6-K
Taoping Inc. (TAOP)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
WASHINGTON,D.C. 20549
FORM6-K
REPORTOF FOREIGN PRIVATE ISSUER
PURSUANTTO RULE 13a-16 OR 15d-16 OF THE
SECURITIESEXCHANGE ACT OF 1934
For the month of June 2020
Commission File Number 001-35722
TAOPINGINC.
(Translation of registrant’s name into English)
21^st^Floor, Everbright Bank BuildingZhuzilin, Futian DistrictShenzhen, Guangdong, 518040People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date:<br> June 12, 2020 | TAOPING INC. | |
|---|---|---|
| By: | /s/ Jianghuai Lin | |
| Jianghuai<br> Lin | ||
| Chief<br> Executive Officer |
EXHIBITINDEX
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release, dated June 12, 2020 |
Exhibit99.1
TAOPReports Fiscal Year 2019 Financial Results
SHENZHEN, China, June 12, 2020 - 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 financial results for the year ended December 31, 2019.
FiscalYear 2019 Financial Highlights
| ● | Revenue<br> was $13.8 million for the year ended December 31, 2019, compared to total revenue of $20.6 million for the year ended December<br> 31, 2018. |
|---|---|
| ● | For<br> the year ended December 31, 2019, net loss attributable to the Company was $3.6 million, compared to net income of $1.7 million<br> for the year ended December 31, 2018. |
| ● | Gross<br> profit as a percentage of revenue was 47.9% for the year ended December 31, 2019 and was 46.9% for the year ended December<br> 31, 2018. |
“In 2019, we expanded Taoping Network to approximately 200 cities, up from 100 cities at the beginning of 2019. We are glad not only that we achieved this expansion, but also that the majority of our city partners and Taoping Alliance Members achieved profitability and gained market share, which gives us confidence that we are on the right track to expand our network into the 3^rd^, 4^th^, and 5^th^ tier cities where consumption growth is robust. Our sales decreased because smaller cities normally do not need as many Taoping display screens as big cities,” said Mr. Jianghuai Lin, CEO and Chairman of TAOP.
Mr. Lin continued, “On top of Taoping Apps for advertisers and display screen owners, we have enhanced our technology platform to integrate with third-party display screens, whether new or already installed, and through cloud connect with third party online advertising platforms (such as Baidu), thus not only increases the number of display screens in our network but also serve these display screens with various kinds of programs, e.g. traditional offline or outdoor advertising programs, online advertising programs, announcement boards, interactive advertising campaigns, etc. Currently, we are providing technical operations of Taoping Network and Taoping e-Stores for free. As part of our growth strategy, we expect to share advertisement revenues and transaction revenues with our city partners sometime in the future or to exercise our right to acquire our city partners, and to continue the expansion of our network to reach more low-tier cities. Though we experienced adverse impacts from the coronavirus pandemic, we are focusing our development efforts on intelligent connections with all major online advertising platforms in China. As China is opening for business, we are experiencing recovery of demands.”
OperationalHighlights
| ● | Taoping<br> Alliance has penetrated into the county-level market nationwide. The number of Taoping Alliance members has increased to approximately<br> 200 from 100 at the beginning of 2019, with a coverage of twenty-six provinces out of thirty-four in China and three overseas<br> members including Canada-based Capital Green Tech & Trade Corp. (CG), Asia Taoping Pte. Ltd. (Asia Taoping), and Singapore<br> Taoping Pte. Ltd. (Singapore Taoping). |
|---|---|
| ● | In<br> January 2020, the Company officially launched Taoping Cloud Window, an innovative cross-platform App that integrates third-party<br> screens to its resource sharing “Smart IoT Terminal - Taoping Net/App - Taoping Go (e-Store)” new media ecosystem.<br> Taoping Cloud Window App is compatible with various models of digital screens (TV screens, LED screens, billboards, etc.)<br> in the market. After installing the App, third-party display screens can be integrated into Taoping Network of smart display<br> screens and can operate on Taoping smart cloud platform for ad publishing, payment processing and targeted advertising. |
| --- | --- |
| ● | In<br> March 2020, the Company announced its cooperation with Baidu Inc. (Nasdaq: BIDU) and Beijing ZMT Network Technology Co., Ltd.,<br> for Taoping Smart Cloud API (“Application Programming Interface”) to integrate with the two companies’ advertising<br> platforms, Baidu Juping and ZMT Smart Screen. |
FinancialResults for Fiscal Year 2019
Revenue
Revenue was $13.8 million for the year ended December 31, 2019, compared to total revenue of $20.6 million for the year ended December 31, 2018, a decrease of $6.8 million, or 33%. The decrease was primarily due to the unfavorable macro-economic environment and the slowdown of the out-of-home advertising market in China in 2019.
