Ku6 Media Reports Unaudited Financial Results For the Third Quarter of Fiscal Year 2015
BEIJING, Nov. 20, 2015 /PRNewswire/ -- Ku6 Media Co., Ltd. ("Ku6 Media" or the "Company") (NASDAQ: KUTV), a leading internet video company focused on User Generated Content ("UGC") in China, today announced its unaudited financial results for the third quarter ended September 30, 2015.
Management Comments
Mr. Feng Gao, Chief Executive Officer of Ku6 Media, commented, "The third quarter represented a period of advancement in our services, as well as positive trends in our financials. We have consistently seen user expansion as individuals are providing a wider variety of content on our platform. Ku6 is focusing on the trend toward video social communication with the creation of our 'Model Interactive Community'. We are also expanding our share of the mobile market through the launching of the mobile application 'Modo', which is part of our cooperation agreement with Beijing Modo. Ultimately, our goal is to continue to increase user traffic while simultaneously enhancing our advertising partnerships. In the third quarter, we have increased revenues and continued to progress towards profitability, and have been pleased with our current trends heading into 2016."
Third Quarter 2015 Highlights (1)
- Total revenues were US$2.45 million (RMB15.46 million) in the third quarter of 2015, as compared to total revenues of US$2.38 million in the second quarter of 2015 and US$1.62 million in the third quarter of 2014.
- Net loss was US$0.64 million (RMB4.03 million) in the third quarter of 2015, as compared to a net loss of US$0.67 million in the second quarter of 2015 and US$0.93 million in the third quarter of 2014.
- Basic and diluted loss per ADS was US$0.01 (RMB0.09) in the third quarter of 2015, as compared to US$0.01 in the second quarter of 2015 and US$0.02 in the third quarter of 2014.
- Cash and cash equivalents were US$7.91 million (RMB50.25 million) as of September 30, 2015.
- Net cash used in operating activities was US$0.32 million (RMB 1.97 million) in the third quarter of 2015, as compared to net cash provided by operating activities of US$0.78 million in the second quarter of 2015 and net cash used in operating activities of US$3.00 million in the third quarter of 2014.
| (1) The reporting currency of the Company is the United States dollar ("U.S. dollar"), but solely for the convenience of the reader, the amounts of Renminbi ("RMB") presented throughout the release were calculated at the rate of US$1.00=RMB6.3556, representing the noon buying rate as of September 30, 2015 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. This convenience translation is not intended to imply that the U.S. dollar amounts could have been, or could be, converted, realized or settled into RMB at that rate on September 30, 2015 or at any other rate. |
Recent Business Developments
Company Extends Advertising Agency Agreement with Partner Huzhong
On August 29, 2015, the Company entered into a supplemental advertising agency agreement with Huzhong Advertising (Shanghai) Ltd. ("Huzhong"), pursuant to which the service price charged to Huzhong increased by a certain percentage in the following 12 months before the next price negotiation may occur. There were no other changes to the existing advertising agency agreement, which will expire on December 31, 2017.
Business Expansion Into Video Social Communication
In July 2015, the Company entered into agreements with two third parties to set up a new media company, Beijing Modo Media Co., Ltd. ("Beijing Modo"), in which Ku6 Media holds a 30% equity interest. Beijing Modo operates a social platform named "Modo" that allows users to engage in real-time online group activities through voice, text and video. Users on the Modo platform may consume virtual items during real-time video broadcasting, including gifts and avatars, and purchase other value-added services. The Company contributes business skills and technical support to Beijing Modo.
Third quarter 2015 Financial Results
Total revenues were US$2.45 million (RMB15.46 million) in the third quarter of 2015, representing an increase of 2.9% from US$2.38 million in the second quarter of 2015 and an increase of 51.8% from US$1.62 million in the third quarter of 2014. The Company reported higher revenues due to increased rate and volume from its advertising partner compared to the prior year.
Cost of revenues was US$2.05 million (RMB12.92 million) in the third quarter of 2015, representing a decrease of 5.3% from US$2.17 million in the second quarter of 2015 and a decrease of 17.4% from US$2.48 million in the third quarter of 2014.
The decrease in cost of revenues, as compared to the third quarter of 2014, was primarily due to (a) a decrease in bandwidth costs by US$0.18 million as we optimized bandwidth efficiency in 2015; (b) a decrease of depreciation costs by US$0.15 million as certain fixed assets were fully depreciated in the third quarter of 2015. These factors also contributed to the decrease from the second quarter of 2015.
Gross profit was US$0.40 million (RMB2.54 million) in the third quarter of 2015, as compared to gross profit of US$0.22 million in the second quarter of 2015 and gross loss of US$0.87 million in the third quarter of 2014.
