ChinaNet Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the
"Company"), a leading B2B (business to business) Internet
technology company providing online-to-offline (O2O) sales channel
expansion, business strategies and marketing solutions for small
and medium-sized enterprises (SMEs) by utilizing data analysis and
cloud computing technologies in the People's Republic of China,
today announced financial results for the first fiscal quarter of
2016.
First Quarter 2016 Financial Highlights
- Gross profit of $1.6 million generated in the first fiscal
quarter of 2016, an 87.4% increase from $0.86 million generated in
the same period a year ago
- Consolidated gross margin increased to 31.7%, compared to 15%
in the same period a year ago, a 112% increase YOY
- Internet advertising and data service gross margin improved to
43%, compared to 27% in the same period a year ago
- $0.44 million cash inflow generated from operating activities,
compared to $2.33 million cash outflow in the same period a year
ago
First Quarter 2016 Financial Results
Chairman and CEO of ChinaNet, Mr. Handong Cheng commented, “The
Company has been increasingly focusing on integrating and
restructuring its business since 2014. We gradually reduced
low-margin television advertising business and put a lot of
research and development resources into upgrading the data service
system. Our gross margin has increased significantly since the
fourth quarter last year. Our gross profit increased by 87.4%
during the first quarter of 2016, which quarter is traditionally
our weakest season during the year. Meanwhile, we have successfully
developed our Business Intelligent Marketing Data Services
System--CloudX, which will be officially launched in the second
quarter of this year.”
Revenues for the three months ended March 31,
2016 were $5.1 million compared to $5.7
million for the three months ended March 31, 2015,
representing an 11.6% decrease. During the first quarter, revenues
from improving internet advertisement and data services, which
increased 48.2% from $2.5 million in the first quarter of 2015 to
$3.6 million in the first quarter of 2016, helped to partially
offset declines in the search engine marketing service. ChinaNet
continues to focus on integrating and upgrading its internet
advertising and data service to SME clients and investing in
developing new service modules for clients, and believes that the
launch of new services in future will help to increase market
penetration and recurring revenues.
Gross profit for the three months ended March 31,
2016 was $1.6 million compared to $0.9
million for the same period in 2015. Gross margin was 31.7%,
up from 15.0% in the first quarter of 2015, primarily due to the
improvement in gross margin of the internet advertisement and data
service, which increased to 43% for the first quarter of 2016 from
27% for the first quarter of 2015, and decrease in lower margin
revenues from the search engine marketing service. The
improvement in gross margin of the internet advertising and data
service was primarily due to optimizing and upgrading of the
Company’s online promotion analysis and cost control system, which
improved the promotion accuracy, Ad. effect conversion rate and
promotion cost control.
The Company incurred an operating loss of $1.4
million for the three months ended March 31,
2016 compared to an operating loss of $2.1
million in the same period a year ago.
Net loss attributable to ChinaNet for the three months
ended March 31, 2016 was $1.4 million and loss
per share was $0.05, compared to a net loss of $1.8
million and loss per share of $0.07 in the first
quarter of 2015.
Balance Sheet and Cash Flow
The Company had $3.7 million in cash and cash
equivalents as of March 31, 2016, compared to $5.5
million as of December 31, 2015, working capital of $11.3
million, compared to $13.7 million as of December
31, 2015, and a current ratio of 2.5 to 1, compared to 2.9 to 1 as
of December 31, 2015. Total stockholders' equity
of ChinaNet was $26.6 million at March 31,
2016 compared to $27.3 million at December 31,
2015.
The Company had a $0.4 million of cash inflows from
operations in the three months ended March 31,
2016 compared to a $2.3 million of cash outflows in
the first three months of 2015.
