BEIJING, June 12, 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 unaudited
financial results for the first quarter of fiscal year 2015, ended
March 31, 2015.
First Quarter 2015 Highlights (1)
- The Company generated substantially all of its revenues from
online advertising, primarily through an advertising agency
agreement with Huzhong Advertising (Shanghai) Ltd. ("Huzhong"), a third party,
pursuant to which Huzhong acted as the Company's exclusive
advertising agency for standard media resources and as its
non-exclusive advertising agency for highly interactive advertising
resources.
- Total revenues were US$2.35
million (RMB14.56 million) in
the first quarter of 2015, as compared to total revenues of
US$3.47 million in the fourth quarter
of 2014 and US$2.81 million in the
first quarter of 2014.
- Net loss was US$0.83million
(RMB5.14 million), as compared to a
net loss of US$0.04 million in the
fourth quarter of 2014 and US$4.41
million in the first quarter of 2014.
- Basic and diluted loss per ADS was US$0.02 (RMB0.11)
in the first quarter of 2015, as compared to US$0.00 in the fourth quarter of 2014 and
US$0.09 in the first quarter of
2014.
- Cash and cash equivalents were US$7.38million (RMB45.73
million) as of March 31,
2015.
- Net cash used in operating
activities was US$1.92 million
(RMB11.90 million) in the first
quarter of 2015, as compared to net cash provided by operating activities of
US$1.60 million in the fourth quarter
of 2014 and net cash provided by operating activities of
US$2.50 million in the first 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=RMB6.1990, representing the noon
buying rate as of March 31, 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
March 31, 2015, or at any other rate.
|
"It's my pleasure to announce Ku6's earnings release for the
first quarter of 2015", Mr. Feng
Gao, Chief Executive Officer of Ku6 Media, commented. "In
the first quarter of 2015, Ku6 Media continued to generate revenues
from its advertising business and achieved a gross profit for the
second consecutive quarter. We intend to improve revenues from advertising
and other available businesses in 2015 to meet operating costs, and
we keep looking for new revenue sources for future
development."
First Quarter 2015 Financial Results
Total revenues were US$2.35
million (RMB14.56 million) in
the first quarter of 2015, representing a decrease of 32.2% from US$3.47 million in the fourth quarter of 2014 and
a decrease of 16.3% from US$2.81
million in the first quarter of 2014. The decrease in
revenues as compared to the fourth quarter of 2014 was primarily
due to the inclusion of guaranteed revenues of US$0.91 million from Shanghai Qinhe Internet
Technology Software Development Co., Ltd., ("Qinhe"), which is
controlled by our previous significant shareholder Mr. Xudong Xu, in the fourth quarter of 2014, and
there was no such guaranteed revenue in the first quarter of
2015.
Cost of revenues was US$2.05 million (RMB12.71
million) in the first quarter of 2015, representing a
decrease of 14.2% from US$2.39
million in the fourth quarter of 2014 and a decrease of
48.0% from US$3.94 million in the
first quarter of 2014. The decrease in cost of revenues as compared
to the first quarter of 2014 was primarily due to (a) a decrease in
bandwidth costs by US$0.68 million as
we optimized bandwidth efficiency in 2014; (b) content costs of
US$0.62 million incurred in the first
quarter of 2014, there being no such costs in the first quarter of
2015; and (c) a decrease of staff costs by US$0.34 million as a result of headcount
reductions earlier in 2014. The decrease in cost of revenues as
compared to the fourth quarter of 2014 reflected lower depreciation
expense as a result of fully depreciated fixed assets, as well as
continued cost reduction measures related to payroll and
optimization of bandwidth costs.
Gross profit was US$0.30 million (RMB1.85
million) in the first quarter of 2015, as compared to gross
profit of US$1.08 million in the
fourth quarter of 2014 and gross loss of US$1.14 million in the first quarter of 2014.
