BEIJING, Sept. 18, 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 second quarter of fiscal year 2015, ended
June 30, 2015.
Second 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 agent for highly interactive advertising
resources.
- Total revenues were US$2.38
million (RMB14.80 million) in
the second quarter of 2015, as compared to total revenues of
US$2.35 million in the first quarter
of 2015 and US$0.70 million in the
second quarter of 2014.
- Net loss was US$0.67 million
(RMB4.12 million), as compared to a
net loss of US$0.83 million in the
first quarter of 2015 and US$5.34
million in the second quarter of 2014.
- Basic and diluted loss per ADS was US$0.01 (RMB0.09)
in the second quarter of 2015, as compared to US$0.02 in the first quarter of 2015 and
US$0.11 in the second quarter of
2014.
- Cash and cash equivalents were US$8.18
million (RMB50.70 million) as
of June 30, 2015.
- Net cash provided by operating activities was US$0.78 million (RMB4.78
million) in the second quarter of 2015, as compared to net
cash used in operating activities of US$1.92
million in the first quarter of 2015 and net cash used in
operating activities of US$6.27
million in the second quarter of 2014.
- During the second quarter of 2015, Shanda Interactive
Entertainment Limited, via its affiliates, reassumed the role of
the major shareholder of the Company via a share re-acquisition
transaction involving Mr. Xudong Xu,
a former significant shareholder and former CEO of the
Company. See "Recent Business Developments" of this news
release.
(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=RMB6.2000, representing the noon
buying rate as of June 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
June 30, 2015, or at any other rate.
|
"It's my pleasure to announce Ku6's earning release for the
second quarter of 2015", Mr. Feng
Gao, Chief Executive Officer of Ku6 Media, commented. "In
the second quarter of 2015, Ku6 Media generated revenues stably and
successfully lowered down loss as compared to last quarter. On the
based of maintaining stable revenues and low operation costs of
current business, we have expanded our business to video social
communication and related field since the second half of 2015. We
expect that the new business will bring opportunities for revenue
growth in the future".
Second quarter 2015 Financial Results
Total revenues were US$2.38
million (RMB14.80 million) in
the second quarter of 2015, representing an increase of 1.5% from
US$2.35 million in the first quarter
of 2015 and an increase of 242.6% from US$0.70 million in the second quarter of
2014.
The significant increase in revenue as compared to the second
quarter 2014 was mainly attributable to: (a) before August 29, 2014, Shanghai Shengyue Advertising
Ltd ("Shengyue") acted as the exclusive advertising agent for our
major media resources, and the billing rate with Shengyue was much
lower than the rate with our current advertising agent Huzhong; (b)
the billing volume with Shengyue in second quarter of 2014 was also
much lower than the volume with Huzhong in the second quarter of
2015.
Cost of revenues was US$2.17 million (RMB13.43
million) in the second quarter of 2015, representing an
increase of 5.6% from US$2.05 million
in the first quarter of 2015 and a decrease of 35.0% from
US$3.33 million in the second quarter
of 2014.
The decrease in cost of revenues as compared to the second
quarter of 2014 was primarily due to (a) a decrease in bandwidth
costs by US$0.33 million as we
optimized bandwidth efficiency in 2015; (b) a decrease of staff
costs by US$0.81 million as a result
of a headcount reduction plan, which has started since April 2014 and was largely completed by
June 2014.
Gross profit was US$0.22 million (RMB1.36
million) in the second quarter of 2015, as compared to gross
profit of US$0.30 million in the
first quarter of 2015 and gross loss of US$2.64 million in the second quarter of
2014.
Operating expenses were US$1.06 million (RMB6.55
million) in the second quarter of 2015, as compared to
US$1.13 million in the first quarter
of 2015, representing a decrease of 6.4%. Operating expenses
reflected a decrease of 65.1% from US$3.03
million in the second quarter of 2014.
