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 17, 2010
CHINANET ONLINE
HOLDINGS, INC.
(Exact Name of Registrant as Specified
in Charter)
|
Nevada
|
000-52672
|
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:
011-86-51600828
____________________________________
(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):
|
*
|
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))
|
Item 2.02. Results of Operations and
Financial Condition.
On August
17, 2010, ChinaNet Online Holdings, Inc., a Nevada corporation, issued a press release containing certain
financial results for its second fiscal quarter of 2010. A copy of
the press release is attached to this Current Report on Form 8-K as Exhibit
99.1.
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 17,
2010
|
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 17,
2010
|
CHINANET ONLINE HOLDINGS,
INC.
|
|
|
By:
|
/s/ Zhige
Zhang
|
|
|
Name: Zhige
Zhang
|
||
|
Title: Chief
Financial Officer
|
||
Exhibit Index
|
No.
|
Description
|
|
99.1
|
Press Release dated August 17,
2010
|
ChinaNet
Online Holdings Reports Record Second Quarter 2010;
Net
Income grew 223% to $4.2 Million with Diluted EPS of $0.20
Results
underscore significant progress in ChinaNet becoming a leading B2B Internet
advertising solutions provider
|
·
|
Revenues
increased 28% in the second quarter, driven by an 87% increase in Internet
Advertising
|
|
·
|
Net
income grew 223% YOY to $4.2 million, with EPS of $0.20 vs. $0.09 for
2Q09
|
|
·
|
Gross
margins surged 1050 bps year-over-year to
50.7%
|
|
·
|
Operating
margins improved 1390 bps to 34.9%
|
|
·
|
Cash
increased to $17.8 million on June 30, 2010, as cash flows from operating
activities increased to $6.2 million for
1H10
|
|
·
|
Reaffirms
2010 guidance; Revenues of $45 million and net income of $14.1
million
|
BEIJING,
August 17 /PRNewswire-Asia-SecondCall/ -- ChinaNet Online Holdings, Inc.
("ChinaNet", NYSE Amex: CNET), a leading full-service media development, and
internet technology company for small and medium-sized enterprises (SMEs) in the
People's Republic of China ("China"), today announced its second quarter 2010
financial results.
Summary
Financials
|
Second Quarter 2010 Results
(USD) (unaudited)
|
|||
|
(three
months ended June 30,)
|
Q2
2010
|
Q2
2009
|
CHANGE
|
|
Sales
|
$12.0
million
|
$9.4
million
|
+28.3%
|
|
Gross
Profit
|
$6.1
million
|
$3.8
million
|
+61.9%
|
|
Gross
Margin
|
50.7%
|
40.2%
|
+26.1%
|
|
Net
Income
|
$4.2
million
|
$1.3
million
|
+222.8%
|
|
Fully
diluted EPS
|
$0.20
|
$0.09
|
+122.2%
|
Second
Quarter 2010 Financial Results
Revenues
for the second quarter of 2010 increased 28.3% to $12.0 million compared to $9.4
million for the second quarter of 2009. In concert with management's plan and
focus for 2010, Internet advertising increased 87.0% year-over-year to $7.8
million, and comprised 65.0% of total revenue. Growth was driven by increased
business from existing customers and continued success in acquiring new
customers through branding and marketing investments made over the past year.
Revenues generated by TV advertising during the second quarter of 2010 declined
15.2% year-over-year to approximately $4.0 million or 33.4% of total revenues.
In the second quarter of 2010, 150 new customers (including 15 branded clients)
were added to 28.com, the Company’s franchise gateway business. During the
second quarter of 2010, the weighted average of active Internet advertising
customers was approximately 700, which included 30 branded clients. Branded
clients pay a premium for additional services, such as brand management, search
engine marketing, search engine optimization, internet information management
and others.
