Exhibit 99.1
Acorn International ReportsFirst Quarter 2020 Financial Results
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SHANGHAI,April 30, 2020 — Acorn International, Inc. (NYSE: ATV) (“Acorn” or the “Company”), a leading marketingand branding company in China, today announced its preliminaryunaudited financial results for the quarter ended March 31, 2020.
FirstQuarter Estimated Results Highlights
● | Net revenues decreased 7.2% year-over-year in Q1 2020 to US$8.0 million. |
● | Gross profit decreased 12.3% year-over-year in Q1 2020 to US$5.5 million. |
● | Gross margin was 68.8% in Q1 2020, compared to 72.8% in Q1 2019. |
● | Loss from continuing operations was US$0.3 million in Q1 2020, compared to income from continuing operations of US$0.6 million in Q1 2019. |
● | Net income was US$2.7 million in Q1 2020 as compared to net income of US$4.8 million in Q1 2019. In Q1 2020, the Company recorded a $3.0 million gain from the sale of shares of E-Money Holding Co., Ltd. (“E-Money”) (formerly known as Shanghai Yimeng Software Technology Co., Ltd.). The year-ago period includes a US$3.8 million gain on the sale of the Company’s former principal office in Shanghai to a third party. |
“Ourresults for the first quarter of 2020 reflect the impact of the COVID-19 crisis on our business. As previously disclosed, althoughwe have seen some increased demand for certain products as more Chinese consumers are shopping from home, we have also experiencedsome demand reduction, supply-side disruption and delivery challenges caused by COVID-19,” said Mr. Jacob A. Fisch, CEOand President of Acorn International.
PreliminaryFinancial Results for the First Quarter of 2020:
Totalnet revenues were US$8.0 million in the first quarter of 2020, down 7.2% from US$8.7 million in the first quarter of 2019, primarilydue to the impact of COVID-19 as well as lower revenues of oxygen-generating products related primarily to the sale of the Company’ssubsidiary Zhuhai Acorn Electronic Technology Co., Ltd.
Costof sales in the first quarter of 2020 was US$2.5 million, up 6.5% from US$2.4 million in the first quarter of 2019. The increasewas primarily attributable to the inclusion of Acorn Digital Services in revenues and cost of sales in the first quarter of 2020(in the year ago period, this business segment was included in other operating income), and a higher proportion of Acorn Freshproducts, which have a slightly lower margin than Babaka branded products, in the product mix.
Grossprofit in the first quarter of 2020 was US$5.5 million, down 12.3% from US$6.3 million in the first quarter of 2019. Gross marginwas 68.8% in the first quarter of 2020, compared with 72.8% in the first quarter of 2019.
Totaloperating expenses in the first quarter of 2020 were US$5.8 million, up 0.9% from US$5.7 million in the first quarter of 2019.
Lossfrom continuing operations was US$0.3 million in the first quarter of 2020, as compared to income from continuing operations ofUS$0.6 million in the first quarter of 2019.
Otherincome was US$3.0 million in the first quarter of 2020, primarily due to a US$3.0 million gain from the sale of shares of E-Money.The year-ago period includes a US$3.8 million gain on the sale of the Company’s former principal office in Shanghai to athird party.
Netincome from continuing operations was US$2.8 million in the first quarter of 2020. This compares to net income from continuingoperations of US$4.9 million in the first quarter of 2019. Net loss from discontinued operations, which reflects the sale of amajority stake in the Company’s HJX electronic learning products business to a third-party investor and operator in 2017as well as the Company’s call center operations which were discontinued in the third quarter of 2019 (refer to “DiscontinuedOperations” discussion below), was US$28 thousand in the first quarter of 2020, compared to net loss from discontinued operationsof US$0.1 million in the first quarter of 2019.
Netincome attributable to Acorn was US$2.7 million in the first quarter of 2020. This compares to net income attributable to Acornof US$4.8 million in the first quarter of 2019.
