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SEC Filings

10-Q
SEVEN STARS CLOUD GROUP, INC. filed this Form 10-Q on 08/14/2017
Entire Document
 

 

Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

100% of the revenue and gross profit from Wide Angle in the calculation of the SVG Performance Guarantees set forth in the Sun Video SPA considering the Company has consolidated Wide Angle.

 

Since the Company, Wecast Services and Wide Angle were controlled by our Chairman Bruno Wu since November 10, 2016, as well as both before and after the acquisition, this transaction was accounted for as a business combination between entities under common control by Mr. Wu. Therefore, in accordance with ASC Subtopic 805-50, the consolidated financial statements of the Company include the acquired assets and liabilities of the SVG and Wide Angle at their historical carrying amounts. In addition, the Company’s consolidated financial statements as of December 31, 2016 have been prepared as if the Wecast Services and Wide Angle had been owned by the Company since November 10, 2016 presented and the Company’s consolidated financial statements as of December 31, 2016 has been retrospectively adjusted accordingly.

 

As of June 30, 2017, the Company recorded the $50 million SVG Note as additional paid in capital, as the Company believes that the Performance Guarantees can be met within 12 months of the closing. Considering the proceeds transferred were larger than carrying amounts of the net assets received, such $50 million was then recognized as a reduction to the Company’s additional paid in capital. The Company has not begun accruing any reserves relating to potential Net Income Threshold earnout payments, since the Sun Video Business is currently not close to exceeding this threshold.

 

5.Accounts Receivable

 

Accounts receivable consists of the following:

 

   June 30,   December 31, 
   2017   2016 
Accounts receivable, gross:  $42,018,388   $12,350,947 
Less: allowance for doubtful accounts   (51,028)   (2,828,796)
Accounts receivable, net  $41,967,360   $9,522,151 

 

The movement of the allowance for doubtful accounts is as follows:

 

   June 30, 2017   December 31, 2016 
Balance at the beginning of the period  $(2,828,796)  $(3,672)
Additions charged to bad debt expense   (103,043)   (2,825,124)
Disposal of Zhong Hai Shi Xun   2,880,811    - 
Balance at the end of the period  $(51,028)  $(2,828,796)

 

6.Property and Equipment

 

The following is a breakdown of the Company’s property and equipment:

 

   June 30,   December 31,  
   2017   2016  
Furniture and office equipment  $286,143   $1,063,481  
Vehicle   145,311    267,023  
Office Building   -    3,948,058  
Leasehold improvements   3,827    939,844  
Total property and equipment   435,281    6,218,406  
Less: accumulated depreciation   (317,892)   (1,254,681 )
Property and Equipment, net  $117,389   $4,963,725  

 

The Company recorded depreciation expense of approximately $32,549 and $200,631 for the three and six months ended June 30, 2017 and $34,000 and $68,000 for the three and six months ended June 30, 2016 respectively.

 

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