ChinaNet-Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the
"Company"), an integrated online advertising, precision marketing
and data-analysis and management services platform, today announced
its unaudited financial results for the second quarter and first
half year of 2019.
Recent DevelopmentsOn August 7,
2019, the Company entered into a Securities Purchase Agreement (the
“Agreement”) with selected investors related to the purchase and
sale of the Company’s common stock. Under the Agreement, the
Company agreed to issue an aggregate of 3,216,860 shares of common
stock for US$4.8 million. Each Share will be sold to investors at
$1.4927 per Share. This private placement was conducted pursuant to
Section 4(2) of the Securities Act of 1933, as amended, and
Regulation S promulgated thereunder. The descriptions of the
Securities Purchase Agreement contained in this announcement does
not purport to be complete and is qualified in its entirety by
reference to the complete text of the Agreement. A copy of the
Agreement has been filed to the U.S. Securities and Exchange
Commission.
On July 8, 2019, the Company announced the
appointment of Mr. Mark Li to the position of the Company’s Chief
Financial Officer, effective immediately. Mr. Zhige Zhang has
resigned from the role of Chief Financial Officer due to personal
reasons. Mr. Mark Li has 20 years of experience working in
financial roles. Most recently, Mr. Li served as Chief Financial
Officer for DMG Entertainment & Media, a global entertainment
and media company with operations in North America and Asia. Prior
to this role, Mr. Li served as Financial Director at China Digital
Culture and in other senior financial management positions. Mr. Li
holds a bachelor’s degree in Economics from Chongqing Institute of
Industry Management and a master’s degree in Finance from Central
University of Finance and Economics. Mr. Li is a member of both the
China Institute of Certified Public Accounts (CICPA) and
Association of Chartered Certified Accounts (ACCA).
Mr. Handong Cheng, Chairman, President and Chief
Executive Officer of CNET, stated, “Our previously announced
private placement agreement with strategic investors will help to
shore up our capital position going forward and provide us with
future growth opportunities. We plan to leverage the commercial and
technological resources of strategic investors to supercharge our
business development initiatives and, in doing so, propel our
launch into a new growth cycle. We are excited to explore the
synergies between both parties’ resources and optimistic regarding
our potential to grow new, profitable lines of businesses through
these collaborations both in China and on a global scale. Such
international expansion will help to reduce our exposure to the
current risks throughout the domestic market as well as enable us
to better support small and medium-sized companies in China to meet
and overcome this same macroeconomic uncertainty through our
products and services.
We will continue to integrate blockchain and AI
technology within our products and services for advertising,
marketing, and data analytics. Such integration will take the scope
of our business to the next level, improve our margin, and increase
our revenue streams over the long-term. Within China and throughout
Asia, there are many opportunities to support small and
medium-sized companies in an increasingly uncertain economic
environment. Going forward, we will continue leveraging our deep
industry experience and close business relationships to serve these
organizations and address their pain points.
Furthermore, we remain committed to bolstering
our management and refining our cost structure. In July, we
appointed Mr. Mark Li as our new Chief Financial Officer. With
extensive leadership and operational experience in financial
management, we are confident that Mr. Li will be a great asset for
us as we continue to optimize our current operations and expand our
data and blockchain businesses.”
Second Quarter 2019 Financial
Results
TOTAL REVENUES Total revenues
for the second quarter of 2019 were $15.5 million compared to $22.5
million in the corresponding period of 2018. This decrease was
primarily caused by reduced revenues generated from the
distribution of search engine marketing services for key search
engines in the second quarter of 2019.
Internet advertising revenues for the second
quarter of 2019 increased by 15.5% to $3.6 million from $3.1
million in the corresponding period of 2018. This growth was
attributable to the increased effectiveness of the Company’s sale
lead generation capabilities attributable to the increase in
investments, which improved the effectiveness of ads on the
Company’s ad portals while increasing customer satisfaction in
turn.
COST OF REVENUES AND GROSS
PROFIT Cost of revenues decreased to $15.1 million in the
second quarter of 2019 from $21.6 million in the corresponding
period of 2018. This decrease was primarily due to the decrease in
costs associated with distribution of search engine marketing
services from key search engines, which was in line with the
decrease in the related revenues during the quarter.
