BEIJING, April 10, 2018 /PRNewswire/ -- Link Motion Inc.,
formerly NQ Mobile Inc. (NYSE: LKM), a leading smart car and smart ride
company, reported its unaudited
financial results for the fourth quarter and full year ended
December 31, 2017.
Fourth Quarter and Full Year 2017 Financial
Highlights:
- Q4 2017 net revenues totaled $13.4
million, a 23.1% decrease from $17.5
million in Q4 2016; 2017 net revenues totaled $57.6 million, a 5.0% decrease from $60.6 million in 2016.
- Q4 2017 GAAP net income attributable to Link Motion increased
to $111.4 million or $1.10 per fully diluted ADS versus net loss of
$111.2 million or $1.12 per fully diluted ADS in Q4 2016; 2017 GAAP
net loss attributable to Link Motion was $5.3million or $0.05 per fully diluted ADS versus net loss of
$127.6 million or $1.29 per fully diluted ADS in 2016.
- At the end of 2017 cash, cash equivalents and term deposits
increased to $319.8 million compared
to $266.9 million at the end of 2016.
In addition, the Company has a note receivable of $270.9 million from the Q4 2017 divestment of FL
Mobile and sale of Showself.
2017 and Subsequent Operational Highlights:
- Completed the FL Mobile Divestment and the Sale of Showself's
Live Social Video Business. The excess of total consideration over
the carrying value of the disposed entities was $342.0 million. The Company recognized
$161.5 million of gain in the fourth
quarter and booked $180.4 million as
deferred gain from the disposal of discontinued operations to be
recognized when the receivables from purchasers are collected in
future periods.
- Shifted the corporate focus to becoming a leading smart car and
smart ride company by leveraging Link Motion's CarBrain
platform. This rebranding from NQ Mobile Inc. to Link Motion
Inc. and the ticker symbol for the Company's ADS traded on the NYSE
from "NQ" to "LKM".
- Formed a partnership with Hangzhou First Technology Co., a
leading car design and engineering firm, to design Link Motion's
passenger-centric smart car for its future Smart Ride
business.
- Extended Link Motion's product offerings beyond passenger cars
to public transportation vehicles and was selected as the platform
vendor for pure electric buses being demonstrated in the city of
Qingdao.
- Formed a partnership with Chery Automotive Co., to jointly
develop a technology platform for the connected vehicle of the
future including fully autonomous vehicles.
- Established a partnership with Irdeto, one of the world leaders
in digital platform security, to integrate its secure vehicle
access solution into our CarBrain platform for new lines of
connected and autonomous cars.
Management Commentary
"2017 was a transformational year for Link Motion, as we
prepared the company to capitalize on the massive smart car
opportunity we believe is in the early stages of its growth cycle,"
said Dr. Vincent Shi, Founder and
Chairman of Link Motion. "Our Company, NQ Mobile was founded for
the smart phone revolution and today Link Motion is built for the
upcoming smart car "revolution."
"Over the last several months, we have made great strides in the
development of our future businesses and have put in place the
skilled talent needed to execute upon our operational plans. As we
move forward into 2018, we expect to continue to form key
partnerships with major industry players and have identified three
key operational milestones we expect to achieve in 2018 including
the commercial rollout of our Smart Ride business in the summer,
the further growth of our CarBrain platform, and the resulting
revenue growth from these new businesses."
"Our entire management team is confident in our ability to ramp
our smart car and smart ride businesses in the quarters to come. We
are focused on delivering the key milestones for 2018."
"To further support the transparency amongst our shareholder
base and new institutional investors, Link Motion will be hosting
investor and analyst events in China expected in the Summer of 2018 after our
launch city is announced. As part of our new strategic investor
relations and communication program, we plan to be aggressive with
our progress updates and adhering to best practices in the United States and abroad. We also expect
to be attending multiple investor conferences throughout 2018 in
key global markets." Concluded Dr. Shi.
Financial Results
The Company announced in a press release on December 14, 2017 (the "disposal date") that it
had completed the divestment of FL Mobile and sale of Showself's
Live Social Video Business (the "Divestments"). Accordingly,
the financial results were deconsolidated as of December 14, 2017. The key financial
information related to the Divestments for the period up to the
disposal date, is quantified in the discontinued sections below.
All results presented for the current period reflect these changes
and the comparable periods presented have also been adjusted
retrospectively.
Additionally, the excess of total consideration over the
carrying value of the disposed entities was $342.0 million. The Company has recognized
$161.5 million of gain in the fourth
quarter, which represents the percentage of the cash received of
the overall consideration. The remaining portion of the
excess which represents the percentage of the consideration that is
still receivable, is $180.4 million
and recorded as deferred gain from the disposal of discontinued
operations on the balance sheet. The Company will recognize
these gains pro-rata as it receives cash from the purchasers in
future periods.
Fourth Quarter 2017 Financial Results
Revenues
Net revenues in the fourth quarter of 2017 decreased 23.1%
year-over-year to $13.4 million from
$17.5 million in the same period in
2016.
Consumer Services revenues consist of advertising and other
consumer services. Advertising revenues increased 14.2%
year-over-year to $3.2 million from
$2.8 million in the same period in
2016. The increase in advertising revenues was mainly due to
overseas promotional business. Other services revenues decreased
17.6% year-over-year to $0.9 million
from $1.1 million in the same period
a year ago. The decrease in other service revenues was mainly due
to lower premium consumer security revenues as a result of the
Company moving away from premium subscription services to an
advertising-based model.
