Kongzhong Corporation - America (NASDAQ:KZ)

BEIJING, March 20, 2017 /PRNewswire/ -- KongZhong Corporation (KZ) ("KongZhong" or the "Company"), a leading online game developer and operator in the People's Republic of China ("PRC"), today announced that, at an extraordinary general meeting ("EGM") held today, the Company's shareholders voted in favor of the proposal to authorize and approve the previously announced agreement and plan of merger dated as of December 1, 2016 (the "Merger Agreement"), by and among the Company, Linkedsee Limited ("Parent") and Wiseman International Limited ("Merger Sub"), a wholly owned subsidiary of Parent, pursuant to which, Merger Sub will be merged with and into the Company with the Company continuing as the surviving company and becoming a wholly owned subsidiary of Parent (the "Merger"), and the plan of merger required to be filed with the Registrar of Companies of the Cayman Islands (the "Plan of Merger").

Approximately 66.25% of the Company's total outstanding shares voted in person or by proxy at today's EGM. Of these ordinary shares voted in person or by proxy at the EGM, approximately 95.56% were voted in favor of the proposal to authorize and approve the Merger Agreement, the Plan of Merger and the transactions contemplated thereby, including the Merger. The Merger Agreement, the Plan of Merger and the transactions contemplated thereby, including the Merger, were therefore duly authorized and approved by way of special resolutions as required by, and in compliance with, the Companies Law of the Cayman Islands.

Completion of the Merger is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. The Company will work with various other parties to the Merger Agreement to satisfy all other conditions precedent to the Merger set forth in the Merger Agreement and complete the Merger as quickly as possible. If and when completed, the Merger would result in the Company becoming a privately held company wholly owned by Parent, and its American depositary shares, each representing forty ordinary shares of the Company, would no longer be listed on the NASDAQ Global Select Market.

Third Quarter 2016 Unaudited Financial Results

• Total revenues for the third quarter of 2016 were US$40.97 mn, an 11.61% decrease from the second quarter of 2016 but a 6.19% increase from the same period last year.
• Non-GAAP net income was US$6.17 mn, a 24.91% decrease from the second quarter of 2016 but a 35.90% increase from the same period last year, with Non-GAAP diluted net income per ADS of US$ 0.13 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures").

BEIJING, Dec. 1, 2016 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KZ) ("KongZhong" or the "Company"), a leading online game developer and operator in the People's Republic of China ("PRC"), today announced that it has entered into a definitive agreement and plan of merger (the "Merger Agreement") with Linkedsee Limited ("Parent") and Wiseman International Limited ("Merger Sub"), a wholly owned subsidiary of Parent, pursuant to which the Company will be acquired by an investor consortium in an all-cash transaction with a transaction value of approximately $299 million.

Pursuant to the terms of the Merger Agreement, at the effective time of the merger, each ordinary share of the Company issued and outstanding immediately prior to the effective time of the merger (each a "Share") will be cancelled in exchange for the right to receive $0.18875 in cash, and each American depositary share (each an "ADS") of the Company, representing 40 Shares, will be cancelled in exchange for the right to receive $7.55 in cash, except for (a) (i) Shares (including Shares represented by ADSs) owned by Mr. Leilei Wang, Chairman and Chief Executive Officer of the Company ("Mr. Wang") and certain of his affiliates, who will be rolled over in the transaction, (ii) Shares (including Shares represented by ADSs) owned by Parent, Merger Sub, the Company or any of their respective wholly-owned subsidiaries, and (iii) Shares (including Shares represented by ADSs) reserved but not yet allocated by the Company for settlement upon the exercise or vesting of any Company share awards, each of which will be cancelled without any conversion thereof or consideration paid therefor, and (b) Shares held by shareholders who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 238 of the Companies Law of the Cayman Islands (the "Dissenting Shares"), which will be cancelled in exchange for the right to receive the payment of fair value of the Dissenting Shares in accordance with Section 238 of the Companies Law of the Cayman Islands.

The merger consideration represents a premium of 17.8% to the closing price of the Company's ADSs on August 24, 2016, the last trading day prior to the Company's announcement of its receipt of a revised "going-private" proposal, a premium of 29.0% to the average closing price of the Company's ADSs during the 90 trading days prior to its receipt of the revised "going-private" proposal, and a premium of 13.4% to the closing price of the Company's ADSs on November 30, 2016, the last trading day prior to the this announcement.

The investor consortium comprises, among others, Mr. Wang, Gongqingcheng Wujiang Xingyao Investment Management Partnership (Limited Partnership), Hexie Chengzhang Phase II (Yiwu) Investment Center (Limited Partnership) and/or their respective affiliates.

The Company's board of directors (the "Board"), acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board (the "Special Committee"), approved the Merger Agreement and the merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its independent financial and legal advisors.

BEIJING, Aug. 25, 2016 /PRNewswire/ -- KongZhong Corporation  (NASDAQ: KZ), a leading online games publisher and developer in the PRC, today announced that its board of directors (the "Board") has received a revised non-binding proposal letter, dated August 25, 2016, from Mr. Leilei Wang, chairman and chief executive officer of the Company, and IDG-Accel China Growth Fund II L.P., who, together with certain other parties, formed a buyer group (the "Buyer Group") to acquire all of the outstanding ordinary shares of the Company not owned by them or their affiliates (the "Transaction") for US$7.18 in cash per American depositary share ("ADS", each representing forty ordinary shares), or approximately US$0.1795 per ordinary share. A copy of the proposal letter is attached hereto as Exhibit A.

The special committee of the Board (the "Special Committee"), formed to consider the original proposal by the Buyer Group, is evaluating this revised proposal with the assistance of its financial and legal advisors. The Special Committee cautions the Company's shareholders and others considering trading in the Company's securities that no decision has been made by the Special Committee or the Board with respect to the revised proposal. There can be no assurance that any definitive offer will be made, any agreement will be executed or that this or any other transaction will be approved or consummated.

