There’s not many publicly traded companies working with blockchain, the technology first made popular by bitcoin. The result is a largely opaque industry, where once transparency was held paramount. While some companies still strive for what might be considered extreme transparency by most current standards, much of our information about blockchain business still comes from filings to the U.S. Securities and Exchange Commission.

Yesterday, a truly rare filing by Beijing-based ChinaNet Online Holdings (Nasdaq CNET), revealed not only a number of key contract details that shed light on the inner-workings of a new blockchain company, but given its proximity to ground-zero of the Covid-19 virus, help paint a much more vivid picture of the stark impact the virus has had on its business. 

While blockchain is increasingly being heralded as a solution to everything from the risks of presenting a physical ID in the age of a global pandemic, to improved privacy in the healthcare industry, and instant payment of future stimulus checks, the filing reveals the virus itself is also delaying at least one company’s ability to deliver.

“The outbreak of COVID-19 and related policies implemented by local governments significantly impacted both our business schedules as well as our suppliers’ and customers’ business schedules in the first fiscal quarter of 2020,” said Handong Cheng, CEO of ChinaNet in a statement. “Nevertheless, despite this momentary setback, we continued to lay the groundwork for our initiatives in healthcare industry advertising, blockchain technology development, and the integration of artificial intelligence with data analytics.”

Notably, in February 2018, ChinaNet entered into a $4.5 million technical development contract with ethereum startup OMG to develop a blockchain solution for internal use by the company. In March 2018, ChinaNet entered into approximately a $0.42 million contract for a social network-based software application with a little-known company called Bo!News.

ChinaNet is now developing and adjusting its blockchain-powered applications to increase the efficiency of moving unspecified transactions to a shared distributed ledger, according to the filing. When the contracts were first signed ChinaNet planned to complete both projects by the end of May 2020, and to integrate the two projects by the end of 2020. “However, due to the Covid-19 outbreak in China during the first fiscal quarter of 2020, the Company currently anticipates that the commercial releasing schedule will likely be postponed for 1 to 2 months,” according to the filing.

Unaudited financial results also published yesterday show the company generated $4.4 million revenue in the first fiscal quarter of 2020, down from $8.6 million in the first fiscal quarter of last year.

ChinaNet Online Holdings, Inc. was incorporated in Texas in April 2006 and re-domiciled to Nevada that same year. Now a wholly-owned subsidiary of ChinaNet Online Media Group Limited, it expanded to include blockchain services in 2018. In March 2020, the same month the company formally began developing a number of new blockchain applications and news of Covid-19 started to gain steam, its stock dropped by about 50% to a low of $0.56 per share, briefly making it ineligible to be listed on Nasdaq. The company has since regained much of that loss, returning to the $1.00 per stock price requirement in June and currently still barely meeting the criteria, trading at $1.02 today. Its current market cap is $21.8 million.

The news is interesting, not because of the scale of the work, but due to the insight into the size of the blockchain deals, and the signs of growth in parallel with the China government’s embrace of blockchain, in spite of the stock’s struggles and delays resulting from the Covid-19 outbreak.

The Company conducts most of its business operations in Beijing and Xiaogan City, located 70 kilometers from Wuhan, the epicenter of the Covid-19 outbreak. “In accordance with the epidemic control measures imposed by the local governments, since February 2020, the Company, along with most other business entities in Xiaogan City and Beijing remained closed after the Chinese New Year holiday,” according to the document, leading to delays in the audit and review process.

In spite of the obstacles, in May 2020, ChinaNet incorporated a wholly-owned subsidiary called ChinaNet Online Guangdong “to enhance the reliability of our future blockchain services” for clients in the area, and is in the process of expanding its corporate business and technology headquarters to Guangzhou in Southern China, by July 2020, according to the documents. “With the start of new stream of revenues, we expect to see more blockchain technology related services and solutions provided in the second half of the year with the addition of these revenues for the growth of the company,” said Handong in the statement.



Source link

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *