SHANGHAI -- Online video company Leshi Internet Information & Technology had 470 million yuan ($68.7 million) in liabilities in excess of assets as of the end of June, and the prospect of continuing losses has raised fears that its shares will be delisted.
The Chinese company reported a net loss of 1.1 billion yuan in January-June results released Wednesday, worsening from a loss of about 600 million yen in the first half of 2017.
Sales plunged 82% on the year over the same period to about 1 billion yuan, as income from memberships and from advertising both dropped roughly 70%. Leshi has failed to stanch an outflow of streaming service users that began around autumn 2016, when rumors of operating troubles at the company emerged on the web and elsewhere.
Leshi, a unit of Chinese technology group LeEco, warned in earnings materials that it is at risk of further losses for the July-December half. If the company were to have liabilities in excess of assets for the full year, the Shenzhen Stock Exchange could remove its shares from its up-and-coming companies section.
Founded in 2004, Leshi made a name for itself as a video services company, and earnings began to grow when it hit on a method of selling content packaged with devices like TVs and smartphones. Thereafter, it started branching into new fields like electric vehicles, as well as expanding overseas and seeking acquisitions.
But Leshi's rapid expansion left it pinched for funding. Moreover, founder Jia Yueting, who last year stepped down as CEO, plunged the company further into chaos by moving to and remaining in the U.S., citing a desire to focus on electric car development, despite demands from Chinese authorities that he return home. The company hoped a rescue by real estate firm Sunac China Holdings would solve its problems, but no earnings recovery is yet in sight.