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 audited financial results for the full year of 2019.
Full Year 2019 Financial
Highlights
- Total Revenues increased by 1.6% to $58.1
million from $57.1 million in the full year of 2018.
- Internet advertising and data service revenues
increased by 54.4% year over year to $14.8 million in 2019.
- Gross profit increased by 127.4% to $5.5
million from $2.4 million in the full year of 2018.
- Gross margin improved to 9.5%, compared to
4.2% in the full year of 2018.
- Operating loss reduced by 88.4% to $1.7
million from $14.5 million in the full year of 2018.
Recent
Developments
ChinaNet appointed a new Chief Technology
Officer in December 2019 and a new Chief Business Officer in
February 2020 to advance its development of blockchain technology,
explore new business opportunities in healthcare industry
advertising, and facilitate the integration of data analytics with
artificial intelligence. Moreover, to enhance the reliability of
its future blockchain services and optimize its location for client
proximity, the Company is in the process of expanding its corporate
business and technology headquarters to the city of Guangzhou in
Southern China. The Company expects to officially open its new
Guangzhou headquarters in either June or July of 2020.
In response to COVID-19, the Company is
currently in the process of using its blockchain capabilities to
launch a free simple blockchain-powered web application (the “web
application”). This web application is designed to help people
better understand their current health status and thus improve
their decision making process regarding the choice to either stay
at home or go to work. By better understanding the potential risks,
people will be able to go about their daily lives with fewer
complications and respond to related concerns more appropriately.
In addition, other functions will be added to the web application
to help enhance people’s understanding of their own health status
as it relates to locations, workspaces, communities, as well as
friends and family. In order to maximize the web application’s
potential to help more people around the world better understand
whether or not they have COVID-19 symptoms, the Company plans to
release the web application in multiple languages, including
English, Italian, Spanish, and Indonesian. The Company currently
projects the initial release date for the web application to be
early in the third quarter of 2020.
Mr. Handong Cheng, Chairman, President, and
Chief Executive Officer of ChinaNet, stated, “In the face of
epidemic headwinds and resulting macroeconomic uncertainty,
ChinaNet delivered a pivotal performance in the full year of 2019
to crucially transition its business via the introduction of new
investors and their resources. Consequently, we ramped up our
service and technology innovation, expanded our blockchain business
development, grew our client base, and bolstered our penetration
rates in key markets during the period. As we advance into 2020, we
have welcomed two seasoned executives to join our ranks, providing
us with further expertise in the technology and healthcare
industries and continuing to fuel our business development efforts.
Moreover, in order to enhance the reliability of our blockchain
services, we also plan to expand our corporate business and
technology headquarters to Guangzhou. This move will not only
enable us to further consolidate our resources, operations, and
technological capabilities, but also broaden our access to a wider
pool of manufacturing clients as well as small- to medium-sized
business clients.
“As we continuously refine our operations and
diversify our service offerings, we are also monitoring the market
closely, maintaining a growth mindset, and keeping an eye out for
potentially advantageous development opportunities. When the
outbreak of COVID-19 significantly impacted the market in the first
quarter of 2020, for example, we launched a number of relief
measures in support of our existing clients to help them overcome
their challenges in operations, business development, and
financing. We have also started a strategic business initiative in
healthcare industry advertising. Our technical competencies,
entrepreneurial business development strategies, formidable team of
industry veterans, and new professional talent joining the team
will continue to serve as competitive advantages going forward. In
light of the Chinese government’s favorable policy towards the
development of blockchain technology, we will continue to focus on
developing and promoting our blockchain-based platform services and
products in the second half of 2020 as planned. We anticipant that
this will help us to not only cultivate more sources of recurring
revenue, but also bolster our preparations for the expansion into
the Southeast Asian market in the near future. The transition of
the Company, coupled with its strong technology base, will bring an
increasing amount of growth momentum to our business and also
enable us to form more partnerships to accelerate our expansion
going forward.”
Full Year 2019 Financial
Results
TOTAL REVENUES
Total revenues in the full year of 2019
increased by 1.6% to $58.1 million from $57.1 million in the full
year of 2018.
Revenues generated from Internet advertising and
data service in the full year of 2019 increased by 54.4% to $14.8
million from $9.6 million in the full year of 2018. Such growth was
attributable to the Company’s higher sales lead conversion rate and
improved advertising and marketing results, resulting from
increased investments for marketing precision and enhanced data
analysis capabilities.
Revenues generated from the distribution of the
right to use search engine marketing service in the full year of
2019 were $41.4 million as compared to $47.4 million in the full
year of 2018. The decrease was due to the tightening of credit
policies by the Company’s key suppliers, which led to a higher
working capital requirement for the same volume of search engine
resources in 2019 when compared to the prior year. In response to
this credit policy change, the Company has started to require its
customers to pay more in advance, strengthened its accounts
receivable management process, and actively engaged in negotiations
with its key suppliers to secure more favorable credit policies to
improve the situation.
