500.com Limited Announces Unaudited Financial Results For the Second Quarter ended June 30, 2020
500.com Limited (WBAI) reported its Q2 2020 results, showing net revenues of RMB3.6 million (US$0.5 million), a 62.9% decline from RMB9.7 million in Q2 2019, primarily due to the suspension of operations in Sweden.
Operating loss was RMB52.3 million (US$7.4 million), improved from RMB138.3 million in Q2 2019. The company continues to face challenges from regulatory suspensions and an ongoing internal investigation impacting its financial activities. Cash reserves stood at RMB295.5 million (US$41.8 million) as of June 30, 2020.
- Operating loss improved from RMB138.3 million in Q2 2019 to RMB52.3 million in Q2 2020.
- Operating expenses decreased by RMB37.1 million or 40.2% year-over-year due to cost reduction measures.
- Net revenues of RMB3.6 million represent a 62.9% decrease year-over-year.
- Temporary suspension of operations in Sweden significantly impacted revenue, which accounted for 89.7% of total net revenues in 2019.
- The internal investigation remains unresolved, creating uncertainty about financial statements.
SHENZHEN, China, Aug. 28, 2020 /PRNewswire/ -- 500.com Limited (NYSE: WBAI) ("500.com," "the Company," "we," "us," "our company," or "our"), an online sports lottery service provider in China, today reported its unaudited financial results for the second quarter ended June 30, 2020.
Suspension of Online Sports Lottery Sales in China
All provincial sports lottery administration centers to which the Company provided sports lottery sales services have suspended accepting online purchase orders for lottery products in response to the Notice related to Self-Inspection and Self-Remedy of Unauthorized Online Lottery Sales (the "Self-Inspection Notice"), which was jointly promulgated by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of the People's Republic of China on January 15, 2015. In response to the Self-Inspection Notice, on April 4, 2015, the Company decided to voluntarily suspend all online lottery sales services. As a result of the provincial sport lottery administration centers' decision to suspend accepting online lottery orders and the Company's voluntary suspension of all online sports lottery sales services in China, the Company has not generated any revenue from these services since April 2015.
Temporary Suspension of Operations in Sweden
The Multi Group ("TMG"), a Malta-based subsidiary of the Company, has temporarily suspended its operations in Sweden as TMG did not complete the renewal of its e-Gaming license before it expired. The Company promptly issued a Current Report on Form 6-K dated January 13, 2020 regarding this situation, and provided an update through another Current Report on Form 6-K dated February 20, 2020. TMG has submitted all the application materials and is in close communication with Sweden's e-Gaming regulatory authority to complete the renewal process. The Company's revenues for the second quarter ended June 30, 2020 have been, and for the fiscal year of 2020 are expected to be, materially and adversely impacted by the temporary suspension of TMG's operations in Sweden. Revenue generated by TMG accounted for approximately
Internal Investigation Still in Progress
On December 31, 2019, the Company announced that its Board of Directors (the "Board") had formed a Special Investigation Committee (the "SIC") to internally investigate alleged illegal money transfers and the role played by consultants following the arrest of one consultant (also a former director of the Company's subsidiary in Japan) and two former consultants by the Tokyo District Public Prosecutors Office. On January 16, 2020, the Company announced that the SIC had retained King & Wood Mallesons LLP ("KWM") as its legal advisor to assist with its internal investigation.
As of today, we understand generally from the SIC that KWM has completed certain investigatory work and the internal investigation is still in progress. The Company currently is unable to determine with certainty what effect (if any) the result of the internal investigation may have on the Company's financial statements for the fiscal year ended December 31, 2019. In addition, the Company currently cannot conclude the assessment of the effectiveness of its internal control over financial reporting as of December 31, 2019 until the internal investigation is completed.
Annual Report on Form 20-F for the Fiscal Year ended December 31, 2019
The Company previously filed a Form 12b-25 with the SEC on June 15, 2020 for late filing of its Annual Report on Form 20-F for the fiscal year ended December 31, 2019 (the "2019 Annual Report"), pursuant to which the 2019 Annual Report was due to be filed by June 30, 2020. The Company expects to file the 2019 Annual Report (i) upon completion of the previously announced internal investigation being conducted by the SIC of the Company's Board, with the assistance of KWM, (ii) once the Company's financial statements for the fiscal year ended December 31, 2019 are finalized, (iii) the Company has completed the assessment of the effectiveness of its internal control over financial reporting as of December 31, 2019, and (iv) Friedman LLP, the Company's independent registered public accounting firm, has completed its audit of financial statements and internal control over financial reporting as of December 31, 2019.
