Nownews Digital Media Technology Reports FY 2014 Financial Results

TAIPEI, April 2, 2015 /PRNewswire/ — Nownews Digital Media Technology Co. Ltd. ("Nownews" or "the Company") (OTCQB: NDMT), a new media company that provides news, information, e-commence and multimedia platform service, today released its financial results of the fiscal year ended December 31, 2014.

Fiscal Year 2014 Highlights

  • Gross profit increased approximately $0.67 million, an increase of 154%.
  • Gross margin was 38% for the year ended December 31, 2014 as compared to 14% for the prior year.

"We are glad to see the profitability of our advertising business is getting stronger, thanks to our strategic focus on the more profitable segments like internet advertising and marketing" said Alan Chen, Chairman of the Company, "This year we are keeping our focus on this part of our business, and looking for more cooperation with other media platforms to increase our international presence."

Fiscal Year 2014 Results

Net Revenue

For the fiscal year 2014, Nownews reported net revenue of $2.93 million, a decrease of 9% from $3.23 million for the year 2013. The decrease was primarily due to the decrease in licensing revenue and E-commerce revenue, partially offset by the increase in advertisement revenue.

  • Advertising

During the fiscal year ended December 31, 2014, the revenue from advertising was $2.36 million, a 26% increase from $1.87 million for the year ended December 31, 2013. The increase was because the Company focuses on the more profitable internet advertising and marketing.

  • Licensing

Revenue from content licensing was $0.30 million for the year ended December 31, 2014, a decrease of 47% from $0.57 million for the year ended December 31, 2013. In 2014, the Company did not license as much content to Yahoo Taiwan, Inc. ("Yahoo Taiwan"), the Company’s top customers for the past two years due to low profits. In addition, the Company terminated low-profit news editing services to Yahoo Taiwan, which services were supplementary to the licensing arrangements with Yahoo Taiwan.

  • E-commerce

Revenue from E-commerce was $0.25 million for the year ended December 31, 2014, a decrease of 65% from $0.71 million for the year ended December 31, 2013. The decrease was primarily attributable to suspension of the E-Commerce business in April 2014 due to continuous losses. The Company is currently in the process of evaluating and adjusting this line of business.

  • Other

Other revenue includes revenue from film/video editing services and licensing copyright to Chunghwa Wideband Best Network Co., Ltd. Other revenue was $0.02 million for the year ended December 31, 2014, a decrease of 75% from $0.08 million for the year ended December 31, 2013. The decrease was primarily due to the termination of editing services and decrease in licensing copyrights charged to Chunghwa Wideband Best Network Co., Ltd.

Cost of Revenue

Cost of revenue was $1.82 million for the year ended December 31, 2014, compared to $2.79 million for the year ended December 31, 2013, a decrease of $0.97 million, or 35%. The decrease was mainly due to a decrease of $0.48 million in cost of goods sold in E-commerce, a decrease in labor costs of $0.42 million due to the decrease in the number of employees in the year 2014 as a result of the Company’s efforts to reduce operating costs and expenses.

Gross Profit

Gross profit increased approximately $0.67 million, an increase of 154% as compared to last year due to the substantial decrease in cost of revenue. Gross margin was 38% for the year ended December 31, 2014 as compared to 14% for the prior year.

Selling Expenses

Selling expenses decreased by 39% from $1.0 million for the year ended December 31, 2013 to $0.61 million for the year ended December 31, 2014. The decrease in selling expenses was primarily due to the decrease in advertisement expenses related to E-commerce and the decrease in labor costs due to decrease in the number of salespersons.

General and Administrative Expenses

General and administrative expenses decreased by 29% from $1.96 million for the year ended December 31, 2013 to $1.38 million for the year ended December 31, 2014. The decrease in general and administration expenses was principally due to the decrease in payroll resulting from reduction in the number of employees.

Interest Expense

Interest expense for the year ended December 31, 2014 was $25,103 compared to $25,267 for the year ended December 31, 2013, a decrease of 1%. The decrease in interest expense was primarily due to reduced bank loans incurred for the year ended December 31, 2014 as compared with the year ended December 31, 2013.

Net Loss

As a result of the above factors, the Company has net loss of approximately $0.70 million for the year ended December 31, 2014 as compared to net loss of approximately $1.71 million for the year ended December 31, 2013, representing a decrease of loss of approximately $1.01 million or approximately 59%.

