[ ]
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
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[x]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2012
OR
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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[ ]
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
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Title of each class
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Name of each exchange on which registered
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None
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None
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*Not for trading, but only in connection with the listing on the NASDAQ Global Market of American Depository Shares each representing 5 ordinary shares pursuant to the requirements of the Securities and Exchange Commission
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[ ] Yes | [x] No |
[ ] Yes | [x] No |
[x] Yes | [ ] No |
[x] Yes | [ ] No |
Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [x] |
·
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“we,” “us,” “our company,” “the company,” “our”, refer to China Finance Online Co. Limited, or CFO Hong Kong and its subsidiaries, and, in the context of describing our operations include consolidated affiliates in China, Hong Kong or British Virgin Islands;
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·
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“shares” and “ordinary shares” refer to our ordinary shares, “preferred shares” refers to our preferred shares, all of which were converted into our ordinary shares upon the completion of our initial public offering on October 20, 2004. “ADSs” refers to our American depositary shares, each of which represents five ordinary shares, and “ADRs” refers to the American depositary receipts which evidence our ADSs;
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“China” or “PRC” refers to the People’s Republic of China, and solely for the purpose of this annual report, excluding Taiwan, Hong Kong and Macau;
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“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
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“U.S. GAAP” refers to generally accepted accounting principles in the United States; and
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·
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all references to “Renminbi,” “RMB” or “yuan” are to the legal currency of China, all references to “U.S. dollars,” “dollars,” “$” or “US$” are to the legal currency of the United States and all references to “Hong Kong dollars” or “HK$” are to the legal currency of Hong Kong. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.
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·
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our goals and new strategies, including how we effect our goals and new strategies;
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·
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our future business developments, business prospects, financial condition and results of operations;
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our future pricing strategies or policies;
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our plans to expand our service offerings and upgrade our business strategies;
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·
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our plans to use acquisitions and investments as part of our corporate strategy;
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·
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our strategic transformation initiative;
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·
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cost-cutting initiatives and their effect on efficiency and operational performance;
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·
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competition in the PRC financial data and information services industry, securities investment advisory and wealth management services industry;
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·
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the market prospect of the online financial data and information services market;
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the market prospect of the securities investment advisory and wealth management services markets;
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the market prospect and competition in other business areas that we have expanded or ventured into, including without limitation, futures brokerage business;
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·
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performance of China’s securities markets, Hong Kong’s securities markets and global financial markets;
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·
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global macroeconomic uncertainties;
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·
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wavering investor confidence that could impact our business;
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·
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our ability to retain key personnel and attract new talents;
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·
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possible non-cash goodwill, intangible assets and investment impairment may adversely affect our net income;
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·
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PRC and Hong Kong governmental policies relating to taxes and how they will impact our business;
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·
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PRC governmental policies relating to the Internet and Internet content providers;
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·
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PRC governmental policies relating to securities investment advisory companies to provide advisory services on securities and related products;
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·
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PRC governmental policies relating to wealth management services;
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·
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PRC governmental policies relating to the distribution of content, especially the distribution of financial content over the Internet; and
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PRC governmental policies relating to mobile value-added services.
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(in thousands of U.S. dollars, except per share or per ADS data)
|
2008
|
2009
|
2010
|
2011
|
2012
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|||||||||||||||
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For the year ended December 31,
|
|||||||||||||||||||
Consolidated statement of comprehensive income (loss) data:
|
|
|
||||||||||||||||||
Net revenues
|
$ | 56,243 | $ | 53,606 | $ | 59,716 | $ | 53,008 | $ | 29,599 | ||||||||||
Cost of revenues
|
(9,367 | ) | (8,147 | ) | (8,497 | ) | (8,771 | ) | (8,090 | ) | ||||||||||
Gross profit
|
46,876 | 45,459 | 51,219 | 44,237 | 21,509 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
General and administrative
|
(15,371 | ) | (16,982 | ) | (13,208 | ) | (11,228 | ) | (11,387 | ) | ||||||||||
Product development
|
(5,635 | ) | (10,754 | ) | (13,028 | ) | (13,314 | ) | (10,736 | ) | ||||||||||
Sales and marketing
|
(13,521 | ) | (26,095 | ) | (26,991 | ) | (21,337 | ) | (13,072 | ) | ||||||||||
Loss from impairment of intangible assets
|
- | - | - | (4,078 | ) | - | ||||||||||||||
Loss from impairment of goodwill
|
- | - | - | (13,463 | ) | - | ||||||||||||||
Total operating expenses
|
(34,527 | ) | (53,831 | ) | (53,227 | ) | (63,420 | ) | (35,195 | ) | ||||||||||
Government subsidies
|
437 | 567 | 514 | 265 | 76 | |||||||||||||||
Income (loss) from operations
|
12,786 | (7,805 | ) | (1,494 | ) | (18,918 | ) | (13,609 | ) | |||||||||||
Interest income
|
1,609 | 1,352 | 1,590 | 2,745 | 3,178 | |||||||||||||||
Interest expense
|
- | - | (142 | ) | (248 | ) | (518 | ) | ||||||||||||
Exchange gain, net
|
1,489 | 2 | 813 | 1,350 | 72 | |||||||||||||||
Short-term investments income
|
- | 41 | 1,138 | 1,032 | 435 | |||||||||||||||
Other expense, net
|
(169 | ) | (258 | ) | (7 | ) | (7 | ) | (634 | ) | ||||||||||
Loss from impairment of cost method investment
|
- | - | - | (1,480 | ) | - | ||||||||||||||
Income (loss) before income tax benefit (expense)
|
15,715 | (6,668 | ) | 1,898 | (15,526 | ) | (11,076 | ) | ||||||||||||
Income tax benefit (expense)
|
3,047 | 446 | (264 | ) | (3,938 | ) | (884 | ) | ||||||||||||
Purchased pre-acquisition earning
|
227 | - | - | - | - | |||||||||||||||
Net income (loss)
|
18,989 | (6,222 | ) | 1,634 | (19,464 | ) | (11,960 | ) | ||||||||||||
Less: net (loss) attributable to the noncontrolling interests
|
(31 | ) | (2 | ) | (326 | ) | (137 | ) | (105 | ) | ||||||||||
Net income (loss) attributable to China Finance Online Co. Limited
|
$ | 19,020 | $ | (6,220 | ) | $ | 1,960 | $ | (19,327 | ) | (11,855 | ) | ||||||||
Net income (loss) per share attributable to China Finance Online Co. Limited
|
||||||||||||||||||||
-basic
|
$ | 0.19 | $ | (0.06 | ) | $ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | |||||||
-diluted
|
$ | 0.17 | $ | (0.06 | ) | $ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | |||||||
Net income (loss) per ADS equivalent attributable to China Finance Online Co. Limited
|
||||||||||||||||||||
-basic(1)
|
$ | 0.96 | $ | (0.30 | ) | $ | 0.09 | $ | (0.89 | ) | $ | (0.54 | ) | |||||||
-diluted(1)
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$ | 0.84 | $ | (0.30 | ) | $ | 0.09 | $ | (0.89 | ) | $ | (0.54 | ) |
|
As of December 31,
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|||||||||||||||||||
(in thousands of U.S. dollars)
|
2008
|
2009
|
2010
|
2011
|
2012
|
|||||||||||||||
|
|
|
||||||||||||||||||
Consolidated balance sheet data:
|
|
|||||||||||||||||||
Cash and cash equivalents
|
$ | 97,544 | $ | 107,391 | $ | 106,773 | $ | 64,641 | $ | 40,906 | ||||||||||
Current working capital(2)
|
78,226 | 81,255 | 90,146 | 90,098 | 70,360 | |||||||||||||||
Total assets
|
141,823 | 165,609 | 180,091 | 159,977 | 121,371 | |||||||||||||||
Short-term loan | - | - | 6,424 | 19,171 | 13,546 | |||||||||||||||
Deferred revenue, current
|
28,202 | 30,620 | 32,995 | 17,287 | 7,551 | |||||||||||||||
Total current liabilities
|
35,472 | 52,401 | 60,259 | 61,903 | 36,331 | |||||||||||||||
Deferred revenue, non-current
|
8,786 | 14,547 | 13,022 | 7,237 | 3,155 | |||||||||||||||
Total China Finance Online Co. limited shareholders’ equity
|
96,942 | 97,407 | 105,900 | 90,941 | 79,965 |
(1)
|
Each ADS represents five ordinary shares.
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(2)
|
Current working capital is the difference between total current assets and total current liabilities.
|
Average(1)
|
High
|
Low
|
Period-end
|
|||||||||||||
|
|
(RMB per U.S.$1.00)
|
|
|||||||||||||
December 31, 2008
|
6.9193
|
7.2946
|
6.7800
|
6.8225
|
||||||||||||
December 31, 2009
|
6.8314
|
6.8399
|
6.8201
|
6.8282
|
||||||||||||
December 31, 2010
|
6.7668
|
6.8284
|
6.6227
|
6.6227
|
||||||||||||
December 31, 2011
|
6.4445
|
6.6349
|
6.3009
|
6.3009
|
||||||||||||
December 31, 2012
|
6.3085
|
6.3495
|
6.2670
|
6.2855
|
||||||||||||
Most recent six months:
|
||||||||||||||||
October 2012
|
6.3144
|
6.3449
|
6.2992
|
6.3002
|
||||||||||||
November 2012
|
6.2953
|
6.3082
|
6.2852
|
6.2892
|
||||||||||||
December 2012
|
6.2910
|
6.2949
|
6.2855
|
6.2855
|
||||||||||||
January 2013
|
6.2787
|
6.2897
|
6.2691
|
6.2795
|
||||||||||||
February 2013
|
6.2842
|
6.2898
|
6.2779
|
6.2779
|
||||||||||||
March 2013
|
6.2743
|
6.2822
|
6.2689
|
6.2689
|
||||||||||||
April 2013(through 16th)
|
6.2565
|
6.2674
|
6.2408
|
6.2408
|
(1)
|
Annual averages are calculated using the average of month-end rates of the relevant year. Monthly averages are calculated using the average of the daily rates during the relevant period.
