KU6 MEDIA CO LTD (ADR) 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
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.
Consolidated Balance Sheets
(Amounts in thousands, December 31, 2014 September 30, 2015 September 30, 2015
except for number of
shares) US$ US$ RMB
(Unaudited) (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$0.00005 par value;
12,000,000,000 shares
authorized; 4,763,360,860
and 4,771,610,860 shares
issued and outstanding as
of December 31, 2014 and
September 30, 2015,
respectively) 238 239 1,516
Additional paid-in capital 184,538 185,025 1,175,944
Accumulated deficit (187,096) (189,230) (1,202,670)
Accumulated other
comprehensive loss (1,816) (1,633) (10,380)
Total shareholders'
deficit (4,136) (5,599) (35,590)
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT 5,630 8,795 55,907
---------------------- ----- ----- ------
Ku6 Media Co., Ltd.
Consolidated Statements of Operations
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
(Amounts in thousands, except for number of shares and ADS
and per share and per ADS data) September 30, June 30, September 30, September 30, September 30, September 30, September 30,
2014 2015 2015 2015 2014 2015 2015
US$ 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$0.05) (RMB0.28)
Weighted average ADSs used in per ADS calculation - basic/
diluted 47,559,940 47,640,147 47,716,109 47,716,109 47,403,125 47,663,923 47,663,923
---------------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Ku6 Media Co., Ltd.
Consolidated Statements of Cash Flows
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
(Amounts in thousands) September 30, June 30, September 30, September 30, September 30, September 30, September 30,
2014 2015 2015 2015 2014 2015 2015
US$ 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
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SOURCE Ku6 Media Co., Ltd.
