HONG KONG, CHINA / ACCESSWIRE / August 14, 2018 / Takung Art Co., Ltd. (NYSE American: TKAT) (hereinafter referred to as, "Takung" or the "Company"), the operator of three online fine art and collectibles platforms, today announced that for the second quarter ended June 30, 2018, the company had a net loss of $(1,084,392) or $(0.10) per diluted share, on revenue of $3,854,010 compared with net income of $246,119 or $0.02 per diluted share, on revenue of $2,919,073 in the second quarter of 2017.
The company's increase in the second quarter revenue compared to the same period last year was primarily due to a year-over-year increase of $1,156,863 or 137% in listing fee revenue arising from an increase in total listing values and corresponding listing fees charged. The Company's Q2 2018 net income was negatively affected by a currency exchange loss of $(1,255,187) compared with a currency exchange gain of $228,014 during the same period of 2017.
For the six months ended June 30, 2018, Takung reported $7,828,294 in total revenue and a net loss of $(661,102) or $(0.06) per diluted share, compared to $7,190,666 in total revenue and net income of $1,506,279 or $0.10 per diluted share, during the same period in 2017. The Company's six-month net income for 2018 was negatively affected by a currency exchange loss of $(262,292) compared with a currency exchange gain of $348,951 during the same period of 2017.
Trading commission revenue decreased by $134,649 or 7.5% for the three months ended June 30, 2018 to $1,668,563 compared to the same period last year primarily due to a decrease in the commission revenue generated by certain VIP traders. The decrease was partially offset by an increase in trading by retail traders which was a 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.
Commencing in the second quarter of 2018, Takung began charging commissions to artist for sales of their art on "Takung Online", the Company's e-commerce platform. As a result, during the three-month period ended June 30, 2018, online art sales revenue was $6,304 compared to $0 for the three months ended June 30, 2017. In addition, during Q2 2018, Takung launched an offering of artwork and artwork related merchandise for sale on the platform.
Takung's second quarter 2018 operating loss of $119,356 compared to a profit of $102,344 during the second quarter 2017 was negatively impacted by a year-over-year increase of $335,709 in general and administrative expenses. The increase in general and administrative expenses resulted primarily from an increase in salary and welfare of $153,104 produced by an increase in employee headcount and an increase in non-deductible input VAT expenses by $126,363, arising from the increased service income earned by Shanghai and Tianjin Takung.
Takung's balance sheet as of June 30, 2018 saw cash and cash equivalents at approximately $10.3 million versus approximately $11.9 million at December 31, 2017 while accrued expenses and other payables decreased to $944,456 from $1,461,858.
For additional information on Takung's Q2 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 (currently its new listings have been suspended until October 2018); Unit+, which facilitates trading and shared ownership of Asian and international collectibles (currently its new listings have been suspended until October 2018); 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)
June 30,
December 31,
2018
2017
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
10,327,827
$
11,866,965
Restricted cash
19,916,431
25,273,617
Account receivables, net
2,517,511
2,291,698
Prepayment and other current assets
2,349,398
2,300,207
Inventories
8,526
-
Amount due from a related party
6,138,490
-
Loan receivables
7,470,240
7,834,115
Total current assets
48,728,423
49,566,602
Non-current assets
Property and equipment, net
2,473,438
2,191,321
Intangible assets
22,240
22,334
Deferred tax assets
293,976
291,430
Other non-current assets
490,571
757,235
Total non-current assets
3,280,225
3,262,320
Total assets
$
52,008,648
$
52,828,922
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities
Accrued expenses and other payables
$
944,456
$
1,461,858
Customer deposits
19,916,431
25,273,617
Advance from customers
79,923
170,078
Short-term borrowings from third parties
7,230,520
7,208,761
Amount due to related parties
6,372,430
483,822
Tax payables
206,636
312,575
