HONG KONG, CHINA / ACCESSWIRE / May 16, 2018 / Takung Art Co., Ltd. (NYSE American: TKAT), the operator of three online fine art and collectibles platforms, today announced that for the first quarter ended March 31, 2018, the company had net income of $423,290, or $.04 per diluted share, on revenue of $3,974,284, compared with net income of $873,539, or $.08 per diluted share, on revenue of $4,271,593 in the first quarter of 2017.
The company's decrease in first quarter revenue compared to the same period last year was due primarily to a year-over-year decrease of $329,279 in listing fee revenue arising from a reduction in total listing values and corresponding listing fees charged. However, first quarter 2018 revenue demonstrated significant improvement on revenue reported in each of the previous three quarters.
Although trading commission revenue remained relatively flat compared to last year's first quarter, this year's Q1 trading commission revenue demonstrated a significant shift from VIP traders towards retail traders. This shift was a direct result of Takung's previously announced business model modifications made in the second half of 2017 to increase participation by the company's retail traders.
Specifically, in Q1 2018, retail trader commission revenue increased by approximately $945,000 over Q1 2017, while VIP trader commission revenue decreased by about $980,000 compared to the prior year's first quarter.
Additionally, as per a change in accounting policy intended to reduce future accounts receivable write offs, since the fourth quarter of 2017 VIP trader commission revenue is only recognized from those VIP traders qualifying as ''active,'' meaning those who trade at least once per month and are therefore less likely to become delinquent in paying their monthly trading commissions. As a result of this accounting policy change, the company believes that the cause of the accounts receivable problem with VIP traders has been remedied and will likely not recur.
Takung's first quarter operating income -- a loss of $211,785 versus a profit of $1,098,016 in Q1 '17 -- was impacted negatively by a year-over-year increase of $435,494 in general and administrative expenses, which resulted primarily from an increase in salary and welfare of $353,193 produced by an increase in employee headcount and a bonus distributed in Q1 2018.
The company's Q1 2018 net income of $423,290 benefitted from a currency exchange gain of $992,895, compared with a currency exchange gain of $120,937 in the like year-ago period.
Takung's balance sheet at March 31, 2018 improved, with cash and cash equivalents at approximately $12.8 million versus about $11.9 million at December 31, 2017 -- the first such increase since the first quarter of last year.
''We are very pleased by the progress made during our first quarter,'' said Takung CEO Mr. Di Xiao, ''and feel confident in asserting that our business model changes have been fully and successfully implemented.'' Among the company's more notable achievements in Q1 2018, he said, were the expansion of its trading base by more than 15% over year-end 2017, the continued implementation of blockchain technology to facilitate Unit platform ownership registration, the increased popularity of Takung's 'A' tier portfolio designed to help retail traders easily identify high-quality artworks, and the material contributions to revenue made by the company's two January Sports Memorabilia offerings.
Looking forward, Mr. Xiao said he expects increasing participation from Takung's retail traders, which has the potential to significantly enhance trading volumes, commission fee revenue and new offering subscriptions. Sports memorabilia offerings, he added, are also expected to contribute to Takung's revenue and earnings growth for the balance of this year.
Accordingly, said the CEO, the company projects its Q2 2018 period to show continued strong growth, with revenue exceeding $4.0 million and positive operating results.
For additional information on Takung's Q1 2018 performance, please see the Company's 10-Q filing at www.sec.gov.
About Takung Art Co., Ltd.
Takung Art Co., Ltd. enables China's growing middle class to invest in fine art and collectibles through three proprietary online platforms: Takung Unit, which facilitates trading and shared ownership of Asian and international fine art; Unit+, which facilitates trading and shared ownership of Asian and international collectibles; and Takung Online, an e-commerce platform enabling artists to promote and sell entire pieces of artwork directly to buyers. Takung is headquartered in Hong Kong and operates primarily in Hong Kong through its direct wholly-owned subsidiary Hong Kong Takung Art Company Limited and its two wholly-owned subsidiaries in Shanghai and Tianjin that facilitate service and support to its PRC-based traders on the Company's platform. For more information, please visit the Company's website: http://ir.takungart.com/ . The Company routinely posts important information on its website.
Forward-Looking Statements
This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions which reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and are subject to change at any time. We operate in a very competitive and rapidly changing environment where new risks may emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements.
