KU6 MEDIA CO LTD (ADR) BEIJING, Jan. 21, 2016 /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 fourth quarter and year ended December 31, 2015.
Fourth Quarter 2015 Highlights((1))
-- Total revenues were US$3.72 million (RMB23.79 million) in the fourth
quarter of 2015, as compared to total revenues of US$2.45 million in the
third quarter of 2015 and US$3.47 million in the fourth quarter of 2014.
-- Net profit was US$0.08 million (RMB0.53 million) in the fourth quarter
of 2015, as compared to a net loss of US$0.64 million in the third
quarter of 2015 and US$0.04 million in the fourth quarter of 2014.
-- Basic and diluted profit per ADS was US$0.00 (RMB0.01) in the fourth
quarter of 2015, as compared to basic and diluted loss per ADS of
US$0.01 in the third quarter of 2015 and US$0.00 in the fourth quarter
of 2014.
-- Cash and cash equivalents were US$7.70 million as of December 31, 2015.
-- Net cash used in operating activities was US$0.22 million (RMB1.42
million) in the fourth quarter of 2015, as compared to net cash used in
operating activities of US$0.32 million in the third quarter of 2015 and
net cash provided by operating activities of US$1.60 million in the
fourth quarter of 2014.
Fiscal Year 2015 Highlights((1))
-- Total revenues were US$10.91 million (RMB68.61 million) in 2015, as
compared to total revenues of US$8.58 million in 2014.
-- Net loss was US$2.05 million (RMB12.77 million) in 2015, as compared to
a net loss of US$10.73 million in 2014.
-- Basic and diluted loss per ADS was US$0.04 (RMB0.27) in 2015, as
compared to basic and diluted loss per ADS of US$0.23 in 2014.
-- Net cash used in operating activities was US$1.46 million (RMB8.92
million) in 2015, as compared to net cash used in operating activities
of US$5.21 million in 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=RMB6.4778,
representing the noon buying rate as of December
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 December 31, 2015 or at
any other rate.
Recent Business Developments
New strategy in virtual reality
In the fourth quarter of 2015, management included virtual reality ("VR") as part of the Company's development strategies. In this regard, the Company has established a VR community on its website and its video social communities will serve as the core platform for users to experience this state-of-the-art technology. The Company is targeting a goal of becoming a leading VR content provider in the internet video industry.
For development of its VR community, management has started to look for investment opportunities in VR-related companies globally and the Company is negotiating with VR entities world-wide for potential M&A transactions and business cooperation opportunities.
Management Comments
Mr. Feng Gao, Chief Executive Officer of Ku6 Media, commented, "The fourth quarter of 2015 has marked a milestone in Ku6's history, as we achieved our first quarterly break-even and determined Ku6's new strategy for the years ahead, which is to become a leading virtual reality internet content provider. We have established a VR community during our fourth quarter of 2015, and started to negotiate with international VR entities for further cooperation. In addition, we also see great potential to use VR technology in advertising and operating video social communication businesses with an eye on improved user experience. I believe Ku6 will have an exciting year in 2016."
Fourth Quarter 2015 Financial Results
Total revenues were US$3.72 million in the fourth quarter of 2015, representing an increase of 51.8% from US$2.45 million in the third quarter of 2015 and an increase of 7.2% from US$3.47 million in the fourth quarter of 2014. The Company reported higher revenues due to increased volume from its advertising partners compared to the third quarter of 2015.
Cost of revenues was US$1.78 million in the fourth quarter of 2015, representing a decrease of 13.2% from US$2.05 million in the third quarter of 2015 and a decrease of 25.6% from US$2.39 million in the fourth quarter of 2014.
The decrease of US$0.61 million, or 25.6% in cost of revenues, as compared to the fourth quarter of 2014, was primarily due to (a) a decrease in bandwidth costs by US$0.26 million as the Company optimized bandwidth efficiency in 2015; (b) certain fixed assets were fully depreciated and there were no related depreciation expenses recorded in the fourth quarter of 2015, while depreciation expenses of these assets were US$0.18 million in the fourth quarter of 2014. These factors also contributed to the decrease from the third quarter of 2015.
