- Signed additional 1,728 trial customers to Liansuo.com in Q3
2011
- Implementing Brand Management and Sales Channel Building
("BMSCB") services with a total of 70 customers
- Both Liansuo.com and Chuangye.com have reached an Alex ranking
within top 10,000 in first 3 months of operation
- $8.4 million operating cash flows in first nine months of
2011
- Management to host conference call Tuesday, November 15th at
10:00amET
ChinaNet Online Holdings, Inc. ("ChinaNet" or the "Company"),
(Nasdaq:CNET), a leading B2B (business to business) Internet
technology company providing online-to-offline ("O2O") sales
channel expansion services for small and medium-sized enterprises
(SMEs) and entrepreneurial management and networking services for
entrepreneurs in the People's Republic of China, today announced
unaudited financial results for the third quarter of 2011.
Extension of Form 10-Q Filing
The Company filed Form 12b-25 with the Securities and Exchange
Commission on November 14, 2011 to extend the filing of the
Company's Form 10-Q for the nine months ended September 30, 2011
for up to an additional five calendar days. The Company is filing
for an extension due to delays in compiling the required
information for XBRL. The extension grants the Company until
November 21, 2011 to file its Form 10-Q. Complying with this
deadline deems the Form 10-Q to be timely filed.
Summary Financials
Third Quarter 2011
Results (USD) (unaudited) |
|
|
Q3 2011 |
Q3 2010 |
CHANGE |
Sales |
$6.4 million |
$8.9 million |
-28% |
Gross Profit |
$3.0 million |
$5.8 million |
-48% |
Gross Margin |
46.7% |
65.0% |
-28% |
Net Income Attributable to Common
Stockholders |
$1.0 million |
$3.7 million |
-72% |
EPS (Diluted) |
$0.06 |
$0.19 |
-68% |
Third Quarter 2011 Financial Results
"The significant slowdown in the SME market overshadowed the
underlying progress we continue to make in our efforts to gain
further market share which includes adding clients based outside
the mainland PRC," began Mr. Handong Cheng, Chairman and CEO of the
Company. "We believe our decision to diversify our customer base
and expand our service offerings will allow us to navigate this
downturn better than our competitors. With more than $21 million in
cash and no debt, we are able to maintain investments in attractive
opportunities such as our social networking services information
platform, Chuangye.com, and advertising and marketing platform,
Liansuo.com. Regardless of the depth and duration of the slowdown,
we remain confident we will emerge as a more resilient and
competitive company."
Revenues for the third quarter of 2011 decreased 28% to $6.4
million from the third quarter of 2010 due to a significant
slowdown in small business formation and lower spending by existing
companies, resulting from a lack of available credit. Revenues from
internet advertising and marketing decreased 46% to $3.9 million
due to lower spending from the majority of both traditional and
branded customers. The number of customers decreased by
approximately 15% from the second quarter of 2011. TV advertisement
revenues increased 23% to $2.0 million as a result of higher
customer utilization rate and implementation of a new sales
strategy. The Company experienced a second consecutive quarter of
increased revenues from brand management and sales channel
expansion services, generating $0.45 million in sales, or 7% of
total revenues in the third quarter of 2011.
Third Quarter 2011 Revenue Breakdown by Business Unit
(USD in thousands) (unaudited)
|
Q3 2011 |
% |
Q3 2010 |
% |
% Change |
Internet Advertisement |
$3,860 |
60% |
$7,160 |
80% |
-46% |
TV Advertisement |
$1,972 |
31% |
$1,603 |
18% |
+23% |
Bank Kiosk |
$140 |
2% |
$133 |
2% |
+5% |
Brand Mgmt. & Sales Channel
Expansion |
$446 |
7% |
-- |
-- |
-- |
Total cost of sales for the third quarter of 2011 was $3.4
million compared to $3.1 million for the same period in 2010. Gross
profit was $3.0 million for the third quarter of 2011, representing
gross margin of 46.7%, compared to $5.8 million of gross profit and
a gross margin of 65.0% in the third quarter of 2010. The
year-over-year decline was a result of lower-margin TV
advertisement revenues accounting for 31% of sales in the third
quarter of 2011 compared to 18% in the corresponding period a year
ago.
Internet advertisement generated 58% gross margin in the third
quarter of 2011, below the 70%-80% historical range due to lower
sales. Margins for TV improved to 15% compared to 9% in the third
quarter of 2010 due to increased efficiency in leveraging
partnerships in purchasing TV time.
