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): November 16,
2010
CHINANET ONLINE HOLDINGS,
INC.
(Exact
Name of Registrant as Specified in Charter)
|
Nevada
|
000-52672
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90-0617940
|
||
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(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):
|
o
|
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02. Results of Operations and Financial Condition.
On
November 16, 2010, ChinaNet Online Holdings, Inc., a Nevada corporation, issued
a press release containing certain financial results for its third 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:
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No.
|
Description
|
|
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99.1
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Press
Release dated November 16,
2010
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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.
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Dated: November
16, 2010
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CHINANET
ONLINE HOLDINGS, INC.
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|
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By:
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/s/ Zhige Zhang
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|
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Name:
Zhige Zhang
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||
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Title: Chief
Financial Officer
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||
Exhibit
Index
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No.
|
Description
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|
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99.1
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Press
Release dated November 16,
2010
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ChinaNet
Online Holdings Reports Third Quarter 2010 Earnings;Adjusted Net Income grew
100% to $3.9 Million with Adjusted Diluted EPS of $0.19
|
|
·
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Revenues
increased 9.5% in the third quarter, driven by 50.3% increase in Internet
Advertising and 48.6% reduction in lower margin TV
sales
|
|
|
·
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Gross
margins expanded by 1460 bps year-over-year to
65.0%
|
|
|
·
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28.com
added ~50 new clients, bringing the total to
750
|
|
|
·
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Cash
increases to $22.2 million on September 30, 2010, as operating cash flows
more than doubled to $11.2 million for
YTD10
|
|
|
·
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Reaffirms
2010 net income guidance of at least $14.1
million
|
BEIJING,
November 16 /PRNewswire-Asia-ThirdCall/ -- ChinaNet Online Holdings, Inc.
("ChinaNet", NASDAQ: 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 third quarter 2010
financial results.
Summary
Financials
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Third Quarter 2010 Results
(USD) (unaudited)
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|||
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(three
months ended September 30,)
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2010
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2009
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CHANGE
|
|
Sales
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$8.9
million
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$8.1
million
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+9.5%
|
|
Gross
Profit
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$5.8
million
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$4.1
million
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+41.2%
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Gross
Margin
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65.0%
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50.4%
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+30.0%
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Adjusted
Net Income (1)
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$3.9
million
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$1.9
million
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+100.1%
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AdjustedEPS
(1)
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$0.19
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$0.11
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+68.2%
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(1)
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Non-GAAP
net income and EPS excludes non-cash lossrelated to changes in fair value
of warrants for the three month period ended September 30, 2009 of $1.3
million.
|
Third
Quarter 2010 Financial Results
Revenues
for the third quarter of 2010 increased 9.5% to $8.9 million compared to $8.1
million for the third quarter of 2009. In concert with management's plan and
focus for 2010, internet advertising increased 50.3% year-over-year to $7.1
million, and comprised 79.9% of total revenue. Growth was driven by focused
marketing campaigns which resulting in net new customer additions, including new
premium franchise customers, which was complemented by the sell through of
additional web based services to the Company’s installed customer base. Lower
margin TV production and advertising service revenues declined 48.5%
year-over-year to approximately $1.6 million or 18.0% of total revenues. As of
September 30, 2010, the number of active customers for the Company's internet
advertising business was 758and during the third quarter, which was up 8% from
previous quarter. The number of customers utilizing the TV
advertising business was 148and approximately 20% of these customers
wereserviced by both platforms.
|
Third Quarter 2010 Revenue
Breakdown By Business Unit (USD in thousands)
(unaudited)
|
|||
|
(3
months ended September 30,)
|
2010
|
2009
|
CHANGE
|
|
Internet
Advertisement
%
of Sales
|
$7,108
79.9%
|
$4,730
58.2%
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+50.3%
|
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TV
Advertisement
%
of Sales
|
$1,603
18.0%
|
$3,114
38.3%
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-48.5%
|
|
Bank
Kiosk
%
of Sales
|
$133
1.5%
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$1
|
--
|
"Our
strong third quarter results demonstrate solid execution of our growth strategy
and the inherent operating leverage in our business model," stated Mr. Handong
Cheng, Chairman and CEO of the Company. "The strategic decision to focus more
resources on 28.com is bearing fruit, and is responsible for expanding margins
and accelerating earnings and cash flows. As we build our brand and introduce
new services to monetize our installed customer base, we see substantial
opportunities to further expand our footprint in the rapidly growing SME
franchise market."