BEIJING, June 29, 2015 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KZ), a leading online games publisher and developer in the PRC, today announced that its board of directors (the "Board") has received a preliminary non-binding proposal letter, dated June 29, 2015, from Mr. Leilei Wang, chairman and chief executive officer of the Company, and IDG-Accel China Growth Fund II L.P. ("IDG) to acquire all of the outstanding ordinary shares of the Company not owned by them or their affiliates (the "Transaction") for US$8.56 in cash per American depositary share ("ADS", each representing forty ordinary shares), or approximately US$0.2140 per ordinary share, which represents a premium of approximately 20% to  the average closing price of the Company's ADSs over the last 30 trading days  and a premium of approximately 21.8% to the closing price of the Company's ADS on June 26, 2015, the last trading day. 

According to the proposal letter, the Transaction is intended to be financed with a combination of debt and/or equity capital. The proposal letter states that its proposal constitutes only a preliminary indication of its interest and is subject to the execution of definitive agreements relating to the proposed Transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Board intends to form a special committee consisting of independent directors to consider the proposal. The Board expects that the special committee will retain independent advisors, including independent financial and legal advisors, to assist it in this process.

The Board cautions the Company's shareholders and others considering trading the Company's securities that the Board has just received the proposal letter and has not had an opportunity to carefully review and evaluate the proposal or make any decision with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any definitive agreement will be executed relating to the proposed transaction or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

BEIJING, Oct. 17, 2014 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KZ), a leading online games publisher and developer in the PRC, today announced that its Board of Directors has declared a special one-time cash dividend of US$0.022 per ordinary share, orUS$0.88 per American Depositary Share ("ADS").

Record holders of the Company's ordinary shares and holders of the Company's ADSs, each representing forty ordinary shares, at the close of business on October 27, 2014 (the "Record Date") will be entitled to receive the special dividend. Citibank, N.A., the depositary bank for the Company's ADS program, expects to pay out dividend to ADS holders on or around November 10, 2014. Dividends to be paid to the Company's ADS holders through the depositary bank will be subject to the terms of the deposit agreement, including the fees and expenses payable thereunder.

The total amount of cash to be distributed for the special dividend is expected to be approximately US$40.1 million.

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "Today's announcement of a US$0.88 per ADS special dividend, is our latest effort in returning capital to our shareholders. Over the past six years, we have undertaken share repurchases with a cumulative value of US$39.3 million. Our strong balance sheet and positive growth opportunities in our Internet and mobile game businesses have allowed us to provide shareholders with this dividend, while preserving financial and operational flexibility to grow our business in the rapidly growing Chinese online game markets. We have strong confidence in our operation cash flow and may consider making further efforts to return capital to our shareholders through dividend distributions. However, the distribution of any dividends will be at the full discretion of the Board of Directors and will be dependent upon our financial position, results of operations, available cash, capital requirements and other factors."

As of June 30, 2014, the Company had US$230.58 million (or US$5.07 per ADS) in cash and cash equivalents, term deposits, held-to-maturity securities, available-for-sale securities and restricted cash. The Company generated US$29.34 million in net cash provided by operating activities for the six months ended June 30, 2014.

BEIJING, June 13, 2014 /PRNewswire/ -- KongZhong Corporation (KONG), a leading online games publisher and developer in the PRC, today officially announced that, effective June 16, 2014, the Company's American Depository Receipts (ADR) will commence trading on the NASDAQ Global Select Market under the new trading symbol "KZ" (NASDAQ: KZ). The change represents the company's efforts to better align its company branding as an online games company. The previous trading symbol was "KONG".

In conjunction with this development, the company also announced that it has launched a new version of its investor relations website, effective June 16, 2014. The updated website offers an improved layout and enhanced design, in order to provide investors with a more clear and succinct picture of the Company's platform, financials and stock performance. 

The Company's Chairman and Chief Executive Officer, Leilei Wang stated, "The change in symbol and website improvements demonstrate our commitment to advancing our new corporate branding and investor relations strategies. Through simplifying our ticker symbol and providing a more intuitive uncluttered web interface, we are better positioned to communicate our future developments as an online games company to the investor community globally."

First Quarter 2014 Financial Results

• Total revenues were US$ 49.61 mn, an increase of 13.2% from the fourth quarter of 2013 and 3.5% from the same period last year, exceeding the guidance range of US$ 45.5 mn to US$ 46.5 mn.
•  Non-GAAP diluted net income per ADS was US$ 0.23 vs. last years same quarter of US$ 0.21.

The Company's Chairman and Chief Executive Officer, Leilei Wang said, " Based on the recently released War Saga brand, with 40.0 mn World of Tank Chinese players, the upcoming open beta test for World of Warplanes, and next year's anticipated release of World of Warships and Blitzkrieg 3, we have created China's largest military genre online game platform. In addition, due to strong user acquisition, outstanding retention and attractive in-game economy metrics from our open beta test for Guild Wars 2 and World of Warplanes, with the strong support of our development partners, in 2Q14 we committed significant marketing resources to commercially release these games to the China market. We are confident that through the successful release of Guild Wars 2 and World of Warplanes in 2Q14, that KongZhong ("KZ") from both a user and revenue standpoint, will see strong future growth based on a newly diversified PC online game portfolio. At the same time, we continue to invest heavily into our self-developed mobile games with a goal to supplement this business through the licensing of overseas games and distribution of our games overseas. I believe KZ will continue to development positively in the future as a leading and differentiated online game company."

Business Outlook (For the second quarter ending June 30, 2014)

The Company expects total revenues for the second quarter of 2014 to be within the range of US$ 57.5 mn to US$ 58.5 mn, with business unit revenues at the mid-point expected to roughly consist of Net Game revenues of US$ 33.5 mn, mobile game revenues of US$ 10.5 mn and WVAS revenues of US$ 14 mn.