Gross profit in the second quarter of 2019 was
$0.4 million, compared to $1.0 million in the corresponding period
of 2018.
OPERATING LOSSOperating
expenses in the second quarter of 2019 were $1.6 million, compared
to $9.3 million in the corresponding period of 2018. As a
percentage of total revenues, operating expenses were 10.3%,
compared to 41.2% in the corresponding period of 2018.
Sales and marketing expenses in the second
quarter of 2019 decreased to $0.2 million from $0.3 million in the
corresponding period of 2018. This decrease was primarily
attributable to the Company’s successful execution of cost control
initiatives and the subsequent decrease in staff salary and benefit
expenses as well as other general departmental expenses.
General and administrative expenses in the
second quarter of 2019 decreased to $1.3 million from $1.5 million
in the corresponding period of 2018. The reduction in general and
administrative expenses was primarily due to the Company’s improved
control of accounts receivable collection, which led to a lower
amount of bad debts provision, optimization of its cost structures,
lower professional service expenses, lower salary and benefit
expenses, and lower other general office expenses.
Research and development expenses in the second
quarter of 2019 were $0.2 million, which were stable when compared
to the corresponding period of 2018.
In the second quarter of 2018, the Company
incurred a $1.9 million and $5.4 million impairment loss in
intangible assets and goodwill, respectively. Such an impairment
loss was not incurred by the Company in the second fiscal quarter
of 2019.
As a result, operating loss in the second
quarter of 2019 narrowed significantly to $1.2 million from $8.3
million in the corresponding period of 2018.
NET LOSSNet loss attributable
to ChinaNet Online Holdings, Inc. was $0.4 million in the second
quarter of 2019, compared to $9.5 million in the corresponding
period of 2018.
BALANCE SHEETAs of June 30,
2019, the Company had cash and cash equivalents of $1.4 million,
compared to $3.7 million as of December 31, 2018. Advances from
customers were $2.8 million as of June 30, 2019, increasing 160.9%
from $1.1 million as of December 31, 2018.
First Half Year 2019 Financial
ResultsFor the first half year of 2019, total revenues
were $24.0 million, compared to $30.8 million in the same period of
2018. Internet advertising revenues for the first half of 2019
increased by 12.4% to $5.4 million from $4.83 million in the
corresponding period of 2018. The growth of revenues generated
through internet advertising services was attributable to the same
reasons that led to a quarterly increase.
Gross profit for the first half year of 2019 was
$0.8 million, compared to $1.6 million in the same period of 2018.
This decrease was primarily due to the decreases in gross profit
margin from the Company’s internet advertising and data services as
well as the Company’s sales volume of the rights to use search
engine marketing services during the second quarter of 2019.
Operating expenses for the first half year of
2019 decreased to $2.8 million from $11.4 million in the same
period of 2018. As a percentage of total revenues, operating
expenses for the first half year of 2019 were 11.5%, compared to
37.1% in the same period of 2018.
Sales and marketing expenses for the first half
year of 2019 decreased to $0.4 million from $0.8 million in the
same period of 2018. General and administrative expenses for the
first half year of 2019 decreased to $2.1 million from $2.8 million
in the same period of 2018. Research and development expenses for
the first half year of 2019 decreased to $0.4 million from $0.5
million in the same period of 2018.
Net loss attributable to ChinaNet Online
Holdings, Inc. for the first half year of 2019 narrowed to $1.5
million from $10.1 million in the same period of 2018 as a result
of significantly reduced operating expenses and assets impairment
losses.
About ChinaNet Online Holdings,
Inc.ChinaNet Online Holdings, Inc., 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 StatementThis
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.