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·
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we may not identify suitable candidates and successfully complete acquisition and investment transactions, and may not be able to manage post-closing issues such as the integration of acquired businesses, products or employees;
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·
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we may not fully realize all of the anticipated benefits of any acquisition and investment transaction;
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·
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the pricing and other terms of contracts for acquisition and investment transactions require us to make estimates and assumptions at the time we enter into these contracts, so that we may pay more than it is worth;
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we may not identify all of the problems during the course of our due diligence, such as factors necessary to estimate our costs accurately, and issues with unlicensed use of intellectual property;
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·
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any increased or unexpected costs, unanticipated delays or failure to meet contractual obligations, and failure of investments to perform as expected, could make these transactions less profitable or unprofitable;
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·
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if we fail to successfully complete acquisitions that further our strategic objectives, we may be required to expend resources to develop products and technology internally, and we may be at a competitive disadvantage or we may be adversely affected by negative market perceptions;
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·
|
our ongoing business may be disrupted and our management’s attention may be diverted by transition or integration issues;
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·
|
we may have legal and tax exposures or lose anticipated tax benefits as a result of unforeseen difficulties in our legal entity integration activities;
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·
|
we may face contingencies related to intellectual property, financial disclosures and accounting practices or internal controls;
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·
|
when goodwill, intangible assets and investments, in connection with potential acquisition and investment transactions become impaired, we may be required to incur additional material charges relating to the impairment of those assets;
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·
|
we may incur additional amortization expense over the useful lives of certain intangible assets acquired in connection with acquisitions;
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·
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any acquisition and investment transactions may require a significant amount of capital investment, which would decrease the amount of cash available for working capital or capital expenditures;
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we may issue common stock, potentially creating dilution for existing stockholders to complete acquisition and investment transactions;
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·
|
we may borrow to finance these transactions, the amount and terms of which as well as other factors could affect our liquidity and financial condition, and debt instruments may contain restrictive covenants that could, among other things, restrict us from distributing dividends;
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·
|
we may experience risks relating to the challenges and costs of closing acquisition and investment transactions and the risk that an announced acquisition and investment transaction may not close.
|
(a)
|
Earnings of our PRC subsidiaries that we directly own and operate inside the PRC are transferred to us by means of dividend payments. The amount of dividends paid to us by our directly owned PRC subsidiaries depends mainly on the service fees paid to them from our consolidated affiliated entities.
|
(b)
|
Earnings of our PRC subsidiaries that we indirectly hold through an intermediary Hong Kong or British Virgin Islands company are transferred to us by means of dividend payments via such intermediary company. The transfer of dividend payments from such intermediary company to us is not subject to PRC taxation or other regulatory restrictions.
|
(c)
|
Earnings of the VIEs, which we exert control via VIE contracts including without limitation exclusive technology consulting and management service agreement, exclusive purchase right agreement, power of attorney and pledge agreement, are first transferred in full (pre-tax) to our wholly foreign owned enterprise via such contractual arrangements.
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·
|
Our articles of association provide for a staggered board, which means that certain number of our directors, not exceeding the half of the remaining directors after excluding our chief executive officer, are retired at every annual general meeting and the vacancies created by the retirement stand for election. Our chief executive officer will at all times serve as a director, and will not retire as a director, so long as he remains our chief executive officer. This means that, with our staggered board, at least two annual shareholders’ meetings, instead of one, are generally required in order to effect a change in a majority of our directors, making it more difficult for any potential acquirer to take control of our board in a relatively short period of time, which may discourage proxy contests for the election of our directors and purchases of substantial blocks of our shares.
|
·
|
Hong Kong law permits shareholders of a company to remove directors by a shareholders’ resolution. Our articles of association require any shareholder who wishes to remove a director by resolutions to give us at least 120 days’ advanced of the same, making it more difficult and time consuming for a potential acquirer who has accumulated a substantial voting position to obtain control of our board by removing opposing directors.
|
·
|
Our articles of association provide that our board can have no less than five and no more than nine directors. Our board currently has five directors as of the date of this report. Any increase in the maximum number of directors on our board beyond nine directors can only be accomplished by amending our articles of association, which under Hong Kong law requires a shareholders’ supermajority vote of 75% and at least 21 days’ notice. These restrictions can make it more difficult for a potential acquirer who has accumulated a majority of our shares to take control of us by promptly increasing the size of our board and appointing new directors that are its nominees.
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·
|
Hong Kong does not have merger laws that permit Hong Kong companies to merge in the same way as U.S. companies could in the United States. However, the Hong Kong Companies Ordinance has provisions that facilitate arrangements for the reconstruction and amalgamation of companies. The arrangement must be approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, representing three-fourths in value of each such class of shareholders or creditors that are present and voting either in person or by proxy at meetings convened by the High Court of Hong Kong. The arrangements must be sanctioned by the High Court of Hong Kong after shareholders or creditors approve it at the court-convened meeting.
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·
|
Our shareholders have authorized our board of directors, without any further action by shareholders, to issue additional shares. Under Hong Kong law, the authority granted by our shareholders will remain valid until the conclusion of our next annual general meeting, or the time when our next annual general meeting is required to be held. For as long as this approval remains effective, or is renewed, our board of directors will have the power to issue additional ordinary shares (including ordinary shares represented by ADSs) and preference shares without any further action by shareholders.
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·
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attract visitors and market our service offerings. The pool of registered users that are attracted by the two finance portals for information and free services forms a natural target for our brokerage services and securities investment advisory services with wealth management services to be added over time;
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·
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store content and serve as an integral part of our information platform;
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·
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serve as download platforms for our service offerings; and
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·
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display online advertisements.
|
a.
|
Our Securities Investment Advisory and over time Wealth Management Services
|
b.
|
Our Securities Analysis Software Business
|
·
|
Categorized macro information
. This feature allows subscribers to search and sort up-to-date and comprehensive news and information relating to the broader financial markets or a specific financial topic or industry sector. We have a dedicated team of professional editors who collect, organize, categorize and index macro-economic and financial market information on a daily basis, according to user feedback and classification methods that we believe are accepted practice in securities markets in China.
|
·
|
Industry sector analysis
. Many investors in China seek to make securities investment decision based on analyzing listed companies’ financial data published in their financial statements and comparing such data among companies within the same industry sector. We collect and process listed company financial data and information according to classification methods set by relevant PRC regulatory authorities, and allow subscribers to view the relative standings of listed companies in the same industry sector or geographical locations based on commonly used performance parameters, including price-to-earnings ratios and profit margins.
|
·
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Fundamental analysis
. Historical and real-time financial information are important to investors because they provide insight into company fundamentals. This research tool integrates the historical and real-time trading information we maintain in our database, as well as fundamental financial information such as earnings-per-share, shareholding structure, business description and competition and other related data and information. Our subscribers can receive fundamental financial and trading information organized by their specifications and display these results on a graphical interface that is intuitive and easy-to-navigate.
|
·
|
Mutual fund analysis
. Our mutual fund research tool focuses on categorizing information relating to the portfolio holdings of mutual funds. This feature allows subscribers to study the collective effect of large market players on individual stocks. This feature also offers information relating to the performance of individual mutual funds, allowing subscribers to assess the risks and rewards of investing in mutual funds.
|
·
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Technical analysis
. This feature allows investors to perform technical analysis on listed companies. With over 60 commonly used technical indicators and a comprehensive database of historical data and information on China’s listed company stocks, our subscribers can perform extensive chart analysis and pattern recognition on stocks listed on China’s stock exchanges.
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·
|
Securities market data analysis
. This feature provides fast and comprehensive trading data and statistical information on market transactions. With our securities market data service packages developed with Level II quotes licensed from the SSE and SZSE, our subscribers are provided with trading transparency and unique insight into a stock price’s movements, and can make more informed investment decisions.
|
c.
|
Our Advertising Business
|
d.
|
Our Institutional Subscription Business
|
e.
|
Our Hong Kong Securities and Futures Brokerage Business
|
·
|
competition from securities advisory and investment corporations providing securities investment advisory services;
|
·
|
competition from brokerage firms providing securities investment advisory services or futures brokerage services;
|
·
|
competitions from commercial banks; many commercial banks rely on their own wealth management arms and sales force to distribute their products;
|
·
|
competition from brokerage firms, trust companies, mutual fund companies which are also engaged in, or may in the future engage in the distribution of wealth management product and services offerings;
|
·
|
competition from independent wealth management service providers; and
|
·
|
competition in hiring competent securities investment advisory personnel.
|
·
|
Publishers and distributors of traditional media, including print, radio and television as well as radio and television programs and news programs focused on financial news and information;
|
·
|
Internet portals providing information on business, finance and investing;
|
·
|
Financial information web pages offered by websites;
|
·
|
Stock research software vendors, especially those that develop and market stock research software through stock brokerage companies;
|
·
|
Stock brokerage companies, especially stock brokerage companies with online trading capabilities; and
|
·
|
Other companies that provide similar products and services as ours.
|
·
|
MIIT (Ministry of Industry and Information Technology);
|
·
|
CSRC (China Securities Regulatory Commission);
|
·
|
CBRC (China Banking Regulatory Commission);
|
·
|
Ministry of Culture;
|
·
|
General Administration of Press and Publication (National Copyright Administration);
|
·
|
National Development and Reform Commission (NDRC);
|
·
|
SAIC (State Administration of Industry and Commerce);
|
·
|
Ministry of Public Security;
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·
|
Ministry of Commerce; and
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·
|
State Administration of Radio Film and Television
|
•
|
PRC Trust Law (2001) and the Administrative Rules Regarding Trust Company-Sponsored Collective Fund Trust Plans (2007 and amended in 2009) are principal laws and regulations for trust products;
|
•
|
PRC Partnership Enterprise Law (2006), the Notice on Further Standardizing the Development and Record-filing Administration of Equity Investment Enterprises in Pilot Regions (2011) promulgated by the NDRC and a series of local regulations promulgated by provinces and certain cities, including Beijing, Shanghai and Tianjin, to encourage and regulate the development of private equity investment in the applicable region;
|
|
|
Jurisdiction of
|
Legal Ownership
|
|
Name
|
|
Incorporation
|
Interest
|
|
Fortune Software (Beijing) Co., Ltd.
|
|
PRC
|
100%
|
|
China Finance Online (Beijing) Co., Ltd.
|
|
PRC
|
100%
|
|
Beijing Fuhua Innovation Technology Development Co., Ltd. *
|
|
PRC
|
Nil
|
|
Fortune (Beijing) Success Technology Co., Ltd.
|
PRC
|
100%
|
||
Beijing Chuangying Advisory and Investment Co., Ltd.*
|
PRC
|
Nil
|
||
Shanghai Meining Computer Software Co., Ltd.*
|
PRC
|
Nil
|
||
Zhengning Information & Technology (Shanghai) Co., Ltd.
|
PRC
|
100%
|
||
Shanghai Chongzhi Co., Ltd.*
|
PRC
|
Nil
|
||
Fortune (Beijing) Qicheng Technology Co., Ltd.*
|
PRC
|
Nil
|
||
Shanghai Stockstar Securities Advisory and Investment Co., Ltd. *
|
PRC
|
Nil
|
||
Jujin Software (Shenzhen) Co., Ltd.
|
PRC
|
100%
|
||
Shenzhen Genius Information Technology Co., Ltd.
|
PRC
|
100%
|
||
Shenzhen Shangtong Software Co., Ltd.
