Oriental Tradition Holding LTD Proclaims First Half 12 months of

HONG KONG, Dec. 23, 2022 (GLOBE NEWSWIRE) — Oriental Tradition Holding LTD. (“OCG” or the “Firm”) (NASDAQ: OCG), a number one on-line supplier of collectibles and art work e-commerce companies, at present introduced its unaudited monetary outcomes for the six months ended June 30, 2022.

First Half 12 months of 2022 Monetary Highlights

  • Complete revenues had been roughly $17.0 million for the six months ended June 30, 2022, in contrast with the full revenues of roughly $24.5 million for the six months ended June 30, 2021.
  • Gross revenue was roughly $16.0 million for the six months ended June 30, 2022, in contrast with roughly gross revenue of $23.1 million for the six months ended June 30, 2021.
  • Gross margin was 93.7% for the six months ended June 30, 2022, in contrast with a gross margin of 94.3% for the six months ended June 30, 2021.
  • Earnings from operations was roughly $5.1 million for the six months ended June 30, 2022, in contrast with earnings from operations of roughly $9.7 million for the six months ended June 30, 2021.
  • Web earnings was roughly $5.6 million for the six months ended June 30, 2022, in contrast with internet earnings of roughly $10.1 million for the six months ended June 30, 2021.

Influence of COVID-19

Starting in late 2019, there was an outbreak of COVID-19 (coronavirus) which unfold rapidly throughout many components of China, the U.S. and worldwide. In March 2020, the World Well being Group declared the COVID-19 as a pandemic. Though the COVID-19 has principally underneath management worldwide, the outbreak of the Omicron variant has resulted in quarantines, journey restrictions, and the momentary closure of shops and enterprise services in lots of a part of China for the primary few months in 2022. Our enterprise and outcomes of operations have been affected as a consequence of workplace closures and disruption in logistics in numerous components of China.

China has just lately began easing the strict lockdown procedures in early December, which has led to surge in COVID infections and disrupt our enterprise operations. Any future impression of COVID-19 on our operation outcomes will rely on, to a big extent, future developments and new info that will emerge concerning the length and resurgence of COVID-19 variants and the actions taken by authorities authorities to comprise COVID-19 or deal with its impression, nearly all of that are past our management.

Current Growth

On July 1, 2022, Mr. Huajun Gao and Mr. Aiming Kong, every an 11.64% shareholder of Oriental Tradition Holding LTD (the “Firm”), had been detained by Nan County Public Security Bureau of Yiyang Metropolis, Hunan Province, China. On July 26, 2022, Nan County Folks’s Procuratorate authorised the arrest of Mr. Gao and Mr. Kong with cost of unlawful enterprise operation of Nanjing Jinwang Artwork Buy E-commerce Co., Ltd., an organization managed by Mr. Gao and Mr. Kong (“Nanjing Jinwang”). On July 1, 2022, the financial institution accounts of Nanjing Jinwang had been frozen by Nan County Public Security Bureau, together with a belief account into which the purchasers of the Firm deposit their safety deposits with a purpose to commerce on the Firm’s two on-line buying and selling platforms which the Firm has entrusted Nanjing Jinwang for escrow.

Additionally, on July 1, 2022, Nan County Public Security Bureau froze sure financial institution accounts of Kashi Longrui Enterprise Administration Providers Co., Ltd. (“Kashi Longrui”), Kashi Dongfang Cangpin Tradition Growth Co., Ltd. (“Kashi Dongfang”) and Nanjing Yanyu Data Know-how Co., Ltd. (“Nanjing Yanyu”), all subsidiaries of Jiangsu Yanggu Tradition Growth Co., Ltd., the variable curiosity entity of the Firm in China (the “VIE”) as a result of they, every had enterprise relationship with Nanjing Jinwang.

Neither the Firm nor its VIE or subsidiaries of its VIE has acquired any notification for enforcement costs from Nan County Public Security Bureau, aside from money and quick time period funding within the frozen financial institution accounts with balances totaling roughly $16.8 million on July 1, 2022 and due from Nangjng Jinwang of roughly $4.0 million referring to the Nanjing Jinwang investigation as described above. Mr. Gao and Mr. Kong usually are not officers, administrators or staff of the Firm, its VIE or subsidiaries of the VIE.