The decrease in operating expenses as compared to the second
quarter of 2014 was mainly attributable to (a) a significant
decrease of staff costs by US$0.93
million as a result of the headcount reduction plan referred
to above and (b) US$0.93 million of
bad debt expenses incurred in the second quarter of 2014.
Operating loss was US$0.84 million (RMB5.19
million) in the second quarter of 2015, as compared to
operating loss of US$0.83 million in
the first quarter of 2015 and US$5.66
million in the second quarter of 2014.
Net loss was US$0.67
million (RMB4.12 million) in
the second quarter of 2015, as compared to US$0.83 million in the first quarter of 2015 and
US$5.34 million in the second quarter
of 2014.
Net loss per basic and diluted ADS was
US$0.01 (RMB0.09) in the second quarter of 2015, as
compared to US$0.02 in the first
quarter of 2015 and US$0.11 in the
second quarter of 2014. Weighted average ADSs used to calculate
basic and diluted net loss per ADS were 47.6 million in the second
quarter of 2015, 47.6 million in the first quarter of 2015 and 47.3
million in the second quarter of 2014.
As of June 30, 2015, the Company
had US$8.18 million (RMB50.70 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, in March 2015. 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, on May 12, 2015 following
our change of ownership (see "Recent Business Developments").
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 agent since late August
2014, (ii) 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
then significant 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; contemporaneously, Mr. Xu
ceased to be a shareholder and no longer holds any of the Company's
shares.
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 on March 31,
2015.
After the closing of the Share Re-Acquisition Transaction, Mr.
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 terms of and the 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 agent 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 was US$2.18
million in the second quarter of 2015, as compared
US$2.24 million in the first quarter
of 2015.
New Business on Video Social Communication
On the base of maintaining stable revenue of current business,
we started to expand our business to explore opportunities for
revenue growth. In July, 2015, we entered into a cooperation
agreement with Beijing Kaitexiu Culture & Art Co., Ltd. and
Beijing Jingying TM Performing Arts and Culture Media Co., Ltd.,
pursuant to which the parties set up a media company, Beijing Modo
Media Co., Ltd. ("Beijing Modo"). We have 30% equity interest in
Beijing Modo. Beijing Modo will focus on video social communication
business. In addition, in August
2015, we also entered into a cooperation agreement with
Beijing Modo, according to which we will share a certain percentage
of its revenue as compensation for traffic promotion provided by
us.
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$
|
June 30, 2015 US$ (Unaudited)
|
June 30,
2015 RMB (Unaudited)
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
4,380
|
8,178
|
50,701
|
Accounts receivable,
net
|
114
|
171
|
1,059
|
Accounts receivable
due from related parties
|
1
|
1
|
6
|
Prepaid expenses and
other current assets
|
490
|
454
|
2,815
|
Other receivables due
from related parties
|
3
|
3
|
18
|
Total current
assets
|
4,988
|
8,807
|
54,599
|
Non-current
assets:
|
|
|
|
Property and
equipment, net
|
294
|
106
|
655
|
Deposits and other
non-current assets
|
348
|
-
|
-
|
TOTAL
ASSETS
|
5,630
|
8,913
|
55,254
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
3,076
|
3,516
|
21,797
|
Accounts payable due
to related parties
|
710
|
620
|
3,841
|
Accrued expenses and
other current liabilities
|
5,980
|
5,254
|
32,575
|
Related party loan
payable
|
-
|
4,839
|
30,000
|
Other payables due to
related parties
|
-
|
104
|
645
|
Total
liabilities
|
9,766
|
14,333
|
88,858
|
|
|
|
|
Shareholders'
deficit:
|
|
|
|
Ordinary shares
(US$0.00005 par value; 12,000,000,000 shares authorized;
4,763,360,860 and 4,771,610,860 shares issued and outstanding as of
December 31, 2014 and June 30, 2015, respectively)
|
238
|
239
|
1,479
|
Additional paid-in
capital
|
184,538
|
184,758
|
1,145,504
|
Accumulated
deficit
|
(187,096)
|
(188,590)
|
(1,169,262)
|
Accumulated other
comprehensive loss
|
(1,816)
|
(1,827)
|
(11,325)
|
Total
shareholders' deficit
|
(4,136)
|
(5,420)
|
(33,604)
|
TOTAL LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
5,630
|
8,913
|
55,254
|
Ku6 Media Co.,
Ltd.
