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): April 17, 2013
CHINANET ONLINE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
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Nevada
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001-34647
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20-4672080
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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No.3 Min Zhuang Road, Building 6,
Yu Quan Hui Gu Tuspark, Haidian District, Beijing, PRC 100195
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(Address of Principal Executive Offices and Zip Code)
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+86-10-51600828
(Registrant’s telephone number, including area code)
N/A
(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 April 17, 2013, ChinaNet Online Holdings, Inc., a Nevada corporation (the “Company”), issued a press release containing certain financial results for its fourth fiscal quarter and fiscal year of 2012. 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 8.01. Other Events.
Attached as Exhibit 99.2 is a slideshow presentation containing information about the Company’s business and certain other financial information that will be made available to investors participating in the Company’s conference call being held on April 17, 2013.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
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No.
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Description
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99.1
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Press Release dated April 17, 2013
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99.2
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Corporate Presentation
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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: April 17, 2013
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CHINANET ONLINE HOLDINGS, INC.
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By:
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/s/ Handong Cheng
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Name: Handong Cheng
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Title: Chief Executive Officer
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Exhibit Index
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No.
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Description
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99.1
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Press Release dated April 17, 2013
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99.2
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Corporate Presentation
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Exhibit 99.1
ChinaNet Online Holdings Reports Fourth Quarter and Full Year 2012 Financial Results
Management to host conference call on Wednesday, April 17th at 8:30 a.m. ET
BEIJING, April 17, 2013 -- ChinaNet Online Holdings, Inc. ("ChinaNet" or the “Company”), (Nasdaq: CNET), a leading B2B (business to business) Internet technology company providing online-to-offline ("O2O") sales channel expansion services for small and medium-sized enterprises (SMEs) and entrepreneurial management and networking services for entrepreneurs in the People's Republic of China, today announced financial results for the fourth quarter and full year 2012.
Summary Financials
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Fourth Quarter 2012 Results (USD) (Unaudited)
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|||
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Q4 2012
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Q4 2011
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CHANGE
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Sales
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$8.3 million
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$6.2 million
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+34%
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Gross Profit
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$4.8 million
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$3.0 million
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+60%
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Gross Margin
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57.7%
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49.0%
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+18%
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Net Income Attributable to Common Stockholders
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$1.2 million
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-$3.9 million
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N/A
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Adjusted Net Income Attributable to Common Stockholders
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$1.4 million(1)
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-$1.8 million(2)
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N/A
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EPS (Diluted)
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$0.06
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-$0.19
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N/A
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Adjusted EPS (Diluted)
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$0.06(1)
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-$0.08(2)
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N/A
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(1) Non-GAAP adjusted net income attributable to common stockholders and EPS excludes $0.2 million non-cash charge of the changes in fair value of the contingent consideration receivables related to make good provisions upon acquisition of VIEs for the three months ended December 31, 2012.
(2) Non-GAAP adjusted net income attributable to common stockholders and EPS excludes: (1) $0.7 million non-cash gain on deconsolidation of a subsidiary and $0.2 million of the related deferred income tax expenses; (2) $0.1 million of non-cash charge of the changes in fair value of the contingent consideration receivables related to make good provisions upon acquisition of VIEs; and (3) $2.6 million of non-cash stock compensation expenses recognized for restricted stock and options issued to management, directors and employees for the three month ended December 31, 2011.
Fourth Quarter 2012 Financial Results
Revenues increased by $2.1 million to $8.3 million for the three months ended December 31, 2012 compared to the three months ended December 31, 2011, representing a 34% increase.
Mr. Handong Cheng, Chairman and CEO of the Company stated, "Our strong financial results for the second half of 2012 reflects successful execution of our long term strategy. We continued investing in new services such as brand management and sales channel building during the 2011 and 2012 economic
downturn. Those investments have started to not only expand our client base but also gradually contribute to our overall revenue and profit growth."
