JMU Limited Reports Audited Fiscal Year 2018 Financial Results

SHANGHAI, July 1, 2019 /PRNewswire/ -- JMU Limited (the "Company" or "JMU") (Nasdaq: JMU), a B2B online e-commerce platform that provides integrated services to suppliers and customers in the foodservice industry in China, today announced its audited financial results for the fiscal year ended December 31, 2018.

Fiscal Year 2018 Highlights

• Revenues in 2018 were $36.5 million, representing a decrease of 58.9% from $88.7 million in 2017. The decrease was mainly due to the Company re-examining its B2B platform business and re-developing and transforming its future positioning and strategy in 2018. During the year, the Company suspended businesses that were strategically misaligned, products with lower gross profit, and a portion of business and services that involved third-party sellers and buyers.  
• Gross profit was $876 thousand in 2018, an increase of $327 thousand from 2017.
• B2B online platform recorded gross billing of RMB7.7 billion (US$1.1 billion) in 2018, measured in terms of gross merchandise value ("GMV"), decreasing 51.9% from gross billing of RMB16.0 billion (US$ 2.5 billion) in 2017. The decrease was mainly due to the Company re-examining its B2B platform business and re-developing and transforming its future positioning and strategy in 2018.
• Active customer accounts were 10,304 as of December 31, 2018, decreasing 68.8% from 33,025 as of December 31, 2017.
• Third-party sellers on the Company's online marketplace decreased to 3,779 as of December 31, 2018, compared to over 15,800 as of December 31, 2017.

Ms. Xiaoxia Zhu, Chairperson and Chief Executive Officer commented, "Through re-examining and adjusting our strategy and business, we hope to bring better growth opportunities for JMU and create better market service value for our customers."

Fiscal Year 2018 Financial Performance

Revenues were $36.5 million for 2018, representing a decrease of 58.9% from $88.7 million in 2017. The decrease of revenue in 2018 was mainly due the Company re-examining its B2B platform business and re-developing and transforming its future positioning and strategy in 2018. During the year, the Company suspended businesses that were strategically misaligned, products with lower gross profit, and a portion of business and services that involved third-party sellers and buyers.

Cost of revenues were $35.6 million in the year of 2018, representing a decrease of 59.6% from $88.2 million in 2017.

Gross profit for 2018 was $876 thousand, representing a 59.6% increase from $549 thousand in 2017. Gross margin increased to 2.4% in 2018 from 0.62% in 2017.

Selling and marketing expenses in 2018 decreased 61.8% to $5.8 million from $15.2 million in 2017. As a percentage of total revenue, selling and marketing expense was 15.9% and 17.1% in fiscal years 2018 and 2017, respectively. The decrease was primarily attributable to the impairment of acquired intangible assets decreasing to zero, which resulted in the amortization of intangible assets decreasing by $7.2 million. Marketing, advertising, and travel expenses also decreased.

General and administrative expenses in 2018 were $4.3 million, representing a decrease of 35.8% from $6.7 million in 2017. As a percentage of total revenues, general and administrative expenses were 9.6% and 7.6% in 2018 and 2017, respectively.

Impairment loss in 2018 was $115.2 million, representing a decrease of 21.7% from $147.0 million in 2017. As a percentage of total revenue, impairment loss were 315.9% and 165.7% in 2018 and 2017, respectively.

Loss from operations in 2018 was $124.4 million, representing a decrease of 26.1% from $168.4 million in 2017.

Net loss attributable to the Company in 2018 was $123.2 million, representing a decrease of 23.9% from $161.9 million in 2017. Non-GAAP net loss attributable to the Company, which excludes amortization of acquired intangible assets, impairment loss, share-based compensation and related provision for income tax benefits, was $9 million in 2018 compared to $12.3 million in 2017. For the years ended December 31, 2018 and 2017, the Company's weighted average number of ordinary shares used in computing loss per ordinary share was 1,476,801,177 and 1,476,144,194, respectively.

As of December 31, 2018, the Company's cash and cash equivalents was $0.4 million, representing a decrease of 92.7% from $4.9 million as of December 31, 2017. Total shareholders' deficit as of December 31, 2018 was $20.2 million compared to total shareholders' equity of $103.6 million as of December 31, 2017.

Form 20-F Filings for Fiscal Year 2018

JMU filed its annual report on Form 20-F for the year ended December 31, 2018 with the Securities and Exchange Commission. The annual report can be accessed and downloaded through the investor relations section of the Company's website and all shareholders can receive a hard copy of the Company's complete audited financial statements free of charge upon request.

Recent Development

On May 21, 2019, JMU entered into a share purchase agreement with Unicorn Investment Limited ("Unicorn") and Mr. Haohan Xu, one of JMU's shareholders, pursuant to which JMU acquired all the issued and outstanding shares of Unicorn held by Mr. Haohan Xu, in consideration for the issuance of 632,660,858 new ordinary shares. Immediately after the closing of the foregoing transaction, Mr. Haohan Xu held approximately 48.0% of all the issued and outstanding shares of the Company. Please refer to the press release issued by JMU on May 21, 2019 for further details.

Non-GAAP Measures

To supplement our consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), we use various non-GAAP financial measures that are adjusted from results based on U.S. GAAP to exclude amortization of acquired intangible assets, impairment of goodwill, share-based compensation and related provision for income tax benefits.

Our non-GAAP financial information is provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the historical and current financial performance of our operations and our prospects for the future. Our non-GAAP financial information should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for or superior to U.S. GAAP financial results. In addition, our calculation of this non-GAAP financial information may be different from the calculation used by other companies, and therefore comparability may be limited.

A limitation of using these non-GAAP financial measures is that amortization of acquired intangible assets, impairment of goodwill, share-based compensation and related provision for income tax benefits have been and may continue to be for the foreseeable future significant recurring expenses in our results of operations. We compensate for these limitations by providing reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures. Please see the reconciliation tables at the end of this earnings release.

About JMU Limited

JMU Limited operates a B2B online e-commerce platform in China that provides integrated services to suppliers and customers in the catering industry. With the help of Internet and cloud technologies, JMU has the vision to reshape the procurement and distribution pattern and build a fair business ecosystem in China's catering industry. JMU keeps concentrating on its ready-to-cook and ready-to-eat products in China.

Through cooperation with national and local industry associations and reputable restaurant groups across China, JMU has formed an industrial alliance and has great resource leverage in China's catering industry. JMU works closely with suppliers and customers in the catering industry, providing one-stop procurement services, as well as other value-added services. For more information, please visit: http://ir.ccjmu.com.

Safe Harbor Statement 

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "aim," "anticipate," "believe," "estimate," "expect," "hope," "going forward," "intend," "ought to," "plan," "project," "potential," "seek," "may," "might," "can," "could," "will," "would," "shall," "should," "is likely to" and the negative form of these words and other similar expressions. Among other things, statements that are not historical facts, including statements about JMU's beliefs and expectations, the business outlook and quotations from management in this announcement, as well as JMU's strategic and operational plans, are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: The general economic and business conditions in China may deteriorate. The growth of Internet and mobile user population in China might not be as strong as expected. JMU's plan to enhance customer experience, upgrade infrastructure and increase service offerings might not be well received. JMU might not be able to implement all of its strategic plans as expected. Competition in China may intensify further. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and JMU does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Contact:

Zhengzhen Li
JMU Limited
lizhengzhen@ccjmu.com 
Tel: +86 (021) 6015-1166, ext. 8904

Kristy Meng
ICR Inc.
kristy.meng@icrinc.com
Tel: +86 (010) 6583-7504

SOURCE JMU Ltd