Gross Profit
Gross profit was $6.6 million for the year ended December 31, 2019, a decrease of $ 3.1 million compared to $9.7 million for the year ended December 31, 2018. Gross profit as a percentage of revenue was 47.9% for the year ended December 31, 2019 and was 46.9% for the year ended December 31, 2018.
The increase in the overall gross margin primarily resulted from the cost advantages in new products and services offered to customers in the private sector.
Administrative, R&D and Selling Expenses
Administrative expenses increased by $2.3 million, or 54.8%, to $6.6 million for the year ended December 31, 2019, from $4.3 million for the year ended December 31, 2018. As a percentage of revenue, administrative expenses increased to 48.3% for 2019, from 20.9% for 2018. Such increase was primarily due to an increase of $2.8 million in provision of doubtful account receivable, as a result of the unfavorable macro-economic environment and the slowdown of the out-of-home advertising industry in China.
Research and development (“R&D”) expenses decreased by $1.2 million, or 24.5%, to $3.6 million for the year ended December 31, 2019, from $4.8 million for the year ended December 31, 2018. Such decrease was primarily due to the decrease of depreciation of R&D related hardware equipment and software. As a percentage of revenue, research and development expenses increased to 26.1% for 2019, from 23.1% in 2018.
Selling expenses increased by $0.1 million, or 21.9%, to $0.5 million for the year ended December 31, 2019, from $0.4 million for the year ended December 31, 2018. This increase was due to the headcount increase of the sales and marketing staff for expansion of nationwide Taoping network.
Net (loss) income attributable to Company
For the year ended December 31, 2019, net loss attributable to the Company was $3.6 million, compared to net income of $1.7 million for the year ended December 31, 2018.
Cash and Financial Position
As of December 31, 2019, the Company had cash and cash equivalents of $1.5 million, compared to $1.7 million as of December 31, 2018. Working capital deficiency was $7.0 million as of December 31, 2019, compared to a working capital of $4.9 million as of December 31, 2018.
Net cash used in operating activities was $1.7 million for the year ended December 31, 2019 and net cash provided by operating activities was $2.5 million for the year ended December 31, 2018.
AboutTaoping Inc.
Taoping Inc. (formerly known as China Information Technology, Inc.) (TAOP), is a leading provider of smart display terminals and solutions for targeted advertising and online retails. The Company provides the integrated end-to-end digital advertising solutions enabling customers to distribute and manage ads on cloud-based ad display screens. Connecting owners of Taoping screens, advertisers and consumers, it builds up a resource sharing “Smart IoT Screen Network- Taoping 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/.
SafeHarbor Statement
This 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.
Forfurther information, please contact:
| Taoping Inc. |
|---|
| Chang<br> Qiu |
| Email:<br> [email protected] |
| or |
| Dragon Gate Investment Partners LLC |
| Tel:<br> +1 (646)-801-2803 |
| Email:<br> [email protected] |
TAOPINGINC.
