Form 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2015

Commission File Number: 001-34238

 

 

THE9 LIMITED

 

 

Building No. 3, 690 Bibo Road

Zhangjiang Hi-tech Park, Pudong New Area

Shanghai 201203, People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

THE9 LIMITED
By:

/s/ Jun Zhu

Name: Jun Zhu
Title: Chairman and Chief Executive Officer

Date: March 26, 2015


Exhibit Index

Exhibit 99.1 — Press Release


Exhibit 99.1

 

LOGO

The9 Limited Announces Unaudited Financial Information as of and for the Six Months Ended December 31, 2014

Shanghai, China – March 26, 2015. The9 Limited (NASDAQ: NCTY) (“The9”), an online game developer and operator, announced its unaudited financial results for the six months ended December 31, 2014 today.

Financial Highlights:

 

  Net revenues in the second half of 2014 amounted to RMB36.9 million (US$5.9 million), representing an increase of 34.4% from RMB27.4 million (US$4.4 million) in the first half of 2014 and a decrease of 37.2% from RMB58.7 million (US$9.5 million) in the second half of 2013.

 

  In the second half of 2014, net profit attributable to holders of ordinary shares was RMB34.2 million (US$5.5 million). In the first half of 2014 and the second half of 2013, net loss attributable to holders of ordinary shares was RMB141.9 million (US$22.9 million) and RMB244.4 million (US$39.4 million), respectively.

Management Comments:

Jun Zhu, Chairman and Chief Executive Officer of The9, said, “Red 5 launched Firefall in July 2014 in North America and Europe. We have high expectations for Firefall in the China market. In August 2014, Shanghai Oriental Pearl Culture Development Co. Ltd., a wholly-owned subsidiary of Shanghai Oriental Pearl (Group) Co., Ltd. (SH: 600832), closed its investment in Red 5 and became a minority shareholder of Red 5. Also in August 2014, Qihoo 360 Technology Co., Ltd. (NASDAQ: QIHU) and we established a 50-50 joint venture System Link Corporation Limited to publish and operate Firefall in China for a five-year term. Under this license agreement, System Link is expected to pay to us no less than an aggregate of US$160 million including license fee and royalties during the term of the agreement. All these show the great potential of Firefall in China. We are dedicating our best resources to prepare for the launch of Firefall in China and we target to launch Firefall in China in the second half of 2015. In addition, we are also planning to launch several mobile games in 2015. In August 2014, we sold Huopu Cloud, a subsidiary which developed and held a proprietary web game, for a total consideration of RMB200 million. This sale has proven our in-house game development capability has been recognized by the market.”

 

Page 1


Discussion of The9’s Unaudited 2014 Second Half Results

Net Revenues

Our net revenues in the second half of 2014 amounted to RMB36.9 million (US$5.9 million), representing an increase of 34.4% from RMB27.4 million (US$4.4 million) in the first half of 2014 and a decrease of 37.2% from RMB58.7 million (US$9.5 million) in the second half of 2013. The increase over the first half of 2014 was mainly due to increase of revenue from Firefall in North America and Europe, and partly offset by decrease of revenue from various MMO, web and social games in China. The decrease from the second half of 2013 was mainly due to the decrease of revenue from Planetside 2.

Gross Loss

Our gross loss in the second half of 2014 amounted to RMB7.2 million (US$1.2 million), compared with RMB14.3 million (US$2.3 million) and RMB5.2 million (US$0.8 million) in the first half of 2014 and in the second half of 2013, respectively. The gross loss in the second half of 2014 reflected lower level of revenue generated coupled with the continued incurrence of a relatively fixed portion of our costs, such as overhead, depreciation and rental charges.

Operating Expenses

In the second half of 2014, our operating expenses, excluding gain from disposal of subsidiaries, were RMB151.8 million (US$24.5 million), which decrease by 0.8% from RMB153.0 million (US$24.7 million) in the first half of 2014 and decrease by 39.9% from RMB252.6 million (US$40.7 million) in the second half of 2013. The decrease compared to the first half of 2014 was primarily due to the net effect of the increase in marketing expenses in the second half relating to the launch of Firefall in the North America and Europe, and reversal of an allowance provided on a long-term receivable from a supplier recognized in the second half of 2013. The decrease compared to the second half of 2013 was primarily due to the cost cutting on product development, marketing expenses and general and administrative expenses, and the reversal of an allowance provided on a long-term receivable from a supplier recognized in the second half of 2013. In addition, in the first half of 2014, we also recorded a gain on disposal of subsidiaries of RMB165.4 million (US$26.7 million) in the second half of 2014 in connection with the disposal of Huopu Cloud Computing Terminal Technology Co., Ltd., a wholly-owned subsidiary, as well as certain other subsidiary, which was recorded as a deduction to operating expense.

 

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Interest Income

Interest income in the second half of 2014 was RMB1.9 million (US$0.3 million), compared to RMB1.5 million (US$0.2 million) in the first half of 2014 and RMB2.6 million (US$0.4 million) in the second half of 2013. The fluctuation of interest income was typically in line with our cash balances.

