ChinaNet Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the
"Company"),"), an integrated online advertising, precision
marketing and data-analysis and management services platform,
announced today financial results for the fiscal year 2016.
Summary Financials
Fiscal Year 2016 Results (USD) |
|
FY 2016 |
FY 2015 |
CHANGE |
Sales |
$34.8 million |
$32.3 million |
+7.7 |
% |
Gross Profit |
$7.8 million |
$7.6 million |
+1.9 |
% |
Gross Margin |
|
22.3 |
% |
|
23.6 |
% |
-5.4 |
% |
Net Loss Attributable to ChinaNet |
($6.5) million |
($9.1) million |
-28.6 |
% |
EPS from continuing operations* (Basic & Diluted) |
($ |
0.57 |
) |
($ |
0.71 |
) |
-- |
|
*Per share amounts for all periods have been
retroactively restated to reflect the Company’s 1 for 2.5 reverse
stock split, which was effective on August 19, 2016
Excluding revenue generated from discontinued operation for year
ended December 31, 2015, total revenues increased to $34.8 million
for the year ended December 31, 2016 from $32.3 million in the
prior year, primarily due to the increase from search engine
marketing revenue during the year.
During the year, revenues from internet
advertising and data services was $17.0 million, which decreased
13.0% from $19.6 million in 2015. ChinaNet continues to focus on
integrating and upgrading its internet advertising and data service
to SME clients and investing in developing new service modules for
clients, and believes that the launch of new services in future
will help to increase market penetration and recurring revenues.
The decline was offset by a search engine marketing services
revenue increase by 59% from $11.1 million in 2015 to $17.6 million
in 2016. This increase was supported by the CloudX system, which
drove more precision marketing and ROI for clients.
Gross profit for the year ended December 31,
2016 was $7.8 million compared to $7.6 million for 2015, an
improvement of 1.9%. Gross margin was 22.3%, down slightly from
23.6% in 2015, primarily due to the increase in relative lower
margin revenues from search engine marketing services during the
year. Internet advertising and data service gross margin increased
to 43% in 2016 from 34% for 2015. The improvement in gross margin
of the internet advertising and data service was primarily due to
optimizing and upgrading of the Company's online promotion analysis
and cost control system, which improved the promotion accuracy, Ad.
effect conversion rate and promotion cost control.
Operating expenses decreased by 17.9% to $13.9
million for the fiscal year ended December 31, 2016. Sales and
marketing expenses decreased by 11.2% to $4.1 million. General and
administrative expenses increased by 2.3% to $7.7 million. Loss
from operations was $6.1 million in 2016, an improvement of 34.0%
compared to $9.3 million in 2015.
Net loss attributable to ChinaNet for the year
ended December 31, 2016 was $6.5 million and loss per share from
continuing operations was $0.57, compared to a net loss of $9.1
million and loss per share from continuing operations of $0.71 in
2015. The weighted average diluted shares outstanding was 11.4
million shares in 2016 versus 10.7 million in 2015.
Balance Sheet and Cash Flow
The Company had $3.0 million in cash and cash
equivalents as of December 31, 2016, compared to $5.5 million as of
December 31, 2015, working capital of $6.9 million compared to
$13.7 million as of December 31, 2015, and a current ratio of 1.9
to 1, compared 2.9 to 1 as of December 31, 2015. Total
shareholders' equity of ChinaNet was $22.2 million at December 31,
2016 compared to $27.3 million at December 31, 2015.
The Company generated approximately $0.6 million
of cash outflows from operations for the year ended December 31,
2016 compared to a $5.7 million of cash inflows for the year ended
December 31, 2015.
Business Updates
In January 2017, ChinaNet announced the launch of its updated
comprehensive website www.chinanet-online.com, reflecting ongoing
efforts to provide up-to-date information for customers, investors
and shareholders. The new ChinaNet website has been redesigned to
be more dynamic, user-friendly and content rich. The website allows
visitors to efficiently access information needed regarding
ChinaNet's profile and history, products and services, and investor
relations content including press releases and SEC reporting. The
website now also includes enhanced video, including a compressive
overview of the Company's business which can be viewed directly at:
http://www.chinanet-online.com/english_index.html
About ChinaNet Online Holdings, Inc.
