HONG KONG, CHINA / ACCESSWIRE / April 2, 2018 / Takung Art Co., Ltd. (NYSE American: TKAT), the operator of three online fine art and collectibles platforms, today reported that for the year ended December 31, 2017, the Company had a net loss of $1,061,575, or $0.10 per diluted share, on revenue of $12,922,388. This represents a decrease from the prior year in which the Company reported a net income of $6,370,694, or $0.56 per diluted share, on revenue of $19,143,429.
The Company's decrease in revenue was primarily due to a year-over-year decrease of $5,341,460 in listing fee revenue arising from the Company's authorized agent retraining program which reduced the number of artworks listed on the Company's trading platform. Takung's year-over-year revenue performance was also impacted by a drop in management fee revenue of $526,318, attributable to the Company's continued promotional activities in which it waived management fees for certain VIP traders during the period from September 1, 2016, to December 31, 2017. In addition, Takung had a decrease of $1,049,364 in annual authorized agent subscription revenue compared to 2016 (Nil in 2017). The Company discontinued the authorized agent subscription fee in 2017 in order to improve its ability to attract new high quality authorized agents.
Revenue in 2017 was boosted by a year-over-year increase of $696,432 in trading commission revenue, net of applicable rebates and discounts. This improvement was the result of an increase in the number of traders utilizing the platform and a 93% increase in trading volume compared to 2016.
Takung's bottom line was also impacted by a year-over-year increase of $4,811,532 in general and administrative expenses, which were driven by the previously announced $1.8 million write-off and the increase in salaries, office expenses, and travel expenses. These expenses were partially offset by a year-over-year reduction of $876,630 in selling expenses due to fewer promotion and advertising events.
"Despite 2017 being a difficult year for Takung, we nevertheless made significant progress in several areas," said Chief Executive Officer Di Xiao. "By year-end, we had expanded our trading base to 170,000 investors compared to just 80,000 a year earlier. We also improved our business in four important ways: first, we created an "A" tier top-performing portfolio designation to help new and retail traders easily identify existing high quality portfolios; second, we reduced the number of lower-quality portfolios; third, we improved the quality of newly listed portfolios by retraining our authorized agents; and fourth, we strengthened our criteria for authorized agents."
"In addition," continued Mr. Xiao, "we introduced two new asset classes, Collectibles and Sports Memorabilia, both of which have received an enthusiastic response from traders and are expected to contribute significant monthly revenue in 2018. In fact, our initial Sports Memorabilia portfolios have already driven strong year-over-year growth in both listing fee revenue and trading commission revenue in January and February of 2018."
"Our strong start to 2018 is supported by a strong balance sheet of cash and cash equivalents at approximately $11.9 million as of December 31, 2017. We expect this cash balance to be more than sufficient to support our 2018 operations and initiatives, which will include the listing of an important work by a western artist and the U.S. launch of our ecommerce platform, Takung Online," concluded Mr. Xiao.
For additional information on Takung's 2017 performance, please see the Company's 10-K 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. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
Contacts:
Takung Art Co., Ltd.
