<SEC-DOCUMENT>0001171843-14-002860.txt : 20140624
<SEC-HEADER>0001171843-14-002860.hdr.sgml : 20140624
<ACCEPTANCE-DATETIME>20140617074519
ACCESSION NUMBER:		0001171843-14-002860
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20140617
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20140617
DATE AS OF CHANGE:		20140617

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ChinaNet Online Holdings, Inc.
		CENTRAL INDEX KEY:			0001376321
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-ADVERTISING AGENCIES [7311]
		IRS NUMBER:				204672080
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34647
		FILM NUMBER:		14924231

	BUSINESS ADDRESS:	
		STREET 1:		NO.3 MIN ZHUANG ROAD, BUILDING 6,
		STREET 2:		YU QUAN HUI GU TUSPARK,
		CITY:			HAIDIAN DISTRICT, BEIJING,
		STATE:			F4
		ZIP:			100195
		BUSINESS PHONE:		888-419-9455

	MAIL ADDRESS:	
		STREET 1:		101-C N. GREENVILLE AVENUE
		STREET 2:		SUITE 255
		CITY:			ALLEN
		STATE:			TX
		ZIP:			75002

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	EMAZING INTERACTIVE, INC.
		DATE OF NAME CHANGE:	20060922
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>document.htm
<DESCRIPTION>FORM 8-K FILING DOCUMENT
<TEXT>
<html>

	<head>
		<title>Form 8-K Filing</title>
	</head>

	<body>
		<p align="center"><b>UNITED STATES</b><br>
			<b>SECURITIES AND EXCHANGE COMMISSION</b><br>
			<b>Washington, D.C. 20549</b><br>
			__________________</p>
		<p align="center"><b>FORM 8-K</b></p>
		<p align="center"><font size="2"><b>CURRENT REPORT<br>
					PURSUANT TO SECTION 13 OR 15(d) OF THE<br>
					SECURITIES EXCHANGE ACT OF 1934</b></font></p>
		<p align="center"><font size="2">Date of Report (Date of earliest event Reported): June 17, 2014 </font></p>
		<p align="center"><font size="4"><b><u>ChinaNet Online Holdings, Inc.</u></b></font><br>
			<font size="2">(Exact Name of Registrant as Specified in Charter)</font></p>
		<!-- Registrant's State of Inc, File and IRS Number -->
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td width="32%" align="center" style="border-bottom: 1pt solid black"><font size="2"><b>Nevada</b></font></td>
				<td width="3%"><font size="2">&nbsp;</font></td>
				<td width="32%" align="center" style="border-bottom: 1pt solid black"><font size="2"><b>001-34647</b></font></td>
				<td width="3%"><font size="2">&nbsp;</font></td>
				<td width="32%" align="center" style="border-bottom: 1pt solid black"><font size="2"><b>20-4672080</b></font></td>
			</tr>
			<tr valign="top">
				<td width="32%" align="center"><font size="2">(State or Other Jurisdiction of Incorporation) </font></td>
				<td width="3%"><font size="2">&nbsp;</font></td>
				<td width="32%" align="center"><font size="2">(Commission File Number) </font></td>
				<td width="3%"><font size="2">&nbsp;</font></td>
				<td width="32%" align="center"><font size="2">(I.R.S. Employer Identification Number) </font></td>
			</tr>
		</table>
		<!-- Registrant's Postal Addess and Zip Code --><br>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="bottom">
				<td width="47%" align="center" style="border-bottom: 1pt solid black"><font size="2"><b>No. 3 Min Zhuang Road, Building 6,<br>
Yu Quan Hui Gu Tuspark, Haidian District, Beijing, PRC 100195</b></font><br>
				</td>
			</tr>
			<tr valign="top">
				<td width="47%" align="center"><font size="2">(Address of Principal Executive Offices and Zip Code)</font></td>
			</tr>
		</table>
		<p align="center"><font size="2">Registrant's telephone number, including area code: <b>+86-10-51600828</b></font></p>
		<p align="center"><br>
			<font size="2"><b>________________________________________________________________________________</b><br>
			(Former name or former address, if changed since last report)</font><font size="2"><b></b></font></p>
		<!-- Simultaneous filing obligation checkboxes --><br>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td colspan="3"><font size="2">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:<br>
						<br>
					</font></td>
			</tr>
			<tr valign="top">
				<td width="21"><font size="2">&nbsp;</font></td>
				<td width="40"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td nowrap><font size="2">&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </font></td>
			</tr>
			<tr valign="top">
				<td width="21"><font size="2">&nbsp;</font></td>
				<td width="40"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td nowrap><font size="2">&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </font></td>
			</tr>
			<tr valign="top">
				<td width="21"><font size="2">&nbsp;</font></td>
				<td width="40"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td nowrap><font size="2">&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </font></td>
			</tr>
			<tr valign="top">
				<td width="21"><font size="2">&nbsp;</font></td>
				<td width="40"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td nowrap><font size="2">&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </font></td>
			</tr>
		</table>
		<br>
		<hr noshade="1">
		<font size="2"></font>
		<p><b><p><font size="3"><b>Item 2.02. Results of Operations and Financial Condition.</b></font></p></b></p>
		<p><font size="2"><p>
	On June 17, 2014, ChinaNet Online Holdings, Inc., a Nevada corporation (the &quot;Company&quot;), issued a press release containing certain financial results for its fiscal year 2013. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1.</p>
<p>
	 </p>
<p>
	As provided in General Instruction B.2 of SEC Form 8-K, such information shall not be deemed &quot;filed&quot; for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the &quot;Exchange Act&quot;), 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.</p>
</font></p>
		<font size="2"></font>
		<p><b><p><font size="3"><b>Item 9.01. Financial Statements and Exhibits.</b></font></p></b></p>
		<p><font size="2"><p>
	(d) Exhibits. </p>
<table border="0" cellpadding="0" cellspacing="0" width="545">