CONSOLIDATEDBALANCE SHEETS
DECEMBER31, 2019 AND 2018
| December<br>31, 2018 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 1,519,666 | $ | 1,653,260 | ||
| Accounts receivable, net | 4,926,081 | 7,995,931 | |||
| Accounts receivable-related parties, net | 8,733,263 | 9,545,453 | |||
| Advances to suppliers | 1,064,901 | 504,002 | |||
| Inventories, net | 302,938 | 693,677 | |||
| Loan receivable | - | 2,180,655 | |||
| loan receivable - related party | 397,041 | - | |||
| Other current assets | 2,087,946 | 6,304,722 | |||
| TOTAL CURRENT ASSETS | 19,031,836 | 28,877,700 | |||
| Non-current accounts receivable, net | 1,648,109 | 1,078,777 | |||
| Non-current accounts receivable-related parties, net | 3,793,949 | - | |||
| Property, plant and equipment, net | 11,835,516 | 11,599,416 | |||
| Intangible assets, net | 1,496 | 59,921 | |||
| Other assets, non-current | 4,304,640 | - | |||
| TOTAL ASSETS | 40,615,546 | $ | 41,615,814 | ||
| LIABILITIES AND EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Short-term bank loans | 6,584,664 | $ | 6,082,574 | ||
| Accounts payable | 12,586,696 | 11,700,763 | |||
| Accounts payable-related parties | 65,276 | 66,135 | |||
| Advances from customers | 421,700 | 304,021 | |||
| Advances from customers-related parties | 140,938 | 51,183 | |||
| Amounts due to related parties | 129,139 | 1,005,307 | |||
| Accrued payroll and benefits | 193,912 | 243,976 | |||
| Other payables and accrued expenses | 4,897,672 | 4,247,391 | |||
| Income tax payable | 70,653 | 310,537 | |||
| Convertible note payable, net of debt discounts | 916,511 | - | |||
| TOTAL CURRENT LIABILITIES | 26,007,161 | 24,011,887 | |||
| EQUITY | |||||
| Ordinary shares, 2019 and 2018: par 0; authorized capital 100,000,000 shares; shares issued and outstanding, 2019: 42,000,163 shares; 2018: 41,760,163 shares; | 126,257,156 | 126,146,996 | |||
| Additional paid-in capital | 16,461,333 | 15,782,904 | |||
| Reserve | 14,044,269 | 14,044,269 | |||
| Accumulated deficit | (174,517,769 | ) | (170,935,437 | ) | |
| Accumulated other comprehensive income | 23,022,845 | 23,218,159 | |||
| Total equity of the Company | 5,267,834 | 8,256,891 | |||
| Non-controlling interest | 9,340,551 | 9,347,036 | |||
| TOTAL EQUITY | 14,608,385 | 17,603,927 | |||
| TOTAL LIABILITIES AND EQUITY | 40,615,546 | $ | 41,615,814 |
All values are in US Dollars.
TAOPINGINC.
CONSOLIDATEDSTATEMENTS OF OPERATIONS
YEARSENDED DECEMBER 31, 2019, 2018 AND 2017
| 2019 | 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue – Products | $ | 3,116,145 | $ | 6,546,016 | $ | 4,312,048 | |||
| Revenue - Products-related parties | 7,352,236 | 9,373,272 | 9,103,222 | ||||||
| Revenue – Software | 2,246,497 | 3,037,912 | 3,441,582 | ||||||
| Revenue – Software-related parties | - | 45,400 | - | ||||||
| Revenue – System integration | - | - | 390,465 | ||||||
| Revenue – Others | 969,751 | 1,490,324 | 884,584 | ||||||
| Revenue - Others-related parties | 106,674 | 85,416 | 57,373 | ||||||
| TOTAL REVENUE | 13,791,303 | 20,578,340 | 18,189,274 | ||||||
| Cost – Products | 6,448,965 | 9,808,837 | 8,973,539 | ||||||
| Cost – Software | 525,473 | 783,702 | 733,617 | ||||||
| Cost – System integration | 57,911 | 227,677 | 135,224 | ||||||
| Cost – Others | 156,743 | 104,030 | 25,128 | ||||||