Total current liabilities
34,750,396
34,910,711
Total liabilities
$
34,750,396
$
34,910,711
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,226,025 shares issued and outstanding as of June 30, 2018; 11,188,882 shares issued and outstanding as of December 31, 2017)
$
11,226
$
11,189
Additional paid-in capital
6,245,600
6,116,216
Retained earnings
11,449,994
12,111,096
Accumulated other comprehensive loss
(448,568
)
(320,290
)
Total stockholders' equity
17,258,252
17,918,211
Total liabilities and stockholders' equity
$
52,008,648
$
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
June 30,
For the Six Months Ended
June 30,
2018
2017
2018
2017
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue
Listing fee
$
2,000,068
$
843,205
$
3,978,735
$
3,151,151
Commission
1,668,563
1,803,212
3,304,080
3,473,825
Management fee
178,913
272,420
347,228
564,971
Annual fee
162
236
324
719
Authorized agent subscription revenue
-
-
191,623
-
Online artwork sales
6,304
-
6,304
-
Total revenue
3,854,010
2,919,073
7,828,294
7,190,666
Cost of revenue
(940,221
)
(267,508
)
(1,873,814
)
(530,167
)
Gross profit
2,913,789
2,651,565
5,954,480
6,660,499
Operating expenses:
General and administrative expenses
(2,574,598
)
(2,238,889
)
(5,583,483
)
(4,812,280
)
Selling expenses
(458,547
)
(310,332
)
(702,138
)
(647,859
)
Total operating expenses
(3,033,145
)
(2,549,221
)
(6,285,621
)
(5,460,139
)
(Loss) income from operations
(119,356
)
102,344
(331,141
)
1,200,360
Other income and expenses:
Other income
165,862
141,853
405,265
254,211
Loan interest expense
(149,683
)
(153,812
)
(304,466
)
(303,703
)
Exchange gain (loss)
(1,255,187
)
228,014
(262,292
)
348,951
Total other income (loss)
(1,239,008
)
216,055
(161,493
)
299,459
(Loss) income before provision for income taxes
(1,358,364
)
318,399
(492,634
)
1,499,819
Income tax benefit (expense)
273,972
(72,280
)
(168,468
)
(380,161
)
Net (loss) income
$
(1,084,392
)
$
246,119
$
(661,102
)
$
1,119,658
Foreign currency translation adjustment
(111,111
)
252,094
(128,278
)
386,621
Comprehensive (loss) income
$
(1,195,503
)
$
498,213
$
(789,380
)
$
1,506,279
(Loss) earnings per common share– basic
$
(0.10
)
$
0.02
$
(0.06
)
$
0.10
(Loss) earnings per common share– diluted
(0.10
)
0.02
(0.06
)
0.10
Weighted average number of common shares outstanding-basic
11,217,359
11,188,882
11,210,918
10,963,724
Weighted average number of common shares outstanding-diluted
11,217,359
11,416,886
11,210,918
11,716,288
TAKUNG ART CO., LTD AND SUBSIDIARIES INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Stated in U.S. Dollars) (UNAUDITED)
For the Six Months
For the Six Months
Ended
Ended
June 30,
June 30,
2018
2017
Cash flows from operating activities:
Net (loss) income
(661,102
)
1,119,658
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
472,485
347,906
Interest expense
160,154
161,604
Bad debt expense
(76,424
)
-
Changes in exchange rate
262,292
(206,399
)
Stock-based compensation
152,421
320,082
Deferred tax liabilities
-
(10,859
)
Deferred tax assets
(2,546
)
(22,743
)
Changes in operating assets and liabilities:
Account receivables
(149,389
)
549,140
Prepayment and other current assets
(336,678
)
(159,804
)
Other non-current assets
266,664
-
Customer deposits
(5,357,186
)
(2,722,935
)
Tax payables
(105,939
)
315,370
Advance from customer
(90,155
)
(343,688
)
Accrued expenses and other payables
(159,662
)
383,901
Net cash (used in) operating activities
(5,625,065
)
(268,767
)
Cash flows from investing activities:
Purchase of property and equipment
(790,159
)
(343,670
)
Purchase of available-for-sales investment
(74,934,730
)
(35,991,917
)
Maturity and redemption of available-for-sales investment
74,934,730
35,991,917
Loan to third parties
-
(3,608,264
)
Loan to related parties
(6,369,809
)
-
Repayment from loan to third parties
239,356
3,456,109
Net cash (used in) investing activities
(6,920,612
)
(495,825
)
Cash flows from financing activities:
Proceeds from related party loan
6,372,430
-
Loan repayment to related party
(483,822
)
-
Net cash provided by financing activities
5,888,608
-
Effect of exchange rate change on cash, cash equivalents and restricted cash
(239,255
)
193,924
Net (decrease) in cash, cash equivalents and restricted cash
(6,896,324
)
(570,668
)
Cash, cash equivalents and restricted cash, beginning balance
37,140,582
35,138,697
Cash, cash equivalents and restricted cash, ending balance
