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 first quarter of 2017.
Summary Financials
First Quarter 2017 Financial Results (USD) |
|
2017 |
2016 |
CHANGE |
Sales |
$7.3 million |
|
$5.1 million |
|
+43.6 |
% |
Gross Profit |
$1.3 million |
|
$1.6 million |
|
-20.7 |
% |
Gross Margin |
|
|
17.5% |
|
|
|
31.7% |
|
-44.8 |
% |
Net Loss Attributable
to ChinaNet |
($1.1) million |
|
($1.4) million |
|
23.0 |
% |
EPS from continuing
operations* (Basic & Diluted) |
|
($0.09) |
|
|
($0.12) |
|
25.0 |
% |
*Per share amount for the three months ended March 31, 2016 has
been retroactively restated to reflect the Company’s 1 for 2.5
reverse stock split, which was effective on August 19, 2016.
For the three months ended March 31, 2017, total revenues
increased to $7.3 million from $5.1 million in the prior year,
primarily due to the increase from search engine marketing revenue
during the quarter.
During the quarter, revenues from internet advertising and data
services was $2.3 million, which decreased 36.8% from $3.6 million
in the first quarter of 2016. 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 an increase in search engine marketing
services revenue of 252.1% from $1.4 million in the first quarter
of 2016 to $5.0 million in the first quarter of 2017. This increase
was supported by the CloudX system, which drove more precision
marketing and ROI for clients.
Gross profit for the quarter ended March 31, 2017 was $1.3
million compared to $1.6 million in the first quarter of 2016, a
decrease of 20.7%. Gross margin was 17.5%, down from 31.7% in 2016,
primarily due to the increase in relative lower margin revenues
from search engine marketing services during the quarter. Internet
advertising and data service gross margin increased to 49% in the
first quarter of 2017 from 43% in 2016. 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.
Operating expenses decreased by 22.9% to $2.3 million for the
three months ended March 31, 2017. Sales and marketing expenses
decreased by 5.2% to $0.8 million. General and administrative
expenses decreased by 36% to $1.1 million. Loss from operations was
$1.0 million in the first quarter of 2017, an improvement of 25.5%
compared to $1.4 million in the first quarter of 2016.
Net loss attributable to ChinaNet for the three months ended
March 31, 2017 was $1.1 million and loss per share from continuing
operations was $0.09, compared to a net loss of $1.4 million and
loss per share from continuing operations of $0.12 in the first
quarter of 2016. The weighted average diluted shares outstanding
for the three months ended March 31, 2017 was 12.0 million shares
versus 11.3 million for the three months ended March 31, 2016.
Balance Sheet and Cash Flow
The Company had $1.0 million in cash and cash equivalents as of
March 31, 2017, compared to $3.0 million as of December 31, 2016,
working capital of $6.4 million compared to $6.9 million as of
December 31, 2016, and a current ratio of 1.6 to 1, compared 1.9 to
1 as of December 31, 2016. Total shareholders' equity of ChinaNet
was $21.5 million at March 31, 2017 compared to $22.2 million at
December 31, 2016.
The Company generated approximately $2.0 million of cash
outflows from operations for the quarter ended March 31, 2017
compared to a $0.4 million of cash inflows for the quarter ended
March 31, 2016.
