Company to Host Conference Call on Tuesday, November 2, 2021, at 8:00 a.m. ET
BEIJING, Nov. 1, 2021 /PRNewswire/ -- Luokung Technology Corp. (NASDAQ:LKCO) ("Luokung" or the "Company"), a leading spatial-temporal intelligent big data services company and provider of interactive location-based services ("LBS") and high-definition maps ("HD Maps") in China, today announced results for the six months ended June 30, 2021 ("First Half 2021"). The full financial statements are available on the Form 6-K filed with the U.S. Securities and Exchange Commission on the same date.
First Half 2021 Financial Highlights:
- Revenues of $37.8 million, compared to $7.3 million for the six months ended June 30, 2020
- Net loss of $26.7 million, compared to net loss of $18.9 million for the six months ended June 30, 2020
- Basic and diluted loss per share of $0.09, which is unchanged from the six months ended June 30, 2020
Mr. Xuesong Song, Chairman and CEO, stated, "In the first half of 2021, we were pleased to complete the transformative acquisition of the control over eMapgo Technology (Beijing) Co., Ltd. ('EMG'), a leading provider of navigation and electronic map services in China, which we anticipate will be an increasingly important growth driver for Luokung in the long term. EMG provides Luokung with a strong foothold in the areas of smart transportation (autonomous driving, smart highway and vehicle-road collaboration), natural resource asset management (carbon neutrality and environmental protection remote sensing data service) and LBS smart industry application spatial-temporal data commercialization. We achieved record revenue of $37.8 million for the First Half 2021, primarily as a result of solid growth in our LBS business. During the period, Luokung expanded its partnership base and began providing our premier portfolio of products and services for leading businesses across various industries, and worked to successfully overcome the challenges of being designated a Chinese Communist Military Company by the U.S. Department of Defense ('DoD Designation Matter'). With these concerns behind us, we placed our focus over the past few months entirely on improving and growing our business. This includes continued investment in R&D, which we believe is critical to building a series of products backed by cutting-edge technologies and establishing competitive advantages in our areas of core competency."
Recent Operational Developments
- In June 2021, Luokung announced that its operating affiliate, EMG, signed an agreement with Geely Automobile Research Institute (Ningbo) Co., Ltd. ("Geely") whereby EMG provided autonomous driving simulation testing services for Geely. EMG provided the services under this agreement for approximately $2.5 million during the third quarter of 2021.
- In September 2021, Luokung announced that its operating affiliate, EMG, signed a cooperation agreement with Microsoft to launch autonomous driving services for automakers. Under the terms of the agreement, EMG will work with Microsoft to provide auto manufacturers with services including the collection, storage, analysis, management and simulation testing of autonomous driving data. EMG has already signed service contracts with a European car manufacturer and a U.S. car manufacturer. Implementation of these contracts has begun and is expected to continue over the next several months.
- In September 2021, Luokung announced that its operating affiliate, EMG, signed an agreement to be the technical service provider for the management of market and service information for China Mobile Group Heilongjiang Co., Ltd. ("Heilongjiang Mobile"), the Heilongjiang division for China Mobile, the leading telecommunications provider in mainland China. Heilongjiang Mobile is Luokung's first new client win in the telecommunication industry since it launched its Internet LBS B2B business.
- In September 2021, Luokung announced that its operating affiliate EMG signed an agreement to provide autonomous driving data services for Zenseact, a wholly owned subsidiary of Volvo Cars, the automotive division of the Swedish multinational manufacturing company, focusing on the development of autonomous driving and active safety software together with its lead customer Volvo Cars.
First Half 2021 Financial Review – GAAP Results
For the First Half 2021, revenues increased to $37.8 million, compared to $7.3 million for the six months ended June 30, 2020. The increase was primarily a result of $24.5 million in increased revenue contributions from the LBS business, as well as growth in the software and services business and EMG business.
Operating costs and expenses
Total operating costs and expenses increased to $62.9 million, compared to $24.2 million for the six months ended June 30, 2020. The increase was primarily driven by:
- a $27.6 million increase in cost of revenues, which primarily consists of mobile traffic acquisition costs and salary and benefit expenses for employees directly involved in data collection and processing, direct production costs and depreciation of facilities and equipment used in data collection and processing;
- a $1.7 million increase in selling and marketing expenses;
- a $2.3 million increase in general and administrative expense; and
- a $7.0 million increase in research and development.
