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SEC Filings

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

 

 

Net loss attributable to non-controlling interest

 

For the period ended June 30, 2017, Hua Cheng has a 20% non-controlling interest in Zhong Hai Media and as such we allocate 20% of the operating loss of Zhong Hai Media to Hua Cheng. During the six months ended June 30, 2017, approximately $0.03 million of our operating profit from Zhong Hai Media was allocated to Hua Cheng. For the six months ended June 30, 2016, operating loss attributable to non-controlling interest was approximately $0.2 million.

 

Dillon Yu has a 49% non-controlling interest in Shanghai Wecast Supply Chain Management Limited (“Wecast SH”) and as such we allocate 49% of the operating loss of Wecast SH to Dillon Yu. During the six months ended June 30, 2017, approximately $0.6 million of our operating loss from Wecast SH was allocated to Dillon Yu, which was nil in the same period in 2016.

 

Swiss Guorong Limited has a 45% non-controlling interest in Wide Angle and as such we allocate 45% of the operating profit of Wide Angle to Swiss Guorong Limited. During the six months ended June 30, 2017, approximately $0.03 million of our operating loss from Wide Angle was allocated to Swiss Guorong Limited, which was nil in the same period in 2016.

 

Liquidity and Capital Resources

 

As of June 30, 2017, the Company had cash of approximately $3.2 million and had accumulated deficits of approximately $117.5 million and $115.7 million as of June 30, 2017 and December 31, 2016, respectively, due to recurring losses since our inception. These factors could raise substantial doubt about the Company’s ability to continue as a going concern.

 

We continue to rely on debt and equity financing to pay for ongoing operating expenses and execution of our business plan. On March 28, 2016, we completed a common stock financing for $10.0 million. On July 19, 2016, we completed a stock financing with SSW for $4.0 million. On August 12, 2016, we completed another common stock financing with Harvest Alternative Investment Opportunities SPC for $4.0 million. On November 17, 2016, we completed another common stock financing with SSSHK for $2.0 million. On May 19, 2017, we completed another common stock financing with certain investors, including officers, directors and other affiliates of the Company for $2.0 million. We have the ability to raise funds through various methods by either issuing debt or equity instruments.

 

The consolidated financial statements included in this report have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustment that might result from the outcome of this uncertainty.

 

The following table provides a summary of our net cash flows from operating, investing and financing activities.

 

   Six  Months Ended 
   June 30,   June 30, 
   2017   2016 
Net cash used in operating activities  $(1,435,592)  $(4,097,000)
Net cash used in investing activities   (845,830)   (7,234,000)
Net cash provided by financing activities   1,650,350    10,000,000 
Effect of exchange rate changes on cash   32,728    (34,000)
Net decrease in cash   (598,344)   (1,365,000)
           
Cash at beginning of period   3,761,814    3,769,000 
           
Cash at end of period  $3,163,470   $2,404,000 

 

Operating Activities

 

Cash used in operating activities decreased for the six months ended June 30, 2017 compared to 2016, primarily due to a decrease in our loss from operation from $3.8 million to $2.1 million.

 

Financing Activities

 

We entered into a subscription agreement with our certain investors, including officers, directors and other affiliates, pursuant to which we issued and sold to such investors, in a private placement, an aggregate of 727,273 shares of the common stock of the Company, for $2.75 per share, or a total purchase price of $2.0 million, and as of June 30, 2017, we already received $1.5 million, and all the remaining subscription have been received as of July 18, 2017; While in the same period in 2016, we received $10 million investment proceeds from the sales of 4,545,455 shares of our common stock and issuance of a two-year warrant to acquire an additional 1,818,182 shares of our common stock at an exercise price of $2.75 per share to SSS.

 

Effects of Inflation

 

Inflation and changing prices have had an effect on our business and we expect that inflation or changing prices could materially affect our business in the foreseeable future. Our management will closely monitor the price change and make efforts to maintain effective cost control in operations.

 

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