Cost of
sales for the three months ended September 30, 2010 was approximately $3.1
million,down 22.8%due to a significant reduction in purchasedtelevision
advertisement time from TV networks and local stations.
Gross
profit for the third quarter of 2010 was $5.8 million, representing gross margin
of 65.0%, compared to $4.1 million in gross profit and a gross margin of 50.4%
in the third quarter of 2009. The meaningful year-over-year increase in gross
margins was due largely to the Company’s deliberate strategy to focus
predominantly in its core internet service and advertisingbusiness, 28.com,
which generate margins of 70%-80% compared to 5%-10% for its TV advertising
business. Gross margins in internet advertising and TV were 76.9% and 9.4%
during the third quarter of 2010, compared to 73.8% and 18.6% in the
corresponding period last year, respectively.
Operating
expenses for the three months ended September 30, 2010 were approximately $1.9
million, up 41.6% from the year ago period. Selling expenses for the period were
$0.9 million, up 36.4% from $0.6 million from the third quarter of 2009 as the
Company invested in new branding initiatives to drive new customer additions.
Research and development expenses grew by 107.5% year-over to $0.3 million.
ChinaNet accelerated spending to upgrade its advertising and internet management
software platform. General and administrative expenses were $0.8 million and
$0.3 million in the third quarter 2010 and 2009, respectively.Approximately $0.5
million of the increase was due to public companyexpenses.
Operating
income for the third quarter of 2010 totaled $3.8 million, a 41% increase from
the $2.7 million reported for the third quarter of 2009. Operating margins
improved 940 basis points year-over-year to 42.7% during the third quarter;
update accordingly.
GAAP net
income for the third quarter was $3.8 million, an increase of 498.3% compared to
$0.6 million reported in the same period of the prior year, while adjusted net
income was $3.9 million and $1.9 million in each corresponding period. Adjusted
diluted net income per share was $0.19 in the third quarter of 2010 compared to
$0.11 in the same period in 2009, based on 20.9 million and 17.6 million
outstanding shares, respectively.
Year-to-date
2010 Financial Results
|
Year-to-date 2010 Results
(USD) (unaudited)
|
|||
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(9
months ended September 30,)
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2010
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2009
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CHANGE
|
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Sales
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$31.2
million
|
$27.3
million
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+14.2%
|
|
Gross
Profit
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$15.4
million
|
$11.4
million
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+35.1%
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Gross
Margin
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49.3%
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41.7%
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+18.2%
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Adjusted
Net Income (2)
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$10.0
million
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$4.5
million
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+121.7%
|
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Adjusted
EPS (2)
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$0.48
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$0.30
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+60.0%
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(1) GAAP
net income and GAAP EPS (Diluted) include a $1.9million non-cash gain related to
changes in fair value of warrants for YTD 2010 of $1.9 million and $1.3 million
loss YTD 2009.
Revenues
for the first nine months of 2010 increased 14.2% to $31.2 million compared to
$27.3 million for the first nine month of 2009. Internet advertising increased
54.6% year-over-year to $19.5 million from $12.6, representing62.5% of total
revenue. TV advertising revenues fell 18.8% during the first nine month of 2010
to $11.0 million or 35.4% of total revenues. Management expects internet
advertising to account for an increasingly larger percent of total sales going
forward as it focuses the majority of its resources on growing
28.com.
|
Year-to-date 2010 Revenue
Breakdown By Business Unit (USD in thousands)
(unaudited)
|
|||
|
(9
months ended September 30,)
|
2010
|
2009
|
CHANGE
|
|
Internet
Advertisement
%
of Sales
|
$19,478
62.5%
|
$12,601
46.1%
|
+54.6%
|
|
TV
Advertisement
%
of Sales
|
$11,044
35.4%
|
$13,600
49.8%
|
-18.8%
|
|
Bank
Kiosk
%
of Sales
|
$396
1.3%
|
$21
|
--
|
Cost of
sales for the nine months ended September 30, 2010 was approximately $15.8
million down 0.8%from the nine months ended September 30, 2009.
Year-to-date,
gross profits increased of 35.1%, resulting in a gross margin of
49.3%.ChinaNet's internet advertising business generated gross profit margin of
74.8%,a 140 basis point improvement from the same period last year.
Operating
expenses for the nine months ended September 30, 2010 were approximately $5.2
million, essentially flat compared to $5.1 million in the same period of 2009.
