UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

 

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 15, 2017

 

ChinaNet Online Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Nevada   001-34647   20-4672080
(State or Other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)

 

No. 3 Min Zhuang Road, Building 6,

Yu Quan Hui Gu Tuspark, Haidian District, Beijing, PRC 100195

(Address of Principal Executive Offices and Zip Code)

 

Registrant’s telephone number, including area code: +86-10-60846616

___________________________________________

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company [ ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On August 15, 2017, ChinaNet Online Holdings, Inc., a Nevada corporation (the “Company”), issued a press release containing certain financial results for its second fiscal quarter of 2017. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

 

As provided in General Instruction B.2 of SEC Form 8-K, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Current Report on Form 8-K.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

No.   Description
99.1   Press Release dated August 15, 2017.
     

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Dated: August 15, 2017     ChinaNet Online Holdings, Inc.
       
    By:  /s/ Handong Cheng
      Name: Handong Cheng
      Title: Chief Executive Officer

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Press Release dated August 15, 2017.
     

 

 

EdgarFiling

EXHIBIT 99.1

ChinaNet Online Holdings Reports Second Quarter 2017 Financial Results

Management to Host Conference Call on Wednesday, August 16th at 8:30 a.m. ET

BEIJING, Aug. 15, 2017 (GLOBE NEWSWIRE) -- ChinaNet Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the "Company"), an integrated online advertising, precision marketing and data-analysis and management services platform, announced today financial results for the second quarter of 2017.

Summary Financials

Second Quarter 2017 Financial Results (USD) (Unaudited)
 20172016CHANGE
Sales$10.5 million $8.4million +24.5%
Gross Profit$1.7 million $2.5 million -31.9%
Gross Margin16.2% 29.6% -45.3%
Net Loss Attributable to ChinaNet($0.8) million ($1.3) million 38.4%
EPS from continuing operations* (Basic & Diluted) ($0.07) ($0.11) 36.4%

*Per share amount for the three months ended June, 2016 has been retroactively restated to reflect the Company’s 1 for 2.5 reverse stock split, which was effective on August 19, 2016.

For the three months ended June 30, 2017, total revenues increased to $10.5 million from $8.4 million in the prior year, primarily due to the increase from search engine marketing and data service revenue during the quarter.

During the quarter, revenues from internet advertising and data services was $2.5 million, which decreased 56.7% from $5.7 million in the second quarter of 2016. ChinaNet continues to focus on integrating and upgrading its internet advertising and data service to SME clients and investing in developing new service modules for clients, and believes that the launch of new services in future will help to increase market penetration and recurring revenues. The decline was offset by an increase in search engine marketing and data service revenue of 188.9% from $2.8 million in the second quarter of 2016 to $8.0 million in the second quarter of 2017. This increase was supported by the CloudX system, which drove more precision marketing and ROI for clients.

Gross profit for the quarter ended June 30, 2017 was $1.7 million, compared to $2.5 million in the second quarter of 2016, a decrease of 31.9%. Gross margin was 16.2%, down from 29.6% in 2016, primarily due to the increase in relative lower margin revenues from search engine marketing and data service during the quarter. Internet advertising and data service gross margin remained 43% in the second quarter of 2017 as in 2016.

Operating expenses decreased by 39.1% to $2.1 million for the three months ended June 30, 2017. Sales and marketing expenses decreased by 22.4% to $0.8 million. General and administrative expenses decreased by 45.9% to $1.0 million. Loss from operations was $0.4 million in the second quarter of 2017, an improvement of 57.3% compared to a loss of $1.0 million in the second quarter of 2016.

Net loss attributable to ChinaNet for the three months ended June 30, 2017 was $0.8 million and loss per share from continuing operations was $0.07, compared to a net loss of $1.3 million and loss per share from continuing operations of $0.11 in the second quarter of 2016. The weighted average diluted shares outstanding for the three months ended June 30, 2017 was 12.0 million shares versus 11.4 million for the three months ended June 30, 2016.

First Half 2017 Financial Results (USD) (Unaudited)
 20172016CHANGE
Sales$17.8 million $13.5 million +31.6%
Gross Profit$3.0 million $4.1 million -27.5%
Gross Margin16.7% 30.4% -44.9%
Net Loss Attributable to ChinaNet($1.9) million ($2.7) million 30.3%
EPS from continuing operations* (Basic & Diluted)($0.16) ($0.23) 30.4%

*Per share amount for the six months ended June, 2016 has been retroactively restated to reflect the Company’s 1 for 2.5 reverse stock split, which was effective on August 19, 2016.

Revenues for the six months ended June 30, 2017 were $17.8 million, an increase of 31.6% from $13.5 million for the same period a year ago, which was primarily an increase in search engine marketing and data service revenue.