The Company also reports that on July 1, 2020, the Company received an expected notice from New York Stock Exchange ("NYSE") Regulation stating that the Company is not in compliance with the NYSE's continued listing requirements under the timely filing criteria pursuant to Section 802.01E of the NYSE Listed Company Manual as a result of the Company's failure to timely file the 2019 Annual Report with the SEC. As required by the notice, (a) a representative of the Company contacted the NYSE on July 1, 2020 to discuss the status of the 2019 Annual Report, and (b) the Company is issuing this press release, disclosing the status of the 2019 Annual Report, noting the delay and the reason for the delay, as mentioned above. The anticipated filing date of the 2019 Annual Report is not known at this time.
NYSE Regulation notified the Company that the NYSE will closely monitor the status of the Company's late filing and related public disclosures for up to a six-month period from the due date of the 2019 Annual Report. If the Company fails to file its annual report and any subsequent delayed filings within six months from the filing due date, the NYSE may, in its sole discretion, allow the Company's securities to trade for up to an additional six months depending on specific circumstances, as outlined in Section 802.01E of the NYSE Listed Company Manual.
The Company intends to meet the filing deadline of six months period from the filing due date of the 2019 Annual Report, or December 31, 2020.
Purchase of the Remaining
In connection with our acquisition of a
Second Quarter 2020 Highlights
- Net revenues were RMB3.6 million (US
$0.5 million ), compared with net revenues of RMB3.1 million for the first quarter of 2020, and net revenues of RMB9.7 million for the second quarter of 2019.
- Operating loss was RMB52.3 million (US
$7.4 million ), compared with operating loss of RMB36.8 million for the first quarter of 2020, and operating loss of RMB138.3 million for the second quarter of 2019.
- Non-GAAP[1] operating loss was RMB33.7 million (US
$4.8 million ), compared with non-GAAP operating loss of RMB31.7 million for the first quarter of 2020, and non-GAAP operating loss of RMB60.9 million for the second quarter of 2019.
- Net loss attributable to 500.com was RMB86.3 million (US
$12.2 million ), compared with net loss attributable to 500.com of RMB36.8 million for the first quarter of 2020, and net loss attributable to 500.com of RMB137.8 million for the second quarter of 2019.
- Non-GAAP net loss attributable to 500.com was RMB34.0 million (US
$4.8 million ), compared with non-GAAP net loss attributable to 500.com of RMB35.3 million for the first quarter of 2020, and non-GAAP net loss attributable to 500.com of RMB60.4 million for the second quarter of 2019.
- Basic and diluted losses per ADS were RMB2.01 (US
$0.28) .
- Non-GAAP basic and diluted losses per ADS were RMB0.79 (US
$0.11) .
[1] Non-GAAP financial measures exclude the impact of share-based compensation expenses, impairment of acquired intangible assets, impairment of goodwill, impairment of long-term investments and deferred tax benefit relating to valuation allowance. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in the table at the end of this release. |
Second Quarter 2020 Financial Results
Net Revenues
Net revenues were RMB3.6 million (US
Operating Expenses
Operating expenses were RMB55.1 million (US
Cost of services was RMB4.6 million (US
Sales and marketing expenses were RMB5.0 million (US
General and administrative expenses were RMB35.4 million (US
Service development expenses were RMB10.1 million (US
Impairments of Goodwill and Acquired Intangible assets
The impairments of goodwill and acquired intangible assets were related to the Company's acquisition of TMG, which were triggered by TMG's temporary suspension of operations in Sweden.
Impairment of goodwill was RMB57.2 million for the second quarter of 2019. There was no additional impairment of goodwill for the first and second quarters of 2020 as the related goodwill and intangible assets were fully impaired as of December 31, 2019.