Selling expenses for the period were $2.2 million, down 32.8% as a result of
lower spending on TV advertising. Research and development costs were $0.6
million, or 1.9% of revenues compared to 1.3% in the prior year
period.
Operating
income for the first nine months of 2010 totaled approximately $10.2 million, up
62.7% from the $6.3 million reported for the first nine month of 2009. Operating
margins were 32.7% and 22.9% for the first nine months of 2010 and 2009,
respectively.
GAAP net
income for the first nine months was $11.9 million, an increase of 267.6%
compared to $3.2 million reported in the same period of the prior year.Adjusted
for the non-cash items, net income was $10.0 million and EPS was $0.48 for the
first nine months of 2010 as compared to $4.5 million net income and $0.30
diluted earnings per share in the same period in 2009, based on 20.9 million and
15.1 million weighted average shares outstanding, respectively.
Balance
Sheet and Cash Flow
The
Company had $22.2 million in cash and equivalents on September 30, 2010,
compared to $13.9 million on December 31, 2009, working capital of $29.3
million, compared to $19.4 million, and a current ratio of 7.0 to 1 compared 4.9
to 1 on December 31, 2009. The Company generated $11.2 million in the first nine
months of 2010 advancing137.3% compared to $4.7 million in the same period last
year. Accounts receivable were $4.5 million on September 30, 2010, up from to
$3.2 million on December 31, 2009, with DSO's of 40 days compared to 20
days.
Guidance
for 2010
Management
reaffirmed 2010 net income guidance of $14.1 million, which represents 67.9%
year-over-year growth, respectively. The Company is ahead of its target to
decrease its television advertising and as such expects revenues to be between
$41 and $43 million for 2010, compared to previous guidance of $45
million.
Business
Updates
ChinaNet
is focused on strategically expanding its rapidly growing internet service and
advertising business, 28.com,which boasts gross margins of 70%-80%, compared to
5%-10% 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 with an emphasis on adding
higher-paying branded clients and 2) introducing additional value added services
to existing and new customers.
Internet
Advertising -- During the third quarter of 2010, the Company's http://www.28.com
web portal exchange further increased its estimated market share to more than
35% due to effective branding and marketing. 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
Company started offering value added IIM services to existing clients, including
search engine marketing, and search engine optimization in the third quarter of
2009. It has also offered add-on brand management services tailored for clients
in various industries. Over the past year, 18% of clients have purchased add-on
services from ChinaNet as adoption has accelerated.With revenues more than
doubling in the first nine months of 2010, ancillary services currently
represent approximately30% (including management) of total internet advertising
revenues in the small and medium sized franchise industry.
The
Company introduced an online consulting service for franchisees during the third
quarter, which provides another value added service and will drive more traffic
to 28.com. With 75 total research and development staff added since the
beginning of 2010, the Company is committed to developing technologies and
services to further differentiate ChinaNet from its competitors.
ChinaNet
participated in the 2010 Taipei International Chain and Franchise Autumn
Exhibition in September to promote its brand to the over 200 franchise
businesses in attendance. With thousands of SMEs in Taiwan looking to expand
into China and vice versa, the Company sees tremendous long term growth
potential. ChinaNet will initially offer a series of its premium services to
franchise owners in Taiwan and expects to sign approximately 10 to 15 new
international customers by the end of 2010.
Management
is in the final stages of due diligence on several small acquisitions which
include technology solutions and advertising service platforms. These
opportunities are aimed at helping the company accelerate its IIM and online
management tools, which will drive new franchisor additions while helping
existing customers meet their expansion targets while providing a much broader
spectrum of services to their franchisee base.
Conference
Call
The
conference call will take place at 8:00 am ET on Tuesday, November 16, 2010.
Interested participants should call 1-877-941-1429 when calling within the
United States or 1-480-629-9666 when calling internationally (passcode
4384506).
A
playback will be available through November 23, 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 4384506for 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=00007DD0, or visiting ViaVid's website at
http://www.viavid.net , where the webcast can be accessed through November 23,
2010.
