Sharing Economy International Reports Second Quarter 2018 Results

WUXI, China, Aug. 10, 2018 /PRNewswire/ -- Sharing Economy International Inc. ("SEII" or "the Company") (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 quarter ended June 30, 2018.

"During the second quarter of 2018, our dyeing and finishing business continued to feel the impact of the persistent lack of credit availability for textile manufacturers in China, resulting in slower sales and negative margins.  Given the challenging conditions in China, we continued to move forward with building our sharing economy business units during the quarter and look forward to seeing strong momentum in the back half of the year," said Mr. Jianhua Wu, Chairman and CEO of SEII. "The sharing economy has changed the way we look at almost every industry today -- a trend we expect to continue for the foreseeable future. We strongly believe our current initiatives in peer-to-peer errand services, coworking spaces and online rental sharing, among others, position SEII to capitalize on the many opportunities presented by the sharing economy revolution."

Mr. Parkson Yip, Vice President of SEII, commented, "We continue to prepare for a major push for each of our sharing economy business units in the months ahead. During the quarter, we officially 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. We currently have over 3,200 buddies and over 134,000 customers who had a positive experience using our platform. In the coming months, we will be heavily promoting BuddiGo via online channels to increase reach and drive registration and conversion for both buy-side and sell-side users. Anyworkspace, our flexible workspace offering, achieved a 71% sequential increase in new users in the second quarter of 2018.  We are actively seeking to expand our space provider base in high growth markets such as India and Singapore, and are in the process of rebuilding the website to better monetize advertising opportunities, attract more users and boost revenue in the second half of the year.

"Our 3D Discovery business unit successfully completed a number of projects during the quarter and continues to develop Autocap, a mobile application which allows users to create a virtual tour of a physical space on their own without the help of specialized 360 camera equipment. We plan to launch the iOS version of Autocap in Australia by the end of the third quarter, followed by Indonesia and Japan. At EC Advertising, we are developing opportunities for each of our platforms to attract advertisers and are in the process of establishing a subsidiary in Xiamen, Fujian Province to expand our advertising business to Mainland China. Finally, through our license agreement with ECrent, we are moving forward with the development of a true peer-to-peer sharing economy based on rentals in key markets across Asia. We plan to relaunch the ECrent website platform in India during the second half of 2018, with Malaysia, Singapore and other countries to follow," Mr. Yip concluded.

Second Quarter 2018 Results

Revenue for the second quarter of 2018 decreased by 30.8% to $2.6 million, compared to $3.7 million in the second quarter of 2017.  The Company's dyeing and finishing business generated substantially all revenue in the second quarter of 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 from the dyeing and finishing business 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 continued to slow down in 2018 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. Revenues from the sharing economy businesses were $52,000 in the second quarter of 2018, compared to $0 in the second quarter of 2017.

Gross loss for the second quarter of 2018 was $720,000 compared to gross profit of $443,000 for the same period in 2017.  Gross margin was negative 28.0% during the second quarter of 2018 compared to 11.9% for the same period in 2017. The gross margin for the second quarter of 2018 was 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 to $5.1 million, compared to $941,000 in the second quarter of 2017.  The increase was due to $3.1 million in professional fees in the form of stock-based compensation related to implementing a new business plan with the objective of improving long-term growth, and higher salaries, travel and entertainment expenses to support new business opportunities. 

Loss from continuing operations was $6.0 million, or $(1.65) per basic and diluted share, compared to loss from continuing operations of $521,000, or $(0.30) per basic and diluted share in the second quarter of 2017.

Loss from discontinued operations (Refer to "Discontinued Operations" discussion below) was $28, or $0.00 per basic and diluted share.  This compares to $0 or $(0.00) in the second quarter of 2017.

Net loss attributable to common shareholders was $5.8 million, or $(1.65) per basic and diluted share, compared a net loss attributable to common shareholders of $521,000, or $(0.30) per basic and diluted share in the second quarter of 2017.

Basic and diluted earnings per share were based on 3,524,660 and 1,730,952 weighted average shares outstanding, respectively, for the quarters ended June 30, 2018 and 2017. The increase in weighted average shares was due to shares issued as stock-based compensation, common stock issued for acquisitions, conversion of a convertible note and the sale of common shares during the quarter. All share and per share information has been adjusted to reflect a 1-for-4 reverse stock split effective March 20, 2017.

Six Month Results

For the six months ended June 30, 2018, revenue was $5.1 million compared to $8.4 in the first half of 2017. Gross loss was $1.1 million, compared to gross profit of $1.0 million in the first half of 2017. Gross margin was negative 21.0%, compared to 12.3% in the first half of 2017.  Loss from continuing operations was $10.9 million, or $(2.98) per basic and diluted share, compared to a loss from continuing operations of $668,000, or $(0.46) per basic and diluted share for the same period in 2017. Gain from discontinued operations was $17,000 for the first half of 2018, compared to $0 for the first half of 2017. Net loss attributable to common shareholders for the first half of 2018 was $10.6 million, or $(2.98) per basic and diluted share, compared to a net loss attributable to common shareholders of $668,000, or ($0.46) per basic and diluted share, in the first half of 2017. Basic and diluted earnings per share were based on 3,554,498 and 1,455,506 weighted average shares outstanding, respectively, for the six months ended June 30, 2018, and 2017. 

Financial Condition              

As of June 30, 2018, SEII held cash and cash equivalents of $2.2 million compared to $1.0 million at December 31, 2017.  Accounts receivable were $5.2 million compared to $9.1 million at December 31, 2017.  Inventories were $6.7 million compared to $4.6 million at December 31, 2017.  The Company had $2.8 million in short-term bank loans payable and short-term convertible debt at June 30, 2018, up from $3.2 million at December 31, 2017. Working capital was $19.2 million at June 30, 2018, compared to $13.5 million at December 31, 2017. Stockholders' equity was $65.1 million at June 30, 2018. 

In the first half of 2018, the Company used $423,000 in cash flow from operations. The Company used $71,000 in cash flow from investing activities, primarily due to cash used for the purchase of property and equipment in Wuxi, China. The Company generated $1.6 million in cash flow from financing activities, primarily due to proceeds from a convertible promissory note, the sale of common stock and an advance from a related party.

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 June 30, 2018 and December 31, 2017 and the operating results have been classified as discontinued operations in the consolidated statements of operations for all years presented.

Recent Events

The Company established a film and media business unit during the quarter. In June 2018, SEII's wholly-owned subsidiary, EC Creative Limited ("EC Creative"), signed an exclusivity agreement with Jidam Co., Ltd. ("Jidam"), regarding the potential acquisition by EC Creative of not less than 51% of the issued share capital of Jidam and further business cooperation agreements between EC Creative and Jidam. Simultaneously, SEII's wholly-owned subsidiary, Sharing Film International Limited ("Sharing Film"), will lease workspaces totaling about 24,000 square feet in Shaw Studios, which is currently owned by Shaw Movie City Hong Kong Limited ("Shaw Movie City"). The initial lease term will be for one year, commencing November 1st, 2018. SEII will issue new shares to Shaw Movie City to pay the up-front amounts due for rent, management fees and the deposit on the spaces. SEII plans to utilize these spaces to explore and develop its film and media production and post-production business and to develop a sharing environment for the film and media production industry.

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-Q for the quarter ended June 30, 2018 and Form 10-K for the year ended December 31, 2017.  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]
+852-31060372

Joseph Chow, Director of Investor Relations
Email: [email protected]

SOURCE Sharing Economy International, Inc.

Related Links

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