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 19, 2013
 
CHINANET ONLINE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Charter)
  
Nevada	 
001-34647	 
20-4672080	
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)	

No. 3 Min Zhuang Road, Building 6,
Yu Quan Hui Gu Tuspark, Haidian District, Beijing, PRC 100195	
(Address of Principal Executive Offices and Zip Code)	

+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):
 
       [  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
       [  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
       [  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
       [  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
Item 2.02. Results of Operations and Financial Condition.

On November 19, 2013, ChinaNet Online Holdings, Inc., a Nevada corporation (the “Company”), issued a press release announcing its financial results for its third fiscal quarter and first nine months of 2013 and providing guidance for full fiscal 2013.  A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by reference.

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

Item 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 to be held on November 20, 2013.

Item 9.01. Financial Statements and Exhibits.
 
(d)           Exhibits:
 
No.	 	Description	
99.1	 	Press Release dated November 19, 2013.	
99.2	 	Corporate Presentation.	

 

 
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:  November 20, 2013	 	CHINANET ONLINE HOLDINGS, INC.	

 	By:	/s/ Handong Cheng	
 	 	Name: Handong Cheng	
 	 	Title: Chief Executive Officer	

 

 

 
Exhibit Index

No.	 	Description	
99.1	 	Press Release dated November 19, 2013.	
99.2	 	Corporate Presentation.	

EXHIBIT 99.1

ChinaNet Online Holdings Reports Third Quarter 2013 Financial Results

Projects $30 Million Revenue and $1.2 Million Net Income for Full Year 2013

Management to Host Earnings Conference Call on Wednesday, November 20th at 8:30 a.m. ET

BEIJING, Nov. 19, 2013 (GLOBE NEWSWIRE) -- ChinaNet Online Holdings, Inc. (Nasdaq:CNET) ("ChinaNet" or the "Company"), 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 third quarter of 2013.
Summary Financials	
 	
Third Quarter 2013 Results (USD) (Unaudited)	
 	Q3 2013	Q3 2012	CHANGE	
Sales	$7.5 million	$10.3 million	-27%	
Gross Profit	$4.1 million	$4.1 million	--	
Gross Margin	55.0%	40.1%	+37%	
Net Income Attributable to Common Stockholders	$1.2 million	$1.2 million	-5%	
EPS (Diluted)	$0.05	$0.05	--	
Third quarter 2013 Financial Results

Revenues for the three months ended September 30, 2013 were $7.5 million compared to $10.3 million for the three months ended September 30, 2012, representing a 27% decrease. Low margin TV advertising fell by $2.7 million, or 83%, accounting for the majority of the year-over-year revenue decline. Internet advertising revenues increased by 7% to $6.1 million.

Mr. George Chu, Chief Operating Officer of the Company stated, "We generated solid growth in our operating cash flows so far this year. While our customers remain cautious with their spending, we were able to increase our internet advertising revenues 7% in the third quarter. We continue to invest in new services and technologies that will further improve our competitive position."
Third quarter 2013 Revenue Breakdown by Business Unit (USD in thousands)	
 	Q3 2013	%	Q3 2012	%	% Change	
Internet Advertisement	$6,071	80%	$5,650	55%	+7%	
TV Advertisement	$560	8%	$3,238	32%	-83%	
Bank Kiosk	$71	1%	$72	1%	--	
Brand Mgmt. & Sales Channel Building	$779	10%	$1,327	13%	-41%	
Revenue from internet advertisements for the three months ended September 30, 2013 increased by 7% to $6.1 million compared to the same period a year ago. TV advertising revenues fell to $0.6 million in the third quarter of 2013 from $3.3 million in the same period in 2012 as the Company had significantly higher TV advertising activity in the third quarter of 2012 related to the launch of its entrepreneurial reality show and the promotion of its entrepreneurial website, 28.com and Chuangye.com. Brand management and sales channel building revenues fell by approximately $0.5 million as a result of lower spending by customers in reaction to the slowing Chinese economy.

Gross profit for the three months ended September 30, 2013 was $4.1 million, essentially unchanged from the third quarter of 2012. Gross margin was 55%, up significantly from 40.1% in the third quarter of 2012. Gross margins improved due to increased contribution from higher margin internet advertising revenues and an improvement in TV advertising margins.