ChinaNet Online Holdings, a parent company of ChinaNet Online
Media Group Ltd., incorporated in the BVI (ChinaNet), is an
integrated online advertising, precision marketing and
data-analysis and management services platform. ChinaNet provides
prescriptive analysis for its clients to improve business outcomes
and to create more efficient enterprises. The Company leverages an
optimization framework, provided by its comprehensive data-analysis
infrastructure, to blend data, mathematical, and computational
sciences into an outcome management platform for which it monetizes
on a per client basis. ChinaNet uniquely optimizes and prescribes
its clients decision making processes based on its proprietary
ecosystem. For more information, visit www.chinanet-online.com.
Safe Harbor
This release contains certain "forward-looking statements"
relating to the business of ChinaNet Online Holdings, Inc., which
can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "estimates" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties, including business uncertainties
relating to government regulation of our industry, market demand,
reliance on key personnel, future capital requirements, competition
in general and other factors that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
filings with the Securities and Exchange Commission. These
forward-looking statements are based on ChinaNet's current
expectations and beliefs concerning future developments and their
potential effects on the Company. There can be no assurance that
future developments affecting ChinaNet will be those anticipated by
ChinaNet. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. ChinaNet undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except for number of shares and
per share data) |
|
|
|
|
As of December 31, |
|
|
|
|
2016 |
|
|
2015 |
|
|
|
|
(US $) |
|
(US $) |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
|
$ |
3,035 |
|
$ |
5,503 |
|
Term
deposit |
|
|
|
3,056 |
|
|
3,265 |
|
Accounts
receivable, net |
|
|
|
3,322 |
|
|
2,549 |
|
Other
receivables, net |
|
|
|
89 |
|
|
1,910 |
|
Prepayment and deposit to suppliers |
|
|
|
4,754 |
|
|
5,843 |
|
Due from
related parties, net |
|
|
|
213 |
|
|
41 |
|
Other
current assets |
|
|
|
6 |
|
|
45 |
|
Assets classified as held for sale |
|
|
|
- |
|
|
1,882 |
|
Total current assets |
|
|
|
14,475 |
|
|
21,038 |
|
|
|
|
|
|
|
Long-term
investments |
|
|
|
1,340 |
|
|
1,133 |
|
Property and equipment,
net |
|
|
|
471 |
|
|
681 |
|
Intangible assets,
net |
|
|
|
7,264 |
|
|
5,638 |
|
Prepayment for
purchasing of software technology |
|
|
|
- |
|
|
1,024 |
|
Goodwill |
|
|
|
4,970 |
|
|
4,396 |
|
Deferred tax assets-non
current |
|
|
|
1,522 |
|
|
1,550 |
|
Total Assets |
|
|
|
30,042 |
|
|
35,460 |
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Short-term bank loan * |
|
|
$ |
721 |
|
$ |
- |
|
Accounts
payable * |
|
|
|
102 |
|
|
95 |
|
Advances
from customers * |
|
|
|
1,420 |
|
|
1,313 |
|
Accrued
payroll and other accruals * |
|
|
|
685 |
|
|
685 |
|
Guarantee
payment and prepayment from investors |
|
|
|
884 |
|
|
944 |
|
Payable
for purchasing of software technology * |
|
|
|
411 |
|
|
- |
|
Taxes
payable * |
|
|
|
2,910 |
|
|
3,186 |
|
Other
payables * |
|
|
|
487 |
|
|
234 |
|
Liabilities classified as held for sale * |
|
|
|
- |
|
|
913 |
|
Total current liabilities |
|
|
|
7,620 |
|
|
7,370 |
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Deferred
tax liability-non current * |
|
|
|
- |
|
|
|
118 |
|
