Financial News
Takung Art Co. Q3 2016 Revenue Up 112% to $5.74 Million; Net Income Rises 114% to $2.45 Million
Company To Roll Out Additional Online Services By Q1 2017
HONG KONG / ACCESSWIRE / November 11, 2016 / Takung Art Co., Ltd. (OTCQB: TKAT), an online platform for acquiring shared ownership in Asian and other fine art, jewelry and precious gems, today reported that, for the third quarter of 2016 ended September 30, revenue was $5,742,209, a 112 percent improvement on revenue of $2,706,388 in the same quarter of 2015. Net income for Q3 2016 was $2,451,737, or $.23 per share, 114 percent higher than the net income of $1,144,073, or $.12 per share, reported for the third quarter of last year.
For the first nine months of 2016 ended September 30, revenue was $14,214,252, a 189 percent improvement on revenue of $4,917,368 in the same period of 2015. Net income for the first three quarters of 2016 was $4,664,632, or $.44 per share, 172 percent higher than the net income of $1,715,344, or $.18 per share, reported for the first three quarters of 2015.
Total platform transaction value for the first nine months of 2016 was $4.91 billion, a 284 percent increase on the total transactions of $1.28 billion recorded in the comparable year-ago period.
Weighted average number of common shares outstanding was 10,632,276 in Q3 2016 versus 9,612,496 in Q3 2015, and 10,632,276 in the first nine months of 2016 versus 9,426,026 in the comparable year-ago period.
The company's strong improvement in third quarter revenue was primarily due to increases of $2,528,723 in listing fee revenue and $754,330 in management fee revenue compared to the third quarter of last year. These improvements, however, were partially offset by a quarter-over-quarter decrease of $569,828 in the company's trading commission revenue. This decrease resulted from Takung's referral incentive program offering commission rebates to certain traders and service agents and flat monthly trading rates for VIP traders. The program was successful in helping the company add a record 23,000 traders to Takung's total trader roster during Q3 2016.
Takung's improved profitability for Q3 2016 was primarily due to the aforementioned quarterly increases in listing fees and management fee revenue, offset in part by quarter-over-quarter increases of $861,983 in general and administrative expenses and $536,117 in selling expenses. The rise in quarterly G&A expenses resulted mainly from increases in employee headcount and total salaries, and to a lesser extent from a rise in office and rental expenses compared to the third quarter of last year. Takung's increase in third quarter selling expenses resulted primarily from the expansion of marketing and training seminar activities designed to introduce the company's shared-art trading platform to potential customers in Chinese and international markets.
At September 30, 2016, the company's cash and cash equivalents totaled $16,831,035, up from $10,769,456 on December 31, 2015. Restricted cash, representing the cash deposited by traders into a specific Takung bank account for the purpose of buying and selling ownership units of artwork, was up to $25,448,772 from $16,195,289 at year-end 2015.
"Our Q3 2016 results demonstrate conclusively that Takung's shared art ownership model continues to succeed in fulfilling an unmet need among middle-class art investors in China," said Takung chairman and CEO Mr. Di Xiao. "The unique benefits we offer our traders – reduced capital investment, increased liquidity and protection against fraud – will continue, we believe, to help Takung establish an increasing foothold in the shared fine art ownership market."
"In addition, Takung expects within the next few months to introduce expanded services such as a direct artist-to-buyer transaction platform for whole pieces of fine art, and an art resource platform to provide extensive information on numerous fine art pieces and their artists for use by art investors, traders and the general public."
These and other upcoming services will be marketed initially to Takung's existing trader base which, due to the company's nationwide seminars and commission reduction incentives, is expanding at record rates.
New online service offerings are expected to roll out beginning Q1 2017, said Mr. Xiao, and additional details will be announced shortly.
ABOUT TAKUNG ART CO., LTD: www.takungart.com
Based in Hong Kong, Takung Art Co., Ltd. is an online trading platform for acquiring shared ownership in Asian fine art, jewelry and precious gems. This proprietary platform allows collectors and investors – including those with modest financial resources -- to buy and sell units of these assets and participate in the booming Asian art market. The company's shared-ownership business model significantly expands the number of interactions between sellers and buyers of fine art far beyond those generated by art galleries and auction houses alone.