| TOTAL COST | 7,189,092 | 10,924,246 | 9,867,508 | ||||||
| GROSS PROFIT | 6,602,211 | 9,654,094 | 8,321,766 | ||||||
| Administrative expenses | 6,657,972 | 4,299,820 | 3,621,570 | ||||||
| Research and development expenses | 3,592,843 | 4,756,088 | 4,031,313 | ||||||
| Selling expenses | 523,557 | 429,362 | 1,119,586 | ||||||
| (LOSS) INCOME FROM OPERATIONS | (4,172,161 | ) | 168,824 | (450,703 | ) | ||||
| Subsidy income | 431,555 | 556,187 | 476,517 | ||||||
| Other income (loss), net | 238,200 | 400,566 | 281,556 | ||||||
| Interest income | 133,517 | 36,381 | 7,900 | ||||||
| Interest expense and debt discounts expense | (499,852 | ) | (484,403 | ) | (450,024 | ) | |||
| Change in fair value of warrant liability | - | - | 3,720 | ||||||
| (Loss) income before income taxes | (3,868,741 | ) | 677,555 | (131,034 | ) | ||||
| Income tax benefit | 274,480 | 1,201,231 | 1,070,343 | ||||||
| NET (LOSS) INCOME | (3,594,261 | ) | 1,878,786 | 939,309 | |||||
| Less: Net (loss) income attributable to<br> <br>the non-controlling interest | 11,929 | (186,803 | ) | (80,704 | ) | ||||
| NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY | $ | (3,582,332 | ) | $ | 1,691,983 | $ | 858,605 | ||
| (Loss) earnings per share - Basic and Diluted | |||||||||
| Basic | $ | (0.09 | ) | $ | 0.04 | $ | 0.02 | ||
| Diluted | $ | (0.09 | ) | $ | 0.04 | $ | 0.02 | ||
| (LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO THE COMPANY | |||||||||
| Basic | $ | (0.09 | ) | $ | 0.04 | $ | 0.02 | ||
| Diluted | $ | (0.09 | ) | $ | 0.04 | $ | 0.02 |
TAOPINGINC.
CONSOLIDATEDSTATEMENTS OF CASH FLOWS
YEARSENDED DECEMBER 31, 2019, 2018 AND 2017
| 2019 | 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||||||
| Net (loss) income | $ | (3,594,261 | ) | $ | 1,878,786 | $ | 939,309 | ||
| Adjustments to reconcile net income (loss) to <br>net cash provided by (used in) operating activities: | |||||||||
| Provision for losses on accounts receivable <br>and other current assets | 3,628,544 | 830,266 | 422,388 | ||||||
| Provision for obsolete inventories | 115,191 | 30,403 | 176,570 | ||||||
| Depreciation | 2,842,787 | 2,940,387 | 2,036,438 | ||||||
| Amortization of intangible assets | 58,164 | 734,150 | 820,468 | ||||||
| Amortization of convertible note discount | 46,165 | - | - | ||||||
| Loss (gain) on sale of property and equipment <br>and land use rights | 4,243 | (7,845 | ) | ||||||
| Loss from disposal of inventories | 62,732 | 189,861 | 138,316 | ||||||
| Stock-based payments for consulting services | 86,326 | 43,788 | 96,313 | ||||||
| Stock-based compensation | 494,316 | 584,629 | 487,407 | ||||||
| Gain from write-off of long aged payables | - | (278,099 | ) | (678,012 | ) | ||||
| Impairment of long-term investments | - | 45,400 | - | ||||||
| Change in fair value of warrants liability | - | - | (3,720 | ) | |||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts receivable | 923,873 | (5,156,120 | ) | (2,145,097 | ) | ||||
| Accounts receivable from related parties | (5,262,357 | ) | (5,137,222 | ) | (4,694,068 | ) | |||
| Inventories | 207,233 | (320,267 | ) | 652,921 | |||||
| Increase in other non-current assets | (4,343,311 | ) | |||||||
| Other receivables and prepaid expenses | 4,385,133 | 2,497,105 | 6,962,862 | ||||||
| Advances to suppliers | (598,082 | ) | 1,123,765 | (1,423,441 | ) | ||||