Operating expenses for the three months ended September 30, 2011
were approximately $1.8 million, down 7% from the period a year
ago. Selling expenses declined 32% to $0.6 million due to lower
sales activity. Research and development expenses increased by 36%
year-over-year to $0.4 million as the Company continues to invest
aggressively in technology and new product development
projects.
Operating income for the third quarter of 2011 decreased by 69%
over the prior year to $1.2 million. Operating margins was 18.5%
compared to 43.2% in the three months ended September 30, 2010.
Net income attributable to common stockholders for the third
quarter was $1.0 million and $3.7 million in the third quarter of
2011 and 2010, respectively. Diluted net income per share was $0.06
in the third quarter of 2011 compared to $0.19 in the same period
in 2010, based on 18.6 million and 20.9 million outstanding shares,
respectively.
Nine months 2011
Results (USD) (unaudited) |
|
|
YTD 2011 |
YTD 2010 |
CHANGE |
Sales |
$22.5 million |
$31.2 million |
-28% |
Gross Profit |
$13.7 million |
$15.4 million |
-11% |
Gross Margin |
60.6% |
49.3% |
+23% |
Net Income Attributable to Common
Stockholders |
$6.5 million |
$11.3 million |
-42% |
Adjusted Net Income Attributable to Common
Stockholders |
$6.3 million(1) |
$9.4 million(2) |
-33% |
EPS (Diluted) |
$0.34 |
$0.57 |
-40% |
Adjusted EPS (Diluted) |
$0.33(1) |
$0.48(2) |
-31% |
|
|
|
|
(1) Non-GAAP adjusted net income
attributable to common stockholders and EPS excludes $0.2 million
non-cash gain on deconsolidation of a subsidiary for the nine month
period ended September 30, 2011. |
|
|
|
|
|
|
|
(2) Non-GAAP adjusted net income
attributable to common stockholders and EPS excludes $1.9 million
non-cash gain related to changes in fair value of warrants for the
nine month period ended September 30, 2010. |
|
|
|
Revenues for the first nine months of 2011 decreased 28% to
$22.5 million from the first nine months of 2010. Revenues from the
internet advertising and marketing business segment were down 17%
year-over-year to $16.4 million, representing 73% of total sales,
while TV advertisement revenues fell 57% to $4.7 million,
representing 21% of total sales. This shift in revenue mix is
consistent with management's strategic decision to allocate more
capital to the Company's higher margin internet advertising and
marketing service businesses.
YTD 2011 Revenue Breakdown By Business Unit (USD in
thousands) (unaudited)
|
YTD 2011 |
% |
YTD 2010 |
% |
% Change |
Internet Advertisement |
$16,434 |
73% |
$19,736 |
63% |
-17% |
TV Advertisement |
$4,742 |
21% |
$11,044 |
35% |
-57% |
Bank Kiosk |
$415 |
2% |
$396 |
1% |
+5% |
Brand Mgmt. & Sales Channel
Expansion |
$943 |
4% |
-- |
-- |
-- |
Total cost of sales for the first nine months of 2011 was $8.9
million compared to $15.8 million for the same period in 2010.
Gross profit for the nine months ended September 30, 2011 was $13.7
million, representing gross margin of 60.6%, compared to $15.4
million in gross profit and a gross margin of 49.3% in the first
nine months of 2010. Internet advertisement and TV advertisement
generated gross margins of 71% and 19% in the nine months ended
September 30, 2011 compared to 75% and 3% in the same period a year
ago, respectively.
Operating expenses for the nine months ended September 30, 2011
increased by 16% to $6.0 million. Selling expenses for the first
nine months of 2011 were flat at $2.2 million for each period.
Research and development expenses grew by 82% year-over-year to
$1.1 million.
Operating income for the first nine months of 2011 fell 25% from
the prior year to $7.6 million. Operating margins were 33.9%
compared to 32.7% in the year-ago period.
GAAP net income attributable to common stockholders for the
first nine months of 2011 was $6.5 million. Non-GAAP adjusted net
income attributable to common stockholders was $6.3 million and
$9.4 million in the first nine months of 2011 and 2010,
respectively. Non-GAAP adjusted diluted net income per share was
$0.33 in the first nine months of 2011 compared to $0.48 in the
same period in 2010, based on 20.3 million and 20.9 million
outstanding shares, respectively.
