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Wecast Network (formerly YOU On Demand) Announces Q3 2016 Results

-- Q3 2016 Revenues up 242% vs Q3 2015

-- YTD 2016 Revenues up 47% vs YTD 2015

-- Company Begins Trading Today with New Ticker Symbol "WCST"

-- Investor Update Call Scheduled Today at 8:00 a.m. EST

NEW YORK, Nov. 14, 2016 /PRNewswire/ -- Wecast Network, Inc. (NASDAQ: WCST) ("Wecast" or the "Company" or "WCST"), formerly YOU On Demand Holdings, Inc. or "YOD," announced today its Q3 2016 operating results for the period ended September 30, 2016 (a full copy of the Company's quarterly report on Form 10-Q is also being posted at www.sec.gov).  

Conference Call: Chairman Bruno Wu and CFO Mei Chen will host a conference call at 8:00 a.m. EST today.

To join the webcast, please visit the 'Webcasts and Events' section of the WCST corporate website, http://corporate.yod.com. Otherwise, the toll-free dial-in is: 877-407-3107; international callers should dial: 201-493-6796.

NEW TRADING SYMBOL

Beginning today and following this morning's earnings call, at 9:30AM Eastern Standard Time, the Company, formerly known as YOU On Demand Holdings, Inc., will continue its trading on the Nasdaq Stock Exchange, but will now be known as Wecast Network, Inc.  The new Company trading symbol will now be, WCST. 

WCST Q3 2016 OPERATING RESULTS

Revenue for Q3 2016 was approximately $1,627,000, as compared to $476,000 for the same period in 2015, an increase of 242%. The revenue increase was primarily attributed to the revenue increase from our cable platform, which comprised 78% of the total revenue for the period.  Revenue for the nine months ended September 30, 2016 was approximately $4,377,000, as compared to $2,984,000 for the same period in 2015, an increase of 47%.

Cost of revenues was approximately $894,000 in Q3 2016, as compared to $900,000 for the same period in 2015.

Gross profit Q3 2016 was approximately $733,000 as compared to gross loss of $424,000 during the same period in 2015. Our gross profit margin percentage was 45% and -89% for Q3 2016 and Q3 2015, respectively. The increase in gross profit of approximately $1,157,000 was primarily due to the increase of revenue recognized in the third quarter of this year, which was driven by certain significant minimum guarantee contracts signed and executed from cable-based revenue streams, occurring alongside our current business transformation and expansion.

Our selling, general and administrative (SG&A) expenses for Q3 2016, increased approximately $488,000, to $2,320,000, as compared to $1,832,000 for the same period in 2015.

Salaries and personnel costs are the primary components of SG&A, accounting for 51% and 58% of SG&A expenses in Q3 2016 and 2015, respectively. In Q3 2016, salaries and personnel costs totaled $1,193,000, an increase of approximately $131,000, or 12%, as compared to $1,062,000 for the same period of 2015.

The other major components of our SG&A expenses include marketing and promotion expenses, outsourced technology costs, rent and severance. In Q3 2016, these costs totaled $1,127,000, a net increase of approximately $356,000, or 46%, compared to $771,000 for the same period in 2015. The increase was primarily attributed to the increase of bad debt expense and business travel, by $367,000 and $76,000 respectively.  This increase which was offset by a decrease of marketing promotion expenses and outsourcing of R&D costs by approximately $115,000 and $45,000, respectively.

Net loss in Q3 2016 was $2,047,000 for Q3 2016 compared to $2,086,000 in the comparable 2015 period. Basic and diluted loss per share for Q3 2016 was $0.05 as compared to a $0.09 loss per share in the same period in 2015. 

Chairman Bruno Wu stated, "With the name change to Wecast Network now officially complete, we begin a new chapter in the history of this Company.  As we reimagine and build-out our business model into global, vertical, ubiquitous and transactional revenue streams, revenues from the legacy business continue to moderately build off of prior comparative periods.  With that being said, we are working towards completion of the previously announced M.Y. Products deal, which assuming all boxes are checked, can be completed sometime in Q4.  With that deal and infrastructure in place, along with several other previously announced strategic partnerships and joint ventures, the Wecast vision of a smart e-commerce & content media company can continue to take shape.  What Wecast ultimately seeks to achieve is the creation of a value chain of Branding, Content, Commerce and Licensing all intertwined and run in an aggregated, synergetic and interwoven manner on one platform.  This platform will look to capture the massive opportunity that exists when targeting media and content consumers who are now accustomed to the benefits of vertical consumption."

About Wecast Network, Inc. (http://corporate.yod.com)

Wecast Network, Inc. (NASDAQ: WCST) is leveraging and optimizing its current operations as a premium content Video On Demand service provider in China to evolve into a global, vertical, ubiquitous and transactional B2B2C, mobile-driven, consumer management platform for both enterprises and consumers.  By aiming to establish the world's premier multimedia, social networking and smart e-commerce-enabled network with the largest global effective connected user base, Wecast, through this expanded, cloud-based, ecosystem of connected screens combined with strong partnerships with leading global providers, will be capable of delivering a vast array of WCST/YOD–branded products and services to enterprise customers and end-use consumers - anytime and anywhere, across multiple platforms and devices.  