Asof March 31, 2020, Acorn’s estimated cash and cash equivalents, with restricted cash, totaled US$13.9 million. This comparesto cash and equivalents, with restricted cash, of US$13.5 million as of December 31, 2019.
Gifquickmaker 1 5 1. DiscontinuedOperations
Audiobook converter 5 1 2. In2017, Acorn reached an agreement to sell a majority stake in its HJX electronic learning products business (“HJX Business”)to a third-party investor and operator, allowing the Company to focus on its core business. Acorn maintains a 37.5% stake in ajoint venture established with this third party. As a result of this transaction, the Company is required by applicable accountingrules to treat the historical operations of the wholly-owned HJX Business as discontinued operations and the minority stake inthe HJX Business as equity in losses of affiliates in the consolidated statements of operations for all periods presented, subjectto the consolidation of the HJX Business into the joint venture entity.
Inthe third quarter of 2019, the Company completed closing of its call center in Wuxi, China. As a result, the Company is requiredby applicable accounting rules to treat the historical operations of the call center as discontinued operations for all periodspresented.
AboutAcorn International, Inc.
AcornInternational is a leading marketing and branding company in China, leveraging a twenty-year direct marketing history tomonetize brand IP, content creation and distribution, and product sales, through digital media in China. For more informationvisit www.acorninternationalgroup.com.
SafeHarbor Statement under the Private Securities Litigation Reform Act of 1995
Thispress release contains forward-looking statements. These statements constitute “forward-looking” statements withinthe meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities LitigationReform Act of 1995. These forward-looking statements can be identified by terminology such as “anticipates,” “believes,”“estimates,” “strives,” “expects,” “future,” “going forward,” “intends,”“outlook,” “plans,” “target,” “will,” and similar statements. Such statementsare based on management’s current expectations and current market and operating conditions, and relate to events that involveknown or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond theCompany’s control, including the extent and duration of the COVID-19 crisis, which may cause the Company’s actualresults, performance, or achievements to differ materially from those in these preliminary financial results and the forward-lookingstatements. Further information regarding these and other risks, uncertainties, or factors is included in the Company’sfilings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-lookingstatement as a result of new information, future events, or otherwise, except as required by law.
Otherfactors that could cause forward-looking statements to differ materially from actual future events or results include risks anduncertainties related to: the Company’s ability to successfully improve or introduce new products and services, includingto offset declines in sales of existing products and services; the Company’s ability to stay abreast of consumer markettrends and maintain the Company’s reputation and consumer confidence; the Company’s ability to execute and maintaina successful market strategy; potential unauthorized use of the Company’s intellectual property; potential disruption ofthe Company’s manufacturing processes; increasing competition in China’s consumer market; the Company’s U.S.tax status as a passive foreign investment company; and general economic and business conditions in China, as well as potentialfriction between the U.S. and China associated with their current trade dispute and related factors, which could potentially impactAcorn. The financial information contained in this release should be read in conjunction with the consolidated financial statementsand notes thereto included in the Company’s 2018 annual report on Form 20-F filed with SEC on April 30, 2019. For adiscussion of other important factors that could adversely affect the Company’s business, financial condition, results ofoperations and prospects, see “Risk Factors” beginning on page 9 of the Company’s 2018 annual report on Form20-F filed with the SEC on April 30, 2019. The Company’s actual results of operations for the first quarter of 2020 arenot necessarily indicative of its operating results for any future periods. Any projections in this release are based on limitedinformation currently available to the Company, which is subject to change. Although such projections and the factors influencingthem will likely change, the Company will not necessarily update the information. Such information speaks only as of the dateof this release.
StatementRegarding Unaudited Financial Information
Theunaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidatedfinancial statements may be identified when audit work has been performed for the Company’s year-end audit, which couldresult in significant differences from this preliminary unaudited condensed financial information.