		<tr height="21">
			<td height="21" width="79">
				<font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;"><u><strong>No.</strong></u></font></font></td>
			<td width="466">
				<font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;"><u><strong>Description </strong></u></font></font></td>
		</tr>
		<tr height="21">
			<td height="21" width="79">
				<font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;">99.1</font></font></td>
			<td width="466">
				<font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;">Press Release dated June 17, 2014.</font></font></td>
		</tr>

</table>
</font></p>
		<hr noshade="1">
		<!-- Registrant's Signature -->
		<p align="center"><b><font size="2">SIGNATURE</font></b></p>
		<p><font size="2">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.</font></p>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td width="47%" valign="top"><font size="2">Date: June 17, 2014</font></td>
				<td colspan="2" valign="top"><font size="2">ChinaNet Online Holdings, Inc.<br>
					<br>
					</font></td>
			</tr>
			<tr valign="top">
				<td width="47%">
					<p></p>
				</td>
				<td width="5%"><font size="2">&nbsp;By: &nbsp;</font></td>
				<td width="47%"><font size="2"><u>/s/ Handong Cheng<!--HANDONG CHENG--></u><br>
					Handong Cheng<br>
					Chief Executive Officer</font></td>
			</tr>
		</table>
		<font size="2"><hr />
<p style="text-align: center;">
	<font style="font-size: 12pt;">EXHIBIT INDEX</font></p>
<table border="0" cellpadding="0" cellspacing="0" width="632">

		<tr height="21">
			<td height="21" width="166">
				<font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;"><u><strong>Exhibit No.</strong></u></font></font></td>
			<td width="466">
				<font style="font-size: 12pt;"><u><font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;"><strong>Description </strong></font></font></u></font></td>
		</tr>
		<tr height="21">
			<td height="21" width="166">
				<font style="font-size: 12pt;"><font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;">99.1</font></font></font></td>
			<td width="466">
				<font style="font-size: 12pt;"><font style="font-size: 12px;"><font style="font-family: times new roman,times,serif;">Press Release dated June 17, 2014.</font></font></font></td>
		</tr>

</table>
</font>
	</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>newsrelease.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<html><head><title>ChinaNet Online Holdings Reports Fiscal Year 2013 Financial Results</title></head><body><p align="right">EXHIBIT 99.1</p><h3 align="center">ChinaNet Online Holdings Reports Fiscal Year 2013 Financial Results</h3><h4 align="center">Expects to File Its 10-Q for the First Quarter of 2014 in July</h4><p>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.</p><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="4" style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Summary Financials</strong></td>
		</tr>
		<tr>
			<td colspan="4" style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="4" style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				<strong>Full Year 2013 Results (USD)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>FY 2013</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>FY 2012</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>CHANGE</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				Sales</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$30.3 million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$46.6 million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				-35%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				Gross Profit</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$13.7 million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$15.0 million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				-9%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				Gross Margin</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				45.2%</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				32.2%</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				+40.4%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				Net (Loss)/ Income Attributable to Common Stockholders</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				($0.2) million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$3.0 million</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				EPS (Diluted)</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				($0.01)</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				$0.14</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				--</td>
		</tr>