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) |
|
|
|
|
|
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
|
|
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
|
|
$ |
1,047 |
|
|
|
|
$ |
3,035 |
|
|
Term
deposit |
|
|
|
|
|
|
3,073 |
|
|
|
|
|
3,056 |
|
|
Accounts
receivable, net |
|
|
|
|
|
|
4,242 |
|
|
|
|
|
3,322 |
|
|
Prepayment and deposit to suppliers |
|
|
|
|
|
|
7,928 |
|
|
|
|
|
4,754 |
|
|
Due from
related parties, net |
|
|
|
|
|
|
1,082 |
|
|
|
|
|
213 |
|
|
Other
current assets |
|
|
|
|
|
|
143 |
|
|
|
|
|
95 |
|
|
Total current assets |
|
|
|
|
|
|
17,515 |
|
|
|
|
|
14,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
investments |
|
|
|
|
|
|
1,348 |
|
|
|
|
|
1,340 |
|
|
Property and equipment,
net |
|
|
|
|
|
|
423 |
|
|
|
|
|
471 |
|
|
Intangible assets,
net |
|
|
|
|
|
|
7,001 |
|
|
|
|
|
7,264 |
|
|
Goodwill |
|
|
|
|
|
|
4,998 |
|
|
|
|
|
4,970 |
|
|
Deferred tax
assets |
|
|
|
|
|
|
1,531 |
|
|
|
|
|
1,522 |
|
|
Total Assets |
|
|
|
|
|
$ |
32,816 |
|
|
|
|
$ |
30,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term bank loan * |
|
|
|
|
|
$ |
725 |
|
|
|
|
$ |
721 |
|
|
Accounts
payable * |
|
|
|
|
|
|
398 |
|
|
|
|
|
102 |
|
|
Advances
from customers * |
|
|
|
|
|
|
4,606 |
|
|
|
|
|
1,420 |
|
|
Accrued
payroll and other accruals * |
|
|
|
|
|
|
597 |
|
|
|
|
|
685 |
|
|
Due to
new investors related to terminated security purchase
agreements |
|
|
|
|
|
|
888 |
|
|
|
|
|
884 |
|
|
Payable
for purchasing of software technology * |
|
|
|
|
|
|
413 |
|
|
|
|
|
411 |
|
|
Taxes
payable * |
|
|
|
|
|
|
2,963 |
|
|
|
|
|
2,910 |
|
|
Other
payables * |
|
|
|
|
|
|
555 |
|
|
|
|
|
487 |
|
|
Total current liabilities |
|
|
|
|
|
|
11,145 |
|
|
|
|
|
7,620 |
|
|
Long-term
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowing from a director |
|
|
|
|
|
127 |
|
|
|
|
|
126 |
|
|
Total Liabilities |
|
|
|
|
|
11,272 |
|
|
|
|
|
7,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock (US$0.001 par value; authorized 50,000,000
shares; issued and outstanding 12,265,542 shares and 12,158,542
shares at March 31, 2017 and December 31, 2016, respectively) |
|
|
|
|
|
12 |
|
|
|
|
|
12 |
|
|
Additional paid-in capital |
|
|
|
|
|
29,496 |
|
|
|
|
|
29,285 |
|
|
Statutory reserves |
|
|
|
|
|
2,607 |
|
|
|
|
|
2,607 |
|
|
Retained deficit |
|
|
|
|
|
(11,449 |
) |
|
|
|
|
(10,362 |
) |
|
Accumulated other comprehensive income |
|
|
|
|
|
843 |
|
|
|
|
|
700 |
|
|
Total ChinaNet Online Holdings, Inc.’s stockholders’
equity |
|
|
|
|
|
21,509 |
|
|
|
|
|
22,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
35 |
|
|
|
|
|
54 |
|
|
Total equity |
|
|
|
|
|
21,544 |
|
|
|
|
|
22,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
|
|
$ |
32,816 |
|
|
|
|
$ |
30,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC. |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS |
|
(In thousands, except for number of shares and
per share data) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
(US $) |
|
|
|
|
(US $) |
|
|
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
|
Revenues |
|
|
|
|
|
|
|
|
|
From unrelated parties |
|
|
7,245 |
|
|
|
|
5,012 |
|
From related parties |
|
|
19 |
|
|
|
|
48 |
|
Total revenues |
|
|
7,264 |
|
|
|
|
5,060 |
|
Cost of revenues |
|
|
5,992 |
|
|
|
|
3,456 |
|
Gross profit |
|
|
1,272 |
|
|
|
|
1,604 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
834 |
|
|
|
|
880 |
|
General and administrative expenses |
|
|
1,092 |
|
|
|
|
1,706 |
|
Research and development expenses |
|
|
395 |
|
|
|
|
426 |
|
Total operating expenses |
|
|
2,321 |
|
|
|
|
3,012 |
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(1,049 |
) |
|
|
|
(1,408 |
) |
|
|
|
|
|
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
|
|
|
|
|
Interest income |
|
|
19 |