*
|
PRC
|
Nil
|
||
Shenzhen Newrand Securities Advisory and Investment Co., Ltd.*
|
PRC
|
Nil
|
||
Stockstar Information Technology (Shanghai) Co., Ltd.
|
|
PRC
|
100%
|
|
iSTAR Financial Holdings Limited
|
BVI
|
85%
|
||
iSTAR International Securities Co. Limited
|
Hong Kong
|
85%
|
||
iSTAR International Futures Co. Limited
|
Hong Kong
|
85%
|
||
iSTAR International Wealth Management Co. Limited
|
Hong Kong
|
85%
|
||
iSTAR International Investment Services Co. Limited
|
Hong Kong
|
85%
|
||
iSTAR International Credit Co. Limited
|
Hong Kong
|
85%
|
||
Hong Kong Genius Information Technology Co., Ltd.
|
Hong Kong
|
100%
|
·
|
global macroeconomic uncertainties, as well as the overall performance of China’s economy;
|
·
|
the strategic transition of our core business from providing premium subscription services to developing fee-based securities investment advisory services with wealth management services to be added over time;
|
·
|
performance of China’s securities markets, and user demand for market intelligence on China’s securities markets;
|
·
|
competition in the PRC financial data and information services industry;
|
·
|
PRC governmental policies relating to the security analysis software industry;
|
·
|
possible non-cash goodwill, intangible assets and investment impairment may adversely affect our net income;
|
·
|
contribution of alternative revenue resources such as revenues from online advertising;
|
·
|
seasonality associated with the level of activity of our users and subscribers and the trading activities of China’s securities markets;
|
·
|
tax refund from the PRC tax authorities for value-added-taxes we are required to pay on the sale of subscriptions to our service packages;
|
·
|
other tax incentives we receive from PRC tax authorities resulting from CFO Success, , CFO Qicheng, and Shenzhen Shangtong Software Co., Ltd. (“CFO Shenzhen Shangtong”) being the “Software Enterprises”; CFO Software, Shanghai Meining Computer Software Co., Ltd. (“CFO Meining”) and CFO Genius being the “High and New Technology” companies;
|
·
|
our cost structure, including, in particular, our cost for raw data, bandwidth costs and personnel-related expenses;
|
·
|
the desirability of our service packages relative to other products and offerings available in the market;
|
·
|
our ability to benefit from the acquisition of CFO Stockstar, CFO Genius, iSTAR Securities and the contractual arrangements with CFO Newrand, CFO Fuhua, CFO Chongzhi, CFO Chuangying, and CFO Securities Consulting and other VIEs; and
|
·
|
PRC regulatory policies.
|
·
|
the number of registered user accounts on our websites;
|
·
|
the number of active paying individual subscribers; and
|
·
|
the service packages selected by our subscribers.
|
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Subscription fees
|
$ | 49,518,331 | $ | 43,100,486 | $ | 20,826,995 | ||||||
Advertising revenue
|
7,031,219 | 6,243,748 | 4,848,622 | |||||||||
Brokerage service revenue
|
3,003,246 | 3,539,664 | 3,817,762 | |||||||||
Others
|
163,246 | 124,167 | 106,107 | |||||||||
Total revenue from external customers
|
$ | 59,716,042 | $ | 53,008,065 | $ | 29,599,486 |
·
|
if we enter into additional commercial agreements for purchasing data from new sources or if we obtain different or additional data from existing sources; or
|
·
|
due to rate increases we may experience in the future upon renewal of our existing agreements.
|
·
|
The revenue growth is projected at a compound annual growth rate, or CAGR. The CAGR of the four reporting units are approximately -31.2%, -18.8%, -5.3%, 1.4% and 3.5% for 2012 through 2016for Southern China; -52.1%, 26.6%, 18.6%, 8.5%, 11.5% for 2012 through 2016 for Eastern China; -19.0 %, 10.0%, 23.1%, 15.6% and 10.0% for 2012 through 2016 for Northern China and -4.5%, 9.6%, 9.4%, 9.3% for 2012 through 2015 for Hong Kong, which is within the range of comparable companies at the time of valuation.
|
·
|
In the projection period, the cost of revenues as a percentage of revenues is expected to remain stable.
|
·
|
Operating expenses, including selling expenses, R&D expenses and general and administrative expenses, as a percentage of sales is expected to remain stable.
|
·
|
To maintain normal operations, capital expenditures are estimated to be around 3% of revenue for each of the four reporting units, respectively.
|
·
|
The working capital requirement is estimated based on main accounts turnover days.
|
·
|
A perpetual growth rate after 2016 is assumed to be at 3% per year for each of the four reporting units.
|
For the year ended December 31,
|
||||||||||||||||||||||||
(in thousands of U.S. dollars, except as % of net revenues)
|
2010
|
2011
|
2012
|
|||||||||||||||||||||
Consolidated statement of comprehensive income (loss) data:
|
||||||||||||||||||||||||
Gross revenues
|
$ | 61,408 | 102.8 | % | $ | 54,487 | 102.8 | % | $ | 30,239 | 102.5 | % | ||||||||||||
Business tax
|
(1,692 | ) | (2.8 | ) | (1,479 | ) | (2.8 | ) | (640 | ) | (2.2 | ) | ||||||||||||
Net revenues
|
59,716 | 100.0 | % | 53,008 | 100.0 | % | 29,599 | 100.0 | % | |||||||||||||||
Cost of revenues
|
(8,497 | ) | (14.2 | ) | (8,771 | ) | (16.5 | ) | (8,089 | ) | (27.3 | ) | ||||||||||||
Gross profit
|
51,219 | 85.8 | 44,237 | 83.5 | 21,510 | 72.7 | ||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
General and administrative
|
(13,208 | ) | (22.1 | ) | (11,228 | ) | (21.2 | ) | (11,387 | ) | (38.5 | ) | ||||||||||||
Product development
|
(13,028 | ) | (21.8 | ) | (13,314 | ) | (25.1 | ) | (10,736 | ) | (36.3 | ) | ||||||||||||
Sales and marketing
|
(26,991 | ) | (45.2 | ) | (21,337 | ) | (40.3 | ) | (13,072 | ) | (44.2 | ) | ||||||||||||
Loss from impairment of intangible assets
|
- | - | (4,078 | ) | (7.7 | ) | - | - | ||||||||||||||||
Loss from impairment of goodwill
|
- | - | (13,463 | ) | (25.4 | ) | - | - | ||||||||||||||||
Total operating expenses
|
(53,227 | ) | (89.1 | ) | (63,420 | ) | (119.6 | ) | (35,195 | ) | (118.9 | ) | ||||||||||||
Government subsidies
|
514 | 0.9 | 265 | 0.5 | 76 | 0.3 | ||||||||||||||||||
Loss from operations
|
(1,494 | ) | (2.5 | ) | (18,918 | ) | (35.7 | ) | (13,609 | ) | (46.0 | ) | ||||||||||||
Interest income
|
1,590 | 2.7 | 2,745 | 5.2 | 3,178 | 10.7 | ||||||||||||||||||
Interest expense
|
(142 | ) | (0.2 | ) | (248 | ) | (0.5 | ) | (518 | ) | (1.8 | ) | ||||||||||||
Exchange gain, net
|
813 | 1.4 | 1,350 | 2.5 | 72 | 0.2 | ||||||||||||||||||
Short-term investment income
|
1,138 | 1.9 | 1,032 | 1.9 | 435 | 1.5 | ||||||||||||||||||
Other expense, net
|
(7 | ) | - | (7 | ) | - | (634 | ) | (2.1 | ) | ||||||||||||||
Loss from impairment of cost method investments
|
- | - | (1,480 | ) | (2.8 | ) | - | - | ||||||||||||||||
Income (loss) before income taxes benefit (expense)
|
1,898 | 3.2 | (15,526 | ) | (29.3 | ) | (11,076 | ) | (37.4 | ) | ||||||||||||||
Income tax expense
|
(264 | ) | (0.4 | ) | (3,938 | ) | (7.4 | ) | (884 | ) | (3.0 | ) | ||||||||||||
Net income (loss)
|
1,634 | 2.7 | (19,464 | ) | (36.7 | ) | (11,960 | ) | (40.4 | ) | ||||||||||||||
Less: net loss attributable to noncontrolling interests
|
(326 | ) | (0.5 | ) | (137 | ) | (0.3 | ) | (105 | ) | (0.4 | ) | ||||||||||||
Net income (loss) attributable to China Finance Online Co. Limited
|
$ | 1,960 | 3.3 | % | $ | (19,327 | ) | (36.5 | %) | $ | (11,855 | ) | (40.1 | %) |
For the year ended December 31
|
||||||||||||
(in thousands of U.S. dollars)
|
2010
|
2011
|
2012
|
|||||||||
Net cash provided by (used in) operating activities
|
|
$ |
4,585
|
|
|
$ |
(23,786)
|
|
|
$ |
(29,043)
|
|
Net cash (used in) provided by investing activities
|
|
|
(14,376)
|
|
|
(32,776)
|
|
|
10,959
|
|||
Net cash provided by (used in) financing activities
|
|
|
7,153
|
|
|
12,739
|
|
|
(5,669)
|
|||
Net decrease in cash and cash equivalents
|
|
|
(618)
|
|
|
|
(42,132)
|
|
|
|
(23,735)
|
|
Cash and cash equivalents at beginning of year
|
|
|
107,391
|
|
|
|
106,773
|
|
|
|
64,641
|
|
Cash and cash equivalents at end of year
|
|
$ |
106,773
|
|
|
$ |
64,641
|
|
|
$ |
40,906
|
|
·
|
increase the breadth of our service offerings through the addition of new features and functions to our service packages;
|
·
|
enhance our subscribers’ experience by improving the quality of our research tools and website; and
|
·
|
develop additional research tools, features, content and services specifically targeting the high-end subscribers.
