Sharing Economy International Reports Full Year 2018 Results

WUXI, Jiangsu Province, China, April 18, 2019 /PRNewswire/ -- Sharing Economy International Inc. ("SEII" or "the Company") (OTC Markets: SEII), a clean technology and sharing economy company that designs, manufactures and distributes of proprietary high and low temperature dyeing and finishing machinery to the textile industry, and is engaged in the development of sharing economy platforms and rental related businesses, today announced its financial results for year ended December 31, 2018.

"In 2018, our legacy dyeing and finishing business continued to face numerous challenges such as difficult economic conditions, rising raw materials costs and forced closures by the Chinese government which adversely impacted our financial results for the year. We also recorded $8.6 million in impairment losses related to patent use rights and the disposition of manufacturing equipment along with an $8.9 million loss on our solar farm equity method investment following the Chinese government's halt on new solar farm installations and reduced subsidies for solar farms already under construction," said Mr. Jianhua Wu, Chairman and CEO of SEII. "Given the challenges facing our existing manufacturing operations, we continue to look for new growth opportunities for the Company. In 2018, we established new sharing economy businesses in peer-to-peer errand services, coworking and 3D virtual tours, and are making good progress in developing our online rental sharing business in Asia."

Mr. Parkson Yip, Vice President of SEII, commented, "While the development of our sharing economy businesses is dependent on additional capital to fund their growth, we made great strides over the last year. In 2018 we launched BuddiGo, our sharing platform that provides on demand delivery of items including packages, flowers, cakes and food delivery by 'buddies' who can spare idle time to run errands in the Hong Kong market. During the year we had over 1,200 individuals officially registered as sell-side buddies and they completed over 500 delivery orders. Meanwhile, 3D Discovery generated over $0.2 million in revenue in 2018 and continues its work on Autocap, a mobile app which allows users to create an interactive virtual tour of a physical space by using a mobile phone camera. Finally, through our agreement with ECrent, we continue our prelaunch activities for our peer-to-peer rental sharing economy in Asia. We remain optimistic about the future of this business and are hopeful it will make a meaningful contribution to our topline in 2019."

Full Year 2018 Results

Revenue for 2018 decreased by 30.9% to $9.5 million, compared to $13.5 million for 2017.  The Company's dyeing and finishing business generated substantially all revenue in 2018, since the forged rolled rings and related products and petroleum and chemical equipment businesses were discontinued in 2016 and the new sharing economy businesses are still in an early stage.  Revenues declined due to an anticipated slowdown in shipments of low-emission airflow dyeing machines as many companies in the dyeing industry had already upgraded to new models and did not require additional equipment, and orders for new low-emission airflow dyeing machines slowed down in 2018 and 2017 as potential customers did not have the financial resources or credit to purchase equipment.  In addition, apparel factories and other factories have been shut down throughout the last year by China's environmental bureau, which has been cutting electricity and gas supply to determine compliance with China's environmental laws, which contributed to the decline in revenues.

Gross loss for 2018 was $4.4 million, compared to a gross loss of $156,000 for 2017.  Gross margin was negative 46.4% during 2018 compared to negative 1.2% for 2017. The gross margin for 2018 was primarily impacted by the reduced scale of operations resulting from lower revenues, which is reflected in the allocation of fixed costs, mainly consisting of depreciation, to cost of revenues, and an increase in labor and raw material costs.

Operating expenses increased by 135.0% to $28.4 million, compared to $12.1 million in 2017.  The increase was primarily due to higher professional fees in the form of stock-based compensation related to implementing a new business plan with the objective of improving long-term growth, an increase in salaries to support new business opportunities, temporary rent expense and an increase in the allowance for doubtful accounts. In addition, the Company recorded impairment losses of approximately $1.9 million related to the write-off its patent of use rights in September 2018 and approximately $6.3 million related to the disposition of manufacturing equipment in December 2018.

