HONG KONG, March 31, 2021 /PRNewswire/ -- Lion Group Holding Ltd. ("Lion" or "the Company") (NASDAQ: LGHL), operator of an all-in-one trading platform that offers a wide spectrum of products and services with a focus on Chinese investors, today announced its unaudited financial results for the full year ended December 31, 2020.
FINANCIAL AND OPERATING HIGHLIGHTS
All comparisons are made on a year-over-year ("yoy") basis.
For the Full Year Ended December 31, 2020
Mr. Chunning (Wilson) Wang, CEO of Lion, commented: "Similar to other companies, our various business segments were adversely affected by the COVID-19 pandemic. Our financial performance is subject to changing global market conditions, particularly the fluctuation and volatility of trading activities on major exchanges worldwide, which resulted in decreases in revenue and margins for Lion this year. Despite these challenges, we made efforts to remain competitive in the industry, largely attributable to our diverse new products and service offerings. For example, we launched our TRS trading services to allow international investors to invest in the Chinese stock market. We are planning to launch a fintech business through the prospective acquisition of Lion Fintech, which holds a proprietary trading license for crypto assets in Dubai. At the same time, we recently sponsored two SPAC companies and hope to realize gains from the appreciation of founder shares upon each SPAC's initial public offering."
"While we expect our CFD trading services to continue being a major revenue source in the near future, we cooperated with Yun Tian Investment Limited, which has dispatched a team of talent in the areas of finance, technology, and marketing, to further advance our development in the TRS trading business. We are also pleased that Mr. Guandong (Gordon) Wang, who has nearly 10 years of experience in quantitative trading, has joined our Board and is expected to play a key role in our TRS trading business."
"As we head into the new year, we remain confident in our long-term strategies and ongoing developments. We expect businesses will return to normal in June this year once large populations have received the vaccine. In addition, the need for new products and services will further increase as our client base diversifies. As such, we will continue to monitor the situation and develop new products and services to keep up with customer demands and industry trends."
RECENT DEVELOPMENTS/BUSINESS HIGHLIGHTS
On July 16, 2020, Lion announced the official launch of "Lion Lu Gu Tong," its total return swap (TRS) service that offers A-shares (shares that are denominated in Renminbi and traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange) and Hong Kong stock basket-linked TRS. Lion earns income from the spread on interest rate loans provided to TRS trading customers and loans borrowed from our business partners, in addition to receiving commissions and fees from customers for trades made through the TRS trading service. Leveraging Lion's advanced technology infrastructure, the new service provides a fast, smooth, and economical channel that facilitates the purchase of Chinese stocks by international investors.
- TRS is growing steadily and may become a new core driver
Lion's TRS trading business is currently growing steadily. In terms of financial support, Lion is raising $10 million in a private placement with Yun Tian Investment Limited ("Yun Tian") through a group of reputable and wealthy private entrepreneurs from South China. Lion expects to use the proceeds from the private placement to develop its TRS trading business, among other business segments, in which the parties will co-operate with each other. In addition to financing, Yun Tian offers professional expertise and industry experience to advance the Company's development in TRS trading business.
- Lion appoints new director to Board of Directors
In January 2021, Lion appointed Mr. Guandong (Gordon) Wang as a director of the Board of Directors. Mr. Wang has approximately 14 years of financial industry experience and approximately 10 years of quantitative trading and technology-related experience. Mr. Wang's diverse background and ample experience will be valuable in playing a key role to develop Lion's TRS trading business and provide insights in developing innovative products to serve the needs of our customers.
- Trend in cross-border investment
Cross-border investment has become more and more popular, which continues to benefit the business of cross-border internet brokerages. Recently, the Northbound funds have seen good performance, and Lu Gang Tong trading is expected to increase quickly. Lion intends to leverage its competitive advantage as one of the few cross-border internet brokerages that offer TRS trading services to Chinese investors.