Balance Sheet and Cash Flow
The Company had $21.3 million in cash and equivalents on
September 30, 2011, compared to $15.6 million on December 31, 2010,
working capital of $36.6 million, compared to $26.6 million on
December 31, 2010, and a current ratio of 8.0 to 1 compared 5.3 to
1 on December 31, 2010. Accounts receivable increased by
approximately $1.8 million from December 31, 2010 to September 30,
2011 due to the Company selectively extending credit to larger
customers with much more stable income and a longer payment history
with ChinaNet. Such extension is provided to retain loyal customers
without aggressively reducing prices.
The Company generated $8.4 million of cash flows from operations
in the first nine months of 2011. ChinaNet spent $1.4 million to
acquire technologies used in the management tools platform and $2.2
million for two advertising firms in Quanzhou. Total stockholders'
equity of ChinaNet was $42.8 million at September 30, 2011 compared
to $35.8 million at December 31, 2010.
Guidance for 2011
The Company recently adjusted its full year 2011 revenue
forecast to between $26.5 million and $28.5 million.
Business Updates
Due to restrictive bank lending and monetary policies impacting
available credit for new and existing SME's in China, management is
focusing on several new growth initiatives to help offset
short-term challenges on 28.com. These include:
- Launched an English-language, full-service portal dedicated to
serving U.S. and international franchises looking to expand into
China: www.expand2china.com. ChinaNet will leverage its strong
relationships with thousands of SMEs, entrepreneurs, and regulators
and industry-leading technology tools and services to help
facilitate successful and sustainable expansion into China by
international franchisors or business owners.
- Approximately one year after its initial expansion into Taiwan,
ChinaNet has 15 clients leveraging both sales channel promotion and
sales channel building services. The Company continues to allocate
additional sales and marketing resources to further penetrate this
high-growth market.
- ChinaNet's management tool platform, Flying Cloud, which
leverages the Company's existing portfolio of technologies and
services to accelerate the adoption of cloud-based services among
franchisees and franchisors. The website, scheduled to launch by
the end of 2011, currently has approximately 40 SMEs on beta
trials.
- The Company plans to launch a reality show for entrepreneurs.
Based on the same premise as the hit TV game show "Shark Tank" in
the U.S., each episode of this show will feature eight prominent or
rising enterprises, such as Peak, Fornet and Rongchan, who will
evaluate the potential success of 5 finalist entrepreneurs who will
be selected from an initial group of hundreds of entrepreneurs. The
winner will receive sponsorship from the participating enterprises
to start and operate his/her own business.
- ChinaNet will open its first franchise expo centre in Beijing
for small to medium sized business owners to showcase their
franchise ideas to prospective business partners. The center, which
is approximately 17,000 square feet, provides shared space for
franchise owners to conduct training, meetings and other business
activities in a professional setting in exchange for a monthly fee.
Management expects to attract new franchisees and entrepreneurs for
its online marketing and brand management services over time while
generating incremental fees from monthly service fees.
Conference Call
The conference call will take place at 10:00 am ET on Tuesday,
November 15, 2011. Interested participants should call 1
877-317-6776 when calling within the United States or +1
412-317-6776 when calling internationally. When prompted on
dial-in, ask for "ChinaNet Online Holdings Third Quarter 2011
Conference Call".
A playback will be available through November 22, 2011. To
listen, please call +1-877-344-7529 within the United States or
+1-412-317-0088 if calling internationally. Utilize the pass code
10006717 for the replay.
This call is being webcast by MZ Technologies and can be
accessed by clicking on the following link:
http://webcast.mz-ir.com/publico.aspx?codplataforma=3356.
About ChinaNet Online Holdings, Inc.
The Company, a parent company of ChinaNet Online Media Group
Ltd., incorporated in the BVI ("ChinaNet"), a leading a leading B2B
(business to business) Internet technology company focusing on
providing online-to-offline ("O2O") sales channel expansion service
for small and medium-sized enterprises (SMEs) and entrepreneurial
management and networking service for entrepreneurs in China.
Founded in 2003 and based in Beijing, PRC, the Company's services
include its 28.com portal to connect SME franchisors with new
franchisees, Internet advertising and marketing with other
value-added communication channels, brand management & sales
channel solutions, and cloud-based management tools (introduced in
2011). Website: http://www.chinanet-online.com.
