ZW Data Action Technologies Inc. (Nasdaq: CNET) (the "Company"), an
integrated Internet advertising, precision marketing, data
analytics and other value-added blockchain services provider
serving enterprise clients, today announced its audited financial
results for the year ended December 31, 2020.
Full Year 2020 Financial
Highlights
|
|
For the Year Ended December 31, |
($ millions, except per share data) |
|
2020 |
|
2019 |
|
% Change |
Revenues |
|
$38.41 |
|
$58.08 |
|
-33.9% |
Gross profit |
|
$0.63 |
|
$5.50 |
|
-88.5% |
Gross margin |
|
1.6% |
|
9.5% |
|
-7.8 pp* |
Loss from operations |
|
($5.70) |
|
($1.69) |
|
237.7% |
Operating loss margin |
|
-14.8% |
|
-2.9% |
|
-11.9 pp* |
Net loss attributable to
CNET |
|
($5.22) |
|
($1.26) |
|
313.6% |
Loss per share |
|
($0.24) |
|
($0.07) |
|
242.9% |
*pp: percent points |
|
|
|
|
|
|
- Revenues decreased by 33.9% to
$38.41 million for the year ended December 31, 2020, primarily due
to the decrease in revenues from our Internet advertising and
distribution of the right to use search engine marketing service
business categories, as a result of the COVID-19 outbreak during
the first fiscal quarter of 2020, which resulted in complete
shutdown of our business operations after the Chinese New Year in
early February until mid-April; slow resuming of business
activities afterwards due to travel restrictions and
quarantine measures adopted by the local governments where we
have operations; and decrease in advertising investment
budgets of our small and medium-sized enterprises (SMEs) clients
due to uncertainties associated with the future
developments of the pandemic.
- Gross profit was $0.63 million with
a gross margin of 1.6% for the year ended December 31, 2020.
- Loss from operations was $5.70
million for the year ended December 31, 2020, compared to $1.69
million for the prior year, primarily attributable to the decrease
in gross profit, which was partially offset by the decrease in
operating expenses.
- Net loss attributable to CNET was
$5.22 million, or loss per share of $0.24, for the year ended
December 31, 2020, compared to $1.26 million, or loss per share of
$0.07, for the prior year.
“Despite the negative impact on our business
brought by the COVID-19 breakout in the first fiscal quarter of
2020 and the subsequent slow recovery of the business environment.
We managed to improve the gross margin of our Internet advertising
and data service sector significantly from 7% last of the prior
year to 21% of FY2020, with the enhancement of data analysis
capabilities and optimization of cost control mechanism. We also
glad to see our first live streaming platform launched officially
in December and many significant progresses on our blockchain
related developments. Going forward, we expect to leverage the
improved COVID-19 situation in China and continue to explore viable
strategic alternatives to strengthen our business,” said Mr.
Handong Cheng, Chairman and Chief Executive Officer of ZW Data
Action Technologies.
Recent Developments
In December 2020, we announced the official
opening of our first live streaming platform in Guangzhou, China,
and the completion of our Blockchain Integrated Framework, or BIF,
for retail business.
In December 2020, we completed an offering of
shares of our common stock together with warrants which resulted in
gross proceeds of $7.0 million. In February 2021, we completed an
additional offering of shares of common stock and a concurrent
private placement of warrants to purchase common stock which
results in gross proceeds of $18.7 million.
With further enhancement of technology on both
blockchain development and internet traffic and data analytics for
the implementation of BOSE, in January and February 2021, we have
initiated and executed a series of partnerships and cooperation to
execute our business plans on building up BOSE to capture the
business opportunity with the opening of our live steaming
platform. Our preliminary business plans include: connecting BOSE
to Enterprise Wechat and CRM SaaS for consolidating and
accumulating behavior data in social media; enhancing online
branding and management service and aggregating more efficient ROI
and cost-effective advertising and marketing services to our
clients; offering services for the supply chain finance with the
focus on the target audiences of KOLs and O2O e-commerce merchants,
with options and selections of digital assets, and adopting crypto
payment gateways with licensed partners; utilizing upgraded
decentralized financial technology and building Defi service on BIF
platform for intellectual property rights with expansion of the BIF
technology on blockchain mining.