|
Office Premises
|
Data Purchase
|
Total
|
||||||||||
(in U.S. dollars)
|
||||||||||||
Less than 1 year
|
$ | 3,338,206 | $ | 2,796,567 | $ | 6,134,773 | ||||||
1 - 3 years
|
1,587,001 | 374,723 | 1,961,724 | |||||||||
3 - 5 years
|
— | — | — |
Name
|
Age
|
Position
|
||
Zhiwei Zhao
|
|
49
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
Kheng Nam Lee(1)
|
|
65
|
|
Director
|
Rongquan Leng(1) (2)(3)
|
64
|
Director
|
||
Neo Chee Beng (1)(2) (3)
|
52
|
Director
|
||
Jun (Jeff) Wang
|
|
42
|
|
Director and Chief Financial Officer
|
(1)
|
Member, audit committee
|
|
(2)
|
|
Member, compensation committee
|
(3)
|
|
Member, nominations committee
*Mr. Ling Wang, former director, resigned from the company’s Board for personal reasons in May 2012.
** Mr. Kiang Dalaroy, former Chief Strategic Officer, resigned from the company for personal reasons in January 2013.
|
|
Number of
|
|
|
|
|
|||||
|
ordinary Shares to
|
|
|
|
|
|||||
|
be issued upon
|
Exercise price per
|
|
|
|
|||||
|
exercise of options
|
ordinary share
|
Date of grant
|
|
Date of expiration
|
|||||
Zhiwei Zhao
|
400,000 | $ | 1.120 |
November 15, 2005
|
|
November 15, 2015
|
||||
|
400,000 | $ | 1.070 |
July 5, 2006
|
|
July 5, 2016
|
||||
|
800,000 | $ | 0.960 |
January 18, 2007
|
|
January 17, 2017
|
||||
750,000 | $ | 1.426 |
February 22, 2010
|
February 21, 2020
|
||||||
Kheng Nam Lee
|
* | $ | 0.160 |
January 5, 2004
|
|
January 4, 2014
|
||||
|
* | $ | 1.040 |
June 15, 2004
|
|
June 14, 2014
|
||||
|
* | $ | 1.314 |
February 18, 2005
|
|
February 18, 2015
|
||||
|
* | $ | 0.960 |
January 18, 2007
|
|
January 17, 2017
|
||||
* | $ | 1.426 |
February 22, 2010
|
February 21, 2020
|
||||||
Ling Wang
2
|
* | $ | 0.160 |
January 5, 2004
|
|
January 4, 2014
|
||||
|
* | $ | 1.040 |
June 15, 2004
|
|
June 14, 2014
|
||||
|
* | $ | 1.314 |
February 18, 2005
|
|
February 18, 2015
|
||||
|
* | $ | 0.960 |
January 18, 2007
|
|
January 17, 2017
|
||||
* | $ | 1.426 |
February 22, 2010
|
February 21, 2020
|
||||||
Jun (Jeff) Wang
2
|
* | $ | 1.070 |
July 5, 2006
|
|
July 5, 2016
|
||||
|
* | $ | 0.960 |
January 18, 2007
|
|
January 17, 2017
|
||||
* | $ | 1.426 |
February 22, 2010
|
February 21, 2020
|
||||||
Kiang Dalaroy
1
|
* | $ | 1.140 |
February 1, 2011
|
|
January 31, 2021
|
*
|
Upon exercise of all options granted, would beneficially own less than 1% of our outstanding ordinary shares.
|
1
|
Change of Executive Officer: Mr. Kiang Dalaroy resigned as Chief Strategic Officer in January 2013.
|
Name
|
Number
|
Percent
|
Selected Employees
|
|
|
Zhiwei Zhao
|
8,958,493
|
8.08%
|
Jun (Jeff) Wang
|
*
|
*
|
Caogang Li
|
*
|
*
|
All executive officers as a group (3 persons)
|
10,558,493
|
9.52%
|
·
|
recommending to our shareholders, if appropriate, the annual re-appointment of our independent registered public accounting firm and pre-approving all auditing and non-auditing service fees permitted to be performed by the independent registered public accounting firm;
|
·
|
annually reviewing an independent registered public accounting firm’s report describing the independent registered public accounting firm’s internal quality-control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent registered public accounting firm and all relationships between the independent registered public accounting firm and our company;
|
·
|
setting clear hiring policies for employees or former employees of the independent registered public accounting firm;
|
·
|
reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;
|
·
|
reviewing and approving all proposed related-party transactions, as defined in Item 404 of Regulation S-K under the U.S. securities laws;
|
·
|
discussing the annual audited financial statements with management and the independent registered public accounting firm;
|
·
|
discussing with management and the independent registered public accounting firm major issues regarding accounting principles and financial statement presentations; reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments;
|
·
|
reviewing reports prepared by management or the independent registered public accounting firm relating to significant financial reporting issues and judgments;
|
·
|
discussing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;
|
·
|
reviewing with management and the independent registered public accounting firm the effect of regulatory and accounting initiatives, as well as off-balance sheet structures on our financial statements;
|
·
|
discussing policies with respect to risk assessment and risk management;
|
·
|
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;
|
·
|
timely reviewing annual reports from the independent registered public accounting firm regarding all critical accounting policies and practices to be adopted by our company, all alternative treatments of financial information within U.S. GAAP that have been discussed with management and all other material written communications between the independent registered public accounting firm and management;
|
·
|
establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
|
·
|
annually reviewing and reassessing the adequacy of our audit committee charter;
|
·
|
such other matters that are specifically delegated to our audit committee by our board of directors from time to time;
|
·
|
meeting separately, periodically, with management and the independent registered public accounting firm; and
|
·
|
reporting regularly to the full board of directors.
|
·
|
determining and recommending the compensation of our senior management;
|
·
|
reviewing and making recommendations to our board of directors regarding our compensation policies and forms of compensation provided to our directors and officers;
|
·
|
reviewing and determining bonuses for our officers and other employees;
|
·
|
reviewing and determining stock-based compensation for our directors, officers, employees and consultants;
|
·
|
administering our equity incentive plans in accordance with the terms thereof; and
|
·
|
such other matters that are specifically delegated to the compensation committee by our board of directors from time to time.
|
·
|
convening shareholders’ meetings and reporting its work to shareholders at such meetings;
|
·
|
implementing shareholders’ resolutions;
|
·
|
determining our business plans and investment proposals;
|
·
|
formulating our profit distribution plans and loss recovery plans;
|
·
|
determining our debt and finance policies and recommending proposals for the increase or decrease in our share capital and the issuance of debentures;
|
·
|
formulating our major acquisition and disposition plans, and plans for consolidation, division or dissolution;
|
·
|
proposing amendments to our articles of association; and
|
·
|
exercising any other powers conferred at shareholders’ meetings or under our memorandum and articles of association.
|
·
|
each person known to us to own beneficially more than 5% of our ordinary shares; and
|
·
|
each of our directors and executive officers who beneficially own any of our ordinary shares.
|
*
|
|
Upon exercise of all options currently exercisable or vesting within 60 days of December 31, 2012, would beneficially own less than 1% of our ordinary shares.
|
(1)
|
|
Mr. Zhiwei Zhao is considered the beneficial owner of 23, 908,493 ordinary shares of the Company, which consists of (i) 10,558,493 ordinary shares issued by the Company to C&F International Holdings Limited, whose parent company C&F Global Limited is wholly held by Mr. Zhiwei Zhao, on behalf of and exclusively for the benefit of the Company’s employees pursuant to the Company’s 2007 Plan and related Restricted Stock Issuance and Allocation Agreement; All the shares granted to C&F International Holdings Limited that have not been activated and vested by the end of calendar year 2012 will be forfeited to the company; (ii) 11,000,000 ordinary shares from IDG Technology Venture Investment, Inc. as of December 31, 2012 to Grand Continental Holdings Limited, a British Virgin Islands company wholly held by Mr. Zhiwei Zhao, as disclosed in a Schedule 13D/A filed with the SEC on November 14, 2011; and (iii) 2,350,000 ordinary shares considered beneficially owned by Zhiwei Zhao upon exercise of all options exercisable or vesting within 60 days of December 31, 2012.
|
(2)
|
|
Includes 6,723,115 ordinary shares held by IDG Technology Venture Investment, LP. as of December 31, 2012, according to a Schedule 13G/A filed with the SEC dated February 8, 2013. The general partner of IDG Technology Venture Investment, LP is IDG Technology Venture Investments, LLC. Chi Sing Ho
and Quan Zhou are managing members of IDG Technology Venture Investments, LLC, both of whom disclaim beneficial ownership of our shares held by IDG Technology Venture Investments, LLC. The registered address of IDG Technology Venture Investment, LP is One Exeter Plaza, Boston, MA 02109, U.S.A.
|
(3)
|
Includes 4,670,505 ordinary shares held by IDG Technology Venture Investment, Inc. as of December 31, 2012 in the form of 934,101 ADSs, according to a Schedule 13G/A filed with the SEC dated February 8, 2013. IDG Technology Venture Investment, Inc. is a wholly owned by International Data Group, Inc., whose controlling shareholder is Patrick J. McGovern. Patrick J. McGovern is citizen of the United States of America. IDG Technology Venture Investment, Inc. and International Data Group, Inc. are each organized under the laws of the Commonwealth of Massachusetts. The registered address of IDG Technology Venture Investment, Inc. is One Exeter Plaza, Boston, MA 02109, U.S.A.
