UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of: December 2012
Commission File Number: 000-51116
Ku6 Media Co., Ltd.
(Exact name of registrant as specified in its charter)
Building 6, Zhengtongchuangyi Centre
No. 18, XibaheXili, Chaoyang District,
Beijing 100020, People’s Republic of China
Fax number: +86 10 57586834
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-N.A.
Ku6 Media Reports Unaudited Financial Results
For the Third Quarter of Fiscal Year 2012
BEIJING, China, December 7, 2012 — 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 2012, ended September 30, 2012.
Third Quarter 2012 Highlights(1)
| • | Total revenues were US$3.06 million (RMB19.21 million) in the third quarter of 2012, representing an increase of 0.9% from US$3.03 million in the second quarter of 2012 and a decrease of 27.7% from US$4.23 million in the third quarter of 2011. |
| • | GAAP net loss was US$3.25 million (RMB20.43 million), as compared to a net loss of US$1.47 million in the second quarter of 2012 and US$12.98 million in the third quarter of 2011. Non-GAAP net loss, which the Company defines as net loss excluding share-based compensation expenses, was US$3.26 million (RMB20.46 million) in the third quarter of 2012, as compared to non-GAAP net loss of US$1.53 million in the second quarter of 2012 and US$12.52 million in the third quarter of 2011. |
| • | Basic and diluted loss per ADS was US$0.07 (RMB0.44) in the third quarter of 2012, as compared to US$0.03 in the second quarter of 2012 and US$0.26 in the third quarter of 2011. |
| • | Cash and cash equivalents were US$12.55 million (RMB78.84 million) as of September 30, 2012. |
| • | Net cash used in operating activities was US$1.92 million (RMB12.07 million) in the third quarter of 2012, as compared to US$1.41 million in the second quarter of 2012 and US$8.81 million in the third quarter of 2011. |
| • | In July 2012, the Company paid US$8.07 million (RMB50.73 million) to repurchase and immediately retire an aggregate of 269,409,276 ordinary shares and 79,717 ADSs. |
| (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=RMB6.2848, representing the noon buying rate as of September 28, 2012 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 28, 2012, or at any other rate. |
Mr. Jeff Shi, Chief Executive Officer of Ku6 Media, commented, “I am pleased to announce our third quarter’s earnings release. We have been focused on creating an interactive online video community based on our value generating user base and devoted to improving our user experience by improving our community. During the third quarter, we launched user growth system, revamped our major website, optimized the search and recommendation functions, and also enhanced our CDN system. Both the quality and quantity of our value generating users have been growing rapidly.”
2
Third Quarter 2012 Financial Results
Total revenueswere US$3.06 million (RMB19.21 million) in the third quarter of 2012, representing an increase of 0.9% from US$3.03 million in the second quarter of 2012 and a decrease of 27.7% from US$4.23 million in the third quarter of 2011.
In the second quarter of 2011, the Company started to generate advertising revenues primarily from performance advertising services using a system called Application Advertisement (“AA”). The performance advertising revenue was realized through an affiliated advertising agent which is under common control of Shanda Interactive Entertainment Limited, the Company’s majority shareholder. The Company generated 94.6% of total revenues in the third quarter of 2012 through this affiliated advertising agent, as compared to 94.8% of total revenues in the second quarter of 2012.
Cost of revenueswere US$3.66 million (RMB23.02 million) in the third quarter of 2012, remained flat compared to the second quarter of 2012, decreased 33.2% from US$5.48 million in the third quarter of 2011.Gross losswas US$0.61 million (RMB3.81 million) in the third quarter of 2012, as compared to a gross loss of US$0.63 million in the second quarter of 2012 and a gross loss of US$1.25 million in the third quarter of 2011.Non-GAAP gross loss, which is herein defined as a gross loss excluding share-based compensation expenses, was US$0.58 million (RMB3.63 million) in the third quarter of 2012, as compared to a non-GAAP gross loss of US$0.66 million in the second quarter of 2012 and US$1.22 million in the third quarter of 2011.