Long-term
borrowing from a director |
|
|
|
126 |
|
|
|
135 |
|
Total Liabilities |
|
|
|
7,746 |
|
|
|
7,623 |
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
- |
|
|
|
129 |
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
|
|
|
Common stock (US$0.001 par value; authorized 50,000,000 shares;
issued and outstanding 12,158,542 shares and 11,856,304 shares at
December 31, 2016 and 2015, respectively) |
|
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
|
29,285 |
|
|
|
26,528 |
|
Statutory reserves |
|
|
|
2,607 |
|
|
|
2,607 |
|
Retained deficit |
|
|
|
(10,362 |
) |
|
|
(3,870 |
) |
Accumulated other comprehensive income |
|
|
|
700 |
|
|
|
2,056 |
|
Total ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
|
22,242 |
|
|
|
27,333 |
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
54 |
|
|
|
375 |
|
Total equity |
|
|
|
22,296 |
|
|
|
27,708 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
$ |
30,042 |
|
|
$ |
35,460 |
|
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS |
(In thousands, except for number of shares and
per share data) |
|
|
|
Year Ended December 31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Revenues |
|
|
|
|
From unrelated
parties |
|
$ |
34,300 |
|
|
$ |
31,522 |
|
From related
parties |
|
|
450 |
|
|
|
743 |
|
Total revenues |
|
|
34,750 |
|
|
|
32,265 |
|
Cost of revenues |
|
|
26,999 |
|
|
|
24,655 |
|
Gross profit |
|
|
7,751 |
|
|
|
7,610 |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing expenses |
|
|
4,074 |
|
|
|
4,586 |
|
General and administrative expenses |
|
|
7,670 |
|
|
|
7,498 |
|
Research and development expenses |
|
|
1,996 |
|
|
|
2,164 |
|
Gain on deconsolidation of VIEs |
|
|
- |
|
|
|
(20 |
) |
Impairment on long-term investments |
|
|
159 |
|
|
|
874 |
|
Goodwill impairment and impairment on fixed assets and intangible
assets |
|
|
- |
|
|
|
1,824 |
|
Total
operating expenses |
|
|
13,899 |
|
|
|
16,926 |
|
|
|
|
|
|
Loss from
operations |
|
|
(6,148 |
) |
|
|
(9,316 |
) |
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
Interest income |
|
|
90 |
|
|
|
117 |
|
Interest expense |
|
|
(13 |
) |
|
|
(47 |
) |
Other (expenses)/income |
|
|
(112 |
) |
|
|
34 |
|
Total
other (expense)/income |
|
|
(35 |
) |
|
|
104 |
|
Loss before
income tax benefit, equity method investments, noncontrolling
interests and discontinued operation |
|
|
(6,183 |
) |
|
|
(9,212 |
) |
Income tax
(expense)/benefit |
|
|
(102 |
) |
|
|
1,496 |
|
Loss before
equity method investments, noncontrolling interests and
discontinued operation |
|
|
(6,285 |
) |
|
|
(7,716 |
) |
Share of losses in equity investment affiliates |
|
|
- |
|
|
|
(2 |
) |
Loss from
continuing operation |
|
|
(6,285 |
) |
|
|
(7,718 |
) |
Loss from and on disposal of discontinued operation, net of
income tax |
|
|
(59 |
) |
|
|
(1,465 |
) |
Net
loss |
|
|
(6,344 |
) |
|
|
(9,183 |
) |
Net
(income)/loss attributable to noncontrolling interests from
continuing operations |
|
|
(148 |
) |
|
|
91 |
|
Net loss
attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(6,492 |
) |
|
$ |
(9,092 |
) |
|
|
|
|
|
Net
loss |
|
$ |
(6,344 |
) |
|
$ |
(9,183 |
) |
Foreign currency translation loss |
|
|
(1,377 |
) |
|
|
(1,594 |
) |
Comprehensive Loss |
|
$ |
(7,721 |
) |
|
$ |
(10,777 |
) |
Comprehensive (income)/loss attributable to noncontrolling
interests |
|
|
(127 |
) |
|
|
116 |
|
Comprehensive
loss attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(7,848 |
) |
|
$ |
(10,661 |
) |
|
|
|
|
|
Loss per share |
|
|