|
|
(4)
|
|
Includes 7,101,494 ordinary shares held by Vertex Technology Fund (III) Ltd as of December 31, 2012 in the form of 1,420,298 ADSs and 4 ordinary shares, according to a Schedule 13G filed with the SEC dated February 4, 2013. Vertex Management (II) Pte Ltd is the fund manager of Vertex Technology Fund (III) Ltd, and may be deemed to have power to vote and dispose of the shares held of record by Vertex Technology Fund (III) Ltd. Vertex Venture Holdings Ltd, as the sole shareholder of Vertex Technology Fund (III) Ltd, and as the sole shareholder of Vickers Capital Limited, which is the sole shareholder of Vertex Management (II) Pte Ltd, may also be deemed to have the power to vote and dispose of these shares. The address of Vertex Technology Fund (III) Ltd is 250 North Bridge Road, #05-01 Raffles City Tower, Singapore 179101.
|
(5)
|
|
Includes (i) 4,028,156 ordinary shares held by Cast Technology, Inc.; and (ii) 3,127,965 ordinary shares held by Fanasia Capital Limited. Both Cast Technology, Inc. and Fanasia Capital Limited are held 45% and 55% by Jianping Lu and Ling Zhang, respectively.
|
(6)
|
|
Includes (i) 4,923,302 ordinary shares held by Cast Technology, Inc.; and (ii) 3,823,068 ordinary shares held by Fanasia Capital Limited. Both Cast Technology, Inc. and Fanasia Capital Limited are held 45% and 55% by Jianping Lu and Ling Zhang, respectively.
|
(7)
|
Harvest Capital Strategies LLC (“HCS”) acts as the investment adviser of one or more investment partnerships, pooled investment vehicles and/or one or more client accounts that beneficially holds 1,307,642 American Depositary Shares of China Finance Online Co. Limited, representing 6,538,210 ordinary shares according to a Schedule 13G/A filed with the SEC dated January 29, 2013. As investment advisor, HCS has been granted the authority to dispose of and vote the Securities. The investment partnerships, pooled investment vehicles and/or client accounts have the right to receive (or the power to direct the receipt of) dividends received in connection with ownership of the Securities, and the proceeds from the sale of the securities. The registered address is 600 Montgomery Street, Suite 1700 San Francisco, CA 94111, U.S.A.
|
Sales Price
|
||
High
|
Low
|
|
Yearly highs and lows
|
||
Year 2007
|
47.68
|
4.53
|
Year 2008
|
26.15
|
4.72
|
Year 2009
|
13.54
|
6.97
|
Year 2010
|
9.1
|
6.2
|
Year 2011
|
7.27
|
1.43
|
Year 2012
|
2.91
|
1.02
|
Quarterly highs and lows
|
||
First Quarter 2010
|
9.01
|
6.86
|
Second Quarter 2010
|
8.19
|
6.2
|
Third Quarter 2010
|
8.28
|
6.9
|
Fourth Quarter 2010
|
8.59
|
6.53
|
First Quarter 2011
|
7.27
|
4.32
|
Second Quarter 2011
|
6.39
|
2.75
|
Third Quarter 2011
|
3.65
|
1.9
|
Fourth Quarter 2011
|
2.23
|
1.43
|
First Quarter 2012
|
2.91
|
1.56
|
Second Quarter 2012
|
2.62
|
1.18
|
Third Quarter 2012
|
1.68
|
1.02
|
Fourth Quarter 2012
|
1.32
|
1.04
|
First Quarter 2013
|
1.60
|
1.16
|
Monthly highs and lows
|
||
October 2012
|
1.32
|
1.15
|
November 2012
|
1.30
|
1.05
|
December 2012
|
1.25
|
1.04
|
January 2013
|
1.60
|
1.16
|
February 2013
|
1.54
|
1.31
|
March 2013
|
1.45
|
1.31
|
·
|
dealers in securities or currencies;
|
·
|
traders in securities that elect to use a mark-to-market method of accounting for securities holdings;
|
·
|
banks or other financial institutions;
|
·
|
insurance companies;
|
·
|
tax-exempt organizations;
|
·
|
regulated investment companies or real estate investment trusts;
|
·
|
U.S. expatriates;
|
·
|
partnerships and other entities treated as partnerships for U.S. federal income tax purposes or persons holding ADSs through any such entities;
|
·
|
persons that hold ADSs as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment;
|
·
|
U.S. Holders (as defined below) whose functional currency for tax purposes is not the U.S. dollar;
|
·
|
persons liable for alternative minimum tax; or
|
·
|
persons who actually or constructively own 10% or more of the total combined voting power of all classes of our shares (including ADSs) entitled to vote.
|
•
|
a citizen or individual resident of the United States;
|
|||
•
|
a corporation, or other entity taxable as a corporation for U.S. federal income purposes, that was created or organized in or under the laws of the United States or any political subdivision thereof;
|
|||
•
|
an estate the income of which is subject to U.S. federal income tax regardless of its source; or
|
|||
•
|
a trust if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
|
•
|
at least 75% of its gross income is passive income (the “income test”), or
|
||
•
|
at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”).
|
•
|
the excess distribution or gain will be allocated ratably over your holding period for the ADSs or ordinary shares,
|
||
•
|
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income, and
|
||
•
|
the amount allocated to each other taxable year will be subject to the highest tax rate in effect for that taxable year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such taxable year.
|
•
|
that gain is effectively connected with the conduct of a U.S. trade or business and, if an applicable income tax treaty so requires as a condition for you to be subject to U.S. federal income tax with respect to income from your ADSs, such gain is attributable to a permanent establishment that you maintain in the United States; or
|
||
•
|
you are a nonresident alien individual and are present in the United States for at least 183 days in the taxable year of the sale or other disposition and either (1) your gain is attributable to an office or other fixed place of business that you maintain in the United States or (2) you have a tax home in the United States.
|
Category
|
Depositary actions
|
Associated fee
|
||
(a) Depositing or substituting
the underlying shares
|
Each person to whom ADSs are issued against deposits of shares, including deposits and issuances in respect of:
u
Share distributions, stock dividend, stock split, merger
u
Exchange of securities or any other transaction or event affecting the ADSs or the deposited securities
|
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs issued
|
||
(b) Receiving or distributing
dividends
|
Distribution of cash dividends
|
US$0.02 or less per ADS
|
||
(c) Selling or exercising rights
|
Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities
|
Up to US$5.00 for each 100 ADSs (or portion thereof)
|
||
(d) Withdrawing an underlying
security
|
Acceptance of ADRs surrendered for withdrawal of deposited securities
|
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered
|
||
(e) Transferring, splitting or
grouping receipts
|
Transfers of depositary receipts
|
US$1.50 per ADS
|
Category
|
Depositary actions
|
Associated fee
|
||
(f) General depositary
services, particularly those
charged on an annual basis
|
Services performed by the depositary in administering the
ADRs
|
US$0.02 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the depositary by billing ADR Holders or by deducting such charge from one or more cash dividends or other cash distributions
|
||
(g) Expenses of the Depositary
|
Expenses incurred on behalf of ADR Holders in connection with:
•
Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment
•
The depositary’s or its custodian’s compliance with applicable law, rule or regulation
•
Stock transfer or other taxes and other governmental charges
•
Cable, telex and facsimile transmission and delivery charges
•
Fees for the transfer or registration of deposited securities in connection with the deposit or withdrawal of deposited securities
•
Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency)
•
Any other charge payable by depositary or its agents in connection with the servicing of the shares or the deposited securities
|
Expenses payable at the sole discretion of the depositary by billing ADR Holders or by deducting such charges from one or more cash dividends or other cash distributions
|
For the Year Ended December 31,
|
||||||||
2012
|
2011
|
2010
|
||||||
Audit Fees
(1)
|
US$
|
594,000
|
US$
|
799,050
|
US$
|
735,000
|
||
Audit Related Fees
|
-
|
-
|
-
|
|||||
Tax Fees
(2)
|
-
|
-
|
-
|
|||||
All Other Fees
|
-
|
-
|
-
|
Exhibit
Number
|
Description
|
|
1.1
|
Amended and Restated Memorandum and Articles of Association of China Finance Online Co. Limited (incorporated by reference to Exhibit 3.1 from our Registration Statement on Form F-1 (File No. 333-119166) filed with the Securities and Exchange Commission on October 4, 2004)
|
|
2.1
|
Specimen ordinary share certificate (incorporated by reference to Exhibit 4.1 from our Registration Statement on Form F-1 (File No. 333-119166) filed with the Securities and Exchange Commission on September 21, 2004)
|
|
2.2
|
Specimen American depositary receipt of China Finance Online Co. Limited (Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-119530) filed with the Securities and Exchange Commission with respect to American depositary shares representing ordinary shares on October 5, 2004
|
|
4.1
|
2004 Incentive Stock Option Plan and form of option agreement (incorporated by reference to Exhibit 4.1 from our 2006 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 29, 2007)
|
|
4.2
|
Restricted Stock Issuance and Allocation Agreement-2007 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 on Form 6-K (File No. 000-50975) filed with the Securities and Exchange Commission on August 24, 2007)
|
|
4.3
|
Amended Restricted Stock Issuance and Allocation Agreement 2007 Equity Incentive Plan dated May 20, 2009(incorporated by reference to Exhibit 4.3 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 28, 2010)
|
|
4.4
|
*
|
Translation of Form Loan Agreement by and among our wholly owned subsidiary and certain employees of the Company for funding significant VIEs controlled by the Company.
|
4.5
|
*
|
Translation of Form Operation Agreement by and between our wholly owned subsidiary and certain significant VIEs controlled by the Company.
|
4.6
|
*
|
Translation of Form Purchase Option and Cooperation Agreement by and among our wholly owned subsidiary and certain significant VIEs controlled by the Company.
|
4.7
|
*
|
Translation of Form Share Pledge Agreement by and among our wholly owned subsidiary, certain significant VIEs controlled by the Company and certain individual shareholders of the VIEs.
|
4.8
|
*
|
Translation of Form Framework Agreement on Exercising Purchase Option by and among our wholly owned subsidiary, certain significant VIEs controlled by the Company and certain individual shareholders of the VIEs.