Mr. Leslie Chow
Phone: +852 31580977
Email: [email protected]
TAKUNG ART CO., LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in U.S. Dollars except Number of Shares)
|
December 31,
|
December 31,
|
|||||||
|
2017
|
2016
|
|||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
$
|
11,866,965
|
$
|
13,395,337
|
||||
|
Restricted cash
|
25,273,617
|
21,743,360
|
||||||
|
Account receivables, net
|
2,291,698
|
3,058,568
|
||||||
|
Prepayment and other current assets
|
2,300,207
|
968,446
|
||||||
|
Loan receivables
|
7,834,115
|
6,374,046
|
||||||
|
Total current assets
|
49,566,602
|
45,539,757
|
||||||
|
Non-current assets
|
||||||||
|
Property and equipment, net
|
2,191,321
|
2,065,182
|
||||||
|
Intangible assets
|
22,334
|
20,546
|
||||||
|
Deferred tax assets, net
|
291,430
|
181,154
|
||||||
|
Other non-current assets
|
757,235
|
428,764
|
||||||
|
Total non-current assets
|
3,262,320
|
2,695,646
|
||||||
|
Total assets
|
$
|
52,828,922
|
$
|
48,235,403
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
LIABILITIES
|
||||||||
|
Current liabilities
|
||||||||
|
Accrued expenses and other payables
|
$
|
1,461,858
|
$
|
608,883
|
||||
|
Customer deposits
|
25,273,617
|
21,743,360
|
||||||
|
Advance from customers
|
170,078
|
360,248
|
||||||
|
Short-term borrowings from third parties
|
7,208,761
|
6,308,513
|
||||||
|
Amount due to related party
|
483,822
|
1,031,805
|
||||||
|
Tax payables
|
312,575
|
549,897
|
||||||
|
Total current liabilities
|
34,910,711
|
30,602,706
|
||||||
|
Total liabilities
|
34,910,711
|
30,602,706
|
||||||
|
COMMITMENTS AND CONTINGENCIES
|
||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||
|
Common stock (1,000,000,000 shares authorized; $0.001 par value; 11,188,882 shares issued and outstanding as of December 31, 2017; 11,169,276 shares issued and outstanding as of December 31, 2016)
|
11,189
|
11,169
|
||||||
|
Additional paid-in capital
|
6,116,216
|
5,532,426
|
||||||
|
Retained earnings
|
12,111,096
|
13,172,671
|
||||||
|
Accumulated other comprehensive loss
|
(320,290)
|
(1,083,569)
|
||||||
|
Total stockholders' equity
|
17,918,211
|
17,632,697
|
||||||
|
Total liabilities and stockholders' equity
|
$
|
52,828,922
|
$
|
48,235,403
|
|
|||
TAKUNG ART CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Stated in U.S. Dollars except Number of Shares)
|
For the Year
Ended December 31,
|
For the Year
Ended December 31,
|
|||||||
|
2017
|
2016
|
|||||||
|
Revenue
|
||||||||
|
Listing fee
|
$
|
5,572,840
|
$
|
10,914,300
|
||||
|
Commission
|
6,112,868
|
5,416,436
|
||||||
|
Authorized agent subscription revenue
|
-
|
1,049,364
|
||||||
|
Management fee
|
1,235,659
|
1,761,977
|
||||||
|
Annual fee
|
1,021
|
1,352
|
||||||
|
Total revenue
|
12,922,388
|
19,143,429
|
||||||
|
Cost of revenue
|
(1,247,286)
|
(1,129,031)
|
||||||
|
Gross profit
|
11,675,102
|
18,014,398
|
||||||
|
Operating expenses
|
||||||||
|
General and administrative expenses
|
(12,111,075)
|
(7,299,543)
|
||||||
|
Selling expenses
|
(1,395,709)
|
(2,272,339)
|
||||||
|
Total operating expenses
|
(13,506,784)
|
(9,571,882)
|
||||||
|
(Loss) income from operations
|
(1,831,682)
|
8,442,516
|
||||||
|
Other income and expenses:
|
||||||||
|
Other income
|
576,965
|
416,353
|
||||||
|
Loan interest expense
|
(600,819)
|
(202,376)
|
||||||
|
Exchange gain (loss)
|
1,136,817
|
(516,350)
|
||||||
|
Total other income (loss)
|
1,112,963
|
(302,373)
|
||||||
|
(Loss) income before income tax expense
|
(718,719)
|
8,140,143
|
||||||
