereof) may determine, will be validly issued and will constitute valid and
legally binding obligations of the Company.
4. The Rights, upon their
issuance and delivery of certificates (or book-entry notation if uncertificated) for such Rights against payment therefor of such lawful
consideration as the Board (or a duly authorized committee thereof) may determine, will be validly issued and will constitute valid and
legally binding obligations of the Company.
5. The Units, upon their issuance
and delivery of certificates (or book-entry notation if uncertificated) for such Units against payment therefor of such lawful consideration
as the Board (or a duly authorized committee thereof) may determine, to the extent that such Units constitute Common Stock or Preferred
Stock, will be validly issued, fully paid and non-assessable, and to the extent such Units constitute or include Debt Securities, will
be validly issued and will constitute valid and legally binding obligations of the Company.
6. The shares of Common Stock
that are issuable upon exercise of the Warrants, when issued upon the exercise of the Warrants in accordance with the terms therein,
will be duly authorized, validly issued, fully paid and non-assessable.
In rendering the foregoing
opinions, we have assumed that: (i) the Registration Statement, and any amendments thereto, shall have become effective under the Securities
Act and will remain effective at the time of issuance of any Securities thereunder; (ii) a Prospectus Supplement describing each class
or series of Securities offered pursuant to the Registration Statement, to the extent required by applicable law and relevant rules and
regulations of the Securities and Exchange Commission (the “Commission”), will be timely filed with the Commission;
(iii) the definitive terms of each class or series of Securities shall have been established in accordance with resolutions duly adopted
by the Board (or an authorized committee thereof) (each, a “Board Action”), the Company’s Certificate of Incorporation,
as amended, (the “Certificate”) and applicable law; (iv) the Company will issue and deliver the Securities in the manner
contemplated by the Registration Statement, the Prospectus, the applicable Prospectus Supplement and any applicable underwriting agreement;
(v) the total number of shares of Common Stock issuable (including upon conversion, exchange or exercise of any other Security) will not
exceed the total number of shares of Common Stock that the Company is then authorized to issue under its Certificate; (vi) the Board Action
authorizing the Company to issue, offer and sell the Securities will have been adopted by the Board (or an authorized committee thereof)
and will be in full force and effect at all times at which the Securities are offered or sold by the Company; and (vii) all Securities
will be issued in compliance with applicable federal and state securities laws.
With respect to any Securities
consisting of Preferred Stock, we have further assumed that: (i) such Preferred Stock shall have been issued pursuant to a Certificate
of Designation filed by the Company with the Delaware Secretary of State (the “Certificate of Designation”); (ii) such
Certificate of Designation shall have been duly authorized, executed and delivered on behalf of the Company; (iii) all terms of such Preferred
Stock shall have been provided in the Certificate of Designation; (iv) such Certificate of Designation, as filed, does not violate any
law applicable to the Company or result in a default under or breach of any agreement or instrument binding upon the Company; (v) such
Certificate of Designation, as filed, will comply with all requirements and restrictions, if any, applicable to the Company, whether imposed
by any court or governmental or regulatory body having jurisdiction over the Company; and (vi) the total number of shares of Preferred
Stock issuable (including upon conversion, exchange or exercise of any other Security) will not exceed the total number of shares of Preferred
Stock that the Company is then authorized to issue under its Certificate or the Certificate of Designation.
With respect to any Securities
consisting of Debt Securities, we have further assumed that: (i) such Debt Securities shall have been issued pursuant to an indenture
(individually, and as supplemented from time to time, an “Indenture”) between the Company and a trustee to be identified
in the applicable Prospectus Supplement (the “Trustee”); (ii) such Indenture shall have been duly authorized, executed
and delivered on behalf of the Company; (iii) all terms of such Debt Securities not provided for in such Indenture shall have been established
in accordance with the provisions of the Indenture and reflected in appropriate documentation approved by us and, if applicable, executed
and delivered by the Company and the Trustee; (iv) such Debt Securities shall have been duly executed, authenticated, issued and delivered
in accordance with the provisions of such Indenture; (v) such Debt Securities, as executed and delivered, do not violate any law applicable
to the Company or result in a default under or breach of any agreement or instrument binding upon the Company; and (vi) such Debt Securities,
as executed and delivered, comply with all requirements and restrictions, if any, applicable to the Company, whether imposed by any court
or governmental or regulatory body having jurisdiction over the Company.