Guild Wars 2 CD-Keys purchased and activated during the pre-order sales period will be amortized over a period of six months beginning from May 1st which was the headstart period for Guild Wars 2 in China. Future post open beta CD-Key revenues will be amortized from the date of activation.

The Company expects total gross profit to be within the range of US$ 24 mn to US$ 25 mn. We expect net loss to be US$ 0.5 mn to US$1.5 mn and Non-GAAP net profit is expected to be roughly break even.

Our 2Q14 guidance reflects roughly US$ 10.0 mn in incremental sales and marketing related expenses compared to 1Q14, for expenses related to the May 15th open beta launch of Guild Wars 2, the open beta launch of World of War Planes on May 29th and other the marketing activities related to the release of the War Saga brand. As such, we expect total operating expenses in 2Q14 to be between US$ 27-28 mn. However, we expect sales and marketing expenses to revert to roughly pre-2Q14 levels as a percentage of sales in subsequent financial periods for Internet games.

BEIJING, Feb. 27, 2014 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KONG), a leading provider of digital entertainment services for consumers in the PRC, today has officially announced its commercialization strategy of Guild Wars 2, the groundbreaking fantasy MMO developed by ArenaNet in the west, when the hit online game publishes in China with partner KongZhong. Guild Wars 2 China will keep the same premium game play experience and innovative business model: players just pay for the game key one time, then are able to play the game for free with no subscription fee. In addition, on March 11, Guild Wars 2 China will host an exclusive two-week closed beta test where Chinese players will be invited to try out the revolutionary MMO for free.

Regarding the final retail price of the game, to ensure a strong market fit, Guild Wars 2 China will conduct a new round of market research with players and then announce the result.

Fourth Quarter 2013 Financial Results:

• Revenues exceed guidance - Total revenues for the fourth quarter of 2013 decreased 0.6% from the third quarter of 2013 but increased 2.8% from the same period last year to US$ 43.84 mn, exceeding the guidance range of US$ 41.0 mn to US$ 42.0 mn.
• Net income and Non-GAAP net income in 4Q13 were US$ 10.03 mn and US$ 10.65 mn, respectively. Diluted income per ADS and diluted Non-GAAP earnings per ADS were US$ 0.21 and US$ 0.23 in 4Q13, respectively.

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "In 2013, the Company spent great efforts preparing for the upcoming the official launch of Guild Wars 2 and World of War Plane, as well as the development of our smartphone games. Through in-house self-development and the licensing of overseas games, we will continue to develop our strong pipeline in both mobile and Internet games. Our goals in 2014 are to maintain stable cashflow from our WVAS business, capture fast growth in our mobile game business and in Internet games, achieving sustained growth in World of Tanks while having successful launches of Guild Wars 2 and World of Warplanes. I believe 2014 is the year the Company has the opportunity to see great performance."

Business Outlook (For the 3-month period ending March 31, 2014):

The Company expects total revenues for 1Q14 to be within the range of US$ 45.5 mn to US$ 46.5 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 13.5 mn, mobile game revenues of US$ 8.5 mn and Net Game revenues of US$ 24.0 mn.

The Company expects total gross profit to be within the range of US$ 22.5 mn to US$ 23.5 mn, net profit to be US$ 9.5 mn to US$ 10.5mn, and Non-GAAP net profit is expected to be US$ 10.5 mn to US$ 11.5 mn.

Regarding Internet Game revenue guidance, beginning in September 2013, with further implementation beginning on January 1, 2014, the Company began to account for the majority part of Internet Game revenues under VAT. Under VAT, the revenue is calculated excluding VAT that has to be paid to tax authority, while under business tax in the prior periods, the revenue is fully recorded including the business tax amount as per Chinese government tax policies. As such, although our Internet Game revenues guidance for domestic Internet games implies a slight decrease in revenues in 1Q14 compared to 4Q13, we expect gross profits from domestic Internet games to remain stable after taking into account the change from business tax to VAT.

BEIJING, January 31, 2014 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KONG), a leading digital entertainment company in China, today announced it has entered into definitive agreements to acquire a minority interest in Ourgame International Holdings Limited ("Ourgame" also known as "LianZhong") for a total consideration of RMB 100.0 mn in cash (equivalent to roughly US$ 16.5 mn at current exchange rates). The board of directors of the Company has approved the transaction, which is set to close before the end of February 2014.

Ourgame is one of the earliest and most popular providers of Internet-based casual board and card games in China. It has developed and currently operates over 300 board and card games with cross-platform support for PC and mobile. Through this strategic investment, Ourgame will accelerate its strategy of being a leader in casual board and card games in the China market, increase its plans to develop and promote 20-30 additional new products in the near future, and expand and enhance its platform offerings to the browser-based and mobile games market.

Over the past few years, Ourgame has significantly expanded their casual PC game presence to mobile with the success of its Dou Dizhu application on Android in China, especially card-based mobile games. Ourgame's Dou Dizhu application had over 40.0 mn downloads is one of the most popular card games in the China smartphone market. In addition, Ourgame has a number of other card games in its mobile game portfolio including Poker World, Texas Hold'em, etc..

Board and Card games is one of the earliest and most popular game genres to first develop on the PC and more recently on mobile. Based on The 29^th China Internet Network Development State Statistic Report conducted byChina Internet Network Information Centre ("CNNIC"), the number Internet board and card game users in Chinareached 259.0 mn, making up 80% of all game users in China.

Through this strategic investment, KONG and Ourgame will seek to pursue co-development, co-marketing and co-distribution synergies through their respective smartphone and PC game businesses.

BEIJING, Jan. 15, 2014 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KONG), a leading provider of digital entertainment services for consumers in the PRC, announced a strategic partnership with leading Vietnamese game publisher, Soha Game, to publish its self-developed mobile game "Hero and Goddess", taking a first step to expand into the burgeoning South East Asiamobile game market.