Takung operates its online trading platform via three wholly-owned subsidiaries, Hong Kong Takung Assets and Equity of Artworks Exchange Co. Ltd., Takung (Shanghai) Co., Ltd., and Takung Cultural Development (Tianjin) Co., Ltd.
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 and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks 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. Leslie Chow
+852 31580977
leslie.chow@takungae.com
Asia IR•PR - Investor Relations
Jimmy Caplan
512-329-9505
jimmy@asia-irpr.com
Asia IR•PR - Media Relations
Rick Eisenberg
212-496-6828
rick@asia-irpr.com
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
| September 30,2016 | December 31,2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 16,831,035 | $ | 10,769,456 | ||||
| Restricted cash | 25,448,772 | 16,195,289 | ||||||
| Short-term investments, available-for-sale | 299,918 | - | ||||||
| Deposits | 7,776 | 70,194 | ||||||
| Accounts receivables, net | 2,080,139 | 184,537 | ||||||
| Prepayment and other current assets | 892,136 | 1,172,405 | ||||||
| Loan receivables | 3,513,534 | - | ||||||
| Amount due from director | - | 502 | ||||||
| Total current assets | 49,073,310 | 28,392,383 | ||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | $ | 1,808,738 | $ | 1,213,255 | ||||
| Intangible assets, net | 20,540 | 22,194 | ||||||
| Deferred tax assets | 191,374 | - | ||||||
| Other non-current assets | 359,256 | 121,381 | ||||||
| Total non-current assets | 2,379,908 | 1,356,830 | ||||||
| TOTAL ASSETS | $ | 51,453,218 | $ | 29,749,213 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accrued expenses and other payables | $ | 528,220 | $ | 667,622 | ||||
| Customer deposits | 25,448,772 | 16,195,289 | ||||||
| Advance from customers | 287,698 | - | ||||||
| Short-term borrowings from third parties | 3,519,580 | - | ||||||
| Amount due to related party | 2,340,895 | - | ||||||
| Tax payables | 2,467,139 | 1,564,370 | ||||||
| Total current liabilities | 34,592,304 | 18,427,281 | ||||||
| NON-CURRENT LIABILITIES | ||||||||
| Deferred tax liabilities | $ | 54,361 | $ | 45,037 | ||||
| Total non-current liabilities | 54,361 | 45,037 | ||||||
| TOTAL LIABILITIES | 34,646,665 | 18,472,318 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Common stock, 1,000,000,000 shares authorized; $0.001 par value; 11,119,276 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | 11,119 | 11,119 | ||||||
| Additional paid-in capital | 5,311,920 | 4,465,217 | ||||||
| Retained earnings | 11,466,610 | 6,801,977 | ||||||
| Accumulated other comprehensive income (loss) | 16,904 | (1,418 | ) | |||||
| Total stockholders' equity | 16,806,553 | 11,276,895 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 51,453,218 | $ | 29,749,213 | ||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Stated in US Dollars except Number of Shares)
| For the Three Months EndedSeptember 30, | For the Nine Months EndedSeptember 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Revenue | ||||||||||||||||
| Listing fee revenue | $ | 2,968,534 | $ | 439,811 | $ | 8,166,072 | $ | 1,549,587 | ||||||||
| Commission revenue | 1,669,698 | 2,239,526 | 3,739,958 | 3,267,516 | ||||||||||||
| Gross management fee revenue | 781,219 | 26,889 | 1,341,294 | 98,674 | ||||||||||||
| Authorized agent subscription revenue | 322,318 | - | 966,059 | - | ||||||||||||
| Annual fee revenue | 440 | 162 | 869 | 1,591 | ||||||||||||
| Total revenue | 5,742,209 | 2,706,388 | 14,214,252 | 4,917,368 | ||||||||||||
| Cost of revenue | (285,252 | ) | (214,530 | ) | (822,735 | ) | (592,342 | ) | ||||||||
| Gross profit | 5,456,957 | 2,491,858 | 13,391,517 | 4,325,026 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | (1,744,965 | ) | (882,982 | ) | (5,076,689 | ) | (1,950,662 | ) | ||||||||
| Selling expenses | (652,207 | ) | (116,090 | ) | (1,993,782 | ) | (173,888 | ) | ||||||||