|
Second Quarter 2010 Revenue
Breakdown By Business Unit (USD in thousands)
(unaudited)
|
|||
|
(three
months ended June 30,)
|
2010
|
2009
|
CHANGE
|
|
Internet
Advertisement
%
of Sales
|
$7,831
65.0%
|
$4,187
44.6%
|
+87.0%
|
|
TV
Advertisement
%
of Sales
|
$4,021
33.4%
|
$4,744
50.6%
|
-15.2%
|
|
Bank
Kiosk
%
of Sales
|
$132
1.1%
|
$19
|
--
|
"We
delivered an exceptionally strong second quarter, led by increased market share
and an increased brand image in our flagship franchise gateway business, 28.com,
which enabled us to achieve record earnings" stated Mr. Handong Cheng, Chairman
and CEO of the Company. "We are building positive momentum in all facets of our
business and have allocated the necessary resources to enhance our position as
the leading Internet advertising resource for small and medium sized businesses,
especially franchise businesses. During the quarter, we added notable franchise
customers, including Yiwu XinGuang Holdings Inc., Shanghai Meili Hua Ltd. and
Shenzhen Excellent Energy Light Technology Ltd., which are engaged in accessory,
stationery and energy saving lights industries, respectively. Our clients have
embraced the new value-added services we have added to our product portfolio,
including brand management and search engine marketing. These unique solutions
provide significant value to franchisors by allowing them to target a larger
universe of potential franchisees in a very cost-effective manner, while
enabling us to monetize our customer base with high margin revenues. In addition
to our normal market channels, we will continue to work with local and federal
government agencies, communities and universities to promote entrepreneurship
and job creation in China to ensure that we continue to be a dominant player
servicing the franchise market."
Cost of
sales for the three months ended June 30, 2010 was approximately $5.9 million,
up 5.8% to $5.6 million from the three months ended June 30, 2009. The costs
associated with the Company's advertising services include costs for purchasing
Internet advertising resources from other well-known portal websites in China
and purchasing television advertisement time from TV networks and local
stations.
Gross
profit for the second quarter of 2010 was $6.1 million, representing gross
margin of 50.7%, compared to $3.8 million in gross profit and a gross margin of
40.2% in the second quarter of 2009. The healthy year-over-year increase in
gross margins was due largely to the Company’s deliberate strategy to focus
predominantly in its core franchise gateway business, 28.com. Internet
advertising generated by 28.com achieved gross profit margins of 73.0% and 70.0%
in the second quarter of 2010 and 2009, respectively, while the Company's TV
advertisement segment generated a gross profit margin of 7% and 17.0% in each
respective quarter.
Operating
expenses for the three months ended June 30, 2010 were approximately $1.9
million, and were essentially flat compared to the same period in 2009. Selling
expenses for the period were $0.9 million, down 22% from $1.2 million from the
second quarter of 2009. The decrease was due to lower spending on TV
advertising. General and administrative expenses were $0.8 million and $0.6
million in the second quarter 2010 and 2009, respectively. More than half of the
increase was due to public company expenses and non-cash equity compensation for
services.
Operating
income for the second quarter of 2010 totaled $4.2 million, a 124.1% increase
from the $1.9 million reported for the second quarter of 2009. Operating margins
were 34.9% and 20.0% for the second quarter of 2010 and 2009,
respectively.
GAAP net
income for the second quarter was $4.2 million, an increase of 222.8% compared
to $1.3 million reported in the same period of the prior year, with
corresponding fully diluted net income per share of $0.20 in the second quarter
of 2010 compared to fully diluted net income per share of $0.09 in the same
period in 2009, based on 20.7 million and 13.9 million outstanding shares,
respectively.
First
Half 2010 Financial Results
|
First Half 2010 Results
(USD) (unaudited)
|
|||
|
(six
months ended June 30,)
|
2010
|
2009
|
CHANGE
|
|
Sales
|
$22.3
million
|
$19.2
million
|
+16.1%
|
|
Gross
Profit
|
$9.6
million
|
$7.3
million
|
+31.8%
|
|
Gross
Margin
|
43.1%
|
38.0%
|
+13.4%
|
|
Net
Income
|
$8.0
million
|
$2.6
million
|
+209.9%
|
|
Adjusted
Net Income (1)
|
$6.1
million
|
$2.6
million
|
+137.9%
|
|
Fully
diluted EPS
|
$0.38
|
$0.19
|
+100.0%
|
|
Adjusted
EPS (1)
|
$0.29
|
$0.19
|
+52.6%
|
(1) GAAP
net income and GAAP EPS (Diluted) for Q1 2010 include a $1.9 million non-cash
gain related to changes in fair value of warrants.