Gross profit was $3.0 million, a decrease of 27.5% for the first six months of 2017, and gross profit margin of 16.7%, compared to 30.4% in 2016. Operating expenses decreased by 31.6% to $4.4 million compared to $6.5 million for the first six months of 2016. The Company reported an operating loss of $1.5 million in the first half of 2017 compared to an operating loss of $2.4 million in the first half of 2016.

Net loss attributable to ChinaNet common shareholders and net loss per share was $1.9 million and $0.16 for the six months ended June 30, 2017.

Balance Sheet and Cash Flow

The Company had $1.8 million in cash and cash equivalents as of June 30, 2017, compared to $3.0 million as of December 31, 2016, working capital of $6.3 million compared to $6.9 million as of December 31, 2016, and a current ratio of 1.7 to 1, compared 1.9 to 1 as of December 31, 2016. Total shareholders' equity of ChinaNet was $21.2 million at June 30, 2017 compared to $22.2 million at December 31, 2016.

The Company generated approximately $1.3 million of cash outflows from operations for the six months ended June 30, 2017 compared to a $0.3 million of cash inflows for the six months ended June 30, 2016.

Business Updates

In January 2017, ChinaNet announced the launch of its updated comprehensive website www.chinanet-online.com, reflecting ongoing efforts to provide up-to-date information for customers, investors and shareholders. The new ChinaNet website has been redesigned to be more dynamic, user-friendly and content rich. The website allows visitors to efficiently access information needed regarding ChinaNet's profile and history, products and services, and investor relations content including press releases and SEC reporting. The website now also includes enhanced video, including a compressive overview of the Company's business which can be viewed directly at: http://www.chinanet-online.com/english_index.html 

Conference Call Details
Date: Wednesday, August 16, 2017
Time: 8:30 a.m. EDT
Toll-free dial-in number: 1-800-263-8506
International dial-in number: 1-719-457-2642
Conference ID: 3341576
Webcast: http://public.viavid.com/index.php?id=125967

A replay of the conference call will be available after 11:30 a.m. Eastern time through September 16, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 3341576

About ChinaNet Online Holdings, Inc.

ChinaNet Online Holdings, a parent company of ChinaNet Online Media Group Ltd., incorporated in the BVI (ChinaNet), is an integrated online advertising, precision marketing and data-analysis and management services platform. ChinaNet provides prescriptive analysis for its clients to improve business outcomes and to create more efficient enterprises. The Company leverages an optimization framework, provided by its comprehensive data-analysis infrastructure, to blend data, mathematical, and computational sciences into an outcome management platform for which it monetizes on a per client basis. ChinaNet uniquely optimizes and prescribes its clients decision making processes based on its proprietary ecosystem. For more information, visit www.chinanet-online.com.

Safe Harbor

This release contains certain "forward-looking statements" relating to the business of ChinaNet Online Holdings, Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including business uncertainties relating to government regulation of our industry, market demand, reliance on key personnel, future capital requirements, competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on ChinaNet's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting ChinaNet will be those anticipated by ChinaNet. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. ChinaNet undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for number of shares and per share data)
     
  June 30,  December 31, 
  2017
  2016
  (US $) (US $)
  (Unaudited)  
Assets    
Current assets:    
Cash and cash equivalents $1,816  $3,035 
Term deposit  3,129   3,056 
Accounts receivable, net  5,091   3,322 
Prepayment and deposit to suppliers  4,693   4,754 
Due from related parties, net  229   213 
Other current assets  183   95 
Total current assets  15,141   14,475 
     
Long-term investments  1,373   1,340 
Property and equipment, net  382   471 
Intangible assets, net  6,823   7,264 
Goodwill  5,090   4,970 
Deferred tax assets  1,444   1,522 
Total Assets $30,253   $30,042  
     
Liabilities and Equity    
Current liabilities:    
Short-term bank loan  $738  $721 
Accounts payable   130   102 
Advances from customers   2,519   1,420 
Accrued payroll and other accruals   467   685 
Due to new investors related to terminated security purchase agreements  905   884 
Payable for purchasing of software technology   421   411 
Taxes payable   3,019   2,910 
Other payables   675   487 
Total current liabilities  8,874   7,620 
     
Long-term liabilities:    
Long-term borrowing from a director  129   126 
Total Liabilities  9,003   7,746 
     
Equity:    
ChinaNet Online Holdings, Inc.’s stockholders’ equity    
Common stock (US$0.001 par value; authorized 50,000,000 shares; issued and outstanding 12,265,542 shares and 12,158,542 shares at June 30, 2017 and December 31, 2016, respectively)  12   12 
Additional paid-in capital  29,633   29,285 
Statutory reserves  2,607   2,607 
Accumulated deficit  (12,238)  (10,362)
Accumulated other comprehensive income  1,167   700 
Total ChinaNet Online Holdings, Inc.’s stockholders’ equity  21,181   22,242 
     
Noncontrolling interests  69   54 
Total equity  21,250   22,296 
     
Total Liabilities and Equity $30,253   $30,042  
 

 