Enterprise Mobility revenues decreased 31.2% year-over-year to
$9.4 million from $13.6 million in the same period in 2016. The
decrease in enterprise product revenues was mainly due to weakness
in customer demand in the fourth quarter of the year compared to
the same period of last year.
Cost of Revenues
Cost of revenues in the fourth quarter of 2017 decreased 45.3%
year-over-year to $11.4 million from
$20.8 million in the same period in
2016. The year-over-year decrease was primarily due to lower
hardware sales within the enterprise business and lower customer
acquisition cost within the consumer services segment.
Gross Profit and Gross Margin
Gross profit in the fourth quarter of 2017 was $2.0 million from a gross loss of $3.4 million in the same period in 2016. Gross
margin, or gross profit as a percentage of net revenues, was 15.2%
in the fourth quarter of 2017, compared with negative gross margin
of 19.2% in the same period in 2016.
Operating Expenses
Selling and marketing expenses in the fourth quarter of 2017
decreased 41.5% year-over-year to $1.2
million from $2.1 million in
the same period in 2016. Non-GAAP selling and marketing expenses,
which exclude share-based compensation decreased 42.9%
year-over-year to $1.2 million from
$2.1 million in the same period in
2016. The year-over-year decrease is primarily driven by a
reduction in overall staff costs and lower overall marketing and
advertising expenses.
General and administrative expenses in the fourth quarter of
2017 increased 135.5% year-over-year to $28.8 million from $12.2
million in the same period in 2016. Non-GAAP general and
administrative expenses, which exclude share-based compensation and
amortization of intangible assets arising from acquisitions,
increased 153.5% year-over-year to $28.7
million from $11.3 million in
the same period in 2016. The year-over-year increase is primarily
driven by a non-cash accounting treatment of allowance for bad debt
in the quarter.
Research and development expenses in the fourth quarter of 2017
increased 98.2% year-over-year to $7.9
million from $4.0 million in
the same period in 2016. Non-GAAP research and development
expenses, which exclude share-based compensation and amortization
of intangible assets arising from acquisitions, increased 93.8% to
$7.8 million from $4.0 million in the same period in 2016. The
increase is mainly due to the Link Motion business and development
projects.
Impairment of goodwill and intangible assets in the fourth
quarter of 2017 was $4.9 million as
the result of a one-time, non-cash impairment of goodwill in the
enterprise reporting unit.
Total operating expenses in the fourth quarter of 2017 decreased
63.5% year-over-year to $42.8 million
from $117.2 million in the same
period in 2016. The decrease was mainly the result of less
impairment of goodwill and intangible assets in the period, offset
by increases in general and administrative expenses and research
and development expenses.
Non-GAAP operating expenses, which exclude share-based
compensation, the amortization of intangible assets arising from
acquisitions, and impairment of goodwill and intangible assets in
the fourth quarter of 2017 increased 116.1% year-over-year to
$37.7 million from $17.4 million in the same period in 2016. The
increase is mainly due to the increase in general and
administrative expenses and research and development expenses as
described above. See below under the heading "Non-GAAP Financial
Measures" for a discussion of Non-GAAP operating expenses and a
reconciliation of such measure to the most comparable measure
calculated under U.S. generally accepted accounting principles
("GAAP").
Share-based Compensation Expenses
Share-based compensation expenses, which were allocated to
related operating cost and expenses line items, amounted to
$0.1 million in the fourth quarter of
2017, compared to $0.1million in the
corresponding period in 2016.
Loss from Operations
Loss from operations in the fourth quarter of 2017 was
$40.8 million, compared with
$120.5 million in the same period in
2016.
Non-GAAP loss from operations, which excludes share-based
compensation, amortization of intangible assets arising from
acquisitions, and impairment of goodwill and intangible assets, was
$35.6 million compared to
$19.8 million in the same period in
2016. See below under the heading "Non-GAAP Financial Measures" for
a discussion of Non-GAAP loss from operations and a reconciliation
of such measure to the most comparable measure calculated under
U.S. generally accepted accounting principles ("GAAP").
Foreign Exchange Gain/(Loss),
Interest Expenses and Other Income
Foreign exchange gain was $1.2
million in the fourth quarter of 2017, compared with a loss
of $0.6 million in the same period in
2016, which was affected by fluctuations in the foreign exchange
rates. Interest expenses were $4.8
million in the fourth quarter of 2017, compared with
$6.1 million in the same period a
year ago. Interest expenses were primarily derived from interest
expense related to convertible debts, offset by the interest income
from certain term deposits. The decrease of interest expenses is
mainly due to we early redeemed $ 88
million convertible debt.
Impairment Loss
In the fourth quarter of 2017, we recognized impairment losses
of $1.4 million, primarily driven by
one-time non-cash write-downs of long-term investments.
Income Tax
Income tax expense was $0.5
million in the fourth quarter of 2017, compared with income
tax benefit of $3.1 million in the
same period in 2016.
Discontinued Operations
The Company announced in a press release on December 14, 2017 that it had completed the
divestment of FL Mobile and Showself's Live Social Video Business.