Cash, Liquidity and Financial Position

As of December 31, 2014, cash and cash equivalents were $0.07 million, compared to $0.32 million at the end of 2013. The Company had a working capital deficit of $1.42 million at December 31, 2014, with $0.89 million of current assets and $2.31 million of current liabilities. The Company believes it can successfully secure financing to meet all working capital and capital expenditure needs for the next twelve months. However, there can be no guarantee that the Company will succeed in raising additional financing.

As of December 31, 2014, long-term debt was $0.81 million.

About Nownews Digital Media Technology Co. Ltd.

Nownews Digital Media Technology Co. Ltd. (OTCQB: NDMT) is a U.S.-listed holding company, through its subsidiaries, engaging in creating, collecting and distributing news and information through its website and applications on mobile phones or tablets. Nownews is also the largest online self-produced news content provider of Taiwan and the only Taiwanese online news website fully accessible in Mainland China. After launched Professional Category news brands, we launched Nownews Mobile Web and Apps. In July 2013, Nownews launched a new concept newspaper "NOWnews", which is the first O2O case in Taiwan. Nownews owns a great amount of brands, such as the largest online self-produced news content provider???NOWnews???, the biggest Citizen Journalist platform???WEnews???, online video shopping website???NOWshopping???, etc. Its partners include CCTV, Yahoo, MSN, Hinet, Yam, Sina and some telecoms.

Forward-Looking Statements

This news release contains "forward-looking statements", which may include, but is not limited to, statements that express the company’s intentions, beliefs, expectations, strategies, predictions or any other statements relating to its future activities or other future events or conditions. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Nownews Digital Media Technology Co. Ltd. to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and Nownews Digital Media Technology Co. Ltd. disclaim, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management’s estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.

Contact:

Investor Relations
Dragon Gate Investment Partners LLC
Email: ndmt@dgipl.com
Tel: +1(646)-801-2803
Website: http://ndmt.nownews.com

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

December 31,

2014

2013

Assets

Current Assets

Cash and cash equivalents

$

70,076

$

324,735

Accounts receivable, net

538,511

511,484

Due from related parties

171,901

250,939

Security deposits

33,089

3,017

Other current assets

9,250

8,531

Current assets of discontinued operations

69,216

90,298

Total Current Assets

892,043

1,189,004

Furniture, fixture, and equipment, net

55,194

136,578

Security deposits

30,587

Intangible assets, net

29,040

49,255

Total Assets

$

976,277

$

1,405,424

Liabilities and Equity

Current Liabilities

Long-term debt, current

$

488,048

$

515,763

Accounts payable

96,354

478,805

Advance from customers

1,418

79,328

Accrued expenses

560,705

645,149

Due to related parties

1,072,495

14,510

Other current liabilities

12,903

5,988

Current liabilities of discontinued operations

79,098

92,028

Total Current Liabilities

2,311,021

1,831,571

Long-term debt

321,295

390,780

Total Liabilities

2,632,316

2,222,351

Equity

Common Stock, $.001 par value, 50,000,000 shares authorized, 22,412,000 and 2,412,000 shares issued and outstanding as of December 31, 2014 and 2013, respectively

22,412

2,412

Additional paid-in capital

2,793,855

1,291,467

Subscriptions received in advance

1,522,388

Accumulated deficit

(3,922,379)

(3,225,091)

Accumulated other comprehensive loss

(56,180)

(101,233)

Total Stockholders’ deficit

(1,162,292)

(510,057)

Noncontrolling Interests

(493,747)

(306,870)

Total Deficit

(1,656,039)

(816,927)

Total Liabilities and Equity

$

976,277

$

1,405,424

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For The Years Ended

December 31,

2014

2013

Net revenue

$

2,932,751

$

3,225,163

Cost of revenue

(1,819,883)

(2,786,702)

Gross profit

1,112,868

438,461

Selling expenses

(606,355)

(998,148)

General and administrative expenses

(1,384,823)

(1,963,141)

Total operating expense

(1,991,178)

(2,961,289)

Operating loss

(878,310)

(2,522,828)

Other income (expense)

Interest income

1,556

848

Interest expense

(25,103)

(25,267)

Other income, net

2,664

7,930

Total other expense

(20,883)

(16,489)

Loss from continuing operations before income taxes

(899,193)

(2,539,317)

Income taxes

Loss from continuing operations

(899,193)

(2,539,317)

Loss from discontinued operations, net of income taxes

(8,604)

(189,751)

Net loss

(907,797)

(2,729,068)

Net loss attributable to noncontrolling interests:

Net loss from continuing operations

205,029

898,853

Net loss from discontinued operations

5,481

120,871

Total net loss attributable to noncontrolling interest

210,510

1,019,724

Net loss attributable to NOWnews Digital Media Technology Co. Ltd.