KONG self-developed "Hero and Goddess" is a strategy RPG mobile game set against a simulated Western mythology based game world. It's game play is based on combining the aspects of questing, romance, city building, role-playing and a unique concubine progression system that supports a hero's overall progression in the game. The game has hundreds of mythical heroes that players can customize and choose from. And the ancient gods and goddess like Athena, Zeus, Odin can become your patrons in the game.

According to 3^rd party market research firms, the Southeast Asia game market -- which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam -- is expected reach $1.2 billion in the next three years. Currently, the gaming market in Southeast Asia creates revenue of around $560 million and $240 million was generated from Vietnam market. The region boasts around 85 million gamers, and market research firms expect that number to grow to 132 million by 2017.  Regarding smartphone game market, Vietnam is the second fast growing smartphone country around the world based on iOS and Android activations.  In Vietnam, Soha Game estimates that they lead the market with over 53% of the total game market (PC and mobile).

Chinese developed games have proven to be successful in the Vietnam game market based on past commercial experience. The first overseas mobile game that Soha Game published in Vietnam was a Chinese mobile game Shenxiandao, which helped Soha Games achieve a record as one of the top grossing mobile games in the Vietnamese game market.

Soha Game is the top leading gaming portals in Vietnam, and is also the first choice for game developers all over the world who would like to enter the Vietnamese market. Soha Game dominates the Vietnamese Internet user base, which has 30 mn Internet users and 18 mn smartphone mobile phone users. Soha Game was the first to publish a smartphone online mobile game inVietnam, and achieved the highest revenue in the Vietnamese gaming history.

As an important growth driver for KongZhong, the Company has established 10 mobile game development studios in Beijing,Shanghai, Xiamen, and Tianjin. KongZhong currently has a portfolio of 4 self-developed smartphone games, namely Pocket Fort, Heroes of the Three Kingdoms OL, Heroes and Goddess (aka Highlord), and Kooky Three Kingdoms, in commercial operation. In 2014, KongZhong's smartphone game strategy will continue to develop and publish 6 to 10 additional high-quality mobile games. In 2014, "Kooky Three Kingdoms" already achieved a strong start in China and the Company expects a similar reception as the game is introduced to the APAC markets in the coming months.

Third Quarter 2013 Financial Results:

• Revenues exceed guidance - Total revenues for the third quarter of 2013 increased 1.2% from the second quarter of 2013 but a 11.7% decline from the same period last year to US$ 44.08 mn, exceeding the guidance range of US$ 43.0 mn to US$ 44.0 mn.
• Non-GAAP net income inline with guidance - Non-GAAP net income was US$ 1.50 mn, inline with the guidance range of US$ 1.5 mn to US$ 2.5 mn. Non-GAAP diluted net income per ADS was US$ 0.03 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures").

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "The Company significantly increased our marketing efforts in the 3rd quarter of 2013 in three main areas to support future growth in our games business. Namely, user acquisition for our new smartphone games, new user acquisition and increased branding for World of Tanks and raising the overall branding of KongZhong as a leading game publisher in China. I believe we were successful during the quarter in these goals and have set a good foundation for strong growth in our Internet games business and smartphone game business for the coming year. This includes the upcoming launches of World of Warplanes and Guild Wars 2 as well as an expected average of 2 new smartphone games to be released to the China market in the hardcore segment of the market each quarter."

Business Outlook (For the 3-month period ending December 31, 2013):

The Company expects total revenues for 4Q13 to be within the range of US$ 41mn to US$ 42 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 13mn, feature phone mobile game revenues of US$ 2mn, smartphone game revenues of US$ 3.5 mn and Net Game revenues of US$ 23mn.

The Company expects total gross profit to be within the range of US$ 20 mn to US$ 21 mn, net profit to be US$ 8 mn to US$ 9 mn, and Non-GAAP net profit is expected to be US$ 9 mn to US$ 10 mn.

BEIJING, November 8, 2013 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KONG), a leading provider of digital entertainment services for consumers in the PRC, announced today its strategic partnership with well known British car racing game developer Eutechnyx, where KongZhong will have exclusive rights to publish and operate the simulated car racing game ("ACR") in Mainland China.Auto Club Revolution is a free-to-play simulated online racing game and car enthusiast community built in collaboration with the motor industry. Featuring officially licensed cars from over 50 of the world's leading motor manufacturers, including BMW, Ford, VW, McLaren, Toyota and others, it delivers a best-in-class racing experience to the free-to-play market while providing a social platform for owning, customizing and enjoying cars online.

Through Kongzhong's success with World of Tanks, the partners believe the demand for a free-to-play online car racing simulation game, playable on the PC, will be high in the mainland China market where there is limited selection for Chinese players due to the lack of console game platforms. Where World of Tanks is a team-based massively multiplayer online action game dedicated to armored warfare, which includes more than 200 historically accurate armored vehicles from military history, ACR will bring hundreds of cars and race tracks with realistic detail and accuracy similar to other car simulation racing games that can only be played on the consoles. Moreover, the partners believe that as China has become the largest automotive market in the world, the interest for ACR should be high.

As the market leader of military genre online games in China, KongZhong is always strategically positioning itself to expand into new under-served market segments. According to CNNIC, by the end of 2012, the China online game market revenues reached 60.13 billion RMB with 336 million game players. However, to-date, there has never been a world-class free-to-play simulated car online racing game in China and through this partnership, KongZhong and Eutechnyx will seek to fulfill this significant gap in the market place.

Through this partnership, KongZhong also expects to bring innovations to Chinese online game and automotive cross marketing. In their overseas operation and marketing, ACR has cooperated with many of the world's top car brands by leveraging the realistic graphics of vehicles in ACR to supplement auto shows, auto showrooms and car portals by allowing players to "test drive" the newest sports and racing cars. With over 25 years of car racing game development experience Eutechnyx has gained the trust of the world's leading car manufacturers and this partnership will seek to leverage the car content in ACR to explore and create a new business model in China with these manufacturers.