Revenues
for the first half of 2010 increased 16.1% to $22.3 million compared to $19.2
million for the first half of 2009. Internet advertising increased 57.2%
year-over-year to $12.4 million from $7.9 million in the same period last year,
representing 55.6% of total revenue. TV advertising revenues decreased by 10.0%
during the first half of 2010 to $9.4 million or 42.3% of total
revenues.
|
First Half 2010 Revenue
Breakdown By Business Unit (USD in thousands)
(unaudited)
|
|||
|
(six
months ended June 30,)
|
2010
|
2009
|
CHANGE
|
|
Internet
Advertisement
%
of Sales
|
$12,375
55.6%
|
$7,871
41.0%
|
+57.2%
|
|
TV
Advertisement
%
of Sales
|
$9,424
42.3%
|
$10,486
54.7%
|
-10.1%
|
|
Bank
Kiosk
%
of Sales
|
$263
1.2%
|
$19
|
--
|
Cost of
sales for the six months ended June 30, 2010 was approximately $12.6 million, up
6.5% to $11.9 million from the six months ended June 30, 2009.
Gross
profit for the first half of 2010 was $9.6 million, an increase of 31.8% versus
the same period last year. Gross margins were 43.1% in the first six months of
2010, compared to 38.0% in the first six months of 2009. ChinaNet's Internet
advertising business generated gross profit margin of 74.0% and 73.0% in the
first half of 2010 and 2009, respectively, while the Company's TV advertisement
segment generated a gross profit margin of 2% and 14.0% in each respective
quarter.
Operating
expenses for the six months ended June 30, 2010 were approximately $3.3 million,
a decrease of 13.2% from $3.8 million for the same period of 2009.
Selling expenses for the period were $1.3 million, down 49% from $2.6 million
from the first half of 2009, as a result of lower spending on TV advertising,
which was partially offset by public company expenses and non-cash equity
compensation charges that led to the increase in general and administration
expenses for the six months ended June 30, 2010 to $1.6 million, up 74% from
$0.92 million from the first half of 2009.
Operating
income for the first half of 2010 totaled approximately $6.3 million, up 79.7%
from the $3.5 million reported for the first half of 2009. Operating margins
were 28.5% and 18.4% for the first half of 2010 and 2009,
respectively.
GAAP net
income for the first half of 2010 was $8.0 million, an increase of 209.9%
compared to $2.6 million reported in the same period of the prior year, with
corresponding fully diluted net income per share of $0.38 in the first half of
2010 compared to fully diluted net income per share of $0.19 in the same period
in 2009, based on 20.9 million and 13.8 million outstanding shares,
respectively. During the first quarter of 2010 the Company realized a non-cash
gain of $1.9 million for changes in fair value of warrants. Adjusted for the
non-cash gain, net income was $6.1 million and EPS was $0.29 for the first six
months of 2010.
Balance
Sheet and Cash Flow
The
Company had $17.8 million in cash and equivalents on June 30, 2010, compared to
$13.9 million on December 31, 2009, working capital of $25.5 million, compared
to $19.4 million, and a current ratio of 5.3 to 1 compared 4.9 to 1 on December
31, 2009. The Company generated $6.2 million cash inflow from operating
activities in the first six months of 2010, an increase of 128.1% compared to
$2.7 million in the same period last year. Accounts receivable were $4.8 million
on June 30, 2010, up from $3.2 million on December 31, 2009, with DSO's of 39
days compared to 30 days.
Guidance
for 2010
Management
reaffirmed 2010 revenue guidance of $45 million and net income guidance of $14.1
million, which represents 19% and 67.9% year-over-year growth,
respectively.