</table><p>
	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.</p><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="6" style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Year Ended December 31, 2013 Revenue Breakdown by Business Unit (USD in thousands)</strong></td>
		</tr>
		<tr>
			<td colspan="6" style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center">
				<strong>FY 2013</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>%</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>FY 2012</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>%</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>% Change</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Internet Advertisement</td>
			<td style="font: 12px Arial; text-align: center">
				$20,672</td>
			<td style="font: 12px Arial; text-align: center">
				68%</td>
			<td style="font: 12px Arial; text-align: center">
				$21,366</td>
			<td style="font: 12px Arial; text-align: center">
				46%</td>
			<td style="font: 12px Arial; text-align: center">
				-3%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				TV Advertisement</td>
			<td style="font: 12px Arial; text-align: center">
				$6,801</td>
			<td style="font: 12px Arial; text-align: center">
				&#160;22%</td>
			<td style="font: 12px Arial; text-align: center">
				$20,454</td>
			<td style="font: 12px Arial; text-align: center">
				&#160;44%</td>
			<td style="font: 12px Arial; text-align: center">
				-67%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Bank Kiosk</td>
			<td style="font: 12px Arial; text-align: center">
				$251</td>
			<td style="font: 12px Arial; text-align: center">
				1%</td>
			<td style="font: 12px Arial; text-align: center">
				$282</td>
			<td style="font: 12px Arial; text-align: center">
				1%</td>
			<td style="font: 12px Arial; text-align: center">
				-11%</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Brand Mgmt. &amp; Sales Channel Building</td>
			<td style="font: 12px Arial; text-align: center">
				$2,569</td>
			<td style="font: 12px Arial; text-align: center">
				9%</td>
			<td style="font: 12px Arial; text-align: center">
				$4,498</td>
			<td style="font: 12px Arial; text-align: center">
				10%</td>
			<td style="font: 12px Arial; text-align: center">
				-43%</td>
		</tr>

</table><p>
	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.</p><p>
	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.</p><p>
	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.</p><p>
	<strong>Balance Sheet and Cash Flow</strong></p><p>
	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.</p><p>
	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.</p><p>
	<strong>Guidance for 2014 </strong></p><p>
	Management anticipates releasing the revenues and net income guidance for fiscal year 2014 in July 2014.</p><p>
	<strong>Business Updates</strong></p><p>
	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.</p><p>
	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.</p><p>
	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. &#160;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.</p><p>
	<strong>About ChinaNet Online Holdings, Inc.</strong></p><p>
	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.</p><p>
	<strong>Safe Harbor</strong></p><p>
	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.</p><p align="center">
	-- FINANCIAL TABLES &#8211;</p><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CHINANET ONLINE HOLDINGS, INC.</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CONSOLIDATED BALANCE SHEETS</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				(In thousands, except for number of shares and per share data)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>As of December 31,</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2013</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2012</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Assets</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Current assets:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Cash and cash equivalents&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$3,442</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$5,483</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Term deposit</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				3,467</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				3,357</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accounts receivable, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				7,673</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				8,486</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other receivables, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				4,299</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				3,103</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Prepayment and deposit to suppliers</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				14,692</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				14,596</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Due from related parties&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				502</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				210</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other current assets</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				27</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				136</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deferred tax assets-current</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				153</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				50</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<strong>Total current assets</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>34,255</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>35,421</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Investment in and advance to equity investment affiliates</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				845</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				959</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Property and equipment, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,057</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,636</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Intangible assets, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				6,015</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				7,167</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deposit for purchasing of software technology</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,453</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Goodwill</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				11,450</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				11,083</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deferred tax assets-non current</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				759</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				652</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Total Assets</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$56,834 </strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$56,918 </strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Liabilities and Equity</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Current liabilities:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Short-term bank loan</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$818</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$&#160;--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accounts payable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				421</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				110</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Advances from customers</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				995</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,065</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accrued payroll and other accruals</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				676</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				904</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Payable for acquisition</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,266</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Taxes payable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				7,029</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				6,683</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other payables</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				288</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				217</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<strong>Total current liabilities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>10,227</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>10,245</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<strong>Long-term liabilities:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>&#160;</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deferred tax liability-non current</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,439</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,689</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Long-term borrowing from director</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				143</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				139</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Total Liabilities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>11,809</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>12,073</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Commitments and contingencies&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Equity:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				ChinaNet Online Holdings, Inc.'s stockholders' equity</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				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 December 31, 2013 and 2012, respectively)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				22</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				22</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Additional paid-in capital</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				19,870</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				20,008</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Statutory reserves</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,602</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,296</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Retained earnings&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				18,965</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				19,505</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Accumulated other comprehensive income</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				3,689</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				2,393</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Total ChinaNet Online Holdings, Inc.'s stockholders' equity</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>45,148</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>44,224</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Noncontrolling interests</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(123)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				621</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Total equity</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>45,025</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>44,845</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Total Liabilities and Equity</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$56,834 </strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$56,918 </strong></td>
		</tr>