Operating expenses were US$1.13million (RMB6.99
million) in the first quarter of 2015, as compared to
US$1.20 million in the fourth quarter
of 2014, representing a decrease of 6.3%.Operating
expenses reflected a decrease
of 68.5% from US$3.59 million in the
first quarter of 2014. The decrease in operating expenses as
compared to the first quarter of 2014 was mainly attributable to
(a) a significant decrease of staff costs by US$1.54 million as a result of headcount
reduction plan implemented earlier in 2014; (b) a decrease in
marketing and promotion expenses of US$0.24
million; and (c) a decrease in litigation settlement
expenses of US$0.14 million.
Operating loss was US$0.83 million (RMB5.14
million) in the first quarter of 2015, as compared
to operating loss of
US$0.12 million in the fourth quarter
of 2014 and US$4.72 million in the
first quarter of 2014.
Net loss was
US$0.83 million (RMB5.14 million) in the first quarter of 2015, as
compared to US$0.04 million in the
fourth quarter of 2013 and US$4.41
million in the first quarter of 2014.
Net loss per basic and diluted ADS was
US$0.02 (RMB0.11) in the first quarter of 2015, as
compared to US$0.00 in the fourth
quarter of 2014 and US$0.09 in the
first quarter of 2014. Weighted average ADSs used to calculate
basic and diluted net loss per ADS were 47.6 million in the first
quarter of 2015, 47.6 million in the fourth quarter of 2014 and
47.3 million in the first quarter of 2014.
As of March 31, 2015, the Company
had US$7.38 million (RMB45.73 million) in cash and cash equivalents,
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. The
US$4.84 million loan has been assumed
by Shanda Computer (Shanghai) Co.,
Ltd ("Shanda Computer") on May 12,
2015.
Liquidity and Going Concern
Substantial doubt exists as to the Company's ability to continue
as a going concern, primarily due to (a) uncertainties associated
with the amount of and growth in revenues from(i) an advertising
agency agreement with Huzhong, the Company's new third party
advertising agency since late August
2014, (ii) revenue sharing with Qinhe, a company controlled
by our previous significant shareholder Xudong Xu (the arrangements, described in the
Company's Form 20-F for the year ended December 31, 2014, have no certainty of being
continued following the Share Re-Acquisition Transaction described
below), and (iii) the amount of and growth in revenues from other
sources; and; (b) uncertainties as to the availability and timing
of additional financing with terms acceptable to the Company.
The unaudited consolidated financial statements included in this
news release do not include any adjustments that might result from
the outcome of these uncertainties and were prepared on the basis
of a going concern which contemplates that the Company will be able
to realize assets and discharge liabilities in the normal course of
business.
Recent Business Developments
Share Re-Acquisition Transaction between Shanda and Mr.
Xudong Xu
On May 11, 2015, the Company's
largest shareholder, Mr. Xudong Xu,
signed and consummated a share purchase agreement with Shanda Media
Group Limited ("Shanda Media"), a wholly owned subsidiary of Shanda
Interactive Entertainment Limited, to sell 1,938,360,784 ordinary
shares of the Company (amounting to approximately 40.7% of the
Company's issued and outstanding share capital) to Shanda Media
(the "Share Re-Acquisition Transaction"). In exchange for the
shares re-acquired by Shanda Media from Mr. Xu, Shanda Media
released Mr. Xu from a promissory note originally entered into on
April 3, 2014 pursuant to which Mr.
Xu had agreed to pay Shanda Media US$47,350,831.05 in exchange for the original
acquisition of the shares; For further information on the original
Share Purchase Transaction in which Mr. Xu had acquired the shares,
please refer to the Company's press release dated April 1,
2014.Subsequent to the consummation of the Share Re-Acquisition
Transaction, Shanda Media held approximately 70.0% of the Company's
shares and became the controlling shareholder of the Company.
Shareholder loan
On February 2, 2015, the Company
entered into a loan agreement with Mr. Xudong Xu, pursuant to which Mr. Xu agreed to
provide a loan of RMB30.0 million
(US$4.84 million) to the Company
within 20 business days from the date thereof. The term of the loan
is one year, and the loan bears interest at a rate of 6.5% per
annum. The Company received RMB30.0
million from Mr. Xu on March 4,
2015 and the Company recorded the shareholder's loan as a
related party loan at March 31,
2015.