Operating expenses were US$2.85 million (RMB17.91 million) in the third quarter of 2012, representing an increase of 73.3% from US$1.64 million in the second quarter of 2012 and a decrease of 74.7% from US$11.28 million in the third quarter of 2011.Non-GAAP operating expenses, which is herein defined as operating expenses excluding share-based compensation expenses, were US$2.88 million (RMB18.11 million) in the third quarter of 2012, as compared to non-GAAP operating expenses of US$1.67 million in the second quarter of 2012 and US$10.85 million in the third quarter of 2011. The sequential increase was mainly attributable to (1) a net increase of US$0.61 million (RMB 3.82 million) in litigation expenses due to the second quarter reversal of accrued liabilities related to favorable settlements of copyright infringement and (2) a US$0.47 million (RMB2.95 million) change in bad debt expense due to the decreased collection of accounts receivable previously written down.
Operating losswas US$3.46 million (RMB21.71 million) in the third quarter of 2012, representing an increase of 51.9% from US$2.28 million in the second quarter of 2012 and a decrease of 72.4% from US$12.53 million in the third quarter of 2011.Non-GAAP operating loss, which reflects the exclusion of share-based compensation expenses, was US$3.46 million (RMB21.75 million) in the third quarter of 2012, as compared to the non-GAAP operating loss of US$2.34 million in the second quarter of 2012 and US$12.07 million in the third quarter of 2011.
3
Net losswas US$3.25 million (RMB20.43 million) in the third quarter of 2012, representing an increase of 120.9% from US$1.47 million in the second quarter of 2012 and a decrease of 75.0% from US$12.98 million in the third quarter of 2011.Non-GAAP net loss, which reflects the exclusion of share-based compensation expenses, was US$3.26 million (RMB20.46 million) in the third quarter of 2012, as compared to US$1.53 million in the second quarter of 2012 and US$12.52 million in the third quarter of 2011. The sequential increase in net loss was primarily attributable to (1) a US$0.73 million (RMB4.59 million) decrease in government subsidy benefits in the third quarter of 2012; (2) the US$0.61 million (RMB3.82 million) net increase in litigation expenses due to the second quarter reversal of accrued liabilities related to favorable settlements of copyright infringement and (3) the US$0.47 million (RMB2.95 million) of changes in bad debt expense.
Net loss attributable to Ku6 Media was US$3.25 million (RMB20.43 million) in the third quarter of 2012, as compared to US$1.47 million in the second quarter of 2012 and US$12.98 million in the third quarter of 2011.Non-GAAP net loss attributable to Ku6 Media, reflecting the exclusion of share based compensation expenses, was US$3.26 million (RMB20.46 million) in the third quarter of 2012, as compared to the non-GAAP net loss attributable to Ku6 Media of US$1.53 million in the second quarter of 2012 and US$12.52 million in the third quarter of 2011.
Net loss attributable to Ku6 Media per basic and diluted ADS was US$0.07 (RMB0.44) in the third quarter of 2012, as compared to US$0.03 in the second quarter of 2012 and US$0.26 in the third quarter of 2011. Weighted average ADSs used to calculate basic and diluted net loss per ADS were 48.3 million in the third quarter of 2012, 50.2 million in the second quarter of 2012 and 50.2 million in the third quarter of 2011.
Adjusted EBITDA loss, which is herein defined as net loss attributable to Ku6 Media before interest income, interest expenses, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses, equity in loss of affiliates and other non-operating items, was US$2.58 million (RMB16.23 million) in the third quarter of 2012, as compared to adjusted EBITDA loss of US$1.48 million in the second quarter of 2012 and US$10.58 million in the third quarter of 2011. The increase was primarily due to the increase in operating expenses.
As of September 30, 2012, the Company had US$12.55 million (RMB78.84 million) in cash and cash equivalents, compared to US$23.28 million as of June 30, 2012. The decrease was primarily due to the cash payment for share repurchase in the amount of US$8.08 million (RMB50.80 million) in the third quarter of 2012.