Contact: | |
Acorn International, Inc. | Compass Investor Relations |
Mr. Martin Key | Ms. Elaine Ketchmere, CFA |
Phone +86-21-5151-8888 | Phone: +1-310-528-3031 |
Email: [email protected] | Email: [email protected] |
www.chinadrtv.com | www.compassinvestorrelations.com |
- FinancialTables Follow -
ACORN INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US dollars)
For the three months ended | |||||
2019/03/31 | 2020/03/31 | ||||
(Unaudited) | (Unaudited) | ||||
Net revenues | |||||
Direct sales | $ | 7,204,182 | $ | 6,894,582 | |
Distribution sales | 1,449,322 | 1,138,259 | |||
Total net revenues | 8,653,504 | 8,032,841 | |||
Cost of revenues | |||||
Direct sales | -1,836,452 | -2,097,431 | |||
Distribution sales | -519,897 | -411,327 | |||
Total cost of revenues | -2,356,349 | -2,508,758 | |||
Gross profit | |||||
Direct sales | 5,367,729 | 4,797,151 | |||
Distribution sales | 929,425 | 726,932 | |||
Total gross profit | 6,297,154 | 5,524,083 | |||
72.8 | % | 68.8 | % | ||
Operating (expenses) income | |||||
Other selling and marketing expenses | -3,868,281 | -4,089,335 | |||
General and administrative expenses | -2,452,609 | -2,138,118 | |||
Other operating income, net | 580,576 | 434,297 | |||
Total operating (expenses) income | -5,740,314 | -5,793,156 | |||
Income (loss) from continuing operations | 556,841 | -269,073 | |||
Interest expense | - | -21,378 | |||
Interest income | 82,361 | 46,017 | |||
Other income (expenses), net | 4,573,849 | 3,048,180 | |||
Income (loss) from continuing operations before income taxes and equity in losses of affiliates | 5,213,051 | 2,803,746 | |||
Income tax - current | -307,585 | - | |||
Income tax - deferred | 0 | -36,812 | |||
Income (loss) from continuing operations before equity in losses of affiliates | 4,905,466 | 2,766,934 | |||
Discontinued operations : | |||||
Income (loss) from discontinued operations | -110,673 | -27,887 | |||
Income (loss) from discontinued operations before equity in losses of affiliates | -110,673 | -27,887 | |||
Equity in losses of affiliates | - | ||||
Net income (loss) | 4,794,793 | 2,739,047 | |||
Net income (loss) attributable to non-controlling interests | 1,738 | -211 | |||
Net income (loss) attributable to Acorn International, Inc. | $ | 4,796,531 | $ | 2,739,258 |
ACORN INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(InUS dollars)
2019/12/31 | 2020/03/31 | |||
Cash and cash equivalents | $ | 13,461,368 | $ | 13,825,003 |
Restricted cash | 75,543 | 74,918 | ||
Accounts receivable, net | 3,611,177 | 4,731,741 | ||
Inventory, net | 3,042,762 | 2,528,777 | ||
Other prepaid expenses and current assets | 7,112,042 | 9,837,301 | ||
Loan receivable | 3,754,735 | 3,776,552 | ||
Held-for-sale assets | 468,191 | 466,431 | ||
Assets to be abandoned | 116,559 | - | ||
Current assets | 31,642,377 | 35,240,722 | ||
Property and equipment, net | 559,964 | 544,058 | ||
Investments in affiliates | - | 91,309 | ||
Available-for-sale securities | 25,681,848 | 20,705,511 | ||
Loan to related party | 14,804,052 | 14,698,550 | ||
Right of use assets | 1,785,194 | 1,533,427 | ||
Deferred tax assets, net | 4,997,111 | 4,963,568 | ||
Other long-term assets | 693,518 | 732,396 | ||
Total assets | $ | 80,164,064 | $ | 78,509,540 |
Accounts payable | 3,172,263 | 2,141,762 | ||
Dividend payable | 133,405 | 131,206 | ||
Accrued expenses and other current liabilities | 6,564,390 | 8,773,664 | ||
Lease Liability | 881,349 | 858,089 | ||
Income taxes payable | 1,648,520 | 1,615,086 | ||
Deferred revenue | 68,798 | 42,338 | ||
Liabilities to be abandoned | 222,578 | - | ||
Current liabilities | 12,691,303 | 13,562,145 | ||
Lease Liability | 1,032,645 | 814,786 | ||
