NEW YORK, Aug. 14, 2017 /PRNewswire/ -- Seven Stars Cloud
Group, Inc. (NASDAQ: SSC) ("SSC" or the "Company"), announced today
its Q2 2017 operating results for the period ending June 30, 2017 (a full copy of the Company's
quarterly report on Form 10-Q will also be posted at www.sec.gov).
Conference Call: CEO Bing Yang, Chairman Bruno Wu and CFO Simon
Wang will host a conference call at 4:15 p.m. ET
today.
To join the webcast, please visit the 'Webcasts and Events'
section of the SSC corporate website
(http://corporate.sevenstarscloud.com/), or
call the toll-free dial-in number: 877-407-3107; International
callers should dial: 201-493-6796.
SSC Q2 2017 OPERATING RESULTS
Revenue for Q2 was $43.3 million
as compared to $1.5 million for the
same period in 2016, an increase of approximately $41.8 million, or 28x over the same period last
year and up 31% over Q1 2017. The increase was mainly due to
SSC's new business line acquired in January
2017. This was partially offset by a decrease of SSC's
legacy YOD business in the amount of $1.5
million, as the legacy YOD business shifts to a new
exclusive distribution agreement with Zhejiang Yanhua, which was
announced in Q4 2016. As revenue generated by Yanhua was not yet
over the revenue sharing threshold, no additional revenue was
recorded in Q2.
Cost of revenue was approximately $43.3
million in Q2, as compared to $0.8
million for the same period in 2016, which is in line with
revenue growth. The Wecast Services business, which currently
is engaged mostly in lower margin electronics e-commerce and supply
chain management, is still in its relative infancy and its business
service offerings, as well as profit-sharing arrangements with a
growing range of suppliers, are currently in transition and/or
being renegotiated.
Selling, general and administrative expense or SG&A for Q2,
was $2.9 million as compared to
$1.8 million for the same period in
2016, an increase of approximately $1.1
million or 59%. The increase was primarily attributed
to the recent business transformation and headcount expansion
during the first and second quarter as well as an increase in
share-based compensation due to recently vested restricted share
units granted to SSC's management team.
In Q2 2017, the Company terminated one of its office leases in
Shanghai, which resulted in an
approximate $0.5 million impairment
of leasehold improvements. In addition, there was an approximate
$0.2 million increase in D&O
insurance expenses.
Professional fees for Q2 were $0.7
million as compared to $0.3
million for the same period in 2016, an increase of
approximately $0.4 million. This
increase was mainly due to audit and valuation fees that were
incurred in Q2 for additional services rendered in relation to our
January acquisitions.
Loss per share for Q2 was $0.06 as
compared to loss per share of $0.05
for the same period in 2016. Net loss for Q2 2017 was
$3.7 million compared to a net loss
of $1.6 million in the same period in
2016.
On June 30, 2017, the Company
entered into a Securities Purchase Agreement ("SPA") with BT
Capital Global Limited, pursuant to which the issued and
outstanding stock that SSC holds in three separate non-core assets
were sold to BT in exchange for guaranteed RMB100 million (approximately $14.75 million at current exchange rate) in a
combination of cash and publicly traded stock to be paid to SSC
within one year of closing. Since the consideration was
agreed to be paid in one year and the required legal transfer
process of Nanjing Tops Game was not completed, there is
accounting-level uncertainty regarding collectability as of
June 30, 2017 (close of Q2).
Therefore the difference between proceeds scheduled to be received
and the carrying amount of the 13% equity interest in Nanjing Tops
Game and the 25% share capital investment in Pantaflix JV cannot be
recognized in the current income statement until either the one
year date of collectability is shortened or the consideration is
paid.
As a note, if the SPA had been fully recognized in Q2
there would have been an approximate $11.5
million realized gain on the disposal of long-term
investment and therefore positive net income and earnings.
Chairman Bruno Wu stated, "In Q2,
Seven Stars Cloud kept its focus and executed on its key priority:
its continued, and what we are forecasting to be a sustainable and
upward trend, in revenues. While the transformation of the
business, investment in VPaaS and some restructuring costs
prevented profitability in Q2, we expect further strong growth over
the next six months and I am confident in saying we can reiterate
our previously stated guidance of $300
million top line revenue in 2017. Our confidence
in this 2017 projection is based on the following strengths: first,
our redefining intelligent industrial internet VPaaS platform;
second, our innovation, joint venture and deal making capacity;
third, a growing market presence; fourth, an even greater
operational efficiency; fifth, our cooperation with government and
industry associations; and sixth, and especially, our high-quality
and highly incentivized and goal aligned employees."
CEO Bing Yang stated, "Today we announced two more joint venture
partnerships with entities that will integrate and gradually move
certain parts of their operations towards SSC's VPaaS in early
2018. The first is with Ocasia Group Holdings, which is
engaged in a broad range of activities including the trading of
physical crude oil, fuel oil and refined oil products as well as
oil storage facilities. Ocasia is a purchasing agent for
major energy companies including Petro
China and China Petroleum & Chemical
Corporation (Sinopec).
The second is with Beijing Urban Construction Holding Materials
Industry Co. a large international construction group engaged in
General Contracting, Real Estate Development and Design & real
estate consultancy. Beijing Urban Construction has
constructed many national and provincial key projects in
China including the National
Stadium, the National Theater for the Performing Arts, the National
Museum, the National Indoor Stadium, the Olympic Basketball
Stadium, the Olympic Village and Terminal 3 of Beijing Capital
International Airport.