4
Recent Business Developments
The Company’s Repurchase and Immediate Retirement of Ordinary Shares and ADSs
On July 12 2012, the Company’s shareholders approved, at the Annual General Meeting, a repurchase (and retirement thereafter) of certain of the Company’s outstanding shares. This repurchase was settled with cash on July 30, 2012. In this transaction, the Company repurchased and immediately retired in the aggregate 269,409,276 ordinary shares formerly held by Mr. Shanyou Li (the original founder and former CEO), Mr. Zhizhong Hao (Former Senior VP), Ms. Xingye Zeng (Former VP of Sales) and Kumella Holdings Limited (an investment entity controlled by Mr. Shanyou Li), at a price of US$ 0.0291 per share, representing a premium to the Company’s current per share price (in total, such repurchase amounting to approximately US$7.84 million). The Company also repurchased and immediately retired 79,717 ADSs (each ADS representing 100 ordinary shares) held by Mr. Shanyou Li at a price of US$2.91 per ADS (in total, approximately US$0.23 million), which represented a premium to the then-current share price.
Given the volatile nature of the Company’s per-ADS price as an appropriate measure of fair value and the susceptibility of the per-share price to significant changes on small trading volumes, the Company engaged with an independent financial advisor to assist its management in determining the appropriate range indicative of the fair value per ADS. The repurchase price paid fell within an appropriate indicative range of fair value. The Company recorded this transaction via a charge to additional paid in capital for the repurchase amount.
Cooperation with NetEase
In September 2012, the Company entered into an agreement with NetEase, Inc. (“NetEase,” NASDAQ: NTES), a well-known internet company in China. Pursuant to the agreement, Ku6 Media will provide technology support for the video related activities on NetEase’s microblog platform, including video uploading and video sharing. Meanwhile NetEase’s microblog users will be given access to Ku6 Media video contents via embedded Ku6 Media video players.
Share Repurchase Program of 2011
Pursuant to a share repurchase program announced December 30, 2011, the Company’s Board of Directors have authorized the Company to repurchase up to an aggregate of US$3.2 million of its outstanding ADSs from time to time following the date thereof, based on market conditions. As of September 30, 2012, the Company has repurchased 11,100 ADSs from open market under this program.
5
Conference Call Information
Ku6’s management team will be hosting a corresponding conference call at 8:00am EST on Friday, December 7, 2012 (9:00pm Beijing time on the same day).
Dial-in numbers: | ||||
International Dial-in Number: | +65 67239381 | |||
United States Toll Free Number: | 18665194004 | |||
Mainland China Toll Free Number: | 4006208038 / 8008190121 | |||
Hong Kong Toll Free Number: | 800930346 | |||
Conference ID: | 74736454 |
A replay will be available from 1:00am December 8, 2012 EST for 7 days.
International Dial-in Number: | +61 2 8199 0299 | |||
United States Toll Free Number: | 18554525696 | |||
Mainland China Toll Free Number: | 4001200932 | |||
Hong Kong Toll Free Number: | 800963117 | |||
Conference ID: | 74736454 |
A live and archived webcast of the conference call will also be available athttp://www.media-server.com/m/p/z2v9kooi
About Ku6 Media Co., Ltd.
Ku6 Media Co., Ltd. (NASDAQ: KUTV) is a leading internet video company in China, focusing 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 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.
6
About Non-GAAP Financial Measures
To supplement Ku6 Media’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), Ku6 Media uses the following measures defined as non-GAAP financial measures by the SEC in evaluating its business: non-GAAP gross profit or loss, non-GAAP operating expenses, non-GAAP product development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss attributable to Ku6 Media and adjusted EBITDA loss. We define non-GAAP gross profit or loss, non-GAAP operating expenses, non-GAAP product development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss attributable to Ku6 Media as the respective nearest comparable GAAP financial measure excluding share-based compensation expenses. We define adjusted EBITDA loss as net loss attributable to Ku6 Media before interest income, interest expenses, income taxes, depreciation and amortization (excluding amortization and write-down of licensed video copyrights), further adjusted for share-based compensation expenses, equity in loss of affiliates and other non-operating items. We present non-GAAP financial measures because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies. A limitation of using non-GAAP financial measures is that non-GAAP measures exclude share-based compensation charges that have been and will continue to be significant recurring expenses in Ku6 Media’s business for the foreseeable future.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP financial measures” at the end of this release.
For further information, please contact:
Ms. Helen Zou
Investor Relations Director
Telephone +86 10 5758 6835
ir@ku6.com
7
Ku6 Media Co., Ltd.
