ZW Data Action Technologies Inc. (Nasdaq: CNET) (the "Company"), an
integrated online advertising, precision marketing, data analytics
and other value-added blockchain services provider serving
enterprise clients, today announced its unaudited financial results
for the three months and six months ended June 30, 2021.
Financial Highlights
- Second Quarter 2021 Revenue of $14.55 million, +39.7% YOY,
- First Half 2021 Revenue of $22.95 million, +55% YOY;
- Working capital of $10.62 million as of June 30, 2021, compared
to $4.86 million as of December 31, 2020;
- Cash and cash equivalents of $11.75 million as of June 30,
2021, compared to $4.30 million as of December 31, 2020.
Second Quarter of 2021 Financial
Results
Revenues
For the three months ended June 30, 2021,
revenues increased by $4.14 million, or 39.7%, to $14.55 million
from $10.42 million for the same period last year. The increase in
revenues was primarily attributable to the increase in revenues
from our Internet advertising and related services business
segment, as a result of economic recovery from the COVID-19
outbreak since the second half of fiscal 2020.
Cost of revenues
Total cost of revenues increased by $4.65
million, or 46.0%, to $14.77 million for the three months ended
June 30, 2021 from $10.12 million for the same period last year.
The increase in cost of revenues was primary attributable to the
increase in costs associated with distribution of the right to use
search engine marketing service we purchased from key search
engines during the periods, which were in line with the increase in
the related revenues.
Gross profit (loss) and gross profit (loss)
margin
Gross loss was $0.22 million for the three
months ended June 30, 2021, compared to a gross profit of $0.30
million for the same period last year, which was primarily due to
the negative gross margin rate incurred by our main stream of
service revenues. Gross loss margin was 1.5% for the three months
ended June 30, 2021, compared to a gross profit margin of 2.9% for
the same period last year.
Operating expenses
Sales and marketing expenses was $0.07 million
for the three months ended June 30, 2021, compared to $0.07 million
for the same period last year.
General and administrative expenses increased by
$6.77 million, or 597.8%, to $7.90 million for the three months
ended June 30, 2021 from $1.13 million for the same period last
year. The increase in general and administrative expenses was
mainly attributable to the increase in share-based compensation
expenses and general departmental expenses, which was partially
offset by the decrease in allowance for doubtful accounts.
Research and development expenses decreased by
$0.03 million, or 23.3%, to $0.09 million for the three months
ended June 30, 2021 from $0.12 million for the same period last
year. The decrease in research and development expenses was mainly
attributable to a decrease in number of staff in our research and
development department.
Operating loss
Loss from operations was $8.28 million for the
three months ended June 30, 2021, compared to $1.02 million for the
same period last year. Operating loss margin was 56.9% for the
three months ended June 30, 2021, compared to 9.8% for the same
period last year.
Other income, net
Total other income increased to $4.61 million
for the three months ended June 30, 2021, compared to $0.04 million
for the same period last year, which was primarily attributable to
the increase in gain from change in fair value of warrant
liabilities. Net loss attributable to CNET and
loss per share
Net loss attributable to CNET was $3.65 million,
or loss per share of $0.11, for the three months ended June 30,
2021, compared to net loss attributable to CNET of $0.97 million,
or loss per share of $0.04, for the same period last year.
First Half 2021 Financial
Results
Revenues
For the first half of 2021, revenues increased
by $8.15 million, or 55.0%, to $22.95 million from $14.80 million
for the same period last year. The increase in revenues was
primarily attributable to the increase in revenues from our
Internet advertising and related services business segment, as a
result of economic recovery from the COVID-19 outbreak since the
second half of fiscal 2020.
Cost of revenues
For the first half of 2021, cost of revenues
increased by $10.28 million, or 75.6%, to $23.88 million from
$13.60 million for the same period last year. The increase in cost
of revenues was primary attributable to the increase in costs
associated with distribution of the right to use search engine
marketing service we purchased from key search engines during the
periods, which were in line with the increase in the related
revenues.