In March 2021, the Company launched the sponsorship of two SPAC companies in cooperation with other parties. Currently, the SPAC companies are in the formation stage. The Company intends to build a professional SPAC sponsorship team, evolve, and develop SPAC sponsorship into a key business segment with plans to sponsor at least one more SPAC by the end of 2021. The Company expects to derive gains from the appreciation of founder shares upon each SPAC's initial public offering and derive gains or losses from further appreciation or depreciation of founder shares following each SPAC's merger transaction, at the cost of the sponsor's risk investment. The Company expects to bring in new talent with SPAC experience to help advance this business segment in 2021.
In January 2021, Lion engaged Mr. Yao Yongjie, chairman of Grandshores Technology Group Limited ("Grandshores") (HKEX: 01647), as the chief technical adviser to provide blockchain technology support, advice on operations, and consulting services in operating digital asset trading platforms. Shortly after, Lion signed a framework partnership agreement with Grandshores. In March 2021, Lion subscribed 64,500,000 shares of Grandshores at a total subscription price of approximately $3.5 million as its first investment into the blockchain field. In cooperation with Grandshores, Lion plans to expand into the blockchain industry, including, but not limited to, investment in cryptocurrency mining, investment in private blockchain technology companies, and issuance of mainstream digital currency trust funds.
Since the beginning of 2020, hundreds of billions of capital from mainland China flowed southward and outside of China, boosting Hong Kong and U.S. financial markets. As a result of the positive impact of the Hong Kong financial market, online-brokerage companies led the market in terms of growth, suggesting that the market is gradually tapping into the Company's value. Recently, Lion has taken the lead in launching its TRS trading service, which complements existing southbound trading in the market.
Lion has completed a couple of private placement transactions since the end of 2020 and acquired sufficient funds to support its upcoming business expansions. See "Liquidity" below.
Lion introduced a Vietnamese-language version of its CFD trading platform, Lion Brokers Pro, in October 2020. The Company currently has a team in place in Ho Chi Minh City to support the expansion and will engage local enterprises as part of its promotion and marketing efforts. In addition to Vietnam, Lion intends to target Singapore and Thailand in the next tranche of its strategic plan to expand into Southeast Asia. The Company established a subsidiary and office in Singapore earlier in 2019 and applied for a Capital Markets Services license with the Monetary Authority of Singapore. Approval is expected in the first half of 2021.
FINANCIAL RESULTS
For the Full Year ended December 31, 2020
Revenues
Total revenues decreased by 44.8% yoy to $10.2 million for the year ended December 31, 2020, from $18.5 million for the year ended December 31, 2019, primarily due to: (i) a decrease in market marking commission income; (ii) a decrease in futures and securities brokerage income; and (iii) a decrease in insurance brokerage income, slightly offset by an increase in trading profits.
Year ended December 31, |
||||||
2020 |
2019 |
|||||
US$ |
% |
US$ |
% |
|||
CFD trading and other services |
7,034,447 |
68.7 |
12,843,574 |
69.3 |
||
Insurance brokerage services |
959,299 |
9.3 |
2,648,141 |
14.3 |
||
Futures and securities brokerage services |
2,029,669 |
19.9 |
2,215,867 |
12.0 |
||
Others |
206,720 |
2.1 |
819,268 |
4.4 |
||
Total |
10,230,135 |
100.0 |
18,526,850 |
100.0 |
Operating expenses
Total operating expenses increased by 32.6% yoy to $13.6 million from US$10.2 million in the prior year, primarily due to increases in G&A expenses, compensation expenses, communication and technology, professional fees, marketing expenses, and service expenses, partially offset by a decrease in commission expenses and interest expenses.
Net (loss) income
Net loss was $3.4 million for the year of 2020, as compared to a net income of $8.2 million in 2019.
Net (loss) income per ADS
Diluted net loss per ADS was $0.33 in 2020, as compared to a diluted net income per ADS of $1.16 in 2019.
