|SEVEN STARS CLOUD GROUP, INC. filed this Form 8-K on 08/15/2017|
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