Gross profit (loss) and gross profit (loss)
margin
Gross loss was $0.94 million for the first half
of 2021, compared to a gross profit of $1.20 million for the same
period last year, which was primarily due to the negative gross
margin rate incurred by our main stream of service revenues.
Overall gross loss margin was 4.1% for first
half of 2021, compared to gross profit margin of 8.1% for the first
half of 2020.
Operating expenses
Sales and marketing expenses decreased by $0.13
million, or 57.0%, to $0.10 million for the first half of 2021 from
$0.24 million for the same period last year. The decrease in sales
and marketing expenses was mainly attributable to the decrease in
share-based compensation expenses, related to restricted shares
granted and issued to our sales staff during the first fiscal
quarter of last year.
General and administrative expenses increased by
$4.97 million, or 126.5%, to $8.90 million for the first half of
2021 from $3.93 million for the same period last year. The increase
in general and administrative expenses was mainly attributable to
the increase in share-based compensation expenses and general
office administrative expense, which was partially offset by the
decrease in allowance for doubtful accounts.
Research and development expenses decreased by
$0.17 million, or 50.6%, to $0.16 million for the first half of
2021 from $0.33 million for the same period last year. The decrease
in research and development expenses was primarily due to the
decrease in share-based compensation expenses, related to
restricted shares granted and issued to our research and
development staff during the first fiscal quarter of last year.
Operating loss
Loss from operations increased by $6.80 million,
or 206.3%, to $10.09 million for the first half of 2021 from $3.30
million for the same period last year. Operating loss margin was
44.0% for the first half of 2021, compared to 22.3% for the same
period last year.
Other income (expense), net
Total other income increased to $7.10 million
for the first half of 2021, compared to $0.08 million for the same
period last year, which was primarily due to the increase in gain
from 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 $2.96 million, or net loss per share of
$0.10, for the first half of 2021, compared to net loss
attributable to CNET of $3.28 million, or net loss per share of
$0.16, for the same period last year.
Financial Condition
As of June 30, 2021, the Company had cash and
cash equivalents of $11.75 million, compared to $4.30 million as of
December 31, 2020. Accounts receivable, net was $3.71 million as of
June 30, 2021, compared to $2.41 million as of December 31, 2020.
Working capital was $10.62 million as of June 30, 2021, compared to
$4.86 million as of December 31, 2020.
Net cash used in operating activities was $5.33
million for the six months ended June 30, 2021, compared to a net
cash provided by operating activities of $1.17 million for the same
period last year. Net cash used in investing activities was $4.36
million for the six months ended June 30, 2021, compared to $1.27
million for the same period last year. Net cash provided by
financing activities was $17.11 million for the six months ended
June 30, 2021, compared to a net cash used in financing activities
of $0.43 million for the same period last year.
Recent Developments
During the first half of 2021, the Company
continued the development of the combination of blockchain
technology and the practical operation of small and medium-sized
enterprises (the “SMEs”). Through upgrading the Bo!News
application, the Company aims at binding franchisees and
enterprises, and providing digitalized franchise management system
for the SMEs in a more efficient, accessible and trustable manner.
The Company plans to launch the upgraded Bo!News application by the
end of the third fiscal quarter.
Meanwhile, the Company expects to officially
launched the blockchain SaaS services for the SMEs’ smart retail
business by the end of 2021, which consist of membership
management, payment management and Non-Fungible Token (“NFT”)
management services.
Furthermore, cooperating with strategic
partners, the Company expects to focus on applying the NFT
technology into more application scenarios, including but not
limited to, IP operation and e-sports and games operation, etc.
About ZW Data Action Technologies
Inc.
ZW Data Action Technologies Inc. is a holding
company that conducts its primary businesses through its People’s
Republic of China subsidiaries and operating entities (the “VIEs”).