Non-GAAP Financial Results
Non-GAAP net income, which excludes stock-based compensation expenses and amortization of debt discounts, was $0.3 million for the year of 2020, as compared to non-GAAP net income of $8.2 million in 2019. Non-GAAP net income per ADS – diluted was US$0.03, as compared to a non-GAAP net income per ADS – diluted of US$1.16 in 2019.
Liquidity
As of December 31, 2020, the Company's cash and restricted cash were $3.4 million (excluding $1.4 million of restricted cash), compared to $6.4 million (excluding $2.2 million of restricted cash), as of December 31, 2019. Net cash provided by operating activities was $0.1 million. Net cash used in investing activities was $6.6 million. Net cash provided by financing activities was $2.6 million.
Subsequently, the Company received proceeds of an aggregate US$28.9 million in exchange for the issuance of 15.0 million ADSs as a result of investors' exercise of warrants. In addition, the Company also received US$6.44 million in consideration of the issuance of Series A Convertible Preferred Shares along with February 2021 Warrants.
BUSINESS OUTLOOK
Based on current market and operating conditions, the Company anticipates that all its businesses will recover from COVID-19 in June 2021. Revenue is expected to grow by 260% to 300% to reach between $37.0 million and $41.7 million for the full year 2021. This forecast reflects the Company's current and preliminary views, which is subject to change, including any potential future impact of the COVID-19 pandemic, the effects of which are difficult to analyze and predict.
Non-GAAP Financial Measures
This press release includes reconciliations of the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. ("GAAP") to non-GAAP financial measures. The Company's calculation of Non-GAAP (loss) income (net loss or income before stock-based compensation and amortization of debt discounts) and Non-GAAP EPS differs from EPS based on net (loss) income because it does not include stock-based compensation and amortization of debt discounts, which are non-cash charges. The Company believes that these measures help the management identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in net loss. The Company believes that these measures provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects, and allow for greater comparability with respect to key metrics used by its management in its financial and operational decision-making.
For more information on the non-GAAP financial measures, please see the table captioned "Unaudited Reconciliations of Non-GAAP and GAAP Financial Results" set forth at the end of this press release.
About Lion
Lion Group Holding Ltd. (NASDAQ: LGHL) operates an all-in-one trading platform that offers a wide spectrum of products and services with a focus on Chinese investors. Through its state-of-the-art technology, Lion offers contract-for-difference (CFD) trading, total return swap (TRS) trading, insurance brokerage, futures brokerage, and securities brokerage on its platform, which can be accessed through applications available on the iOS, Android, Windows, and macOS systems. Lion's customers are predominantly well-educated and affluent Chinese individual investors residing both inside and outside the PRC as well as institutional clients in Hong Kong. Additional information may be found at http://ir.liongrouphl.com.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, Lion's actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company, and the industry in which it operates. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "might" and "continues," and similar expressions are intended to identify such forward-looking statements. Lion cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Lion does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, subject to applicable law. Investors and potential investors should consult all of the information set forth herein and should also refer to the risk factors set forth in LGHL's Annual Report on Form 20-F to be filed in March 2021, and other reports filed or to be filed from time-to-time with the Securities and Exchange Commission.