Accordingly, the financial statements of FL Mobile and Showself
were deconsolidated as of the disposal date. Up to the disposal
date, the total net revenues, net loss attributable to Link Motion,
and net loss attributable to our non-controlling interests from FL
Mobile in the fourth quarter of 2017 was $30.7 million, $13.2
million, and $8.4 million
respectively. Up to the disposal date, the total net revenues, net
income attributable to Link Motion, and net income attributable to
our non-controlling interests from Showself in the fourth quarter
of 2017 were $22.9 million,
$3.3 million, and $1.7 million respectively. Loss from discontinued
operations, net of income tax, was $16.6
million in the fourth quarter of 2017 compared to income of
$11.2 million in the same period in
2016. Additionally, the excess of total consideration over the
carrying value of the disposed entities was $342.0 million. The Company has recognized
$161.5 million of gain in the fourth
quarter, which represents the percentage of the cash received of
the overall consideration. The remaining portion of the
excess which represents the percentage of the consideration that is
still receivable, is $180.4 million
and recorded as deferred gain from the disposal of discontinued
operations on the balance sheet. The Company will recognize
these gains pro-rata as it receives cash from the purchasers in
future periods.
Net Income/Loss
Net Income attributable to Link Motion was $111.4 million in the fourth quarter of 2017,
compared with net loss of $111.2
million in the same period in 2016. Non-GAAP net income
attributable to Link Motion, which excludes share-based
compensation, interest expenses related to convertible debts ,fair
value change of derivative liability and loss of early redemption
of convertible debts, amortization of intangible assets arising
from acquisitions, impairment losses from goodwill, intangible
assets and investment, and income tax provision related to the
amortization of intangible assets arising from acquisitions and
impairment loss from goodwill, intangible assets and investment,
was $121.9 million in the fourth
quarter of 2017, compared with non-GAAP net income attributable to
Link Motion of $9.8 million in the
same period in 2016. See below under the heading "Non-GAAP
Financial Measures" for a discussion of Non-GAAP net income and a
reconciliation of such measure to the most comparable measure
calculated under U.S. generally accepted accounting principles
("GAAP").
Cash and Cash Equivalents, Term Deposits and Restricted
Cash
Cash and cash equivalents, term deposits and restricted cash
together amounted to $319.8 million
as of December 31, 2017.
Cash Flow
Net cash flow used in operations for the fourth quarter of 2017
was $13.7 million.
Fiscal Year 2017 Financial Results
Revenues
Net revenues for the fiscal year 2017 decreased 5.0%
year-over-year to $57.6 million from
$60.6 million in 2016.
Consumer Services revenues consist of advertising and other
consumer services. Advertising revenues decreased 33.1%
year-over-year to $10.4 million from
$15.6 million in the same period in
2016. The decrease in advertising revenues was mainly due to lower
overall activity within many of the traffic-related businesses as
the Company prepares to optimize its operations and change focus to
the smart car and smart ride businesses in the future. Other
services revenues decreased 32.4% year-over-year to $4.0 million from $5.9
million in the same period a year ago. The decrease in other
services revenues was mainly due to lower premium consumer security
revenues as a result of the Company moving away from premium
subscription services to an advertising-based model.
Enterprise Mobility revenues increased 10.3% year-over-year to
$43.2 million from $39.2 million in the same period in 2016.
The increase in enterprise mobility revenues was mainly due to
stronger overall hardware sales of Trustek in the year.
Cost of Revenues
Cost of revenues for the fiscal year 2017 decreased 12.1%
year-over-year to $56.6 million from
$64.4 million in the same period in
2016. The year-over-year decrease was primarily due to lower
overall customer acquisition costs associated with the overall
smartphone related businesses and lower overall amortization cost
of intangible assets arising from acquisition as impaired in
2017.
Gross Profit and Gross Margin
Gross profit for the fiscal year 2017 increased to $1.1 million from a gross loss of $3.7 million in 2016. Gross margin, or gross
profit as a percentage of net revenues, was 1.8% for the fiscal
year 2017, compared with a negative gross margin of 6.1% in
2016.
Operating Expenses
Selling and marketing expenses for the fiscal year 2017
decreased 37.4% year-over-year to $4.8
million from $7.6 million in
2016. Non-GAAP selling and marketing expenses for the fiscal year
2017, which exclude share-based compensation, decreased 33.5%
year-over-year to $4.8 million from
$7.2 million in 2016. The
year-over-year decrease was primarily the driven by a reduction in
overall staff costs and lower overall marketing and advertising
expenses.
General and administrative expenses for the fiscal year 2017
increased 18.6% year-over-year to $57.8
million from $48.8 million in
2016. Non-GAAP general and administrative expenses for the fiscal
year 2017, which exclude share-based compensation and the
amortization of intangible assets arising from acquisitions,
increased 53.1% year-over-year to $52.3
million from $34.2 million in
2016. The increase is primarily driven by a non-cash accounting
treatment of allowance for bad debt expense.
Research and development expenses for the fiscal year 2017
increased 32.5% year-over-year to $17.4
million from $13.2 million in
2016. Non-GAAP research and development expenses for the fiscal
year 2017, which exclude share-based compensation and the
amortization of intangible assets arising from acquisitions,
increased 37.2% to $17.1 million from
$12.4 million in 2016. This
year-over-year increase is mainly due to the Link Motion business
and other development projects.
Impairment of goodwill and intangible assets for the fiscal year
2017 was $102.7 million which is
mainly the result of a one-time, non-cash impairment of goodwill
and intangible assets in the remaining portion of the Security and
Others reporting unit and Enterprise reporting unit.