Fourth Quarter 2012 Revenue Breakdown by Business Unit (USD in thousands)
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Q4 2012
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%
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Q4 2011
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%
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% Change
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Internet Advertisement
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$6,013
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73%
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$3,547
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57%
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+70%
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TV Advertisement
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$703
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8%
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$1,692
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27%
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-58%
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Bank Kiosk
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$68
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1%
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$72
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1%
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-6%
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Brand Mgmt. & Sales Channel Building
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$1,467
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18%
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$886
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14%
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+66%
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Revenue from Internet advertisements for the three months ended December 31, 2012 increased by 70% to $6.0 million compared to the three months ended December 31, 2011, primarily due to the additional revenues from Sou Yi Lian Mei (“SOOE”), the company ChinaNet acquired in December 2011. Sales of brand management and sales channel building services increased by 66% to $1.5 million, representing 18% of total sales for the three months ended December 31, 2012. This increase was due to an increase in the average advertising spending per customer from larger-sized clients. TV advertising revenues fell to $0.7 million in the fourth quarter of 2012 from $1.7 million in the fourth quarter of 2011.
Gross profit for the three months ended December 31, 2012 was $4.8 million, up 60% from $3.0 million in the same period one year ago. Gross margin was 57.7%, an improvement from 40.1% in the third quarter of 2012 and 49% in the fourth quarter of 2011.
Operating expenses for the three months ended December 31, 2012 were approximately $3.1 million, down substantially from $7.5 million in the comparable period in 2011. General and administrative expenses fell by $3.5 million to $1.7 million due to lower non-cash bad debts provision and stock compensation expenses.
The Company had $1.7 million of operating income in the three months ended December 31, 2012 compared to $4.5 million of operating loss in the same period one year ago. Operating margin was 20.6% in the fourth quarter of 2012.
Net income attributable to common stockholders for the three months ended December 31, 2012 was $1.2 million and earnings per share was $0.06, compared to -$3.9 million and -$0.19 for the three months ended December 31, 2011, respectively.
Non-GAAP adjusted net income attributable to common stockholders for the three months ended December 31, 2012 was $1.4 million and adjusted earnings per share was $0.06, compared to -$1.8 million and -$0.08 for the three months ended December 31, 2011, respectively.
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Full Year 2012 Results (USD)
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|||
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FY 2012
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FY 2011
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CHANGE
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Sales
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$46.6 million
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$28.7 million
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+62%
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Gross Profit
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$15.0 million
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$16.7 million
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-10%
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Gross Margin
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32.3%
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58.1%
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-44%
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Net Income Attributable to Common Stockholders
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$3.0 million
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$2.6 million
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+15%
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Adjusted Net Income Attributable to Common Stockholders
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$3.2 million(1)
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$4.5 million(2)
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-31%
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EPS (Diluted)
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$0.14
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$0.14
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0%
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Adjusted EPS (Diluted)
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$0.14(1)
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$0.24(2)
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-42%
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(1) Non-GAAP adjusted net income attributable to common stockholders and EPS exclude a $0.2 million non-cash charge of the changes in fair value of the contingent consideration receivables for the year ended December 31, 2012.
(2) Non-GAAP adjusted net income attributable to common stockholders and EPS excludes: (1) $0.9 million non-cash gain on deconsolidation of subsidiaries and $0.2 million of the related deferred income tax expenses; (2) $0.1 million non-cash charge of the changes in fair value of the contingent consideration receivables related to make good provisions upon acquisition of VIEs; and (3) $2.6 million non-cash stock compensation expense recognized for restricted stock and options issued to management, directors and employees for the year ended December 31, 2011.
Year Ended December 31, 2012 Revenue Breakdown by Business Unit (USD in thousands)
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FY 2012
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%
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FY 2011
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%
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% Change
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Internet Advertisement
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$21,366
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46%
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$19,981
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70%
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+7%
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TV Advertisement
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$20,454
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44%
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$6,434
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22%
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+218%
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Bank Kiosk
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$282
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1%
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$487
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2%
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-42%
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Brand Mgmt. & Sales Channel Building
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$4,498
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10%
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$1,829
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6%
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+146%
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Net revenues for the year ended December 31, 2012 increased by 62% to $46.6 million compared to $28.7 million for the year ended December 31, 2011. Higher revenues from Internet and TV advertisement and brand management and sales channel building services offset lower revenues from the bank kiosk segment.
Total cost of revenues increased to $31.6 million for the year ended December 31, 2012 from $12.0 million for the same period in 2011. The increase of total cost of revenues for the year ended December 31, 2012 was primarily due to the significant increase in costs associated with the TV advertising business segment.