Eutechnyx's CEO, Mr. Darren Jobling said, "We are excited to have KongZhong, as one of the leading online game providers in China, be our partner to introduce the first free-to-play simulated car online racing game to China. This is indeed a great honor for Eutechnyx. Eutechnyx has very good partnerships with many of the world-class auto brands and is always striving to bring the best product to Chinese players. Through our close cooperation with KongZhong, Eutechnyx hopes ACR can bring Chinese players the best online car racing game experiences."

KongZhong's Chairman and CEO, Mr. Wang Leilei said, "Eutechnyx is a world-wide famous game developer with many of its games published by the console game industry's leading players. Leveraging on Eutechnyx' 25 year racing game development experience and KongZhong's mainland China operation and marketing experience, we believe ACR will have great success in China by bringing Chinese players the first free-to-play simulated online racing game."

Second Quarter 2013 Financial Results

• Revenues inline with guidance - Total revenues for the second quarter of 2013 decreased 12.8% from the same period last year and 9.1% from the first quarter of 2013 to US$ 43.58 mn, inline with guidance range ofUS$ 43.5 mn to US$ 44.5 mn.
• Gross profit inline with guidance - Total gross profit declined 4.0% from the first quarter of 2013 to US$ 17.85 mn, inline with guidance range of US$ 17 mn to US$ 18 mn.
• Net income exceeds guidance - Net income declined 4.3% from the first quarter of 2013 to US$ 6.51 mn, exceeding the guidance range of US$ 5.5 mn to US$ 6.5 mn. Basic net income per American Depositary Shares ("ADS") was US$ 0.16.
• Non-GAAP net income exceeds guidance - Non-GAAP net income decreased 12.1% from the first quarter of 2013 to US$ 7.82 mn, exceeding the guidance range of US$ 6.5 mn to US$ 7.5 mn. Non-GAAP diluted net income per ADS was US$ 0.18 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures").

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "Second quarter operating results came inline with our expectations. In the third quarter, we will invest significantly in the promotion of a new content update for World of Tanks and begin building marketing activities around the upcoming beta tests for Guild Wars 2, World of Warplanes and Master of the Meteor Blades. Additionally, we will ramp up our marketing spend around our self-developed smartphone games, with around 8 new games to be commercially launched or entering beta testing in the 2nd half of this year. We expect to deliver revenue growth in the following quarters from these new marketing activities. Lastly, we will continue to drive our long-term strategy to become a leading games Company in China. For Internet games, we will concentrate our efforts on the self-development and licensing of high-quality AAA online games with a focus on e-sports and military games. For smartphone games, we will focus on the self-development, promotion and operation of AAA smartphone games, based on our in-house smartphone game engine."

Business Outlook (For the 3-month period ending September 30, 2013):

The Company expects total revenues for 3Q13 to be within the range of US$ 43mn to US$ 44 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 16 mn, mobile game revenues of US$ 6mn and Net Game revenues of US$ 21.5mn.

The Company expects total gross profit to be within the range of US$ 19 mn to US$ 20 mn, total operating expenses to be US$ 19 mn to US$ 20 mn, net profit to be US$ 0.5 mn to US$ 1.5 mn, and Non-GAAP net profit is expected to be US$ 1.5 mn to US$ 2.5 mn.

The increased level of operating expenses expected in 3Q13 reflects an increase in sales and marketing activities for the Company's smartphone and Internet games.

First Quarter 2013 Financial Results:

• Revenues exceeds guidance Total revenues for the first quarter of 2013 increased 9.3% from the same period last year and 12.4% from the fourth quarter of 2012 to US$ 47.94 mn, exceeding the guidance range of US$ 45 mn to US$ 46 mn.
• Gross profit exceeds guidance Total gross profit declined 0.8% from the same period last year but increased 3.3% from the fourth quarter of 2012 to US$ 18.59 mn, exceeding the guidance range of US$ 17 mn to US$ 18 mn.
• Net income exceeds guidance Net income declined 0.8% from the same period last year in 1Q13 but increased 42.6% from the fourth quarter of 2012 to US$ 6.81 mn, exceeding the guidance range of US$ 3 mn to US$ 4 mn. Basic net income per American Depositary Shares ("ADS") was US$ 0.17.
• Non-GAAP net income exceeds guidance � Non-GAAP net income increased 2.8% from the same period last year and 14.9% from the fourth quarter of 2012 to US$ 8.90 mn, exceeding the guidance range of US$ 5.5 mn to US$ 6.5 mn. Non-GAAP diluted net income per ADS was US$ 0.21 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures").

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "In the first quarter of 2013, we continued to demonstrate strong performance in our Internet games business which now makes up nearly 60% of total revenues and 70% of total gross profits. Since 2012, through our cooperation with overseas and domestic games developers, as well as the restructuring of our internal game development resources, we have established a strong future Internet game pipeline. For example, we continue to make preparations for the upcoming launch of World of Warplanes and Guild Wars 2 to the China market, which is now one of the most anticipated new games in China. Over the long term, to take advantage of opportunities in smartphone games market, we are developing more innovative mobile game products by leveraging our in-house game engine and R&D teams. We believe that in the following quarters, we will continue to bring new Internet games, as well as mobile games to the market."

Business Outlook (For the 3-month period ending June 30, 2013):

The Company expects total revenues for 2Q13 to be within the range of US$ 43.5 mn to US$ 44.5 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 15 mn, mobile game revenues of US$3.5 mn and Net Game revenues of US$ 25.5 mn.

The Company expects total gross profit to be within the range of US$ 17 mn to US$ 18 mn, total operating profit to be US$ 5.5 mn to US$ 6.5 mn, net profit to be US$ 5.5 mn to US$ 6.5 mn, and Non-GAAP net profit is expected to be US$ 6.5 mn to US$ 7.5 mn.

