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 unaudited financial
results for the three months ended March 31, 2021.
First Quarter of 2021 Financial
Results
Revenues
For the three months ended March 31, 2021,
revenues increased by $4.01 million, or 91.5%, to $8.40 million
from $4.38 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 last year.
Cost of revenues
Total cost of revenues increased by $5.63
million, or 161.5%, to $9.11 million for the three months ended
March 31, 2021 from $3.49 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 and cost related to providing Internet advertising services
on our ad portals, which was in line with the increase in the
related revenues.
Gross profit (loss) and gross profit (loss)
margin
Gross loss was $0.72 million for the three
months ended March 31, 2021, compared to gross profit of $0.90
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 8.5% for the three months
ended March 31, 2021, compared to a gross profit margin of 20.5%
for the same period last year.
Operating expenses
Sales and marketing expenses decreased by $0.14
million, or 83.0%, to $0.03 million for the three months ended
March 31, 2021 from $0.17 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.
General and administrative expenses decreased by
$1.80 million, or 64.4%, to $1.00 million for the three months
ended March 31, 2021 from $2.80 million for the same period last
year. The decrease in general and administrative expenses was
mainly attributable to the decrease in share-based compensation
expenses and allowance for doubtful accounts, which decrease was
partially offset by the increase in general administrative expenses
due to the office shutdown in the first fiscal quarter last year,
as a result of COVID-19 outbreak during that period.
Research and development expenses decreased by
$0.14 million, or 65.4%, to $0.08 million for the three months
ended March 31, 2021 from $0.21 million for the same period last
year. The decrease in research and development expenses was mainly
attributable to the decrease in share-based compensation
expenses.
Operating loss
Loss from operations was $1.82 million for the
three months ended March 31, 2021, compared to $2.28 million for
the same period last year. Operating loss margin was 21.6% for the
three months ended March 31, 2021, compared to 51.9% for the same
period last year.
Other income, net
Total other income increased to $2.48 million
for the three months ended March 31, 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 income (loss) attributable to CNET and
earnings (loss) per share
Net income attributable to CNET was $0.69
million, or earnings per share of $0.02, for the three months ended
March 31, 2021. This compared to a net loss attributable to CNET of
$2.31 million, or loss per share of $0.11, for the same period last
year.
Financial Condition
As of March 31, 2021, the Company had cash and
cash equivalents of $15.79 million, compared to $4.30 million as of
December 31, 2020. Accounts receivable, net was $1.69 million as of
March 31, 2021, compared to $2.41 million as of December 31, 2020.
Working capital was $8.36 million as of March 31, 2021, compared to
$4.86 million as of December 31, 2020.
Net cash used in operating activities was $3.71
million for the three months ended March 31, 2021, compared to net
cash provided by operating activities of $1.52 million for the same
period last year. Net cash used in investing activities was $1.87
million for the three months ended March 31, 2021, compared to
$1.12 million for the same period last year. Net cash provided by
financing activities was $17.11 million for the three months ended