CHINANET ONLINE HOLDINGS, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  
(In thousands, except for number of shares and per share data)  
           
  Six Months Ended
June 30,
 Three Months Ended
June 30,
  
   2017   2016   2017   2016   
  (US $) (US $) (US $) (US $)  
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)  
Revenues          
From unrelated parties $17,662  $13,276  $10,417  $8,264   
From related parties  102   220   83   172   
Total revenues  17,764   13,496   10,500   8,436   
Cost of revenues  14,792   9,395   8,800   5,939   
Gross profit  2,972   4,101   1,700   2,497   
           
Operating expenses          
Sales and marketing expenses  1,659   1,943   825   1,063   
General and administrative expenses  2,084   3,538   992   1,832   
Research and development expenses  700   1,016   305   590   
Total operating expenses  4,443   6,497   2,122   3,485   
           
Loss from operations    (1,471)    (2,396)    (422)    (988)  
           
Other income (expenses)          
Interest income  37   53   18   26   
Interest expense  (73)  -   (37)  -   
Other expenses  (206)  (13)  (203)  (1)  
Total other (expenses)/income  (242)  40   (222)  25   
           
Loss before income tax expense, noncontrolling interests and discontinued operation    (1,713)   (2,356)    (644)  (963)  
Income tax expense  (113)  (152)  (113)  (180)  
Loss from continuing operations    (1,826)    (2,508)    (757)    (1,143)  
Loss from and on disposal of discontinued operation, net of income tax   -      (60)   -      (14)  
Net loss    (1,826)    (2,568)    (757)    (1,157)  
Net income attributable to noncontrolling interests from continuing operations  (50)  (123)  (32)  (123)  
Net loss attributable to ChinaNet Online Holdings, Inc. $   (1,876) $   (2,691) $   (789) $   (1,280)  
           
Net loss $(1,826) $(2,568) $(757) $(1,157)  
Foreign currency translation gain/(loss)  432   (478)  326   (590)  
Comprehensive loss $   (1,394) $   (3,046) $   (431) $   (1,747)  
Comprehensive income attributable to noncontrolling interests  (15)  (94)  (34)  (111)  
Comprehensive loss attributable to ChinaNet Online Holdings, Inc. $   (1,409) $   (3,140) $   (465) $   (1,858)  
           
Loss per share          
Loss from continuing operations per common share          
Basic and diluted $(0.16) $(0.23) $(0.07) $(0.11)  
Loss from discontinued operations per common share          
Basic and diluted $-  $(0.01) $-  $-   
           
Weighted average number of common shares outstanding:          
Basic and diluted  11,990,950   11,350,971   11,999,304   11,358,971   
           
** Weighted average number of shares outstanding and per share amounts for the six and three months ended June 30, 2016 have been retroactively restated to reflect the Company’s 1 for 2.5 reverse stock split, which was effective on August 19, 2016.

 

CHINANET ONLINE HOLDINGS, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
     
  Six Months Ended June 30,
   2017   2016 
  (US $) (US $)
  (Unaudited) (Unaudited)
Cash flows from operating activities    
Net loss $  (1,826) $  (2,568)
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities    
Depreciation and amortization    707     760 
Share-based compensation expenses     348     1,135 
Loss on disposal of fixed assets   -      21 
Reverse of allowances for doubtful accounts    (29)   -  
Loss on deconsolidation of VIEs   -      9 
Deferred taxes    113     152 
Changes in operating assets and liabilities    
Accounts receivable    (1,666)    (771)
Other receivables    (19)    1,325 
Prepayment and deposit to suppliers    173     612 
Due from related parties    (10)    (25)
Other current assets    (37)    1 
Accounts payable    24     (154)
Advances from customers    1,050     (388)
Accrued payroll and other accruals    (225)    (89)
Other payables    86     296 
Taxes payable    38     86 
Commitment and contingencies   -      (129)
Net cash (used in)/provided by operating activities    (1,273)    273  
     
Cash flows from investing activities    
Payment for office equipment and leasehold improvement    (2)    (148)
Long-term investment in and advance to cost/equity method investees   -      (754)
Payment for purchasing of software technology   -      (1,991)
Proceeds from disposal of VIEs   -      28 
Cash effect on deconsolidation of VIEs   -      (18)
Net cash used in investing activities    (2)    (2,883)
     
Cash flows from financing activities    
     
Net cash provided by/(used in) financing activities   -     -  
     
Changes in cash and cash equivalents included in assets classified as held for sale   -      55 
     
Effect of exchange rate fluctuation on cash and cash equivalents    56     (72)
     
Net decrease in cash and cash equivalents    (1,219)    (2,627)
     
Cash and cash equivalents at beginning of the period    3,035     5,503 
Cash and cash equivalents at end of the period $   1,816   $   2,876  
     


Contact:

MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us