KU6 Media CO., Ltd. (KUTV)

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NEWS: Ku6 Media Reports Unaudited-Financial-Results for-the Third-Quarter of Fiscal Year 2014

Last update: 06/02/2015 6:18:12 am


Ku6 Media Reports Unaudited Financial Results for the Third Quarter of Fiscal Year 2014

PR Newswire

BEIJING, Feb. 6, 2015

BEIJING, Feb. 6, 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 third quarter of fiscal year 2014 ended September 30, 2014.

Third Quarter 2014 Highlights (1)
-- Total revenues were US$1.62 million (RMB9.92 million) in the third
quarter of 2014, as compared to total revenues of US$0.70 million in the
second quarter of 2014 and US$3.40 million in the third quarter of 2013.

-- GAAP net loss was US$0.93million (RMB5.72 million), as compared to a net
loss of US$5.34 million in the second quarter of 2014 and US$3.44 million
in the third quarter of 2013. Non-GAAP net loss, which the Company
defines as net loss excluding expenses (benefits) associated with
share-based compensation, was US$0.76 million (RMB4.68 million) in the
third quarter of 2014, as compared to non-GAAP net loss of US$5.30million
in the second quarter of 2014 and US$3.14 million in the third quarter of
2013.

-- Basic and diluted loss per ADS was US$0.02(RMB0.12) in the third quarter
of 2014, as compared to US$0.11 in the second quarter of 2014 and US$0.07
in the third quarter of 2013.

-- Cash and cash equivalents were US$2.77million (RMB17.02 million) as of
September 30, 2014.

-- Net cash used in operating activities was US$3.00 million (RMB18.39
million) in the third quarter of 2014, as compared to net cash used in
operating activities of US$6.27 million in the second quarter of 2014 and
net cash used in operating activities of US$3.86 million in the third
quarter of 2013.

(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=RMB6.1380,representing the noon buying rate as of September30, 2014
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, 2014, or at any other rate.


"It's my pleasure to announce Ku6's earnings release for the third quarter of 2014," Mr. Xudong Xu, Chief Executive Officer of Ku6 Media, commented. "After the reduction of labor and CDN costs in the second quarter of 2014, we entered into a new advertising agency agreement with Huzhong in August which allowed us to realize higher revenue and enjoy better cash collection terms. As a result, we significantly narrowed our operating cash deficit by the end of the quarter and we are now forecasting a better operating cash flow in the next year."

Third Quarter 2014 Financial Results

Total revenues were US$1.62 million (RMB9.92 million) in the third quarter of 2014, representing an increase of 132.2% from US$0.70 million in the second quarter of 2014 and a decrease of 52.5% from US$3.40 million in the third quarter of 2013. The increase in revenues as compared to the second quarter of 2014 was due to an increase in third party advertising revenues and related party revenues from the Company's arrangements with Qinhe.

Cost of revenues was US$2.48 million (RMB15.24million) in the third quarter of 2014, representing a decrease of 25.5% from US$3.31 million in the second quarter of 2014 and a decrease of 32.8% from US$3.69 million in the third quarter of 2013. The decrease in cost of revenues as compared to the second quarter of 2014 was primarily due to decreased bandwidth costs and labor costs as a result of cost reduction measures.

Gross loss was US$0.87million (RMB5.32 million) in the third quarter of 2014, as compared to a gross loss of US$2.64 million in the second quarter of 2014 and a gross loss of US$0.29 million in the third quarter of 2013. Non-GAAP gross loss, which is herein defined as a gross loss excluding expenses (benefits) associated with share-based compensation, was US$0.83million (RMB5.11 million) in the third quarter of 2014, as compared to a non-GAAP gross loss of US$2.60 million in the second quarter of 2014 and a non-GAAP gross loss of US$0.25 million in the third quarter of 2013.