Investor Relations ContactICR,
Inc.Jack WangTel: +1-646-308-1635Email: CNET@icrinc.com
CHINANET ONLINE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS (In thousands, except for number of
shares and per share data)
|
|
|
Six Months Ended June 30, |
|
Three Months Ended June 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(US $) |
|
(US $) |
|
(US $) |
|
(US $) |
| |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| Revenues |
|
|
|
|
|
|
|
|
|
From unrelated parties |
|
$ |
23,912 |
|
|
$ |
30,780 |
|
|
$ |
15,352 |
|
|
$ |
22,520 |
|
|
From a related party |
|
|
108 |
|
|
|
- |
|
|
|
101 |
|
|
|
- |
|
| Total revenues |
|
|
24,020 |
|
|
|
30,780 |
|
|
|
15,453 |
|
|
|
22,520 |
|
|
Cost of revenues |
|
|
23,212 |
|
|
|
29,211 |
|
|
|
15,087 |
|
|
|
21,552 |
|
|
Gross profit |
|
|
808 |
|
|
|
1,569 |
|
|
|
366 |
|
|
|
968 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
350 |
|
|
|
844 |
|
|
|
181 |
|
|
|
280 |
|
|
General and administrative expenses |
|
|
2,058 |
|
|
|
2,842 |
|
|
|
1,248 |
|
|
|
1,478 |
|
|
Research and development expenses |
|
|
360 |
|
|
|
458 |
|
|
|
159 |
|
|
|
240 |
|
|
Impairment on intangible assets |
|
|
- |
|
|
|
1,878 |
|
|
|
- |
|
|
|
1,878 |
|
|
Impairment on goodwill |
|
|
- |
|
|
|
5,412 |
|
|
|
- |
|
|
|
5,412 |
|
|
Total operating expenses |
|
|
2,768 |
|
|
|
11,434 |
|
|
|
1,588 |
|
|
|
9,288 |
|
| |
|
|
|
|
|
|
|
|
| Loss from
operations |
|
|
(1,960 |
) |
|
|
(9,865 |
) |
|
|
(1,222 |
) |
|
|
(8,320 |
) |
| |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
|
Impairment on long-term investments |
|
|
- |
|
|
|
(471 |
) |
|
|
- |
|
|
|
- |
|
|
Interest expense, net |
|
|
(23 |
) |
|
|
(19 |
) |
|
|
(12 |
) |
|
|
(9 |
) |
|
Other expenses |
|
|
(4 |
) |
|
|
(28 |
) |
|
|
(2 |
) |
|
|
(6 |
) |
|
Change in fair value of warrant liabilities |
|
|
471 |
|
|
|
948 |
|
|
|
821 |
|
|
|
(526 |
) |
|
Total other income/(expenses) |
|
|
444 |
|
|
|
430 |
|
|
|
807 |
|
|
|
(541 |
) |
| |
|
|
|
|
|
|
|
|
| Loss before income tax
(expense)/benefit and noncontrolling interests |
|
|
(1,516 |
) |
|
|
(9,435 |
) |
|
|
(415 |
) |
|
|
(8,861 |
) |
|
Income tax (expense)/benefit |
|
|
(6 |
) |
|
|
(689 |
) |
|
|
33 |
|
|
|
(693 |
) |
| Net loss |
|
|
(1,522 |
) |
|
|
(10,124 |
) |
|
|
(382 |
) |
|
|
(9,554 |
) |
|
Net loss attributable to noncontrolling interests |
|
|
5 |
|
|
|
55 |
|
|
|
3 |
|
|
|
50 |
|
| Net loss attributable to
ChinaNet Online Holdings, Inc. |
|
$ |
(1,517 |
) |
|
$ |
(10,069 |
) |
|
$ |
(379 |
) |
|
$ |
(9,504 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,522 |
) |
|
$ |
(10,124 |
) |
|
$ |
(382 |
) |
|
$ |
(9,554 |
) |
| Foreign currency translation
gain/(loss) |
|
|
24 |
|
|
|
194 |
|
|
|
60 |
|
|
|
(280 |
) |
| Comprehensive
loss |
|
$ |
(1,498 |
) |
|
$ |
(9,930 |
) |
|
$ |
(322 |
) |
|
$ |
(9,834 |
) |
| Comprehensive loss attributable
to noncontrolling interests |
|
|
5 |
|
|
|
49 |
|
|
|
2 |
|
|
|
52 |
|
| Comprehensive
loss attributable to
ChinaNet Online Holdings, Inc. |
|
$ |
(1,493 |
) |
|
$ |
(9,881 |
) |
|
$ |
(320 |
) |
|
$ |
(9,782 |
) |
| |
|
|
|
|
|
|
|
|
| Loss per
share |
|
|
|
|
|
|
|
|