March 31, 2021, compared to net cash used in financing activities
of $0.43 million for the same period last 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 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)
|
March 31, 2021 |
|
December 31, 2020 |
|
(US $) |
|
(US $) |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents * |
$ |
15,785 |
|
$ |
4,297 |
|
Accounts receivable, net of allowance for doubtful accounts of
$4,217 and $4,247, respectively * |
|
1,694 |
|
|
2,407 |
|
Prepayment and deposit to suppliers * |
|
7,194 |
|
|
4,657 |
|
Due from related parties, net * |
|
102 |
|
|
61 |
|
Other current assets, net * |
|
1,765 |
|
|
1,462 |
|
Total current assets |
|
26,540 |
|
|
12,884 |
|
|
|
|
|
Long-term investments * |
|
404 |
|
|
67 |
|
Operating lease right-of-use
assets * |
|
2,199 |
|
|
48 |
|
Property and equipment, net
* |
|
61 |
|
|
60 |
|
Intangible assets, net * |
|
3,603 |
|
|
2,557 |
|
Blockchain platform
applications development costs |
|
4,403 |
|
|
4,406 |
|
Long-term deposits and
prepayments * |
|
793 |
|
|
39 |
|
Deferred tax assets, net
* |
|
624 |
|
|
606 |
|
Total Assets |
$ |
38,627 |
|
$ |
20,667 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable * |
$ |
1,226 |
|
$ |
608 |
|
Advances from customers * |
|
1,592 |
|
|
1,436 |
|
Accrued payroll and other accruals * |
|
286 |
|
|
489 |
|
Taxes payable * |
|
3,385 |
|
|
3,430 |
|
Operating lease liabilities * |
|
267 |
|
|
18 |
|
Lease payment liabilities related to short-term leases * |
|
200 |
|
|
203 |
|
Other current liabilities * |
|
306 |
|
|
333 |
|
Warrant liabilities |
|
10,919 |
|
|
1,505 |
|
Total current liabilities |
|
18,181 |
|
|
8,022 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
Operating lease liabilities-Non current * |
|
1,953 |
|
|
|
32 |
|
Long-term borrowing from a director |
|
133 |
|
|
|
134 |
|
Total Liabilities |
|
20,267 |
|
|
|
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 31,304,915 shares and 26,062,915 shares at
March 31, 2021 and December 31, 2020, respectively) |
|
31 |
|
|
|
26 |
|
Additional paid-in capital |
|
54,980 |
|
|
|
49,772 |
|
Statutory reserves |
|
2,598 |
|
|
|
2,598 |
|
Accumulated deficit |
|
(40,295 |
) |
|
|
(40,980 |
) |
Accumulated other comprehensive income |
|
1,110 |
|
|
|
1,129 |
|
Total ZW Data Action Technologies Inc.’s stockholders’ equity |
|
18,424 |
|
|
|
12,545 |
|
|
|
|
|
Noncontrolling interests |
|
(64 |
) |
|
|
(66 |
) |
Total equity |
|
18,360 |
|
|
|
12,479 |
|
|
|
|
|
Total Liabilities and Equity |
$ |
38,627 |
|
|
$ |
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 INCOME/(LOSS)(In thousands,
except for number of shares and per share data)
|
|
|
Three Months Ended March 31, |
2021 |
|
2020 |
|
(US $) |
|
(US $) |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
Revenues |
|
|
|
From unrelated parties |
$ |
8,396 |
|
|
$ |
4,371 |
|
From related parities |
|
- |
|
|
|
13 |
|
Total revenues |
|
8,396 |
|
|
|
4,384 |
|
Cost of revenues |
|
9,113 |
|
|
|
3,485 |
|
Gross (loss)/profit |
|
(717 |
) |
|
|
899 |
|
|
|
|
|
Operating expenses |
|
|
|
Sales and marketing expenses |
|
28 |
|
|
|
165 |
|
General and administrative expenses |
|
996 |
|
|
|
2,796 |
|
Research and development expenses |
|
74 |
|
|
|
214 |
|
Total operating expenses |
|
1,098 |
|
|
|
3,175 |
|
|
|
|
|
Loss from
operations |
|
(1,815 |
) |
|
|
(2,276 |
) |
|
|
|
|
Other income/(expenses) |
|
|
|
Interest income/(expense), net |
|
1 |
|
|
|
(1 |
) |
Other expenses |
|
(24 |
) |
|
|
(1 |
) |
Change in fair value of warrant liabilities |
|
2,507 |
|
|
|
46 |
|
Total other income |
|
2,484 |
|
|
|
44 |
|
|
|
|
|
Income/(loss) before income tax benefit/(expense) and