Total operating expenses for the fiscal year 2017 increased 8.5%
year-over-year to $182.8 million from
$168.5 million in 2016 driven mostly
from the one-time, non-cash impairment of goodwill and intangible
assets recorded during the year of $102.7
million.
Non-GAAP operating expenses, which exclude share-based
compensation expenses, the amortization of intangible assets
arising from acquisitions, and impairment of goodwill and
intangible assets increased 37.8% year-over year to $74.2 million from $53.8
million in 2016.
Share-based Compensation Expenses
Share-based compensation expenses, which were allocated to
related operating cost and expenses line items, amounted to
$5.6 million for the fiscal year
2017, compared to $12.6 million in
the fiscal year 2016. The decrease in share-based compensation
expenses was mainly due to less performance-based share options and
equity granted in relation to acquisitions and performance in
comparable periods.
Loss from Operations
Loss from operations for the fiscal year 2017 was $181.7 million, compared with $172.2 million in fiscal year 2016.
Foreign Exchange Gain, Interest
Expenses/Income
Foreign exchange gain was $1.8
million for the fiscal year 2017, compared with a foreign
exchange loss of $1.2 million in
2016. The gain in foreign exchange was primarily attributable to
the fluctuation in foreign exchange rates. Interest expenses were
$24.0 million for the fiscal year
2017, compared with $11.7 million in
2016. Interest expenses were primarily derived from interest
expense related to convertible debts, offset by the interest income
from certain term deposits.
Impairment Loss
In the fiscal year 2017, we recognized impairment losses of
$3.5 million, primarily driven by
one-time non-cash write-downs of long-term investments.
Income Tax
Income tax benefit was $0.7
million for the fiscal year 2017, compared with income tax
benefit of $4.8 million in 2016.
Discontinued Operations
The Company announced in a press release on the disposal date
that it had completed the divestment of FL Mobile and sale of
Showself's Live Social Video Business. Accordingly, the financial
results were de-consolidated as of the disposal date. Up to
the disposal date, the total net revenues, net loss attributable to
us, and net loss attributable to our non-controlling interests from
FL Mobile in the fiscal year 2017 was $152.3
million, $5.1 million, and
$3.0 million respectively. Up to the
disposal date, the total net revenues, net income attributable to
us, and net income attributable to our non-controlling interests
from Showself in the fiscal year 2017 was $112.7 million, $14.2
million, and $7.1million
respectively. Income from discontinued operations, net of income
tax, was $13.2 million in the fiscal
year 2017 compared to $58.7 million
in the same period in 2016. Additionally, the excess of total
consideration over the carrying value of the disposed entities was
$342.0 million. The Company has
recognized $161.5 million of gain in
the fourth quarter, which represents the percentage of the cash
received of the overall consideration. The remaining portion
of the excess which represents the percentage of the consideration
that is still receivable, is $180.4
million and recorded as deferred gain from the disposal of
discontinued operations on the balance sheet. The Company
will recognize these gains pro-rata as it receives cash from the
purchasers in future periods.
Net Loss/Income
Net loss attributable to Link Motion was $5.3 million for the fiscal year 2017, compared
with Net Loss attributable to Link Motion of $127.6 million in 2016.
Non-GAAP net income attributable to Link Motion, which excludes
share-based compensation, interest expenses related to convertible
debts, fair value change of derivative liability and loss of early
redemption of convertible debts, amortization of intangible assets
arising from acquisition, impairment losses from goodwill,
intangible assets and investments and income tax provision related
to the amortization of intangible assets arising from acquisitions
and impairment loss from goodwill, intangible assets and investment
was $137.0 million for the fiscal
year 2017, compared with $21.8
million in 2016.
Cash Flow
Net cash used in operating activities for the fiscal year 2017
was $66.2 million.
Cash, cash equivalents, term deposits on December 31, 2017 totaled $319.8 million, as compared to $266.9 million on December
31, 2016. In addition, the company had $270.9 million in notes receivable at
December 31, 2017. The substantial
balance of cash, cash equivalents, term deposits and notes
receivable as of December 31, 2017
resulted primarily from the divestment process as Link Motion
shifts into a leading smart car and smart ride company.
Other Significant Events
The Company announced the effective date for the Corporate
Name Change and Ticker Symbol Change
In a press release dated January 22,
2018, the Company announced that the board of directors had
approved a rebranding effort around its new focus as a smart ride
company. In conjunction with this rebranding, the Company
proposed to change its name from "NQ Mobile Inc" to "Link Motion
Inc" and change its ticker from "NYSE: NQ" to "NYSE: LKM" and
scheduled an extraordinary general meeting of shareholders on
February 27, 2018.
In a press release dated February 27,
2018, the Company announced the results of the Extraordinary
General Meeting and resolved as a special resolution to change the
Legal Name to Link Motion Inc. and the ticker to LKM.
In a press release dated March 12,
2018, the Company announced that the effective date of the
corporate name change and ticker change would be effective at the
opening of trading on the NYSE on March
14, 2018.
The Company engaged MZ Group to lead a strategic investor
relations and shareholder communication program.
In a press release dated Feb 13,
2018, the Company announced it had engaged MZ Global, an
International IR Specialist firm to lead a comprehensive strategic
investor relations and financial communication program across all
key markets. MZ Group works closely with management in
executing a comprehensive capital markets strategy designed to
increase the Company's visibility throughout the investment
community.
The Company releases a Letter to Shareholders from the
Chairman of the Board.