About Non-GAAP Financial Measures
To supplement the unaudited consolidated statement of income and
comprehensive income presented in accordance with GAAP, we are also
providing non-GAAP measures of income before income tax expenses,
net income, net income attributable to us and basic and diluted
earnings per share for the nine months ended September 30, 2011 and
2010, which are adjusted from results based on GAAP to exclude the
non-cash gain recorded, which related to the gain on
deconsolidation of a subsidiary for the nine months ended September
30, 2011 and the fair value changes of the warrants we issued in
our August 2009 financing for the nine months ended September 30,
2010. The non-GAAP financial measures are provided to enhance the
investors' overall understanding of our current performance in
on-going core operations as well as prospects for the future. These
measures should be considered in addition to results prepared and
presented in accordance with GAAP, but should not be considered a
substitute for or superior to GAAP results. We use both GAAP and
non-GAAP information in evaluating our operating business results
internally and therefore deem it important to provide all of this
information to investors.
The following table presents a reconciliation of our non-GAAP
financial measures to the unaudited consolidated statements of
income and comprehensive income for the six months ended June 30,
2011 and 2010, (all amounts in thousands of US dollars):
|
Nine months ended
September 30, |
|
2011 |
2010 |
|
GAAP |
NON GAAP |
GAAP |
NON GAAP |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Income from operations |
$ 7,642 |
$ 7,642 |
$ 10,183 |
$ 10,183 |
Other income
(expenses): |
|
|
|
|
Changes in fair value of warrants |
-- |
-- |
1,861 |
-- |
Share of losses in equity investment
affiliates |
(180) |
(180) |
-- |
-- |
Gain on deconsolidation of
subsidiary |
232 |
-- |
-- |
-- |
Interest income |
9 |
9 |
8 |
8 |
Other income (other expenses) |
5 |
5 |
7 |
7 |
|
66 |
|
1,876 |
|
|
|
(166) |
|
15 |
Income before income tax
expense |
7,708 |
|
12,059 |
|
Adjusted income before income tax
expense |
|
7,476 |
|
10,198 |
Income tax expense |
861 |
861 |
304 |
304 |
Net income |
6,847 |
|
11,755 |
|
Adjusted net income |
|
6,615 |
|
9,894 |
Net (income)/ loss attributable to
noncontrolling interest |
96 |
96 |
127 |
127 |
Net income attributable to ChinaNet
Online Holdings, Inc. |
$ 6,943 |
|
$ 11,882 |
|
Adjusted net income attributable to
ChinaNet Online Holdings, Inc. |
|
$ 6,711 |
|
$ 10,021 |
|
|
|
|
|
Dividend for series A convertible
preferred stock |
(407) |
(407) |
(612) |
(612) |
Net income attributable to common
stockholders of ChinaNet Online
Holdings, Inc. |
$ 6,536 |
|
$ 11,270 |
|
Adjusted net income attributable to
common stockholders of ChinaNet
Online Holdings, Inc. |
|
$ 6,304 |
|
$ 9,409 |
Earnings per common
share-Basic |
$ 0.37 |
|
$ 0.68 |
|
Adjusted earnings per common
share-Basic |
|
$ 0.35 |
|
$ 0.56 |
Earnings per common
share-Diluted |
$ 0.34 |
|
$ 0.57 |
|
Adjusted earnings per common
share-Diluted |
|
$ 0.33 |
|
$ 0.48 |
|
|
|
|
|
Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
17,806,818 |
17,806,818 |
16,676,752 |
16,676,752 |
Diluted |
20,265,764 |
20,265,764 |
20,905,796 |
20,905,796 |
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.