Consolidated Balance Sheets
(Amounts in thousands, except for number of shares) | December 31, 2011 US$ | September 30, 2012 US$ (Unaudited) | September 30, 2012 RMB (Unaudited) | |||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | 26,751 | 12,545 | 78,843 | |||||||||
Restricted cash | 3,600 | — | — | |||||||||
Accounts receivable, net | 777 | 11 | 69 | |||||||||
Accounts receivable due from related parties | 2,740 | 3,247 | 20,407 | |||||||||
Prepaid expenses and other current assets | 884 | 738 | 4,638 | |||||||||
Other receivables due from related parties | 19,539 | 10,404 | 65,387 | |||||||||
Total current assets | 54,291 | 26,945 | 169,344 | |||||||||
Non-current assets: | ||||||||||||
Deposits | 307 | 307 | 1,929 | |||||||||
Property and equipment, net | 3,593 | 3,489 | 21,928 | |||||||||
Acquired intangible assets, net | 24,111 | 22,942 | 144,186 | |||||||||
Investment in equity affiliate | 255 | — | — | |||||||||
Goodwill | 6,233 | 6,233 | 39,173 | |||||||||
Total non-current assets | 34,499 | 32,971 | 207,216 | |||||||||
TOTAL ASSETS | 88,790 | 59,916 | 376,560 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Short-term borrowings | 3,178 | — | — | |||||||||
Accounts payable | 6,365 | 4,748 | 29,840 | |||||||||
Accrued expenses and other current liabilities | 10,016 | 9,959 | 62,590 | |||||||||
Other payables due to related parties | 13,552 | 3,695 | 23,222 | |||||||||
Total current liabilities | 33,111 | 18,402 | 115,652 | |||||||||
Non-current deferred tax liabilities | 4,826 | 4,826 | 30,330 | |||||||||
Total liabilities | 37,937 | 23,228 | 145,982 | |||||||||
Shareholders’ equity: | ||||||||||||
Ordinary shares (US$0.00005 par value; 12,000,000,000 shares authorized; 5,019,786,036 shares and 4,741,295,060 shares issued and outstanding as of December 31, 2011 and September 30, 2012, respectively) | 251 | 237 | 1,489 | |||||||||
Additional paid-in capital | 184,874 | 177,249 | 1,113,975 | |||||||||
Accumulated deficit | (132,449 | ) | (138,959 | ) | (873,329 | ) | ||||||
Accumulated other comprehensive loss | (1,823 | ) | (1,839 | ) | (11,557 | ) | ||||||
Total Ku6 Media Co., Ltd. shareholders’ equity | 50,853 | 36,688 | 230,578 | |||||||||
Non-controlling interests | — | — | — | |||||||||
Total shareholders’ equity | 50,853 | 36,688 | 230,578 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 88,790 | 59,916 | 376,560 | |||||||||
8
Ku6 Media Co., Ltd.