Operating expenses were US$1.01 million (RMB6.36 million) in the third quarter of 2015, as compared to US$1.06 million in the second quarter of 2015, representing a decrease of 4.4%. Operating expenses reflected a decrease of 36.9% from US$1.60 million in the third quarter of 2014.
The decrease in operating expenses, as compared to the third quarter of 2014, was mainly attribute to (a) a decrease of office rental expenses by US$0.18 million as we reduced office space in the second quarter of 2015, and (b) a reversal of US$0.24 million of accrued litigation expenses in the third quarter of 2015, as compared to a reversal of US$0.04 million incurred in the third quarter of 2014. This reversal contributed to the decrease in operating expenses from the second quarter of 2015 as well.
Operating loss was US$0.61 million (RMB3.82 million) in the third quarter of 2015, as compared to operating loss of US$0.84 million in the second quarter of 2015 and US$2.47 million in the third quarter of 2014.
Net loss was US$0.64 million (RMB4.03 million) in the third quarter of 2015, as compared to US$0.67 million in the second quarter of 2015 and US$0.93 million in the third quarter of 2014.
Net loss per basic and diluted ADS was US$0.01 (RMB0.09) in the third quarter of 2015, as compared to US$0.01 in the second quarter of 2015 and US$0.02 in the third quarter of 2014. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 47.7 million in the third quarter of 2015, 47.6 million in the second quarter of 2015 and 47.6 million in the third quarter of 2014.
Balance Sheet Highlights
As of September 30, 2015, the Company had US$7.91 million (RMB50.25 million) in cash and cash equivalents, as compared to US$4.38 million as of December 31, 2014. The increase was primarily attributable to a loan of US$4.84 million extended from Mr. Xudong Xu, our previous significant shareholder in March 2015. On May 12, 2015, following our change of ownership, the US$4.84 million loan was assumed by Shanda Computer (Shanghai) Co., Ltd ("Shanda Computer"), a wholly-owned subsidiary of Shanda Interactive Entertainment Limited.
About Ku6 Media Co., Ltd.
Ku6 Media Co., Ltd. (NASDAQ: KUTV) is a leading internet video company in China focused on User Generated Content ("UGC"). Through its premier online brand and online video website, www.ku6.com, Ku6 Media provides online video uploading and sharing services, video reports, information and entertainment in China. For more information about Ku6 Media, please visit http://ir.ku6.com.
Forward-looking Statements
This news release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "believes," "could," "expects," "may," "might," "should," "will," or "would," and by similar statements. Forward-looking statements are not historical facts, but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of its control. It is possible that the Company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Some of the risks and important factors that could affect the Company's future results and financial condition include: continued competitive pressures in China's internet video portal market; changes in technology and consumer demand in this market; the risk that Ku6 Media may not be able to control its expenses in the future; regulatory changes in China with respect to the operations of internet video portal websites; the ability of the Company to consistently derive revenues from its renewed agreement with Huzhong; the success of Ku6 Media's ability to sell advertising and other services on its websites; and other risks outlined in the Company's filings with the Securities and Exchange Commission,including the Company's annual report on Form 20-F. Ku6 Media does not undertake any obligation to update this forward-looking information, except as required under law.
Contact:
For further information, please contact:
At the Company:
Ms. Wendy Xuan
Investor Relations Manager
Telephone: +86 10 5758 6819
[email protected]
Investor Relations:
The Equity Group Inc.