Through its PRC operating subsidiaries and VIEs, ZW Data Action
Technologies primarily offers online 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. ZW Data Action Technologies also develops blockchain and
artificial intelligence enabled web/mobile applications and
software solutions for clients. 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 Inc. 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 Inc. will be those
anticipated by ZW Data Action Technologies Inc. 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 Inc.
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) |
|
|
|
June 30, 2021 |
|
December 31, 2020 |
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents * |
|
$ |
11,752 |
|
$ |
4,297 |
Accounts receivable, net of allowance for doubtful accounts of
$2,207 and |
|
|
|
|
|
|
$4,247, respectively * |
|
|
3,707 |
|
|
2,407 |
Prepayment and deposit to suppliers * |
|
|
8,035 |
|
|
4,657 |
Due from related parties * |
|
|
104 |
|
|
61 |
Other current assets * |
|
|
462 |
|
|
1,462 |
Total current assets |
|
|
24,060 |
|
|
12,884 |
|
|
|
|
|
Long-term investments * |
|
|
450 |
|
|
67 |
Operating lease right-of-use assets * |
|
|
2,107 |
|
|
48 |
Property
and equipment, net * |
|
|
116 |
|
|
60 |
Intangible assets, net * |
|
|
3,438 |
|
|
2,557 |
Blockchain platform applications development costs |
|
|
4,409 |
|
|
4,406 |
Long-term deposits and prepayments * |
|
|
1,716 |
|
|
39 |
Deferred
tax assets, net * |
|
|
652 |
|
|
606 |
Total Assets |
|
$ |
36,948 |
|
$ |
20,667 |
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable * |
|
$ |
1,015 |
|
$ |
608 |
Advance from customers * |
|
|
1,539 |
|
|
1,436 |
Accrued payroll and other accruals * |
|
|
280 |
|
|
489 |
Taxes payable * |
|
|
3,408 |
|
|
3,430 |
Operating lease liabilities * |
|
|
187 |
|
|
18 |
Lease payment liability related to short-term leases * |
|
|
151 |
|
|
203 |
Other current liabilities * |
|
|
267 |
|
|
333 |
Warrant liabilities |
|
|
6,597 |
|
|
1,505 |
Total current liabilities |
|
|
13,444 |
|
|
8,022 |
Long-term liabilities: |
|
|
|
|
Operating lease liabilities-Non current * |
|
|
1,979 |
|
|
|
32 |
|
Long-term borrowing from a director |
|
|
135 |
|
|
|
134 |
|
Total Liabilities |
|
|
15,558 |
|
|
|
8,188 |
|
|
|
|
|
|
|
|
|
|
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 35,290,650 shares and 26,062,915 shares at June 30,
2021 and |
|
|
|
|
|
|
|
|
December 31, 2020, respectively) |
|
|
35 |
|
|
|
26 |
|
Additional paid-in capital |
|
|
61,656 |
|
|
|
49,772 |
|
Statutory reserves |
|
|
2,598 |
|
|
|
2,598 |
|
Accumulated deficit |
|
|
(43,941 |
) |
|
|
(40,980 |
) |
Accumulated other comprehensive income |
|
|
1,107 |
|
|
|
1,129 |
|
Total ZW Data Action Technologies Inc.’s stockholders’ equity |
|
|
21,455 |
|
|
|
12,545 |
|
|
|
|
|
|
Noncontrolling interests |
|
|
(65 |
) |
|
|
(66 |
) |
Total equity |
|
|
21,390 |
|
|
|
12,479 |
|
|
|
|
|
|
Total Liabilities and Equity |
|
$ |
36,948 |
|
|
$ |
20,667 |
|
|
|
|
|
|
|
|
|
|
*All of the VIEs' assets can be used to settle
obligations of their primary beneficiary. Liabilities recognized as
a result of consolidating these VIEs do not represent additional
claims on the Company’s general assets.