- FINANCIAL TABLES - |
|
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED BALANCE
SHEET |
|
|
September 30, |
December 31, |
|
2011 |
2010 |
|
(US $'000) |
(US $'000) |
|
(Unaudited) |
|
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$21,280 |
$15,590 |
Accounts receivable, net |
6,147 |
4,319 |
Other receivables |
10,558 |
7,811 |
Prepayment and deposits to suppliers |
3,334 |
3,325 |
Due from equity investment
affiliates |
42 |
-- |
Due from related parties |
390 |
185 |
Deposit for acquisitions |
-- |
1,512 |
Other current assets |
147 |
31 |
Total current assets |
41,898 |
32,773 |
|
|
|
Investment in and loan to equity investment
affiliates |
588 |
7,162 |
Property and equipment, net |
1,916 |
2,010 |
Intangible assets, net |
3,197 |
51 |
Contingent returnable consideration |
119 |
-- |
Goodwill |
1,950 |
-- |
|
$49,668 |
$41,996 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$105 |
$174 |
Advances from customers |
848 |
2,120 |
Other payables |
272 |
10 |
Accrued payroll and other accruals |
391 |
470 |
Due to related parties |
160 |
291 |
|
|
|
Due to Control Group |
-- |
81 |
Due to director |
-- |
559 |
Taxes payable |
3,186 |
2,193 |
Dividends payable |
288 |
255 |
Total current
liabilities |
5,250 |
6,153 |
|
|
|
Deferred tax liabilities-non current |
434 |
-- |
Long-term borrowing from director |
137 |
132 |
|
5,821 |
6,285 |
Commitments and
contingencies |
|
|
|
|
|
Stockholders' equity: |
|
|
Series A convertible preferred stock
(US$0.001 par value; authorized 8,000,000 shares; issued and
outstanding nil and 2,877,600 shares at September 30, 2011 and
December 31, 2010, respectively; aggregate liquidation preference
amount: $288 and $7,449, including accrued but unpaid dividends of
$288 and $255, at September 30, 2011 and December 31, 2010,
respectively) |
-- |
3 |
Common stock (US$0.001 par value; authorized
50,000,000 shares; issued and outstanding 20,039,920 shares and
17,102,320 shares at September 30, 2011 and December 31, 2010,
respectively) |
20 |
17 |
Additional paid-in capital |
18,086 |
18,614 |
Statutory reserves |
1,587 |
1,587 |
Retained earnings |
21,166 |
14,630 |
Accumulated other comprehensive
income |
1,979 |
930 |
Total ChinaNet's Online Holdings,
Inc.'s stockholders' equity |
42,838 |
35,781 |
|
|
|
Noncontrolling interest |
1,009 |
(70) |
Total stockholders'
equity |
43,847 |
35,711 |
|
|
|
|
$49,668 |
$41,996 |
|
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED STATEMENT
OF INCOME AND COMPREHENSIVE INCOME |
|
|
Nine months ended
September 30, |
Three months
ended September 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(US $'000) |
(US $'000) |
(US $'000) |
(US $'000) |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
|
|
|
|
Sales |
|
|
|
|
From unrelated parties |
$21,987 |
$30,304 |
$6,329 |
$8,631 |
From related parties |
547 |
872 |
89 |
265 |
|
$22,534 |
$31,176 |
$6,418 |
$8,896 |
|
|
|
|
|
Cost of sales |
|
|
|
|
From unrelated parties |
8,047 |
15,791 |
3,369 |
3,110 |
From related parties |
821 |
-- |
49 |
-- |
|
8,868 |
15,791 |
3,418 |
3,110 |
|
|
|
|
|
Gross margin |
13,666 |
15,385 |
3,000 |
5,786 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling expenses |
2,198 |
2,187 |
575 |
851 |
General and administrative expenses |
2,726 |
2,410 |
861 |
815 |
Research and development expenses |
1,100 |
605 |
376 |
276 |
|
6,024 |
5,202 |
1,812 |
1,942 |
|
|
|
|
|
Income from
operations |
7,642 |
10,183 |
1,188 |
3,844 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Changes in fair value of
warrants |
-- |
1,861 |
-- |
-- |
Interest income |
9 |
8 |
5 |
4 |
Share of earnings (losses) in equity
investment affiliates |
(180) |
-- |
(75) |
-- |
Gain on deconsolidation of
subsidiary |
232 |
-- |
-- |
-- |
Other income (expenses) |
5 |
7 |
-- |
4 |
|
66 |
1,876 |
(70) |
8 |
|
|
|
|
|
Income before income tax expense and
noncontrolling interest |
7,708 |
12,059 |
1,118 |
3,852 |
Income tax expense |
861 |
304 |
107 |