CONTACTS
Lion Group Holding
Tel: +852 2820 9011
Email: ir@liongrouphl.com
ICR, LLC
William Zima
Tel: +1 203 682 8233
Email: ir@liongrouphl.com
LION GROUP HOLDING LTD UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in dollar amount) |
|||||||||
For the Years Ended December 31, |
|||||||||
2020 |
2019 |
||||||||
Revenues |
|||||||||
Insurance brokerage commissions |
$ 959,299 |
$ 2,648,119 |
|||||||
Futures and securities brokerage commissions |
1,890,502 |
2,210,915 |
|||||||
Market making commissions and fees |
4,940,623 |
11,056,431 |
|||||||
Trading gains (losses) |
1,833,875 |
1,782,750 |
|||||||
Interest and other |
605,836 |
828,635 |
|||||||
10,230,135 |
18,526,850 |
||||||||
Expenses |
|||||||||
Commissions and fees |
1,845,994 |
3,355,205 |
|||||||
Compensation and benefits |
3,802,793 |
2,430,636 |
|||||||
Occupancy |
683,160 |
591,936 |
|||||||
Communication and technology |
1,454,050 |
823,433 |
|||||||
General and administrative |
2,264,318 |
692,648 |
|||||||
Professional fees |
1,565,834 |
761,238 |
|||||||
Services fees |
833,864 |
384,840 |
|||||||
Interest |
183,157 |
731,812 |
|||||||
Depreciation |
40,556 |
52,852 |
|||||||
Marketing |
651,324 |
55,378 |
|||||||
Payment service charge |
245,030 |
355,585 |
|||||||
Other operating |
11,464 |
10,463 |
|||||||
13,581,544 |
10,246,026 |
||||||||
(Loss)income before income taxes |
(3,351,409) |
8,280,824 |
|||||||
Income tax expense |
(1,316) |
(64,472) |
|||||||
Net (loss) income |
$ (3,352,725) |
$ 8,216,352 |
|||||||
Other comprehensive (loss) income |
|||||||||
Foreign currency translation adjustment |
20,487 |
75,637 |
|||||||
Comprehensive (loss) income |
$ (3,332,238) |
$ 8,291,989 |
|||||||
(Loss) earnings per share for both Class A and Class B |
|||||||||
- basic and diluted (i) |
$ (0.33) |
$ 1.16 |
|||||||
Weighted average Class A ordinary shares outstanding |
|||||||||
- basic and diluted (i) |
6,180,795 |
3,140,388 |
|||||||
Weighted average Class B ordinary shares outstanding |
|||||||||
- basic and diluted (i) |
3,962,294 |
3,949,993 |
|||||||
(i) |
Share and per share data have been retroactively restated to give effect to the reverse recapitalization |
LION GROUP HOLDING LTD UNAUDITED CONSOLIDATED BALANCE SHEETS (in dollar amount) |
|||||||||
December 31, |
December 31, |
||||||||
2020 |
2019 |
||||||||
Assets |
|||||||||
Cash and cash equivalents |
$ 3,426,467 |
$ 6,388,978 |
|||||||
Restricted cash-bank balances held on behalf of customers |
1,367,630 |
2,192,201 |
|||||||
Securities owned, at fair value |
17,622 |
180,201 |
|||||||
Derivatives assets |
- |
194,110 |
|||||||
Receivables from broker-dealers and clearing organizations |
8,089,193 |
1,684,961 |
|||||||
Commissions receivable |
71,253 |
88,560 |
|||||||
Short-term loans receivable |
2,239,378 |
1,637,310 |
|||||||
Other receivables |
724,708 |
166,064 |
|||||||
Prepaids, deposits and other |
677,978 |
510,291 |
|||||||
Total current assets |
16,614,229 |
13,042,676 |
|||||||
Fixed assets, net |
34,919 |
73,688 |
|||||||
Intangible assets |
86,728 |
67,964 |
|||||||
Other assets |
6,169,065 |
233,343 |
|||||||
Deferred taxes |
1,128 |
677 |
|||||||
Total Assets |
$ 22,906,069 |
$ 13,418,348 |
|||||||
Liabilities and Stockholders' Equity |
|||||||||
Liabilities |
|||||||||
Current Liabilities |
|||||||||
Payables to customers |
$ 5,221,270 |
$ 3,853,693 |
|||||||
Payables to broker-dealers and clearing organizations |
3,845,740 |
- |
|||||||
Commissions payable |
39,180 |
29,439 |
|||||||
Accrued expenses and other payables |
1,763,094 |
417,445 |
|||||||