|
|
ZW DATA ACTION TECHNOLOGIES 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, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(US $) |
|
(US $) |
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Revenues |
|
|
|
|
|
|
|
|
From unrelated parties |
|
$ |
22,947 |
|
|
$ |
14,786 |
|
|
$ |
14,551 |
|
|
$ |
10,415 |
|
From a related party |
|
|
- |
|
|
|
14 |
|
|
|
- |
|
|
|
1 |
|
Total
revenues |
|
|
22,947 |
|
|
|
14,800 |
|
|
|
14,551 |
|
|
|
10,416 |
|
Cost of revenues |
|
|
23,882 |
|
|
|
13,603 |
|
|
|
14,769 |
|
|
|
10,118 |
|
Gross (loss)/profit |
|
|
(935 |
) |
|
|
1,197 |
|
|
|
(218 |
) |
|
|
298 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
|
101 |
|
|
|
235 |
|
|
|
73 |
|
|
|
70 |
|
General and administrative expenses |
|
|
8,895 |
|
|
|
3,928 |
|
|
|
7,899 |
|
|
|
1,132 |
|
Research and development expenses |
|
|
163 |
|
|
|
330 |
|
|
|
89 |
|
|
|
116 |
|
Total operating expenses |
|
|
9,159 |
|
|
|
4,493 |
|
|
|
8,061 |
|
|
|
1,318 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(10,094 |
) |
|
|
(3,296 |
) |
|
|
(8,279 |
) |
|
|
(1,020 |
) |
|
|
|
|
|
|
|
|
|
Other income/(expenses) |
|
|
|
|
|
|
|
|
Interest income/(expense), net |
|
|
2 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
- |
|
Other income/(expenses), net |
|
|
302 |
|
|
|
17 |
|
|
|
326 |
|
|
|
18 |
|
Loss on disposal of long-term investments |
|
|
(38 |
) |
|
|
- |
|
|
|
(38 |
) |
|
|
- |
|
Change in fair value of warrant liabilities |
|
|
6,829 |
|
|
|
68 |
|
|
|
4,322 |
|
|
|
22 |
|
Total other income |
|
|
7,095 |
|
|
|
84 |
|
|
|
4,611 |
|
|
|
40 |
|
|
|
|
|
|
|
|
|
|
Loss before income tax
benefit/(expense) and noncontrolling interests |
|
|
(2,999 |
) |
|
|
(3,212 |
) |
|
|
(3,668 |
) |
|
|
(980 |
) |
Income tax benefit/(expense) |
|
|
40 |
|
|
|
(68 |
) |
|
|
22 |
|
|
|
10 |
|
Net loss |
|
|
(2,959 |
) |
|
|
(3,280 |
) |
|
|
(3,646 |
) |
|
|
(970 |
) |
Net (income)/loss attributable to noncontrolling interests |
|
|
(2 |
) |
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
Net loss attributable to ZW Data Action Technologies
Inc. |
|
$ |
(2,961 |
) |
|
$ |
(3,278 |
) |
|
$ |
(3,646 |
) |
|
$ |
(968 |
) |
Net loss |
|
$ |
(2,959 |
) |
|
$ |
(3,280 |
) |
|
$ |
(3,646 |
) |
|
$ |
(970 |
) |
Foreign
currency translation (loss)/gain |
|
|
(23 |
) |
|
|
68 |
|
|
|
(4 |
) |
|
|
(4 |
) |
Comprehensive loss |
|
$ |
(2,982 |
) |
|
$ |
(3,212 |
) |
|
$ |
(3,650 |
) |
|
$ |
(974 |
) |
Comprehensive (income)/loss attributable to noncontrolling
interests |
|
|
(1 |
) |
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
Comprehensive loss attributable to ZW Data Action
Technologies Inc. |
|
$ |
(2,983 |
) |
|
$ |
(3,211 |
) |
|
$ |
(3,649 |
) |
|
$ |
(972 |
) |
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
Loss per
common share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
30,727,546 |
|
|
|
21,044,666 |
|
|
|
32,925,488 |
|
|
|
21,691,926 |
|
ZW DATA ACTION TECHNOLOGIES INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) |
