SOURCE: Takung Art Co., Ltd

Takung Art Co., Ltd

August 19, 2016 16:16 ET

Takung Art Co. Q2 2016 Revenue Up 400% to $4.68 Million; Net Income of $1.12 Million vs. $77,176 in Q2 2015

HONG KONG, CHINA--(Marketwired - Aug 19, 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 second quarter of 2016 ended June 30, revenue was $4,683,273, a 400 percent improvement on revenue of $936,101 in the same quarter of 2015. Net income for Q2 2016 was $1,116,843, or $.11 per share, 1347 percent higher than the net income of $77,176, or $.01 per share, reported for the second quarter of last year.

For the first six months of 2016 ended June 30, revenue was $8,472,043, a 283 percent improvement on revenue of $2,210,980 in the same period of 2015. Net income for the first half of 2016 was $2,212,895, or $.21 per share, 287 percent higher than the net income of $571,271, or $.06 per share, reported for the first half of 2015.

Total platform transaction value for the first six months of 2016 reached US$2.09 billion, a 308 percent increase on the total transactions of $510.95 million recorded in the first half of 2015.

Weighted average number of common shares outstanding in the second quarter and first half of 2016 was 10,632,276 compared to 9,332,267 for the corresponding periods in 2015.

The company's strong improvement in revenue compared to the second quarter of 2015 was primarily due to an increase of $2,396,331 in listing fee revenue, produced mainly by increases in the number of pieces listed, listing values and corresponding listing fees charged compared to the second quarter of last year. The company's Q2 2016 revenue was also boosted by quarter-over-quarter increases of $625,407 in trading commission revenue, $403,148 in management fee revenue, and $322,158 in authorized agent subscription revenue (compared to none such revenue in Q2 2015).

Takung's improved profitability for Q2 2016 was primarily due to the aforementioned increases in listing fees, trading commissions, management fees and authorized agent subscription revenue, offset by quarter-over-quarter increases of $1,169,165 in general and administrative expenses and $655,023 in selling expenses. The rise in quarterly G&A expenses resulted mainly from increases in salaries, office and rental expenses, stock based compensation, and legal and professional fees. Takung's increase in second quarter selling expenses resulted from the expansion of the company's sales force and marketing activities, participation in industry trade shows, and China-based and international travel and related training seminars, all of which were designed to introduce the company's shared-art trading platform to potential customers in major Chinese and international markets.

"Our Q2 2016 results demonstrate that our unique shared art ownership business model is gaining significant traction," said Takung chairman and CEO Mr. Di Xiao. "Once again, we achieved major increases in revenue and profitability, while growing the total dollar volume transacted on our platform.

"Significant increases in G&A and selling expenses in the current year have been necessary to support the company's rapid growth, attract and retain tens of thousands of new traders on the platform, and strengthen the Takung brand in China's fine art market. While their impact will have a mild adverse effect on profitability in the near-term, we believe these investments will help secure even greater profitability on rising revenue in the months and years ahead."

Mr. Xiao noted that because of the company's strong financial position, Takung has the ability to fund the expansion of its infrastructure and sales efforts from positive cash flow and earnings.

"Not only do we expect solid continued growth in China," he added, "but we also expect to soon see revenue contributions from customers in our four new international markets -- Russia, Mongolia, Australia and New Zealand -- as marketing, sales and training personnel are being deployed in these markets.

"Considering the distinct advantages we offer art investors -- reduced capital investment with liquidity and protection against fraud -- we are confident that our shared art ownership model will establish strong revenue footholds in each of these new markets, and, up the line, many others."

At June 30, 2016, the company's cash position was $4,094,609, and short-term investments totaled $9,780,466. 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 $25,676,516.

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

   
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(Stated in US Dollars except Number of Shares)  
   
    June 30,
2016
  December 31,
2015
 
    (Unaudited)      
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents   $ 4,094,609   $ 10,769,456  
Restricted cash     25,676,516     16,195,289  
Short-term investments, held to maturity     9,780,466     -  
Deposits     87,496     70,194  
Accounts receivables, net     736,376     184,537  
Prepayment and other current assets     822,734     1,172,405  
Due from director     -     502  
Total current assets     41,198,197     28,392,383  
               
NON-CURRENT ASSETS              
Property and equipment, net   $ 1,849,163   $ 1,213,255  
Intangible assets, net     20,531     22,194  
Deferred tax assets     110,185     -  
Other non-current assets     196,199     121,381  
Total non-current assets     2,176,078     1,356,830  
TOTAL ASSETS   $ 43,374,275   $ 29,749,213  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES              
Accrued expenses and other payables   $ 1,345,310   $ 667,622  
Customer deposits     25,676,516     16,195,289  
Advance from customers     260,353     -  
Tax payables     1,873,906     1,564,370  
Total current liabilities     29,156,085     18,427,281  
               