Both businesses do billions of US dollars a year in purchasing
and procurement turnover and both are examples of the businesses
that SSC will be partnering with in the future."
About Seven Stars Cloud, Inc.
(http://corporate.sevenstarscloud.com/)
Seven Stars Cloud Group, Inc. (NASDAQ: SSC) is aiming to be a
leading Intelligent Industrial internet solution provider for
commercial enterprises. With a focus on 'BASE' technology and
infrastructure (Blockchain, Artificial Intelligence, Supply Chain
& Exchanges) to power our VPaaS (Virtual Platform as a
Service), SSC is creating a closed trade ecosystem for buyers and
sellers designed to eliminate supply chain and transactional
middlemen and create a more direct and margin-expanding trading
path for principals. SSC is applying BASE + VPaaS to focus on 3
Core Cloud Areas: I. Intellectual Property Cloud; II. Product Sales
Cloud; III. Financial Services Cloud. With the three clouds
functioning both independently and interdependently, SSC is
creating a vertical, transactional and flexible platform for
today's global enterprises.
Safe Harbor Statement
This press release contains certain statements that may
include "forward looking statements." All statements other than
statements of historical fact included herein are "forward-looking
statements." These forward looking statements are often identified
by the use of forward-looking terminology such as "believes,"
"expects" or similar expressions, involve known and unknown risks
and uncertainties. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. You should not
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including those discussed in the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website (http://www.sec.gov). All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking
statements.
CONTACT:
Jason Finkelstein
VP, Strategy & Investor Relations
Seven Stars Cloud Group, Inc.
212-206-1216
Seven Stars Cloud
Group, Inc., Its Subsidiaries and Variable Interest
Entities
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
|
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Three Months
Ended
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Six Months
Ended
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June
30,
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June
30,
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June
30,
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June
30,
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2017
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2016
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2017
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2016
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Revenue
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$
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43,324,439
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$
|
1,480,464
|
|
$
|
76,488,790
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$
|
2,750,190
|
|
Cost of
revenue
|
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43,272,723
|
|
|
800,399
|
|
|
72,615,102
|
|
|
1,716,179
|
|
Gross
profit
|
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51,716
|
|
|
680,065
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|
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3,873,688
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|
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1,034,011
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Operating
expenses:
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Selling, general and administrative expense
|
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2,875,440
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|
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1,808,906
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|
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4,140,612
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|
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3,973,959
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Professional fees
|
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747,418
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|
|
270,491
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|
|
1,014,551
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|
|
637,937
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Depreciation and amortization
|
|
60,942
|
|
|
123,343
|
|
|
257,153
|
|
|
220,806
|
|
Impairment of
other intangible assets
|
|
63,621
|
|
|
-
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|
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63,621
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|
-
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Total operating
expense
|
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3,747,421
|
|
|
2,202,740
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|
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5,475,937
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|
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4,832,702
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Loss from
operations
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(3,695,705)
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|
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(1,522,675)
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|
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(1,602,249)
|
|
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(3,798,691)
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Interest and other
income (expense)
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Interest expense, net
|
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(3,696)
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|
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(166,710)
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|
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(45,253)
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|
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(200,183)
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Change in fair value of warrant liabilities
|
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26,117
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|
|
106,583
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(243,999)
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|
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143,606
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Equity in loss of equity method investees
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(33,090)
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|
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(27,001)
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(76,836)
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(37,349)
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Other
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(11,072)
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|
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(5,258)
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(110,642)
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|
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(5,096)
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Loss before income
taxes
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(3,717,446)
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(1,615,061)
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(2,078,979)
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(3,897,713)
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Income tax
benefit
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-
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|
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8,612
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|
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-
|
|
|
17,224
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|
|
|
|
|
|
|
|
|
|
|
|
|
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Net
loss
|
|
(3,717,446)
|
|
|
(1,606,449)
|
|
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(2,078,979)
|
|
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(3,880,489)
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Net loss attributable
to non-controlling interest
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57,221
|
|
|
18,360
|
|
|
631,633
|
|
|
155,929
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Net loss
attributable to Seven Stars Cloud
shareholders
|
$
|
(3,660,225)
|
|
$
|
(1,588,089)
|
|
$
|
(1,447,346)
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|
$
|
(3,724,560)
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Basic loss per
share
|
$
|
(0.06)
|
|
$
|
(0.05)
|
|
$
|
(0.02)
|
|
$
|
(0.14)
|
|
Diluted loss per
share
|
$
|
(0.06)
|
|
$
|
(0.05)
|
|
$
|
(0.02)
|
|
$
|
(0.14)
|
|
|
|
|
|
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Weighted average
shares outstanding:
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Basic
|
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61,180,365
|
|
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29,197,899
|
|
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58,297,202
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|
|
26,815,888
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|
Diluted
|
|
61,180,365
|
|
|
29,197,899
|
|
|
58,297,202
|
|
|
26,815,888
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View original
content:http://www.prnewswire.com/news-releases/seven-stars-cloud-reports-q2-2017-results-300503640.html
SOURCE Seven Stars Cloud Group, Inc.