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
(US $) |
|
(US $) |
|
|
(Unaudited) |
|
(Unaudited) |
Cash flows from operating activities |
|
|
|
|
Net loss |
|
$ |
(2,959 |
) |
|
$ |
(3,280 |
) |
Adjustments to reconcile net loss to net cash (used
in)/provided by operating |
|
|
|
|
activities |
|
|
|
|
Depreciation and amortization |
|
|
282 |
|
|
|
415 |
|
Amortization of operating lease right-of-use assets |
|
|
92 |
|
- |
|
5 |
|
Share-based compensation expenses |
|
|
6,857 |
|
|
|
1,987 |
|
Provision for allowances for doubtful accounts |
|
|
- |
|
|
|
747 |
|
Loss on disposal of long-term investments |
|
|
38 |
|
|
|
- |
|
Deferred taxes |
|
|
(40 |
) |
|
|
11 |
|
Change in fair value of warrant liabilities |
|
|
(6,829 |
) |
|
|
(68 |
) |
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
|
(1,284 |
) |
|
|
(38 |
) |
Prepayment and deposit to suppliers |
|
|
(980 |
) |
|
|
2,090 |
|
Due from related parties |
|
|
- |
|
|
|
28 |
|
Other current assets |
|
|
8 |
|
|
|
(3 |
) |
Long-term deposits and prepayments |
|
|
(554 |
) |
|
|
(750 |
) |
Accounts payable |
|
|
403 |
|
|
|
(9 |
) |
Advance from customers |
|
|
89 |
|
|
|
(362 |
) |
Accrued payroll and other accruals |
|
|
(197 |
) |
|
|
(57 |
) |
Other current liabilities |
|
|
(123 |
) |
|
|
326 |
|
Taxes payable |
|
|
(49 |
) |
|
|
89 |
|
Lease payment liability related to short-term leases |
|
|
(54 |
) |
|
|
43 |
|
Operating lease liabilities |
|
|
(31 |
) |
|
|
(9 |
) |
Net cash (used in)/provided by operating
activities |
|
|
(5,331 |
) |
|
|
1,165 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payment for leasehold improvements and purchase of vehicles,
furniture and office equipment |
|
|
(221 |
) |
|
|
- |
|
Cash effect of deconsolidation of VIEs’ subsidiaries |
|
|
(8 |
) |
|
|
- |
|
Investments and advances to ownership investee entities |
|
|
(463 |
) |
|
|
(27 |
) |
Short-term loan to an unrelated party |
|
|
(312 |
) |
|
|
(944 |
) |
Repayment of short-term loan from an unrelated party |
|
|
1,303 |
|
|
|
- |
|
Payment for purchase of software technologies |
|
|
(1,160 |
) |
|
|
- |
|
Deposit and prepayment paid for contracts of other investing
activities |
|
|
(3,500 |
) |
|
|
- |
|
Payment for blockchain platform applications development costs |
|
|
- |
|
|
|
(302 |
) |
Net cash used in investing activities |
|
|
(4,361 |
) |
|
|
(1,273 |
) |
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of common stock and warrant (net of cash
offering cost of US$1,600) |
|
|
17,111 |
|
|
- |
|
Repayment of short-term bank loan |
|
|
- |
|
|
(427 |
) |
Net cash provided by/(used in) financing
activities |
|
|
17,111 |
|
|
(427 |
) |
|
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
|
36 |
|
|
(13 |
) |
|
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents |
|
|
7,455 |
|
|
(548 |
) |
|
|
|
|
|
Cash and cash equivalents at beginning of the
period |
|
|
4,297 |
|
|
1,603 |
|
Cash and cash equivalents at end of the period |
|
$ |
11,752 |
|
$ |
1,055 |
|
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