ChinaNet Online Holdings Reports Second Quarter 2012 Financial Results

– FINANCIAL TABLES –

CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
	June 30,  2012	December 31, 2011
	(US $)	(US $)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$ 8,572	$ 10,695
Accounts receivable, net	9,476	4,444
Other receivables, net	5,672	3,631
Prepayment and deposit to suppliers	13,485	15,360
Due from related parties	283	324
Contingent consideration receivables	160	159
Other current assets	103	129
Deferred tax assets-current	272	--
Total current assets	38,023	34,742
Investment in and advance to equity investment affiliates	1,109	1,396
Property and equipment, net	1,666	1,902
Intangible assets, net	7,686	8,151
Goodwill	11,077	10,999
Deferred tax assets-non current	270	92
Total Assets	$ 59,831	$ 57,282
Liabilities and Equity
Current liabilities:
Accounts payable	$ 380	$ 268
Advances from customers	1,800	724
Accrued payroll and other accruals	1,037	616
Due to equity investment affiliate	--	220
Due to related parties	--	161
Payable for acquisition	--	550
Taxes payable	5,860	5,040
Other payables	188	114
Dividend payable	--	5
Total current liabilities	9,265	7,698
Long-term liabilities:
Deferred tax liability-non current	1,797	1,893
Long-term borrowing from director	138	137
Total Liabilities	11,200	9,728
Commitments and contingencies
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 June 30, 2012 and December 31, 2011, respectively)	22	22
Additional paid-in capital	20,774	20,747
Statutory reserves	2,117	2,117
Retained earnings	17,217	16,688
Accumulated other comprehensive income	2,387	2,132
Total ChinaNet Online Holdings, Inc.'s stockholders' equity	42,517	41,706
Noncontrolling interests	6,114	5,848
Total equity	48,631	47,554
Total Liabilities and Equity	$ 59,831	$ 57,282

CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands)
	Six Months Ended June 30,		Three Months Ended June 30,
	2012	2011	2012	2011
	(US $)	(US $)	(US $)	(US $)
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Sales
From unrelated parties	$ 27,996	$ 15,636	$ 13,076	$ 8,814
From related parties	66	457	51	267
	28,062	16,093	13,127	9,081
Cost of sales	21,902	5,458	9,364	3,437
Gross margin	6,160	10,635	3,763	5,644
Operating expenses
Selling expenses	1,402	1,620	713	908
General and administrative expenses	3,060	1,865	1,817	975
Research and development expenses	756	724	425	372
	5,218	4,209	2,955	2,255
Income from operations	942	6,426	808	3,389
Other income (expenses)
Interest income	121	4	116	3
Gain on deconsolidation of subsidiaries	--	230	--	--
Other (expenses)/income	--	5	1	(1)
	121	239	117	2
Income before income tax expense, equity method investments and noncontrolling interests	1,063	6,665	925	3,391
Income tax expense / (benefit)	14	751	(222)	319
Income before equity method investments and noncontrolling interests	1,049	5,914	1,147	3,072
Share of losses in equity investment affiliates	(297)	(105)	(104)	(59)
Net income	752	5,809	1,043	3,013
Net income attributable to noncontrolling interests	(223)	(3)	(148)	(19)
Net income attributable to ChinaNet Online Holdings, Inc.	529	5,806	895	2,994
Dividend of Series A convertible preferred stock	--	(322)	--	(153)
Net income attributable to common stockholders of ChinaNet Online Holdings, Inc.	$ 529	$ 5,484	$ 895	$ 2,841
Earnings per share
Earnings per common share
Basic	$ 0.02	$ 0.32	$ 0.04	$ 0.16
Diluted	$ 0.02	$ 0.28	$ 0.04	$ 0.15
Weighted average number of common shares outstanding:
Basic	22,184,562	17,387,336	22,186,540	17,528,785
Diluted	22,184,562	20,410,724	22,186,540	20,005,962

 

CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
	Six Months Ended June 30,
	2012	2011
	(US $)	(US $)
	(Unaudited)	(Unaudited)
Cash flows from operating activities
Net income	$ 752	$ 5,809
Adjustments to reconcile net income to net cash provide d by operating activities
Depreciation and amortization	818	470
Share-based compensation expenses	27	172
Allowances for doubtful debts	561	--
Share of losses in equity investment affiliates	297	105
Gain on deconsolidation of subsidiaries	--	(230)
Gain on disposal of property and equipment	--	(3)
Deferred taxes	(558)	(46)
Changes in operating assets and liabilities
Accounts receivable	(5,346)	(2,171)
Other receivables	226	1,320
Prepayment and deposit to suppliers	1,983	(309)
Due from related parties	43	(258)
Other current assets	26	(2)
Accounts payable	109	258
Advances from customers	1,070	(1,477)
Accrued payroll and other accruals	418	(50)
Due to director	--	(147)
Due to Control Group	--	(81)
Due to related parties	(162)	(137)
Other payables	45	77
Taxes payable	783	797
Net cash provided by operating activities	1,092	4,097
Cash flows from investing activities
Purchases of vehicles and office equipment	(46)	(152)
Purchase of intangible assets	--	(1,429)
Project development deposit to a third party	(2,450)	--
Restricted cash for incorporation of VIEs	--	(186)
Cash from acquisition of VIEs	--	24
Cash effect on deconsolidation of VIEs	--	(182)
Long-term investment in and advance to equity investment affiliates	--	(1,527)
Disposal of investment in and loan repayment from equity investment affiliate	--	1,527
Payment for acquisition of VIEs	(553)	(1,451)
Net cash used in investing activities	(3,049)	(3,376)
Cash flows from financing activities
Cash investment contributed by noncontrolling interests	--	224
Dividend paid to convertible preferred stockholders	(5)	(283)
Short-term loan borrowed from a equity investment affiliate	316	--
Short-term loan repaid to a equity investment affiliate	(538)	--
Net cash used in financing activities	(227)	(59)
Effect of exchange rate fluctuation on cash and cash equivalents	61	195
Net (decrease) / increase in cash and cash equivalents	(2,123)	857
Cash and cash equivalents at beginning of the period	10,695	15,590
Cash and cash equivalents at end of the period	$ 8,572	$ 16,447

CONTACT: Ted Haberfield, President
         MZ North America, IR
         MZ Group
         Direct: [phone]
         Email: [e-mail]

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