| Amounts due to/from related parties | (870,859 | ) | (118,771 | ) | - | ||||
| Other payables and accrued expenses | 663,584 | 652,149 | 1,497,312 | ||||||
| Advances from customers | 122,720 | 38,951 | (1,442,928 | ) | |||||
| Advances from customers from related parties | 91,233 | (939,957 | ) | 2,111,157 | |||||
| Accounts payable and bills payable | (503,267 | ) | 3,963,341 | (239,628 | ) | ||||
| Accounts payable from related party | - | 68,845 | - | ||||||
| Income tax payable | (237,968 | ) | (1,201,831 | ) | (1,166,473 | ) | |||
| Net cash (used in) provided by operating activities | (1,682,104 | ) | 2,473,802 | 4,540,249 | |||||
| INVESTING ACTIVITIES | |||||||||
| Proceeds from sale of property and equipment | 133 | 577 | 7,845 | ||||||
| Purchases of property and equipment | (1,619,325 | ) | (1,797,510 | ) | (3,783,064 | ) | |||
| Disbursement of loan receivable - related party | (400,608 | ) | |||||||
| Proceeds(disbursement) of Loan receivable | 2,171,655 | (2,270,006 | ) | - | |||||
| Net cash provided by (used in) investing activities | 151,855 | (4,066,939 | ) | (3,775,219 | ) | ||||
| FINANCING ACTIVITIES | |||||||||
| Proceeds from borrowings under short-term loans | 7,817,959 | 6,810,017 | 8,880,840 | ||||||
| Proceeds from exercise of consultants stock options | - | 44,843 | - | ||||||
| Proceeds from issuance of convertible note, <br>net of debt issuance costs | 1,000,000 | - | - | ||||||
| Proceeds from issuance of ordinary shares <br>in connection with private placement | - | 1,500,000 | - | ||||||
| Repayment of short-term loans | (7,231,612 | ) | (8,178,074 | ) | (9,366,326 | ) | |||
| Net cash provided by (used in) financing activities | 1,586,347 | 176,786 | (485,486 | ) | |||||
| Effect of exchange rate changes on cash and <br>cash equivalents | (189,692 | ) | (191,197 | ) | (771,111 | ) | |||
| NET DECREASE IN CASH AND <br>CASH EQUIVALENTS | (133,594 | ) | (1,607,548 | ) | (491,567 | ) | |||
| CASH AND CASH EQUIVALENTS, BEGINNING | 1,653,260 | 3,260,808 | 3,752,375 | ||||||
| CASH AND CASH EQUIVALENTS, ENDING | $ | 1,519,666 | $ | 1,653,260 | $ | 3,260,808 | |||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid during the year | |||||||||
| Income taxes | $ | - | $ | 600 | $ | 3,057 | |||
| Interest | $ | 445,582 | $ | 484,403 | $ | 450,024 |
Supplemental disclosure of significant non-cash transactions:
In 2018, the Company issued 479,004 ordinary shares in an amount of approximately $626,000, as a result of cashless exercise of stock options granted to the Company’s employees under its 2016 equity Incentive Plan.
In 2018, purchase of software in an amount of approximately $1.5 million was made by an increase in accounts payable.
In 2019, the Company issued 240,000 ordinary shares as compensation of approximately $110,000 to a consultant’s service.
In 2019, the Company issued an individual investor warrant to purchase 160,000 ordinary shares of the Company in connection with the issuance of a convertible promissory note with the principle amount of $1.04 million.
In 2019, the Company issued warrant to purchase 150,000 shares of the Company’s ordinary shares as compensation of approximately $58,000 for a consultant’s service.
In 2019, purchase of software and equipment in an amount of approximately $1.6 million was made by an increase in accounts payable.