Operating expenses for the three months ended September 30, 2013 were approximately $2.7 million, up 21% compared to $2.3 million in the same period in 2012. The Company increased research and development expenses by 62% to support new product investments. Selling expenses fell by 4% to $0.6 million in the third quarter of 2013.

The Company recorded $1.4 million of operating income in the three months ended September 30, 2013 compared to $1.9 million in the same period one year ago.

Net income attributable to common stockholders for the three months ended September 30, 2013 was $1.2 million and earnings per share was $0.05 for the third quarter of 2013 and 2012.
 	
First Nine months 2013 Results (USD) (Unaudited)	
 	YTD 2013	YTD 2012	CHANGE	
Sales	$23.4 million	$38.3 million	-39%	
Gross Profit	$10.3 million	$10.3 million	--	
Gross Margin	44.0%	26.8%	+64%	
Net Income/(Loss) Attributable to Common Stockholders	$1.6 million	$1.7 million	-7%	
EPS (Diluted)	$0.07	$0.08	-13%	
Revenue for the nine months ended September 30, 2013 was $23.4 million compared to $38.3 million in the corresponding period a year ago. Internet advertising, TV advertising, and brand management and sales channel building revenues were $15.3 million, $5.7 million, and $2.2 million in the first nine months of 2013, respectively.

Gross profit and gross margin for the first nine months of 2013 were $10.3 million and 44% compared to $10.3 million and 26.8%, respectively, in the same period a year ago.

Operating expenses increased by 10% to $8.2 million in the first nine months of 2013. ChinaNet generated $2.1 million in operating income, down 25% from $2.8 million in the first nine months of 2012.

Net income attributable to ChinaNet common stockholders and net income per share were $1.6 million and $0.07 in the first nine months of 2013. The weighted average diluted shares outstanding was essentially flat year-over-year at 22.3 million shares.

Balance Sheet and Cash Flow

The Company had $4.9 million in cash and cash equivalents as of September 30, 2013, compared to $5.5 million as of December 31, 2012, working capital of $24.6 million, compared to $25.2 million as of December 31, 2012, and a current ratio of 3.0 to 1, compared 3.5 to 1 as of December 31, 2012. Total shareholders' equity of ChinaNet was $46.8 million at September 30, 2013 compared to $44.2 million at December 31, 2012.

The Company generated approximately $2.8 million of cash flows from operations in the first nine months of 2013 compared to a $2.5 million of cash inflows for the first nine months of 2012.

Guidance for 2013

The Company provides the following guidance for fiscal year 2013.

Revenues: $30 million
Net Income: $1.2 million

Business Updates

ChinaNet hosted its 10-year Anniversary and Customer Sharing Conference ("the Conference") in Zhengjie Palace Hot Spring Hotel in Beijing, China from August 17th to 18th, 2013. The Company secured over $1 million of new contract signings during the 2-day conference. At the Conference, the Company celebrated its achievements over the past decade and introduced the latest services, including "366 value added service platform", to its customers. Over 250 guests and employees participated in the Conference. Executives from ChinaNet's close business partners, such as Baidu, Qihu (360), China Business Journal, Source for Enterprise Group, Skylife Group, and Guangfa Technology Co., Ltd also attended the event.

ChinaNet launched a fall promotional campaign in October 2013 to help entrepreneurs and franchisees securing funding and services for their businesses. The three month campaign attracted hundreds of clients and funders.

The Company continued to establish closer ties with local communities and businesses through various initiatives. In October 2013, ChinaNet began a marketing awareness campaign to help promote Joy Paradise, one of the largest retail shopping centers under construction in Hebei Province. The new state-of-the-art complex will house close to 300 retail and entertainment shops and restaurants – all prospective clients of ChinaNet - when it opens in August 2014. Separately, Company executives met with local government officials from Quanzhou to discuss various cultural and creative projects that could help promote local businesses in Fujian Province.

In early November 2013, ChinaNet's subsidiary Liansuo.com signed an agreement with Beijing Origus Food Co. Ltd. ("Origus") to help them expand their franchise in China and internationally. Origus, a pioneer of the pizza buffet concept in China, has hundreds of locations in more than 20 provinces. Liansuo.com will help Origus promote their brand and attract potential franchise partners.

ChinaNet participated in the inaugural China Franchise Exhibition to be held at the Chengdu Century International Convention Center, located in Chengdu, China from November 14th to 16th, 2013. ChinaNet representatives will network with franchise owners and local government representatives to discuss Liansuo.com and other ChinaNet products and services.