With respect to any Securities
consisting of Warrants, we have further assumed that (i) such Warrants shall have been issued pursuant to a warrant agreement (individually,
a “Warrant Agreement”) between the Company and a warrant agent to be identified in the applicable Prospectus Supplement
(the “Warrant Agent”); (ii) such Warrant Agreement shall have been duly authorized, executed and delivered on behalf
of the Company; (iii) all terms of such Warrants shall have been established in accordance with the provisions of such Warrant Agreement(s);
(iv) such Warrants shall have been duly executed, issued and delivered in accordance with the provisions of such Warrant Agreement(s);
(v) such Warrants and the related Warrant Agreement(s), as executed and delivered, do not violate any law applicable to the Company or
result in a default under or breach of any agreement or instrument binding upon the Company; and (vi) such Warrants and the related Warrant
Agreement(s), as executed and delivered, comply with all requirements and restrictions, if any, applicable to the Company, in any case
whether imposed by any court or governmental or regulatory body having jurisdiction over the Company.
With respect to any Securities
consisting of Rights, we have further assumed that (i) such Rights shall have been issued pursuant to a rights agreement (individually,
a “Rights Agreement”) between the Company and a rights agent to be identified in the applicable Prospectus Supplement
(the “Rights Agent”); (ii) such Rights Agreement shall have been duly authorized, executed and delivered on behalf
of the Company; (iii) all terms of such Rights shall have been established in accordance with the provisions of such Rights Agreement(s);
(iv) such Rights shall have been duly executed, issued and delivered in accordance with the provisions of such Rights Agreement(s); (v)
such Rights and the related Rights Agreement(s), as executed and delivered, do not violate any law applicable to the Company or result
in a default under or breach of any agreement or instrument binding upon the Company; and (vi) such Rights and the related Rights Agreement(s),
as executed and delivered, comply with all requirements and restrictions, if any, applicable to the Company, in any case whether imposed
by any court or governmental or regulatory body having jurisdiction over the Company.
To the extent that the obligations
of the Company under an Indenture may be dependent on such matters, we further have assumed for purposes of this opinion letter that the
Trustee under each Indenture (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization;
(ii) is duly qualified to engage in activities contemplated by such Indenture; (iii) has duly authorized, executed and delivered such
Indenture and such Indenture constitutes the legally valid and binding obligation of such Trustee enforceable against such Trustee in
accordance with its terms; (iv) is in compliance, with respect to acting as a trustee under such Indenture, with all applicable laws and
regulations; and (v) has the requisite organizational and legal power and authority to perform its obligations under such Indenture.
To the extent that the obligations
of the Company under any Warrant or Warrant Agreement may be dependent on such matters, we further have assumed for purposes of this opinion
letter that the Warrant Agent under each Warrant Agreement (i) is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization; (ii) is duly qualified to engage in the activities contemplated by such Warrant Agreement; (iii)
has duly authorized, executed and delivered such Warrant Agreement and such Warrant Agreement constitutes the legally valid and binding
obligation of such Warrant Agent enforceable against such Warrant Agent in accordance with its terms; (iv) is in compliance, with respect
to acting as a Warrant Agent under such Warrant Agreement, with all applicable laws and regulations; and (v) has the requisite organizational
and legal power and authority to perform its obligations under such Warrant Agreement.
To the extent that the obligations
of the Company under any Rights or Rights Agreement may be dependent on such matters, we further have assumed for purposes of this opinion
letter that the Rights Agent under each Rights Agreement (i) is duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization; (ii) is duly qualified to engage in the activities contemplated by such Rights Agreement; (iii) has
duly authorized, executed and delivered such Rights Agreement and such Rights Agreement constitutes the legally valid and binding obligation
of such Rights Agent enforceable against such Rights Agent in accordance with its terms; (iv) is in compliance, with respect to acting
as a Rights Agent under such Rights Agreement, with all applicable laws and regulations; and (v) has the requisite organizational and
legal power and authority to perform its obligations under such Rights Agreement.