|
Consolidated
Statements of Operations
|
|
|
For the Three
Months Ended
|
For the Six Months
Ended
|
(Amounts in
thousands, except for number of shares and ADS and per share and
per ADS data)
|
June 30, 2014
|
March 31, 2015
|
June 30, 2015
|
June 30, 2015
|
June 30, 2014
|
June 30, 2015
|
June 30, 2015
|
US$
|
US$
|
US$
|
RMB
|
US$
|
US$
|
RMB
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
Third
parties
|
696
|
2,348
|
2,384
|
14,795
|
798
|
4,732
|
29,351
|
Related
parties
|
-
|
-
|
-
|
-
|
2,704
|
-
|
-
|
Total
revenues
|
696
|
2,348
|
2,384
|
14,795
|
3,502
|
4,732
|
29,351
|
|
|
|
|
|
|
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
Third
parties
|
3,100
|
1,836
|
1,937
|
12,018
|
6,812
|
3,772
|
23,395
|
Related
parties
|
231
|
214
|
228
|
1,413
|
460
|
442
|
2,743
|
Total cost of
revenues
|
3,331
|
2,050
|
2,165
|
13,431
|
7,272
|
4,214
|
26,138
|
|
|
|
|
|
|
|
|
Gross profit /
(loss)
|
(2,635)
|
298
|
219
|
1,364
|
(3,770)
|
518
|
3,213
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Product
development
|
479
|
-
|
-
|
-
|
1,359
|
-
|
-
|
Sales and
marketing
|
168
|
192
|
272
|
1,686
|
622
|
464
|
2,876
|
General and
administrative
|
2,381
|
935
|
784
|
4,864
|
4,632
|
1,719
|
10,664
|
Total operating
expenses
|
3,028
|
1,127
|
1,056
|
6,550
|
6,613
|
2,183
|
13,540
|
|
|
|
|
|
|
|
|
Operating
loss
|
(5,663)
|
(829)
|
(837)
|
(5,186)
|
(10,383)
|
(1,665)
|
(10,327)
|
|
|
|
|
|
|
|
|
Interest
income
|
24
|
14
|
61
|
380
|
29
|
75
|
469
|
Other
income
|
295
|
12
|
189
|
1,162
|
597
|
201
|
1,234
|
Interest expense due to related party
|
-
|
(26)
|
(78)
|
(482)
|
-
|
(104)
|
(644)
|
Loss before income
tax benefit
|
(5,344)
|
(829)
|
(665)
|
(4,126)
|
(9,757)
|
(1,493)
|
(9,268)
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Net
loss
|
(5,344)
|
(829)
|
(665)
|
(4,126)
|
(9,757)
|
(1,493)
|
(9,268)
|
|
|
|
|
|
|
|
|
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
|
4,734,016,675
|
4,763,360,860
|
4,764,014,706
|
4,764,014,706
|
4,732,341,822
|
4,763,689,589
|
4,763,689,589
|
|
|
|
|
|
|
|
|
Loss per ADS -
basic and diluted
|
|
|
|
|
|
|
|
Net loss
|
(US$0.11)
|
(US$0.02)
|
(US$0.01)
|
(RMB0.09)
|
(US$0.21)
|
(US$0.03)
|
(RMB0.19)
|
Weighted average ADSs
used in per ADS calculation – basic/diluted
|
47,340,167
|
47,633,609
|
47,640,147
|
47,640,147
|
47,323,418
|
47,636,896
|
47,636,896
|
|
|
|
|
|
|
|
|
|
|
|
Ku6 Media Co.,
Ltd.