|
4.9
|
*
|
Translation of Form Strategic Consulting and Service Agreement between our wholly owned subsidiary and certain significant VIEs
|
4.10
|
*
|
Translation of Form Technical Support Agreement between our wholly owned subsidiary and certain significant VIEs
|
4.11
|
Translation of Framework Agreement for Exercise of Purchase Option dated January 1, 2012 among Shaoming Shi, Lin Yang, CFO Shenzhen Shangtong, and CFO Success (filed as Exhibit 4.29 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.12
|
Translation of Framework Agreement for Exercise of Purchase Option dated January 1, 2012 among Linghai Ma, Lin Yang, CFO Shenzhen Shangtong, and CFO Success (filed as Exhibit 4.30 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.13
|
Translation of Purchase Option Agreement dated January 1, 2012 among CFO Success, CFO Shenzhen Shangtong, Lin Yang and Linghai Ma (filed as Exhibit 4.31 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.14
|
Translation of Share Pledge Agreement dated January 1, 2012 among CFO Success, Lin Yang and Linghai Ma (filed as Exhibit 4.32 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.15
|
Translation of Framework Agreement on Exercising Purchase Option dated January 11, 2012 among Lin Yang, CFO Newrand, CFO Fuhua and CFO Software (filed as Exhibit 4.50 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.16
|
Translation of Framework Agreement on Exercising Purchase Option dated January 11, 2012 among Linghai Ma, CFO Newrand, CFO Success, CFO Fuhua and CFO Software (filed as Exhibit 4.51 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.17
|
Translation of Purchase Option Agreement dated January 11, 2012 among CFO Software, CFO Newrand and Lin Yang (filed as Exhibit 4.52 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.18
|
Translation of Purchase Option Agreement dated January 11, 2012 among CFO Software, CFO Newrand and Linghai Ma (filed as Exhibit 4.53 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.19
|
Translation of Labor Contract of Zhao Zhiwei dated June 21, 2010 (incorporated by reference to Exhibit 4.103 from our 2010 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 31, 2011)
|
|
4.20
|
Translation of Labor Contract of Jeff Wang dated May 24, 2011(incorporated by reference to Exhibit 4.104 from our 2010 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 31, 2011)
|
|
4.21
|
Translation of Shenzhen Stock Exchange Proprietary Information License Agreement dated March, 2012 between CFO Fuhua and Shenzhen Securities Information Co., Ltd. (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.; filed as Exhibit 4.61 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
4.22
|
Translation of Securities Information License Contract dated December 26, 2011 between SSE Infonet Ltd. and CFO Fuhua (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission., which request is pending; filed as Exhibit 4.62 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.23
|
Market Data Vendor Licence Agreement dated March 31, 2011 between HKEx Information Services Limited and CFO Software (filed as Exhibit 4.63 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 30, 2012, and incorporated herein by reference)
|
|
4.24
|
Translation of China Financial Futures Exchange Futures Information License Agreement dated April 8, 2009 between CFO Software and China Financial Futures Exchange (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.) (incorporated by reference to Exhibit 4.75 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 28, 2010); Supplemental Agreement dated April 16, 2011 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.) (incorporated by reference to Exhibit 4.78 from our 2010 Annual Report on Form 20-F (File No.000-50975) filed with the Securities and Exchange Commission on May 31, 2011)
|
|
4.25
|
*
|
Translation of Agreement for Supply of Real-time Hang Seng Family of Indexes by and between the Company and Hang Seng Indexes Company Limited dated February 27, 2009 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
4.26
|
*
|
Translation of Agreement for Supply of Real-time Hang Seng Family of Indexes by and between CFO Fuhua and Hang Seng Indexes Company Limited dated December 11, 2012 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
4.27
|
*
|
Renewal of Shanghai Stock Exchange Securities Information Operation License Agreement by and between CFO Fuhua and Shanghai Stock Exchange Information Network Co., Ltd. dated December 25, 2012 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
4.28
|
*
|
Renewal of Shenzhen Stock Exchange Proprietary Information License Agreement by and between CFO Fuhua and Shenzhen Securities Information Network Co., Ltd. dated March 15, 2013 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
4.29
|
*
|
Renewal of Shenzhen Stock Exchange Proprietary Information License Agreement by and between CFO Meining and Shenzhen Securities Information Network Co., Ltd. dated March 1, 2013 (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
4.30
|
*
|
English Summary of the real estate investment contract and the shareholder agreement by and among CFO Yingchuang, Langfang Shengshi Real Estate Development Co., Ltd. and its original shareholders dated March 19, 2013. (Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 83 (17 C.F.R. Section 200.83). The omitted materials have been filed separately with the Securities and Exchange Commission.)
|
8.1
|
*
|
List of principle subsidiaries and significant PRC-incorporated affiliates
|
12.1
|
*
|
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
12.2
|
*
|
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
13.1
|
*
|
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
13.2
|
*
|
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
15.1
|
*
|
Consent of Grant Thornton China
|
15.2
|
*
|
Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP
|
15.3
|
*
|
Written Consent of American Appraisal China Limited
|
15.4 | * | DTTC's Letter to the SEC Regarding Item 16F of 2012 Form 20-F |
Date: April 29, 2013
|
CHINA FINANCE ONLINE CO. LIMITED
|
|
|
|
/s/ Jeff Wang
|
|
|
|
Name:
|
Jeff Wang
|
|
|
Title:
|
Chief Financial Officer
|
|
|
CONTENTS
|
PAGE
|
December 31,
|
||||||||
2011 | 2012 | |||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 64,641,092 | $ | 40,905,996 | ||||
Restricted cash
|
29,861,162 | 28,874,284 | ||||||
Prepaid expenses and other current assets
|
3,578,672 | 2,780,347 | ||||||
Advances to employees
|
- | 1,056,423 | ||||||
Trust bank balances held on behalf of customers
|
18,663,564 | 8,811,691 | ||||||
Accounts receivable - margin clients, net of allowance for doubtful accounts
|
||||||||
of nil and nil in 2011 and 2012, respectively
|
12,888,630 | 15,054,331 | ||||||
Accounts receivable - others, net of allowance for doubtful accounts
|
||||||||
of $129,439 and $41,893 in 2011 and 2012, respectively
|
1,467,851 | 4,970,427 | ||||||
Loan receivable
|
9,565,503 | 1,205,604 | ||||||
Short-term investments
|
10,700,838 | 2,639,589 | ||||||
Deferred tax assets, current
|
633,678 | 391,625 | ||||||
Total current assets
|
152,000,990 | 106,690,317 | ||||||
Property and equipment, net
|
6,529,819 | 4,914,114 | ||||||
Acquired intangible assets, net
|
- | 4,675,237 | ||||||
Cost method investment
|
- | 802,202 | ||||||
Rental deposits
|
738,297 | 751,627 | ||||||
Goodwill
|
- | 3,049,281 | ||||||
Other assets
|
223,874 | 287,443 | ||||||
Deferred tax assets, non-current
|
483,703 | 200,774 | ||||||
Total assets
|
$ | 159,976,683 | $ | 121,370,995 | ||||
|
|
|||||||
Liabilities and shareholders' equity
|
||||||||
Current liabilities:
|
||||||||
Deferred revenue, current (including deferred revenue, current of the consolidated variable
interest entities without recourse to China Finance Online Co. Limited $7,037,155 and $3,792,852 as of December 31, 2011 and December 31, 2012, respectively)
|
$ | 17,287,260 | $ | 7,551,457 | ||||
Accrued expenses and other current liabilities (including accrued expenses and other
current liabilities of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $3,127,403 and $2,731,088 as of December 31, 2011 and December 31, 2012, respectively)
|
6,457,049 | 5,388,630 | ||||||
Amounts due to customers for the trust bank balances held on their behalf (including
amounts due to customers for the trust bank balances held on their behalf of the consolidated variable interest entities without recourse to China Finance Online Co. Limited nil and nil as of December 31, 2011 and December 31, 2012, respectively)
|
18,663,564 | 8,811,691 | ||||||
Short-term loan (including short-term loan of the consolidated variable interest entities
without recourse to China Finance Online Co. Limited nil and nil as of December 31, 2011 and December 31, 2012, respectively)
|
19,170,891 | 13,546,115 | ||||||
Accounts payable (including accounts payable of the consolidated variable interest
entities without recourse to China Finance Online Co. Limited $114,934 and $140,641 as of December 31, 2011 and December 31, 2012, respectively)
|
144,496 | 804,851 | ||||||
Income taxes payable (including income taxes payable of the consolidated variable
interest entities without recourse to China Finance Online Co. Limited $24,621 and $7,837 as of December 31, 2011 and December 31, 2012, respectively)