25 |
Net income |
6,847 |
11,755 |
1,011 |
3,827 |
Net loss attributable to noncontrolling
interest |
96 |
127 |
100 |
50 |
Net income attributable to ChinaNet
Online Holdings, Inc. |
6,943 |
11,882 |
1,111 |
3,877 |
|
|
|
|
|
Net income attributable to ChinaNet
Online Holdings, Inc. |
6,943 |
11,882 |
1,111 |
3,877 |
Dividend of Series A convertible preferred
stock |
(407) |
(612) |
(85) |
(190) |
Net income attributable to common
stockholders of ChinaNet Online Holdings, Inc. |
$6,536 |
$11,270 |
$1,026 |
$3,687 |
|
|
|
|
|
Earnings per share |
|
|
|
|
Earnings per common share |
|
|
|
|
Basic |
$0.37 |
$0.68 |
$0.06 |
$0.22 |
Diluted |
$0.34 |
$0.57 |
$0.06 |
$0.19 |
|
|
|
|
|
Weighted average number of common
shares outstanding: |
|
|
|
|
Basic |
17,806,818 |
16,676,752 |
18,632,103 |
16,939,961 |
Diluted |
20,265,764 |
20,905,796 |
18,632,103 |
20,916,463 |
|
|
|
|
|
Comprehensive Income |
|
|
|
|
Net income |
$6,847 |
$11,755 |
$1,011 |
$3,827 |
Foreign currency translation gain |
1074 |
442 |
330 |
365 |
|
$7,921 |
$12,197 |
$1,341 |
$4,192 |
Comprehensive Income |
|
|
|
|
|
|
|
|
|
Comprehensive income / (loss)
attributable to noncontrolling interest |
($71) |
($127) |
($98) |
($50) |
Comprehensive income attributable to
ChinaNet's Online Holdings, Inc. |
7,992 |
12,324 |
1,439 |
4,242 |
|
$7,921 |
$12,197 |
$1,341 |
$4,192 |
|
|
CHINANET ONLINE
HOLDINGS, INC. |
CONSOLIDATED STATEMENT
OF CASH FLOW |
|
|
Nine months ended
September 30, |
|
2011 |
2010 |
|
(US $'000) |
(US $'000) |
|
(Unaudited) |
(Unaudited) |
|
|
|
Cash flows from operating
activities |
|
|
Net income |
$6,847 |
$11,755 |
Adjustments to reconcile net income
to net cash provided by operating activities |
|
Depreciation and Amortization |
727 |
275 |
Share-based compensation
expenses |
237 |
177 |
Changes in fair value of
warrants |
-- |
(1,861) |
Share of earnings (losses) in equity
investment affiliates |
180 |
-- |
Gain on deconsolidation of
subsidiary |
(232) |
-- |
Gain on disposal of property and
equipment |
(3) |
-- |
Deferred taxes |
(65) |
-- |
|
|
|
Changes in operating assets and
liabilities |
|
|
Accounts receivable |
(1,591) |
(1,195) |
Other receivables |
3,768 |
2,095 |
Prepayments and deposits to
suppliers |
(19) |
(24) |
Due from related parties |
(195) |
283 |
Other current assets |
(113) |
(141) |
Accounts payable |
(72) |
77 |
Advances from customers |
(1,320) |
76 |
Other payables |
238 |
(5) |
Accrued payroll and other accruals |
(67) |
104 |
Due to Control Group |
(82) |
(738) |
Due to director |
(559) |
389 |
Due to related parties |
(138) |
(24) |
Taxes payable |
902 |
(8) |
Net cash provided by operating
activities |
8,443 |
11,235 |
|
|
|
Cash flows from investing
activities |
|
|
Purchases of vehicles and office
equipment |
(245) |
(389) |
Purchases of intangible assets |
(1,438) |
(59) |
Cash from acquisition of VIEs |
24 |
-- |
Cash effect on deconsolidation of a
VIE |
(184) |
-- |
Payment for acquisition of VIEs |
(2,183) |
|
Long-term investment in equity investment
affiliate |
(166) |
|
Disposal of investment in equity
investment affiliate |
1,076 |
-- |
Net cash used in investing
activities |
(3,116) |
(448) |
|
|
|
Cash flows from financing
activities |
|
|
Cash investment contributed by
noncontrolling interest |
377 |
144 |
Dividend paid to Series A convertible
preferred stockholders |
(374) |
(605) |
Increase of short-term loan to third
parties |
-- |
(2,257) |
Net cash provided by (used in)
financing activities |
3 |
(2,718) |
|
|
|
Effect of foreign currency fluctuation on
cash and cash equivalents |
360 |
255 |
|
|
|
Net increase in cash and cash
equivalents |
5,690 |
8,324 |
|
|
|
Cash and cash equivalents at beginning of
year |
15,590 |
13,917 |
Cash and cash equivalents at end of
period |
$21,280 |
$22,241 |
CONTACT: Ted Haberfield, President
MZ North America, IR
MZ Group
Direct: +1-760-755-2716
Email: thaberfield@hcinternational.net
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