Consolidated Statements of Operations
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
(Amounts in thousands, except for number of shares and ADS and per share and per ADS data) | September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2012 | |||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Advertising | ||||||||||||||||||||||||||||
Third parties | 1,100 | 158 | 161 | 1,012 | 10,169 | 1,214 | 7,630 | |||||||||||||||||||||
Related parties | 3,129 | 2,871 | 2,895 | 18,194 | 4,632 | 9,551 | 60,026 | |||||||||||||||||||||
Total revenues | 4,229 | 3,029 | 3,056 | 19,206 | 14,801 | 10,765 | 67,656 | |||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||
Advertising | ||||||||||||||||||||||||||||
Third parties | 5,482 | 3,660 | 3,662 | 23,015 | 26,268 | 10,853 | 68,209 | |||||||||||||||||||||
Related parties | — | — | — | — | 380 | — | — | |||||||||||||||||||||
Total cost of revenues | 5,482 | 3,660 | 3,662 | 23,015 | 26,648 | 10,853 | 68,209 | |||||||||||||||||||||
Gross loss | (1,253 | ) | (631 | ) | (606 | ) | (3,809 | ) | (11,847 | ) | (88 | ) | (553 | ) | ||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Product development | 857 | 363 | 468 | 2,941 | 2,101 | 1,410 | 8,862 | |||||||||||||||||||||
Sales and marketing | 2,005 | 240 | 283 | 1,778 | 11,799 | 892 | 5,606 | |||||||||||||||||||||
General and administrative | 8,413 | 1,041 | 2,098 | 13,186 | 19,637 | 5,015 | 31,518 | |||||||||||||||||||||
Total operating expenses | 11,275 | 1,644 | 2,849 | 17,905 | 33,537 | 7,317 | 45,986 | |||||||||||||||||||||
Operating loss | (12,528 | ) | (2,275 | ) | (3,455 | ) | (21,714 | ) | (45,384 | ) | (7,405 | ) | (46,539 | ) | ||||||||||||||
Interest income | 49 | 162 | 129 | 810 | 89 | 462 | 2,904 | |||||||||||||||||||||
Other income | 32 | 993 | 256 | 1,609 | 730 | 1,249 | 7,850 | |||||||||||||||||||||
Interest expenses | (330 | ) | (213 | ) | (114 | ) | (716 | ) | (786 | ) | (564 | ) | (3,545 | ) | ||||||||||||||
Equity in loss of affiliates | (201 | ) | (138 | ) | (66 | ) | (415 | ) | (201 | ) | (252 | ) | (1,584 | ) | ||||||||||||||
Loss before income tax expense | (12,978 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,552 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Income tax benefit | — | — | — | — | 99 | — | — | |||||||||||||||||||||
Net loss | (12,978 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,453 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Less: Net loss attributable to non-controlling interests | 2 | — | — | — | 47 | — | — | |||||||||||||||||||||
Net loss attributable to Ku6 Media Co., Ltd. | (12,976 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,406 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Loss per share—basic and diluted | ||||||||||||||||||||||||||||
Net loss attributable to Ku6 Media Co., Ltd. ordinary shareholders | (US$0.00 | ) | (US$0.00 | ) | (US$0.00 | ) | (RMB0.00 | ) | (US$0.01 | ) | (US$0.00 | ) | (RMB0.00 | ) | ||||||||||||||
Loss per ADS—basic and diluted | ||||||||||||||||||||||||||||
Net loss attributable to Ku6 Media Co., Ltd. ordinary shareholders | (US$0.26 | ) | (US$0.03 | ) | (US$0.07 | ) | (RMB0.44 | ) | (US$1.13 | ) | (US$0.13 | ) | (RMB0.82 | ) | ||||||||||||||
Weighted average shares used in per share calculation—basic and diluted | 5,019,786,036 | 5,019,786,036 | 4,832,763,530 | 4,832,763,530 | 4,011,011,072 | 4,956,990,158 | 4,956,990,158 | |||||||||||||||||||||
Weighted average ADSs used in per ADS calculation—basic and diluted | 50,197,860 | 50,197,860 | 48,327,635 | 48,327,635 | 40,110,111 | 49,569,902 | 49,569,902 | |||||||||||||||||||||
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Ku6 Media Co., Ltd.