Operating Loss
Operating loss was RMB52.3 million (US
Non-GAAP operating loss was RMB33.7 million (US
Net Loss Attributable to 500.com
Net loss attributable to 500.com was RMB86.3 million (US
Non-GAAP net loss attributable to 500.com was RMB34.0 million (US
Cash and Cash Equivalents, Restricted Cash, Time Deposits and Short-term Investments
As of June 30, 2020, the Company had cash and cash equivalents of RMB295.5 million (US
[2] Restricted cash represents: (i) government grants received but pending final clearance; and (ii) deposits in merchant banks yet to be withdrawn. |
[3] Time deposit represents deposits in commercial banks with original maturities of greater than three months but less than a year. |
[4] Short-term investment represents investments in structured financial products provided by financial institutions in the PRC with an initial maturity of six months. |
Prepayments and Other Current Assets
As of June 30, 2020, the balance of prepayment and other current assets was RMB24.9 million (US
Business Outlook
The Company does not expect to issue any earnings forecast until it receives clear instructions as to the resumption date of online sports lottery sales from the Ministry of Finance.
Currency Convenience Translation
This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate of RMB7.0651 to US
About 500.com Limited
500.com Limited (NYSE: WBAI) is an online sports lottery service provider in China. The Company offers a comprehensive and integrated suite of online lottery services, information, user tools and virtual community venues to its users. 500.com was among the first companies to provide online lottery services in China, and is one of two entities that have been approved by the Ministry of Finance to provide online lottery sales services on behalf of the China Sports Lottery Administration Center, which is the government authority that is in charge of the issuance and sale of sports lottery products in China.
Safe Harbor Statements
This news release contains forward-looking statements within the meaning of 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," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
About Non-GAAP Financial Measures
To supplement the Company's financial results presented in accordance with U.S. GAAP, the Company uses non-GAAP financial measures, which are adjusted from results based on U.S. GAAP to exclude share-based compensation expenses in the Company's consolidated affiliated entities. Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures are set forth in table at the end of this release, which provide more details on the non-GAAP financial measures.
Non-GAAP financial information is provided as additional information to help 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 prospects for the future. Non-GAAP financial information should not be considered a substitute for or superior to U.S. GAAP results. In addition, calculations of this non-GAAP financial information may be different from calculations used by other companies, and therefore comparability may be limited.
For more information, please contact:
500.com Limited
ir@500wan.com
Christensen
In China
Mr. Eric Yuan
Phone: +86-10-5900-1548
Email: Eyuan@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
500.com Limited | |||||
December 31, | June 30, | June 30, | |||
RMB | RMB | US$ | |||
Unaudited | Unaudited | Unaudited | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 361,220 | 295,505 | 41,826 | ||
Restricted cash | 4,576 | 4,640 | 657 | ||
Time deposits | 23,849 | 200 | 28 | ||
Short-term investments | - | 50,000 | 7,077 | ||
Amounts due from related parties | 10,401 | 503 | 71 | ||
Prepayments and other current assets | 30,280 | 24,936 | 3,529 | ||
Total current assets | 430,326 | 375,784 | 53,188 | ||
Non-current assets: | |||||
Property and equipment, net | 64,112 | 49,384 | 6,990 | ||
Intangible assets, net | 4,505 | 3,299 | 467 | ||
Deposits | 5,388 | 5,282 | 748 | ||