Because of the investigation of Nanjing Jinwang and frozen financial institution accounts, the enterprise operations of the Firm have been materially and negatively impacted as its clients skilled difficulties withdrawing their safety deposits by way of on-line banking and have issues concerning their deposited funds. The Firm has taken remedial measures to help its clients in withdrawing safety deposits, reminiscent of by way of handbook and in particular person utility with the financial institution to switch funds, in order that they’ll trust within the Firm and proceed to checklist and commerce artwork and collectible merchandise on the net platforms of the Firm. Nevertheless, there could be no assurance that these measures will restore buyer confidence in utilizing the Firm’s companies effectively or in any respect.

As of June 30, 2022, the Firm’s fund deposited with Nanjing Jinwang amounted to $4.0 million. As of December 22, 2022, the Firm had efficiently withdrawn roughly $0.9 million and the Firm is within the processing of withdrawing the remaining funds and expects to funds to be absolutely returned by January 2023.

The investigation of Mr. Gao, Mr. Kong and Nanjing Jinwang is ongoing. The Firm has and can proceed to speak with Nan County Public Security Bureau and different authorities authorities to acquire extra info concerning the investigation and to aim to unfreeze the financial institution accounts for the subsidiaries of the VIE. The Firm will monitor the event of the investigation and can present further info regarding its impression on the Firm’s enterprise sooner or later.

Remark from administration

Mr. Yi Shao, Chief Govt Officer of the Firm, commented, “Throughout the first half of 2022, our enterprise and operation suffered detrimental impression by the outbreak of Omicron variant with the closure of workplaces and restrictions on logistics in China. Regardless of this circumstance, we’re working proactively on working, increasing new clients and collections, and have achieved affordable efficiency.”

Liquidity and Capital Sources

The Firm sometimes financed its operations by way of internally generated money and fairness financing. As of June 30, 2022, the Firm had roughly $40.6 million in money and quick time period funding. With roughly $16.8 million money and funding being frozen as talked about above, the Firm nonetheless had roughly $23.7 million in money and roughly $0.6 million from IPO proceeds escrow account which is anticipated to be returned to the Firm in January 2023. The Firm’s working capital was roughly $24.3 million at June 30, 2022, excluding the funds that was frozen.

If the Firm is unable to comprehend its belongings inside the regular working cycle of a twelve (12) month interval, the Firm might have to contemplate supplementing its accessible sources of funds by way of the next sources:

  • different accessible sources of fairness or debt financing from monetary establishments; and  
  • monetary assist from our associated events and shareholders.  

Based mostly on the above concerns, the Firm’s administration is of the opinion that it has ample funds to fulfill its working capital necessities and debt obligations as they change into due over the subsequent twelve (12) months.

Outcomes of Operations

The tables within the following dialogue summarize our unaudited interim condensed consolidated statements of earnings and complete earnings for the durations indicated. The working ends in any interval usually are not essentially of the outcomes that could be anticipated for any future interval.

Six Months Ended June 30, 2022 and June 30, 2021

    For the Six Months Ended
June 30,
    Variance
    2022     2021     Quantity     %
    (Unaudited)     (Unaudited)            
Web Revenues   $ 16,947,668     $ 24,331,668     $ (7,384,000 )     -30.3 %
Web Revenues – associated events     99,052       129,071       (30,019 )     -23.3 %
Complete working income     17,046,720       24,460,739       (7,414,019 )     -30.3 %
Value of revenues     (1,076,308 )     (1,397,828 )     321,520       -23.0 %
Gross revenue     15,970,412       23,062,911       (7,092,499 )     -30.8 %
Working bills     (10,896,753 )     (13,339,262 )     2,442,509       -18.3 %
Earnings from operations     5,073,659       9,723,649       (4,649,990 )     -47.8 %
Different earnings     549,796       356,504       193,292       54.2 %
Earnings earlier than earnings taxes     5,623,455       10,080,153       (4,456,698 )     -44.2 %
Provision for earnings taxes                        
Web earnings     5,623,455       10,080,153       (4,456,698 )     -44.2 %
International forex translation adjustment     (1,347,769 )     (69,596 )     (1,278,173 )     1,836.6 %
Complete earnings   $ 4,275,686     $ 10,010,557     $ (5,734,871 )     -57.3 %
Weighted common variety of extraordinary shares excellent – primary and diluted     21,052,813       20,444,712       608,101       3.0 %
Primary and diluted earnings per share   $ 0.27     $ 0.49     $ (0.22 )     -44.9 %

