SOURCE: Takung Art Co., Ltd

Takung Art Co., Ltd

May 17, 2016 07:00 ET

Takung Art Co. Q1 2016 Revenue up 197% to $3.8 Million; Net Income Rises 122% to $1.1 Million

HONG KONG, CHINA--(Marketwired - May 17, 2016) -  Takung Art Co., Ltd. (OTCQB: TKAT), an online platform for acquiring shared ownership in Asian fine art, jewelry and precious gems, today reported that, for the first quarter of 2016 ended March 31, revenue was $3,788,770, a 197 percent improvement on revenue of $1,274,879 in the same quarter of 2015. Net income for Q1 2016 was $1,096,052, or $.10 per share, 122 percent higher than the net income of $494,095, or $.05 per share, reported for the first quarter of last year.

Weighted average number of common shares outstanding was 11,119,276 in the first quarter of 2016 and 9,332,267 for the same quarter in 2015.

The company's strong improvement in revenue compared to Q1 2015 was primarily due to an increase of $1,691,431 in listing fee revenue, mainly produced by an increase in the number of artworks listed on the company's online trading platform, the value of the artworks, and the corresponding higher listing fees charged to artwork owners. Takung's first quarter 2016 revenue also improved due to a quarter-over-quarter increase of $416,863 in trading commission revenue, in turn the result of a significant rise in the number of traders utilizing the company's platform and a corresponding 311 percent rise in the value of transactions processed.

Additionally, Takung's overall Q1 2016 revenue was boosted by $321,583 in authorized agent subscription revenue, compared to none such revenue in Q1 2015.

The company's improved profitability for Q1 2016 was offset by quarter-over-quarter increases of $1,094,880 in general and administrative expenses and $628,753 in selling expenses. The rise in Q1 2016 G&A expenses -- $1,561,373 versus $466,493 in Q1 2015 -- resulted mainly from increases in salaries, consultancy fees, legal and professional fees, and office and rental expenses. The company has amortized $384,730 in Q1 2016 for the issuance of 487,000 common shares as share-based compensation, and will amortize the remaining $256,487 in Q2 2016.

Takung said the significant increase in first quarter selling expenses to $638,209 from $9,456 in the like year-ago period can be attributed to the expansion of the company's sales force and marketing activities, participation in industry trade shows, and international travel to promote its products to major global markets. To steadily increase its trader base, Takung now utilizes the services of outside organizations to stage ongoing events in major cites throughout China. The purpose of these events is to educate interested traders about the Takung shared-art investment model and how they can set up accounts and utilize the platform to buy and sell ownership units.

As of March 31, 2016, the company's cash and cash equivalents totaled $11,668,639. 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 $17,791,375.

"We are very happy with our Q1 2016 results," said Takung chairman and CEO Mr. Di Xiao. "Once again, we achieved major increases in revenue and profitability, while greatly expanding the total dollar volume transacted on our platform.

"We are confident these milestones further validate the demand for our shared fine art ownership service, and we expect our business will continue to bring large numbers of middle-class Chinese investors into the fine art marketplace in the months and years to come."

As previously reported, Takung's platform generated over $1.18 billion in trading transactions during the first four months of 2016 compared to $272.43 million recorded in the same period last year. In calendar 2015, the platform generated total trading transactions of about $2.33 billion.

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.

   
   
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(Stated in US Dollars except Number of Shares)  
   