Long-term investments | 152,954 | 109,495 | 15,498 | ||
Right-of-use assets | 36,607 | 24,161 | 3,420 | ||
Other non-current assets | 1,887 | 1,664 | 236 | ||
Total non-current assets | 265,453 | 193,285 | 27,359 | ||
TOTAL ASSETS | 695,779 | 569,069 | 80,547 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accrued payroll and welfare payable | 6,879 | 3,093 | 438 | ||
Accrued expenses and other current liabilities | 51,398 | 53,684 | 7,599 | ||
Income tax payable | 2,213 | 545 | 77 | ||
Operating lease liabilities - current | 16,672 | 16,154 | 2,286 | ||
Total current liabilities | 77,162 | 73,476 | 10,400 | ||
Non-current liabilities: | |||||
Long-term payables | 2,965 | 751 | 106 | ||
Deferred tax liabilities | 59 | - | - | ||
Operating lease liabilities - non-current | 31,675 | 21,747 | 3,078 | ||
Total non-current liabilities | 34,699 | 22,498 | 3,184 | ||
TOTAL LIABILITIES | 111,861 | 95,974 | 13,584 | ||
Redeemable noncontrolling interest | 14,849 | - | - | ||
Shareholders' Equity: | |||||
Class A ordinary shares, par value US | 145 | 149 | 22 | ||
Class B ordinary shares, par value US and outstanding as of December 31, 2019 and | 6 | 2 | - | ||
Additional paid-in capital | 2,547,293 | 2,571,064 | 363,910 | ||
Treasury shares | (143,780) | (143,780) | (20,351) | ||
Accumulated deficit | (1,960,692) | (2,083,838) | (294,948) | ||
Accumulated other comprehensive income | 141,484 | 143,200 | 20,269 | ||
Total 500.com Limited shareholders' equity | 584,456 | 486,797 | 68,902 | ||
Noncontrolling interests | (15,387) | (13,702) | (1,939) | ||
Total shareholders' equity | 569,069 | 473,095 | 66,963 | ||
TOTAL LIABILITIES, NONCONTROLLING | 695,779 | 569,069 | 80,547 | ||
500.com Limited | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | ||||||
Net Revenues | 9,705 | 3,064 | 3,648 | 516 | 21,340 | 6,712 | 950 | |||||
Operating costs and expenses: | ||||||||||||
Cost of services | (15,032) | (3,984) | (4,616) | (653) | (31,100) | (8,600) | (1,217) | |||||
Sales and marketing expenses | (9,567) | (3,042) | (4,998) | (707) | (24,332) | (8,040) | (1,138) | |||||
General and administrative expenses | (55,738) | (29,876) | (35,373) | (5,007) | (121,417) | (65,249) | (9,235) | |||||
Service development expenses | (11,825) | (7,146) | (10,070) | (1,425) | (25,612) | (17,216) | (2,437) | |||||
Total operating expenses | (92,162) | (44,048) | (55,057) | (7,792) | (202,461) | (99,105) | (14,027) | |||||
Other operating income | 952 | 4,091 | 453 | 64 | 4,715 | 4,544 | 643 | |||||
Government grant | 377 | 169 | 172 | 24 | 3,022 | 341 | 48 | |||||
Other operating income (expenses) | 40 | (53) | (1,553) | (220) | (6,720) | (1,606) | (227) | |||||
Impairment of goodwill | (57,218) | - | - | - | (57,218) | - | - | |||||
Operating loss from continuing operations | (138,306) | (36,777) | (52,337) | (7,408) | (237,322) | (89,114) | (12,613) | |||||
Other income (expenses), net | 1 | (375) | 1,116 | 158 | 389 | 741 | 105 | |||||
Interest income | 3,427 | 2,391 | 2,554 | 361 | 7,117 | 4,945 | 700 | |||||
Loss from equity method investments | (6,568) | (5,211) | (2,769) | (392) | (6,911) | (7,980) | (1,129) | |||||
Impairment of long-term investments | - | - | (33,706) | (4,771) | - | (33,706) | (4,771) | |||||
Loss before income tax | (141,446) | (39,972) | (85,142) | (12,052) | (236,727) | (125,114) | (17,708) | |||||
Income tax benefit | 342 | 3,593 | 60 | 8 | 440 | 3,653 | 517 | |||||
Net loss from continuing operations | (141,104) | (36,379) | (85,082) | (12,044) | (236,287) | (121,461) | (17,191) | |||||
Net loss | (141,104) | (36,379) | (85,082) | (12,044) | (236,287) | (121,461) | (17,191) | |||||
Less: Net (loss) income attributable to noncontrolling interest and Redeemable noncontrollling interest | (3,306) | 449 | 1,236 | 175 | (3,554) | 1,685 | 238 | |||||
Net (loss) income attributable to noncontrolling interests | (3,306) | 449 | 1,236 | 175 | (3,554) | 1,685 | 238 | |||||
Net loss attributable to 500.com Limited | (137,798) | (36,828) | (86,318) | (12,219) | (232,733) | (123,146) | (17,429) | |||||
