500.com Limited Announces Unaudited Financial Results For the Third Quarter ended September 30, 2020
500.com Limited (NYSE: WBAI) has announced its unaudited financial results for Q3 2020, reporting net revenues of RMB6.1 million (US$0.9 million), a 37.8% decrease from Q3 2019. The company faced an operating loss of RMB50.2 million (US$7.4 million) and a net loss of RMB44.0 million (US$6.5 million). The significant revenue impact stems from the temporary suspension of operations in Sweden, which previously contributed about 89.7% of total net revenues. The company has resumed operations in Sweden but faces challenges in the online sports lottery sector in China. No earnings forecast is provided until further clarity is received from regulators.
- Net revenues increased sequentially by 69.4% from the second quarter of 2020.
- Operating loss decreased year-over-year from RMB98.4 million in Q3 2019 to RMB50.2 million in Q3 2020.
- Net revenues decreased by 37.8% year-over-year, impacted by the suspension of operations in Sweden.
- No earnings guidance until the resumption date of online sports lottery sales is confirmed.
SHENZHEN, China, Nov. 20, 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 third quarter ended September 30, 2020.
Resumption of Operations in Sweden
The Multi Group ("TMG"), a Malta-based subsidiary of the Company, has temporarily suspended its operations in Sweden in early 2020 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. After submitting all the application materials and maintaining close communication with Sweden's e-Gaming regulatory authority, TMG completed the renewal process and resumed its operations in Sweden in September 2020. The Company's revenues for the third quarter ended September 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
Completion of Internal Investigation
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.
On October 7, 2020, the Company announced that the SIC of the Company's Board completed its internal investigation.
KWM presented its investigation review to SIC on October 7, 2020. Based on the findings and analyses in KWM's review, the SIC has concluded that it did not find a sufficient basis to establish a violation of the US Foreign Corrupt Practices Act of 1977 in connection with the Company's prior activities in Japan. The SIC has also reviewed the Company's compliance policies, procedures and internal controls in light of the suggestions from KWM. The Company has updated such policies, procedures and internal controls based on recommendations from the SIC, and will continue to enhance its internal controls as appropriate.
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) once the Company has completed the assessment of the effectiveness of its internal control over financial reporting as of December 31, 2019, and (iv) once 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 from the filing due date of the 2019 Annual Report, or December 31, 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.
Third Quarter 2020 Highlights
- Net revenues were RMB6.1 million (US
$0.9 million ), compared with net revenues of RMB3.6 million for the second quarter of 2020, and net revenues of RMB9.8 million for the third quarter of 2019. - Operating loss was RMB50.2 million (US
$7.4 million ), compared with operating loss of RMB52.3 million for the second quarter of 2020, and operating loss of RMB98.4 million for the third quarter of 2019. - Non-GAAP[1] operating loss was RMB37.6 million (US
$5.5 million ), compared with non-GAAP operating loss of RMB33.7 million for the second quarter of 2020, and non-GAAP operating loss of RMB52.3 million for the third quarter of 2019. - Net loss attributable to 500.com was RMB44.0 million (US
$6.5 million ), compared with net loss attributable to 500.com of RMB86.3 million for the second quarter of 2020, and net loss attributable to 500.com of RMB95.8 million for the third quarter of 2019. - Non-GAAP net loss attributable to 500.com was RMB31.6 million (US
$4.7 million ), compared with non-GAAP net loss attributable to 500.com of RMB34.0 million for the second quarter of 2020, and non-GAAP net loss attributable to 500.com of RMB49.7 million for the third quarter of 2019. - Basic and diluted losses per ADS were RMB1.02 (US
$0.15) . - Non-GAAP basic and diluted losses per ADS were RMB0.73 (US
$0.11) .
Third Quarter 2020 Financial Results
Net Revenues
Net revenues were RMB6.1 million (US
Operating Expenses
Operating expenses were RMB56.2 million (US
Cost of services was RMB3.8 million (US
Sales and marketing expenses were RMB4.2 million (US
General and administrative expenses were RMB46.4 million (US
Service development expenses were RMB1.8 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 its operations in Sweden.
Impairment of goodwill was RMB30.9 million for the third quarter of 2019. There was no additional impairment of goodwill for the second and third quarters of 2020 as the related goodwill and intangible assets were fully impaired as of December 31, 2019.