Business Updates
In May, ChinaNet reported its self-developed Business
Intelligent Marketing Data Services System, CloudX, was installed
and tested at 13 food and beverage stores for field testing during
the Beijing Sakura Festival (the "Festival") in April with
improvements in weekly sales of up to six times average. The new
CloudX system, set to launch officially in late May, collects and
analyzes product sale numbers from stores and is analyzed by
ChinaNet for suggested adjustments to product stock and inventory
to improve customer sales. By utilizing CloudX in stores, ChinaNet
can provide owners with sales analysis reports, including each
single item's sales amount and period of time. The system was
judged highly by store owners during the Festival. With these
results, and after debugging and optimizing, CloudX will be
officially launched at the end of May, adding to ChinaNet’s growing
ecosystem of SME products and services.
About ChinaNet Online Holdings, Inc.
The Company, a parent company of ChinaNet Online Media Group
Ltd., incorporated in the BVI ("ChinaNet"), is a leading digital
B2B (business to business) Internet technology company focusing on
providing O2O sales channel expansion service for small and
medium-sized enterprises (SMEs) and entrepreneurial management and
networking service for entrepreneurs in China. The Company, through
certain contractual arrangements with operating companies in the
PRC, provides Internet advertising and other services for Chinese
SMEs via its portal websites, 28.com, Liansuo.com and Chuangye.com.
Website: http://www.chinanet-online.com.
Safe Harbor
This release contains certain "forward-looking statements"
relating to the business of ChinaNet Online Holdings, Inc., which
can be identified by the use of forward-looking terminology such as
"believes," "expects," "anticipates," "estimates" or similar
expressions. Such forward-looking statements involve known and
unknown risks and uncertainties, including business uncertainties
relating to government regulation of our industry, market demand,
reliance on key personnel, future capital requirements, competition
in general and other factors that may cause actual results to be
materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and
uncertainties are or will be described in greater detail in our
filings with the Securities and Exchange Commission. These
forward-looking statements are based on ChinaNet's current
expectations and beliefs concerning future developments and their
potential effects on the Company. There can be no assurance that
future developments affecting ChinaNet will be those anticipated by
ChinaNet. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by such forward-looking statements. ChinaNet undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
CHINANET ONLINE HOLDINGS, INC. |
|
CONSOLIDATED BALANCE SHEETS |
|
(In thousands, except for number of shares and per
share data) |
|
|
|
|
|
|
|
|
|
March
31, |
|
December
31, |
|
|
|
2016 |
|
2015 |
|
|
|
(US $) |
|
(US $) |
|
|
|
(Unaudited) |
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
3,744 |
|
|
$ |
5,503 |
|
|
Term deposit |
|
|
3,281 |
|
|
|
3,265 |
|
|
Accounts receivable, net |
|
|
3,030 |
|
|
|
2,549 |
|
|
Other receivables, net |
|
|
436 |
|
|
|
1,910 |
|
|
Prepayment and deposit to
suppliers |
|
|
6,013 |
|
|
|
5,843 |
|
|
Due from related parties |
|
|
323 |
|
|
|
41 |
|
|
Other current assets |
|
|
16 |
|
|
|
45 |
|
|
Assets classified as held for
sale |
|
|
1,958 |
|
|
|