Operating expenses were US$1.60 million (RMB9.82 million) in the third quarter of 2014, representing a decrease of 47.2% from US$3.03 million in the second quarter of 2014 and a decrease of 61.1% from US$4.12 million in the third quarter of 2013. Non-GAAP operating expenses, which are defined as operating expenses excluding expenses (benefits) associated with share-based compensation, were US$1.47 million (RMB9.00 million) in the third quarter of 2014, as compared to non-GAAP operating expenses of US$3.02 million in the second quarter of 2014 and US$3.86 million in the third quarter of 2013. The decrease in operating expenses as compared to the second quarter of 2014 was mainly attributable to (i)the effect of severance pay in relation to the Company's headcount reduction plan started in April and (ii) a second quarter charge to provide an allowance of US$0.92 million (RMB5.71 million) for accounts receivable due from Shengyue, the Company's previous exclusive advertising agency, which originated during the period of time Shengyue was owned by Shanda Interactive for which collection was assessed to be remote.

Operating loss was US$2.47 million (RMB15.14 million) in the third quarter of 2014, representing a decrease of 56.4% from US$5.66 million in the second quarter of 2014 and a decrease of 44.0% from US$4.40 million in the third quarter of 2013. Non-GAAP operating loss, which reflects the exclusion of expenses (benefits) associated with share-based compensation, was US$2.30million (RMB14.11 million) in the third quarter of 2014, as compared to the non-GAAP operating loss of US$5.62 million in the second quarter of 2014 and US$4.10 million in the third quarter of 2013.

Net loss was US$0.93 million (RMB5.72 million) in the third quarter of 2014, representing a decrease of 82.6% from US$5.34 million in the second quarter of 2014 and a decrease of 72.9% from US$3.44 million in the third quarter of 2013.Non-GAAP net loss, which reflects the exclusion of expenses (benefits) associated with share-based compensation, was US$0.76 million (RMB4.68 million) in the third quarter of 2014, as compared to US$5.30 million in the second quarter of 2014 and US$3.14 million in the third quarter of 2013. The decrease in net loss as compared to the second quarter of 2014 was primarily attributable to the increase in revenues, the decrease in cost of revenues, the decrease in operating expenses, and a US$1.45 million (RMB8.91 million) gain from the disposal of the Company's equity interest in an affiliate to a third party company.

Net loss per basic and diluted ADS was US$0.02(RMB0.12) in the third quarter of 2014, as compared to US$0.11 in the second quarter of 2014 and US$0.07 in the third quarter of 2013. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 47.6 million in the third quarter of 2014, 47.3 million in the second quarter of 2014and 47.3 million in the third quarter of 2013.

Adjusted EBITDA loss, which is herein defined as net loss before interest income, interest expense, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses (benefits), other non-operating items, and the gain from disposal of an equity interest in an affiliate was US$2.05 million (RMB12.55million) in the third quarter of 2014, as compared to adjusted EBITDA loss of US$5.33 million in the second quarter of 2014 and US$3.31 million in the third quarter of 2013.

As of September 30, 2014, the Company had US$2.77 million (RMB17.02 million) in cash and cash equivalents, compared to US$4.24 million as of June 30, 2014. The decrease in cash and cash equivalents was primarily attributable to US$3.00 million (RMB18.39 million) of net cash outflows for operating activities, partially offset by proceeds from the disposal of an equity interest in an affiliate in the amount of US$1.45 million (RMB8.91 million).

Liquidity and Going Concern

Substantial doubt exists as to the Company's ability to continue as a going concern, primarily due to uncertainties regarding (1) the Company's ability to continue to improve operating cash inflows, which depend on growth in revenues from (i) Huzhong, the Company's new third party advertising agency since late August 2014, and (ii) two cooperation agreements with related party Qinhe; (2) the Company's ability to reduce its operating cash outflows; and (3) the availability and timing of additional financing with terms acceptable to the Company. Growth in the Company's operating cash inflows is principally dependent upon achieving revenue growth from successful cooperation with Huzhong and Qinhe as well as other efforts to expand sources of revenue.

The unaudited consolidated financial information included in this news release does not include any adjustments that might result from the outcome of these uncertainties and was 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

Advertising Agency Agreement with Shengyue

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