Conference Call

Date: Wednesday, November 20, 2013
Time: 8:30 a.m. Eastern Time
Conference Line (U.S.): 1-877-941-4774
International Dial-In: 1-480-629-9760
Conference ID: 4651460
Webcast: http://public.viavid.com/index.php?id=106961

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 11:59 pm Eastern Time on November 27, 2013. To listen, call 1-877-870-5176 within the United States or 1-858-384-5517 when calling internationally. Please use the replay pin number 4651460.

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 services for small and medium-sized enterprises and entrepreneurial management and networking services 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.

Safe Harbor

This release contains certain "forward-looking statements" relating to the business of ChinaNet Online Holdings, Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including business uncertainties relating to government regulation of our industry, market demand, reliance on key personnel, future capital requirements, competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. These forward-looking statements are based on ChinaNet's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting ChinaNet will be those anticipated by ChinaNet. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. ChinaNet undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
CHINANET ONLINE HOLDINGS, INC.	
CONSOLIDATED BALANCE SHEETS	
(In thousands, except for number of shares and per share data)	
 	 	 	
 	September 30, 	December 31,	
 	2013	2012	
 	(US $)	(US $)	
 	(Unaudited)	 	
Assets	 	 	
Current assets:	 	 	
Cash and cash equivalents 	$4,933	$5,483	
Term deposit	3,446	3,357	
Accounts receivable, net	10,772	8,486	
Other receivables, net	2,285	3,103	
Prepayment and deposit to suppliers	15,115	14,596	
Due from related parties 	443	210	
Other current assets	47	136	
Deferred tax assets-current	35	50	
Total current assets	37,076	35,421	
Investment in and advance to equity investment affiliates	845	959	
Property and equipment, net	1,280	1,636	
Intangible assets, net	6,559	7,167	
Deposit for purchasing of software technology	2,438	--	
Goodwill	11,380	11,083	
Deferred tax assets-non current	1,220	652	
Total Assets	$60,798	$56,918	
Liabilities and Equity	 	 	
Current liabilities:	 	 	
Short-term bank loan	$813	$ --	
Accounts payable	402	110	
Advances from customers	1,485	1,065	
Accrued payroll and other accruals	833	904	
Payable for acquisition	488	1,266	
Taxes payable	8,190	6,683	
Other payables	263	217	
Total current liabilities	12,474	10,245	
Long-term liabilities:	 	 	
Deferred tax liability-non current	1,566	1,689	
Long-term borrowing from director	142	139	
Total Liabilities	14,182	12,073	
 	 	 	
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 22,376,540 shares and 22,186,540 shares at September 30, 2013 and December 31, 2012, respectively)	 	 	
 	 	 	
 	22	22	
Additional paid-in capital	19,860	20,008	
Statutory reserves	2,296	2,296	
Retained earnings 	21,128	19,505	
Accumulated other comprehensive income	3,462	2,393	
Total ChinaNet Online Holdings, Inc.'s stockholders' equity	46,768	44,224	
Noncontrolling interests	(152)	621	
Total equity	46,616	44,845	
 	 	 	
Total Liabilities and Equity	$60,798	$56,918	
 	
CHINANET ONLINE HOLDINGS, INC.	
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME	
(In thousands, except for number of shares and per share data)	
 	 	 	 	 	
 	Nine Months Ended September 30,	Three Months Ended September 30,	
 	2013	2012	2013	2012	
 	(US $)	(US $)	(US $)	(US $)	
 	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	
Sales	 	 	 	 	
 From unrelated parties	$23,108	$38,232	$7,341	$10,236	
 From related parties	314	117	140	51	
 	23,422	38,349	7,481	10,287	
Cost of sales	13,123	28,065	3,366	6,163	
Gross margin	10,299	10,284	4,115	4,124	
Operating expenses	 	 	 	 	
Selling expenses	2,007	2,042	617	640	
General and administrative expenses	4,690	4,320	1,544	1,260	
Research and development expenses	1,490	1,112	578	356	
 	8,187	7,474	2,739	2,256	
Income from operations	2,112	2,810	1,376	1,868	
 	 	 	 	 	
Other income (expenses)	 	 	 	 	
Interest income	94	123	30	2	
Interest expense	(10)	--	(10)	--	
Other expenses	(12)	(148)	(10)	(148)	
 	72	(25)	10	(146)	
 	 	 	 	 	
