ChinaNet Online Holdings Reports Fiscal Year 2013 Financial Results

ChinaNet Online Holdings Reports Fiscal Year 2013 Financial Results

Expects to File Its 10-Q for the First Quarter of 2014 in July

BEIJING, June 17, 2014 (GLOBE NEWSWIRE) -- 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
fiscal year 2013.

Summary Financials

Full Year 2013 Results (USD)
                                          FY 2013        FY 2012       CHANGE
Sales                                      $30.3 million  $46.6 million -35%
Gross Profit                               $13.7 million  $15.0 million -9%
Gross Margin                               45.2%          32.2%         +40.4%
Net (Loss)/ Income Attributable to Common  ($0.2) million $3.0 million  --
Stockholders
EPS (Diluted)                              ($0.01)        $0.14         --

Revenue for the fiscal year ended December 31, 2013 was $30.3 million compared
to $46.6 million for the fiscal year ended December 31, 2012. Internet
advertising, TV advertising, and brand management and sales channel building
revenues were $20.7 million, $6.8 million, and $2.6 million in fiscal year
2013, respectively.

Year Ended December 31, 2013 Revenue Breakdown by Business Unit (USD in
thousands)

                                    FY 2013   %      FY 2012  %     % Change
Internet Advertisement               $20,672   68%    $21,366  46%   -3%
TV Advertisement                     $6,801    22%   $20,454  44%  -67%
Bank Kiosk                           $251      1%     $282     1%    -11%
Brand Mgmt. & Sales Channel Building $2,569    9%     $4,498   10%   -43%

Gross profit and gross margin for the fiscal year ended December 31, 2013 were
$13.7 million and 45.2% compared to $15.0 million and 32.2%, respectively, for
the fiscal year ended December 31, 2012. The primary reason for the
year-over-year increase in the gross margin was lower margin TV advertising
revenues declining from 44% of total revenues in fiscal year 2012 to 22% in
fiscal year 2013.

Operating expenses increased by 17% to $12.3 million for the fiscal year ended
December 31, 2013. General and administrative expenses and research and
development expenses increased by 28% and 10% to $7.7 million and $2.0
million, respectively. ChinaNet generated $1.5 million in operating income in
2013, down from $4.5 million in 2012.

Net income attributable to ChinaNet common stockholders and net income per
share were -$0.2 million and -$0.01 for the fiscal year ended December 31,
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 $3.4 million in cash and cash equivalents as of December 31,
2013, compared to $5.5 million as of December 31, 2012, working capital of
$24.0 million, compared to $25.2 million as of December 31, 2012, and a
current ratio of 3.3 to 1, compared 3.5 to 1 as of December 31, 2012. Total
shareholders' equity of ChinaNet was $45.0 million at December 31, 2013
compared to $44.2 million at December 31, 2012.

The Company generated approximately $2.8 million of cash flows from operations
for the year ended December 31, 2013 compared to a $5.0 million of cash
inflows for the year ended December 31, 2012.

Guidance for 2014

Management anticipates releasing the revenues and net income guidance for
fiscal year 2014 in July 2014.

Business Updates

The Company's brand consulting subsidiary, Quanzhou Zhilang Company
("Zhilang"), signed a brand promotion agreement with Beijing Daisy Corporation
Ltd. ("Daisy") in March 2014, pursuant to which Zhilang agreed to offer
comprehensive advertising, branding and marketing services to Daisy and its
subsidiaries. Daisy is dedicated in providing solutions and recommendations to
parents on child caring problems and has established a high reputation among
Chinese consumers. It owns multiple brands and sells a variety of products and
services including clothing, postpartum recovery center, baby haircut, toys,
baby shampoo and baby photography.

ChinaNet's subsidiary 28.com received a high credit rating by the Beijing
Zhongguancun Enterprises Credit Promotion Association (ECPA) for 2014. Beijing
Zhongguancun Enterprises Credit Promotion Association is an independent entity
established by various high-tech enterprises in 2003 to promote members
complying with the laws and regulations and national policies and to
strengthen cooperation between members. The credit audit is conducted by
Beijing Credit Ratings Co., Ltd, which is certified by the Beijing
Zhongguancun government and covers the areas of internal controls, financial
statements and credit and working capital management. This is the second
consecutive year 28.com received this prestigious recognition from the ECPA.