</table><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CHINANET ONLINE HOLDINGS, INC.</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				(In thousands, except for number of shares and per share data)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>Year Ended December 31,</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2013</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2012</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Sales</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				From unrelated parties</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$29,932</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$46,403</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				From related parties</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				361</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				197</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				30,293</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				46,600</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Cost of sales</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				16,563</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				31,558</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Gross margin</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>13,730</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>15,042</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Operating expenses</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Selling expenses</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,574</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,683</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				General and administrative expenses</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				7,691</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				6,030</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Research and development expenses</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				1,995</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				1,819</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				12,260</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				10,532</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Income from operations</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>1,470</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>4,510</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Other income (expenses)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Interest income</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				125</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				186</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Interest expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(26)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Change in fair value of contingent consideration receivables</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(160)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Loss on disposal of intangible asset</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(315)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Loss on disposal of subsidiaries</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(543)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other income (expenses)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				5</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(150)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(754)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(124)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Income before income tax expense, equity method investments and noncontrolling interests&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>716</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>4,386</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Income tax expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(816)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(529)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Loss/income before equity method investments and noncontrolling interests&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>(100)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>3,857</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Share of losses in equity investment affiliates</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(183)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(449)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net loss/income</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>(283)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>3,408</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Net loss/(income) attributable to noncontrolling interests</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				49</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(412)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net loss/income attributable to ChinaNet Online Holdings, Inc.</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$(234)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$2,996 </strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Loss/earnings per share</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Loss/earnings per common share</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Basic&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$(0.01)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$0.14 </strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Diluted</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$(0.01)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$0.14 </strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Weighted average number of common shares outstanding:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>&#160;Basic</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>22,284,485</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>22,185,556</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>&#160;Diluted&#160;</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>22,284,485</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>22,185,556</strong></td>
		</tr>

</table><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CHINANET ONLINE HOLDINGS, INC.</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>CONSOLIDATED STATEMENTS OF CASH FLOWS</strong></td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				(In thousands)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>Year Ended December 31,</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2013</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2012</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
			<td style="font: 12px Arial; text-align: center">
				<strong>(US $)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Cash flows from operating activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Net loss/income</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$(283)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				$3,408</td>
		</tr>
		<tr>
			<td colspan="2" style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Adjustments to reconcile net loss/income to net cash provided by operating activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Depreciation and amortization</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,617</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,637</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Share-based compensation expenses&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				125</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				48</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Change in fair value of&#160;contingent consideration receivable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				160</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Allowances for doubtful debts</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,702</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,141</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Share of losses in equity investment affiliates</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				183</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				449</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Loss on disposal of property and equipment</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				3</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Loss on disposal of subsidiaries</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				543</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Loss on disposal of intangible assets</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				315</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deferred taxes</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(486)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(828)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Changes in operating assets and liabilities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accounts receivable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(3,676)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(5,516)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other receivables</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				98</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				1,400</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Prepayment and deposit to suppliers</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				380</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				882</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Due from related parties</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(282)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				117</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other current assets</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				106</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(5)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accounts payable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				301</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(158)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Advances from customers</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(104)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				335</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Accrued payroll and other accruals</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(242)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				285</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Due to related parties</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(4)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Other payables</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(69)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				72</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Taxes payable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				1,525</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				1,603</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net cash provided by operating activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>2,756</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>5,028</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Cash flows from investing activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Purchases of vehicles and office equipment</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(79)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(314)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Deposit for purchasing of software technology</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(2,420)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Short-term loan to unrelated entities</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(790)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(475)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Long-term investment in and advance to equity investment affiliates</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(40)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Payment for acquisition of VIEs</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(2,258)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(5,775)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Cash effect on disposal of VIEs</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(146)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Project development deposit to a third party</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(2,453)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Refund of project development deposit from a third party</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				2,453</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Placement of term deposit</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(3,355)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net cash used in investing activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>(5,733)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>(9,919)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Cash flows from financing activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Proceeds from short-term bank loan</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				807</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Dividend paid to convertible preferred stockholders</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(5)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Short-term loan borrowed from an equity investment affiliate</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				316</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Short-term loan repaid to an equity investment affiliate</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				(538)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Repayment to legal (nominal) shareholders of Shanghai Jing Yang</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				(158)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net cash provided by (used in) financing activities</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>807</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>(385)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Effect of exchange rate fluctuation on cash and cash equivalents</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>129</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				<strong>64</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Net decrease in cash and cash equivalents</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>(2,041)</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				<strong>(5,212)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Cash and cash equivalents at beginning of the year</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				5,483</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				10,695</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 10.0px;">
				Cash and cash equivalents at end of the year</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$3,442 </strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				<strong>$5,483 </strong></td>
		</tr>

</table><pre>CONTACT: MZ North America
         Ted Haberfield, President
         Direct: +1-760-755-2716
         Email: thaberfield@mzgroup.us
         Web: www.mzgroup.us</pre></body></html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