After the closing of the Share Re-Acquisition Transaction as
described in the previous paragraph, Mr. Xudong Xu transferred all of the rights and
obligations relating to the shareholder's loan to Shanda Computer on May
12, 2015 in exchange for a payment of RMB 30.3 million, making Shanda Computer the counterparty to the
related party loan. The term of and rate associated with the loan
were not changed.
Advertising Agency Agreement with Huzhong
On August 29, 2014, the Company
entered into an advertising agency agreement with Huzhong, pursuant
to which Huzhong has agreed to act as the Company's exclusive
advertising agency for standard media resources and as its
non-exclusive advertising agency for highly interactive advertising
resources. According to the agreement, the Company has agreed to
guarantee a certain amount of web traffic per day for its webpage
on which Huzhong posts advertisements. In return, Huzhong
guarantees to the Company a minimum amount of advertising revenues
per day. The minimum guarantee amount under this agreement is
higher than that under the agency agreement with Shengyue (the
Company's previous advertising agent for a number of years)
terminated on August 28, 2014. If the
Company fails to meet the web traffic target, the minimum amount
guaranteed by Huzhong will be adjusted downward proportionally.
Huzhong will prepay 50% of the minimum guaranteed amounts with the
Company prior to the beginning of each month, and the balance will
be settled monthly. The advertising agency agreement started on
August 29, 2014 and will expire on
December 31, 2017.
The revenue from Huzhong decreased from US$2.52 million in the fourth quarter to
US$2.24 million in the first quarter
of 2015, as there were more public holidays in the first quarter of
a year which has negative impact on advertising revenues.
Revenue Sharing Cooperation with Qinhe
During the second quarter of 2014, the Company entered into two
revenue sharing agreements with related party Qinhe, a company
controlled by Mr. Xu. The agreements stipulate that the Company
will assist Qinhe by providing online game and interactive
entertainment marketing services. In exchange, the Company will
receive a portion of profit that is generated by Qinhe from Ku6's video viewers who join
Qinhe's games or video-shows after linking to them through
advertisements on the Company's websites. Profits are calculated as
revenues from the content provided by Qinhe, net of certain
operating costs.
A supplemental agreement was signed in the third quarter of
2014, pursuant to which Qinhe agreed to pay additional guaranteed
revenue amounts, stated in monthly terms, from July 2014 to December
2014. The guaranteed amounts and related terms, which were
intended to compensate Ku6 for its resource costs in operating the
relevant infrastructure, did not result in any changes to the
sharing terms in the original agreements. Pursuant to the
supplemental contract, the Company did receive guaranteed amounts
relating to 2014 operations in full from Qinhe in year of
2014.
As the supplemental agreement related to interactive
entertainment marketing services expired on December 31, 2014, the Company no longer received any guaranteed
revenues from Qinhe since the beginning of 2015. Subsequent to the
Share Re-acquisition Transaction between Shanda and Mr.
Xudong Xu, the revenue sharing with
Qinhehas continued under the original revenue sharing agreement,
which is still ongoing. However, there are still some uncertainties
that the original revenue
sharing agreement cannot be
continued following the change of share ownership and Mr. Xu's
control of Qinhe.
Change of Board Members
The Company announced the resignation of Mr. Haifa Zhu as
director of the board and all board committee positions which he
held. Mr. Mingfeng Chen was
appointed as director of the board and member of the compensation
and leadership development committee and the corporate development
and finance committee, effective as of June
12, 2015.
Mr. Mingfeng Chen has served on
our board of directors since June
2015. He also has served as a partner of Shanda Capital
since 2014. Prior to that, Mr. Chen served as the vice president of
Cloudary Corporation from 2010 to 2014 and as an associate director
in the legal department of Shanda Interactive from 2003 to
2010.Prior to joining Shanda Interactive, Mr. Chen worked in the
legal department of Lifan Industry (Group) for approximately two
years. Mr. Chen holds a bachelor's degree in law from Southwest
University of Political Science & Law.
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 service, 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.