Revenues
|
For the Year Ended December 31, |
|
2020 |
|
2019 |
|
% Change |
- Internet advertising and related data service |
8,421 |
|
14,807 |
|
-43.1 |
% |
- Distribution of the right to use search engine marketing
service |
25,997 |
|
41,361 |
|
-37.1 |
% |
- Data and technical
services |
1,200 |
|
710 |
|
69.0 |
% |
Internet advertising and
related services |
35,618 |
|
56,878 |
|
-37.4 |
% |
Ecommerce O2O advertisement and marketing services |
1,545 |
|
-- |
|
NM |
Technical solution
services |
1,245 |
|
-- |
|
NM |
Software sales |
-- |
|
1,202 |
|
-100.0 |
% |
Total
revenues |
38,408 |
|
58,080 |
|
-33.9 |
% |
For the year ended December 31, 2020, revenues
decreased by $19.67 million, or 33.9%, to $38.41 million from
$58.08 million for the prior year. The decrease in revenues was
primarily attributable to the decrease in revenues from our
Internet advertising and distribution of the right to use search
engine marketing service business categories, as a result of the
COVID-19 outbreak during the first fiscal quarter and the slow
recovery in the subsequent fiscal quarters of 2020.
Cost of revenues
|
For the Year Ended December 31, |
|
2020 |
|
2019 |
|
% Change |
- Internet advertising and related data service |
6,688 |
|
13,802 |
|
-51.5 |
% |
- Distribution of the right to use search engine marketing
service |
27,950 |
|
38,775 |
|
-27.9 |
% |
- Data and technical
services |
1,062 |
|
5 |
|
21140.0 |
% |
Internet advertising and
related services |
35,700 |
|
52,582 |
|
-32.1 |
% |
Ecommerce O2O advertisement and marketing services |
1,500 |
|
-- |
|
NM |
Technical solution
services |
576 |
|
-- |
|
NM |
Total cost of
revenues |
37,776 |
|
52,582 |
|
-28.2 |
% |
For the year ended December 31, 2020, cost of
revenues decreased by $14.81 million, or 28.2%, to $37.78 million
from $52.58 million for the prior year, which was primarily due to
the decrease in costs associated with the distribution of the right
to use search engine marketing service we purchased from key search
engines and cost related to providing Internet advertising services
on our ad portals, which was in line with the decrease in the
related revenues.
Gross profit and gross margin
Gross profit decreased by $4.87 million, or
88.5%, to $0.63 million for the year ended December 31, 2020 from
$5.50 million for the prior year, as a result of the gross loss of
our distribution of the right to use search engine marketing
service and partially offset by and the increase in gross profit
generated from our Internet advertising service, Ecommerce O2O
advertising and marketing services and technical solution services
during the year of 2020.
Overall gross margin was 1.6% for the year ended
December 31, 2020, compared to 9.5% for the prior year.
Operating expenses
Sales and marketing expenses decreased by $0.18
million, or 33.1%, to $0.36 million for the year ended December 31,
2020 from $0.54 million for the prior year. The changes in sales
and marketing expenses was mainly attributable to the following
reasons: (1) staff salary and benefit expenses, performance based
bonus and general departmental expenses decreased by approximately
US$0.30 million, due to office shutdown during the first fiscal
quarter of 2020, resulted from the COVID-19 outbreak, and slow
recovery of business performance after the outbreak in the
following quarters of 2020; and (2) the increase in share-based
compensation expenses of approximately US$0.12 million, related to
restricted shares granted and issued to our sales staff in fiscal
2020.
General and administrative expenses decreased by
$0.34 million, or 6.0%, to $5.43 million for the year ended
December 31, 2020 from $5.78 million for the prior year. The
changes in general and administrative expenses was mainly
attributable to the following reasons: (1) the increase in
share-based compensation expenses of approximately US$1.49 million,
due to restricted shares granted and issued in fiscal 2020; (2) the
decrease in allowance for doubtful accounts of approximately
US$1.50 million; and (3) the decrease in general departmental
expenses of approximately US$0.33 million, due to office shutdown
during the first fiscal quarter of 2020, and cost reduction plan
executed by management after the COVID-19 outbreak.