Operating Loss
Operating loss was RMB50.2 million (US
Non-GAAP operating loss was RMB37.6 million (US
Net Loss Attributable to 500.com
Net loss attributable to 500.com was RMB44.0 million (US
Non-GAAP net loss attributable to 500.com was RMB31.6 million (US
Cash and Cash Equivalents, Restricted Cash, Time Deposits and Short-term Investments
As of September 30, 2020, the Company had cash and cash equivalents of RMB278.4 million (US
Prepayments and Other Current Assets
As of September 30, 2020, the balance of prepayment and other current assets was RMB23.5 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 RMB6.7896 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.
[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. |
[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. |
For more information, please contact:
500.com Limited
Christensen
In China
Mr. Eric Yuan Phone: +86-10-5900-1548
E-mail: Eyuan@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
500.com Limited | |||||
December 31, | September 30, | September 30, | |||
RMB | RMB | US$ | |||
Unaudited | Unaudited | Unaudited | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | 361,220 | 278,391 | 41,003 | ||
Restricted cash | 4,576 | 2,437 | 359 | ||
Time deposits | 23,849 | 200 | 29 | ||
Short-term investments | - | 50,000 | 7,364 | ||
Amounts due from related parties | 10,401 | 560 | 82 | ||
Prepayments and other current assets | 30,280 | 23,467 | 3,456 | ||
Total current assets | 430,326 | 355,055 | 52,293 | ||
Non-current assets: | |||||
Property and equipment, net | 64,112 | 22,828 | 3,362 | ||
Intangible assets, net | 4,505 | 2,765 | 407 | ||
Deposits | 5,388 | 1,516 | 223 | ||
Long-term investments | 152,954 | 110,336 | 16,251 | ||
Right-of-use assets | 36,607 | 6,327 | 932 | ||
Other non-current assets | 1,887 | 1,664 | 245 | ||
Total non-current assets | 265,453 | 145,436 | 21,420 | ||
TOTAL ASSETS | 695,779 | 500,491 | 73,713 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accrued payroll and welfare payable | 6,879 | 21 | 3 | ||
Accrued expenses and other current liabilities | 51,398 | 57,157 | 8,418 | ||
Income tax payable | 2,213 | 547 | 81 | ||
Operating lease liabilities - current | 16,672 | 3,802 | 560 | ||
Total current liabilities | 77,162 | 61,527 | 9,062 | ||
Non-current liabilities: | |||||
Long-term payables | 2,965 | 604 | 89 | ||
Deferred tax liabilities | 59 | - | - | ||
Operating lease liabilities - non-current | 31,675 | 2,989 | 440 | ||
Total non-current liabilities | 34,699 | 3,593 | 529 | ||
TOTAL LIABILITIES | 111,861 | 65,120 | 9,591 | ||
Redeemable noncontrolling interest | 14,849 | - | - | ||
Shareholders' Equity: | |||||
Class A ordinary shares, par value US | 145 | 148 | 22 | ||
Class B ordinary shares, par value US | 6 | 3 | - | ||
Additional paid-in capital | 2,547,293 | 2,583,689 | 380,536 | ||
Treasury shares | (143,780) | (143,780) | (21,177) | ||
Accumulated deficit | (1,960,692) | (2,127,811) | (313,393) | ||
Accumulated other comprehensive income | 141,484 | 136,278 | 20,072 | ||
Total 500.com Limited shareholders' equity | 584,456 | 448,527 | 66,060 | ||
Noncontrolling interests | (15,387) | (13,156) | (1,938) | ||
Total shareholders' equity | 569,069 | 435,371 | 64,122 | ||
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND | 695,779 | 500,491 | 73,713 | ||
500.com Limited | |||||||
Three Months Ended | |||||||
September 30, | June 30, | September 30, | September 30, | ||||
RMB | RMB | RMB | US$ | ||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||
Net Revenues | 9,763 | 3,648 | 6,145 | 905 | |||
Operating costs and expenses: | |||||||
Cost of services | (16,096) | (4,616) | (3,824) | (563) | |||
Sales and marketing expenses | (8,980) | (4,998) | (4,158) | (612) | |||
General and administrative expenses | (43,080) | (35,373) | (46,401) | (6,834) | |||
Service development expenses | (11,072) | (10,070) | (1,840) | (271) | |||
Total operating expenses | (79,228) | (55,057) | (56,223) | (8,280) | |||