Ku6 Media Co.,
Ltd.
|
Consolidated
Balance Sheets
|
(Amounts in
thousands,
except for number
of shares)
|
December
31,
2014
US$
|
March
31,
2015
US$
(Unaudited)
|
March
31,
2015
RMB
(Unaudited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
4,380
|
7,376
|
45,727
|
Accounts receivable,
net
|
114
|
309
|
1,916
|
Accounts receivable
due from related parties
|
1
|
1
|
6
|
Prepaid expenses and
other current assets
|
490
|
391
|
2,424
|
Other receivables due
from related parties
|
3
|
3
|
18
|
Total current
assets
|
4,988
|
8,080
|
50,091
|
Non-current
assets:
|
|
|
|
Property and
equipment, net
|
294
|
198
|
1,226
|
Deposits and other
non-current assets
|
348
|
348
|
2,159
|
TOTAL
ASSETS
|
5,630
|
8,626
|
53,476
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
3,076
|
2,928
|
18,152
|
Accounts payable due
to related parties
|
710
|
609
|
3,773
|
Accrued expenses and
other current liabilities
|
5,980
|
5,150
|
31,929
|
Related party loan
payable
|
-
|
4,839
|
30,000
|
Total
liabilities
|
9,766
|
13,526
|
83,854
|
|
|
|
|
Shareholders'
deficit:
|
|
|
|
Ordinary shares
(US$0.00005 par value;
12,000,000,000 shares
authorized; 4,763,360,860
shares issued and
outstanding as of December 31,
2014 and March 31,
2015)
|
238
|
238
|
1,476
|
Additional paid-in
capital
|
184,538
|
184,615
|
1,144,426
|
Accumulated
deficit
|
(187,096)
|
(187,925)
|
(1,164,949)
|
Accumulated other
comprehensive loss
|
(1,816)
|
(1,828)
|
(11,331)
|
Total
shareholders' deficit
|
(4,136)
|
(4,900)
|
(30,378)
|
TOTAL LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
5,630
|
8,626
|
53,476
|
Ku6 Media Co.,
Ltd.
|
Consolidated
Statements of Operations
|
|
For the Three
Months Ended
|
(Amounts in
thousands, except for number of shares and ADS and per share and
per ADS data)
|
March
31,
2014
|
December
31,
2014
|
March 31,
2015
|
March
31,
2015
|
US$
|
US$
|
US$
|
RMB
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Revenues:
|
|
|
|
|
Third
parties
|
102
|
2,519
|
2,348
|
14,556
|
Related
parties
|
2,704
|
946
|
-
|
-
|
Total
revenues
|
2,806
|
3,465
|
2,348
|
14,556
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
Third
parties
|
3,712
|
2,147
|
1,836
|
11,378
|
Related
parties
|
229
|
239
|
214
|
1,329
|
Total cost of
revenues
|
3,941
|
2,386
|
2,050
|
12,707
|
|
|
|
|
|
Gross
(loss)/profit
|
(1,135)
|
1,079
|
298
|
1,849
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Product
development
|
880
|
8
|
-
|
-
|
Sales and
marketing
|
454
|
175
|
192
|
1,190
|
General and
administrative
|
2,251
|
1,020
|
935
|
5,801
|
Total operating
expenses
|
3,585
|
1,203
|
1,127
|
6,991
|
|
|
|
|
|
Operating
loss
|
(4,720)
|
(124)
|
(829)
|
(5,142)
|
|
|
|
|
|
Interest
income
|
5
|
12
|
14
|
89
|
Other
income
|
302
|
73
|
12
|
72
|
Related party
interest expense
|
-
|
-
|
(26)
|
(161)
|
Loss before income
tax expense
|
(4,413)
|
(39)
|
(829)
|
(5,142)
|
|
|
|
|
|
Income tax expense
(benefit)
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Net
loss
|
(4,413)
|
(39)
|
(829)
|
(5,142)
|
|
|
|
|
|
Loss per share -
basic and diluted
|
|
|
|
|
Net loss
|
(US$0.00)
|
(US$0.00)
|
(US$0.00)
|
(RMB0.00)
|
|
|
|
|
|
Loss per ADS -
basic and diluted
|
|
|
|
|
Net loss
|
(US$0.09)
|
(US$0.00)
|
(US$0.02)
|
(RMB0.11)
|
|
|
|
|
|
Weighted average
shares used in per
share calculation-basic and
diluted
|
4,730,648,360
|
4,763,360,860
|
4,763,360,860
|
4,763,360,860
|
Weighted average ADSs
used in per
ADS calculation-basic and
diluted
|
47,306,484
|
47,633,609
|
47,633,609
|
47,633,609
|
Ku6 Media Co.,
Ltd.