|
Consolidated
Statements of Cash Flows
|
|
|
For the Three
Months Ended
|
For the Six Months
Ended
|
(Amounts in
thousands)
|
June 30, 2014
|
March 31, 2015
|
June 30,
2015
|
June 30, 2015
|
June 30, 2014
|
June 30, 2015
|
June 30, 2015
|
US$
|
US$
|
US$
|
RMB
|
US$
|
US$
|
RMB
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
(5,344)
|
(829)
|
(665)
|
(4,126)
|
(9,757)
|
(1,493)
|
(9,268)
|
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
48
|
76
|
59
|
366
|
288
|
135
|
839
|
Depreciation and
amortization
|
289
|
112
|
107
|
663
|
594
|
219
|
1,355
|
Bad debt
provision
|
931
|
-
|
-
|
-
|
931
|
-
|
-
|
Gain on derecognition
of aged operating liabilities
|
(106)
|
(14)
|
-
|
-
|
(198)
|
(14)
|
(86)
|
Exchange losses
(gains)
|
(11)
|
(29)
|
3
|
29
|
43
|
(26)
|
(178)
|
Gain on disposal of
property and equipment
|
-
|
(71)
|
(19)
|
(115)
|
-
|
(90)
|
(552)
|
Changes in assets and
liabilities, net of acquisitions and dispositions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(923)
|
(195)
|
138
|
857
|
(896)
|
(57)
|
(353)
|
Prepaid expenses and
other current assets
|
66
|
99
|
9
|
56
|
86
|
108
|
672
|
Amount due from
related parties
|
1,387
|
-
|
-
|
-
|
6,334
|
-
|
-
|
Deposits and other
non-current assets
|
(18)
|
-
|
348
|
2,159
|
(18)
|
348
|
2,159
|
Accounts
payable
|
(854)
|
(143)
|
585
|
3,628
|
(295)
|
442
|
2,744
|
Accrued expenses and
other current liabilities
|
(1,965)
|
(821)
|
130
|
804
|
(1,251)
|
(691)
|
(4,283)
|
Amount due to related
parties
|
234
|
(101)
|
89
|
550
|
374
|
(12)
|
(78)
|
Net cash provided
by (used in) operating activities
|
(6,266)
|
(1,916)
|
784
|
4,871
|
(3,765)
|
(1,131)
|
(7,029)
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
-
|
-
|
(13)
|
(79)
|
(192)
|
(13)
|
(79)
|
Proceeds from
disposal of property and equipment
|
-
|
71
|
19
|
115
|
-
|
90
|
552
|
Loan repayments from
related parties controlled by Shanda
|
-
|
-
|
-
|
-
|
484
|
-
|
-
|
Net cash provided
by investing activities
|
-
|
71
|
6
|
36
|
292
|
77
|
473
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
exercise of stock options
|
262
|
-
|
13
|
80
|
262
|
13
|
80
|
Borrowings from
former shareholder
|
-
|
4,839
|
-
|
-
|
-
|
4,839
|
30,000
|
Borrowings from
related parties controlled by Shanda
|
5,797
|
-
|
-
|
-
|
5,797
|
-
|
-
|
Net cash provided
by (used in) financing activities
|
6,059
|
4,839
|
13
|
80
|
6,059
|
4,852
|
30,080
|
Effect of exchange
rate changes on cash and cash equivalents
|
(1)
|
2
|
(1)
|
(13)
|
(17)
|
-
|
(3)
|
Net increase
(decrease) in cash and cash equivalents
|
(208)
|
2,996
|
802
|
4,974
|
2,569
|
3,798
|
23,521
|
Cash and cash
equivalents, beginning of period
|
4,448
|
4,380
|
7,376
|
45,727
|
1,671
|
4,380
|
27,180
|
Cash and cash
equivalents, end of period
|
4,240
|
7,376
|
8,178
|
50,701
|
4,240
|
8,178
|
50,701
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ku6-media-reports-unaudited-financial-results-for-the-second-quarter-of-fiscal-year-2015-300145481.html
SOURCE Ku6 Media Co., Ltd.