We express no opinion with
respect to the enforceability of: (i) provisions relating to choice of law, choice of venue, jurisdiction or waivers of jury trial, or
(ii) any waiver of any usury defense. This opinion letter is rendered as of the date hereof, and we disclaim any undertaking to advise
you of any subsequent changes in the facts stated or assumed herein or any subsequent changes in applicable law that may come to our attention,
and we have assumed that no change in the facts stated or assumed herein or in applicable law after the date hereof will affect adversely
our ability to render an opinion letter after the date hereof (i) containing the same legal conclusions set forth herein; and (ii) subject
only to such (or fewer) assumptions, limitations and qualifications as are contained herein.
The foregoing opinions are
limited to the statutory provisions of Delaware corporate law, including the rules and regulations underlying those provisions, all applicable
provisions of the Delaware Constitution and all applicable judicial and regulatory determinations (with respect to the opinions in paragraphs
1 through 5), and limited to the laws of the State of New York (with respect to the opinion in paragraph 6) and applicable federal laws
of the United States of America, and we express no opinion as to the effect of the laws of any other jurisdiction, domestic or foreign.
We are not rendering any opinion as to compliance with any federal or state antifraud law, rule, or regulation relating to securities,
or to the sale or issuance thereof.
We hereby consent to the filing
of this opinion letter with the Commission as Exhibit 5.1 to the Registration Statement in accordance with the requirements of Item 601(b)(5)
of Regulation S−K under the Securities Act and to the reference to our firm therein and in the Prospectus and any Prospectus Supplement
under the caption “Legal Matters.” In giving such consent, we do not thereby admit that this firm is within the category of
persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
|
Very truly yours, |
|
|
|
/s/ MagStone Law, LLP |
|
MAGSTONE LAW, LLP |
6
Exhibit 21.1
List of Subsidiaries and Consolidated Entity
of TD Holdings, Inc. as of August 2, 2023
Name of Subsidiary |
|
Jurisdiction of Incorporation or Organization |
HC High Summit Holding Limited |
|
British Virgin Islands |
BAIYU International Supply Chain PTE.LTD |
|
Singapore |
TD Internet Of Things Technology Company Limited |
|
Hong Kong |
Zhong Hui Dao Ming Investment Management
Limited |
|
Hong Kong |
Tongdow E-trade Limited |
|
Hong Kong |
Shanghai Jianchi Supply Chain Co., Ltd. |
|
People’s Republic of China |
Shenzhen Baiyu Jucheng Data Technology Co., Ltd. |
|
People’s Republic of China |
Shenzhen Qianhai Baiyu Supply Chain Co., Ltd. |
|
People’s Republic of China |
Shenzhen Tongdow Internet Technology Co., Ltd. |
|
People’s Republic of China |
Tongdow (Hainan) Data Technology Co. Ltd. |
|
People’s Republic of China |
Hainan Jianchi Import and Export Co., Ltd. |
|
People’s Republic of China |
Hainan Baiyu Cross-border E-commerce Co., Ltd. |
|
People’s Republic of China |
Yangzhou Baiyu Venture Capital Co., Ltd. |
|
People’s Republic of China |
Yangzhou Baiyu Cross-border E-commerce Co., Ltd. |
|
People’s Republic of China |
Zhejiang Baiyu Lightweight New Material Co., Ltd. |
|
People’s Republic of China |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 (File No. 333- ) of TD Holdings, Inc. of our report dated March 10, 2023
relating to the financial statements, which appears in TD
Holdings, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022 and 2021.