Revenues:

The next desk units forth the principal parts of our internet revenues by quantities and percentages of our internet revenues for the durations indicated. Our general lower in income was as a result of impression of the COVID-19 variant that brought about momentary workplace closures and disruption in logistics in numerous components of China which negatively affected the buying and selling actions on our platform by the purchasers.

    For the Six Months Ended June 30,     Variance  
    2022     2021     Quantity     %  
    (Unaudited)     (Unaudited)              
    Income     %     Income     %              
Itemizing companies charges (1)   $ 1,249,593       7.3     $ 4,487,953       18.3     $ (3,238,360 )     -72 %
Transaction price (2)     12,835,350       75.3       16,265,107       66.5       (3,429,757 )     -21 %
Advertising service charges (3)     2,855,684       16.8       3,416,630       14.0       (560,946 )     -16 %
Different revenues (4)*     106,093       0.6       291,049       1.2       (184,956 )     -64 %
Complete working revenues, internet   $ 17,046,720       100.0     $ 24,460,739       100.0     $ (7,414,019 )     -30 %
  * Together with $99,052 and $129,071 from associated events for the six months ended June 30, 2022 and 2021, respectively

(1) Itemizing service charges: Our efficiency obligation is to supply itemizing on our platform. Itemizing service charges are calculated primarily based on a share of the itemizing worth of collectibles, artworks and commodities. Itemizing worth is the full providing value of the collectible, the art work or the commodity when the possession items are initially listed on our buying and selling platform. We make the most of an appraised worth as a foundation to find out the suitable itemizing worth for each bit of collectible or art work, or portfolio of collectibles or art work. Generally, itemizing service charges are acknowledged upon completion of our efficiency obligation. Our customary itemizing charges vary from 2.3% to five.3% for art work and collectibles and 1%-6% for commodities of the preliminary itemizing worth. The speed depends on the kind of listings and is negotiated on a case by case foundation. The typical itemizing interval is round three months.

Complete itemizing service charges decreased by roughly $3.2 million or 72% from $4,487,953 for the six months ended June 30, 2021 to $1,249,593 for a similar interval in 2022. Throughout the six months ended June 30, 2022 and 2021, complete itemizing worth of listed art work, collectibles and commodities amounted to roughly $1.5 billion and $1.8 billion, respectively. As well as, there have been much less itemizing worth generated by new merchandise listings with roughly $33.3 million and $155.4 million for brand new merchandise listed through the six months ended Jun 30, 2022 and 2021, respectively. The quantity in new collectibles/art work and commodities that had been listed on our platforms decreased from 187 for the six months ended June 30, 2021 to 29 for the six months ended June 30, 2022.

(2) Transaction price income: Transaction price income is usually calculated primarily based on the transaction worth of collectibles, art work or commodity per transaction for our companies to facilitate the buying and selling transactions. Transaction worth is the greenback quantity of the acquisition and sale of the possession items of the collectibles, art work or commodities after it’s listed on our platform. We sometimes cost from 0.15% to 0.3% of the transaction worth per transaction from each the acquisition and sale aspect of the transaction leading to an mixture of 0.3% to 0.6% of complete transaction worth. Typically, we cost a predetermined transaction price, which is negotiated on a case by case foundation, for chosen merchants with particular giant transactions. Transaction price income additionally contains predetermined month-to-month transaction charges, that are negotiated case by case for chosen merchants with excessive buying and selling quantity, and is acknowledged and earned over the desired service interval.

Complete transaction price income decreased by roughly $3.4 million or 21% from $16,265,107 for the six months ended June 30, 2021 to $12,835,350 for a similar interval in 2022. The lower was primarily as a result of lower in complete transaction worth. The whole transaction worth on our platforms decreased from roughly $10.8 billion for the six months ended June 30, 2021 to roughly $8.3 billion for a similar interval in 2022.