Business
Outlook
ChinaNet
is focused on strategically expanding its rapidly growing franchise gateway
business, 28.com, which boasts gross margins of 70%-80%, compared to 15% for its
TV Advertising business segment. Two components of the Company’s strategy
uniquely positions ChinaNet to succeed: 1) an exclusive focus on the burgeoning
Small and Medium Enterprises (SMEs) market, particularly franchise enterprise
and 2) leveraging multiple initiatives to sell additional value added services
to existing and new customers thus monetizing the customer base. The SME market,
already a vibrant sector with over 3,000 franchise enterprises generating over
$30 billion in sales in 2007, will continue to grow faster than the Chinese
economy overall as a result of the central government’s concerted efforts to add
millions of new jobs every year. ChinaNet was one of the two major co-sponsors
of the “Entrepreneurship Fund for Chinese College Students”, a program launched
in partnership with six major central government agencies and other private
corporations to help young Chinese students start their own business. These
types of partnerships will further strengthen ChinaNet’s brand, drive more new
franchisors and franchisees to 28.com, and increase the number of branded
clients.
During
the late second half of 2009, the Company started preparing to offer value added
services to existing clients, including brand management, search engine
marketing, search engine optimization and so forth. Because most small business
owners lack the expertise and resources to create and manage their advertising
and marketing campaigns, ChinaNet is providing a valuable service that many
clients need. The Company has already seen benefits of this strategic initiative
through an increase in the number of branded clients, who pay a weighted average
of approximately $28,000 per month, in comparison with an average of $4,000 per
month for non branded clients.
Internet
Advertising -- During the second quarter of 2010, the Company's
http://www.28.com web portal (or so-called online franchise gateway) exchange
successfully maintained its estimated market share of 35% due to effective
branding and marketing, which was supported by increased productivity from the
Company's sales team. The Company plans to continue to add new software modules
to its 28.com network including: Software V3.0 of Internet Users Monitoring and
Comprehensive Analysis Appraisal System, Software V2.0 of Internet Information
Comprehensive Management Platform, etc. and the Company is evaluating
acquisitions which would bring unique services which can be offered through a
dashboard strategy. ChinaNet continues to help SMEs increase the
profile and value of their businesses through multi-media branding campaigns by
integrating Internet advertising with TV advertising. Its Internet Information
Management (IIM) division was created in August 2009 to offer clients an
intelligent software product based on its proprietary search engine optimization
technology. The enhanced search engine optimization function, which provides
clients with more advanced tools that increase the effectiveness of their
internet advertising campaigns, has seen solid traction and is generating
incremental, high margin revenue.
ChinaNet
TV -- The Company produces web-based video ads and TV infomercials for start-ups
and entrepreneurs. Shows are distributed over airtime purchased from the largest
provincial satellite TV stations. Customers pay ChinaNet TV for proprietary
editorial coverage and advertising spots. During the first half of 2010 the
Company sold about 12,000 minutes of advertising time that it purchased from
seven provincial TV stations compared with approximately 14,000 minutes in the
same period of 2009, a 14.3% decrease. While the Company will continue to use TV
advertising as a component of an integrated marketing strategy for clients, it
will continue to shift resources away from TV to more cost-effective and
targeted media such as sponsored search. Management expects this strategic shift
to increase both margins and returns.
Bank
Kiosks -- ChinaNet's advertising business provides online access for bank
customers while displaying advertising for both PRC and global based companies
through an exclusive arrangement with the China Construction Bank (CCB). This
advertising medium generated $0.1 million and $0.3 million in revenues for the
three and six month period ended June 30, 2010, respectively, and provides
another component to the Company’s multi-platform advertising solution. As of
June 30, 2010, the Company has deployed 200 kiosks in China Construction Bank
Henan Branch and plans to deploy 1,300 more kiosks in the aggregate by the end
of 2010, including offices in Henan, Shanghai and eventually
Beijing. Guangdong and Si Chuan are other potential geographic
destinations the Company will pursue. Management estimates a payback
of one and half years for all equipment deployed, with higher margins and
recurring advertising revenue.
Conference
Call
The
conference call will take place at 10:00 a.m. ET on Tuesday, August 17, 2010.
Interested participants should call 1-877-941-8601 when calling within the
United States or 1-480-629-9810 when calling internationally.