Research and development expenses decreased by
$0.33 million, or 38.0%, to $0.54 million for the year ended
December 31, 2020 from $0.87 million for the prior year. Research
and development expenses accounted for 1.4% of total revenues for
the year ended December 31, 2020, compared to 1.5% for the prior
year.
Operating loss
Loss from operations increased by $4.01 million,
or 237.7%, to $5.70 million for the year ended December 31, 2020
from $1.69 million for the prior year. Operating loss margin was
14.8% for the year ended December 31, 2020, compared to 2.9% for
the prior year.
Other income (expense), net
Total other income was $0.62 for the year ended
December 31, 2020, compared to $0.47 million for the prior year,
which was primarily related to change in fair value of warrant
liabilities. Net loss attributable to CNET and
loss per share
As a result of the foregoing, net loss
attributable to CNET was $5.22 million, or loss per share of $0.24,
for the year ended December 31, 2020. This compared to net loss
attributable to CNET of $1.26 million, or loss per share of $0.07,
for the prior year.
Financial Condition
As of December 31, 2020, the Company had cash
and cash equivalents of $4.30 million, compared to $1.60 million as
of December 31, 2019. Accounts receivable, net was $2.41 million as
of December 31, 2020, compared to $3.26 million as of December 31,
2019. Working capital was $4.86 million as of December 31, 2020,
compared to $4.92 million as of December 31, 2019.
Net cash provided by operating activities was
$0.33 million for the year ended December 31, 2020, compared to net
cash used in operating activities of $4.31 million for the prior
year. Net cash used in investing activities was $3.47 million for
the year ended December 31, 2020, compared to $2.16 million for the
prior year. Net cash provided by financing activities was $5.82
million for the year ended December 31, 2020, compared to $4.35
million for the prior year.
About ZW Data Action Technologies
Inc.
Established in 2003 and headquartered in
Beijing, China, ZW Data Action Technologies Inc. (the “Company”)
offers Internet advertising, precision marketing, data analytics
and other value-added services for enterprise clients. Leveraging
its fully integrated services platform, proprietary database, and
cutting-edge algorithms, ZW Data Action Technologies delivers
customized, result-driven business solutions for small and
medium-sized enterprise clients in China. The Company also develops
blockchain and artificial intelligence enabled web/mobile
applications and software solutions for general public, enterprise
clients, and government agencies. More information about the
Company can be found at: http://www.zdat.com/.
Safe Harbor Statement
This release contains certain "forward-looking
statements" relating to the business of ZW Data Action Technologies
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 ZW Data
Action Technologies current expectations and beliefs concerning
future developments and their potential effects on the Company.
There can be no assurance that future developments affecting ZW
Data Action Technologies will be those anticipated by ZW Data
Action Technologies. 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. ZW Data
Action Technologies 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.
For more information, please contact:
Sherry
Zheng Weitian Group
LLCEmail: shunyu.zheng@weitian-ir.comPhone: +1 718-213-7386
ZW DATA ACTION TECHNOLOGIES
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except for number of shares and per
share data)
|
As of December
31, |
|
|
2020 |
|
|
|
2019 |
|
|
|
(US $) |
|
|
|
(US $) |
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,297 |