Other comprehensive income (loss) | ||||||||||||
Changes in unrealized (loss) gain | - | (2,409) | 436 | 62 | - | (1,973) | (279) | |||||
Foreign currency translation gain (loss) | 7,835 | 4,104 | (415) | (59) | (1,010) | 3,689 | 522 | |||||
Other comprehensive income (loss), net of tax | 7,835 | 1,695 | 21 | 3 | (1,010) | 1,716 | 243 | |||||
Comprehensive loss | (133,269) | (34,684) | (85,061) | (12,041) | (237,297) | (119,745) | (16,948) | |||||
Less: Comprehensive (loss) income attributable to noncontrolling interests and Redeemable noncontrolling | (3,306) | 449 | 1,236 | 175 | (3,554) | 1,685 | 238 | |||||
Comprehensive loss attributable to 500.com Limited | (129,963) | (35,133) | (86,297) | (12,216) | (233,743) | (121,430) | (17,186) | |||||
Weighted average number of Class A and Class B ordinary shares outstanding: | ||||||||||||
Basic | 428,561,237 | 430,002,155 | 430,009,704 | 430,009,704 | 427,202,484 | 430,005,930 | 430,005,930 | |||||
Diluted | 428,561,237 | 430,002,155 | 430,009,704 | 430,009,704 | 427,202,484 | 430,005,930 | 430,005,930 | |||||
Losses per share attributable to 500.com Limited-Basic and Diluted | ||||||||||||
Net loss | (0.32) | (0.09) | (0.20) | (0.03) | (0.54) | (0.29) | (0.04) | |||||
Losses per ADS* attributable to 500.com Limited-Basic and Diluted | ||||||||||||
Net loss | (3.22) | (0.86) | (2.01) | (0.28) | (5.45) | (2.86) | (0.41) | |||||
* American Depositary Shares, which are traded on the NYSE. Each ADS represents ten Class A ordinary | ||||||||||||
Numerator adjustment for net loss attributable to 500.com Limited | ||||||||||||
500.com Limited | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||
RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | ||||||
Operating loss from continuing operations | (138,306) | (36,777) | (52,337) | (7,408) | (237,322) | (89,114) | (12,613) | |||||
Adjustment for share-based compensation expenses | 20,203 | 5,103 | 18,649 | 2,640 | 48,919 | 23,752 | 3,362 | |||||
Adjustment for impairment of goodwill | 57,218 | - | - | - | 57,218 | - | - | |||||
Adjusted operating loss from continuing operations (non-GAAP) | (60,885) | (31,674) | (33,688) | (4,768) | (131,185) | (65,362) | (9,251) | |||||
Net loss attributable to 500.com Limited | (137,798) | (36,828) | (86,318) | (12,219) | (232,733) | (123,146) | (17,429) | |||||
Adjustment for share-based compensation expenses | 20,203 | 5,103 | 18,649 | 2,640 | 48,919 | 23,752 | 3,362 | |||||
Adjustment for impairment of goodwill | 57,218 | - | - | - | 57,218 | - | - | |||||
Adjustment for Impairment of long-term investments | - | - | 33,706 | 4,771 | - | 33,706 | 4,771 | |||||
Adjustment for deferred tax benefit relating to valuation allowance | - | (3,599) | (60) | (8) | - | (3,659) | (518) | |||||
Adjusted net loss attributable to 500.com Limited (non-GAAP) | (60,377) | (35,324) | (34,023) | (4,816) | (126,596) | (69,347) | (9,814) | |||||
Weighted average number of Class A and Class B ordinary shares outstanding: | ||||||||||||
Basic | 428,561,237 | 430,002,155 | 430,009,704 | 430,009,704 | 427,202,484 | 430,005,930 | 430,005,930 | |||||
Diluted | 428,561,237 | 430,002,155 | 430,009,704 | 430,009,704 | 427,202,484 | 430,005,930 | 430,005,930 | |||||
Losses per share attributable to 500.com Limited (non-GAAP)-Basic and diluted | ||||||||||||
Net loss (non-GAAP) | (0.14) | (0.08) | (0.08) | (0.01) | (0.30) | (0.16) | (0.02) | |||||
Losses per ADS* attributable to 500.com Limited (non-GAAP)-Basic and diluted | ||||||||||||
Net loss (non-GAAP) | (1.41) | (0.82) | (0.79) | (0.11) | (2.96) | (1.61) | (0.23) | |||||
* American Depositary Shares, which are traded on the NYSE. Each ADS represents ten Class A ordinary shares of the Company. | ||||||||||||
Numerator adjustment for net loss attributable to 500.com Limited | ||||||||||||
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SOURCE 500.com Limited
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