Income before income tax expense, equity method investments and noncontrolling interests 	2,184	2,785	1,386	 1,722	
Income tax expense	(469)	(196)	(201)	(182)	
Income before equity method investments and noncontrolling interests 	 1,715	 2,589	 1,185	 1,540	
Share of losses in equity investment affiliates	(170)	(394)	(45)	(97)	
Net income	1,545	2,195	1,140	1,443	
Net loss / (income) attributable to noncontrolling interests	78	(446)	19	(223)	
Net income attributable to ChinaNet Online Holdings, Inc.	 $1,623	 $1,749	 $1,159	 $1,220	
 	 	 	 	 	
Net income	1,545	2,195	1,140	1,443	
Foreign currency translation gain	1,076	159	248	(139)	
Comprehensive Income	$2,621	$2,354	$1,388	$1,304	
Comprehensive loss/ (income) attributable to noncontrolling interests	71	(450)	24	(184)	
Comprehensive income attributable to ChinaNet Online Holdings, Inc.	$2,692	$1,904	$1,412	$1,120	
 	 	 	 	 	
Earnings per share	 	 	 	 	
Earnings per common share	 	 	 	 	
Basic 	$0.07	$0.08	$0.05	$0.05	
Diluted	$0.07	$0.08	$0.05	$0.05	
Weighted average number of common shares outstanding:	 	 	 	 	
Basic	22,253,463	22,185,226	22,371,649	22,186,540	
Diluted 	22,253,463	22,185,226	22,371,649	22,186,540	
 	
CHINANET ONLINE HOLDINGS, INC.	
CONSOLIDATED STATEMENTS OF CASH FLOWS	
(In thousands)	
 	 	 	
 	Nine Months Ended September 30,	
 	2013	2012	
 	(US $)	(US $)	
 	(Unaudited)	(Unaudited)	
Cash flows from operating activities	 	 	
Net income	$1,545	$2,195	
Adjustments to reconcile net income to net cash provided by operating activities	 	 	
Depreciation and amortization	1,252	1,223	
Share-based compensation expenses 	114	38	
Allowances for doubtful debts	1,024	561	
Share of losses in equity investment affiliates	170	394	
Loss on disposal of property and equipment	--	2	
Deferred taxes	(696)	(749)	
Changes in operating assets and liabilities	 	 	
Accounts receivable	(2,269)	(5,712)	
Other receivables	101	198	
Prepayment and deposit to suppliers	(127)	3,401	
Due from related parties	(225)	4	
Other current assets	89	34	
Accounts payable	284	(172)	
Advances from customers	388	111	
Accrued payroll and other accruals	(84)	(134)	
Due to related parties	--	(162)	
Other payables	(67)	25	
Taxes payable	1,313	1,210	
Net cash provided by operating activities	2,812	2,467	
 	 	 	
Cash flows from investing activities	 	 	
Purchases of vehicles and office equipment	(65)	(185)	
Deposit for purchasing of software technology	(2,411)	--	
Long-term investment in and advance to equity investment affiliates	(32)	--	
Project development deposit to a third party	--	(2,450)	
Cash effect on deconsolidation of VIEs	--	(15)	
Payment for acquisition of VIEs	(1,768)	(1,817)	
Net cash used in investing activities	(4,276)	(4,467)	
 	 	 	
Cash flows from financing activities	 	 	
Proceeds from short-term bank loan	804	--	
Dividend paid to convertible preferred stockholders	--	(5)	
Short-term loan borrowed from an equity investment affiliate	--	316	
Short-term loan repaid to an equity investment affiliate	--	(537)	
Net cash provided by (used in) financing activities	804	(226)	
 	 	 	
Effect of exchange rate fluctuation on cash and cash equivalents	110	44	
 	 	 	
Net decrease in cash and cash equivalents	(550)	(2,182)	
 	 	 	
Cash and cash equivalents at beginning of the period	5,483	10,695	
Cash and cash equivalents at end of the period	$4,933	$8,513	
 	 	 	
Supplemental disclosure of cash flow information	 	 	
 	 	 	
Income taxes paid	$39	$74	
 	 	 	
Non-cash transactions:	 	 	
Restricted stock and options granted for future service	$11	$53	
CONTACT: MZ North America
Ted Haberfield, President
Direct: +1-760-755-2716
Email: thaberfield@mzgroup.us
Web: www.mzgroup.us

EXHIBIT 99.2