BEIJING, Dec. 7 /Xinhua-PRNewswire/ -- Xinhua China Ltd. (OTC Bulletin
Board: XHUA) today clarified its new operating strategy following
deconsolidation of its interest in Xinhua Publications Circulation &
Distribution Center Co. Ltd. in Beijing, China. "We are concentrating our
business strategy on the growing opportunity in China for online content
distribution, co-publishing and digital rights management," reported Xianping
Wang, president and chief executive officer.
"We expect the connections and channels established within the publishing
industry as a result of our interest in Xinhua C & D will help us execute
this strategy. We still own 7.98 percent of Xinhua C & D so there is an
ongoing relationship there. We anticipate establishing Xinhua China wholly
owned subsidiaries as leaders in the digital media industry in China," Mr.
Wang added.
"Our goal is to build our business to include electronic sales, delivery
and distribution of media content. We plan to partner with publishers
outside of China to provide their content within the country. To become a
digital media company we have established one subsidiary and will establish
one more. The first is Joannes, intended to be our digital media company to
distribute all digital content for Xinhua C & D and others. It anticipates
operating its e-commerce portal as http://www.geezip.com . It plans to allow
customers to purchase electronic and hard copies of books online," Mr. Wang
noted.
"Additionally, we are planning to establish a co-publishing company to
secure agreements with Chinese domestic publishers and others outside of
China for publishing hard copy and digital works," he stated.
In announcing results for the first quarter ended September 30, 2006, Mr.
Wang noted that because of the deconsolidation of its majority ownership in
Xinhua C & D effective May 31, 2006, the first quarter encompasses operations
of Joannes only. Therefore, year-to-year comparisons when the year ago
quarter included the operations of Xinhua C & D are not comparable, he said.
Net sales for this year’s first quarter totaled $50,220 after discounts
and returns versus $16,068,991 in the year ago quarter that included Xinhua C
& D. The company had a net loss of $1,295,925 in the quarter this year
compared with a net loss of $1,715,896 in the year ago quarter. The company
said it is taking actions to cut costs and build the business, including
reductions in headcounts and corporate overhead expenses, while developing
the Joannes business.
The company announced its pending sale of its Boheng ownership and said
that is expected to reduce general and administrative expenses. On September
30, Xinhua China entered an agreement to dispose of its 95 percent equity
interest in Boheng for approximately $1.9 million cash. The company received
a deposit of $252,000 during the first quarter. The balance is to be paid in
interest free installments payable over two years. The transaction is
subject to the company receiving consent of the holders of its convertible
debentures which has not yet been received, it reported.
The company reported working capital on September 30 of $1.26 million
versus $1.22 million at June 30, 2006. It said the reduction in its equity
interest in Xinhua C & D discharged its commitment to contribute further
capital of $16.7 million into that company. These moves are intended to
alleviate the demands on cash flow in the future, it stated. The company
currently has a shareholders’ deficiency of $7.92 million.
Cash used in operations, it said, amounted to $657,689 in the first
quarter, which primarily paid its general and administrative expenses and
those related to Boheng.
About Xinhua China
Xinhua China Ltd. is a US-traded holding company and a US domiciled
company with publishing and distribution interests in China. Through its
subsidiary, Beijing Joannes Information Technology Co., Ltd., it is entering
into the online distribution businesses through existing and new strategic
partnerships with both domestic and foreign publishers, authors, and
distributors in China.
Safe Harbor Statement
This news release may include forward-looking statements within the
meaning of section 27a of the UNITED STATES SECURITIES ACT of 1933, as
amended, and section 21e of the UNITED STATES SECURITIES and EXCHANGE ACT of
1934, as amended, with respect to achieving corporate objectives, developing
additional project interests, Xinhua China’s analysis of opportunities in
the acquisition and development of various project interests and certain
other matters. These statements are made under the "safe harbor" provisions
of the United States private securities litigation reform act of 1995 and
involve risks and uncertainties, which could cause actual results to differ
materially from those in the forward-looking statements contained herein.