/s/ Audit Alliance LLP
Singapore
August 3, 2023
Exhibit 107
Calculation of Filing Fee Table
Form S-3
(Form Type)
TD HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Table 1 - Newly Registered Securities |
|
Security Type | |
Security Class Title | |
Fee Calculation Rule | | |
Amount Registered(2) | | |
Proposed Maximum Offering Price Per Security | | |
Maximum Aggregate Offering Price | | |
Fee Rate | | |
Amount of Registration Fee | |
Unallocated (Universal Shelf) | |
Common Stock, par value $0.001 per share; Preferred Stock, par value $0.001 per share; Debt Securities; Warrants; Subscription Rights; Units | |
| 457(o) | | |
| | (1) | |
| | (3)(4) | |
$ | 100,000,000 | (4) | |
| $110.20 per $1,000,000 | | |
$ | 11,020 | |
Equity | |
Common Stock, par value $0.001 per share | |
| 457(o) | | |
| | (5) | |
| | (5) | |
$ | 1,500,000 | (4)(5) | |
| $110.20 per $1,000,000 | | |
$ | 165.3 | |
Total Offering Amounts | | |
| | | |
$ | 101,500,000 | | |
| | | |
$ | 11,185.3 | |
Total Fees Previously Paid | | |
| | | |
| | | |
| | | |
| — | |
Total Fee Offsets | | |
| | | |
| | | |
| | | |
$ | 4,774.74 | |
Net Fee Due | | |
| | | |
| | | |
| | | |
$ | 6,410.56 | |
(1) |
The securities registered hereunder include such indeterminate number of (a) shares of common stock, (b) shares of preferred stock, (c) debt securities, (d) warrants to purchase common stock, preferred stock or debt securities of the registrant, (e) subscription rights to purchase common stock, preferred stock, debt securities, warrants or units consisting of some or all of these securities of the registrant, and (f) units consisting of some or all of these securities, as may be sold from time to time by the registrant. There are also being registered hereunder an indeterminate number of shares of common stock and preferred stock as shall be issuable upon conversion, exchange or exercise of any securities that provide for such issuance. |
(2) |
Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, this registration statement shall also cover any additional shares of the registrant’s securities that become issuable by reason of any share splits, share dividends or similar transactions. |
(3) |
The proposed maximum offering price per security and proposed maximum aggregate offering price per class of security will be determined from time to time by the registrant in connection with the issuance by the registrant of the securities registered hereunder and is not specified as to each class of security pursuant to General Instruction II.D. of Form S-3 under the Securities Act. Separate consideration may or may not be received for securities that are issuable on exercise, conversion or exchange of other securities, or that are issued in units. |
(4) |
Estimated solely for the purpose of calculating the registration fee. Subject to Rule 462(b) under the Securities Act, the aggregate maximum offering price of all securities issued by the registrant pursuant to this registration statement will not exceed the amount set forth above. |
(5) |
Represents the shares of common stock of the Registrant that will be offered for resale by the selling stockholder, Streeterville Capital, LLC, pursuant to the prospectus to which this exhibit is attached, consisting of shares of the Registrant’s common stock issuable upon the conversion of $1,500,000 principal amount of certain Convertible Promissory Note dated March 13, 2023 issued to the selling stockholder (the “Note”). The Note is convertible into the Registrant’s shares of common stock at a redemption conversion price equal to 80% multiplied by the lowest VWAP (the dollar volume-weighted average price for the Registrant’s shares of common stock on the Nasdaq Capital Market) during the 15 trading days immediately preceding the date the applicable redemption notice is delivered in accordance with the terms and conditions of the Note. No redemption notice has been delivered. The resale of such shares of common stock issuable pursuant to the conversion of $1,500,000 principal amount of the Note was previously registered in the 424b5 Prospectus Supplement to the S-3, pursuant to the Registrant’s Registration Statement on Form S-3 (Registration No. 333-239757). |
Table 2: Fee Offset Claims and Sources
| |
Registrant
or Filer Name | |
Form or
Filing Type | | |
File
Number | | |
Initial
Filing Date | | |
Filing
Date | | |
Fee
Offset Claimed | | |
Security
Type Associated with Fee Offset Claimed | |
Security
Title Associated with Fee Offset Claimed | |
Unsold
Securities Associated with Fee Offset Claimed | | |
Unsold
Aggregate Offering Amount Associated with Fee Offset Claimed | |
| |
Fee
Paid with Fee Offset Source |
|
Rule 457(p) |
Fee
Offset Claims | |
TD
Holdings, Inc. | |
S-3 | | |
333-239757 | | |
07/08/2020 | | |
| | | |
$ | 4,774.74 | (1) | |
Unallocated
(Universal) Shelf | |
Unallocated
(Universal) Shelf | |
| | (1) | |
| | (1) |
| |
|
|
Fee
Offset Sources | |
TD Holdings,
Inc. | |
S-3 | | |
333-239757 | | |
| | |
| 07/08/2020 | | |
| | | |
| |
| |
| | | |
| | |
| $ |
12,980 |
(1) |
(1) |
On July 8, 2020, the Registrant filed a Registration
Statement on Form S-3 (Registration No. 333-239757), pursuant to which it registered in aggregate principal amount of $100,000,000
of the Registrant’s common stock, preferred stock, debt securities, warrants to purchase 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, to be offered by the Registrant from time to time pursuant to
prospectus supplements to the S-3 to be filed by the Registrant with Securities and Exchange Commission (the “SEC”) at
a future date (the “2020 Universal Shelf”). The 2020 Universal Shelf was declared effective by the SEC on August 4, 2020.
The Registrant paid the registration fee in an amount of $12,980 with respect to the
2020 Universal Shelf.
On November 24, 2020, the Registrant filed
a 424b5 Prospectus Supplement to the S-3 with the SEC, pursuant to which it registered 8,000,000 shares of its common stock having
an aggregate offering price of $20,000,000 (the “2020 Offering”). The filing fee amount attributable to such sale of
securities was $2,596, as calculated in accordance with Rule 457 of the Securities
Act.
On January 20, 2021, the Registrant filed
a 424b5 Prospectus Supplement to the S-3 with the SEC, pursuant to which it reregistered up to 15,800,000 shares of its common stock,
consisting of an offering up to 15,775,000 shares to one investor and an offering of 25,000 shares of common stock to its placement
agent, for an aggregate offering price of up to $40,000,000 (the “2021 Offering”). The filing fee amount attributable
to such sale of securities was $4,364, as calculated in accordance with Rule 457 of
the Securities Act. On December 14, 2022, the Registrant filed a 424b5 Supplement No. 1 to the Prospectus Supplement filed on January
20, 2021, pursuant to which it amended the registration of an offering of up to 15,775,000 shares to one investor to up to 2,589,306
shares of its common stock.
On March 14, 2023, the Registrant filed a
424b5 Prospectus Supplement to the S-3 with the SEC, pursuant to which it reregistered shares of common stock, for an aggregate offering
price of up to $1,500,000, issuable upon the conversion of $1,500,000 principal amount of a 10% convertible note and interest accrued
thereon (the “2023 First Offering”). The filing fee attributable to such sale of securities was $165.3,
as calculated in accordance with Rule 457 of the Securities Act.
On July 31, 2023, the Registrant filed a
424b5 Prospectus Supplement to the S-3 with the SEC, pursuant to which it reregistered 28,000,000 shares of common stock, at an offering
price of $0.35 per share, for an aggregate offering price of $9,800,000 (the “2023 Second Offering”, together with the
2023 First Offering, collectively, the “2023 Offering”). The filing fee attributable to such sale of securities was $1,079.96,
as calculated in accordance with Rule 457 of the Securities Act.
As a result, after the 2020 Offering, the
2021 Offering, and the 2023 Offering, the Registrant has $4,774.74 in unused filing
fees paid by the Registrant in connection with its filing of the 2020 Universal Shelf. In accordance with Rule 457(p) under the Securities
Act, the registrant is using such $4,774.74 unused filing fees paid by the Registrant
in connection with its filing of the 2020 Universal Shelf to offset against the registration fee of $11,185.3
due for this offering. The remaining balance of the registration fee, $6,410.56,
is being paid herewith in connection with the filing of this Form S-3. The Registrant has terminated
the offering that included the unsold securities associated with the claimed offset under the prior registration statement. |
Table 3: Combined Prospectuses
N/A
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