Second-Quarter 2012 Highlights:

• Revenues were $17.9 million, a decrease of 26.6% as compared to $24.3 million in the year-ago quarter
• Gross profit was $6.6 million, as compared to $10.6 million in the year-ago quarter
• Net loss was $1.3 million, or $0.09 per diluted share; non-GAAP net loss was $1.2 million, or $0.08 per diluted share
• A related company received an initial RMB 2.5 million (U.S. $0.4 million) investment from Zhongguancun Development Group (the "Group") for the research, development and commercialization of Telestone Intelligent Premise System (TIPS) technology. This investment is part of a RMB 15 million (U.S. $2.4 million) total commitment awarded in May, which the Group is expected to fulfill over the next three to five years

"Although we reported a loss in the second quarter, which was in line with our expectations, this was largely due to the current weak capital-spending environment and an allowance for doubtful accounts. This year, we have deliberately moderated our top-line growth in order to improve collections so that we can position Telestone for a return to growth and focus on developing our U-DAS (WFDS) and TIPS technologies," commented Mr. Daqing Han, Chairman and CEO of Telestone.

Business Outlook

For the full-year 2012, Telestone continues to expect revenues to increase to approximately $117 million.

"We believe that the current drought of spending is temporary and that the start of the carriers' large-scale 4G network construction, in addition to the development and growth of our U-DAS and TIPS technology-based products, will help Telestone hit its revenue target this year and create a bright future for the company, its employees, and shareholders," concluded Mr. Han.

First Quarter 2012 Financial Highlights:

• Revenues exceeds guidance - Total revenues for the first quarter of 2012 increased 12% from the fourth quarter of 2011 to US$ 43.84 mn, exceeding the Company's 1Q12 revenue guidance range of US$ 41.5 mn to US$ 42.5 mn.
• Gross profit exceeds guidance - Total gross profit was US$ 18.75 mn for 1Q12, exceeding the Company's 1Q12 guidance range of US$ 17 mn to US$ 18 mn.
• Net income exceeds guidance - Net income in 1Q12 was US$ 6.86 mn, exceeding the Company's guidance range of US$ 4.5 mn to US$ 5.5 mn, a 21% increase compared to net income of US$ 5.67 mn in 4Q11. Basic net income per American Depositary Shares ("ADS") was US$ 0.17.
• Non-GAAP net income exceeds guidance - Non-GAAP net income was US$ 8.66 mn, exceeding the Company's guidance range of US$ 6.5 mn to US$ 7.5 mn, while Non-GAAP diluted net income per ADS wasUS$ 0.21 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures.")
• Cash and cash equivalents - As of March 31, 2012, the Company had US$ 178.19 mn in cash and cash equivalents, held-to-maturity securities and trading securities or US$ 4.34 per ADS in cash and cash equivalents, held-to-maturity securities and trading securities, compared to US$ 154.57 mn at the end of 4Q11.

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wangsaid, "The Company achieved record revenues and non-GAAP Net Profit After Tax ("NPAT") in the first quarter of 2012 and more importantly, we continue to build a strong foundation for future growth in our Internet and mobile game businesses."

Business Outlook (For the 3-month period ending June 30, 2012):

The Company expects total revenues for 2Q12 to be within the range of US$ 49 mn to US$ 50 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 20.5 mn, mobile game revenues of US$ 6.0 mn and Net Game revenues of US$ 23 mn.

The Company expects total gross profit to be within the range of US$ 21.5 mn to US$ 22.5 mn, total operating profit to be US$ 6.5 mn to US$ 7.5 mn, net profit to be US$ 6.5 mn to US$ 7.5 mn, and Non-GAAP net profit is expected to be US$ 9 mn to US$ 10 mn.

BEIJING, May 14, 2012 /PRNewswire-Asia/ -- KongZhong Corporation (NASDAQ: KONG), a leading provider of digital entertainment services for consumers in the PRC, today announced that it has entered into a series of agreements with Wargaming.net to create a strategic partnership for all of Wargaming.net's existing and future games in the mainland China market, including but not limited to World of Tanks, World of Warplanes and World of Battleships.

As part of this partnership, KONG's board of directors has approved the grant of warrants for the issuance of issue up to 5.0 million American Depositary Shares ("ADSs') representing ordinary shares of KONG to Wargaming.net with an exercise price of US$ 5.94 per ADS. The warrants have a duration ranging from 1 to 6 years, and the exercise of the warrant is subject to various conditions, including the commercial launch of Wargaming.net's future games in the mainland China market.

Moreover, as part of this strategic partnership, Wargaming.net has granted to KONG (i) exclusive and long-term operating rights for World of Tanks, World of Warplanes, World of Battleships in mainland China and (ii) the right of first offer over the operating rights of any future Wargaming.net game (including mobile games) in mainland China.

The Company's Chief Financial Officer and Board Member, Jay Chang said, "We are excited to have Wargaming.net as a strategic partner of KONG. Through this partnership, we have fully aligned our long-term interests to maximize the success of all of Wargaming.net's games in the China market for many years to come."

Victor Kislyi, CEO of Wargaming.net said, "After a year of close cooperation and success with World of Tanks in China, we believe KONG is the ideal partner to support the growth and development of all of Wargaming.net's existing and future games for the China market and we are proud to be a strategic partner with KONG."