Other expense was $9.3 million, compared to other expense of $188,000 in 2017. The increase was primarily due to an $8.9 million loss in equity investment in Shengxin, a developer and designer of solar farms in China. In April 2018, Shengxin secured and invested in a large solar PV project in Guizhou province, paid RMB40.0 million for the project rights and also engaged a local contractor to proceed with building the project. However, on June 1, 2018, the Chinese government halted installation of new solar farms for the remainder of the year and reduced subsidies for projects already under construction. Due to significant doubt about the status of this project and recoverability of the Company's investment, the Company fully impaired the value of its investment during the third quarter of 2018.

Loss from continuing operations was $42.1 million, or $(7.15) per basic and diluted share, compared to loss from continuing operations of $12.8 million, or $(6.99) per basic and diluted share in 2017.

Gain from discontinued operations (Refer to "Discontinued Operations" discussion below) was $16,000, or $0.00 per basic and diluted share.  This compares to loss from discontinued operations of $98,000, or $(0.05) in 2017.

Net loss for 2018 was $41.1 million, or $(7.15) per basic and diluted share, compared to net loss of $12.9 million, or $(7.04) per basic and diluted share, in 2017.   

Basic and diluted earnings per share were based on 5,753,698 and 1,832,900 weighted average shares outstanding, respectively, for the years ended December 31, 2018 and 2017. All share and per share information has been adjusted to reflect a 1-for-4 reverse stock split effective March 20, 2017.

Financial Condition

As of December 31, 2018, SEII held cash and cash equivalents of $0.9 million compared to $1.0 million at December 31, 2017.  Accounts receivable were $4.3 million compared to $9.1 million at December 31, 2017.  Inventories were $6.4 million compared to $4.6 million at December 31, 2017.  The Company had $2.3 million in short-term bank loans payable at December 31, 2018, down slightly from $2.5 million at December 31, 2017. Working capital was $10.6 million at December 31, 2018 compared to $13.5 million at December 31, 2017.   Stockholders' equity was $35.4 million at December 31, 2017. 

In 2018, the Company used $2.5 million in cash flow from operations. The Company used $72,000 in cash flow from investing activities, and generated $2.0 million in cash flow from financing activities, primarily due to proceeds $0.9 million in from the sale of a convertible note, proceeds from the sale of common stock of $0.3 million and advances from a related party of $1.4 million.

Discontinued Operations

On December 30, 2016, the Company sold and transferred 100% of the stock of Wuxi Fulland Wind Energy Equipment Co., Ltd. ("Fulland Wind") to an unrelated party and discontinued the Company's forged rolled rings and related components business. Additionally, the Company's management decided to discontinue its petroleum and chemical equipment segment due to significant declines in revenues and the loss of its major customer. As such, the assets and liabilities of these two segments have been classified on the consolidated balance sheet as assets and liabilities of discontinued operations as of December 31, 2018 and 2017 and the operating results have been classified as discontinued operations in the consolidated statements of operations for all years presented.

About Sharing Economy International Inc.

Sharing Economy International Inc., through its affiliated companies, designs, manufactures and distributes a line of proprietary high and low temperature dyeing and finishing machinery to the textile industry. The Company's latest business initiatives are focused on targeting the technology and global sharing economy markets, by developing online platforms and rental business partnerships that will drive the global development of sharing through economical rental business models. Moreover, the Company will actively pursue blockchain technology in its existing and to-be-acquired business, enabling the general public to realize the beauty of resource sharing. For more information visit www.seii.com.  

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary and affiliated companies and certain potential transactions that they may enter into. These forward looking statements are often identified by the use of forward looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website, including factors described in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K for the year ended December 31, 2018.  All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

Company Contact:

Sharing Economy International Inc.
Mr. Parkson Yip
Vice President of Strategic Business Development
Email: [email protected]  
Phone: +852-31060372

SOURCE Sharing Economy International, Inc.

Related Links

http://www.cleantechsolutionsinternational.com

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