| Loss per common share |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.60 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
16,411,548 |
|
|
|
15,676,249 |
|
|
|
16,412,543 |
|
|
|
15,866,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands, except for number of shares and per share data)
| |
|
June 30, 2019 |
|
December 31,2018 |
| |
|
(US $) |
|
(US $) |
|
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,379 |
|
|
$ |
3,717 |
|
|
Term deposit, restricted |
|
|
25 |
|
|
|
25 |
|
|
Accounts receivable, net of allowance for doubtful accounts of
$1,373 and $3,393, respectively |
|
|
6,749 |
|
|
|
6,359 |
|
|
Prepayment and deposit to suppliers, net |
|
|
2,049 |
|
|
|
2,154 |
|
|
Due from related parties, net |
|
|
- |
|
|
|
226 |
|
|
Other current assets, net |
|
|
8 |
|
|
|
19 |
|
|
Total current assets |
|
|
10,210 |
|
|
|
12,500 |
|
| |
|
|
|
|
| Long-term investments |
|
|
36 |
|
|
|
- |
|
| Property and equipment, net |
|
|
99 |
|
|
|
142 |
|
| Intangible assets, net |
|
|
36 |
|
|
|
45 |
|
| Operating lease right-of-use
assets |
|
|
17 |
|
|
|
- |
|
| Blockchain application platform
development costs |
|
|
3,724 |
|
|
|
3,725 |
|
| Deferred tax assets, net |
|
|
549 |
|
|
|
556 |
|
|
Total Assets |
|
$ |
14,671 |
|
|
$ |
6,968 |
|
| |
|
|
|
|
| Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Short-term bank loan |
|
$ |
873 |
|
|
$ |
874 |
|
|
Accounts payable |
|
|
742 |
|
|
|
2,869 |
|
|
Advance from customers |
|
|
2,768 |
|
|
|
1,061 |
|
|
Advance from a customer, related |
|
|
53 |
|
|
|
- |
|
|
Accrued payroll and other accruals |
|
|
289 |
|
|
|
521 |
|
|
Taxes payable |
|
|
3,082 |
|
|
|
2,997 |
|
|
Lease payment liability related to a short-term lease |
|
|
118 |
|
|
|
- |
|
|
Other current liabilities |
|
|
162 |
|
|
|
118 |
|
|
Warrant liabilities |
|
|
135 |
|
|
|
606 |
|
|
Total current liabilities |
|
|
8,222 |
|
|
|
9,046 |
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
Long-term borrowing from a director |
|
|
127 |
|
|
|
128 |
|
|
Total Liabilities |
|
|
8,349 |
|
|
|
9,174 |
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
|
|
|
Common stock (US$0.001 par value; authorized 50,000,000 shares;
issued and outstanding 16,412,543 shares and 16,382,543 shares
at June 30, 2019 and December 31, 2018, respectively) |
|
|
16 |
|
|
|
16 |
|
|
Additional paid-in capital |
|
|
38,301 |
|
|
|
38,275 |
|
|
Statutory reserves |
|
|
2,607 |
|
|
|
2,607 |
|
|
Accumulated deficit |
|
|
(36,029 |
) |
|
|
(34,512 |
) |
|
Accumulated other comprehensive income |
|
|
1,481 |
|
|
|
1,457 |
|
|
Total ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
6,376 |
|
|
|
7,843 |
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
(54 |
) |
|
|
(49 |
) |
|
Total equity |
|
|
6,322 |
|
|
|
7,794 |
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
14,671 |
|
|
$ |
16,968 |
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| |
|
|
|
Six Months Ended June 30, |
| |
|
|
|
2019 |
|
2018 |
| |
|
|
|
(US $) |
|
(US $) |
| |
|
|
|
(Unaudited) |
|
(Unaudited) |
| |
Cash flows from operating activities |
|
|
|
|
|
| |
Net loss |
|
$ |
(1,522 |
) |
|
$ |
(10,124 |
) |
| |
Adjustments to reconcile
net loss to net cash used
in operating activities |