|
|
|
|
27 |
|
Interest expense |
|
|
(36 |
) |
|
|
|
- |
|
Other expenses |
|
|
(3 |
) |
|
|
|
(12 |
) |
Total other (expense)/income |
|
|
(20 |
) |
|
|
|
15 |
|
Loss before income tax benefit, noncontrolling interests
and discontinued operation |
|
|
(1,069 |
) |
|
|
|
(1,393 |
) |
Income tax
benefit |
|
|
- |
|
|
|
|
28 |
|
Loss from continuing operation |
|
|
(1,069 |
) |
|
|
|
(1,365 |
) |
Loss from discontinued operation, net of income
tax |
|
|
- |
|
|
|
|
(46 |
) |
Net
loss |
|
|
(1,069 |
) |
|
|
|
(1,411 |
) |
Net income attributable to noncontrolling interests from
continuing operations |
|
|
(18 |
) |
|
|
|
- |
|
Net
loss attributable to ChinaNet Online Holdings, Inc. |
|
|
(1,087 |
) |
|
|
|
(1,411 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
|
|
(1,069 |
) |
|
|
|
(1,411 |
) |
|
Foreign currency translation gain |
|
|
|
|
106 |
|
|
|
|
112 |
|
|
Comprehensive Loss |
|
|
|
|
(963 |
) |
|
|
|
(1,299 |
) |
|
Comprehensive loss attributable to noncontrolling interests |
|
|
|
|
19 |
|
|
|
|
17 |
|
|
Comprehensive
loss attributable to ChinaNet Online Holdings, Inc. |
|
|
|
|
(944 |
) |
|
|
|
(1,282 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from continuing operations per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
$ |
(0.09 |
) |
|
|
$ |
(0.12 |
) |
|
Loss
from discontinued operations per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
$ |
- |
|
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
11,982,504 |
|
|
|
|
11,342,971 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
|
Three Months Ended March 31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating
activities |
|
|
|
|
Net loss |
|
$ |
(1,069 |
) |
|
$ |
(1,411 |
) |
Adjustments to reconcile net loss
to net cash (used in)/provided by
operating activities |
|
|
|
|
Depreciation and amortization |
|
|
354 |
|
|
|
384 |
|
Share-based compensation expenses |
|
|
211 |
|
|
|
564 |
|
Loss on disposal of fixed assets/other long-term assets |
|
|
- |
|
|
|
21 |
|
(Reverse of)/provision for allowances for doubtful
accounts |
|
|
(29 |
) |
|
|
- |
|
Deferred taxes |
|
|
- |
|
|
|
(28 |
) |
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(903 |
) |
|
|
(507 |
) |
Other receivables |
|
|
20 |
|
|
|
1,464 |
|
Prepayment and deposit to suppliers |
|
|
(3,154 |
) |
|
|
(152 |
) |
Due from related parties |
|
|
(870 |
) |
|
|
(19 |
) |
Other current assets |
|
|
(38 |
) |
|
|
29 |
|
Accounts payable |
|
|
295 |
|
|
|
190 |
|
Advances from customers |
|
|
3,185 |
|
|
|
64 |
|
Accrued payroll and other accruals |
|
|
(90 |
) |
|
|
(89 |
) |
Other payables |
|
|
44 |
|
|
|
(114 |
) |
Taxes payable |
|
|
37 |
|
|
|
47 |
|
Net cash (used in)/provided
by operating activities |
|
|
(2,007 |
) |
|
|
443 |
|
|
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
Payment for office equipment and leasehold improvement |
|
|
- |
|
|
|
(117 |
) |
Long-term investment in cost/equity method investees |
|
|
- |
|
|
|
(693 |
) |
Payment for purchasing of software technology |
|
|
- |
|
|
|
(1,394 |
) |
Net cash used
in investing
activities |
|
|
- |
|
|
|
(2,204 |
) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in)
financing activities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Changes in cash and cash equivalents included in assets classified
as held for sale |
|
|
- |
|
|
|
(6 |
) |
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
19 |
|
|
|
8 |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(1,988 |
) |
|
|
(1,759 |
) |
|
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
|
3,035 |
|
|
|
5,503 |
|
Cash and cash equivalents at end of the period |
|
$ |
1,047 |
|
|
$ |
3,744 |
|
|
|
|
|
|
Contact:
MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
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