Deferred tax liability, net | - | - | ||
Total liabilities | 13,723,948 | 14,376,932 | ||
Ordinary shares | 918,844 | 918,844 | ||
Additional paid-in capital | 117,445,969 | 117,445,969 | ||
Statutory reserve | 8,350,141 | 8,350,141 | ||
Retained earnings | (77,913,299 | ) | (75,174,041 | ) |
Beginning balance | (87,749,530 | ) | (77,913,299 | ) |
Net income (loss) attributable to Acorn | 9,836,231 | 2,739,258 | ||
Appropriation of statutory reserve fund | - | - | ||
Accumulated other comprehensive income | 45,635,771 | 40,594,179 | ||
Treasury stock, at cost | (28,320,324 | ) | (28,320,324 | ) |
Total Acorn International, Inc. shareholders' equity | 66,117,102 | 63,814,768 | ||
Noncontrolling interests | 323,014 | 317,841 | ||
Total equity | 66,440,116 | 64,132,609 | ||
Total liabilities and equity | $ | 80,164,064 | $ | 78,509,540 |
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5
Investors -- and millennials -- are nuts about Acorns.
Acorns is a new investment app that lets people automatically invest spare change from debit and credit card purchases.
On Wednesday, the eight-month old app announced that it banked$23 million in its third round of funding. The new round comes from investors including venture capital firms Greycroft and e.ventures and brings its funding total to $32 million.
It has 650,000 members who are mostly millennials. So far, they've saved a combined $25 million since the app launched in August. Not too shabby for an audience that is known to be gun shy about investing.
'People generally associate investing with lots of dollars,' said Jeff Cruttenden, co-founder and CEO of Acorns. 'Once [people] find out that you can invest spare change, it's a really attractive concept.'
Acorns connects to a debit or credit card to 'round up' the spare change to the next dollar on all purchases. Once the roundups reach $5, it withdraws the money and invests in a personalized stock portfolio.
Nobel Prize winner Dr. Harry Markowitz helped Acorns devise its system to personalize a portfolio composed of index funds like real estate stocks and corporate bonds. Users answer basic questions about investment goals and risk preferences, which determine where their change goes.
There's also an option to manually invest roundups for those willing to put in the time.
Cruttenden, 28, came up with the idea for the business in 2011 while he was a student in Portland, Oregon.
'So many of my friends talked about investing all the time, [but] they literally had nothing,' he said.
Acorns not only eliminates the guesswork in picking funds but it also doesn't charge a commission. And users can cancel their account at any time. It does, however, take a $1 per month fee on accounts under $5,000 -- and .25% per year on accounts over that amount.
Cruttenden founded the company with his father, Walter, in 2012 but it took a couple years to get the app up and running.
Acorns, which is based in Newport Beach, Calif., and counts 77 employees, has had a lot of traction among its members during its short lifespan. On average, customers are putting $100 per month into investment funds.
Acorns also lets users make larger investments.
'The majority do take that opportunity to invest outside of the 'round ups',' said Cruttenden.
Acorn 6 5 30 Amp
With the funding, Acorns plans to roll out a desktop version and expand globally. It is currently only available in the U.S.
'Our goal is to create as many investors as possible,' added Cruttenden.
Correction: An earlier version of the story misstated the percent Acorns takes on accounts over $5,000.
6'5 Tall
CNNMoney (New York) First published April 15, 2015: 10:36 AM ET