Non-GAAP
reconciliation
|
Nine
months
|
Three
months
|
|||||||||||||||
|
ended
September 30,
|
ended
September 30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(US
$)
|
(US
$)
|
(US
$)
|
(US
$)
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
|
NON
GAAP
|
NON
GAAP
|
NON
GAAP
|
NON
GAAP
|
|||||||||||||
|
Income
from operations
|
$ | 10,183 | $ | 6,257 | $ | 3,844 | $ | 2,726 | ||||||||
|
Other
income (expenses):
|
||||||||||||||||
|
Changes in fair value of warrants
(note1)
|
- | - | - | - | ||||||||||||
|
Interest
income
|
8 | 9 | 4 | 4 | ||||||||||||
|
Other
income
|
8 | 8 | 4 | 2 | ||||||||||||
|
Other
expenses
|
(1 | ) | (100 | ) | 0 | (99 | ) | |||||||||
| 15 | (83 | ) | 8 | (93 | ) | |||||||||||
|
Income
before income tax expense
|
10,198 | 6,174 | 3,852 | 2,633 | ||||||||||||
|
Income tax
expense
|
304 | 1,653 | 25 | 696 | ||||||||||||
|
Net
income
|
9,894 | 4,521 | 3,827 | 1,937 | ||||||||||||
|
Net
loss attributable to noncontrolling interest
|
127 | - | 50 | - | ||||||||||||
|
Net
income attributable to ChinaNet Online
|
||||||||||||||||
|
Holdings,
Inc.
|
10,021 | 4,521 | 3,877 | 1,937 | ||||||||||||
|
Other
comprehensive income
|
||||||||||||||||
|
Foreign currency translation
gain
|
442 | 13 | 365 | 8 | ||||||||||||
|
Comprehensive
income
|
$ | 10,336 | $ | 4,534 | $ | 4,192 | $ | 1,945 | ||||||||
|
Net
income attributable to ChinaNet Online
|
10,021 | 4,521 | 3,877 | 1,937 | ||||||||||||
|
Holdings,
Inc.
|
||||||||||||||||
|
Beneficial conversion feature of
Series A
|
- | - | - | - | ||||||||||||
|
convertible preferred stock
(note2)
|
||||||||||||||||
|
Dividend of Series A convertible
preferred stock
|
(612 | ) | - | (190 | ) | - | ||||||||||
|
Net
income attributable to common
|
||||||||||||||||
|
shareholders
of ChinaNet Online Holdings, Inc.
|
$ | 9,409 | $ | 4,521 | $ | 3,687 | $ | 1,937 | ||||||||
|
Earnings
per share
|
||||||||||||||||
|
Earnings
per common share
|
||||||||||||||||
|
Basic
|
$ | 0.56 | $ | 0.31 | $ | 0.22 | $ | 0.12 | ||||||||
|
Diluted
|
$ | 0.48 | $ | 0.30 | $ | 0.19 | $ | 0.11 | ||||||||
|
Weighted
average number of common shares
|
||||||||||||||||
|
outstanding:
|
||||||||||||||||
|
Basic
|
16,676,752 | 14,495,560 | 16,939,961 | 15,774,300 | ||||||||||||
|
Diluted
|
20,905,796 | 15,126,526 | 20,916,463 | 17,646,624 | ||||||||||||
About
ChinaNet Online Holdings, Inc.
The
Company, a parent company of ChinaNet Online Media Group Ltd., incorporated in
the BVI ("ChinaNet" or "Zhong Wang Zai Xian"), is a leading full-service media
development, advertising and communications company for small and medium
companies (SME) in China. The Company, through its 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 .
SafeHarbor
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 STATEMENT
(In
thousands, except for number of shares and per share data)
|
Nine
Months Ended September 30,
|
Three
Months Ended September 30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(US
$'000)
|
(US
$'000)
|
(US
$'000)
|
(US
$'000)
|
|||||||||||||
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
|
Sales
|
||||||||||||||||
|
To
unrelated parties
|
$ | 30,304 | $ | 25,320 | $ | 8,631 | $ | 7,604 | ||||||||
|
To
related parties
|
872 | 1,985 | 265 | 522 | ||||||||||||
| $ | 31,176 | $ | 27,305 | $ | 8,896 | $ | 8,126 | |||||||||
|
Cost
of sales
|
15,791 | 15,918 | 3,110 | 4,029 | ||||||||||||
|
Gross
margin
|
15,385 | 11,387 | 5,786 | 4,097 | ||||||||||||
|
Operating
expenses
|
||||||||||||||||
|
Selling
expenses
|
2,187 | 3,253 | 851 | 624 | ||||||||||||
|
General
and administrative expenses
|
2,410 | 1,530 | 815 | 614 | ||||||||||||
|
Research
and development expenses
|
605 | 347 | 276 | 133 | ||||||||||||
| 5,202 | 5,130 | 1,942 | 1,371 | |||||||||||||
|
Income from
operations
|
10,183 | 6,257 | 3,844 | 2,726 | ||||||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Changes
in fair value of warrants
|
1,861 | (1,289 | ) | - | (1,289 | ) | ||||||||||
|
Interest
income
|
8 | 9 | 4 | 4 | ||||||||||||
|
Other
income
|
8 | 8 | 4 | 2 | ||||||||||||
|
Other
expenses
|
(1 | ) | (100 | ) | - | (99 | ) | |||||||||
| 1,876 | (1,372 | ) | 8 | (1,382 | ) | |||||||||||
|
Income
before income tax expense and noncontrolling interest
|
12,059 | 4,885 | 3,852 | 1,344 | ||||||||||||
|
Income
tax expense
|
304 | 1653 | 25 | 696 | ||||||||||||
|
Net
income
|
11,755 | 3,232 | 3,827 | 648 | ||||||||||||
|
Net
loss attributable to noncontrolling interest
|
127 | - | 50 | - | ||||||||||||
|
Net
income attributable to ChinaNet Online Holdings, Inc.