Wecast has content distribution agreements in place with many of Hollywood's top studios including Disney Media Distribution, Paramount Pictures, NBC Universal and Twentieth Century Fox Television Distribution, Miramax, as well as a broad selection of the best content from Chinese filmmakers.  In addition, the Company has governmental partnerships and licenses as well as numerous JV partnerships and strategic cooperation agreements with an array of distribution and content partners in the global new media space. Wecast is headquartered in both New York, NY and Beijing, China.

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

CONTACT:
Jason Finkelstein    
Director Strategy & IR                         
Wecast Network, Inc.                                    
212-206-1216                                              

Financial Tables Follow

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS











Three Months Ended



Nine Months Ended




September 30,



September 30,



September 30,



September 30,




2016



2015



2016



2015















Revenue

$

1,626,844


$

476,165


$

4,377,034


$

2,983,741


Cost of revenue


893,796



900,284



2,609,975



2,772,322


Gross profit


733,048



(424,119)



1,767,059



211,419















Operating expenses:













       Selling, general and administrative expense


2,320,247



1,832,443



6,294,206



5,939,559


       Professional fees


326,353



141,034



964,290



581,115


       Depreciation and amortization


123,502



98,643



344,308



283,468


       Impairment of long-lived assets (Note 6)


172,064



-



172,064



-


Total operating expense


2,942,166



2,072,120



7,774,868



6,804,142















Loss from operations


(2,209,118)



(2,496,239)



(6,007,809)



(6,592,723)















Interest and other income/(expense)













       Interest expense, net


(24,971)



(30,613)



(225,154)



(89,168)


       Change in fair value of warrant liabilities


58,220



91,315



201,826



125,364


       Equity in earning (loss) of equity method
       investees


17,487



(50,642)



(19,862)



(143,666)


       Other


(3,313)



142,280



(8,409)



95,937


Loss before income taxes and non-controlling
        interest


(2,161,695)



(2,343,899)



(6,059,408)



(6,604,256)















Income tax benefit


8,612



8,612



25,836



25,836















Net loss


(2,153,083)



(2,335,287)



(6,033,572)



(6,578,420)















Net loss attributable to non-controlling interest


105,879



249,369



261,809



376,893















Net loss attributable to Wecast Network
       shareholders

$

(2,047,204)


$

(2,085,918)


$

(5,771,763)


$

(6,201,527)















Basic and diluted loss per share

$

(0.05)


$

(0.09)


$

(0.18)


$

(0.26)















Weighted average shares outstanding:













       Basic and diluted


41,184,037



24,003,403



31,640,230



23,890,929


UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS





Nine Months Ended




September 30,



September 30,




2016



2015


Cash flows from operating activities:







     Net loss

$

(6,033,572)


$

(6,578,420)


     Adjustments to reconcile net loss to net cash used in operating activities







           Share-based compensation expense


286,577



517,903


           Provision for doubtful accounts (Note 4)


366,887



9,087


           Depreciation and amortization


344,308



283,468


Amortization of debt issuance costs


122,696



-


           Income tax benefit


(25,836)



(25,836)


           Equity in losses of equity method investees


19,863



143,666


           Loss on disposal of assets


-



2,421


           Change in fair value of warrant liabilities


(201,826)



(125,364)


           Impairment of long-lived assets


172,064



-


           Foreign currency exchange losses


3,430



-









Change in assets and liabilities:







           Accounts receivable


(2,890,663)



(1,496,756)


           Licensed content


(639,225)



80,889


           Prepaid expenses and other assets


(799)



(338,814)


           Accounts payable


177,354



(88,440)


           Accrued expenses, salary and other current liabilities


250,856



796,467


           Deferred revenue


(10,359)



204,560


           Accrued license content fees


112,896



398,064


Net cash used in operating activities


(7,945,349)



(6,217,105)









Cash flows from investing activities:







           Acquisition of and deposit for property and equipment


(3,130,862)



(32,193)


           Acquisition of leasehold improvements


(455,723)



-


           Deposit for investment (Note 10)


(650,000)



-


           Investments in intangibles


(2,811,346)



(48,938)


           Investment in long term investments


(3,584,025)



-


Net cash used in investing activities


(10,631,956)



(81,131)









Cash flows from financing activities







           Proceeds from issuance of shares and warrant (Note 8 and Note 11)


18,000,000



-


           Costs associated with financing activities


(294,890)



-


Net cash provided by financing activities


17,705,110



-


           Effect of exchange rate changes on cash


(57,416)



(157,374)


Net decrease in cash


(929,611)



(6,455,610)









Cash at beginning of period


3,768,897



10,812,371









Cash at end of period

$

2,839,286


$

4,356,761









Supplemental Cash Flow Information:














Cash paid for income taxes

$

-


$

-


Cash paid for interest

$

-


$

-


Exchange of Series E Preferred Stock for common stock

$

100


$

110


Issuance of convertible note for licensed content (Note 11)

$

17,717,847


$

-


Issuance of shares for the settlement of liability

$

75,000


$

-


Issuance of shares upon conversion of convertible note, including accrued interest and debt issuance
       cost (Note 11)

$

17,733,297


$

-


Acquisition of long term investment through transfer of Game IP rights (Note 7)

$

2,714,441


$

-


Payable for workforce acquired (Note 6)

$

93,828


$

-


Workforce intangible acquired for shares (Note 6)

$

121,695


$

-


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/wecast-network-formerly-you-on-demand-announces-q3-2016-results-300361923.html

SOURCE Wecast Network, Inc.