|
|
Loss
from continuing operations per common share |
|
|
|
|
Basic and diluted |
|
$ |
(0.57 |
) |
|
$ |
(0.71 |
) |
Loss
from discontinued operations per common share |
|
|
|
|
Basic and diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
Basic and diluted |
|
|
11,357,907 |
|
|
|
10,706,521 |
|
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
|
Year Ended December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Cash flows from operating
activities |
|
|
|
|
Net loss |
|
$ |
(6,344 |
) |
|
$ |
(9,183 |
) |
Adjustments to reconcile net loss
to net cash (used in)/provided
by operating activities |
|
|
|
|
Depreciation and amortization |
|
|
1,572 |
|
|
|
1,768 |
|
Share-based compensation expenses |
|
|
2,309 |
|
|
|
2,256 |
|
Provision for allowances for doubtful accounts |
|
|
368 |
|
|
|
88 |
|
Share of losses in equity investment affiliates |
|
|
- |
|
|
|
2 |
|
Goodwill impairment and impairment on fixed assets and
intangible assets |
|
|
- |
|
|
|
3,110 |
|
Impairment on long-term investments |
|
|
159 |
|
|
|
874 |
|
Loss/(gain) on deconsolidation of VIEs |
|
|
9 |
|
|
|
(20 |
) |
Loss on disposal of fixed assets/other long-term assets |
|
|
116 |
|
|
|
63 |
|
Deferred taxes |
|
|
102 |
|
|
|
(1,558 |
) |
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(975 |
) |
|
|
(580 |
) |
Other receivables |
|
|
1,527 |
|
|
|
6,369 |
|
Prepayment and deposit to suppliers |
|
|
1,106 |
|
|
|
1,476 |
|
Due from related parties |
|
|
(336 |
) |
|
|
7 |
|
Other current assets |
|
|
38 |
|
|
|
13 |
|
Accounts payable |
|
|
(137 |
) |
|
|
(509 |
) |
Advances from customers |
|
|
(362 |
) |
|
|
1,152 |
|
Accrued payroll and other accruals |
|
|
(21 |
) |
|
|
173 |
|
Other payables |
|
|
413 |
|
|
|
37 |
|
Taxes payable |
|
|
19 |
|
|
|
59 |
|
Commitment and contingencies |
|
|
(126 |
) |
|
|
135 |
|
Net cash (used
in)/provided by operating activities |
|
|
(563 |
) |
|
|
5,732 |
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Payment for office equipment and leasehold improvement |
|
|
(148 |
) |
|
|
(356 |
) |
Payment for purchasing of software technology |
|
|
(1,969 |
) |
|
|
(3,880 |
) |
Refund of prepayment for software development contract
terminated |
|
|
- |
|
|
|
772 |
|
Long-term investment in cost/equity method investees |
|
|
(470 |
) |
|
|
(1,163 |
) |
Proceeds from disposal of VIEs |
|
|
28 |
|
|
|
- |
|
Cash effect on deconsolidation of a VIE |
|
|
(17 |
) |
|
|
- |
|
Net cash used in
investing activities |
|
|
(2,576 |
) |
|
|
(4,627 |
) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds
from short-term bank loan |
|
|
753 |
|
|
|
- |
|
Repayment
of short-term bank loan |
|
|
- |
|
|
|
(803 |
) |
Repayment
of short-term loan to noncontrolling interest of VIE |
|
|
- |
|
|
|
(312 |
) |
Guarantee
payment and prepayment from new investors |
|
|
- |
|
|
|
984 |
|
Net cash provided by/(used in)
financing activities |
|
|
753 |
|
|
|
(131 |
) |
|
|
|
|
|
Change in cash and cash equivalents included in assets classified
as held for sale |
|
|
177 |
|
|
|
(189 |
) |
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
(259 |
) |
|
|
(319 |
) |
|
|
|
|
|
Net (decrease)/increase
in cash and cash equivalents |
|
|
(2,468 |
) |
|
|
466 |
|
|
|
|
|
|
Cash and
cash equivalents at beginning of the year |
|
|
5,503 |
|
|
|
5,037 |
|
Cash and
cash equivalents at end of the year |
|
$ |
3,035 |
|
|
$ |
5,503 |
|
Contact:
MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
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