COST OF REVENUES AND GROSS
PROFIT
Cost of revenues in the full year of 2019
decreased by 3.9% to $52.6 million from $54.7 million in the full
year of 2018. This decrease was primarily due to the decreased
costs associated with the distribution of the right to use search
engine marketing service and TV advertising service, which were
partially offset by the increased costs associated with Internet
advertising and data service.
Gross profit in the full year of 2019 increased
by 127.4% to $5.5 million compared to $2.4 million in the full year
of 2018. Gross margin in the full year of 2019 expanded to 9.5%
from 4.2% in the full year of 2018. The increase in gross margin
was primarily driven by an increase in gross margin rates for both
of the Company’s core business lines, Internet advertising and data
service and distribution of the right to use search engine
marketing service.
OPERATING LOSS
Operating expenses in the full year of 2019
decreased by 57.6% to $7.2 million from $16.9 million in the full
year of 2018. As a percentage of total revenues, operating expenses
in the full year of 2019 reduced to 12.4% from 29.6% in the full
year of 2018.
Sales and marketing expenses in the full year of
2019 decreased by 72.6% to $0.5 million from $2.0 million in the
full year of 2018. This decrease was primarily attributable to the
decrease in advertising expenses for brand development as well as
the Company’s successful execution of cost control initiatives,
which led to a reduction in staff salary and benefit expenses as
well as other general departmental expenses.
General and administrative expenses in the full
year of 2019 increased by 5.3% to $5.8 million from $5.5 million in
the full year of 2018. The increase was primarily attributable to
the increase in allowance for doubtful accounts due to the
uncertainties surrounding future collection caused by the COVID-19
outbreak as well as a slight increase in share-based compensation,
which was partially offset by decreased professional service
expenses, salary and benefit expenses, and other general office
expenses as the Company continued to optimize its cost
structures.
Research and development expenses in the full
year of 2019 were slightly below $0.9 million, which was stable in
comparison to the full year of 2018, during which research and
development expenses were slightly above $0.9 million.
In the full year of 2018, the Company incurred a
$3.3 million impairment loss in intangible assets and a $5.2
million impairment loss in goodwill. No such impairment loss was
recognized by the Company in the full year of 2019.As a result,
operating loss in the full year of 2019 decreased significantly to
$1.7 million from $14.5 million in the full year of 2018.
NET LOSS
Net loss attributable to ChinaNet Online Holdings, Inc. in the
full year of 2019 was $1.3 million compared to $14.0 million in the
full year of 2018.
EBITDA AND ADJUSTED NET
INCOME/(LOSS)
For the year ended December 31, 2019, EBITDA
loss was US$0.9 million, compared to US$12.8 million in the full
year of 2018. EBITDA represents net loss before (i) depreciation
and amortization; (ii) interest expense; (iii) interest income; and
(iv) income tax expense.
For the year ended December 31, 2019, adjusted
net income was US$1.1 million, compared to an adjusted net loss of
US$3.7 million in the full year of 2018. Adjusted net income/(loss)
represents net income/(loss) before non-cash items, including: (i)
depreciation and amortization; (ii) deferred income tax
benefit/(expense); (iii) share-based compensation; (iv) bad debt
provision; (v) gain from changes in fair value of warrant
liabilities; and (vi) impairment on intangible assets, goodwill and
equity investments.
BALANCE SHEET
As of December 31, 2019, the Company had cash
and cash equivalents of $1.6 million, compared to $3.7 million as
of December 31, 2018. Advances from customers grew to $2.0 million
as of December 31, 2019, increasing significantly from $1.1 million
as of December 31, 2018.
Non-GAAP
Disclosure
ChinaNet uses adjusted net income/(loss), a
non-GAAP financial measure, in evaluating its operating results as
well as for financial and operational decision-making purposes. The
Company believes that adjusted net income/(loss) helps to identify
underlying trends in its business that could otherwise be distorted
by the effect of the expenses and gains that are included in net
loss. The Company believes that adjusted net income/(loss) provides
useful information about its operating results and enhances
investors’ overall understanding of the Company’s past performance
and future prospects.
Adjusted net income/(loss) should not be
considered in isolation or construed as an alternative to net
income/(loss) or any other measure of performance or as an
indicator of the Company’s operating performance. Investors are
encouraged to review non-GAAP financial measures against the most
directly comparable GAAP measures. Adjusted net income/(loss)
presented here may not be comparable to similarly titled measures
presented by other companies. Other companies may calculate
similarly titled measures differently, limiting their usefulness as
comparative measures to the Company’s financial data. The Company’s
financial information should be reviewed in its entirety and is not
reliant upon a single financial measure.
