China Teletech Holding Inc (CNCT)·Q3 2017 Earnings Summary

Executive Summary

• CNCT reported no revenue and widening losses for the nine months ended September 30, 2017, driven by higher audit, legal and compensation expenses as the company transitioned its business; basic/diluted EPS for the nine months was $(0.002) vs $(0.0003) in the prior year period .
• The Kuncheng share exchange closed on November 13, 2017, pivoting CNCT into PRC education services (A‑level prep and tutoring); as of H1 2017 Kuncheng generated $0.10M revenue with a reduced net loss vs prior year, aided by growing student count .
• Liquidity remains strained: zero cash, stockholders’ deficit $(436)K and related‑party advances of $0.54M due to the CEO at 9/30/17; management disclosed going‑concern uncertainty and ineffective disclosure controls .
• No Q3 2017 Item 2.02 earnings press release or earnings call transcript was found; no formal guidance was issued. Street estimates were not available via S&P Global for CNCT (no coverage/mapping) .

What Went Well and What Went Wrong

• What Went Well

  • Kuncheng H1 2017 revenue nearly doubled year over year ($100,634 vs $51,411), reflecting higher student enrollment and an average annual tuition rate of RMB 92,000 (≈$13,580) .
  • Strategic pivot executed: CNCT closed the 51% Kuncheng acquisition, moving into education services with ~25 A‑level students enrolled in 2016–2017 and ~10 tutoring students, building a local reputation (management notes “a good reputation … no need to advertise”) .
  • Seasonality tailwind: filings note historically higher gross revenue growth in Q3 for the school year start (context for future quarters as operations integrate) .

• What Went Wrong

  • Consolidated results show zero revenue and sharply higher G&A, expanding nine‑month net loss to $(409,101) vs $(44,588) in 2016; management attributes the increase to audit, legal and compensation costs .
  • Regulatory risk: the operated Center’s private school permit expired in March 2016; operating without a valid permit may trigger administrative penalties or cessation risk .
  • Financial controls and liquidity: disclosure controls deemed not effective; zero cash on balance sheet, accumulated deficit of $8.0M, and reliance on $0.54M related‑party advances (payable on demand) raise going‑concern risk .

Financial Results

Consolidated CNCT (USD) – Year-to-Date comparisons (oldest → newest)

Kuncheng (PRC education subsidiary) – First half comparisons (oldest → newest)

KPIs and Operating Data

Segment breakdown: Management reports under a single operating focus; no segment financials disclosed .

Vs. Estimates: Street consensus not available (S&P Global mapping/coverage unavailable for CNCT) — no beat/miss analysis possible .

Guidance Changes

Earnings Call Themes & Trends

No earnings call transcript identified for Q3 2017; themes below reflect filings.

Management Commentary

• Strategic direction: “As a result of the Kuncheng Share Exchange, we are… primarily engaged in providing education‑related services and investment in education services and education entities.”
• Operating drivers: “The revenue… was $100,634… representing an increase… mainly due to the increase of the number of students. The average charging rate was approximately $13,580 (RMB 92,000) per year.”
• Reputation and marketing: “As of June 30, 2017, the number of students was increasing… therefore, a good reputation of the Company has been built in Shenyang and there is no need to advertise in the future.”
• Cost headwinds: “The increase of net loss was mainly due to the increase of auditing fee, legal fee and compensation cost.”
• Risk disclosure: “The private school operating permit… is currently expired and we may be deemed operating a school illegally and may be subject to administrative penalties.”

Q&A Highlights

No Q3 2017 earnings call or Q&A transcript identified; no analyst questions or management clarifications available .

Estimates Context

• Wall Street consensus (S&P Global) was not available for CNCT; no CIQ mapping/coverage, so EPS/revenue beat/miss analysis cannot be performed for Q3 2017 .
• Implication: Absent coverage, investors should anchor on reported filings and track early operational KPIs (enrollment, tuition realization, permit status) for forward expectations .

Key Takeaways for Investors

• Execution pivot complete but financials remain fragile: zero revenue at the holding company, widening YTD losses, zero cash, and reliance on related‑party funding under a going‑concern warning .
• Early signs at Kuncheng are constructive (H1 revenue growth with sharply lower G&A vs prior year) as enrollment ramps and pricing holds at RMB 92k, but scale is very small and seasonality will matter .
• Regulatory overhang is material: operating the Center without a valid private school permit poses shutdown/penalty risk; resolution is a near‑term catalyst to monitor .
• Governance/controls risk persists (ineffective disclosure controls, mid‑year auditor change), adding execution and reporting risk premium for investors .
• With no Street coverage/guidance, trading is likely headline/KPI‑driven: watch for permit reinstatement, enrollment updates for the 2017–2018 intake, and financing actions to address liquidity .
• Dilution risk exists given repeated stock issuances for compensation and acquisitions and ongoing cash needs; track share count and related‑party loan dynamics .

Sources: CNCT Q3 2017 Form 10‑Q (filed 2017‑11‑21) ; CNCT Form 8‑K (filed 2017‑11‑13) including Kuncheng MD&A and business disclosures ; CNCT Q1 2017 Form 10‑Q (filed 2017‑05‑23) ; CNCT 8‑K changes in auditor (July 2017) .