Short-term borrowings |
293,905 |
1,412,570 |
|||||||
Short-term borrowings from related party |
- |
128,415 |
|||||||
Derivative liabilities |
5,653 |
- |
|||||||
Due to director |
149,522 |
- |
|||||||
Dividends payable |
- |
385,901 |
|||||||
Total current liabilities |
11,318,364 |
6,227,463 |
|||||||
Convertible debenture |
816,006 |
- |
|||||||
Total Liabilities |
12,134,370 |
6,227,463 |
|||||||
Commitments and Contingencies |
|||||||||
Stockholders' Equity |
|||||||||
Preferred shares, $.0001 par value, 50,000,000 shares authorized, |
|||||||||
none issued and outstanding as of December 31, 2020 and 2019, respectively |
$ - |
$ - |
|||||||
Class A ordinary shares, $0.0001 par value, 300,000,000 shares |
|||||||||
authorized, 9,627,553 and 3,140,388 shares issued and outstanding |
|||||||||
at December 31, 2020 and 2019, respectively (i) |
963 |
314 |
|||||||
Class B ordinary shares, $0.0001 par value, 150,000,000 shares |
|||||||||
authorized, 9,843,096 and 3,949,993 shares issued and outstanding |
|||||||||
at December 31, 2020 and 2019, respectively (i) |
984 |
395 |
|||||||
Additional paid in capital (i) |
14,516,848 |
7,605,034 |
|||||||
Accumulated deficit |
(3,729,628) |
(376,903) |
|||||||
Accumulated other comprehensive losses |
(17,468) |
(37,955) |
|||||||
Total Stockholders' Equity |
10,771,699 |
7,190,885 |
|||||||
Total Liabilities and Stockholders' equity |
$ 22,906,069 |
$ 13,418,348 |
|||||||
(i) |
Par value of ordinary shares, additional paid-in capital and share data have been retroactively restated to give effect to the reverse |
LION GROUP HOLDING LTD UNAUDITED SUMMARY OF CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS DATA (in dollar amount) |
||
For the Years Ended December 31, |
||
2020 |
2019 |
|
Net cash provided by operating activities |
$ 105,675 |
$ 7,976,995 |
Net cash used in investing activities |
(6,549,514) |
(27,254,283) |
Net cash provided by financing activities |
2,640,316 |
20,664,343 |
Effect of exchange rate changes on cash |
16,441 |
85,966 |
Net increase (decrease) in cash |
(3,787,082) |
1,473,021 |
Cash and restricted cash at beginning of year |
8,581,179 |
7,108,158 |
Cash and restricted cash at end of year |
$ 4,794,097 |
$ 8,581,179 |
LION GROUP HOLDING LTD UNAUDITED RECONCILIATIONS OF NON-GAAP AND GAAP FINANCIAL RESULTS (in dollar amount) |
||||||
Year ended December 31, |
||||||
2020 |
2019 |
|||||
US$ |
US$ |
|||||
Net (loss) income |
(3,352,725) |
8,216,352 |
||||
Stock-based compensation |
3,656,800 |
- |
||||
Amortization of debt discounts |
13,288 |
- |
||||
Non-GAAP (loss) income before stock-based compensation and |
317,363 |
8,216,352 |
||||
(Loss) earnings per share for both Class A and Class B |
||||||
- basic and diluted (i) |
0.03 |
1.16 |
||||
Weighted average Class A ordinary shares outstanding |
||||||
- basic and diluted (i) |
6,180,795 |
3,140,388 |
||||
Weighted average Class B ordinary shares outstanding |
||||||
- basic and diluted (i) |
3,962,294 |
3,949,993 |
||||
(i) Share and per share data have been retroactively restated to give effect to the reverse recapitalization |
Year ended December 31, |
|||||||||
2020 |
2019 |
||||||||
Basic |
Fully |
Basic |
Fully |
||||||
(Loss) earnings per share for both Class A and Class B |
(0.33) |
(0.33) |
1.16 |
1.16 |
|||||
Stock-based compensation |
0.36 |
0.36 |
- |
- |
|||||
Amortization of debt discounts |
0.00 |
0.00 |
- |
- |
|||||
Non-GAAP (loss) earnings per share for both Class A and |
0.03 |
0.03 |
1.16 |
1.16 |
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