Gross profit was US$1.94 million in the fourth quarter of 2015, as compared to US$0.40 million in the third quarter of 2015 and US$1.08 million in the fourth quarter of 2014.
Operating expenses were US$1.84 million in the fourth quarter of 2015, as compared to US$1.01 million in the third quarter of 2015, representing an increase of 82.2 %. Operating expenses reflected an increase of 53.3% from US$1.20 million in the fourth quarter of 2014.
The increase of US$0.64 million or 53.3% in operating expenses, as compared to the fourth quarter of 2014, was mainly attributed to an increase of marketing expenses by US$0.63 million as the Company added resources to motivate the advertising revenues in the fourth quarter of 2015. This also contributed to the increase in operating expenses from the third quarter of 2015.
Operating profit was US$0.11 million in the fourth quarter of 2015, as compared to operating loss of US$0.61 million in the third quarter of 2015 and operating loss of US$0.12 million in the fourth quarter of 2014.
Net profit was US$0.08 million in the fourth quarter of 2015, as compared to net loss of US$0.64 million in the third quarter of 2015 and net loss of US$0.04 million in the fourth quarter of 2014.
Net profit per basic and diluted ADS was US$0.00 in the fourth quarter of 2015, as compared to net loss per basic and diluted ADS of US$0.01 in the third quarter of 2015 and US$0.00 in the fourth quarter of 2014. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 47.7 million in the fourth quarter of 2015, 47.7 million in the third quarter of 2015 and 47.6 million in the fourth quarter of 2014.
Fiscal Year 2015 Financial Results
Total revenues were US$10.91 million in 2015, compared to US$8.58 million in 2014. The Company reported higher revenues in 2015 due to increased volume from its advertising partners compared to the year 2014.
Cost of revenues was US$8.04 million in 2015, representing 73.7% of total revenues, as compared to US$12.14 million, or 141.5% of revenues, in 2014.
The cost of revenues decreased by US$4.10 million or 33.8% in 2015 as a result of (1) a decrease in bandwidth costs by US$1.49 million as the Company optimized bandwidth efficiency in 2015; (b) a decrease in content costs of US$0.53 million as there being few content costs incurred in 2015; and (c) a decrease in staff costs by US$1.32 million as a result of headcount reductions in 2014.
Gross profit was US$2.86 million in 2015, as compared to a gross loss of US$3.56 million in 2014.
Operating expenses were US$5.03 million in 2015 as compared to US$9.42 million in 2014. The operating expenses significantly decreased by US$4.39 million or 46.6% in 2015 as a result of (a) a decrease of staff costs by US$2.62 million as a result of headcount reductions in mid 2014; (b) a decrease of office rental expenses by US$0.49 million as the Company reduced office space since the second quarter of 2015, and (c) a bad debt expenses of US$0.99 million incurred in 2014 compared to no such costs in 2015.
Operating loss was US$2.16 million in 2015 as compared to US$12.97 million in 2014.
Net loss was US$2.05 million in 2015 as compared to US$10.73 million in 2014.
Net loss per basic and diluted ADS was US$0.04 in 2015 as compared to US$0.23 in 2014. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 47.7 million in 2015 and 47.5 million in 2014.
Balance Sheet Highlights
As of December 31, 2015, the Company had US$7.70 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 RMB30 million (equals to US$4.84 million at the transaction date) extended from Mr. Xudong Xu, our previous significant shareholder in March 2015. On May 12, 2015, following our change of ownership, the RMB30 million loan was assumed by Shanda Computer (Shanghai) Co., Ltd ("Shanda Computer"), a wholly-owned subsidiary of Shanda Interactive Entertainment Limited.
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) other sources; and; (b) uncertainties as to the availability and timing of additional financing with terms acceptable to the Company.
The unaudited consolidated financial information 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.