Consolidated Statements of Cash Flows
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| (Amounts in thousands) | September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2012 | |||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||||||
Net loss | (12,978 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,453 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||||||||||
Share-based compensation (reversal) | 461 | (60 | ) | (5 | ) | (31 | ) | 1,754 | 444 | 2,790 | ||||||||||||||||||
Share-based compensation cost in relation to disposition of Yisheng | 522 | — | — | — | 522 | — | — | |||||||||||||||||||||
Depreciation and amortization | 1,482 | 851 | 877 | 5,512 | 4,347 | 2,553 | 16,045 | |||||||||||||||||||||
Amortization and write-down of licensed video copyrights | 611 | — | — | — | 3,429 | 1 | 6 | |||||||||||||||||||||
Impairment of intangible assets | — | — | — | — | 1,365 | — | — | |||||||||||||||||||||
Bad debt provision (reversal) | 1,139 | (656 | ) | (187 | ) | (1,175 | ) | 3,522 | (2,202 | ) | (13,839 | ) | ||||||||||||||||
Reversal of legal provision | — | (565 | ) | — | — | — | (565 | ) | (3,551 | ) | ||||||||||||||||||
Exchange loss (gain) | 239 | (3 | ) | (93 | ) | (584 | ) | 317 | (101 | ) | (635 | ) | ||||||||||||||||
Equity in loss of affiliates | 201 | 138 | 66 | 415 | 201 | 252 | 1,584 | |||||||||||||||||||||
Loss (gain) on disposal of property and equipments | 2,942 | (22 | ) | — | — | 2,978 | (21 | ) | (132 | ) | ||||||||||||||||||
Changes in assets and liabilities, net of acquisitions and dispositions: | ||||||||||||||||||||||||||||
Accounts receivable | 1,980 | 733 | 188 | 1,182 | 2,217 | 2,969 | 18,660 | |||||||||||||||||||||
Prepaid expenses and other current assets | (3,520 | ) | 169 | (290 | ) | (1,823 | ) | (1,200 | ) | 145 | 911 | |||||||||||||||||
Amount due from related parties | (2,723 | ) | 999 | 232 | 1,458 | (3,738 | ) | (603 | ) | (3,790 | ) | |||||||||||||||||
Deposits and other non-current assets | 33 | — | — | — | (285 | ) | — | — | ||||||||||||||||||||
Inventories | — | — | — | — | 31 | — | — | |||||||||||||||||||||
Accounts payable | (2,540 | ) | (517 | ) | 658 | 4,135 | 862 | (1,381 | ) | (8,679 | ) | |||||||||||||||||
Accrued expenses and other current liabilities | 3,491 | (1,063 | ) | (171 | ) | (1,075 | ) | 3,237 | 508 | 3,193 | ||||||||||||||||||
Amount due to related parties | (153 | ) | 53 | 54 | 339 | 385 | 107 | 673 | ||||||||||||||||||||
Income tax payable | — | — | — | — | (99 | ) | — | — | ||||||||||||||||||||
Net cash used in operating activities | (8,813 | ) | (1,414 | ) | (1,921 | ) | (12,073 | ) | (25,608 | ) | (4,404 | ) | (27,678 | ) | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||||||
Purchases of property and equipment | (289 | ) | (28 | ) | (1,092 | ) | (6,863 | ) | (1,220 | ) | (1,272 | ) | (7,994 | ) | ||||||||||||||
Proceeds from disposal of property and equipments | — | 23 | — | — | — | 23 | 145 | |||||||||||||||||||||
Payments for licensed video copyrights | (1,388 | ) | (8 | ) | (88 | ) | (553 | ) | (5,376 | ) | (236 | ) | (1,483 | ) | ||||||||||||||
Cash-out from disposal of subsidiaries, net of cash disposed | (112 | ) | — | — | — | (112 | ) | — | — | |||||||||||||||||||
Restricted cash for pledge of bank loans | (5,666 | ) | — | 3,600 | 22,625 | (5,666 | ) | 3,600 | 22,625 | |||||||||||||||||||
Loans to related parties under common control by Shanda | (7,408 | ) | — | — | — | (14,108 | ) | (470 | ) | (2,954 | ) | |||||||||||||||||
Repayment of loans to related parties under common control by Shanda | — | 9,700 | — | — | — | 9,700 | 60,962 | |||||||||||||||||||||
Net cash provided by (used in) investing activities | (14,863 | ) | 9,687 | 2,420 | 15,209 | (26,482 | ) | 11,345 | 71,301 | |||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||||||
Proceeds from exercise of stock options | — | — | — | — | 4 | — | — | |||||||||||||||||||||
Proceeds from issuance of common shares to Shanda | — | — | — | — | 50,000 | — | — | |||||||||||||||||||||
Proceeds from issuance of convertible bonds to Shanda | — | — | — | — | 50,000 | — | — | |||||||||||||||||||||