Please download the PowerPoint that we
will reference on the call through the following link: http://www.chinanet-online.com/tzzgx_en.html. Please allow approximately 10 minutes
to download a copy of the company's earnings results
presentation.
A
playback will be available through August 24, 2010. To listen, please call
1-877-870-5176 within the United States or 1-858-384-5517 when calling
internationally. Utilize the pass code 4348158 for the replay.
This call
is being webcast by ViaVid Broadcasting and can be accessed by clicking on this
link http://viavid.net/dce.aspx?sid=00007991, or visiting ViaVid's website at
http://www.viavid.net, where the webcast can be accessed through August 24,
2010.
About
ChinaNet Online Holdings, Inc.
The
Company, a parent company of ChinaNet Online Media Group Ltd., incorporated in
the BVI ("ChinaNet"), is a leading full-service media development, and internet
technology company providing online advertising and brand management solutions
for small and medium-sized enterprises (SMEs) n China. The Company, through
certain contractual arrangements with operating companies in the PRC, provides
Internet advertising and other services for Chinese SMEs via its portal website
28.com, TV commercials and program production via China-Net TV, and in-house LCD
advertising on banking kiosks targeting Chinese banking patrons. Website: http://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.
About
Non-GAAP Financial Measures
To
supplement our consolidated financial statements, which statements are prepared
and presented in accordance with GAAP, we use the following non-GAAP financial
measures: adjusted net income and adjusted EPS (basic and diluted). The
presentation of this financial information is not intended to be considered in
isolation or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. We use these non-GAAP financial
measures for financial and operational decision making and as a means to
evaluate period-to-period comparisons. Our management believes that these
non-GAAP financial measures provide meaningful supplemental information
regarding our performance by excluding certain items that may not be indicative
of our "recurring core business operating results." We believe that both
management and investors benefit from referring to these non-GAAP financial
measures in assessing our performance and when planning, forecasting and
analyzing future periods. We believe these non-GAAP financial measures are
useful to investors both because (1) they allow for greater transparency with
respect to key metrics used by management in its financial and operational
decision making and (2) they are used by our institutional investors and the
analyst community to help them analyze the health of our business.
For
further information, please contact:
HC
International, Inc.
Ted
Haberfield, Executive VP
Tel: +1-760-755-2716
Email:
thaberfield@hcinternational.net
-
Financial Tables Follow –
CHINANET
ONLINE HOLDINGS, INC.
CONSOLIDATED
INCOME AND COMPREHENSIVE INCOME STATEMENT
(In
thousands, except for number of shares and per share data)
|
Six
Months Ended June 30,
|
Three
Months Ended June 30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(US
$000)
|
(US
$000)
|
(US
$000)
|
(US
$000)
|
|||||||||||||
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
|
Sales
|
||||||||||||||||
|
To
unrelated parties
|
$ | 21,660 | $ | 17,715 | $ | 11,627 | $ | 8,412 | ||||||||
|
To
related parties
|
607 | 1,463 | 413 | 969 | ||||||||||||
| $ | 22,267 | $ | 19,178 | $ | 12,040 | $ | 9,381 | |||||||||
|
Cost
of sales
|
12,663 | 11,889 | 5,936 | 5,611 | ||||||||||||
|
Gross
margin
|
9,604 | 7,289 | 6,104 | 3,770 | ||||||||||||
|
Operating
expenses
|
||||||||||||||||
|
Selling
expenses
|
1,337 | 2,629 | 911 | 1,166 | ||||||||||||
|
General
and administrative expenses
|
1,595 | 916 | 801 | 568 | ||||||||||||
|
Research
and development expenses
|
330 | 214 | 196 | 164 | ||||||||||||
| 3,262 | 3,759 | 1,908 | 1,898 | |||||||||||||
|
Income
from operations
|
6,342 | 3,530 | 4,196 | 1,872 | ||||||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Changes
in fair value of warrants
|
1,861 | - | - | - | ||||||||||||
|
Interest
income
|
4 | 5 | 2 | 2 | ||||||||||||
|
Other
income
|
4 | 6 | 4 | 2 | ||||||||||||
|
Other
expenses
|
(1 | ) | - | (1 | ) | - | ||||||||||
| 1,868 | 11 | 5 | 4 | |||||||||||||
|
Income
before income tax expense and noncontrolling interest
|
8,210 | 3,541 | 4,201 | 1,876 | ||||||||||||
|
Income
tax expense
|
279 | 957 | 65 | 571 | ||||||||||||
|
Net
income
|
7,931 | 2,584 | 4,136 | 1,305 | ||||||||||||
|
Net
loss attributable to noncontrolling interest
|
77 | - | 77 | - | ||||||||||||
|
Net
income attributable to ChinaNet Online Holdings, Inc.
