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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

 

Basic loss per common share attributable to Seven Stars Cloud shareholders is calculated by dividing the net loss attributable to Seven Stars Cloud shareholders by the weighted average number of outstanding common shares during the applicable period.

 

Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted loss per share for the three and nine months ended September 30, 2017 and 2016 both equal to basic loss per share for respective periods because the effect of securities convertible into common shares is anti-dilutive.

 

The following table includes the number of shares that may be dilutive potential common shares in the future. These shares were not included in the computation of diluted loss per share because the effect was either antidilutive or the performance condition was not met.

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30,   September 30,   September 30, 
   2017   2016   2017   2016 
Warrants   3,118,181    3,783,002    3,118,181    3,783,002 
Options   2,267,095    2,151,428    2,267,095    2,151,428 
Series A Preferred Stock   933,333    933,333    933,333    933,333 
Series E Preferred Stock   -    7,154,997    -    7,154,997 
Convertible promissory note and interest   35,598,447    2,015,812    35,598,447    2,015,812 
Total   41,917,056    16,038,572    41,917,056    16,038,572 

  

16.Income Taxes

 

As of September 30, 2017, the Company had approximately $34.4 million of the U.S domestic cumulative tax loss carryforwards and approximately $15.0 million of the foreign cumulative tax loss carryforwards, which may be available to reduce future income tax liabilities in certain jurisdictions. These U.S. and foreign tax loss carryforwards will expire beginning in 2028 through 2036, and 2018 to 2022, respectively.

 

The income tax expense for the nine months ended September 30, 2017 is nil because of net operating loss and deferred tax assets related to the net operating loss carryovers utilized had been offset by a valuations allowance. Company had established a 100% valuation allowance against its net deferred tax assets due to its history of pre-tax losses and the likelihood that the deferred tax assets will not be realized. The valuation allowance was increased approximately $1.0 million during the nine months ended September 30, 2017.

 

As of September 30, 2017, there are no unrecorded tax benefits which would impact our financial position or our results of operations.

 

17.Contingencies and Commitments

 

(a)Operating Lease Commitment

 

The Company is committed to paying leased property costs related to our offices as follows:

 

   Leased Property 
Years ending December 31,  Costs 
2017(3 months)  $19,711 
2018   70,211 
2019   36,269 
2020   37,147 
Thereafter   18,575 
Total  $181,913 

 

(b)Lawsuits and Legal Proceedings

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. As of September 30, 2017, there are no such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 

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