(3) Advertising service charges: Advertising service price income is a price that we cost for selling and advertising and marketing our clients’ collectible or art work. The companies embody aiding our clients in connection together with his/her/its itemizing and buying and selling of his/her/its collectible/art work on our platform, which primarily contains consulting and supporting companies of the marketability for the collectible/art work; assessing its market worth and market acceptance for the collectible/art work; and aiding within the utility and authorized safety required for the client’s collectible/art work to be authorised for itemizing on our platform. For advertising and marketing service contracts during which the associated efficiency obligations could be accomplished inside a brief time period, the Firm acknowledges the associated income upon the completion of its efficiency obligations.

Advertising service agreements additionally contains offering promotion companies for patrons’ gadgets as the place to put advertisements on well-known cultural artwork change web sites in China, to supply on-line and offline advertising and marketing companies together with cooperation with public sale homes and take part in industry-related exhibitions and gala’s. The advertising and marketing service charges are charged on numerous mounted price foundation, that are primarily based on the kind of the itemizing session that the client applies for and whether or not the client has listed and offered its collectible on different platforms earlier than, they usually weren’t tied to the sort or worth of the underlying collectible/art work. Advertising service contracts and costs are acknowledged upon the completion of all efficiency obligations.

Advertising service charges decreased by roughly $0.6 million or 16% from $3,416,630 for the six months ended June 30, 2021 to $2,855,684 for a similar interval in 2022. The lower was as a consequence of decreased promotion and itemizing companies for collectible/art work. Throughout the six months ended June 30, 2022 and 2021, 29 and 187 collectibles/art work had been efficiently listed on our platforms, of which we promoted 29 and 51 newly listed collectibles and art work for our clients, respectively. 

(4) Different revenues: Different revenues (together with $99,052 and $129,071 from associated events for the six months ended June 30, 2022 and 2021, respectively) primarily contains companies charges for IT technical assist and income from termination of a cooperation settlement for the six months ended June 30, 2021. IT technical assist charges are negotiated on a case by case foundation and are acknowledged when the associated companies have been carried out primarily based on the precise phrases of the contract. Complete different revenues decreased by roughly $0.2 million or 64% from $291,049 (together with $129,071 from offering technological companies to our associated events) for the six months ended June 30, 2021 to $106,093 (together with $99,052 from offering technological companies to our associated events) for a similar interval in 2022. The lower was as a result of we generated different income of roughly $69,000 for the six months ended June 30, 2021 when a 3rd celebration terminated a cooperation settlement with us in growing a web based platform for area of interest market the place we didn’t have such income for the six months ended June 30, 2022.

Value of Revenues

Value of revenues decreased by roughly $0.3 million or 23% from $1,397,828 for the six months ended June 30, 2021 to $1,076,308 for a similar interval in 2022. The lower in value of revenues was primarily as a result of lower in storage charges of roughly $0.3 million as a result of lower within the itemizing worth of collectibles/art work. The warehouse storage charges are primarily based on a sure share of the itemizing worth of collectibles/art work.

Gross Revenue

Gross revenue for the six months ended June 30, 2022 and 2021 amounted to $15,970,412and $23,062,911, respectively. Gross revenue decreased by roughly $7.1 million or 30.8% as a result of causes talked about above.

Promoting and Advertising Bills

Promoting and advertising and marketing bills decreased by roughly $2.8 million or 27.8% from $10,238,213 (together with $341,952 to a associated celebration) for the six months ended June 30, 2021 to $7,392,637 (together with $43,897 to a associated celebration) for a similar interval in 2022. The lower was primarily as a result of lower in advertising and marketing bills of roughly $2.5 million as we paid much less commissions as a consequence of much less new listings and merchants launched by third events, and the lower of roughly $0.3 million from a associated celebration as we paid much less promoting charges to Kashi Jinwang Artwork Buy E-commerce Co., Ltd. as a result of lower of revenues, through the six months ended June 30, 2022 in comparison with the identical interval of 2021. The Firm has two sorts of reward program, one is to rebate on to clients whereas the opposite is to reward third celebration gross sales brokers. Rebates to clients are thought-about as a discount in gross sales value, so the rebate is instantaneous whereas rebates to 3rd celebration gross sales brokers is often paid one to a few month in arrears.