The Company was unable to file its Form 10-K for fiscal 2013 until June 16,
2014 due to the following facts and circumstances: (1) Mr. George Chu, its
Chief Operating Officer and primary member of management responsible for the
organization, coordination and supervision of its SEC reporting processes was
hospitalized; (2) the Company had material balances and transactions, incurred
during the year or carried forward from prior year, which its independent
auditors needed additional time to verify; and (3) the additional audit
procedures that were performed, as discussed above, resulted in an increase of
internal documentation that needed to be generated by the Company and reviewed
by the independent auditors in order to complete the related internal review
procedures in accordance with the standards of the Public Company Accounting
Oversight Board. Due to the significant amount of time and resources the
Company needed to dedicate to complete the Form 10-K filing, it was unable to
timely finalize its financial results as well as the disclosure requirements
of the Form 10-Q for the three months ended March 31, 2014. The Company
submitted to the NASDAQ Stock Market LLC a compliance plan with respect to the
delinquent Form 10-Q on June 16, 2014. The Company is continuing to work
diligently to complete and finalize the Form 10-Q. Based on discussions with
the independent auditors, management expects to finalize and file the Form
10-Q in July 2014.

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.

                            -- FINANCIAL TABLES –

CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for number of shares and per share data)
                                                           As of December 31,
                                                           2013      2012
                                                           (US $)    (US $)
Assets                                                               
Current assets:                                                      
Cash and cash equivalents                                  $3,442    $5,483
Term deposit                                                3,467     3,357
Accounts receivable, net                                    7,673     8,486
Other receivables, net                                      4,299     3,103
Prepayment and deposit to suppliers                         14,692    14,596
Due from related parties                                   502       210
Other current assets                                        27        136
Deferred tax assets-current                                 153       50
Total current assets                                        34,255    35,421
                                                                    
Investment in and advance to equity investment affiliates   845       959
Property and equipment, net                                 1,057     1,636
Intangible assets, net                                      6,015     7,167
Deposit for purchasing of software technology               2,453     --
Goodwill                                                    11,450    11,083
Deferred tax assets-non current                             759       652
Total Assets                                                $56,834   $56,918
                                                                    
Liabilities and Equity                                               
Current liabilities:                                                 
Short-term bank loan                                        $818      $--
Accounts payable                                            421       110
Advances from customers                                     995       1,065
Accrued payroll and other accruals                          676       904
Payable for acquisition                                     --        1,266
Taxes payable                                               7,029     6,683
Other payables                                              288       217
Total current liabilities                                   10,227    10,245
Long-term liabilities:                                               
Deferred tax liability-non current                          1,439     1,689
Long-term borrowing from director                           143       139
Total Liabilities                                           11,809    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        22
22,186,540 shares at December 31, 2013 and 2012,
respectively)
Additional paid-in capital                                  19,870    20,008
Statutory reserves                                          2,602     2,296
Retained earnings                                          18,965    19,505
Accumulated other comprehensive income                      3,689     2,393
Total ChinaNet Online Holdings, Inc.'s stockholders' equity 45,148    44,224
                                                                    
Noncontrolling interests                                    (123)     621
Total equity                                                45,025    44,845
Total Liabilities and Equity                                $56,834   $56,918


CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except for number of shares and per share data)
                                                      Year Ended December 31,
                                                      2013        2012
                                                      (US $)      (US $)
Sales                                                             
From unrelated parties                                 $29,932     $46,403
From related parties                                   361         197
                                                      30,293      46,600
Cost of sales                                          16,563      31,558
Gross margin                                           13,730      15,042
Operating expenses                                                
Selling expenses                                       2,574       2,683
General and administrative expenses                    7,691       6,030
Research and development expenses                      1,995       1,819
                                                      12,260      10,532
Income from operations                                 1,470       4,510
Other income (expenses)                                           
Interest income                                        125         186
Interest expense                                       (26)        --
Change in fair value of contingent consideration       --          (160)
receivables
Loss on disposal of intangible asset                   (315)       --
Loss on disposal of subsidiaries                       (543)       --
Other income (expenses)                                5           (150)
                                                      (754)       (124)
Income before income tax expense, equity method                   
investments and noncontrolling interests
                                                      716         4,386
Income tax expense                                     (816)       (529)
Loss/income before equity method investments and       (100)       3,857
noncontrolling interests
Share of losses in equity investment affiliates        (183)       (449)
Net loss/income                                        (283)       3,408
Net loss/(income) attributable to noncontrolling       49          (412)
interests
Net loss/income attributable to ChinaNet Online        $(234)      $2,996
Holdings, Inc.
                                                                 
Loss/earnings per share                                           
Loss/earnings per common share                                    
Basic                                                 $(0.01)     $0.14
Diluted                                                $(0.01)     $0.14
                                                                 
Weighted average number of common shares outstanding:             
Basic                                                 22,284,485  22,185,556
Diluted                                              22,284,485  22,185,556


CHINANET ONLINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                                      Year Ended December 31,
                                                      2013           2012
                                                      (US $)         (US $)
Cash flows from operating activities                                 
Net loss/income                                        $(283)         $3,408
Adjustments to reconcile net loss/income to net cash provided by      
operating activities
Depreciation and amortization                          1,617          1,637
Share-based compensation expenses                     125            48
Change in fair value ofcontingent consideration       --             160
receivable
Allowances for doubtful debts                          2,702          1,141
Share of losses in equity investment affiliates        183            449
Loss on disposal of property and equipment             3              2
Loss on disposal of subsidiaries                       543            --
Loss on disposal of intangible assets                  315            --
Deferred taxes                                         (486)          (828)
Changes in operating assets and liabilities                          
Accounts receivable                                    (3,676)        (5,516)
Other receivables                                      98             1,400
Prepayment and deposit to suppliers                    380            882
Due from related parties                               (282)          117
Other current assets                                   106            (5)
Accounts payable                                       301            (158)
Advances from customers                                (104)          335
Accrued payroll and other accruals                     (242)          285
Due to related parties                                 --             (4)
Other payables                                         (69)           72
Taxes payable                                          1,525          1,603
Net cash provided by operating activities              2,756          5,028
                                                                    
Cash flows from investing activities                                 
Purchases of vehicles and office equipment             (79)           (314)
Deposit for purchasing of software technology          (2,420)        --
Short-term loan to unrelated entities                  (790)          (475)
Long-term investment in and advance to equity          (40)           --
investment affiliates
Payment for acquisition of VIEs                        (2,258)        (5,775)
Cash effect on disposal of VIEs                        (146)          --
Project development deposit to a third party           --             (2,453)
Refund of project development deposit from a third     --             2,453
party
Placement of term deposit                              --             (3,355)
Net cash used in investing activities                  (5,733)        (9,919)
Cash flows from financing activities                                 
Proceeds from short-term bank loan                     807            --
Dividend paid to convertible preferred stockholders    --             (5)
Short-term loan borrowed from an equity investment     --             316
affiliate
Short-term loan repaid to an equity investment         --             (538)
affiliate
Repayment to legal (nominal) shareholders of Shanghai  --             (158)
Jing Yang
Net cash provided by (used in) financing activities    807            (385)
                                                                    
Effect of exchange rate fluctuation on cash and cash   129            64
equivalents
                                                                    
Net decrease in cash and cash equivalents              (2,041)        (5,212)
                                                                    
Cash and cash equivalents at beginning of the year     5,483          10,695
Cash and cash equivalents at end of the year           $3,442         $5,483

CONTACT: MZ North America
         Ted Haberfield, President
         Direct: +1-760-755-2716
         Email: thaberfield@mzgroup.us
         Web: www.mzgroup.us
 
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