noncontrolling interests |
|
669 |
|
|
|
(2,232 |
) |
Income tax benefit/(expense) |
|
18 |
|
|
|
(78 |
) |
Net
income/(loss) |
|
687 |
|
|
|
(2,310 |
) |
Net (income)/loss attributable to noncontrolling interests |
|
(2 |
) |
|
|
- |
|
Net
income/(loss) attributable to ZW Data Action Technologies
Inc. |
$ |
685 |
|
|
$ |
(2,310 |
) |
Net income/(loss) |
$ |
687 |
|
|
$ |
(2,310 |
) |
Foreign currency translation (loss)/gain |
|
(19 |
) |
|
|
72 |
|
Comprehensive income/(loss) |
|
668 |
|
|
|
(2,238 |
) |
Comprehensive income attributable to noncontrolling interests |
|
(2 |
) |
|
|
(1 |
) |
Comprehensive
income/(loss) attributable to ZW Data Action Technologies
Inc. |
$ |
666 |
|
|
$ |
(2,239 |
) |
|
|
|
|
Earnings/(loss) per share |
|
|
|
Earnings/(loss) per common share |
|
|
|
|
|
|
|
Basic and diluted |
$ |
0.02 |
|
|
$ |
(0.11 |
) |
|
|
|
|
Weighted average number of common shares
outstanding: |
|
|
|
|
|
|
|
Basic and diluted |
|
28,505,181 |
|
|
|
20,397,406 |
|
|
|
|
|
|
|
|
|
ZW DATA ACTION TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
|
|
Three Months Ended March 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
(US $) |
|
|
|
(US $) |
|
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Net income/(loss) |
$ |
687 |
|
|
$ |
(2,310 |
) |
Adjustments to
reconcile net income/(loss) to net cash (used in)/provided by
operating activities |
|
|
|
|
|
|
|
Depreciation and amortization |
|
112 |
|
|
|
207 |
|
Amortization of operating lease right-of-use assets |
|
36 |
|
|
|
3 |
|
Share-based compensation expenses |
|
100 |
|
|
|
1,919 |
|
Provision for allowances for doubtful accounts |
|
- |
|
|
|
410 |
|
Deferred taxes |
|
(18 |
) |
|
|
(5 |
) |
Change in fair value of warrant liabilities |
|
(2,507 |
) |
|
|
(46 |
) |
Changes in operating
assets and liabilities |
|
|
|
Accounts receivable |
|
700 |
|
|
|
(255 |
) |
Prepayment and deposit to suppliers |
|
(2,630 |
) |
|
|
2,236 |
|
Due from related parties |
|
- |
|
|
|
29 |
|
Other current assets |
|
7 |
|
|
|
(5 |
) |
Long-term deposits and prepayments |
|
(794 |
) |
|
|
(1,125 |
) |
Accounts payable |
|
628 |
|
|
|
(147 |
) |
Advances from customers |
|
169 |
|
|
|
123 |
|
Accrued payroll and other accruals |
|
(188 |
) |
|
|
34 |
|
Other current liabilities |
|
25 |
|
|
|
319 |
|
Taxes payable |
|
(18 |
) |
|
|
94 |
|
Lease payment liability related to short-term leases |
|
(1 |
) |
|
|
37 |
|
Operating lease liabilities |
|
(14 |
) |
|
|
- |
|
Net cash (used in)/provided by operating
activities |
|
(3,706 |
) |
|
|
1,518 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Cash effect of deconsolidation of VIEs’ subsidiaries |
|
(8 |
) |
|
|
- |
|
Investments and advances to ownership investee entities |
|
(385 |
) |
|
|
- |
|
Short-term loan to an unrelated party |
|
(312 |
) |
|
|
(815 |
) |
Payment for purchase of software technologies |
|
(1,160 |
) |
|
|
- |
|
Payment for blockchain platform applications development costs |
|
- |
|
|
|
(302 |
) |
Net cash used in investing activities |
|
(1,865 |
) |
|
|
(1,117 |
) |
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 |
|
- |
|
|
|
(430 |
) |
Net cash provided by/(used in) financing
activities |
|
17,111 |
|
|
|
(430 |
) |
|
|
|
|
Effect of exchange rate fluctuation on cash and cash
equivalents |
|
(52 |
) |
|
|
(19 |
) |
|
|
|
|
Net increase/(decrease) in cash and cash
equivalents |
|
11,488 |
|
|
|
(48 |
) |
|
|
|
|
Cash and cash equivalents at beginning of the period |
|
4,297 |
|
|
|
1,603 |
|
Cash and cash equivalents at end of the period |
$ |
15,785 |
|
|
$ |
1,555 |
|
|
|
|
|
|
|
|
|
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