Gross profit for the year ended December 31, 2012 was $15.0 million compared to $16.7 million in the same period a year ago. Gross margin decreased to 32.3% from 58.1% for the same period in 2011 as a result of the significant increase in revenues from TV advertising, which is a lower margin business. Revenues from TV advertising accounted for approximately 44% of total revenues in the year ended December 31, 2012 compared to 22% for 2011.
Operating expenses for the year ended December 31, 2012 were approximately $10.5 million, representing a decrease of 22% from $13.5 million in the comparable period in 2011. Even excluding the absence of $1.9 million non-recurring stock compensation expenses related to restricted stock and options granted to management and employees in November 2011, the Company successfully reduced expenses across the board, with year-over-year declines in general and administrative and selling expenses. Research and development expenses were $1.8 million for the twelve months ended December 31, 2012 compared to $2.1 million in the comparable period a year ago due to the absence of a $0.7 million non-cash, non-recurring R&D expense related to restricted stock and options granted to management and employees in November 2011.
Operating income for the year ended December 31, 2012 was $4.5 million, representing an operating margin of 9.7% compared to $3.2 million and 11.0%, respectively, in the same period one year ago.
GAAP net income attributable to common stockholders for the fiscal year 2012 was $3.0 million and earnings per share was $0.14 compared to $2.6 million and $0.14 for the fiscal year of 2011, respectively. Non-GAAP adjusted net income attributable to common stockholders and earnings per share for 2012 were $3.2 million and $0.14, respectively. The weighted average shares outstanding for the fiscal year of 2012 and 2011 was 22.2 million shares and 18.8 million shares, respectively.
Balance Sheet and Cash Flow
The Company had $5.5 million in cash and cash equivalents as of December 31, 2012, compared to $10.7 million as of December 31, 2011, working capital of $25.2 million, compared to $27.0 million as of December 31, 2011, and a current ratio of 3.5 to 1 compared 4.5 to 1 as of December 31, 2011. Total shareholders’ equity of ChinaNet was $44.2 million at December 31, 2012 compared to $41.7 million at December 31, 2011.
The Company generated $5 million of cash inflows from operations for the full year of 2012 compared to a $0.6 million of cash outflow for the full year of 2011.
Guidance for 2013
Management anticipants to release the revenues and net income guidance for fiscal year 2013 in May 2013.
Business Updates
ChinaNet participated as a judge and sponsor for the 2012 International Youth Innovation Games during December 2012. The event, supported by China’s Ministry of Education, signified support of youth innovation by academia, government and private entities.
Liansuo.com, the Company’s subsidiary, signed an agreement to help Super 8 International Limited expand its franchise outside the U.S. Super 8 International, a subsidiary of Wyndham Worldwide, is one of the largest hotel operators in the world with more than 2,600 hotels. Liansuo.com will help Super 8 International build a strong brand in China through traditional and online marketing.
ChinaNet continued to build its international presence by participating in two major international franchise exhibitions – the Korean Chain Industry Fair in December 2012 and the Beijing Franchise Expo in April 2013.
Conference Call
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Date:
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Wednesday, April 17, 2013
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Time:
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8:30 a.m. Eastern Time
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Conference Line (U.S.):
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1-877-317-6776
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International Dial-In:
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1-412-317-6776
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Conference ID:
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10027127
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Webcast:
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http://webcast.mzvaluemonitor.com/Cover.aspx?PlatformId=1071
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A power point presentation will be available for downloading on the date of the conference call on ChinaNet’s corporate website www.chinanet-online.com; under Investor Relations-News/Events-Events and Presentations.
Please dial in at least 10 minutes before the call to ensure timely participation.
A playback of the call will be available until 8:30 a.m. Eastern Time on April 24, 2013. To listen, call 1-877-344-7529 within the United States or 1-412-317-0088 when calling internationally. Please use the replay pin number 10027127.
About ChinaNet Online Holdings, Inc.