In a press release dated February 7,
2018, the Company released a letter from the Chairman of the
Board which can be found here:
http://ir.lkmotion.com/phoenix.zhtml?c=243152&p=irol-newsArticle&ID=2330954
Conference Call Information
Link Motion Founder & Chairman Vincent Shi, CEO Zemin
Xu, CFO Roland Wu, President
Justin Chen and Vice President of
Capital Markets, Matt Mathison will
host the conference call, followed by a question and answer
period.
To access the call, please use the following information:
Date:
|
Tuesday, April 10,
2018
|
Time:
|
8:00 p.m. ET, 5:00
p.m. PT, (April 11, 2018 - 8:00 a.m. HKT)
|
Toll-free dial-in
number:
|
1-866-519-4004
|
International dial-in
number:
|
+1-845-675-0437
|
Hong Kong:
|
+852-3018-6771
|
United
Kingdom:
|
+44
203-621-4779
|
China
Mainland:
|
4006208038 or
8008190121
|
Conference
ID:
|
1355718
|
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact MZ Group at 1-949-491-8235.
The conference call will be broadcast live and available for
replay https://edge.media-server.com/m6/p/y9fj7vrj and via the
investor relations section of the Company's website here.
A replay of the conference call will be available after
11:00 p.m. Eastern time through
April 17, 2018.
Toll-free replay
number:
|
1-855-452-5696
|
International replay
number:
|
+1-646-254-3697
|
Replay ID:
|
1355718
|
About Link Motion Inc.
Link Motion Inc. ("Link Motion" or the "Company", NYSE: LKM) is
a leading smart car and smart ride company. Link Motion's portfolio
of offerings includes enabling technology solutions and secure
connected carputers for the ecosystem of car businesses, consumer
ride sharing services, as well as legacy mobile security,
productivity and other related applications. For more information
on Link Motion, please visit www.lkmotion.com or the company's U.S.
investor relations site here.
Non-GAAP Financial Measures
To supplement the Company's financial results prepared in
accordance with United States Generally Accepted Accounting
Principles ("GAAP"), Link Motion's management uses non-GAAP
measures of cost of revenues, operating expenses, income from
operations and net income attributable to Link Motion, which are
adjusted from results based on GAAP to exclude share-based
compensation expenses, interest expenses related to convertible
debts and fair value change of derivative liability related to the
convertible debts and the loss of early redemption of convertible
debts, amortization of intangible assets arising from acquisitions,
impairment losses from goodwill, intangible assets and investments,
and income tax provision related to the amortization of intangible
assets arising from acquisitions and impairment loss from goodwill,
intangible assets and investment. The Company also uses non-GAAP
fully diluted earnings per ADS, which is the non-GAAP net income
attributable to common shareholders divided by weighted average
number of diluted ADS.
The Company's non-GAAP financial information is provided as
additional information to help the Company's investors compare
business trends among different reporting periods on a consistent
basis and to enhance investors' overall understanding of the
historical and current financial performance of the Company's
continuing operations and its prospects for the future. The
Company's non-GAAP financial information should be considered in
addition to results prepared in accordance with GAAP, but should
not be considered a substitute for, or superior to, GAAP results.
In addition, the Company's calculation of this non-GAAP financial
information may be different from the calculation used by other
companies, and therefore comparability may be limited.
The non-GAAP financial measures are provided to enhance
investors' overall understanding of Link Motion's current financial
performance and prospects for the future. A limitation of using
non-GAAP cost of revenues, operating expenses, income from
operations and net income attributable to Link Motion, excluding
share-based compensation expenses, interest expenses related to
convertible debts and fair value change of derivative
liability related to the convertible debts and loss of early
redemption of the convertible debts, amortization of intangible
assets arising from acquisitions, impairment losses from goodwill,
intangible assets and investments, and income tax provision related
to the amortization of intangible assets arising from acquisitions
and impairment loss from goodwill, intangible assets and investment
are that these items has been and may continue to be a significant
expense in the Company's business for the foreseeable future. In
order to mitigate these limitations, the Company has provided
specific information regarding the GAAP amounts excluded from each
non-GAAP measure. The accompanying tables include details on the
reconciliation between GAAP financial measures that are most
directly comparable to the non-GAAP financial measures the Company
has presented.
Forward Looking Statements
This news release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates,"
"future," "intends," "plans," "believes," "estimates" and similar
statements. All statements other than statements of historical fact
in this press release are forward-looking statements and involve
certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements.
These forward-looking statements are based on management's current
expectations, assumptions, estimates and projections about the
Company and the industry in which the Company operates, but involve
a number of unknown risks and uncertainties, Further information
regarding these and other risks is included in the Company's
filings with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although the Company believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that such expectations will turn out to be correct, and actual
results may differ materially from the anticipated results. You are
urged to consider these factors carefully in evaluating the
forward-looking statements contained herein and are cautioned not
to place undue reliance on such forward-looking statements, which
are qualified in their entirety by these cautionary statements.