|
134,732 | 87,709 | ||||||
Deferred tax liabilities, current (including deferred tax liabilities, current of the consolidated
variable interest entities without recourse to China Finance Online Co. Limited $2,725 and $140,074 as of December 31, 2011 and December 31, 2012, respectively)
|
45,333 | 140,074 | ||||||
|
|
|||||||
Total current liabilities
|
61,903,325 | 36,330,527 | ||||||
|
|
|||||||
Deferred revenue, non-current (including deferred revenue, non-current of the consolidated
variable interest entities without recourse to China Finance Online Co. Limited $3,032,794 and $1,062,318 as of December 31, 2011 and December 31, 2012, respectively)
|
7,237,117 | 3,155,108 | ||||||
Deferred tax liabilities, non-current (including deferred tax liabilities, non-current of the
consolidated variable interest entities without recourse to China Finance Online Co. Limited nil and $1,168,809 as of December 31, 2011 and December 31, 2012, respectively)
|
- | 1,168,809 | ||||||
|
|
|||||||
Total liabilities
|
69,140,442 | 40,654,444 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Commitments and contingencies (Note 21)
|
||||||||
Equity:
|
||||||||
China Finance Online Co. Limited shareholder's equity:
|
||||||||
Ordinary shares ($0.00013 par value; 500,000,000 shares authorized;
110,935,383 and 110,955,383 shares issued and outstanding as of December 31, 2011 and 2012, respectively)
|
14,325 | 14,328 | ||||||
Additional paid-in capital
|
80,446,578 | 81,163,244 | ||||||
Accumulated other comprehensive income
|
10,927,248 | 11,089,820 | ||||||
Retained deficits
|
(447,002 | ) | (12,302,209 | ) | ||||
Total China Finance Online Co. Limited shareholders' equity
|
90,941,149 | 79,965,183 | ||||||
Noncontrolling interest
|
(104,908 | ) | 751,368 | |||||
Total equity
|
90,836,241 | 80,716,551 | ||||||
Total liabilities and equity
|
$ | 159,976,683 | $ | 121,370,995 |
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net revenues
|
$ | 59,716,042 | $ | 53,008,065 | $ | 29,599,486 | ||||||
Cost of revenues
|
8,497,145 | 8,770,617 | 8,089,394 | |||||||||
Gross profit
|
51,218,897 | 44,237,448 | 21,510,092 | |||||||||
Operating expenses:
|
||||||||||||
General and administrative (including share-based
compensation of $4,152,437, $1,326,174 and $765,937
for 2010, 2011 and 2012, respectively)
|
13,208,337 | 11,227,632 | 11,387,381 | |||||||||
Product development (including share-based compensation of
$151,255, $99,239 and $12,017 for 2010, 2011 and 2012, respectively)
|
13,027,879 | 13,313,635 | 10,735,570 | |||||||||
Sales and marketing (including share-based compensation of $215,979,
$113,389 and $24,771 for 2010, 2011 and 2012, respectively)
|
26,991,093 | 21,337,799 | 13,072,017 | |||||||||
Loss from impairment of intangible assets
|
- | 4,078,084 | - | |||||||||
Loss from impairment of goodwill
|
- | 13,463,224 | - | |||||||||
Total operating expenses
|
53,227,309 | 63,420,374 | 35,194,968 | |||||||||
Government subsidies
|
514,113 | 265,016 | 75,883 | |||||||||
Loss from operations
|
(1,494,299 | ) | (18,917,910 | ) | (13,608,993 | ) | ||||||
Interest income
|
1,590,218 | 2,744,665 | 3,177,544 | |||||||||
Interest expense
|
(142,169 | ) | (247,818 | ) | (517,620 | ) | ||||||
Exchange gain, net
|
812,969 | 1,349,924 | 71,516 | |||||||||
Short-term investment income
|
1,138,147 | 1,032,444 | 435,105 | |||||||||
Other expense, net
|
(7,321 | ) | (7,256 | ) | (633,981 | ) | ||||||
Loss from impairment of cost method investment
|
- | (1,479,571 | ) | - | ||||||||
Income (loss) before income tax expense
|
1,897,545 | (15,525,522 | ) | (11,076,429 | ) | |||||||
Income tax expense
|
(263,386 | ) | (3,938,433 | ) | (883,718 | ) | ||||||
Net income (loss)
|
$ | 1,634,159 | $ | (19,463,955 | ) | $ | (11,960,147 | ) | ||||
Less: net loss attributable to the noncontrolling interest
|
(325,963 | ) | (137,046 | ) | (104,940 | ) | ||||||
Net income (loss) attributable to China Finance Online Co. Limited
|
$ | 1,960,122 | $ | (19,326,909 | ) | $ | (11,855,207 | ) | ||||
Net income (loss) per share attributable to China Finance Online Co. Limited
|
||||||||||||
Basic
|
$ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | ||||
Diluted
|
$ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | ||||
Weighted average shares used in calculating net income (loss) per share
|
||||||||||||
Basic
|
108,247,552 | 108,961,642 | 108,983,249 | |||||||||
Diluted
|
114,125,022 | 108,961,642 | 108,983,249 | |||||||||
Other comprehensive income, net of tax:
|
||||||||||||
Changes in foreign currency translation adjustment
|
$ | 1,688,217 | $ | 2,928,723 | $ | 130,115 | ||||||
Net unrealized loss on available-for-sale securities,
net of tax effects of nil, ($5,728) and $5,728
for 2010, 2011 and 2012, respectively
|
- | (32,457 | ) | (13,110 | ) | |||||||
Reclassification adjustment of available-for-sale securities,
net of tax effects of nil, nil, and nil
for 2010, 2011 and 2012, respectively
|
- | - | 45,567 | |||||||||
Other comprehensive income, net of tax
|
1,688,217 | 2,896,266 | 162,572 | |||||||||
Comprehensive income (loss)
|
3,322,376 | (16,567,689 | ) | (11,797,575 | ) | |||||||
Less: comprehensive loss attributable to the noncontrolling interest
|
(325,963 | ) | (137,046 | ) | (104,940 | ) | ||||||
Comprehensive income (loss)
attributable to China Finance Online Co. Limited
|
$ | 3,648,339 | $ | (16,430,643 | ) | $ | (11,692,635 | ) |
Accumulated
other
|
Total China Finance
|
Non
|
||||||||||||||||||||||||||||||
Ordinary shares
|
Additional | comprehensive | Retained | Online Co. Limited | controlling | Total | ||||||||||||||||||||||||||
Shares
|
Amount
|
paid-in capital
|
income (loss)
|
earnings
|
shareholders' equity
|
interest
|
equity
|
|||||||||||||||||||||||||
Balance as of January 1, 2010
|
110,250,163 | $ | 14,237 | $ | 74,130,609 | $ | 6,342,765 | $ | 16,919,785 | $ | 97,407,396 | $ | 259,529 | $ | 97,666,925 | |||||||||||||||||
Exercise of share options by employees
|
637,720 | 82 | 717,175 | - | - | 717,257 | - | 717,257 | ||||||||||||||||||||||||
Share-based compensation
|
- | - | 4,504,806 | - | - | 4,504,806 | 14,865 | 4,519,671 | ||||||||||||||||||||||||
Acquisition of noncontrolling interest
of CFO Securities Consulting
|
- | - | (377,893 | ) | - | - | (377,893 | ) | (5,233 | ) | (383,126 | ) | ||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 1,688,217 | - | 1,688,217 | - | 1,688,217 | ||||||||||||||||||||||||
Net income (loss)
|
- | - | - | - | 1,960,122 | 1,960,122 | (325,963 | ) | 1,634,159 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of December 31, 2010
|
110,887,883 | 14,319 | 78,974,697 | 8,030,982 | 18,879,907 | 105,899,905 | (56,802 | ) | 105,843,103 | |||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Exercise of share options by employees
|
47,500 | 6 | 22,019 | - | - | 22,025 | - | 22,025 | ||||||||||||||||||||||||
Share-based compensation
|
- | - | 1,449,862 | - | - | 1,449,862 | 88,940 | 1,538,802 | ||||||||||||||||||||||||
Net unrealized losses on available-for-sale
securities, net of tax effects of $(5,728)
|
- | - | - | (32,457 | ) | - | (32,457 | ) | - | (32,457 | ) | |||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 2,928,723 | - | 2,928,723 | - | 2,928,723 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | (19,326,909 | ) | (19,326,909 | ) | (137,046 | ) | (19,463,955 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of December 31, 2011
|
110,935,383 | 14,325 | 80,446,578 | 10,927,248 | (447,002 | ) | 90,941,149 | (104,908 | ) | 90,836,241 | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Exercise of share options by employees
|
20,000 | 3 | 3,197 | - | - | 3,200 | - | 3,200 | ||||||||||||||||||||||||
Share-based compensation
|
- | - | 713,469 | - | - | 713,469 | 89,256 | 802,725 | ||||||||||||||||||||||||
Acquisition of CFO East Win
|
- | - | - | - | - | - | 871,960 | 871,960 | ||||||||||||||||||||||||
Net unrealized losses on available-for-sale
securities, net of tax effects of $5,728
|
- | - | - |
(13,110
|
) | - |
(13,110
|
) | - |
(13,110
|
) | |||||||||||||||||||||
Reclassification adjustment of available-for-sale
securities,
net of tax effects of nil
|
- | - | - |
45,567
|
- |
45,567
|
- | 45,567 | ||||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 130,115 | - | 130,115 | - | 130,115 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | (11,855,207 | ) | (11,855,207 | ) | (104,940 | ) | (11,960,147 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Balance as of December 31, 2012
|
110,955,383 | $ | 14,328 | $ | 81,163,244 | $ | 11,089,820 | $ | (12,302,209 | ) | $ | 79,965,183 | $ | 751,368 | $ | 80,716,551 |
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Operating activities:
|
||||||||||||
Net income (loss)
|
$ | 1,634,159 | $ | (19,463,955 | ) | $ | (11,960,147 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
||||||||||||
Share-based compensation
|
4,519,671 | 1,538,802 | 802,725 | |||||||||
Depreciation and amortization
|
3,610,026 | 3,481,973 | 3,062,461 | |||||||||
Provision of allowance for doubtful accounts
|
238,077 | 93,400 | 1,203 | |||||||||
Gain from short term investments
|
(1,138,147 | ) | (1,032,444 | ) | (435,105 | ) | ||||||
Deferred taxes
|
(99,475 | ) | 3,276,319 | 568,521 | ||||||||
Loss on disposal of property and equipment
|