1,882 |
|
|
Total current assets |
|
|
18,801 |
|
|
|
21,038 |
|
|
|
|
|
|
|
|
Long-term investments |
|
|
1,576 |
|
|
|
1,133 |
|
|
Property and equipment,
net |
|
|
711 |
|
|
|
681 |
|
|
Intangible assets,
net |
|
|
5,351 |
|
|
|
5,638 |
|
|
Deposit and prepayment for
purchasing of software technology |
|
|
2,438 |
|
|
|
1,024 |
|
|
Goodwill |
|
|
4,418 |
|
|
|
4,396 |
|
|
Deferred tax assets-non
current |
|
|
1,556 |
|
|
|
1,550 |
|
|
Total Assets |
|
$ |
34,851 |
|
|
$ |
35,460 |
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable * |
|
$ |
217 |
|
|
$ |
95 |
|
|
Advances from customers * |
|
|
1,379 |
|
|
|
1,313 |
|
|
Accrued payroll and other accruals
* |
|
|
615 |
|
|
|
685 |
|
|
Guarantee payment and prepayment
from new investors |
|
|
949 |
|
|
|
944 |
|
|
Taxes payable * |
|
|
3,255 |
|
|
|
3,186 |
|
|
Other payables * |
|
|
145 |
|
|
|
234 |
|
|
Liabilities classified as held for
sale * |
|
|
964 |
|
|
|
913 |
|
|
Total current
liabilities |
|
|
7,524 |
|
|
|
7,370 |
|
|
Long-term liabilities: |
|
|
|
|
|
Deferred tax liability-non current
* |
|
|
89 |
|
|
|
118 |
|
|
Long-term borrowing from a
director |
|
|
135 |
|
|
|
135 |
|
|
Total Liabilities |
|
|
7,748 |
|
|
|
7,623 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
130 |
|
|
|
129 |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
ChinaNet Online Holdings, Inc.’s
stockholders’ equity |
|
|
|
|
|
Common stock (US$0.001 par value;
authorized 50,000,000 shares; |
|
|
|
|
|
|
|
|
|
issued and outstanding 30,355,722
shares and 29,640,130 shares |
|
|
|
|
|
|
|
|
|
at March 31, 2016 and
December 31, 2015, respectively) |
|
|
30 |
|
|
|
30 |
|
|
Additional paid-in
capital |
|
|
27,074 |
|
|
|
26,510 |
|
|
Statutory reserves |
|
|
2,607 |
|
|
|
2,607 |
|
|
Retained deficit |
|
|
(5,281 |
) |
|
|
(3,870 |
) |
|
Accumulated other comprehensive
income |
|
|
2,185 |
|
|
|
2,056 |
|
|
Total ChinaNet Online Holdings,
Inc.’s stockholders’ equity |
|
|
26,615 |
|
|
|
27,333 |
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
358 |
|
|
|
375 |
|
|
Total equity |
|
|
26,973 |
|
|
|
27,708 |
|
|
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
34,851 |
|
|
$ |
35,460 |
|
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS |
(In thousands, except for number of shares and per
share data) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Revenues |
|
|
|
|
|
|
|
|
From unrelated parties |
|
$ |
5,012 |
|
|
$ |
5,661 |
|
From related parties |
|
|
48 |
|
|
|
63 |
|
Total revenues |
|
|
5,060 |
|
|
|
5,724 |
|
Cost of revenues |
|
|
3,456 |
|
|
|
4,868 |
|
Gross profit |
|
|
1,604 |
|
|
|
856 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
880 |
|
|
|
1,185 |
|
General and administrative
expenses |
|
|
1,706 |
|
|
|
1,245 |
|
Research and development
expenses |
|
|
426 |
|
|
|
490 |
|
Total
operating expenses |
|
|
3,012 |
|
|
|
2,920 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(1,408 |
) |
|
|
(2,064 |
) |
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
|
|
Interest income |
|
|
27 |
|
|
|
29 |
|
Interest expense |
|
|
- |
|
|
|
(17 |
) |
Other (expenses)/income |
|
|
(12 |
) |
|
|
32 |
|
Total
other income |
|
|
15 |
|
|
|
44 |
|
Loss before income
tax expense, equity method investments, noncontrolling interests
and discontinued operation |
|
|
(1,393 |
) |
|
|
(2,020 |
) |
Income tax benefit |
|
|
28 |
|
|
|
222 |
|
Loss before equity
method investments, noncontrolling interests and discontinued
operation |
|
|
(1,365 |
) |
|
|
(1,798 |
) |
Share of income in equity
