Skip to Content

SEC Filings

10-Q
SEVEN STARS CLOUD GROUP, INC. filed this Form 10-Q on 11/13/2017
Entire Document
 

 

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

 

   September 30,   December 31, 
   2017   2016 
ASSETS          
Current assets:          
Cash  $4,063   $1,519,125 
Accounts receivable, net   -    1,260,529 
Prepaid expenses   2,156    30,455 
Other current assets   1,503    191,427 
Intercompany receivables due from the Company's subsidiaries(i)   2,439,391    150,725 
Total current assets   2,447,113    3,152,261 
Property and equipment, net   -    196,677 
Intangible assets, net   -    2,570 
Long term investments   3,649,042    3,654,664 
Other non-current assets   -    442,782 
Total assets  $6,096,155   $7,448,954 
           
LIABILITIES          
Current liabilities:          
Accounts payable  $-   $5,817 
Deferred revenue   -    824,563 
Accrued expenses   -    268,074 
Other current liabilities   40    394,314 
Accrued license content fees   -    1,236,661 
Intercompany payables due to the Company's subsidiaries(i)   3,518,877    14,752,338 
Total current liabilities   3,518,917    17,481,767 
Total liabilities  $3,518,917   $17,481,767 

 

   Nine Months Ended 
   September 30,   September 30, 
   2017   2016 
Revenue  $794,273   $4,377,034 
Net loss  $(4,293,469)  $(1,182,884)

 

   Nine Months Ended 
   September 30,   September 30, 
   2017   2016 
Net cash used in operating activities  $(1,661,531)  $(3,777,951)
Net cash used in investing activities  $(43,047)  $(3,355,296)
Net cash provided by financing activities(i)  $189,515   $6,555,377 

 

(i)Intercompany receivables and payables are eliminated upon consolidation. The intercompany financing activities include the capital injection of $0.2 million to Sinotop Beijing in the nine months period ended September 30, 2017.

 

After the disposal of Zhong Hai Shi Xun Media as of June 30, 2017, the total assets consisted of receivables and long term investments. The Company expects that a lower percentage of its total revenue will be generated from its VIEs in the foreseeable future.

 

4.Acquisition

 

On January 30, 2017, the Company entered into a Securities Purchase Agreement (the “Sun Video SPA”) with BT Capital Global Limited, a British Virgin Islands company (“BT”) which is controlled by Company’s Chairman Bruno Wu, for the purchase by SSC of all of the outstanding capital stock of Sun Video Group Hong Kong Limited, a Hong Kong corporation (“SVG”), for an aggregate purchase price of $800,000 and a $50 million Promissory Note (the “SVG Note”) with the principal and interest thereon convertible into shares of the Company’s common stock at a conversion rate of $1.50 per share. BT has guaranteed that SVG will achieve certain financial goals within 12 months of the closing. Until receipt of necessary shareholder approvals, the SVG Note is not convertible into shares of our common stock, but once the necessary shareholder approval is received, the unpaid principal and interest thereon will automatically convert. Under the terms of the Sun Video SPA, BT has guaranteed that the business of SVG and its subsidiaries (the “Sun Video Business”) shall achieve revenue of $250 million and $15 million of gross profit (collectively the “Performance Guarantees”) within 12 months of the closing. If the Sun Video Business fails to meet either of the Performance Guarantees within such time, BT shall forfeit back to the Company the shares of the Company’s common stock or the SVG Note, on a pro rata basis based on the Performance Guarantee for which the Sun Video Business achieves the lowest percentage of the respective amount guaranteed.

 

 16