ChinaNet Online Holdings, Inc., a parent company of ChinaNet Online Media Group Ltd., incorporated in the BVI, is a leading business to business Internet technology company focusing on providing online-to-offline sales channel expansion service for small and medium-sized enterprises and entrepreneurial management and networking service for entrepreneurs in China. Founded in 2003 and based in Beijing, PRC, the Company's services include its 28.com portal to connect SME franchisors with new franchisees, Internet advertising and marketing with other value-added communication channels, brand management and sales channel solutions, and cloud-computing based management tools, expected to be officially commercialized in 2013. Website: http://www.chinanet-online.com.
About Non-GAAP Financial Measures
To supplement the audited consolidated statement of income and comprehensive income presented in accordance with GAAP, we are also providing non-GAAP measures of income from operations, income before income tax expenses, net income, net income attributable to us, net income attributable to our common stockholders and basic and diluted earnings per share for the year ended December 31, 2012 and 2011, which are adjusted from results based on GAAP to exclude the non-cash gain and expenses recorded, which related to changes in fair value of contingent consideration receivables related to the “make-good” provisions upon acquisition of VIEs for the year ended December 31, 2012; the gain on deconsolidation of subsidiaries, the related deferred income tax expenses, changes in fair value of contingent consideration receivables related to the “make-good” provisions upon acquisition of VIEs, and non-cash share-based compensation expenses recognized for the restricted stock and common stock purchase options issued to our management, directors and employees for the year ended December 31, 2011. The non-GAAP financial measures are provided to enhance the investors' overall
understanding of our current performance in on-going core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We use both GAAP and non-GAAP information in evaluating our operating business results internally and therefore deemed it important to provide all of this information to investors.
The following table presents reconciliations of our non-GAAP financial measures to the audited consolidated statements of income and comprehensive income for the years ended December 31, 2012 and 2011 (all amounts, except number of shares and per share data, are presented in thousands of US dollars):
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Year Ended December 31,
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||||||||||||||||
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2012
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2011
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|||||||||||||||
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GAAP
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NON GAAP
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GAAP
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NONGAAP
|
|||||||||||||
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US$
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US$
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US$
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US$
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|||||||||||||
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Gross Profit
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$ | 15,042 | $ | 15,042 | $ | 16,704 | $ | 16,704 | ||||||||
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Operating expenses
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||||||||||||||||
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Selling expenses
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2,683 | 2,683 | 3,506 | 2,827 | ||||||||||||
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General and administrative expenses
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6,030 | 6,030 | 7,904 | 6,647 | ||||||||||||
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Research and development expenses
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1,819 | 1,819 | 2,132 | 1,461 | ||||||||||||
| 10,532 | 10,532 | 13,542 | ||||||||||||||
| 10,935 | ||||||||||||||||
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Income from operations
|
4,510 | 4,510 | $ | 3,162 | ||||||||||||
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Adjusted income from operations
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$ | 5,769 | ||||||||||||||
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Other income (expenses):
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||||||||||||||||
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Changes in fair value of contingent consideration receivables
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(160 | ) | - | (70 | ) | - | ||||||||||
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Interest income
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186 | 186 | 13 | 13 | ||||||||||||
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Gain on deconsolidation of subsidiaries
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- | - | 925 | - | ||||||||||||
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Other (expenses) income
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(150 | ) | (150 | ) | 5 | 5 | ||||||||||
| (124 | ) | 873 | ||||||||||||||
| 36 | 18 | |||||||||||||||
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Income before income tax expense, equity method investments and noncontrolling interests
|
4,386 | 4,035 | ||||||||||||||
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Adjusted income before income tax expense, equity method investments and noncontrolling interests
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4,546 | 5,787 | ||||||||||||||
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Income tax expense
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529 | 529 | 1,035 | 827 | ||||||||||||
|
Income before equity method investments and noncontrolling interests
|
3,857 | 3,000 | ||||||||||||||
|
Adjusted income before equity method investments and noncontrolling interests
|
4,017 | 4,960 | ||||||||||||||
|
Share of losses in equity investment affiliates
|
(449 | ) | (449 | ) | (219 | ) | (219 | ) | ||||||||
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Net income
|
3,408 | 2,781 | ||||||||||||||
|
Adjusted net income
|
3,568 | 4,741 | ||||||||||||||
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Net (income) loss attributable to noncontrolling interest
|
(412 | ) | (412 | ) | 214 | 214 | ||||||||||
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Net income attributable to ChinaNet Online Holdings, Inc.