    March 31, 2016   December 31, 2015  
    (Unaudited)      
ASSETS              
CURRENT ASSETS              
Cash and cash equivalents   $ 11,668,639   $ 10,769,456  
Restricted cash     17,791,375     16,195,289  
Deposits     200,560     191,575  
Accounts receivables, net     458,771     184,537  
Other receivables     16,653     -  
Prepayment     1,363,556     1,172,405  
Due from director     -     502  
Total current assets     31,499,554     28,513,764  
NON-CURRENT ASSETS              
Property and equipment, net     1,524,436     1,213,255  
Intangibles, net     20,538     22,194  
Prepayment - Non-current     4,547     -  
Total non-current assets     1,549,521     1,235,449  
TOTAL ASSETS   $ 33,049,075   $ 29,749,213  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES              
Accrued expenses and other payables   $ 827,151   $ 667,622  
Customer deposits     17,791,375     16,195,289  
Deferred revenue     147,337     -  
Tax payables     1,414,873     1,564,370  
Total current liabilities     20,180,736     18,427,281  
               
NON-CURRENT LIABILITIES              
Deferred tax liabilities   $ 42,572   $ 45,037  
Total non-current liabilities     42,572     45,037  
TOTAL LIABILITIES     20,223,308     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 at March 31, 2016 and December 31, 2015     11,119     11,119  
Additional paid-in capital     4,905,953     4,465,217  
Retained earnings     7,898,029     6,801,977  
Accumulated other comprehensive income (loss)     10,666     (1,418 )
Total stockholders' equity     12,825,767     11,276,895  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 33,049,075   $ 29,749,213  
               
               
               
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  
(Stated in US Dollars except Number of Shares)  
(UNAUDITED)  
   
    For the Three Months Ended
March 31,
 
    2016   2015  
Revenue   $ 3,788,770   $ 1,274,879  
               
Cost of revenue     (262,067 )   (177,692 )
               
Gross profit     3,526,703     1,097,187  
               
Operating expenses:              
General and administrative expenses     (1,561,373 )   (466,493 )
Selling expenses     (638,209 )   (9,456 )
               
Income from operations     1,327,121     621,238  
               
Other income and expense:              
Other income     50,643     29  
Exchange gain or loss     119,456     -  
               
Total other income     170,099     29  
               
Income before provision for income taxes     1,497,220     621,267  
               
Provision for income taxes     (401,168 )   (127,172 )
               
Net income   $ 1,096,052   $ 494,095  
               
Foreign currency translation adjustment     12,084     (364 )
               
Comprehensive income   $ 1,108,136   $ 493,731  
               
Earnings per common share- basic   $ 0.10   $ 0.05  
Earnings per common share- diluted     0.10   $ 0.05  
Weighted average number of common shares outstanding- basic     11,119,276     9,332,267  
Weighted average number of common shares outstanding- diluted     11,147,577     9,332,267  
               
               
               
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOW  
(Stated in US Dollars)  
(UNAUDITED)  
   
    For the Three Months Ended
March 31,
 
    2016     2015  
Cash flows from operating activities:                
                 
Net income   $ 1,096,052     $ 494,095  
Adjustments to reconcile net income to net cash provided by operating activities                
Depreciation     102,973       74,128  
Changes in exchange rate     (157,518 )     -  
Stock-based compensation     440,736       -  
Changes in operating assets and liabilities:                
Accounts receivables     (274,234 )     -  
Deposit     (8,985 )     (115,992 )
Other receivables     (16,653 )     (281 )
Prepayment     (195,698 )     56,810  
Restricted cash     (1,499,123 )     3,093,533  
Deferred revenue     147,337       -  
Due from director     502       (18,688 )
Customer deposits     1,499,123       (3,093,533 )
Deferred tax liabilities     (2,465 )     12,431  
Tax payable     (149,497 )     114,694  
Accrued expenses and other payables     278,985       (661,425 )
Net cash provided by (used in) operating activities     1,261,535       (44,228 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of property, plant and equipment     (409,664 )     (218,167 )
Net cash used in investing activities     (409,664 )     (218,167 )
                 
Effect of exchange rate change on cash and cash equivalents     47,312       (402 )
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     899,183       (262,797 )
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD     10,769,456       2,355,839  
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 11,668,639     $ 2,093,042  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY                
Cash paid during the year for income taxes   $ 521,714     $ -  
Cash paid during the year for interest expense   $ -     $ -  

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