Subsequent events
On January 8, 2016, the Company repaid RMB1.95 million to Shanda Computer, regarding the loan agreement signed in 2015 with original total principal of RMB30 million. After the repayment, the principal payable balance to Shanda Computer regarding the loan agreement decreased to RMB28.05 million.
In addition, on January 5, 2016, the Company entered into a new loan agreement with Shanda Technology Overseas Capital Company Limited ("Shanda Technology"), pursuant to which Shanda Technology agreed to provide a loan of US$0.3 million to the Company, which the Company has received.
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
ir@ku6.com
Investor Relations:
The Equity Group Inc.
Ms. Katherine Yao,
Senior Associate
Telephone: +86 10 6587 6435
kyao@equityny.com
Ku6 Media Co., Ltd.
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Consolidated Balance Sheets
---------------------------
(Amounts in thousands, December 31, December 31, December 31,
2014 2015 2015
except for number of shares)
US$ US$ RMB
(Unaudited) (Unaudited)
--- --- ---------- -----------
ASSETS
Current assets:
Cash and cash equivalents 4,380 7,698 49,866
Accounts receivable, net 114 91 592
Accounts receivable due from related parties 1 12 78
Prepaid expenses and other current assets 490 528 3,418
Other receivables due from related parties 3 - -
Total current assets 4,988 8,329 53,954
Non-current assets:
Property and equipment, net 294 515 3,333
Investment in equity affiliate - 169 1,092
Deposits and other non-current assets 348 -
TOTAL ASSETS 5,630 9,013 58,379
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable 3,076 2,824 18,294
Accounts payable due to related parties 710 913 5,911
Accrued expenses and other current liabilities 5,980 5,690 36,856
Related party loan payable - 4,631 30,000
Other payables due to related parties - 253 1,641
Total liabilities 9,766 14,311 92,702
Shareholders' deficit:
Ordinary shares (US$0.00005 par value; 238 239 1,545
12,000,000,000 shares authorized;
4,763,360,860 and 4,771,610,860 shares
issued and outstanding as of December 31,
2014 and 2015, respectively)
Additional paid-in capital 184,538 185,094 1,199,000
Accumulated deficit (187,096) (189,147) (1,225,257)
Accumulated other comprehensive loss (1,816) (1,484) (9,611)
Total shareholders' deficit (4,136) (5,298) (34,323)
TOTAL LIABILITIES AND SHAREHOLDERS' 5,630 9,013 58,379
DEFICIT
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Ku6 Media Co., Ltd.
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Consolidated Statements of Operations
-------------------------------------
For the Three Months Ended For the Twelve Months Ended
-------------------------- ---------------------------
(Amounts in thousands, December 31, September 30, December 31, December 31, December 31, December 31, December 31,
except for number of shares
and ADS and per share and 2014 2015 2015 2015 2014 2015 2015
per ADS data)
US$ US$ US$ RMB US$ US$ RMB
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Third parties 2,519 2,413 3,642 23,541 4,267 10,787 68,355
Related parties 946 40 81 251 4,317 121 251
Total revenues 3,465 2,453 3,723 23,792 8,584 10,908 68,606
Cost of revenues:
Third parties 2,147 1,835 1,780 11,374 11,231 7,387 46,333
Related parties 239 215 - - 910 657 4,101
Total cost of revenues 2,386 2,050 1,780 11,374 12,141 8,044 50,434
Gross profit / (loss) 1,079 403 1,943 12,418 (3,557) 2,864 18,172
Operating expenses:
Product development 8 - - - 1,385 - -
Sales and marketing 175 288 1,053 6,729 942 1,805 11,419
General and administrative 1,020 722 782 4,999 7,088 3,223 20,213
Total operating expenses 1,203 1,010 1,835 11,728 9,415 5,028 31,632
Operating profit/(loss) (124) (607) 108 690 (12,972) (2,164) (13,460)
Interest income 12 52 60 384 47 187 1,181
Other income/expenses 73 5 (2) (11) 745 204 1,257
Interest expense - related - (79) (78) (498) - (261) (1,640)
party loan
Gain from disposal of equity - - - - 1,452 - -
interest in affiliates
Equity in loss of affiliate - (12) (5) (34) - (17) (107)
Profit/(loss) before income (39) (641) 83 531 (10,728) (2,051) (12,769)
tax benefit
Income tax benefit - - - - - - -
Net profit/(loss) (39) (641) 83 531 (10,728) (2,051) (12,769)
Loss per share - basic and diluted
Net profit/(loss) (US$0.00) (US$0.00) US$0.00 RMB0.00 (US$0.00) (US$0.00) (RMB0.00)
Weighted average shares used 4,763,369,860 4,771,610,860 4,771,610,860 4,771,610,860 4,746,450,872 4,767,742,804 4,767,742,804
in per share calculation --
basic/diluted
Loss per ADS - basic and diluted
Net profit/(loss) (US$0.00) (US$0.01) US$0.00 RMB0.01 (US$0.23) (US$0.04) (RMB0.27)
Weighted average ADSs used in 47,633,609 47,716,109 47,716,109 47,716,109 47,464,509 47,677,428 47,677,428
per ADS calculation --
basic/diluted
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Ku6 Media Co., Ltd.