Ms. Katherine Yao,
Senior Associate
Telephone: +86 10 6587 6435
[email protected]
|
Ku6 Media Co., Ltd. |
|||
|
Consolidated Balance Sheets |
|||
| (Amounts in thousands, except for number of shares) |
December 31, 2014 US$ |
September 30, 2015 US$ (Unaudited) |
September 30, 2015 RMB (Unaudited) |
| ASSETS |
|||
| Current assets: |
|||
| Cash and cash equivalents |
4,380 |
7,906 |
50,250 |
| Accounts receivable, net |
114 |
84 |
536 |
| Accounts receivable due from related parties |
1 |
23 |
147 |
| Prepaid expenses and other current assets |
490 |
570 |
3,623 |
| Other receivables due from related parties |
3 |
3 |
18 |
| Total current assets |
4,988 |
8,586 |
54,574 |
| Non-current assets: |
|||
| Property and equipment, net |
294 |
32 |
206 |
| Investment in equity affiliate |
- |
177 |
1,127 |
| Deposits and other non-current assets |
348 |
- |
- |
| TOTAL ASSETS |
5,630 |
8,795 |
55,907 |
| LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||
| Current liabilities: |
|||
| Accounts payable |
3,076 |
3,165 |
20,116 |
| Accounts payable due to related parties |
710 |
615 |
3,909 |
| Accrued expenses and other current liabilities |
5,980 |
5,894 |
37,472 |
| Related party loan payable |
- |
4,720 |
30,000 |
| Total liabilities |
9,766 |
14,394 |
91,497 |
| Shareholders' deficit: |
|||
| Ordinary shares (US$0.00005 par value; 12,000,000,000 shares authorized; 4,763,360,860 and 4,771,610,860 shares issued and outstanding as of December 31, 2014 and September 30, 2015, respectively) |
238 |
239 |
1,516 |
| Additional paid-in capital |
184,538 |
185,025 |
1,175,944 |
| Accumulated deficit |
(187,096) |
(189,230) |
(1,202,670) |
| Accumulated other comprehensive loss |
(1,816) |
(1,633) |
(10,380) |
| Total shareholders' deficit |
(4,136) |
(5,599) |
(35,590) |
| TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT |
5,630 |
8,795 |
55,907 |
| Ku6 Media Co., Ltd. |
|||||||
| Consolidated Statements of Operations |
|||||||
| For the Three Months Ended |
For the Nine Months Ended |
||||||
| (Amounts in thousands, except for number of shares and ADS and per share and per ADS data) |
September 30, 2014 |
June 30, 2015 |
September 30, 2015 |
September 30, 2015 |
September 30, 2014 |
September 30, 2015 |
September 30, 2015 |
| US$ |
US$ |
US$ |
RMB |
US$ |
US$ |
RMB |
|
| (Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
| Revenues: |
|||||||
| Third parties |
924 |
2,384 |
2,413 |
15,212 |
1,722 |
7,145 |
44,563 |
| Related parties |
692 |
- |
40 |
251 |
3,396 |
40 |
251 |
| Total revenues |
1,616 |
2,384 |
2,453 |
15,463 |
5,118 |
7,185 |
44,814 |
| Cost of revenues: |
|||||||
| Third parties |
2,245 |
1,937 |
1,835 |
11,564 |
9,057 |
5,607 |
34,959 |
| Related parties |
238 |
228 |
215 |
1,358 |
698 |
657 |
4,101 |
| Total cost of revenues |
2,483 |
2,165 |
2,050 |
12,922 |
9,755 |
6,264 |
39,060 |
| Gross profit / (loss) |
(867) |
219 |
403 |
2,541 |
(4,637) |
921 |
5,754 |
| Operating expenses: |
|||||||
| Product development |
18 |
- |
- |
- |
1,377 |
- |
- |
| Sales and marketing |
146 |
272 |
288 |
1,814 |
768 |
752 |
4,690 |
| General and administrative |
1,436 |
784 |
722 |
4,550 |
6,068 |
2,441 |
15,214 |
| Total operating expenses |
1,600 |
1,056 |
1,010 |
6,364 |
8,213 |
3,193 |
19,904 |
| Operating loss |
(2,467) |
(837) |
(607) |
(3,823) |
(12,850) |
(2,272) |
(14,150) |
| Interest income |
6 |
61 |
52 |
329 |
35 |
127 |
798 |
| Other income |
77 |
189 |
5 |
32 |
674 |
206 |
1,266 |
| Interest expense - related party loan |
- |
(78) |
(79) |
(498) |
- |
(183) |
(1,142) |
| Gain from disposal of equity interest in affiliates |
1,452 |
- |
- |
- |
1,452 |
- |
- |
| Equity in loss of affiliate |
- |
- |
(12) |
(73) |
- |
(12) |
(73) |
| Loss before income tax benefit |
(932) |
(665) |
(641) |
(4,033) |
(10,689) |
(2,134) |
(13,301) |
| Income tax benefit |
- |
- |
- |
- |
- |
- |
- |
| Net loss |
(932) |
(665) |
(641) |
(4,033) |
(10,689) |
(2,134) |
(13,301) |
| Loss per share - basic and diluted |