INVESTOR RELATIONS:
MZ North America
Chris Tyson
Managing Director
949-491-8235
LKM@mzgroup.us
www.mzgroup.us
Luke Zimmerman
Senior Associate
949-259-4987
LKM@mzgroup.us
www.mzgroup.us
LINK MOTION
INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
As
of
|
|
|
December
31, 2017
|
|
December
31, 2016
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
60,887
|
|
43,220
|
Term
deposits
|
|
258,945
|
|
223,728
|
Accounts receivable, net of allowance of US$24,072
and US$16,423 as of December 31, 2017 and December 31, 2016,
respectively
|
|
6,127
|
|
16,148
|
Inventory
|
|
1,659
|
|
1,922
|
Deferred tax assets, current portion
|
|
-
|
|
188
|
Prepaid
expenses and other current assets, net of allowance of US$24,443
and US$7,144 as of Dec 31, 2017 and December 31, 2016,
respectively
|
|
59,279
|
|
33,907
|
Receivable of security deposit for
loan
|
|
88,062
|
|
-
|
Assets
held for sale classified as current assets
|
|
-
|
|
176,585
|
Total current
assets
|
|
474,959
|
|
495,698
|
Non-current
assets:
|
|
|
|
|
Equity
investments, net
|
|
87,404
|
|
67,911
|
Property and equipment, net
|
|
2,077
|
|
2,798
|
Intangible assets, net
|
|
1,694
|
|
9,067
|
Goodwill
|
|
1,668
|
|
118,851
|
Deferred tax assets, non-current portion
|
|
748
|
|
1,427
|
Investment prepayment
|
|
8,642
|
|
4,081
|
Other
non-current assets
|
|
54,512
|
|
1,003
|
Notes
receivable
|
|
270,882
|
|
-
|
Assets
held for sale classified as non-current assets
|
|
-
|
|
152,792
|
Total
Assets
|
|
902,586
|
|
853,628
|
LIABILITIES
|
|
|
Current
liabilities:
|
|
|
|
|
Advance
from customers
|
|
414
|
|
852
|
Accounts payable
|
|
9,845
|
|
8,537
|
Deferred revenue
|
|
4,583
|
|
4,626
|
Accrued
expenses and other current liabilities
|
|
41,654
|
|
20,039
|
Tax
payable
|
|
3,750
|
|
2,946
|
Short
term borrowing
|
|
94,520
|
|
2,850
|
Derivative liability
|
|
4,696
|
|
-
|
Convertible debt
|
|
128,504
|
|
-
|
Consideration received from shareholder
|
|
-
|
|
46,521
|
Liabilities held for sale classified as current
liabilities
|
|
-
|
|
73,272
|
Total current
liabilities
|
|
287,966
|
|
159,643
|
Non-current
liabilities:
|
|
|
|
|
Derivative liability
|
|
-
|
|
7,205
|
Convertible debt
|
|
-
|
|
207,040
|
Deferred tax liabilities
|
|
95
|
|
3,247
|
Deferred gain of disposal of subsidiaries
|
|
180,443
|
|
-
|
Liabilities held for sale classified as non-current
liabilities
|
|
-
|
|
729
|
Total
Liabilities
|
|
468,504
|
|
377,864
|
EQUITY
|
|
|
|
|
Link
Motion Inc.'s shareholders' equity
|
|
446,030
|
|
385,843
|
Non-controlling interest
|
|
(11,948)
|
|
89,921
|
Total
equity
|
|
434,082
|
|
475,764
|
Total Liabilities
and Equity
|
|
902,586
|
|
853,628
|
|
LINK MOTION
INC.
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands,
except for share and per share data)
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
|
|
September
30,
|
|
December
31,
|
|
December
31,
|
|
December
31,
|
|
2017
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
Net
Revenues
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
Advertising
|
3,181
|
|
2,317
|
|
2,785
|
|
10,400
|
|
15,554
|
Other
services
|
878
|
|
1,191
|
|
1,066
|
|
3,986
|
|
5,897
|
Enterprise
|
|
|
|
|
|
|
|
|
|
Enterprise mobility
|
8,887
|
|
13,790
|
|
13,165
|
|
42,250
|
|
36,944
|
Services
|
486
|
|
186
|
|
451
|
|
975
|
|
2,249
|
|
|
|
|
|
|
|
|
|
|
Total net
revenues
|
13,432
|
|
17,484
|
|
17,467
|
|
57,611
|
|
60,644
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
(11,385)
|
|
(16,906)
|
|
(20,823)
|
|
(56,559)
|
|
(64,352)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
2,047
|
|
578
|
|
(3,356)
|
|
1,052
|
|
(3,708)
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling
and marketing expenses*
|
(1,205)
|
|
(1,194)
|
|
(2,061)
|
|
(4,783)
|
|
(7,645)
|
General
and administrative expenses*
|
(28,829)
|
|
(6,715)
|
|
(12,244)
|
|
(57,834)
|
|
(48,780)
|
Research
and development expenses*
|
(7,887)
|
|
(2,573)
|
|
(3,980)
|
|
(17,447)
|
|
(13,165)
|
Impairment of goodwill and intangible
assets
|
(4,878)
|
|
(17,254)
|
|
(98,902)
|
|
(102,736)
|
|
(98,902)
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
(42,799)
|
|
(27,736)
|
|
(117,187)
|
|
(182,800)
|
|
(168,492)
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(40,752)
|
|
(27,158)
|
|
(120,543)
|
|
(181,748)
|
|
(172,200)
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(4,813)
|
|
(6,428)
|
