SHENZHEN, China, Sept. 30, 2020 (GLOBE NEWSWIRE) — Taoping Inc. (NASDAQ: TAOP), a leading provider of internet-based smart display screens, and a new-media ecosystem that enables targeted advertising and online retail, today announced its unaudited financial results for the six months ended June 30, 2020.
Revenue was $3.7 million for the first six months of 2020, a decrease of $3.4 million, compared to $7.1 million for the same period last year. The decrease in sales is largely due to the impact of the COVID-19 pandemic and an unfavorable macro environment in China for the first half year of 2020.The Company incurred a loss from operations of $7.5 million for the first six months of 2020, compared to a loss from operations of $2.2 million for the same period of last year. The increase in loss from operations in the first half of 2020 was mainly attributed to an increase of $5.8 million in allowance for credit losses.Net loss attributable to the Company was $7.7 million for the first six months of 2020, compared to a net loss attributable to the Company of $1.8 million for the same period of last year. The net loss was mainly attributed to the loss from operations. Loss per share was $1.12 for the first six months of 2020, compared to loss per share of $0.24 for the same period of 2019. On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s ordinary shares. The basic and diluted loss per share were retroactively adjusted for all periods presented.Net cash used in operating activities was $1.2 million for the first six months of 2020, compared to net cash used in operating activities of $0.8 million for the first six months of 2019. For the first six months of 2020, negative operating cash flow was mainly attributable to the increased net loss, increase in advances to suppliers and decrease in accounts payable.Working capital deficit was $10.0 million as of June 30, 2020, compared to working capital deficit of $7.0 million as of December 31, 2019.“In first half of 2020, the new-media industry of China experienced a slowdown attributed to the unfavorable macro environment and COVID-19. Recognizing various challenges during this period, we moved quickly to enhance liquidity by raising additional capital and extending bank loans, reduce expense base and cash outflows to further our commitment to building long-term shareholder value,” said Mr. Jianghuai Lin, CEO and Chairman of Taoping Inc.Mr. Lin added, “We continued to advance our technology and platform to provide cost-effective digital advertising solutions to customers. In July, we upgraded the Taoping Smart Cloud Platform and optimized the performance of ad publishing, data monitoring, publication management, transaction system, and Application Programming Interface (API) docking. With Taoping Smart Cloud Platform, the Company will accelerate the integration of offline scenes and online Internet interaction channels, open connection to third-party Demand Side Platform (DSP) and Ad Exchange (ADX) Internet traffic platforms, and realize online and offline traffic interoperability through Real-Time Bidding (RTB) technology. During the third quarter, we are experiencing demand recovery. Looking ahead, we will seek opportunities to expand the product line based on our accumulated technological knowledge in the IT industry while continue to manage our financial position conservatively. We believe we are well-positioned to continue to expand and enhance our existing network and to create value well into the future.”Operational HighlightsFinancial Results for the First Six Months of 2020RevenueRevenue was $3.7 million for the first six months of 2020, compared to $7.1 million for the same period of last year, a decrease of $3.4 million, or 47.2%. The decrease was primarily due to the impact of the COVID-19 pandemic and the unfavorable macro environment in China for the first half year of 2020.Gross ProfitGross profit was $1.5 million for the first six months of 2020, a decrease of $ 1.6 million compared to $3.1 million for the first six months of 2019. Gross profit as a percentage of revenue was 39.3% for the first six months of 2020, decreased from 44.0% for the same period of last year.The decrease in the overall gross profits primarily resulted from the decrease of product revenue from cloud-based display terminals, which have a comparatively higher gross profit margin and the increase of lower margin revenue from high-end data storage servers. The Company expects that the gross margin for the remaining of 2020 would be consistent with the first half of the year.Administrative, R&D and Selling ExpensesAdministrative expenses increased by $4.0 million, or 125%, to $7.1 million for the first six months of 2020, from $3.1 million for the same period of 2019. Such increase was a result of an increase of $5.8 million in allowance for credit losses, offset by the decrease in amortization of intangible assets and payrolls. The Company considered the Covid-19 impact and expected future credit losses in the determination of credit loss reserves as of June 30, 2020. As a result, the Company made credit loss reserves on uncollected accounts receivable from prior years of $5.8 million in first half of 2020 due to the deterioration of certain customers’ financial conditions. As a percentage of revenue, administrative expenses increased to 189% for the first six months of 2020, from 44.3% for the same period of 2019.Research and development (“R&D”) expenses decreased by $0.1 million, or 5.4%, to $1.8 million for the first six months of 2020, from $1.9 million for the first six months of 2019. Such decrease was primarily due to decrease in payroll and benefits for R&D staff as a result of the decrease in headcount, and the decrease of depreciation of software purchased. As a percentage of revenue, R&D expenses increased to 48.2% for the first six months of 2020, from 26.9% for the same period of last year. R&D expenses for the remaining of 2020 are expected to be consistent with the first half of the year.Selling expenses decreased by $0.2 million, or 52.2%, to $0.1 million for the first six months of 2020, from $0.3 million for the first six months of 2019. This decrease was primarily due to the decreased headcount of sales and marketing staff. Selling expenses for the remaining of 2020 is expected to be consistent with the first half of the year.Net loss attributable to CompanyAs a result of the cumulative effect of the foregoing factors, for the first six months of 2020, net loss attributable to the Company was $7.7 million, compared to a net loss attributable to the Company of $1.8 million for the same period of last year.Cash and Financial PositionAs of June 30, 2020, the Company had cash and cash equivalents of $0.3 million and restricted cash of $0.2 million, compared to $1.5 million of cash and cash equivalents as of December 31, 2019. Working capital deficit was $10.0 million as of June 30, 2020, compared to working capital deficit of $7.0 million as of December 31, 2019.Net cash used in operating activities was $1.2 million for the first six months of 2020, compared to net cash used in operating activities of $0.8 million for the first six months of 2019.About Taoping Inc.Taoping Inc. (formerly known as China Information Technology, Inc.) (TAOP), is a leading provider of smart display terminals for targeted advertising and online retail. The Company provides integrated end-to-end digital advertising solutions enabling customers to distribute and manage advertisements on advertisement display terminals. Connecting cloud-based advertisement terminal owners, advertisers and consumers, it builds up a resource sharing “Smart IoT Terminal – Taoping Net/ App – Taoping Go (e-Store)” media ecosystem to ultimately achieve the mission “our technology makes advertising and branding affordable and effective for everyone.” To learn more, please visit http://www.taop.com/.Safe Harbor StatementThis press release may contain certain “forward-looking statements” relating to the business of Taoping Inc. and its subsidiaries and other consolidated entities. All statements, other than statements of historical fact included herein, are “forward-looking statements” in nature within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, often identified by the use of forward-looking terminologies such as “believes”, “expects” or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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 (http://www.sec.gov). All forward-looking statements attributable to the Company and its subsidiaries and other consolidated entities or persons acting on their 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.For further information, please contact:
TAOPING INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2020 AND DECEMBER 31, 2019*On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. Except for shares authorized, all references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted.TAOPING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019*On July 30, 2020, the Company implemented a one-for-six reverse stock split of the Company’s issued and outstanding ordinary shares. The computation of basic and diluted EPS was retroactively adjusted for all periods presented.TAOPING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019


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