|||||||
| Net loss |
(US$0.00) |
(US$0.00) |
(US$0.00) |
(RMB0.00) |
(US$0.00) |
(US$0.00) |
(RMB0.00) |
| Weighted average shares used in per share calculation – basic/diluted |
4,755,993,958 |
4,764,014,706 |
4,771,610,860 |
4,771,610,860 |
4,740,312,505 |
4,766,392,341 |
4,766,392,341 |
| Loss per ADS - basic and diluted |
|||||||
| Net loss |
(US$0.02) |
(US$0.01) |
(US$0.01) |
(RMB0.09) |
(US$0.23) |
(US$0.05) |
(RMB0.28) |
| Weighted average ADSs used in per ADS calculation – basic/diluted |
47,559,940 |
47,640,147 |
47,716,109 |
47,716,109 |
47,403,125 |
47,663,923 |
47,663,923 |
| Ku6 Media Co., Ltd. |
||||||||
|
Consolidated Statements of Cash Flows |
||||||||
| For the Three Months Ended |
For the Nine Months Ended |
|||||||
| (Amounts in thousands) |
September 30, 2014 |
June 30, 2015 |
September 30, 2015 |
September 30, 2015 |
September 30, 2014 |
September 30, 2015 |
September 30, 2015 |
|
| US$ |
US$ |
US$ |
RMB |
US$ |
US$ |
RMB |
||
| (Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||
| Cash flows from operating activities: |
||||||||
| Net loss |
(932) |
(665) |
(641) |
(4,033) |
(10,689) |
(2,134) |
(13,301) |
|
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Share-based compensation expenses |
169 |
59 |
78 |
494 |
457 |
213 |
1,333 |
|
| Depreciation and amortization |
253 |
107 |
73 |
462 |
847 |
292 |
1,817 |
|
| Equity in loss of affiliated company |
- |
- |
12 |
73 |
- |
12 |
73 |
|
| Bad debt provision |
58 |
- |
- |
- |
989 |
- |
- |
|
| Gain on derecognition of aged operating liabilities |
(9) |
- |
- |
- |
(207) |
(14) |
(86) |
|
| Exchange losses (gains) |
(77) |
3 |
56 |
355 |
(34) |
30 |
177 |
|
| Gain on disposal of property and equipment |
- |
(19) |
(24) |
(153) |
- |
(114) |
(705) |
|
| Gain from disposal of equity interest in affiliates |
(1,452) |
- |
- |
- |
(1,452) |
- |
- |
|
| Changes in assets and liabilities, net of acquisitions and dispositions: |
||||||||
| Accounts receivable |
(98) |
138 |
86 |
549 |
(994) |
29 |
196 |
|
| Prepaid expenses and other current assets |
(222) |
9 |
(116) |
(737) |
(136) |
(8) |
(65) |
|
| Amount due from related parties |
(711) |
- |
(22) |
(141) |
5,623 |
(22) |
(141) |
|
| Deposits and other non-current assets |
- |
348 |
- |
- |
(18) |
348 |
2,159 |
|
| Accounts payable |
(277) |
585 |
(351) |
(2,228) |
(572) |
91 |
516 |
|
| Accrued expenses and other current liabilities |
60 |
130 |
642 |
4,079 |
(1,191) |
(49) |
(204) |
|
| Amount due to related parties |
242 |
89 |
(108) |
(689) |
616 |
(120) |
(767) |
|
| Net cash provided by (used in) operating activities |
(2,996) |
784 |
(315) |
(1,969) |
(6,761) |
(1,446) |
(8,998) |
|
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
- |
(13) |
(1) |
(9) |
(192) |
(14) |
(88) |
|
| Proceeds from disposal of property and equipment |
- |
19 |
24 |
153 |
- |
114 |
705 |
|
| Repayment of loans from related parties controlled by Shanda |
- |
- |
- |
- |
484 |
- |
- |
|
| Proceeds from disposal of equity interest in affiliates |
1,452 |
- |
- |
- |
1,452 |
- |
- |
|
| Net cash provided by (used in) investing activities |
1,452 |
6 |
23 |
144 |
1,744 |
100 |
617 |
|
| Cash flows from financing activities: |
||||||||
| Proceeds from exercise of stock options |
77 |
13 |
- |
- |
339 |
13 |
80 |
|
| Borrowings from related parties controlled by Shanda |
- |
- |
- |
- |
5,797 |
4,839 |
30,000 |
|
| Net cash provided by financing activities |
77 |
13 |
- |
- |
6,136 |
4,852 |
30,080 |
|
| Effect of exchange rate changes on cash and cash equivalents |
- |
(1) |
20 |
1,374 |
(17) |
20 |
1,371 |
|
| Net increase (decrease) in cash and cash equivalents |
(1,467) |
802 |
(272) |
(451) |
1,102 |
3,526 |
23,070 |
|
| Cash and cash equivalents, beginning of period |
4,240 |
7,376 |
8,178 |
50,701 |
1,671 |
4,380 |
27,180 |
|
| Cash and cash equivalents, end of period |
2,773 |
8,178 |
7,906 |
50,250 |
2,773 |
7,906 |
50,250 |
|
SOURCE Ku6 Media Co., Ltd.
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