investment affiliates |
|
|
- |
|
|
|
1 |
|
Loss from
continuing operations |
|
|
(1,365 |
) |
|
|
(1,797 |
) |
Loss from
discontinued operation, net of income tax |
|
|
(46 |
) |
|
|
(25 |
) |
Net
loss |
|
|
(1,411 |
) |
|
|
(1,822 |
) |
Net loss attributable to
noncontrolling interests from continuing operations |
|
|
- |
|
|
|
34 |
|
Net loss
attributable to ChinaNet Online Holdings, Inc. |
|
|
(1,411 |
) |
|
|
(1,788 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(1,411 |
) |
|
|
(1,822 |
) |
Foreign currency
translation gain/(loss) |
|
|
112 |
|
|
|
(120 |
) |
Comprehensive loss |
|
|
(1,299 |
) |
|
|
(1,942 |
) |
Comprehensive loss
attributable to noncontrolling interests |
|
|
17 |
|
|
|
33 |
|
Comprehensive loss
attributable to ChinaNet Online Holdings, Inc. |
|
|
(1,282 |
) |
|
|
(1,909 |
) |
|
|
|
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
|
|
|
Loss from continuing
operations per common share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.07 |
) |
Loss from discontinued
operations per common share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
28,356,797 |
|
|
|
26,366,797 |
|
CHINANET ONLINE HOLDINGS, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating activities |
|
|
|
|
Net loss |
|
$ |
(1,411 |
) |
|
$ |
(1,822 |
) |
Adjustments to
reconcile net loss to net cash provided by/(used in) operating
activities |
|
|
|
|
Depreciation and amortization |
|
|
384 |
|
|
|
444 |
|
Share-based compensation
expenses |
|
|
564 |
|
|
|
455 |
|
Loss on disposal of fixed
assets |
|
|
21 |
|
|
|
- |
|
Reverse of allowances for doubtful
accounts |
|
|
- |
|
|
|
(220 |
) |
Share of income in equity
investment affiliates |
|
|
- |
|
|
|
(1 |
) |
Deferred taxes |
|
|
(28 |
) |
|
|
(226 |
) |
Changes in
operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(507 |
) |
|
|
(42 |
) |
Other receivables |
|
|
1,464 |
|
|
|
200 |
|
Prepayment and deposit to
suppliers |
|
|
(152 |
) |
|
|
(2,175 |
) |
Due from related parties |
|
|
(19 |
) |
|
|
(8 |
) |
Other current assets |
|
|
29 |
|
|
|
(119 |
) |
Accounts payable |
|
|
190 |
|
|
|
(38 |
) |
Advances from customers |
|
|
64 |
|
|
|
1,279 |
|
Accrued payroll and other
accruals |
|
|
(89 |
) |
|
|
(72 |
) |
Other payables |
|
|
(114 |
) |
|
|
42 |
|
Taxes payable |
|
|
47 |
|
|
|
(25 |
) |
Net cash provided by/(used in) operating
activities |
|
|
443 |
|
|
|
(2,328 |
) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payment for office equipment and
leasehold improvement |
|
|
(117 |
) |
|
|
- |
|
Long-term investment in and advance
to cost/equity method investees |
|
|
(693 |
) |
|
|
(183 |
) |
Payment for purchasing of software
technology |
|
|
(1,394 |
) |
|
|
(326 |
) |
Net cash used in investing activities |
|
|
(2,204 |
) |
|
|
(509 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
Net cash provided by/(used in) financing
activities |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Changes
in cash and cash equivalents included in assets held for sale |
|
|
(6 |
) |
|
|
- |
|
|
|
|
|
|
Effect
of exchange rate fluctuation on cash and cash equivalents |
|
|
8 |
|
|
|
(16 |
) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(1,759 |
) |
|
|
(2,853 |
) |
|
|
|
|
|
Cash and cash equivalents at
beginning of the period |
|
|
5,503 |
|
|
|
5,037 |
|
Cash and cash equivalents at end of
the period |
|
$ |
3,744 |
|
|
$ |
2,184 |
|
|
|
|
|
|
|
|
|
|
Contact:
MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us
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