|
Consolidated
Statements of Cash Flows
|
|
For the Three
Months Ended
|
(Amounts in
thousands)
|
March
31,
2014
|
December
31,
2014
|
March 31,
2015
|
March
31,
2015
|
US$
|
US$
|
US$
|
RMB
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Cash flows from
operating activities:
|
|
|
|
|
Net
loss
|
(4,413)
|
(39)
|
(829)
|
(5,142)
|
Adjustments to
reconcile net loss to net cash provided by
(used
in) operating activities:
|
|
|
|
|
Share-based
compensation expenses
|
240
|
144
|
76
|
473
|
Depreciation and
amortization
|
305
|
199
|
112
|
692
|
Gain on derecognition
of aged operating liabilities
|
(92)
|
-
|
(14)
|
(86)
|
Exchange losses
(gains)
|
54
|
84
|
(29)
|
(206)
|
Gain on disposal of
property and equipment
|
-
|
-
|
(71)
|
(437)
|
Changes in operating
assets and liabilities, net of acquisitions
and
dispositions:
|
|
|
|
|
Accounts
receivable
|
27
|
20
|
(195)
|
(1,210)
|
Prepaid expenses and
other current assets
|
20
|
32
|
99
|
614
|
Amount due from
related parties
|
4,947
|
816
|
-
|
-
|
Accounts
payable
|
559
|
(10)
|
(143)
|
(884)
|
Accrued expenses and
other current liabilities
|
714
|
123
|
(821)
|
(5,087)
|
Amount due to related
parties
|
140
|
231
|
(101)
|
(628)
|
Net cash provided
by (used in) operating activities
|
2,501
|
1,600
|
(1,916)
|
(11,901)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of property
and equipment
|
(192)
|
-
|
-
|
-
|
Proceeds from
disposal of property and equipment
|
-
|
-
|
71
|
437
|
Repayment of loans to
related parties under control of Shanda
|
484
|
-
|
-
|
-
|
Net cash provided
by investing activities
|
292
|
-
|
71
|
437
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Loan from related
party
|
-
|
-
|
4,839
|
30,000
|
Net cash provided
by financing activities
|
-
|
-
|
4,839
|
30,000
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(16)
|
7
|
2
|
11
|
Net increase in
cash and cash equivalents
|
2,777
|
1,607
|
2,996
|
18,547
|
Cash and cash
equivalents, beginning of period
|
1,671
|
2,773
|
4,380
|
27,180
|
Cash and cash
equivalents, end of period
|
4,448
|
4,380
|
7,376
|
45,727
|
Adjusted EBITDA
Loss
|
|
|
For the Three Months Ended
|
|
|
|
March
31,
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
|
|
2014
|
|
2014
|
|
2015
|
|
2015
|
|
|
|
US$
|
|
US$
|
|
US$
|
|
RMB
|
|
Net loss
|
|
(4,413)
|
|
(39)
|
|
(829)
|
|
(5,142)
|
|
Add back
(deduct):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
(5)
|
|
(12)
|
|
(14)
|
|
(89)
|
|
Depreciation and
amortization
|
|
305
|
|
199
|
|
112
|
|
692
|
|
EBITDA
loss
|
|
(4,113)
|
|
148
|
|
(731)
|
|
(4,539)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
240
|
|
144
|
|
76
|
|
473
|
|
Other income
|
|
(302)
|
|
(73)
|
|
(83)
|
|
(509)
|
|
Adjusted EBITDA
loss
|
|
(4,175)
|
|
219
|
|
(738)
|
|
(4,575)
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ku6-media-reports-unaudited-financial-results-for-the-first-quarter-of-fiscal-year-2015-300098318.html
SOURCE Ku6 Media Co., Ltd.