|
11,882 | 3,232 | 3,877 | 648 | ||||||||||||
|
Other
comprehensive income
|
||||||||||||||||
|
Foreign
currency translation gain
|
442 | 13 | 365 | 8.00 | ||||||||||||
|
Comprehensive
income
|
$ | 12,197 | $ | 3,245 | $ | 4,192 | $ | 656 | ||||||||
|
Net
income attributable to ChinaNet Online Holdings, Inc.
|
11,882 | 3,232 | 3,877 | 648 | ||||||||||||
|
Beneficial
conversion feature of Series A
convertible
preferred stock
|
- | (5,898 | ) | (5,898 | ) | |||||||||||
|
Dividend
of Series A convertible preferred stock
|
(612 | ) | - | (190 | ) | - | ||||||||||
|
Net
income attributable to common shareholders of
ChinaNet
Online Holdings, Inc.
|
$ | 11,270 | $ | (2,666 | ) | $ | 3,687 | $ | (5,250 | ) | ||||||
|
Earnings
per share
|
||||||||||||||||
|
Earnings
per common share
|
||||||||||||||||
|
Basic
|
$ | 0.68 | $ | (0.18 | ) | $ | 0.22 | $ | (0.33 | ) | ||||||
|
Diluted
|
$ | 0.57 | $ | (0.18 | ) | $ | 0.19 | $ | (0.33 | ) | ||||||
|
Weighted
average number of common shares outstanding:
|
||||||||||||||||
|
Basic
|
16,676,752 | 14,495,560 | 16,939,961 | 15,774,300 | ||||||||||||
|
Diluted
|
20,905,796 | 14,495,560 | 20,916,463 | 15,774,300 | ||||||||||||
CHINANET
ONLINE HOLDINGS INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands)
|
September
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(US
$'000)
|
(US
$'000)
|
|||||||
|
Unaudited
|
||||||||
|
Assets
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 22,241 | $ | 13,917 | ||||
|
Accounts
receivable, net
|
4,455 | 3,173 | ||||||
|
Other
receivables
|
2,856 | 2,636 | ||||||
|
Prepayment
and deposits to suppliers
|
4,221 | 4,111 | ||||||
|
Due
from related parties
|
214 | 492 | ||||||
|
Inventories
|
2 | 2 | ||||||
|
Other
current assets
|
174 | 30 | ||||||
|
Total
current assets
|
34,163 | 24,361 | ||||||
|
Property
and equipment, net
|
1,518 | 1,355 | ||||||
|
Intangible
assets, net
|
59 | - | ||||||
|
Other
long-term assets
|
31 | 48 | ||||||
| $ | 35,771 | $ | 25,764 | |||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 374 | $ | 290 | ||||
|
Advances
from customers
|
1,009 | 914 | ||||||
|
Other
payables
|
22 | 27 | ||||||
|
Accrued
payroll and other accruals
|
298 | 191 | ||||||
|
Due
to related parties
|
- | 24 | ||||||
|
Due
to Control Group
|
416 | 1,142 | ||||||
|
Due
to director
|
389 | - | ||||||
|
Taxes
payable
|
2,010 | 1,978 | ||||||
|
Dividends
payable
|
380 | 373 | ||||||
|
Total
current liabilities
|
4,898 | 4,939 | ||||||
|
Long-term borrowing from
director
|
131 | 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-2,918,600 and 4,121,600 shares at September 30,
2010 and
December
31, 2009 respectively;
aggregate liquidation preference amount: $7,677
and
$10,677, including accrued but unpaid
dividends of $380 and $373, at
September
30, 2010 and December 31, 2009, respectively.