• Revenues inline with guidance - Total revenues for the fourth quarter of 2011 increased 9% from the fourth quarter of 2010 to US$ 39.28 mn, inline with the Company's 4Q11 revenue guidance range of US$ 39 mn to US$ 40 mn.
• Gross profit exceeds guidance - Total gross profit was US$ 16.67 mn for 4Q11, exceeding the Company's 4Q11 guidance range of US$ 15 mn to US$ 16 mn.
• Net income exceeds guidance - Net income in 4Q11 was US$ 5.67 mn, exceeding the Company's guidance range of US$ 3 mn to US$ 4 mn, a 13% increase compared to net income of US$ 5.01 mn in 4Q10. Basic net income per American Depositary Shares ("ADS") was US$ 0.14.
• Non-GAAP net income exceeds guidance - Non-GAAP net income was US$ 7.47 mn, exceeding the Company's guidance range of US$ 5.0 mn to US$ 6.0 mn, while Non-GAAP diluted net income per ADS wasUS$ 0.18 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures.")
• Cash and cash equivalents - As of December 31, 2011, the Company had US$ 154.6 mn in cash and cash equivalents, short term investments and trading securities or US$ 3.76 per ADS in cash and cash equivalents, short term investments and trading securities, compared to US$ 143.7 mn at the end of 3Q11. Cash and cash equivalents exclude US$ 22.19 mn loans to a third party.

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang said, "In 4Q11, the Company achieved record GAAP and Non-GAAP net profit since we arrived at KONG in late 2008 with our strong performance being driven by our diversification into Internet games. "During the quarter, World of Tanks ("WoT") continued to drive our Internet games business and we expect WoT's strong momentum to carry into 2012 as one of the top team-based massively multiplayer online games in the mainland China market. "We plan to release our self-developed flagship 3D MMORPG game,Kung Fu Hero, to open beta in March and expect Kung Fu Heroto be a significant contributor to our Internet games business in the 2nd quarter of 2012 and beyond. "To further diversify KONG's business, we recently announced the acquisition of Noumena and its Handymo smartphone mobile game engine platform to accelerate the development of KONG's mobile game business in both the China and global smartphone mobile game markets. "I'm pleased with our 4Q11 performance and believe KONG has strong momentum which will carry our strong 4Q11 performance into 2012."

Third Quarter 2011 Results

We believe that our current cash and cash equivalents and cash flow from operations will be sufficient to meet our anticipated cash needs, including for working capital purposes, capital expenditures and various contractual obligations, for at least the next 12 months. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue.

We intend to meet the majority of our future funding needs through cash flow generated from operating activities and our current cash and cash equivalents.

First Quarter 2011 Financial Highlights:

(Note: Unless otherwise indicated, all financial statement amounts used in this press release are based on United States Generally Accepted Accounting Principles (GAAP) and denominated in US dollars)

• Revenues exceeds guidance – Total revenues for the first quarter of 2011 ("1Q11") increased 11% quarter-over-quarter ("QoQ") to US$ 40.1 million ("mn"), exceeding the Company's 1Q11 revenue guidance range of US$ 38.5 mn to US$ 39.5 mn.
• Gross profit inline with guidance – Total gross profit was US$ 16.5 mn for 1Q11, inline with the Company's 1Q11 guidance range of US$ 15.5 mn to US$ 16.5 mn.
• Net income – Net loss in 1Q11 was US$ 0.46 mn, including a change in the fair value of the Dacheng contingent consideration of US$ 3.73 mn. Excluding this change, net income in 1Q11 was US$ 3.27 mn, a 3% increase compared to US$ 3.17 mn in 1Q10. Basic net loss per ADS was US$ 0.01 based on 37.58 mn ADS outstanding as of March 31, 2011.
• Non-GAAP net income inline with guidance – Non-GAAP net income was US$ 6.9 mn, inline with the Company's guidance range of US$ 6.0 mn to US$ 7.0 mn.
• Non-GAAP diluted net income per ADS was US$ 0.17 vs. $0.15 (Non-GAAP Financial Measures are described and reconciled to the corresponding GAAP measures in the section titled "Non-GAAP Financial Measures.")
• Cash and cash equivalents – As of March 31, 2011, the Company had US$ 118.3 mn in cash and cash equivalents or US$ 3.1 per basic ADS in cash and cash equivalents.  This includes a US$ 9.3 mn payment for the early extinguishment of convertible note issued to Nokia Growth Partners, a US$ 14.6 mn payment for the cash portion related to the final payment for Dacheng and a US$ 21.2 mn investment in RMB denominated short-term loan to a third party.

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang, said, "Against a stabilized WVAS environment, the Company continued to generate stable Non-GAAP net profit while building up future growth opportunities within our Internet game business.  On March 15th, we successfully launched World of Tanks ("WoT") to the market and based on the first few months of operation, continue to believe that WoT has potential to one of the top team-based shooters in the mainland China.  Moreover, development of our self-developed 3D MMORPGs, Kung Fu Hero and Emofaze 3 (the second in the EMFZ series), continues on track with a 3Q 2011 open beta targeted for Kung Fu Hero and a late 2011 or early 2012 open beta target for EMFZ3.  Lastly, to further diversify our online game portfolio, we recently announced our partnership with Gamepot, to exclusively operate one of the most popular online first person shooters in Japan, Paperman."

Business Outlook (For the 3-month period ending June 30, 2011):

The Company expects

• total revenues for 2Q11 to be within the range of US$ 41.5 mn to US$ 42.5 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 20 mn, mobile game revenues of US$ 12 mn and Online Game revenues of US$ 10 mn.  
• total gross profit to be within the range of US$ 16 mn to US$ 17 mn
• total operating profit to be US$ 4 mn to US$ 5 mn
• net profit to be US$ 4 mn to US$ 5 mn
• Non-GAAP net profit is expected to be between US$ 6 mn to US$7 mn.