|
(6,115)
|
|
(24,019)
|
|
(11,656)
|
Foreign
exchange gain/(loss)
|
1,173
|
|
266
|
|
(604)
|
|
1,815
|
|
(1,200)
|
Realized
gain/(loss) on disposal of a subsidiary
|
367
|
|
-
|
|
(2,963)
|
|
1,405
|
|
(2,963)
|
Investment income/(loss)
|
51
|
|
(17)
|
|
100
|
|
86
|
|
1,454
|
Impairment loss
|
(1,370)
|
|
(2,091)
|
|
(12,203)
|
|
(3,461)
|
|
(12,203)
|
FV
change of derivative liability
|
5,020
|
|
(1,381)
|
|
(1,157)
|
|
2,508
|
|
(1,157)
|
Other(expense)/ income, net
|
(2,129)
|
|
542
|
|
739
|
|
(435)
|
|
2,774
|
Loss before
income taxes
|
(42,453)
|
|
(36,267)
|
|
(142,746)
|
|
(203,849)
|
|
(197,151)
|
|
|
|
|
|
|
|
|
|
|
Income
tax (expense)/benefit
|
(543)
|
|
572
|
|
3,121
|
|
711
|
|
4,835
|
Net loss from
continuing operation
|
(42,996)
|
|
(35,695)
|
|
(139,625)
|
|
(203,138)
|
|
(192,316)
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
(Loss)/Income from
discontinued operations (net of income tax benefit/(expense) of
US$3,510, US$1,211, US$(1,477) for three months ended December
31,2017, September 30, 2017 and December 31. 2016 respectively, and
net of income tax benefit/(expense) of US$ 4,894 and US$ (4,392)
for twelve months ended December 31,2017 and December 31, 2016,
respectively)
|
(16,607)
|
|
10,567
|
|
11,195
|
|
13,234
|
|
58,713
|
Gain from disposal of
discontinued operation
|
161,511
|
|
-
|
|
-
|
|
161,511
|
|
-
|
Income from
disposal of discontinued operations, net of income tax expenses
(net of income tax benefit/(expense) of US$3,510, US$1,211,
US$(1,477) for three months ended December 31,2017, September 30,
2017 and December 31, 2016, respectively and net of income tax
benefit/(expense) of US$ 4,894 and US$ (4,392) for twelve months
ended December 31,2017 and December 31, 2016,
respectively)
|
144,904
|
|
10,567
|
|
11,195
|
|
174,745
|
|
58,713
|
Net
income/(loss)
|
101,908
|
|
(25,128)
|
|
(128,430)
|
|
(28,393)
|
|
(133,603)
|
Net loss/(income)
attributable to the non-controlling interest
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to the non-controlling interest from continuing
operation
|
2,762
|
|
4,670
|
|
20,799
|
|
27,127
|
|
23,164
|
Net loss/(income)
attributable to the non-controlling interest from discontinued
operation
|
6,711
|
|
(3,969)
|
|
(3,618)
|
|
(4,008)
|
|
(17,154)
|
Net income/(loss)
attributable to Link Motion Inc.
|
111,381
|
|
(24,427)
|
|
(111,249)
|
|
(5,274)
|
|
(127,593)
|
|
|
|
|
|
|
|
|
|
|
Net
income/(loss)
|
101,908
|
|
(25,128)
|
|
(128,430)
|
|
(28,393)
|
|
(133,603)
|
Other
comprehensive income/(loss): Foreign currency translation
adjustment
|
11,382
|
|
11,402
|
|
(9,319)
|
|
37,613
|
|
(28,362)
|
Comprehensive
income/(loss)
|
113,290
|
|
(13,726)
|
|
(137,749)
|
|
9,220
|
|
(161,965)
|
Comprehensive income/(loss) attributable to
non-controlling interest
|
9,056
|
|
(800)
|
|
19,918
|
|
19,870
|
|
10,579
|
Comprehensive
income/(loss) attributable to Link Motion Inc.
|
122,346
|
|
(14,526)
|
|
(117,831)
|
|
29,090
|
|
(151,386)
|
|
|
|
|
|
|
|
|
|
|
Net earnings/(loss)
per Class A and Class B common share, basic &
diluted
|
0.2193
|
|
(0.0481)
|
|
(0.2238)
|
|
(0.0104)
|
|
(0.2588)
|
Net loss per Class A
and Class B common share from continuing operations, basic &
diluted
|
(0.0792)
|
|
(0.0611)
|
|
(0.2390)
|
|
(0.3487)
|
|
(0.3431)
|
Net earnings per Class
A and Class B common share from discontinued operations, basic
& diluted
|
0.2985
|
|
0.0130
|
|
0.0152
|
|
0.3383
|
|
0.0843
|
Net earnings/(loss)
per ADS, basic & diluted
|
1.0965
|
|
(0.2405)
|
|
(1.1190)
|
|
(0.0520)
|
|
(1.2940)
|
Net loss per ADS from
continuing operations, basic & diluted
|
(0.3960)
|
|
(0.3055)
|
|
(1.1950)
|
|
(1.7435)
|
|
(1.7155)
|
Net earnings per ADS
from discontinued operations, basic & diluted
|
1.4925
|
|
0.0650
|
|
0.0760
|
|
1.6915
|
|
0.4215
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
507,800,671
|
|
507,475,590
|
|
497,129,411
|
|
504,750,685
|
|
492,939,263
|
* Share-based
compensation expenses included in:
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
6
|
|
7
|
|
(62)
|
|
124
|
|
(53)
|
Selling
and marketing expenses
|
6
|
|
7
|
|
(39)
|
|
(21)
|
|
416
|
General
and administrative expenses
|
126
|
|
163
|
|
369
|
|
5,522
|
|
12,350
|
Research
and development expenses
|
-
|
|
-
|
|
(145)
|
|
(63)
|
|
(106)
|
Total
|
138
|
|
177
|
|
123
|
|
5,562
|
|
12,607
|
|
|
|
|
|
|
|
|
|
|
|
LINK MOTION
INC.