|
|
$ |
1,603 |
|
Accounts receivable, net of allowance for doubtful accounts of
$4,247 and $3,148, respectively |
|
2,407 |
|
|
|
3,260 |
|
Prepayment and deposit to suppliers |
|
4,657 |
|
|
|
6,980 |
|
Due from related parties, net |
|
61 |
|
|
|
81 |
|
Other current assets, net |
|
1,462 |
|
|
|
11 |
|
Total current assets |
|
12,884 |
|
|
|
11,935 |
|
|
|
|
|
|
|
|
|
Long-term investments |
|
67 |
|
|
|
35 |
|
Operating lease right-of-use
assets |
|
48 |
|
|
|
12 |
|
Property and equipment, net |
|
60 |
|
|
|
78 |
|
Intangible assets, net |
|
2,557 |
|
|
|
1,899 |
|
Blockchain platform applications
development costs |
|
4,406 |
|
|
|
3,879 |
|
Long-term prepayments |
|
39 |
|
|
|
- |
|
Deferred tax assets, net |
|
606 |
|
|
|
713 |
|
Total Assets |
$ |
20,667 |
|
|
$ |
18,551 |
|
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Short-term bank loan |
$ |
- |
|
|
$ |
430 |
|
Accounts payable |
|
608 |
|
|
|
408 |
|
Advances from customers |
|
1,436 |
|
|
|
2,006 |
|
Accrued payroll and other
accruals * |
|
489 |
|
|
|
491 |
|
Taxes payable |
|
3,430 |
|
|
|
3,214 |
|
Operating lease liabilities |
|
18 |
|
|
|
- |
|
Lease payment liabilities related
to short-term leases |
|
203 |
|
|
|
136 |
|
Other current liabilities |
|
333 |
|
|
|
221 |
|
Warrant liabilities |
|
1,505 |
|
|
|
107 |
|
Total current liabilities |
|
8,022 |
|
|
|
7,013 |
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
Operating lease liabilities-Non current |
|
32 |
|
|
|
- |
|
Long-term borrowing from a director |
|
134 |
|
|
|
125 |
|
Total Liabilities |
|
8,188 |
|
|
|
7,138 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
|
|
|
|
|
Common stock (US$0.001 par value; authorized 50,000,000 shares;
issued and outstanding 26,062,915 shares and 19,629,403 shares at
December 31, 2020 and 2019, respectively) |
|
26 |
|
|
|
20 |
|
Additional paid-in capital |
|
49,772 |
|
|
|
43,111 |
|
Statutory reserves |
|
2,598 |
|
|
|
2,607 |
|
Accumulated deficit |
|
(40,980) |
|
|
|
(35,773) |
|
Accumulated other comprehensive income |
|
1,129 |
|
|
|
1,505 |
|
Total ZW Data Action Technologies Inc.’s stockholders’ equity |
|
12,545 |
|
|
|
11,470 |
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
(66) |
|
|
|
(57) |
|
Total equity |
|
12,479 |
|
|
|
11,413 |
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
$ |
20,667 |
|
|
$ |
18,551 |
|
|
|
|
|
|
|
|
|
ZW DATA ACTION TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS(In thousands, except for
number of shares and per share data)
|
|
Year Ended December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Revenues |
|
|
|
|
From unrelated parties |
|
$ |
38,390 |
|
|
$ |
57,181 |
|
From related parties |
|
|
18 |
|
|
|
899 |
|
Total revenues |
|
|
38,408 |
|
|
|
58,080 |
|
Cost of revenues |
|
|
37,776 |
|
|
|
52,582 |
|
Gross profit |
|
|
632 |
|
|
|
5,498 |
|
|
|
|
|
|
Operating expenses |
|
|
|
|
Sales and marketing expenses |
|
|
361 |
|
|
|
540 |
|
General and administrative expenses |
|
|
5,433 |
|
|
|
5,777 |
|
Research and development expenses |
|
|
539 |
|
|
|
869 |
|
Total operating expenses |
|
|
6,333 |
|
|
|
7,186 |
|
|
|
|
|
|
Loss from
operations |
|
|
(5,701 |
) |
|
|
(1,688 |
) |
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
Change in fair value of warrant liabilities |
|
|
653 |
|
|
|
499 |
|
Interest income/(expense), net |
|
|
1 |
|
|
|
(35 |
) |
Other (expenses)/income, net |
|
|
(31 |
) |
|
|
3 |
|
Total other income |
|
|
623 |
|
|
|
467 |
|
|
|
|
|
|
Loss before income tax
expense and noncontrolling interests |
|
|
(5,078 |
) |
|
|
(1,221 |
) |
Income tax expense |
|
|
(143 |
) |
|
|
(49 |
) |
Net loss |
|
|
(5,221 |
) |
|
|
(1,270 |
) |