(697,287)

(1,709,344)

Foreign currency translation gain (loss)

68,686

(3,776)

Comprehensive loss

(628,601)

(1,713,120)

Other comprehensive loss attributable to noncontrolling interests

(23,633)

(608)

Comprehensive loss attributable to NOWnews Digital Media Technology Co. Ltd.

$

(652,234)

$

(1,713,728)

Amount attributable to common stockholders:

Net loss from continuing operations, net of income taxes

$

(694,164)

$

(1,640,464)

Net loss from discontinued operations, net of income taxes

(3,123)

(68,880)

Net loss attributable to common stockholders

$

(697,287)

$

(1,709,344)

Net loss attributable to common stockholders – basic and diluted

Loss from continuing operations

$

(0.15)

$

(0.68)

Loss from discontinued operations

(0.00)

(0.03)

Net loss attributable to common stockholders

$

(0.15)

$

(0.71)

Weighted average shares outstanding, basic and diluted

4,676,756

2,412,000

NOWNEWS DIGITAL MEDIA TECHNOLOGY CO. LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

December 31,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(907,797)

$

(2,729,068)

Loss from discontinued operations

8,604

189,751

Depreciation

72,048

115,601

Amortization

18,371

70,923

Loss on film costs

134,321

Loss from disposal of equipment

3,201

Loss from lawsuit settlement

16,502

92,824

Bad debt expense

8,314

Adjustments to reconcile net loss to net cash provided by operating activities:

Increase in accounts receivable

(58,067)

(34,333)

(Increase) decrease in related-parties trade receivable

(24,611)

173,335

Increase in security deposits

(1,426)

(472)

(Increase) decrease in other current assets

(950)

6,037

Increase in film costs

(43,341)

Decrease in other assets

741

(Decrease) increase in accounts payable

(370,900)

369,177

(Decrease) increase in advance from customers

(76,621)

79,729

(Decrease) increase in accrued expenses

(69,464)

93,850

Increase (decrease) in other current liabilities

8,092

(3,352)

Net cash used in continuing activities

(1,383,018)

(1,475,963)

Net cash used in discontinued operations

(33,453)

(233,091)

Net cash used in operating activities

(1,416,471)

(1,709,054)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of furniture and equipment

(54,597)

Purchase of intangible assets

(166)

(39,024)

Acquisition of subsidiary equity interest

(92,655)

Net cash used in continuing activities

(166)

(186,276)

Net cash used in discontinued operations

Net cash used in investing activities

(166)

(186,276)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of short-term loan

(336,928)

Repayments of current portion of long-term loan

(48,416)

(48,207)

Proceeds from long-term loans

345,520

Cash released from commercial line of credit

50,640

Net proceeds from loans from related parties

1,184,953

1,506,963

Proceeds from subscriptions received in advance

1,522,388

Return of capital as an effect of restructuring

(1,522,388)

Net proceeds from capital contributions

404,313

Net cash provided by continuing activities

1,136,537

1,922,301

Net cash provided by discontinued operations

31,190

239,790

Net cash provided by financing activities

1,167,727

2,162,091

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS

(8,012)

(1,425)

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS

(256,922)

265,336

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS

(2,263)

6,699

NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS FROM CONTINUING OPERATIONS

(254,659)

258,637

CASH & CASH EQUIVALENTS, BEGINNING BALANCE

324,735

66,098

CASH & CASH EQUIVALENTS, ENDING BALANCE

$

70,076

$

324,735

SUPPLEMENTAL DISCLOSURES:

Income tax paid

$

$

Interest paid

$

26,156

$

24,192

NONCASH INVESTING AND FINANCING ACTIVITIES:

Debt conversion to paid-in capital

$

$

1,884,739

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nownews-digital-media-technology-reports-fy-2014-financial-results-300059589.html