Approximately $1.3 million in legal and consulting fees were directly related to services rendered to defend the Company against the DoD Designation Matter during the six months ended June 30, 2021.
Loss from operations
For the First Half 2021, loss from operations was $25.1 million, compared to loss from operations of $16.9 million in the prior-year period, as a result of the increased operating expenses described above.
Net loss was $26.7 million, or $0.09 per share, for the First Half 2021, compared to net loss of $18.9 million, or $0.09 per share, for the six months ended June 30, 2020. Weighted average shares outstanding for the six months ended June 30, 2021 and 2020 were 307,146,263 and 211,365,515, respectively.
Balance Sheet Highlights
As of June 30, 2021, Luokung's cash balance was $14.5 million, working capital deficit was $51.2 million and total shareholders' equity was $136.7 million, compared to cash balance of $0.07 million, working capital deficit of $61.6 million and total shareholders' equity of $52.7 million, respectively, as of December 31, 2020.
Subsequent to the end of First Half 2021, on September 22, 2021, Luokung closed a registered direct offering of an aggregate of 27,333,300 ordinary shares and warrants to purchase 13,666,650 ordinary shares to certain institutional investors at a purchase price of $1.20 per share for aggregate gross proceeds of approximately $32.8 million before deducting placement agent fees and other estimated offering expenses. The warrants have an exercise price of $1.60 per share and expire three years from the date of issuance.
Conference Call and Webcast Information
Luokung will host a conference call at 8:00 a.m. Eastern Time on Tuesday, November 2, 2021, during which management will discuss the First Half 2021 results. Investors and analysts are welcomed to participate or send questions in advance.
To participate in the conference call, please use the following dial-in numbers:
U.S. & Canada (Toll-Free):
+1 (877) 445-9755
+1 (201) 493-6744
A live webcast of the conference call can be accessed at: https://78449.themediaframe.com/dataconf/productusers/lkco/mediaframe/47072/indexl.html. A replay will be available shortly after the call and will remain available for 90 days.
ABOUT LUOKUNG TECHNOLOGY CORP.
Luokung Technology Corp. is a leading spatial-temporal intelligent big data services company, as well as a leading provider of LBS and HD Maps for various industries in China. Backed by its proprietary technologies and expertise in HD Maps and related intelligent spatial-temporal big data, Luokung establishes city-level and industry-level holographic spatial-temporal digital twin systems and actively serves industries including autonomous driving, vehicle-road collaboration (V2X), smart transportation, smart travel, local business LBS, new infrastructure, smart cities, and smart industries (emergency, natural resources, environmental protection, water conservancy, energy, smart training, among others). The Company routinely provides important updates on its website: www.luokung.com/en.
ABOUT eMapgo Technology (Beijing) Co., Ltd.
eMapgo Technology (Beijing) Co., Ltd. ("EMG"), a variable interest entity of Luokung, is a leading provider of navigation and electronic map services in China, as well as a leading provider in Internet map services, geographic information system engineering and other A-level mapping qualifications. EMG possesses the National Class-A qualification certificates of navigable Surveying and Mapping and actively develops autonomous driving and HD Map services. For more information, please visit its website: www.emapgo.com.cn.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Information regarding the Company's future growth prospects and the preliminary unaudited financial results contained in this press release may constitute forward-looking-information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The financial estimates provided in this press release are to provide early guidance on the semi-annual financial performance of the Company and readers are cautioned that this information may not be appropriate for any other purpose. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events including that the Company has not finished its review of the full financial positions and the Company may continue to incur net losses. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this press release, including with respect to any future growth, is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement.
CAUTION REGARDING FINANCIAL ESTIMATES
The financial estimates set forth above are based on an initial review of the Company's operations for the six months ended June 30, 2021 and are subject to change. The Company's independent registered public accounting firm has not audited, reviewed or performed any procedures with respect to the accompanying financial estimates and other data, and accordingly does not express an opinion or any other form of assurance with respect thereto. They should not be viewed as a substitute for audited financial statements prepared in accordance with generally accepted accounting principles and are not necessarily indicative of the Company's results for any future period.
Mr. Jay Yu
Chief Financial Officer
Ms. Carolyne Sohn
The Equity Group Inc.
SOURCE Luokung Technology Corp.