Common and Administrative Bills

Our basic and administrative bills elevated by roughly $0.4 million, or 13% from $3,101,049 (together with $78,716 to a associated celebration) for the six months ended June 30, 2021 to $3,504,116 (together with $122,274 to a associated celebration) for a similar interval in 2022. The rise in our basic and administrative bills was primarily as a result of enhance in skilled charges of roughly $0.4 million.

Different Earnings

Complete different earnings elevated by roughly $0.2 million or 54.2%, from $356,504 for the six months ended June 30, 2021 to $549,796 for a similar interval in 2022. The opposite earnings consists of a achieve from a short-term funding, curiosity earnings and different earnings. The rise was primarily as a result of enhance in roughly $0.1 million in rental earnings that we subleased a part of our workplace constructing and curiosity earnings, which is as a result of enhance in common money and money equal steadiness, of roughly $0.1 million.

Provision for Earnings Taxes

Our provision for earnings taxes amounted to nil for the six months ended June 30, 2021 and 2022. We generated most of our earnings from the subsidiaries of our VIE Jiangsu Yanggu Tradition Growth Co., Ltd. that had preferential tax remedy that are fashioned and registered in Kashi in Xinjiang Provence, China. We even have offered 100% valuation allowance on internet working losses of Jiangsu Yanggu Tradition Growth Co., Ltd. which incurred losses.

Web Earnings

Our internet earnings decreased by roughly $4.5 million, or 44.2%, from $10,080,153 for the six months ended June 30, 2021 to $5,623,456 for a similar interval in 2022. Such change was the results of the mix of the modifications as mentioned above.

Primary and diluted earnings per share

Primary and diluted earnings per share had been $0.27 and $0.49 for the six months ended June 30, 2022 and 2021, respectively, representing a 44.9% lower.

About Oriental Tradition Holding LTD

Oriental Tradition Holding LTD is a web based supplier of collectibles and art work e-commerce companies, which permits collectors, artists, artwork sellers and homeowners to entry an artwork buying and selling market with a wider vary of collectibles and art work buyers. By way of its subsidiaries in Hong Kong, the Firm supplies buying and selling facilitation for particular person and institutional clients of every kind of collectibles, art work and sure commodities on its on-line platforms, in addition to on-line and offline built-in advertising and marketing, storage and technical upkeep companies to clients in China. For extra details about the Firm, please go to: www.ocgroup.hk.

Secure Harbor Assertion

This press launch incorporates forward-looking statements as outlined by the Non-public Securities Litigation Reform Act of 1995. Ahead-looking statements embody statements regarding plans, aims, objectives, methods, future occasions or efficiency, and underlying assumptions and different statements which might be aside from statements of historic information. When the Firm makes use of phrases reminiscent of “might, “will, “intend,” “ought to,” “imagine,” “count on,” “anticipate,” “venture,” “estimate” or related expressions that don’t relate solely to historic issues, it’s making forward-looking statements. Ahead-looking statements usually are not ensures of future efficiency and contain dangers and uncertainties that will trigger the precise outcomes to vary materially from the Firm’s expectations mentioned within the forward-looking statements. These statements are topic to uncertainties and dangers together with, however not restricted to, the next: the Firm’s objectives and techniques; the Firm’s future enterprise growth; monetary situation and outcomes of operations; product and repair demand and acceptance; status and model; the impression of competitors and pricing; modifications in expertise; authorities rules; fluctuations basically financial and enterprise situations in China and assumptions underlying or associated to any of the foregoing and different dangers contained in reviews filed by the Firm with the SEC. For these causes, amongst others, buyers are cautioned to not place undue reliance upon any forward-looking statements on this press launch. Extra components are mentioned within the Firm’s filings with the SEC, which can be found for evaluation at www.sec.gov. The Firm undertakes no obligation to publicly revise these forward-looking statements to mirror occasions or circumstances that come up after the date hereof.

