|SEVEN STARS CLOUD GROUP, INC. filed this Form 10-Q on 08/14/2017|
Revenue for the six months ended June 30, 2017 was approximately $76.5 million, as compared to $2.8 million for the same period in 2016. The increase in revenue of approximately $75.7 million was attributable to the new consumer electronics e-commerce business line acquired in January 2017, and to a lesser extent, a one-time consulting services that we provided to certain customers. These revenues were partially offset by the decrease of our legacy YOD business, which is in line with our business strategy transition.
Our gross profit for the six months ended June 30, 2017 was approximately $3.9 million, as compared to $1.0 million during the same period in 2016. Gross profit ratio for the six months ended June 30, 2017 was 5.06%, a decrease from 37.60%, as the Wecast Services business, which currently is engaged mostly in lower margin electronics e-commerce, is still in its relative infancy and the business service offerings as well as profit-sharing arrangements with a growing range of suppliers are in transition.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the six months ended June 30, 2017 increased approximately $0.2 million, or 4%, as compared with the amount for the six months ended June 30, 2016.
Salaries and personnel costs are the primary components of selling, general and administrative expenses, accounting for 55% and 43% of our selling, general and administrative expenses for the six months ended June 30, 2017 and June 30, 2016, respectively. For the half year of 2017, salaries and personnel costs totaled $2.4 million, an increase of approximately $0.7 million, or 41%, as compared to the same period of 2016. The increase was primarily due to the increase in headcount as part of our business transformation and expansion strategy in 2017.
Professional fees are generally related to public company reporting and governance expenses as well as legal fees related to business transition and expansion. Our costs for professional fees increased approximately $0.4 million, or 59%, to $1.0 million for the six months ended June 30, 2017, for the same period in 2016. The increase in professional fees was mainly caused by the legal, valuation and auditing service fees incurred in relation to the acquisitions in January 2017.
Interest expense, net
Our interest expense decreased by approximately $0.2 million for the six months ended June 30, 2017. In the same period of 2016, we incurred approximately $0.1 million in interest expense related to the amortization of debt costs from the issuance of the $17.7 million convertible note to SSS which was no longer incurred in 2017.
Change in fair value of warrant liabilities
Certain of our warrants are recognized as derivative liabilities and re-measured at the end of every reporting period and upon settlement, with the change in value reported in the statement of operations. We reported a loss of approximately $0.3 million but a gain of approximately $0.1 million for the six months ended June 30, 2017 and 2016, respectively. The changes are primarily due to fluctuations in our closing stock price.