|
3 | 4 | ||||||
|
Common
stock (US$0.001 par value;authorized-50,000,000 shares; issued and
outstanding-17,061,320
shares and
15,828,320 shares at September 30, 2010 and
December
31, 2009 respectively)
|
17 | 16 | ||||||
|
Additional
paid-in capital
|
18,454 | 10,574 | ||||||
|
Statutory
reserves
|
372 | 372 | ||||||
|
Retained
earnings
|
11,320 | 50 | ||||||
|
Accumulated
other comprehensive income
|
559 | 117 | ||||||
|
Total
ChinaNet’s Online Holdings, Inc.’s stockholders’ equity
|
30,725 | 11,133 | ||||||
|
Noncontrolling
interest
|
17 | - | ||||||
|
Total
stockholders’ equity
|
30,742 | 11,133 | ||||||
| $ | 35,771 | $ | 25,764 | |||||
CHINANET
ONLINE HOLDINGS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands)
|
Nine
Months Ended September 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
(US
$'000)
|
(US
$'000)
|
|||||||
|
Unaudited
|
Unaudited
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | 11,755 | $ | 3,232 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities
|
||||||||
|
Depreciation
and Amortization
|
275 | 134 | ||||||
|
Share-based
compensation expenses
|
177 | 190 | ||||||
|
Changes
in fair value of warrants
|
(1,861 | ) | 1,289 | |||||
|
Others
|
- | 19 | ||||||
|
Changes
in operating assets and liabilities
|
||||||||
|
Accounts
receivable
|
(1,195 | ) | (1,445 | ) | ||||
|
Other
receivables
|
2,095 | (166 | ) | |||||
|
Prepayments
and deposits to suppliers
|
(24 | ) | 9 | |||||
|
Due
from related parties
|
283 | (154 | ) | |||||
|
Other
current assets
|
(141 | ) | 33 | |||||
|
Accounts
payable
|
77 | 117 | ||||||
|
Advances
from customers
|
76 | 361 | ||||||
|
Accrued
payroll and other accruals
|
104 | 134 | ||||||
|
Due
to related parties
|
(24 | ) | (327 | ) | ||||
|
Due
to director
|
389 | - | ||||||
|
Due
to Control Group
|
(738 | ) | 33 | |||||
|
Other
payables
|
(5 | ) | - | |||||
|
Taxes
payable
|
(8 | ) | 1,275 | |||||
|
Net
cash provided by operating activities
|
11,235 | 4,734 | ||||||
|
Cash
flows from investing activities
|
||||||||
|
Purchases
of vehicles and office equipment
|
(385 | ) | (310 | ) | ||||
|
Purchases
of intangible assets
|
(59 | ) | - | |||||
|
Purchases
of other long-term assets
|
(4 | ) | (38 | ) | ||||
|
Net
cash used in investing activities
|
(448 | ) | (348 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Cash
investment contributed by noncontrolling interest
|
144 | - | ||||||
|
Dividend
paid to convertible preferred stockholders
|
(605 | ) | - | |||||
|
Increase
of short-term loan with third parties
|
(2,257 | ) | (2,024 | ) | ||||
|
Decrease
of short-term loan from directors
|
- | (13 | ) | |||||
|
Cancellation
and retirement of common stock
|
- | (300 | ) | |||||
|
Proceeds
from issuance of Series A convertible preferred stock and warrants
(net of issuance cost of US$1,142)
|
- | 9,162 | ||||||
|
Net
cash provided by financing activities
|
(2,718 | ) | 6,825 | |||||
|
Effect
of exchange rate fluctuation on cash and cash equivalents
|
||||||||
| 255 | 10 | |||||||
|
Net
increase in cash and cash equivalents
|
8,324 | 11,221 | ||||||
|
Cash
and cash equivalents at beginning of year
|
13,917 | 2,679 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 22,241 | $ | 13,900 | ||||
|
|
||||||||
|
Supplemental
disclosure of cash flow information
|
||||||||
|
Interest
paid
|
$ | - | $ | - | ||||
|
Income
taxes paid
|
$ | 1,242 | $ | 900 | ||||
|
Non-cash
transactions:
|
||||||||
|
Warrant liability
reclassify to additional paid in capital
|
$ | 7,703 | $ | - | ||||