Other operating income | 1,233 | 453 | 487 | 72 | |||
Government grant | 264 | 172 | 246 | 36 | |||
Other operating expenses | 465 | (1,553) | (892) | (131) | |||
Impairment of goodwill | (30,916) | - | - | - | |||
Operating loss from continuing operations | (98,419) | (52,337) | (50,237) | (7,398) | |||
Other expenses (income), net | (1) | 1,116 | (2) | - | |||
Interest income | 3,289 | 2,554 | 2,225 | 328 | |||
(Loss) income from equity method investments | (699) | (2,769) | 4,338 | 639 | |||
Impairment of long-term investments | - | (33,706) | 249 | 37 | |||
Loss before income tax | (95,830) | (85,142) | (43,427) | (6,394) | |||
Income tax benefit | 230 | 60 | - | - | |||
Net loss from continuing operations | (95,600) | (85,082) | (43,427) | (6,394) | |||
Net income attributable to noncontrolling interests | 189 | 1,236 | 546 | 80 | |||
Net loss attributable to 500.com Limited | (95,789) | (86,318) | (43,973) | (6,474) | |||
Other comprehensive loss | |||||||
Changes in unrealized gain | - | 436 | 739 | 109 | |||
Foreign currency translation gain (loss) | 10,195 | (415) | (7,661) | (1,128) | |||
Other comprehensive income (loss), net of tax | 10,195 | 21 | (6,922) | (1,019) | |||
Comprehensive loss | (85,405) | (85,061) | (50,349) | (7,413) | |||
Less: Comprehensive income attributable to noncontrolling interests and Redeemable | 189 | 1,236 | 546 | 80 | |||
Comprehensive loss attributable to 500.com Limited | (85,594) | (86,297) | (50,895) | (7,493) | |||
Weighted average number of Class A and Class B ordinary shares outstanding: | |||||||
Basic | 429,912,365 | 430,009,704 | 430,014,891 | 430,014,891 | |||
Diluted | 429,912,365 | 430,009,704 | 430,014,891 | 430,014,891 | |||
Losses per share attributable to 500.com Limited-Basic and Diluted | |||||||
Net loss | (0.22) | (0.20) | (0.10) | (0.02) | |||
Losses per ADS* attributable to 500.com Limited-Basic and Diluted | |||||||
Net loss | (2.23) | (2.01) | (1.02) | (0.15) | |||
* American Depositary Shares, which are traded on the NYSE. Each ADS represents ten | |||||||
500.com Limited | |||||||
Three Months Ended | |||||||
September 30, | June 30, | September 30, | September 30, | ||||
RMB | RMB | RMB | US$ | ||||
Unaudited | Unaudited | Unaudited | Unaudited | ||||
Operating loss from continuing operations | (98,419) | (52,337) | (50,237) | (7,398) | |||
Adjustment for share-based compensation expenses | 15,175 | 18,649 | 12,626 | 1,860 | |||
Adjustment for impairment of goodwill | 30,916 | - | - | - | |||
Adjusted operating loss from continuing operations (non-GAAP) | (52,328) | (33,688) | (37,611) | (5,538) | |||
Net loss attributable to 500.com Limited | (95,789) | (86,318) | (43,973) | (6,474) | |||
Adjustment for share-based compensation expenses | 15,175 | 18,649 | 12,626 | 1,860 | |||
Adjustment for impairment of goodwill | 30,916 | - | - | - | |||
Adjustment for Impairment of long-term investments | - | 33,706 | (249) | (37) | |||
Adjustment for deferred tax benefit relating to valuation allowance | - | (60) | - | - | |||
Adjusted net loss attributable to 500.com Limited (non-GAAP) | (49,698) | (34,023) | (31,596) | (4,651) | |||
Weighted average number of Class A and Class B ordinary shares outstanding: | |||||||
Basic | 429,912,365 | 430,009,704 | 430,014,891 | 430,014,891 | |||
Diluted | 429,912,365 | 430,009,704 | 430,014,891 | 430,014,891 | |||
Losses per share attributable to 500.com Limited (non-GAAP)-Basic and diluted | |||||||
Net loss (non-GAAP) | (0.12) | (0.08) | (0.07) | (0.01) | |||
Losses per ADS* attributable to 500.com Limited (non-GAAP)-Basic and diluted | |||||||
Net loss (non-GAAP) | (1.16) | (0.79) | (0.73) | (0.11) | |||
* American Depositary Shares, which are traded on the NYSE. Each ADS represents ten Class A ordinary shares of the Company. | |||||||
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SOURCE 500.com Limited
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