Net loss attributable to noncontrolling interests |
|
|
5 |
|
|
|
9 |
|
Net loss attributable to
ZW Data Action Technologies Inc. |
|
$ |
(5,216 |
) |
|
$ |
(1,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,221 |
) |
|
$ |
(1,270 |
) |
Foreign currency translation (loss)/gain |
|
|
(380 |
) |
|
|
49 |
|
Comprehensive loss |
|
$ |
(5,601 |
) |
|
$ |
(1,221 |
) |
Comprehensive loss attributable to noncontrolling interests |
|
|
9 |
|
|
|
8 |
|
Comprehensive loss
attributable to ZW Data Action Technologies Inc. |
|
$ |
(5,592 |
) |
|
$ |
(1,213 |
) |
|
|
|
|
|
Loss per share |
|
|
|
|
Loss per common share |
|
|
|
|
Basic and diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.07 |
) |
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
Basic and diluted |
|
|
21,602,107 |
|
|
|
17,130,335 |
|
|
|
|
|
|
|
|
|
|
ZW DATA ACTION TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
|
Year Ended December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
(US $) |
|
(US $) |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Net loss |
|
$ |
(5,221 |
) |
|
$ |
(1,270 |
) |
Adjustments to reconcile
net loss to net cash provided by/(used in) operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
856 |
|
|
|
170 |
|
Amortization of operating lease right-of-use assets |
|
|
13 |
|
|
|
90 |
|
Loss on disposal of fixed assets |
|
|
11 |
|
|
|
- |
|
Share-based compensation expenses |
|
|
2,152 |
|
|
|
393 |
|
Provision of allowances for doubtful accounts |
|
|
833 |
|
|
|
2,335 |
|
Change in fair value of warrant liabilities |
|
|
(653 |
) |
|
|
(499 |
) |
Deferred taxes |
|
|
143 |
|
|
|
(168 |
) |
Changes in operating
assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
116 |
|
|
|
699 |
|
Prepayment and deposit to suppliers |
|
|
2,804 |
|
|
|
(5,221 |
) |
Due from related parties |
|
|
24 |
|
|
|
145 |
|
Other current assets |
|
|
(6 |
) |
|
|
7 |
|
Accounts payable |
|
|
180 |
|
|
|
(2,441 |
) |
Advances from customers |
|
|
(671 |
) |
|
|
973 |
|
Accrued payroll and other accruals |
|
|
(16 |
) |
|
|
(27 |
) |
Other current liabilities |
|
|
(299 |
) |
|
|
110 |
|
Taxes payable |
|
|
14 |
|
|
|
265 |
|
Prepaid lease payment |
|
|
(9 |
) |
|
|
(10 |
) |
Operating lease liabilities |
|
|
1 |
|
|
|
- |
|
Lease payment liability related to short-term leases |
|
|
54 |
|
|
|
138 |
|
Net cash provided by/(used in) operating
activities |
|
|
326 |
|
|
|
(4,311 |
) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Proceeds from disposal of fixed assets |
|
|
3 |
|
|
|
- |
|
Investment to investee entities |
|
|
(28 |
) |
|
|
(36 |
) |
Short-term loan to unrelated parties |
|
|
(1,444 |
) |
|
|
- |
|
Payment for blockchain platform applications development costs |
|
|
(503 |
) |
|
|
(160 |
) |
Payment for purchase of software technology and other intangible
assets |
|
|
(1,500 |
) |
|
|
(1,962 |
) |
Net cash used in investing activities |
|
|
(3,472 |
) |
|
|
(2,158 |
) |
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of common stock and warrants (net of cash
offering cost of $750 and $15, respectively) |
|
|
6,250 |
|
|
|
4,787 |
|
Proceeds from short-term bank loan |
|
|
- |
|
|
|
435 |
|
Repayment of short-term bank loan |
|
|
(435 |
) |
|
|
(870 |
) |
Net cash provided by financing activities |
|
|
5,815 |
|
|
|
4,352 |
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
25 |
|
|
|
(22 |
) |
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents |
|
|
2,694 |
|
|
|
(2,139 |
) |
|
|
|
|
|
Cash and cash equivalents at beginning of the year |
|
|
1,603 |
|
|
|
3,742 |
|
Cash and cash equivalents at end of the year |
|
$ |
4,297 |
|
|
$ |
1,603 |
|
|
|
|
|
|
ZW Data Action Technolog... (NASDAQ:CNET)
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