For extra info, please contact:

The Firm:
IR Division
Electronic mail: [email protected]
Cellphone: (852) 2110-3909

ORIENTAL CULTURE HOLDING LTD AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

    June 30,
2022
    December 31,
2021
 
    (Unaudited)        
ASSETS            
             
CURRENT ASSETS            
Money and money equivalents   $ 38,707,190     $ 29,398,047  
Quick-term funding     1,877,336       3,748,900  
Accounts receivable, internet     44,707       47,060  
Accounts receivable – associated events     7,352       8,093  
Different receivables and pay as you go bills     879,502       1,385,394  
Different receivables – associated celebration     4,041,459       928,913  
Escrow     600,000       600,000  
Complete present belongings     46,157,546       36,116,407  
                 
PROPERTY AND EQUIPMENT, NET     9,510,964       9,904,289  
                 
OTHER ASSETS                
Certificates of deposit           3,136,910  
Proper-of-use belongings     45,614       11,494  
Value methodology Funding     967,733       548,151  
Intangible belongings, internet     988,324       1,120,021  
Complete different belongings     2,001,671       4,816,576  
                 
Complete belongings   $ 57,670,181     $ 50,837,272  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
                 
CURRENT LIABILITIES                
Accounts payable   $ 3,648,982     $ 1,623,829  
Accounts payable – associated events     52,423       1,665  
Deferred income     688,286       697,863  
Different payables and accrued liabilities     414,789       1,284,235  
Taxes payable     170,115       29,826  
Lease legal responsibility – present     34,190       11,494  
Complete present liabilities     5,008,785       3,648,912  
                 
OTHER LIABILITIES                
Lease legal responsibility – noncurrent     11,424        
                 
Complete liabilities     5,020,209       3,648,912  
                 
COMMITMENTS AND CONTINGENCIES                
                 
SHAREHOLDERS’ EQUITY                
Most well-liked shares, $0.00005 par worth, 100,000,000 shares approved, no shares issued and excellent as of June 30, 2022 and December 31, 2021            
Abnormal shares, $0.00005 par worth, 900,000,000 shares approved, 30,836,992 shares issued, 21,226,992 shares excellent as of June 30, 2022 and December 31, 2021, respectively     1,542       1,533  
Treasury shares, at value, 9,610,000 shares issued as of June 30, 2022 and December 31, 2021, respectively     (481 )     (481 )
Extra paid-in capital     22,070,878       21,884,962  
Subscription receivable           (1,000,000 )
Statutory reserves     112,347       112,347  
Retained earnings     30,715,499       25,092,043  
Gathered different complete earnings (loss)     (249,813 )     1,097,956  
Complete shareholders’ fairness     52,649,972       47,188,360  
                 
Complete liabilities and shareholders’ fairness   $ 57,670,181     $ 50,837,272  

ORIENTAL CULTURE HOLDING LTD AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

    For the Six Months
Ended June 30,
 
    2022     2021  
             
OPERATING REVENUES:            
Web revenues   $ 16,947,668     $ 24,331,668  
Web revenues – associated events     99,052       129,071  
Complete working revenues     17,046,720       24,460,739  
                 
COST OF REVENUES:     (1,076,308 )     (1,397,828 )
                 
GROSS PROFIT     15,970,412       23,062,911  
                 
OPERATING EXPENSES:                
Promoting and advertising and marketing     (7,348,740 )     (9,896,261 )
Promoting and advertising and marketing – associated celebration     (43,897 )     (341,952 )
Common and administrative     (3,381,842 )     (3,022,333 )
Common and administrative – associated events     (122,274 )     (78,716 )
Complete working bills     (10,896,753 )     (13,339,262 )
                 
INCOME FROM OPERATIONS     5,073,659       9,723,649  
                 
OTHER INCOME                
Acquire on short-term funding     30,237       45,466  
Curiosity earnings     167,422       87,251  
Different earnings, internet     352,137       223,787  
Complete different earnings, internet     549,796       356,504  
                 
INCOME BEFORE INCOME TAXES     5,623,455       10,080,153  
                 
PROVISION FOR INCOME TAX            
                 
NET INCOME   $ 5,623,455     $ 10,080,153  
                 
OTHER COMPREHENSIVE LOSS                
International forex translation adjustment     (1,347,769 )     (69,596 )
                 
COMPREHENSIVE INCOME   $ 4,275,686     $ 10,010,557  
                 
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES                
Primary and diluted     21,052,813       20,444,712  
                 
EARNINGS PER SHARE                
Primary and diluted   $ 0.27     $ 0.49  

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