|
Provision for income taxes
|
(342,856)
|
(1,769,449)
|
||||||
|
Net (loss) income
|
(1,061,575)
|
6,370,694
|
||||||
|
Foreign currency translation adjustment
|
763,279
|
(1,082,151)
|
||||||
|
Comprehensive (loss) income
|
$
|
(298,296)
|
$
|
5,288,543
|
||||
|
Earnings per common share – basic
|
$
|
(0.10)
|
$
|
0.60
|
||||
|
Earnings per common share – diluted
|
$
|
(0.10)
|
$
|
0.56
|
||||
|
Weighted average number of common shares outstanding –basic
|
11,077,845
|
10,641,180
|
||||||
|
Weighted average number of common shares outstanding –diluted
|
11,077,845
|
11,309,190
|
|
|||||
TAKUNG ART CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
|
For the Year
|
For the Year
|
|||||||
|
Ended December 31,
|
Ended December 31,
|
|||||||
|
2017
|
2016
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net (loss) income
|
$ | (1,061,575 | ) | $ | 6,370,694 | |||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Depreciation
|
742,272 | 523,698 | ||||||
|
Interest expense
|
283,636 | - | ||||||
|
Bad debt expense
|
2,076,159 | - | ||||||
|
Changes in exchange rate
|
(1,105,458 | ) | 508,606 | |||||
|
Stock-based compensation
|
751,157 | 812,759 | ||||||
|
Deferred tax liabilities
|
(23,668 | ) | 17,581 | |||||
|
Deferred tax assets
|
(86,608 | ) | (243,772 | ) | ||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Account receivables
|
(1,309,289 | ) | (2,874,031 | ) | ||||
|
Amount due to related party
|
(622,392 | ) | - | |||||
|
Prepayment and other current assets
|
(2,056,243 | ) | 528,653 | |||||
|
Other non-current assets
|
(328,471 | ) | (307,383 | ) | ||||
|
Restricted cash
|
(3,530,257 | ) | (5,548,071 | ) | ||||
|
Due to director
|
- | 502 | ||||||
|
Customer deposits
|
3,530,257 | 5,548,071 | ||||||
|
Tax payables
|
(237,322 | ) | (1,014,473 | ) | ||||
|
Advance from customer
|
(190,170 | ) | 360,248 | |||||
|
Accrued expenses and other payables
|
852,975 | (58,739 | ) | |||||
|
Net cash (used in) provided by operating activities
|
(2,314,997 | ) | 4,624,343 | |||||
|
Cash flows from investing activities:
|
||||||||
|
Purchase of property and equipment
|
(814,455 | ) | (1,412,302 | ) | ||||
|
Purchase of available-for-sale investments
|
(76,810,709 | ) | (8,929,857 | ) | ||||
|
Maturity and redemption of available-for-sale investments
|
76,810,709 | 8,929,857 | ||||||
|
Purchase of held-to-maturity investments
|
- | (14,402,996 | ) | |||||
|
Repayment of loans by third parties
|
3,795,028 | - | ||||||
|
Maturity and redemption of held-to-maturity investments
|
- | 14,402,996 | ||||||
|
Loans to third parties
|
(4,553,532 | ) | (6,374,046 | ) | ||||
|
Net cash used in investing activities
|
(1,572,959 | ) | (7,786,348 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds from short-term borrowings
|
1,000,000 | 6,308,513 | ||||||
|
Proceeds from related party loans
|
- | 1,031,805 | ||||||
|
Net cash provided by financing activities
|
1,000,000 | 7,340,318 | ||||||
|
Effect of exchange rate change on cash and cash equivalents
|
1,359,584 | (1,552,432 | ) | |||||
|
Net (decrease) increase in cash and cash equivalents
|
(1,528,372 | ) | 2,625,881 | |||||
|
Cash and cash equivalents, beginning balance
|
13,395,337 | 10,769,456 | ||||||
|
Cash and cash equivalents, ending balance
|
$ | 11,866,965 | $ | 13,395,337 | ||||
|
Supplemental cash flows information:
|
||||||||
|
Cash paid for interest
|
$ | 526,411 | $ | 434,968 | ||||
|
Cash paid for income tax
|
$ | 1,830,376 | $ | 3,024,665 | ||||
SOURCE: Takung Art Co., Ltd.