|
2,996 | 2,995 | ||||||||||||||
|
Adjusted net income attributable to ChinaNet Online Holdings, Inc.
|
3,156 | 4,955 | ||||||||||||||
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Dividend for series A convertible preferred stock
|
- | - | (407 | ) | (407 | ) | ||||||||||
|
Net income attributable to common shareholders of ChinaNet Online
|
$ | 2,996 | $ | 2,588 | ||||||||||||
|
Adjusted net income attributable to common shareholders of ChinaNet Online
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$ | 3,156 | $ | 4,548 | ||||||||||||
|
Earnings per common share-Basic
|
$ | 0.14 | $ | 0.14 | ||||||||||||
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Adjusted earnings per common share-Basic
|
$ | 0.14 | $ | 0.25 | ||||||||||||
|
Earnings per common share-Diluted
|
$ | 0.14 | $ | 0.14 | ||||||||||||
|
Adjusted earnings per common share-Diluted
|
$ | 0.14 | $ | 0.24 | ||||||||||||
|
Weighted average number of common shares outstanding:
|
||||||||||||||||
|
Basic
|
22,185,556 | 22,185,556 | 18,545,609 | 18,545,609 | ||||||||||||
|
Diluted
|
22,185,556 | 22,185,556 | 18,759,240 | (1) | 20,384,766 | (2) | ||||||||||
|
(1)
|
For the year ended December 31, 2011, the effect of the 1,625,526 incremental shares resulted from assumed conversion of the convertible preferred stock was not included, because its effect was anti-dilutive under GAAP measures.
|
|
(2)
|
For the year ended December 31, 2011, the effect of the 1,625,526 incremental shares resulted from assumed conversion of the convertible preferred stock was included, because the effect was dilutive for not including the non-cash gain and expenses related to the non-recurring transactions incurred under NON-GAAP measures.
|
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.
Contact:
|
MZ North America
|
|
Ted Haberfield, President
|
|
Direct: +1-760-755-2716
|
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Email: thaberfield@mzgroup.us
|
|
Web: www.mzgroup.us
|
-- FINANCIAL TABLES –
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for number of shares)
|
As of December 31,
|
||||||||
|
2012
|
2011
|
|||||||
|
(US $)
|
(US $)
|
|||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 5,483 | $ | 10,695 | ||||
|
Term deposit
|
3,357 | - | ||||||
|
Accounts receivable, net
|
8,486 | 4,444 | ||||||
|
Other receivables, net
|
3,103 | 3,631 | ||||||
|
Prepayment and deposit to suppliers
|
14,596 | 15,360 | ||||||
|
Due from related parties
|
210 | 324 | ||||||
|
Contingent consideration receivables
|
- | 159 | ||||||
|
Other current assets
|
136 | 129 | ||||||
|
Deferred tax assets-current
|
50 | - | ||||||
|
Total current assets
|
35,421 | 34,742 | ||||||
|
Investment in and advance to equity investment affiliates
|
959 | 1,396 | ||||||
|
Property and equipment, net
|
1,636 | 1,902 | ||||||
|
Intangible assets, net
|
7,167 | 8,151 | ||||||
|
Goodwill
|
11,083 | 10,999 | ||||||
|
Deferred tax assets-non current
|
652 | 92 | ||||||
|
Total Assets
|
$ | 56,918 | $ | 57,282 | ||||
|
Liabilities and Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 110 | $ | 268 | ||||
|
Advances from customers
|
1,065 | 724 | ||||||
|
Accrued payroll and other accruals
|
904 | 616 | ||||||
|
Due to equity investment affiliate
|
- | 220 | ||||||
|
Due to related parties