Fourth Quarter Highlights:

• Revenues inline with guidance – Total revenues for the Fourth Quarter of 2010 ("4Q10") increased 5% year-over-year ("YoY") to US$ 36.0 million ("mn"), inline with the Company's 4Q10 revenue guidance range of US$ 35.5 mn to US$ 36.5 mn.
• Gross profit inline with guidance – Total gross profit was US$ 15.96 mn for 4Q10, inline with the Company's 4Q10 guidance range of US$ 15.5 mn to US$ 16.5mn.
• Net income grew quarter-over-quarter ("QoQ") and YoY – Net income in 4Q10 was US$ 5.01 mn a 330% increase compared to US$ 1.17 mn in 3Q10 and a 149% increase compared to US$ 2.0 mn in 4Q09.
• Basic net income per ADS was US$ 0.13 based on 37.31 mn ADS while diluted net income per ADS was US$ 0.13 based on 39.08 mn ADS outstanding as of December 31, 2010.
• Non-GAAP net income exceeds guidance – Non-GAAP net income was US$ 7.27 mn, exceeding the Company's guidance range of US$ 5.5 mn to US$ 6.5 mn, while Non-GAAP diluted net income per ADS was US$ 0.18

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang, said, "KONG achieved our highest quarterly net profit and non-GAAP net profit since I joined the Company, driven by our diversification into Internet games, cost efficiencies and a stabilizing WVAS market. With the strong performance from Internet games helping to balance the challenges in WVAS, I believe our diversification into Internet games has been a success."

The Company expects total revenues for 1Q11 to be within the range of US$ 38.5 mn to US$ 39.5 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 20.3 mn, mobile game revenues of US$ 13.5 mn and Online Game revenues of US$ 5.2 mn.  

The Company expects total gross profit to be within the range of US$ 15.5 mn to US$ 16.5 mn, total operating profit to be US$ 4 mn to US$ 5 mn, net profit to be US$ 2 mn to US$ 3 mn (which includes an estimated US$ 1.6 mn non-cash expense related to the early extinguishment of the portion of NGP convertible notes prepaid), while Non-GAAP net profit is expected to be between US$ 6 mn to US$ 7 mn.

Third Quarter 2010 Financial Highlights:

• Revenues above guidance – Total revenues for the Third Quarter of 2010 ("3Q10") increased 7% year-over-year to US$ 37.67 million ("mn"), above the Company's 3Q10 revenue guidance range of US$ 35 mn to US$ 36 mn.

• Gross profit above prior guidance – Total gross profit was US$ 15.6 mn for 3Q10, exceeding the Company's 3Q10 guidance range of US$ 14.5 mn to US$ 15.5 mn.

• Net income in line with guidance – Net income in 3Q10 was US$ 1.17 mn, in line with the Company's 3Q10 guidance range of US$1.0 mn to US$ 1.5 mn.  

• Basic net income per ADS was US$ 0.03 based on 37.05 mn ADS while diluted net income per ADS was US$ 0.03 based on 38.28 mn ADS outstanding as of September 30, 2010.

• Non-GAAP net income in line with guidance – Non-GAAP net income wasUS$ 4.13 mn, in line with the Company's guidance range ofUS$ 3.5 mn to US$ 4.5 mn, while Non-GAAP diluted net income per ADS was US$ 0.10

• Cash and cash equivalents – As of September 30, 2010, the Company had US$ 138.54 mn in cash and cash equivalents or US$ 3.74 per basic ADS in cash and cash equivalents.

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang, said, "Against a more stable WVAS environment, KongZhong continued to make long-term investments to become a diversified digital entertainment player in the mainland China market. In 3Q, we streamlined our WIS and WVAS business to more efficiently address the coming consolidation we foresee in the China WVAS market, we continued to lead the mobile game market and we made significant progress in our Internet game strategy to develop a robust and differentiated online game pipeline for 2011."

Business Outlook (For the 3-month period ending December 31, 2010):

The Company expects total revenues for 4Q10 to be within the range of US$ 35.5 mn to 36.5 mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$18.5 mn, mobile game revenues of US$ 13 mn and Online Game revenues of US$ 4.5mn.  

The Company expects

• total gross profit to be within the range of US$ 15.5 mn to 16.5mn
• total operating profit to be US$ 3 mn to 4 mn
• Non-GAAP net profit to be roughly US$ 5.5 mn to US$ 6.5 mn.

Business Outlook (For the 3-month period ending June 30, 2010):

The Company expects total revenues for 2Q10 to be within the range of US$ 34.5mn to 35.5mn, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of US$ 16.5 mn, mobile game revenues of US$ 13.0 mn, WIS revenues of US$ 1.0 mn and Online Game revenues of US$ 4.5mn.

The Company expects total gross profit to be within the range of US$ 16.5mn to 17.5 mn, total operating profit and net profit to be US$ 2.5mn to 3.0 mn, while Non-GAAP net profit to be roughly US$ 5.3 mn to US$ 5.8 mn.

Commenting on the results, the Company's Chairman and Chief Executive Officer, Leilei Wang, said, "I'm pleased to report that in the second quarter of 2009, KongZhong continued to grow overall profits driven by strong growth in our mobile games business, while at the same time, we were still able to maintain our long-term investment in Kong.net.

^a The above forecasts reflect the Company's current and preliminary view and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

Commenting on the first quarter results, the Company's Chairman and Chief Executive Officer, Leilei Wang, said, 'In my first full quarter as CEO of KongZhong, I'm pleased to report that we have returned the Company to a positive operating profit and positioned the Company for future growth opportunities.

'Overall, I'm very pleased with our results for the 1st quarter of 2009 and look forward to building upon these achievements as we seek to become the pre-eminent leader of the mobile Internet industry in China.'

^a The above forecasts reflect the Company's current and preliminary view and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

Guidance Report:

Commenting on the 2008 full year results the Company's Chairman and Chief Executive Officer, Leilei Wang, said, 'I'm very pleased with the performance of our team in the fourth quarter and in the full fiscal year 2008. Since I assumed the position of KongZhong's CEO a few months ago, I and my team have begun to implement various measures to improve the performance of our WVAS segment. More importantly, we have begun to invest more efficiently in our mobile games and KONG.net areas. The strong year-over-year growth in mobile games and KONG.net and improved gross margins across all of our business lines reflect some of the early results of these initiatives. I look forward to building upon these gains in 2009 and beyond as we seek to become the pre-eminent leader of the mobile Internet industry in China.'

Full Year Fiscal 2009 Guidance Ending March

Source: PR Newswire (February 18, 2009)