Other Income (Expenses), Net

Other expenses in the second half of 2014 was RMB5.4 million (US$0.9 million), compared to other income of RMB3.3 million (US$0.5 million) in the first half of 2014 and other income of RMB7.0 million (US$1.1 million) in the second half of 2013. Other expenses in the second half of 2014 mainly represented foreign exchange losses. Other income in the first half of 2014 mainly represented foreign exchange gains. Other income in the second half of 2013 mainly represented a refund of game license fee.

Net Profit (Loss) attributable to holders of ordinary shares

In the second half of 2014, net profit attributable to holders of ordinary shares was RMB34.2 million (US$5.5 million). In the first half of 2014 and the second half of 2013, net loss attributable to holders of ordinary shares was RMB141.9 million (US$22.9 million) and RMB244.4 million (US$39.4 million), respectively.

Basic net profit per share and per ADS in the second half of 2014 was RMB1.48 (US$0.25), compared to basic net loss per share of RMB6.13 (US$0.99) in the first half of 2014 and basic net loss per share of RMB10.64 (US$1.71) in the second half of 2013.

Currency Convenience Translation

The translation of Renminbi (RMB) into US dollars (US$) in this press release are presented solely for the convenience of the readers at the noon buying rate in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the H.10 weekly statistical release of the Federal Reserve Board as of December 31, 2014, which was RMB 6.2046 to US$1.00. Such translations should not be construed as representations that the RMB amounts represents, or have been or could be converted into, US$ at that or any other rate. The percentages stated in this press release are calculated based on the RMB amounts.

About The9 Limited

The9 Limited is an online game developer and operator in China. The9 develops and operates, directly or through its affiliates, its proprietary MMO, web and mobile games including Firefall, TianTianWanDiaoChan and Dao Feng. In 2010, The9 established its wireless business unit to focus on mobile internet business. In 2013, The9 formed a joint venture with Shanghai ZTE to develop and operate home entertainment set top box business.

 

Page 3


Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of 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” and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. The9 may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about The9’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, political and economic policies of the Chinese government, the laws and regulations governing the online game industry, information disseminated over the Internet and Internet content providers in China, intensified government regulation of Internet cafes, The9’s ability to retain existing players and attract new players, license, develop or acquire additional online games that are appealing to users, anticipate and adapt to changing consumer preferences and respond to competitive market conditions, and other risks and uncertainties outlined in The9’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 20-F. The9 does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For further information, please contact:

Ms. Phyllis Sai

Manager, Investor Relations

The9 Limited

Tel: +86 (21) 5172-9990

Email: IR@corp.the9.com

Website: http://www.corp.the9.com/

– Tables follow –

 

Page 4


THE9 LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$, except share data)

 

     Six month
ended Jun 30
    Six month
ended December 31
 
     2014     2013     2014     2014  
    

RMB

(unaudited)

   

RMB

(unaudited)

   

RMB

(unaudited)

   

US$

(Note)

 

Revenues:

        

Online game services

     22,199,785        52,415,966        33,217,915        5,353,756   

Other revenues

     5,547,325        7,069,176        3,874,540        624,462   
  

 

 

   

 

 

   

 

 

   

 

 

 
  27,747,110      59,485,142      37,092,455      5,978,218   

Sales Taxes

  (326,865   (774,716   (235,809   (38,005
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenues

  27,420,245      58,710,426      36,856,646      5,940,213   

Cost of revenue

  (41,706,220   (63,913,645   (44,076,349   (7,103,818
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross loss

  (14,285,975   (5,203,219   (7,219,703   (1,163,605

Operating Expenses:

Product development

  (79,550,315   (100,558,324   (76,702,721   (12,362,235

Sales and marketing

  (18,270,728   (49,663,417   (33,487,372   (5,397,185

General and administrative

  (51,629,447   (66,923,309   (59,527,803   (9,594,139

Impairment on equipment, intangible assets, other assets and allowance(reversal of allowance) of long-term receivable

  (3,555,845   (35,466,122   17,927,763      2,889,431   

Gain on disposal of subsidiaries

  0      0      165,392,382      26,656,413   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

  (153,006,335   (252,611,172   13,602,249      2,192,285   

Other operating Income

  50,000      55,372      25,000      4,029   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

  (167,242,310   (257,759,019   6,407,546      1,032,709   

Investment income from cost method investment

  0      0      1,142,353      184,114   

Interest income, net

  1,482,111      2,605,392      1,932,448      311,454   

Other income(expense), net

  3,276,714      6,985,096      (5,382,192   (867,452
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit (Loss) before income tax expense, gain on investment disposal, impairment loss on investments and share of loss in equity investments

  (162,483,485   (248,168,531   4,100,155      660,825   

Income tax expense

  0      0      0      0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit (Loss) before gain on investment disposal, impairment loss on investments and share of loss in equity investments

  (162,483,485   (248,168,531   4,100,155      660,825   

Gain on disposal of equity investee and available-for-sale investment

  9,403,451      0      23,750,001      3,827,805   

Impairment loss on investments

  0      (15,181,566   0      0   

Share of loss in equity investments

  (879,476   (411,547   (2,833,054   (456,606
  

 