Contacts:
Takung Art Co., Ltd. Mr. Leslie Chow Phone: +852 31580977 Email: irmail@takungae.com
TAKUNG ART CO., LTD AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars except Number of Shares)
March 31,
December 31,
2018
2017
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
12,809,609
$
11,866,965
Restricted cash
28,104,820
25,273,617
Account receivables, net
893,940
2,291,698
Prepayment and other current assets
2,099,718
2,300,207
Loan receivables
7,880,516
7,834,115
Total current assets
51,788,603
49,566,602
Non-current assets
Property and equipment, net
2,519,496
2,191,321
Intangible assets
22,234
22,334
Deferred tax assets
215,858
291,430
Other non-current assets
536,176
757,235
Total non-current assets
3,293,764
3,262,320
Total assets
$
55,082,367
$
52,828,922
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities
Accrued expenses and other payables
$
1,007,156
$
1,461,858
Customer deposits
28,104,820
25,273,617
Advance from customers
138,791
170,078
Short-term borrowings from third parties
7,080,903
7,208,761
Amount due to related party
-
483,822
Tax payables
352,614
312,575
Total current liabilities
36,684,284
34,910,711
Total liabilities
$
36,684,284
$
34,910,711
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,208,882 shares issued and outstanding as of March 31, 2018;
11,188,882 shares issued and outstanding as of December 31, 2017)
$
11,209
$
11,189
Additional paid-in capital
6,189,945
6,116,216
Retained earnings
12,534,386
12,111,096
Accumulated other comprehensive loss
(337,457
)
(320,290
)
Total stockholders' equity
18,398,083
17,918,211
Total liabilities and stockholders' equity
$
55,082,367
$
52,828,922
TAKUNG ART CO., LTD AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Stated in U.S. Dollars except Number of Shares) (UNAUDITED)
For the Three Months
Ended March 31,
For the Three Months
Ended March 31,
2018
2017
Revenue
Listing fee
$
1,978,667
$
2,307,946
Commission
1,635,517
1,670,613
Authorized agent subscription revenue
191,623
-
Management fee
168,315
292,551
Annual fee
162
483
Total revenue
3,974,284
4,271,593
Cost ofrevenue
(933,593
)
(262,659
)
Gross profit
3,040,691
4,008,934
Operating expenses
General and administrative expenses
(3,008,885
)
(2,573,391
)
Selling expenses
(243,591
)
(337,527
)
Total operating expenses
(3,252,476
)
(2,910,918
)
(Loss) income from operations
(211,785
)
1,098,016
Other income and expenses:
Other income
239,403
112,358
Loan interest expense
(154,783
)
(149,891
)
Exchange gain
992,895
120,937
Total other income
1,077,515
83,404
Income before income tax expense
865,730
1,181,420
Provision for income taxes
(442,440
)
(307,881
)
Net income
423,290
873,539
Foreign currency translation adjustment
(17,167
)
134,527
Comprehensive income
$
406,123
$
1,008,066
Earnings per common share - basic
$
0.04
$
0.08
Earnings per common share - diluted
$
0.04
$
0.08
Weighted average number of common shares outstanding - basic
11,204,215
10,733,506
Weighted average number of common shares outstanding - diluted
11,223,408
11,509,938
TAKUNG ART CO., LTD AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Stated in U.S. Dollars) (UNAUDITED)
For the Three Months
For the Three Months
Ended
Ended
March 31,
March 31,
2018
2017
Cash flows from operating activities:
Net cash provided by (used in) operating activities
3,039,614
(616,716
)
Cash flows from investing activities:
Purchase of property and equipment
(231,478
)
(59,900
)
Purchase of available-for-sales investment
(28,173,448
)
(13,656,439
)
Maturity and redemption of available-for-sales investment
28,173,448
13,656,439
Loan to third parties
-
(3,553,799
)
Repayment from loan to third parties
239,356
3,403,940
Net cash provided by (used in) investing activities
7,878
(209,759
)
Effect of exchange rate change on cash, cash equivalents and restricted cash
726,355
139,134
Net increase (decrease) in cash, cash equivalents and restricted cash
3,773,847
(687,341
)
Cash, cash equivalents and restricted cash, beginning balance
37,140,582
35,138,697
Cash, cash equivalents and restricted cash, ending balance