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
Statement
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, risks associated with the
COVID-19 pandemic outbreak 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
Contact
ICR, Inc.Xinran RaoTel: +1-646-308-1635Email:
CNET@icrinc.com
|
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, |
|
2019 |
|
2018 |
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Revenues |
|
|
|
|
From unrelated parties |
|
$ |
57,181 |
|
|
$ |
57,146 |
|
From related parties |
|
899 |
|
|
- |
|
Total revenues |
|
58,080 |
|
|
57,146 |
|
Cost of revenues |
|
52,582 |
|
|
54,728 |
|
Gross profit |
|
5,498 |
|
|
2,418 |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing expenses |
|
540 |
|
|
1,970 |
|
General and administrative expenses |
|
5,777 |
|
|
5,486 |
|
Research and development expenses |
|
869 |
|
|
933 |
|
Impairment on intangible assets |
|
- |
|
|
3,330 |
|
Impairment on goodwill |
|
- |
|
|
5,211 |
|
Total operating expenses |
|
7,186 |
|
|
16,930 |
|
|
|
|
|
|
Loss from
operations |
|
(1,688 |
) |
|
(14,512 |
) |
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
Change in fair value of warrant liabilities |
|
499 |
|
|
1,669 |
|
Impairment on long-term investments |
|
- |
|
|
(453 |
) |
Interest expense, net |
|
(35 |
) |
|
(37 |
) |
Other income/(expenses) |
|
3 |
|
|
(30 |
) |
Total other income |
|
467 |
|
|
1,149 |
|
|
|
|
|
|
Loss before income tax
expense and noncontrolling interests |
|
(1,221 |
) |
|
(13,363 |
) |
Income tax expense |
|
(49 |
) |
|
(764 |
) |
Net loss |
|
(1,270 |
) |
|
(14,127 |
) |
Net loss attributable to noncontrolling interests |
|
9 |
|
|
102 |
|
Net loss attributable to
ChinaNet Online Holdings, Inc. |
|
$ |
(1,261 |
) |
|
$ |
(14,025 |
) |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,270 |
) |
|
$ |
(14,127 |
) |
Foreign currency translation gain/(loss) |
|
|
49 |
|
|
|
(135 |
) |
Comprehensive loss |
|
$ |
(1,221 |
) |
|
$ |
(14,262 |
) |
Comprehensive loss attributable to noncontrolling interests |
|
|
8 |
|
|
|
96 |
|
Comprehensive loss
attributable to ChinaNet Online Holdings, Inc. |
|
$ |
(1,213 |
) |
|
$ |
(14,166 |
) |
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
Loss per common share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.88 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
17,130,335 |
|
|
|
15,863,894 |
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS (In thousands, except
for number of shares and per share data) |
|
|
|
As of December 31, |
|
|
2019 |
|
2018 |
|
|
(US $) |
|
(US $) |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,603 |
|
$ |
3,742 |
Accounts receivable, net of allowance for doubtful accounts of
$3,148 and $3,393, respectively |
|
|
3,260 |
|
|
6,359 |
Prepayment and deposit to suppliers |
|
|
6,980 |
|
|
2,154 |
Due from related parties, net |
|
|
81 |
|
|
226 |
Other current assets, net |
|
|
11 |
|
|
19 |
Total current assets |
|
|
11,935 |
|
|
12,500 |
|
|
|
|
|
Long-term investments |
|
|
35 |
|
|
- |
Operating lease right-of-use assets |
|
|
12 |
|
|
- |
Property and equipment, net |
|
|
78 |
|
|
142 |
Intangible assets, net |
|
|
1,899 |
|
|
45 |
Blockchain platform applications development costs |
|
|
3,879 |
|
|
3,725 |
Deferred tax assets, net |
|
|
713 |
|
|
556 |
Total Assets |
|
$ |
18,551 |
|
$ |
16,968 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Short-term bank loan * |
|
$ |
430 |
|
$ |
874 |
Accounts payable * |
|
|
408 |
|
|
2,869 |
Advances from customers * |
|
|
2,006 |
|
|
1,061 |
Accrued payroll and other accruals * |
|
|
491 |
|
|
521 |
Taxes payable * |
|
|
3,214 |
|
|
2,997 |
Lease payment liabilities related to short-term leases * |
|
|
136 |
|
|
- |
Other current liabilities * |
|
|
221 |
|
|
118 |
Warrant liabilities |
|
|
107 |
|
|
606 |
Total current liabilities |
|
|
7,013 |
|
|
9,046 |
Long-term liabilities: |
|
|
|
|
Long-term borrowing from a director |
|
|
125 |
|
|
|
128 |
|
Total Liabilities |
|
|
7,138 |
|
|
|