|
|
|
|
|
| |
Depreciation and amortization |
|
|
52 |
|
|
|
427 |
|
| |
Amortization of operating lease right-of-use assets |
|
|
87 |
|
|
|
- |
|
| |
Share-based compensation expenses |
|
|
203 |
|
|
|
151 |
|
| |
Provision for allowances for doubtful accounts |
|
|
460 |
|
|
|
794 |
|
| |
Impairment on intangible assets |
|
|
- |
|
|
|
1,878 |
|
| |
Impairment on goodwill |
|
|
- |
|
|
|
5,412 |
|
| |
Impairment on long-term investments |
|
|
- |
|
|
|
471 |
|
| |
Deferred taxes |
|
|
6 |
|
|
|
689 |
|
| |
Change in fair value of warrant liabilities |
|
|
(471 |
) |
|
|
(948 |
) |
| |
Changes in operating
assets and liabilities |
|
|
|
|
|
| |
Accounts receivable |
|
|
(866 |
) |
|
|
(257 |
) |
| |
Prepayment and deposit to suppliers |
|
|
(76 |
) |
|
|
1,504 |
|
| |
Due from related parties |
|
|
227 |
|
|
|
23 |
|
| |
Other current assets |
|
|
11 |
|
|
|
(16 |
) |
| |
Accounts payable |
|
|
(2,153 |
) |
|
|
(1,402 |
) |
| |
Advance from customers |
|
|
1,733 |
|
|
|
(2,197 |
) |
| |
Advance from a customer, related |
|
|
54 |
|
|
|
- |
|
| |
Accrued payroll and other accruals |
|
|
(232 |
) |
|
|
(154 |
) |
| |
Lease payment liability related to a short-term lease |
|
|
120 |
|
|
|
- |
|
| |
Other current liabilities |
|
|
(39 |
) |
|
|
(495 |
) |
| |
Taxes payable |
|
|
91 |
|
|
|
(77 |
) |
| |
Prepaid lease payment |
|
|
(10 |
) |
|
|
- |
|
| |
Net cash used in
operating activities |
|
|
(2,325 |
) |
|
|
(4,321 |
) |
| |
|
|
|
|
|
|
| |
Cash flows from investing activities |
|
|
|
|
|
| |
Payment for purchase of office equipment |
|
|
- |
|
|
|
(6 |
) |
| |
Investment to an investee |
|
|
(36 |
) |
|
|
- |
|
| |
Short-term loan to an unrelated party |
|
|
- |
|
|
|
(2,111 |
) |
| |
Collection of short-term loan from an unrelated party |
|
|
- |
|
|
|
4,668 |
|
| |
Payment for acquisition of noncontrolling interest |
|
|
- |
|
|
|
(1,177 |
) |
| |
Payment for blockchain application platform development costs |
|
|
- |
|
|
|
(3,752 |
) |
| |
Purchase of software technology |
|
|
- |
|
|
|
(447 |
) |
| |
Net cash used in
investing activities |
|
|
(36 |
) |
|
|
(2,825 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Proceeds from issuance of common stock and warrant (net of cash
offering cost of US$809) |
|
|
- |
|
|
|
|
10,263 |
|
|
Repayment to investors related to terminated security purchase
agreements |
|
|
- |
|
|
|
|
(957 |
) |
|
Proceeds from short-term bank loan |
|
|
442 |
|
|
|
|
- |
|
|
Repayment of short-term bank loan |
|
|
(442 |
) |
|
|
|
- |
|
|
Net cash provided by
financing activities |
|
|
- |
|
|
|
|
9,306 |
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
23 |
|
|
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
Net (decrease)/increase in cash, cash equivalents, and
restricted cash |
|
|
(2,338 |
) |
|
|
|
2,134 |
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of the
period |
|
|
3,742 |
|
|
|
|
2,952 |
|
|
Cash, cash equivalents, and restricted cash at end of the
period |
|
$ |
1,404 |
|
|
|
$ |
5,086 |
|
|
|
|
|
|
|
|
|
|
|
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Mar 2024 to Apr 2024
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Apr 2023 to Apr 2024