|
8,008 | 2,584 | 4,213 | 1,305 | ||||||||||||
|
Other
comprehensive income
|
||||||||||||||||
|
Foreign
currency translation gain
|
77 | 6 | 74 | - | ||||||||||||
|
Comprehensive
income
|
$ | 8,008 | $ | 2,590 | $ | 4,210 | $ | 1,305 | ||||||||
|
Net
income attributable to ChinaNet Online Holdings, Inc.
|
8,008 | 2,584 | 4,213 | 1,305 | ||||||||||||
|
Dividend
of Series A convertible preferred stock
|
(422 | ) | - | (193 | ) | - | ||||||||||
|
Net
income attributable to common shareholders of
|
||||||||||||||||
|
ChinaNet
Online Holdings, Inc.
|
$ | 7,586 | $ | 2,584 | $ | 4,020 | $ | 1,305 | ||||||||
|
Earnings
per share
|
||||||||||||||||
|
Earnings
per common share
|
||||||||||||||||
|
Basic
|
$ | 0.46 | $ | 0.19 | $ | 0.24 | $ | 0.09 | ||||||||
|
Diluted
|
$ | 0.38 | $ | 0.19 | $ | 0.20 | $ | 0.09 | ||||||||
|
Weighted
average number of common shares oustanding:
|
||||||||||||||||
|
Basic
|
16,542,966 | 13,845,593 | 16,848,023 | 13,899,784 | ||||||||||||
|
Diluted
|
20,900,374 | 13,845,593 | 20,742,817 | 13,899,784 | ||||||||||||
CHINANET
ONLINE HOLDINGS INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands)
|
June
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(US
$000)
|
(US
$000)
|
|||||||
|
Unaudited
|
||||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 17,848 | $ | 13,917 | ||||
|
Accounts
receivable, net
|
4,751 | 3,173 | ||||||
|
Other
receivables
|
2,570 | 2,636 | ||||||
|
Prepayment
and deposits to suppliers
|
5,477 | 4,111 | ||||||
|
Due
from related parties
|
485 | 492 | ||||||
|
Inventories
|
2 | 2 | ||||||
|
Other
current assets
|
269 | 30 | ||||||
|
Total
current assets
|
31,402 | 24,361 | ||||||
|
Property
and equipment, net
|
1,307 | 1,355 | ||||||
|
Other
long-term assets
|
52 | 48 | ||||||
| $ | 32,761 | $ | 25,764 | |||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 329 | $ | 290 | ||||
|
Advances
from customers
|
948 | 914 | ||||||
|
Other
payables
|
21 | 27 | ||||||
|
Accrued
payroll and other accruals
|
287 | 191 | ||||||
|
Due
to related parties
|
- | 24 | ||||||
|
Due
to Control Group
|
1,143 | 1,142 | ||||||
|
Due
to director
|
382 | - | ||||||
|
Taxes
payable
|
2,326 | 1,978 | ||||||
|
Dividends
payable
|
510 | 373 | ||||||
|
Total
current liabilities
|
5,946 | 4,939 | ||||||
|
Long-term
borrowing from director
|
128 | 128 | ||||||
|
Warrant
liabilities
|
- | 9,564 | ||||||
|
Commitments
and contingencies
|
- | - | ||||||
|
Stockholders’
equity:
|
||||||||
|
Series
A convertible preferred stock (US$0.001 par value; authorized-8,000,000
shares; issued and outstanding-3,018,600 and 4,121,600 shares at June 30,
2010 and December 31, 2009 respectively; Liquidation preference of $2.5
per share and the accrued but unpaid dividend of $510 and $373, at June
30, 2010 and December 31, 2009, respectively)
|
3 | 4 | ||||||
|
Common
stock (US$0.001 par value;authorized-50,000,000 shares; issued and
outstanding-16,931,320 shares and 15,828,320 shares at June 30, 2010 and
December 31, 2009 respectively)