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 19,629,403 shares and 16,382,543 shares at
December 31, 2019 and 2018, respectively) |
|
|
20 |
|
|
|
16 |
|
Additional paid-in capital |
|
|
43,111 |
|
|
|
38,275 |
|
Statutory reserves |
|
|
2,607 |
|
|
|
2,607 |
|
Accumulated deficit |
|
|
(35,773 |
) |
|
|
(34,512 |
) |
Accumulated other comprehensive income |
|
|
1,505 |
|
|
|
1,457 |
|
Total ChinaNet Online Holdings, Inc.’s stockholders’ equity |
|
|
11,470 |
|
|
|
7,843 |
|
|
|
|
|
|
Noncontrolling interests |
|
|
(57 |
) |
|
|
(49 |
) |
Total equity |
|
|
11,413 |
|
|
|
7,794 |
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
18,551 |
|
|
$ |
16,968 |
|
|
|
|
|
|
|
|
|
|
|
CHINANET ONLINE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) |
|
|
|
Year Ended December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Cash flows from operating
activities |
|
|
|
|
Net loss |
|
$ |
(1,270 |
) |
|
$ |
(14,127 |
) |
Adjustments
to reconcile net loss to net cash used in operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
170 |
|
|
|
541 |
|
Amortization of operating lease right-of-use assets |
|
|
90 |
|
|
|
- |
|
Share-based compensation expenses |
|
|
393 |
|
|
|
233 |
|
Provision of allowances for doubtful accounts |
|
|
2,335 |
|
|
|
1,523 |
|
Impairment on intangible assets |
|
|
- |
|
|
|
3,330 |
|
Impairment on goodwill |
|
|
- |
|
|
|
5,211 |
|
Impairment on long-term investments |
|
|
- |
|
|
|
453 |
|
Change in fair value of warrant liabilities |
|
|
(499 |
) |
|
|
(1,669 |
) |
Deferred taxes |
|
|
(168 |
) |
|
|
764 |
|
Changes in
operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
699 |
|
|
|
(232 |
) |
Prepayment and deposit to suppliers |
|
|
(5,221 |
) |
|
|
1,345 |
|
Due from related parties |
|
|
145 |
|
|
|
(178 |
) |
Other current assets |
|
|
7 |
|
|
|
25 |
|
Accounts payable |
|
|
(2,441 |
) |
|
|
161 |
|
Advances from customers |
|
|
973 |
|
|
|
(2,414 |
) |
Accrued payroll and other accruals |
|
|
(27 |
) |
|
|
(28 |
) |
Other current liabilities |
|
|
110 |
|
|
|
(307 |
) |
Taxes payable |
|
|
265 |
|
|
|
(20 |
) |
Prepaid lease payment |
|
|
(10 |
) |
|
|
- |
|
Lease payment liability related to short-term leases |
|
|
138 |
|
|
|
- |
|
Net cash used in operating activities |
|
|
(4,311 |
) |
|
|
(5,389 |
) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payment for office equipment |
|
|
- |
|
|
|
(11 |
) |
(Investment to)/withdraw investment from investees |
|
|
(36 |
) |
|
|
453 |
|
Short-term loan to unrelated parties |
|
|
- |
|
|
|
(2,107 |
) |
Collection of short-term loan from unrelated parties |
|
|
- |
|
|
|
4,676 |
|
Payment for acquisition of noncontrolling interest |
|
|
- |
|
|
|
(1,889 |
) |
Payment for blockchain platform applications development costs |
|
|
(160 |
) |
|
|
(3,738 |
) |
Payment for purchase of software technology and other intangible
assets |
|
|
(1,962 |
) |
|
|
(431 |
) |
Net cash used in investing activities |
|
|
(2,158 |
) |
|
|
(3,047 |
) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of common stock and warrant (net of cash
offering cost of US$15 and US$809, respectively) |
|
|
4,787 |
|
|
|
10,263 |
|
Repayment to investors related to terminated security purchase
agreements |
|
|
- |
|
|
|
(922 |
) |
Proceeds from short-term bank loan |
|
|
435 |
|
|
|
907 |
|
Repayment of short-term bank loan |
|
|
(870 |
) |
|
|
(756 |
) |
Net cash provided by financing activities |
|
|
4,352 |
|
|
|
9,492 |
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash, cash equivalents, and
restricted cash |
|
|
(22 |
) |
|
|
(266 |
) |
|
|
|
|
|
Net (decrease)/increase in cash, cash equivalents and
restricted cash |
|
|
(2,139 |
) |
|
|
790 |
|
|
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of the
year |
|
|
3,742 |
|
|
|
2,952 |
|
Cash, cash equivalents, and restricted cash at end of the year |
|
$ |
1,603 |
|
|
$ |
3,742 |
|
|
|
|
|
|
|
|
|
|
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Aug 2024 to Sep 2024
ZW Data Action Technolog... (NASDAQ:CNET)
Historical Stock Chart
From Sep 2023 to Sep 2024