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Consolidated Statements of Cash Flows
-------------------------------------
For the Three Months Ended For the Twelve Months Ended
-------------------------- ---------------------------
(Amounts in thousands) December 31, September 30, December 31, December 31, December 31, December 31, December 31,
2014 2015 2015 2015 2014 2015 2015
US$ US$ US$ RMB US$ US$ RMB
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net profit/(loss) (39) (641) 83 531 (10,728) (2,051) (12,769)
Share-based compensation expenses 144 78 69 445 601 282 1,827
Depreciation and amortization 199 73 263 1,702 1,048 555 3,595
Equity in loss of affiliated company - 12 5 35 - 17 110
Bad debt provision - - - - 988 - -
Gain on derecognition of aged - - - - (207) (14) (91)
operating liabilities
Exchange losses/(gains) 84 56 52 341 225 (367) (2,377)
Gain on disposal of property and - (24) (1) (7) - (115) (745)
equipment
Gain from disposal of equity interest - - - - (1,452) - -
in affiliates
Changes in assets and liabilities, net of
acquisitions and dispositions:
Accounts receivable 20 86 (7) (45) (1,037) 23 149
Prepaid expenses and other current 32 (116) 42 274 (104) (38) (246)
assets
Amount due from related parties 816 (22) 14 90 6,564 (11) (71)
Deposits and other non-current - - - (9) 348 2,254
assets
Accounts payable (10) (351) (341) (2,208) (676) (252) (1,632)
Accrued expenses and other current 123 642 (26) (171) (1,207) (290) (1,879)
liabilities
Amount due to related parties 231 (108) (372) (2,410) 784 456 2,954
Net cash provided by (used in) 1,600 (315) (219) (1,423) (5,210) (1,457) (8,921)
operating activities
Cash flows from investing activities:
Purchases of property and equipment - (1) (2) (12) (210) (16) (104)
Proceeds from disposal of property and - 24 1 7 2 115 745
equipment
Repayment of loans from related parties - - - - 499 - -
controlled by Shanda
Proceeds from disposal of equity - - - - 1,452 - -
interest in affiliates
Net cash provided by (used in) - 23 (1) (5) 1,743 99 641
investing activities
Cash flows from financing activities:
Proceeds from exercise of stock options - - - - 339 13 84
Borrowings from related parties - - - - 5,847 4,631 30,000
controlled by Shanda
Net cash provided by financing - - - - 6,186 4,644 30,084
activities
Effect of exchange rate changes on cash 7 20 12 1,044 (10) 32 882
and cash equivalents
Net increase (decrease) in cash and 1,607 (272) (208) (384) 2,709 3,318 22,686
cash equivalents
Cash and cash equivalents, beginning of 2,773 8,178 7,906 50,250 1,671 4,380 27,180
period
Cash and cash equivalents, end of 4,380 7,906 7,698 49,866 4,380 7,698 49,866
period
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SOURCE Ku6 Media Co., Ltd.