|
NON-GAAP MEASURE
RECONCILIATIONS
|
(In thousands,
except for share and per share data)
|
|
Three months
ended
|
|
Twelve months
ended
|
|
December
31,
2017
|
September
30, 2017
|
December
31,
2016
|
|
December
31, 2017
|
December
31, 2016
|
|
US$
|
US$
|
US$
|
|
US$
|
US$
|
Selling and
marketing expenses under GAAP
|
(1,205)
|
(1,194)
|
(2,061)
|
|
(4,783)
|
(7,645)
|
Adjustment (a)
|
6
|
7
|
(39)
|
|
(21)
|
416
|
Non-GAAP selling
and marketing expenses
|
(1,199)
|
(1,187)
|
(2,100)
|
|
(4,804)
|
(7,229)
|
|
|
|
|
|
|
|
General and
administrative expenses under GAAP
|
(28,829)
|
(6,715)
|
(12,244)
|
|
(57,834)
|
(48,780)
|
Adjustment (a)
|
126
|
163
|
369
|
|
5,522
|
12,350
|
Adjustment (c)
|
-
|
-
|
551
|
|
-
|
2,270
|
Non-GAAP general
and administrative expenses
|
(28,703)
|
(6,552)
|
(11,324)
|
|
(52,312)
|
(34,160)
|
|
|
|
|
|
|
|
Research and
development expenses under GAAP
|
(7,887)
|
(2,573)
|
(3,980)
|
|
(17,447)
|
(13,165)
|
Adjustment (a)
|
-
|
-
|
(145)
|
|
(63)
|
(106)
|
Adjustment (c)
|
114
|
114
|
114
|
|
456
|
838
|
Non-GAAP research
and development expenses
|
(7,773)
|
(2,459)
|
(4,011)
|
|
(17,054)
|
(12,433)
|
|
|
|
|
|
|
|
Loss from
operations under GAAP
|
(40,752)
|
(27,158)
|
(120,543)
|
|
(181,748)
|
(172,200)
|
Adjustment (a)
|
138
|
177
|
123
|
|
5,562
|
12,607
|
Adjustment (c)
|
138
|
358
|
1,724
|
|
1,403
|
6,978
|
Adjustment (d)
|
4,878
|
17,254
|
98,902
|
|
102,736
|
98,902
|
Non-GAAP loss from
operations
|
(35,598)
|
(9,369)
|
(19,794)
|
|
(72,047)
|
(53,713)
|
|
|
|
|
|
|
|
Net
income/(loss) attributable to Link Motion Inc. under
GAAP
|
111,381
|
(24,427)
|
(111,249)
|
|
(5,274)
|
(127,593)
|
Adjustment (a)
|
138
|
177
|
123
|
|
5,562
|
12,607
|
Adjustment (b)
|
3,474
|
8,730
|
8,325
|
|
27,848
|
15,646
|
Adjustment (c)
|
662
|
1,067
|
3,316
|
|
4,645
|
13,722
|
Adjustment (d)
|
6,248
|
19,345
|
111,105
|
|
106,197
|
111,105
|
Adjustment (e)
|
(49)
|
(570)
|
(1,814)
|
|
(1,997)
|
(3,727)
|
Non-GAAP net income
attributable to Link Motion Inc.
|
121,854
|
4,322
|
9,806
|
|
136,981
|
21,760
|
|
|
|
|
|
|
|
Non-GAAP
weighted average number of diluted ADS outstanding:
|
|
|
|
|
|
|
Basic
|
101,560,134
|
101,495,118
|
99,425,882
|
|
100,950,137
|
98,587,853
|
Diluted
|
102,031,817
|
101,896,886
|
100,371,595
|
|
101,475,544
|
99,723,579
|
Non-GAAP
earnings per ADS, basic
|
1.1998
|
0.0426
|
0.0986
|
|
1.3569
|
0.2207
|
Non-GAAP
earnings per ADS, diluted
|
1.1943
|
0.0424
|
0.0977
|
|
1.3499
|
0.2182
|
|
|
|
|
|
|
|
|
(a) Adjustment
to exclude the share-based compensation expenses for each
period
(b) Adjustment to exclude the interest expenses related to
convertible debt, fair value change of derivative liability related
to the convertible debts and loss of early redemption of
convertible debts.
(c) Adjustment to exclude the amortization of intangible
assets arising from acquisitions
(d) Adjustment to exclude impairment loss from goodwill,
intangible assets arising from acquisitions and investment
(e) To adjust income tax provision related to item (c) and
(d). Deferred tax liabilities was recognized along with intangible
assets recognized related to acquisitions. The amortization and
impairment of such intangible assets resulted in reversal of
corresponding deferred tax liabilities that impact deferred income
tax expense. Other non-GAAP to GAAP reconciling items have no
income tax effect *
*The reconciliation items (a) and (b) were recorded in entities in
tax free jurisdictions hence no income tax implications.
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content:http://www.prnewswire.com/news-releases/link-motion-reports-unaudited-financial-results-for-the-fourth-quarter-and-fiscal-year-2017-300627637.html
SOURCE Link Motion Inc.