|
- | 161 | ||||||
|
Payable for acquisition
|
1,266 | 550 | ||||||
|
Taxes payable
|
6,683 | 5,040 | ||||||
|
Other payables
|
217 | 114 | ||||||
|
Dividend payable
|
- | 5 | ||||||
|
Total current liabilities
|
10,245 | 7,698 | ||||||
|
Long-term liabilities:
|
||||||||
|
Deferred tax liability-non current
|
1,689 | 1,893 | ||||||
|
Long-term borrowing from director
|
139 | 137 | ||||||
|
Total Liabilities
|
12,073 | 9,728 | ||||||
|
Commitments and contingencies
|
||||||||
|
Equity:
|
||||||||
|
ChinaNet Online Holdings, Inc.’s stockholders’ equity
|
||||||||
|
Common stock (US$0.001 par value; authorized 50,000,000 shares; issued and outstanding 22,186,540 shares and 22,146,540 shares at December 31, 2012 and 2011, respectively)
|
22 | 22 | ||||||
|
Additional paid-in capital
|
20,008 | 20,747 | ||||||
|
Statutory reserves
|
2,296 | 2,117 | ||||||
|
Retained earnings
|
19,505 | 16,688 | ||||||
|
Accumulated other comprehensive income
|
2,393 | 2,132 | ||||||
|
Total ChinaNet Online Holdings, Inc.’s stockholders’ equity
|
44,224 | 41,706 | ||||||
|
Noncontrolling interests
|
621 | 5,848 | ||||||
|
Total equity
|
44,845 | 47,554 | ||||||
|
Total Liabilities and Equity
|
$ | 56,918 | $ | 57,282 | ||||
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except for number of shares and per share data)
|
Year Ended December 31,
|
||||||||
|
2012
|
2011
|
|||||||
|
(US $)
|
(US $)
|
|||||||
|
Sales
|
||||||||
|
From unrelated parties
|
$ | 46,403 | $ | 28,105 | ||||
|
From related parties
|
197 | 626 | ||||||
| 46,600 | 28,731 | |||||||
|
Cost of sales
|
31,558 | 12,027 | ||||||
|
Gross margin
|
15,042 | 16,704 | ||||||
|
Operating expenses
|
||||||||
|
Selling expenses
|
2,683 | 3,506 | ||||||
|
General and administrative expenses
|
6,030 | 7,904 | ||||||
|
Research and development expenses
|
1,819 | 2,132 | ||||||
| 10,532 | 13,542 | |||||||
|
Income from operations
|
4,510 | 3,162 | ||||||
|
Other income (expenses)
|
||||||||
|
Changes in fair value of contingent consideration receivables
|
(160 | ) | (70 | ) | ||||
|
Interest income
|
186 | 13 | ||||||
|
Gain on deconsolidation of subsidiaries
|
- | 925 | ||||||
|
Other (expenses)/income
|
(150 | ) | 5 | |||||
| (124 | ) | 873 | ||||||
|
Income before income tax expense, equity method investments and noncontrolling interests
|
4,386 | 4,035 | ||||||
|
Income tax expense
|
529 | 1,035 | ||||||
|
Income before equity method investments and noncontrolling interests
|
3,857 | 3,000 | ||||||
|
Share of losses in equity investment affiliates
|
(449 | ) | (219 | ) | ||||
|
Net income
|
3,408 | 2,781 | ||||||
|
Net (income) / losses attributable to noncontrolling interests
|
(412 | ) | 214 | |||||
|
Net income attributable to ChinaNet Online Holdings, Inc.
|
2,996 | 2,995 | ||||||
|
Dividend of Series A convertible preferred stock
|
- | (407 | ) | |||||
|
Net income attributable to common stockholders of ChinaNet Online Holdings, Inc.
|
$ | 2,996 | $ | 2,588 | ||||
|
Net income
|
3,408 | 2,781 | ||||||
|
Foreign currency translation gain
|
267 | 1,254 | ||||||
|
Comprehensive Income
|
$ | 3,675 | $ | 4,035 | ||||
|
Comprehensive (income) / losses attributable to noncontrolling interests
|
(418 | ) | 162 | |||||
|
Comprehensive income attributable to ChinaNet Online Holdings, Inc.