Cash paid for redemption of convertible bonds to Shanda | (50,000 | ) | — | — | — | (50,000 | ) | — | — | |||||||||||||||||||
Repurchase of ordinary shares | — | — | (8,083 | ) | (50,800 | ) | — | (8,083 | ) | (50,800 | ) | |||||||||||||||||
Borrowings from bank | 2,093 | — | — | — | 2,093 | — | — | |||||||||||||||||||||
Repayment for loans from bank | — | — | (3,148 | ) | (19,785 | ) | — | (3,148 | ) | (19,785 | ) | |||||||||||||||||
Borrowings from related parties under common control by Shanda | 575 | — | — | — | 13,336 | — | — | |||||||||||||||||||||
Repayment of loans from related parties under common control of Shanda | (12 | ) | (6,768 | ) | — | — | (12 | ) | (9,904 | ) | (62,244 | ) | ||||||||||||||||
Net cash provided by (used in) financing activities | (47,344 | ) | (6,768 | ) | (11,231 | ) | (70,585 | ) | 65,421 | (21,135 | ) | (132,829 | ) | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,205 | (9 | ) | (5 | ) | (31 | ) | 1,003 | (12 | ) | (76 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (69,815 | ) | 1,496 | (10,737 | ) | (67,480 | ) | 14,334 | (14,206 | ) | (89,282 | ) | ||||||||||||||||
Cash and cash equivalents, beginning of period | 111,444 | 21,786 | 23,282 | 146,323 | 27,295 | 26,751 | 168,125 | |||||||||||||||||||||
Cash and cash equivalents, end of period | 41,629 | 23,282 | 12,545 | 78,843 | 41,629 | 12,545 | 78,843 | |||||||||||||||||||||
10
Reconciliations of Non-GAAP results of operations measures to the nearest comparable GAAP financial measures (*)
(Amounts in thousands of United States dollars (“US$”) and Renminbi (“RMB”), unaudited)
| 1. | Non-GAAP Gross Profit (Loss) |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Gross loss | (1,253 | ) | (631 | ) | (606 | ) | (3,809 | ) | (11,847 | ) | (88 | ) | (553 | ) | ||||||||||||||
Add back: share-based compensation | 34 | (31 | ) | 28 | 176 | 531 | 92 | 578 | ||||||||||||||||||||
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Non-GAAP gross profit (loss) | (1,219 | ) | (662 | ) | (578 | ) | (3,633 | ) | (11,316 | ) | 4 | 25 | ||||||||||||||||
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| 2. | Non-GAAP Operating Expenses |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Operating expenses | 11,275 | 1,644 | 2,849 | 17,905 | 33,537 | 7,317 | 45,986 | |||||||||||||||||||||
Deduct: share-based compensation | 427 | (29 | ) | (33 | ) | (207 | ) | 1,223 | 352 | 2,212 | ||||||||||||||||||
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Non-GAAP operating expenses | 10,848 | 1,673 | 2,882 | 18,112 | 32,314 | 6,965 | 43,774 | |||||||||||||||||||||
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| 3. | Non-GAAP Product Development Expenses |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Product development expenses | 857 | 363 | 468 | 2,941 | 2,101 | 1,410 | 8,862 | |||||||||||||||||||||
Deduct: share-based compensation | 140 | (40 | ) | 22 | 138 | 345 | 41 | 258 | ||||||||||||||||||||
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Non-GAAP product development expenses | 717 | 403 | 446 | 2,803 | 1,756 | 1,369 | 8,604 | |||||||||||||||||||||
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| 4. | Non-GAAP Sales and Marketing Expenses |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Sales and marketing expenses | 2,005 | 240 | 283 | 1,778 | 11,799 | 892 | 5,606 | |||||||||||||||||||||
Deduct: share-based compensation | (2 | ) | (17 | ) | 8 | 50 | 444 | 20 | 126 | |||||||||||||||||||
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Non-GAAP sales and marketing expenses | 2,007 | 257 | 275 | 1,728 | 11,355 | 872 | 5,480 | |||||||||||||||||||||
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11
| 5. | Non-GAAP General and Administrative Expenses |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
General and administrative expenses | 8,413 | 1,041 | 2,098 | 13,186 | 19,637 | 5,015 | 31,518 | |||||||||||||||||||||
Deduct: share-based compensation | 289 | 28 | (63 | ) | (395 | ) | 434 | 291 | 1,828 | |||||||||||||||||||