NON-CURRENT LIABILITIES              
Deferred tax liabilities   $ 60,476   $ 45,037  
Total non-current liabilities     60,476     45,037  
               
TOTAL LIABILITIES     29,216,561     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 June 30, 2016 and December 31, 2015     11,119     11,119  
Additional paid-in capital     5,124,991     4,465,217  
Retained earnings     9,014,872     6,801,977  
Accumulated other comprehensive income (loss)     6,732     (1,418 )
Total stockholders' equity     14,157,714     11,276,895  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 43,374,275   $ 29,749,213  
               
   
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME  
(Stated in US Dollars except Number of Shares)  
   
    For the Three Months Ended
June 30,
    For the Six Months Ended
June 30,
 
    2016     2015     2016     2015  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Revenue                        
Listing fee revenue   $ 3,002,474     $ 606,143     $ 5,197,538     $ 1,109,776  
Commission revenue     926,789       301,382       2,070,260       1,027,990  
Gross management fee revenue     431,584       28,436       560,075       71,785  
Annual fee revenue     268       140       429       1,429  
Authorized agent subscription revenue     322,158       -       643,741       -  
Total revenue     4,683,273       936,101       8,472,043       2,210,980  
                                 
Cost of revenue     (275,416 )     (200,120 )     (537,483 )     (377,812 )
                                 
Gross profit     4,407,857       735,981       7,934,560       1,833,168  
                                 
Operating expenses:                                
General and administrative expenses     (1,770,351 )     (601,186 )     (3,331,724 )     (1,067,679 )
Selling expenses     (703,366 )     (48,343 )     (1,341,575 )     (57,799 )
                                 
Income from operations     1,934,140       86,452       3,261,261       707,690  
                                 
Other income and expenses:                                
Other income     99,887       454       150,530       454  
Exchange gain or loss     (538,006 )     -       (418,550 )     29  
Total other (loss) income     (438,119 )     454       (268,020 )     483  
                                 
Income before provision for income taxes     1,496,021       86,906       2,993,241       708,173  
                                 
Provision for income taxes     379,178       9,730       780,346       136,902  
                                 
Net income   $ 1,116,843     $ 77,176     $ 2,212,895     $ 571,271  
                                 
Foreign currency translation adjustment     (3,934 )     984       8,150       620  
                                 
Comprehensive income   $ 1,112,909     $ 78,160     $ 2,221,045     $ 571,891  
                                 
Earnings per common share-basic   $ 0.11     $ 0.01     $ 0.21     $ 0.06  
Earnings per common share-diluted     0.10       0.01       0.20       0.06  
Weighted average number of common shares outstanding-basic     10,632,276       9,332,267       10,632,276       9,332,267  
Weighted average number of common shares outstanding-diluted     11,311,385       9,332,267       11,232,989       9,332,267  
                                 
   
TAKUNG ART CO., LTD AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOW  
(STATED IN U.S. DOLLARS)  
(UNAUDITED)  
   
    For the Six Months Ended
June 30,
 
    2016     2015  
Cash flows from operating activities:            
             
Net income   $ 2,212,895     $ 571,271  
Adjustments to reconcile net income to net cash provided by operating activities                
Depreciation     239,700       156,940  
Amortization     1,663       -  
Changes in exchange rate     539,986       -  
Stock-based compensation     659,774       -  
Changes in operating assets and liabilities:                
Deposits     104,079       (116,498 )
Prepayment and other current assets     349,671       (15,762 )
Other non-current assets     (196,199 )     -  
Account receivables     (551,839 )     -  
Due from director     502       (7,033 )
Customer deposits     9,481,227       17,789  
Deferred tax assets     (49,709 )     -  
Deferred tax liabilities     (45,037 )     (9,310 )
Restricted cash     (9,481,227 )     (17,789 )
Tax payables     309,536       146,238  
Advance from customers     260,353       -  
Accrued expenses and other payables     259,138       (1,139,853 )
Net cash provided by (used in) operating activities     4,094,513       (414,007 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchase of property and equipment     (884,555 )     (236,448 )
Purchase of held-to-maturity investments     (9,780,466 )     -  
                 
Net cash used in investing activities     (10,665,021 )     (236,448 )
                 
Cash flows from financing activities:                
Proceeds from subscription receivables     -       515,876  
Net cash provided by financing activities     -       515,876  
                 
Effect of exchange rate change on cash and cash equivalents     (104,339 )     618  
                 
NET (DECREASE) IN CASH AND CASH EQUIVALENTS     (6,674,847 )     (133,961 )
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD     10,769,456       2,355,839  
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 4,094,609     $ 2,221,878  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITY                
Cash paid during the period for income taxes   $ 563,021     $ -  
Cash paid during the period for interest expense   $ -     $ -  
                 

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