|
$ | 3,257 | $ | 4,197 | ||||
|
|
||||||||
|
Earnings per share
|
||||||||
|
Earnings per common share
|
||||||||
|
Basic
|
$ | 0.14 | $ | 0.14 | ||||
|
Diluted
|
$ | 0.14 | $ | 0.14 | ||||
|
Weighted average number of common shares outstanding:
|
||||||||
|
Basic
|
22,185,556 | 18,545,609 | ||||||
|
Diluted
|
22,185,556 | 18,759,240 | ||||||
CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
Year Ended December 31,
|
||||||||
|
2012
|
2011
|
|||||||
|
(US $)
|
(US $)
|
|||||||
|
Cash flows from operating activities
|
||||||||
|
Net income
|
$ | 3,408 | $ | 2,781 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
|
Depreciation and amortization
|
1,637 | 1,012 | ||||||
|
Share-based compensation expenses
|
48 | 2,900 | ||||||
|
Changes in fair value of contingent consideration receivables
|
160 | 70 | ||||||
|
Allowances for doubtful debts
|
1,141 | 2,583 | ||||||
|
Share of losses in equity investment affiliates
|
449 | 219 | ||||||
|
Gain on deconsolidation of subsidiaries
|
- | (925 | ) | |||||
|
Loss / (gain) on disposal of property and equipment
|
2 | (3 | ) | |||||
|
Deferred taxes
|
(828 | ) | 27 | |||||
|
Changes in operating assets and liabilities
|
||||||||
|
Accounts receivable
|
(5,516 | ) | (2,100 | ) | ||||
|
Other receivables
|
1,400 | 5,276 | ||||||
|
Prepayment and deposit to suppliers
|
882 | (11,247 | ) | |||||
|
Due from related parties
|
117 | (130 | ) | |||||
|
Other current assets
|
(5 | ) | (197 | ) | ||||
|
Accounts payable
|
(158 | ) | 27 | |||||
|
Advances from customers
|
335 | (1,575 | ) | |||||
|
Accrued payroll and other accruals
|
285 | 166 | ||||||
|
Due to director
|
- | (559 | ) | |||||
|
Due to Control Group
|
- | (82 | ) | |||||
|
Due to related parties
|
(4 | ) | (139 | ) | ||||
|
Other payables
|
72 | 490 | ||||||
|
Taxes payable
|
1,603 | 803 | ||||||
|
Net cash provided by (used in) operating activities
|
5,028 | (603 | ) | |||||
|
Cash flows from investing activities
|
||||||||
|
Purchases of vehicles and office equipment
|
(314 | ) | (741 | ) | ||||
|
Purchase of intangible assets
|
- | (1,445 | ) | |||||
|
Short-term loan to unrelated entities
|
(475 | ) | - | |||||
|
Project development deposit to a third party
|
(2,453 | ) | - | |||||
|
Refund of project development deposit from a third party
|
2,453 | - | ||||||
|
Cash from acquisition of VIEs
|
- | 330 | ||||||
|
Cash effect on deconsolidation of VIEs
|
- | (1,670 | ) | |||||
|
Long-term investment in and advance to equity investment affiliates
|
- | (1,712 | ) | |||||
|
Disposal of investment in and loan repayment from equity investment affiliate
|
- | 8,885 | ||||||
|
Payment for acquisition of VIEs
|
(5,775 | ) | (9,731 | ) | ||||
|
Placement of term deposit
|
(3,355 | ) | - | |||||
|
Net cash used in investing activities
|
(9,919 | ) | (6,084 | ) | ||||
|
Cash flows from financing activities
|
||||||||
|
Cash investment contributed by noncontrolling interests
|
- | 378 | ||||||
|
Dividend paid to convertible preferred stockholders
|
(5 | ) | (657 | ) | ||||
|
Short-term loan borrowed from an equity investment affiliate
|
316 | 216 | ||||||
|
Short-term loan repaid to an equity investment affiliate
|
(538 | ) | - | |||||
|
Repayment to legal (nominal) shareholders of Shanghai Jing Yang
|
(158 | ) | - | |||||
|
Capital contributions received in advance from new shareholders of Zhao Shang Ke Hubei before deconsolidation
|
- | 1,545 | ||||||
|
Net cash (used in) provided by financing activities
|
(385 | ) | 1,482 | |||||
|
Effect of exchange rate fluctuation on cash and cash equivalents
|
64 | 310 | ||||||
|
Net decrease in cash and cash equivalents
|
(5,212 | ) | (4,895 | ) | ||||
|
Cash and cash equivalents at beginning of the year
|
10,695 | 15,590 | ||||||
|
Cash and cash equivalents at end of the year
|
$ | 5,483 | $ | 10,695 | ||||
Exhibit 99.2