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Non-GAAP general and administrative expenses | 8,124 | 1,013 | 2,161 | 13,581 | 19,203 | 4,724 | 29,690 | |||||||||||||||||||||
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| 6. | Non-GAAP Operating Loss |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Operating loss | (12,528 | ) | (2,275 | ) | (3,455 | ) | (21,714 | ) | (45,384 | ) | (7,405 | ) | (46,539 | ) | ||||||||||||||
Add back: share-based compensation | 461 | (60 | ) | (5 | ) | (31 | ) | 1,754 | 444 | 2,790 | ||||||||||||||||||
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Non-GAAP operating loss | (12,067 | ) | (2,335 | ) | (3,460 | ) | (21,745 | ) | (43,630 | ) | (6,961 | ) | (43,749) | |||||||||||||||
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| 7. | Non-GAAP Net Loss |
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||
| 2011 | 2012 | 2012 | 2012 | 2011 | 2012 | 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Net loss | (12,978 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,453 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Add back: share-based compensation | 461 | (60 | ) | (5 | ) | (31 | ) | 1,754 | 444 | 2,790 | ||||||||||||||||||
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Non-GAAP net loss | (12,517 | ) | (1,531 | ) | (3,255 | ) | (20,457 | ) | (43,699 | ) | (6,066 | ) | (38,124 | ) | ||||||||||||||
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12
| 8. | Non-GAAP Net Loss Attributable to Ku6 Media Co., Ltd. |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Net loss attributable to Ku6 Media Co., Ltd. | (12,976 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,406 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Add back: share-based compensation | 461 | (60 | ) | (5 | ) | (31 | ) | 1,754 | 444 | 2,790 | ||||||||||||||||||
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Non-GAAP net loss attributable to Ku6 Media Co., Ltd. | (12,515 | ) | (1,531 | ) | (3,255 | ) | (20,457 | ) | (43,652 | ) | (6,066 | ) | (38,124 | ) | ||||||||||||||
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| 9. | Adjusted EBITDA Loss |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||||
| September 30, 2011 | June 30, 2012 | September 30, 2012 | September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2012 | ||||||||||||||||||||||
| US$ | US$ | US$ | RMB | US$ | US$ | RMB | ||||||||||||||||||||||
Net loss attributable to Ku6 Media Co., Ltd. | (12,976 | ) | (1,471 | ) | (3,250 | ) | (20,426 | ) | (45,406 | ) | (6,510 | ) | (40,914 | ) | ||||||||||||||
Add back (deduct): | ||||||||||||||||||||||||||||
Interest income | (49 | ) | (162 | ) | (129 | ) | (810 | ) | (89 | ) | (462 | ) | (2,904 | ) | ||||||||||||||
Interest expenses | 330 | 213 | 114 | 716 | 786 | 564 | 3,545 | |||||||||||||||||||||
Income tax benefit | — | — | — | — | (99 | ) | — | — | ||||||||||||||||||||
Depreciation and amortization (excluding amortization and write-down of licensed video copyrights) | 1,482 | 851 | 877 | 5,512 | 4,347 | 2,553 | 16,045 | |||||||||||||||||||||
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EBITDA loss | (11,213 | ) | (569 | ) | (2,388 | ) | (15,008 | ) | (40,461 | ) | (3,855 | ) | (24,228 | ) | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Share-based compensation | 461 | (60 | ) | (5 | ) | (31 | ) | 1,754 | 444 | 2,790 | ||||||||||||||||||
Equity in loss of affiliates | 201 | 138 | 66 | 415 | 201 | 252 | 1,584 | |||||||||||||||||||||
Other income | (32 | ) | (993 | ) | (256 | ) | (1,609 | ) | (730 | ) | (1,249 | ) | (7,850 | ) | ||||||||||||||
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Adjusted EBITDA loss | (10,583 | ) | (1,484 | ) | (2,583 | ) | (16,233 | ) | (39,236 | ) | (4,408 | ) | (27,704 | ) | ||||||||||||||
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| * | For more information on the Non-GAAP financial measures, please see the section captioned “About Non-GAAP Financial Measures” in the earnings release. |
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Ku6 Media Co., Ltd. | ||
| By: | /s/ Frank Feng | |
| Name: | Frank Feng | |
| Title: | Acting CFO | |
Date: December 7, 2012
14