|
17 | 16 | ||||||
|
Additional
paid-in capital
|
18,398 | 10,574 | ||||||
|
Statutory
reserves
|
372 | 372 | ||||||
|
Retained
earnings
|
7,636 | 50 | ||||||
|
Accumulated
other comprehensive income
|
194 | 117 | ||||||
|
Total
ChinaNet’s Online Holdings, Inc.’s stockholders’ equity
|
26,620 | 11,133 | ||||||
|
Noncontrolling
interest
|
67 | - | ||||||
|
Total
stockholders’ equity
|
26,687 | 11,133 | ||||||
| $ | 32,761 | $ | 25,764 | |||||
CHINANET
ONLINE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands)
|
Six
Months
|
||||||||
|
2010
|
2009
|
|||||||
|
(US
$000)
|
(US
$000)
|
|||||||
|
Unaudited
|
Unaudited
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | 7,931 | $ | 2,584 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||
|
Depreciation
and Amortization
|
163 | 85 | ||||||
|
Share-based
compensation expenses
|
121 | 150 | ||||||
|
Changes
in fair value of warrants
|
(1861 | ) | - | |||||
|
Changes
in operating assets and liabilities
|
||||||||
|
Accounts
receivable
|
(1,559 | ) | (1,145 | ) | ||||
|
Other
receivables
|
2,110 | (89 | ) | |||||
|
Prepayments
and deposits to suppliers
|
(1,343 | ) | 731 | |||||
|
Due
from related parties
|
9 | (22 | ) | |||||
|
Other
current assets
|
(238 | ) | 22 | |||||
|
Accounts
payable
|
38 | 123 | ||||||
|
Advances
from customers
|
31 | (29 | ) | |||||
|
Accrued
payroll and other accruals
|
95 | 123 | ||||||
|
Due
to related parties
|
(24 | ) | (274 | ) | ||||
|
Due
to director
|
381 | - | ||||||
|
Due
to Control Group
|
(4 | ) | 32 | |||||
|
Other
payables
|
(6 | ) | - | |||||
|
Taxes
payable
|
339 | 420 | ||||||
|
Net
cash provided by operating activities
|
6,183 | 2,711 | ||||||
|
Cash
flows from investing activities
|
||||||||
|
Purchases
of vehicles and office equipment
|
(110 | ) | (64 | ) | ||||
|
Purchases
of other long-term assets
|
(4 | ) | (37 | ) | ||||
|
Net
cash used in investing activities
|
(114 | ) | (101 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Cash
investment contributed by noncontrolling interest
|
143 | - | ||||||
|
Dividend
paid to convertible preferred stockholders
|
(284 | ) | - | |||||
|
Increase
of short-term loan with third parties
|
(2,034 | ) | (1,404 | ) | ||||
|
Decrease
of short-term loan from directors
|
- | (90 | ) | |||||
|
Cancellation
and retirement of common stock
|
- | (300 | ) | |||||
|
Net
cash provided by financing activities
|
(2,175 | ) | (1,794 | ) | ||||
|
Effect
of exchange rate fluctuation on cash and cash
|
||||||||
| 37 | 7 | |||||||
|
Net
increase in cash and cash equivalents
|
3,931 | 823 | ||||||
|
Cash
and cash equivalents at beginning of year
|
13,917 | 2,679 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 17,848 | $ | 3,502 | ||||
|
Supplemental
disclosure of cash flow information
|
||||||||
|
Interest
paid
|
$ | - | $ | - | ||||
|
Income
taxes paid
|
$ | 1,082 | $ | 831 | ||||
|
Non-cash
transactions:
|
||||||||
|
Warrant liability reclassify to
additional paid in capital
|
$ | 7,703 | $ | - | ||||