| Income from operations | 3,059,785 | 1,492,786 | 6,321,046 | 2,200,476 | ||||||||||||
| Other income and expenses: | ||||||||||||||||
| Other income (loss) | 163,738 | (659 | ) | 314,268 | (205 | ) | ||||||||||
| Loan interest expense | (62,670 | ) | - | (62,670 | ) | - | ||||||||||
| Exchange loss | (112,384 | ) | (4,542 | ) | (530,934 | ) | (4,513 | ) | ||||||||
| Total other income (loss) | (11,316 | ) | (5,201 | ) | (279,336 | ) | (4,718 | ) | ||||||||
| Income before provision for income taxes | 3,048,469 | 1,487,585 | 6,041,710 | 2,195,758 | ||||||||||||
| Provision for income taxes | (596,732 | ) | (343,512 | ) | (1,377,078 | ) | (480,414 | ) | ||||||||
| Net income | $ | 2,451,737 | $ | 1,144,073 | $ | 4,664,632 | $ | 1,715,344 | ||||||||
| Foreign currency translation adjustment | 10,172 | (22,523 | ) | 18,322 | (21,903 | ) | ||||||||||
| Comprehensive income | $ | 2,461,909 | $ | 1,121,550 | $ | 4,682,954 | $ | 1,693,441 | ||||||||
| Earnings per common share– basic | $ | 0.23 | $ | 0.12 | $ | 0.44 | $ | 0.18 | ||||||||
| Earnings per common share– diluted | 0.22 | 0.12 | 0.41 | 0.18 | ||||||||||||
| Weighted average number of common shares outstanding-basic | 10,632,276 | 9,612,496 | 10,632,276 | 9,426,026 | ||||||||||||
| Weighted average number of common shares outstanding-diluted | 11,365,597 | 9,612,496 | 11,277,845 | 9,426,026 | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOW
(STATED IN U.S. DOLLARS)
(UNAUDITED)
| For the Nine Months EndedSeptember 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 4,664,632 | $ | 1,715,344 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation | 373,308 | 240,921 | ||||||
| Changes in exchange rate | 672,021 | - | ||||||
| Stock-based compensation | 846,703 | 186,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Deposits | 62,418 | (117,678 | ) | |||||
| Prepayment and other current assets | 280,269 | (348,566 | ) | |||||
| Other non-current assets | (237,875 | ) | - | |||||
| Account receivables | (1,895,602 | ) | - | |||||
| Due from director | 502 | (3,231 | ) | |||||
| Customer deposits | 9,253,483 | 7,949,252 | ||||||
| Deferred tax assets | (191,374 | ) | - | |||||
| Deferred tax liabilities | 9,324 | (15,303 | ) | |||||
| Restricted cash | (9,253,483 | ) | (7,949,252 | ) | ||||
| Tax payables | 902,769 | 495,775 | ||||||
| Advance from customers | 287,698 | - | ||||||
| Accrued expenses and other payables | (670,336 | ) | (1,341,632 | ) | ||||
| Net cash provided by operating activities | 5,104,457 | 811,630 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (976,460 | ) | (507,032 | ) | ||||
| Purchase of available-for-sale investments | (299,918 | ) | - | |||||
| Purchase of held-to-maturity investments | (14,995,876 | ) | - | |||||
| Maturity and redemption of held-to-maturity investments | 14,995,876 | - | ||||||
| Net cash used in investing activities | (1,276,378 | ) | (507,032 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from subscription receivables | - | 1,928,191 | ||||||
| Proceeds from short-term borrowings | 3,519,580 | - | ||||||
| Proceeds from related party loans | 2,340,895 | - | ||||||
| Loan to third parties | (3,513,534 | ) | - | |||||
| Net cash provided by financing activities | 2,346,941 | 1,928,191 | ||||||
| Effect of exchange rate change on cash and cash equivalents | (113,441 | ) | 3,053 | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 6,061,579 | 2,235,842 | ||||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 10,769,456 | 2,355,839 | ||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 16,831,035 | $ | 4,591,681 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY | ||||||||
| Cash paid during the period for income taxes | $ | 562,994 | $ | - | ||||
| Cash paid during the period for interest expense | $ | - | $ | - | ||||
SOURCE: Takung Art Co., Ltd.
ReleaseID: 448771
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