 

   

 

 

   

 

 

   

 

 

 

Net profit (loss)

  (153,959,510   (263,761,644   25,017,102      4,032,024   

Net loss attributable to noncontrolling interest

  (12,046,743   (19,401,046   (9,396,578   (1,514,454

Net loss attributable to redeemable noncontrolling interest

  0      0      (20,876,617   (3,364,700
  

 

 

   

 

 

   

 

 

   

 

 

 

Net profit (loss) attributable to The9 Limited

  (141,912,767   (244,360,598   55,290,297      8,911,178   
  

 

 

   

 

 

   

 

 

   

 

 

 

Accretion on redeemable noncontrollling interest

  0      0      21,076,744      3,396,955   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net profit (loss) attributable to holders of ordinary shares

  (141,912,767   (244,360,598   34,213,553      5,514,223   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net profit (loss) attributable to holders of ordinary shares per share

- Basic

  (6.13   (10.64   1.48      0.24   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding

- Basic

  23,146,859      22,968,487      23,182,241      23,182,241   

 

Page 5


THE9 LIMITED

CONSOLIDATED BALANCE SHEETS INFORMATION

(Expressed in Renminbi - RMB and US Dollars - US$)

 

     As of December 31, 2013     As of December 31, 2014  
     RMB     RMB     US$  
     (audited)     (unaudited)     (unaudited)  

Assets

      

Current Assets

      

Cash and cash equivalents

     156,987,201        181,482,300        29,249,638   

Accounts receivable

     19,138,096        11,804,750        1,902,581   

Advances to suppliers, net

     4,525,549        733,339        118,193   

Prepayments and other current assets, net

     32,464,598        56,573,321        9,117,964   

Prepaid royalties

     4,878,579        0        0   

Deferred costs

     68,217        9,745        1,571   

Amounts due from a related party

     0        5,250,000        846,146   
  

 

 

   

 

 

   

 

 

 

Total current assets

  218,062,240      255,853,455      41,236,093   

Restricted cash

  700,000      0      0   

Investments in equity investees

  50,848,141      39,223,925      6,321,749   

Property, equipment and software, net

  50,439,400      36,346,230      5,857,949   

Goodwill

  9,710,854      9,746,054      1,570,779   

Intangible assets, net

  128,643,824      97,539,341      15,720,488   

Land use right, net

  72,194,206      70,273,296      11,325,999   

Other long-term assets, net

  16,080,483      8,348,409      1,345,519   
  

 

 

   

 

 

   

 

 

 

Total Assets

  546,679,148      517,330,710      83,378,576   
  

 

 

   

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable

  69,376,348      40,213,660      6,481,266   

Other taxes payable

  1,238,852      932,431      150,281   

Advances from customers

  18,896,049      16,833,165      2,713,014   

Amounts due to related parties

  4,799,753      6,304,956      1,016,174   

Deferred revenue

  20,113,256      20,434,962      3,293,518   

Refund of game points

  169,998,682      169,998,682      27,398,814   

Other payables and accruals

  45,669,488      41,872,851      6,748,679   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

  330,092,428      296,590,707      47,801,746   

Long-term accounts payable

  21,110,517      18,992,201      3,060,987   

Deferred tax liabilities, non-current

  5,343,060      5,362,427      864,266   
  

 

 

   

 

 

   

 

 

 

Total Liabilities

  356,546,005      320,945,335      51,726,999   
  

 

 

   

 

 

   

 

 

 

Redeemable Noncontrolling Interest

  0      131,497,104      21,193,486   

Ordinary shares (US$0.01 par value; 23,146,859 and 23,201,601 shares issued and outstanding as of December 31, 2013 and December 31, 2014, respectively)

  1,881,784      1,885,153      303,832   

Additional paid-in capital

  2,152,320,786      2,075,900,461      334,574,422   

Statutory reserves

  28,071,982      28,071,982      4,524,382   

Accumulated other comprehensive loss

  (8,987,041   (8,638,604   (1,392,290

Accumulated deficit

  (1,912,569,874   (1,999,192,344   (322,211,318
  

 

 

   

 

 

   

 

 

 

The9 Limited shareholders’ equity

  260,717,637      98,026,648      15,799,028   

Noncontrolling interests

  (70,584,494   (33,138,377   (5,340,937
  

 

 

   

 

 

   

 

 

 

Total equity

  190,133,143      64,888,271      10,458,091   
  

 

 

   

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and equity

  546,679,148      517,330,710      83,378,576   
  

 

 

   

 

 

   

 

 

 

 

Page 6


Note: The United States dollar (“US dollar” or “US$”) amounts disclosed in the accompanying financial statements are presented solely for the convenience of the readers at the rate of US$1.00 =RMB6.2046, representing the noon buying rate in the City of New York for cable transfers of RMB, as certified for customs purposes by the Federal Reserve Bank of New York, on December 31, 2014.

 

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