53,547 | 30,702 | 237,154 | |||||||||
Loss from impairment of cost method investment
|
- | 1,479,571 | - | |||||||||
Loss from impairment of intangible assets
|
- | 4,078,084 | - | |||||||||
Loss from impairment of goodwill
|
- | 13,463,224 | - | |||||||||
Changes in assets and liabilities:
|
||||||||||||
Accounts receivable, others
|
(971,341 | ) | 2,156,795 | (3,495,881 | ) | |||||||
Accounts receivable, margin clients
|
(5,390,473 | ) | (4,773,915 | ) | (2,129,273 | ) | ||||||
Prepaid expenses and other current assets
|
157,930 | 321,279 | 471,699 | |||||||||
Advances to employees
|
- | - | (1,051,971 | ) | ||||||||
Trust bank balances held on behalf of customers
|
3,642,887 | (9,009,643 | ) | 9,894,410 | ||||||||
Restricted cash
|
- | (468,176 | ) | 468,367 | ||||||||
Rental deposits
|
20,021 | 5,326 | (2,796 | ) | ||||||||
Deferred revenue
|
(540,386 | ) | (23,245,520 | ) | (15,332,999 | ) | ||||||
Account payable
|
108,382 | (135,763 | ) | 516,086 | ||||||||
Accrued expenses and other current liabilities
|
2,355,637 | (4,571,482 | ) | (715,741 | ) | |||||||
Amounts due to customers for the trust bank balance held on their behalf
|
(3,642,887 | ) | 9,009,643 | (9,894,410 | ) | |||||||
Income taxes payable
|
27,067 | (20,662 | ) | (47,235 | ) | |||||||
|
|
|||||||||||
Net cash provided by (used in) operating activities
|
4,584,695 | (23,786,442 | ) | (29,042,932 | ) | |||||||
|
|
|
||||||||||
Investing activities:
|
||||||||||||
Purchase of property and equipment
|
(906,296 | ) | (726,468 | ) | (775,437 | ) | ||||||
Purchase of intangible asset
|
- | - | (2,063,361 | ) | ||||||||
Acquisition of businesses (net of cash acquired of nil, nil and $14,073
for the years ended December 31, 2010, 2011 and 2012, respectively)
|
(89,335 | ) | - | (2,834,434 | ) | |||||||
Consideration paid for acquiring noncontrolling interest of CFO Securities
Consulting
|
(383,126 | ) | - | - | ||||||||
Purchase of term deposits
|
- | (19,712,865 | ) | - | ||||||||
Proceeds from maturity of term deposits
|
- | 19,903,236 | - | |||||||||
Purchase of short-term investments
|
(5,616,027 | ) | (40,732,106 | ) | (28,277,746 | ) | ||||||
Proceeds from sales of short-term investments
|
6,830,374 | 31,562,160 | 36,767,023 | |||||||||
Acquisition of cost method investment
|
- | - | (802,202 | ) | ||||||||
Restricted cash
|
(14,216,294 | ) | (13,511,584 | ) | 542,818 | |||||||
Loan receivable
|
- | (9,559,001 | ) | 8,379,638 | ||||||||
Proceeds from disposal of fixed assets
|
4,936 | 632 | 24,556 | |||||||||
|
|
|
||||||||||
Net cash (used in) provided by investing activities
|
(14,375,768 | ) | (32,775,996 | ) | 10,960,855 | |||||||
|
|
|
||||||||||
Financing activities:
|
||||||||||||
Proceeds from stock options exercised by employees
|
717,257 | 22,025 | 3,200 | |||||||||
Proceeds from short-term loan
|
6,435,586 | 12,716,763 | - | |||||||||
Repayment of short-term loan
|
- | - | (5,672,004 | ) | ||||||||
|
|
|
||||||||||
Net cash provided by (used in) financing activities
|
7,152,843 | 12,738,788 | (5,668,804 | ) | ||||||||
|
|
|
||||||||||
Effect of exchange rate changes
|
2,020,624 | 1,691,264 | 15,785 | |||||||||
|
|
|
||||||||||
Net decrease in cash and cash equivalents
|
(617,606 | ) | (42,132,386 | ) | (23,735,096 | ) | ||||||
Cash and cash equivalents, beginning of year
|
107,391,084 | 106,773,478 | 64,641,092 | |||||||||
|
|
|
||||||||||
Cash and cash equivalents, end of year
|
106,773,478 | 64,641,092 | 40,905,996 | |||||||||
|
|
|
||||||||||
Supplemental disclosure of cash flow information
|
||||||||||||
Income taxes paid
|
$ | 377,970 | $ | 682,776 | $ | 375,107 |
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Company name
|
Place of
incorporation or
|
Date of
incorporation or
|
Legal
ownership
|
Principal
activity
|
Subsidiaries:
|
||||
China Finance Online (Beijing) Co., Ltd. ("CFO Beijing")
|
Beijing, PRC
|
Jul. 9, 1998
|
100%
|
Subscription service
|
Fortune Software (Beijing) Co., Ltd. ("CFO Software")
|
Beijing, PRC
|
Dec. 7, 2004
|
100%
|
Subscription service
|
Fortune (Beijing) Success Technology Co., Ltd. ("CFO Success")
|
Beijing, PRC
|
Oct. 16, 2007
|
100%
|
Subscription service
|
Jujin Software (Shenzhen) Co., Ltd. ("CFO Jujin")
|
Shenzhen, PRC
|
Mar. 9, 2007
|
100%
|
Subscription service
|
Shenzhen Genius Information Technology Co., Ltd. ("CFO Genius")
|
Shenzhen, PRC
|
Sep. 21, 2006
|
100%
|
Subscription service
|
Stockstar Information Technology (Shanghai) Co., Ltd. ("CFO Stockstar")
|
Shanghai, PRC
|
Oct. 1, 2006
|
100%
|
Subscription service
|
Zhengning Information & Technology (Shanghai) Co., Ltd.
("CFO Zhengning")
|
Shanghai, PRC
|
Jan. 31, 2007
|
100%
|
Subscription service
|
iSTAR Financial Holdings Limited
(former name: Daily Growth Financial Holdings Limited)
("iSTAR FinancialHoldings")
|
BVI
|
Jul. 16, 2007
|
85%
|
Investment holdings
|
iSTAR International Securities Co., Limited
(former name: Daily Growth Securities Limited) ("iSTAR Securities")
|
Hong Kong, PRC
|
Nov. 23, 2007
|
85%
|
Brokerage service
|
iSTAR International Futures Co., Limited
(former name: Daily Growth Futures Limited) ("iSTAR Futures")
|
Hong Kong, PRC
|
Apr. 16, 2008
|
85%
|
Brokerage service
|
iSTAR International Wealth Management Limited
(former name: Daily Growth Wealth Management Limited)
("iSTAR Wealth Management")
|
Hong Kong, PRC
|
Oct. 8, 2008
|
85%
|
Securities advising
|
iSTAR International Investment Services Co., Limited
(former name: Daily Growth Investment Services Limited)
("iSTAR Investment Services")
|
Hong Kong, PRC
|
Jun. 30, 2009
|
85%
|
N/A
|
iSTAR International Credit Co. Limited ("iSTAR Credit")
|
Hong Kong, PRC
|
Feb. 10, 2012
|
85%
|
N/A
|
Hong Kong Genius Information Technology Co., Ltd. ("CFO HK Genius")
|
Hong Kong, PRC
|
May. 18, 2010
|
100%
|
N/A
|
Variable interest entities:
|
||||
Beijing Fuhua Innovation Technology Development Co., Ltd. ("CFO Fuhua")
|
Beijing, PRC
|
Dec. 31, 2000
|
Nil
|
Web portal and advertising service
|
Shanghai Chongzhi Co., Ltd. ("CFO Chongzhi")
|
Shanghai, PRC
|
Jun. 6, 2008
|
Nil
|
Subscription service
|
Fortune (Beijing) Qicheng Technology Co., Ltd. ("CFO Qicheng")
|
Beijing, PRC
|
Dec. 18, 2009
|
Nil
|
N/A
|
Beijing Chuangying Advisory and Investment Co., Ltd.
("CFO Chuangying")
|
Beijing, PRC
|
Jan. 9, 2009
|
Nil
|
Investment advising
|
Shenzhen Newrand Securities Advisory and Investment Co., Ltd.
("CFO Newrand ")
|
Shenzhen, PRC
|
Oct. 17, 2008
|
Nil
|
Securities investment advising
|
Subsidiaries of variable interest entities:
|
||||
Shanghai Meining Computer Software Co., Ltd. ("CFO Meining")
|
Shanghai, PRC
|
Oct. 1, 2006
|
Nil
|
Web portal, advertising, subscription,
|
and SMS
|
||||
Shenzhen Newrand Securities Training Center ("CFO Newrand Training")
|
Shenzhen, PRC
|
Oct. 17, 2008
|
Nil
|
Securities investment training
|
Shanghai Stockstar Securities Advisory and Investment Co., Ltd.
("CFO Securities Consulting")
|
Shanghai, PRC
|
Nov. 5, 2009
|
Nil
|
Securities investment advising
|
Shenzhen Shangtong Software Co., Ltd. ("CFO Shenzhen Shangtong")
|
Shenzhen, PRC
|
Sep. 23, 2009
|
Nil
|
Subscription service
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES - continued
|
·
|
strategic consulting services agreement, pursuant to which the amount of the fee to be charged is 30% of each VIE's income before tax;
|
·
|
technical support services agreement, pursuant to which the amount of the fee to be charged is 30% of each VIE's income before tax; and
|
·
|
operating support services agreement, pursuant to which the amount of the fee to be charged is 40% of each VIE's income before tax.
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES - continued
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES - continued
|
·
|
revoke the business and operating licenses of our PRC subsidiaries or VIEs;
|
·
|
restrict the rights to collect revenues from any of our PRC subsidiaries;
|
·
|
discontinue or restrict the operations of any related-party transactions among our PRC subsidiaries or VIEs;
|
·
|
require our PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations;
|
·
|
take other regulatory or enforcement actions, including levying fines that could be harmful to our business; or
|
·
|
impose additional conditions or requirements with which we may not be able to comply.
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES - continued
|
Year ended December 31,
|
||||||||
2011
|
2012
|
|||||||
Total assets
|
$ | 33,120,325 | $ | 39,592,530 | ||||
Total liabilities
|
$ | 16,431,574 | $ | 17,141,853 |
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net revenue
|
$ | 25,737,779 | $ | 27,837,567 | $ | 17,271,563 | ||||||
Net income (loss)
|
$ | 3,614,094 | $ | (7,573,823 | ) | $ | (6,948,118 | ) |
Year ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net cash provided by (used in)
operating activities
|
$ | 7,926,255 | $ | (11,948,507 | ) | $ | (13,860,354 | ) | ||||
Net cash provided by (used in)
investing activities
|
178,192 | (7,726,567 | ) | 3,449,449 | ||||||||
Net cash provided by (used in)
financing activities
|
2,629,738 | (37,146,641 | ) | 6,461,007 | ||||||||
Effect of exchange rate changes
|
1,922,878 | 895,082 | 52,740 |
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
Technology infrastructure
|
5 years
|
Computer equipment
|
5 years
|
Furniture, fixtures and equipment
|
5 years
|
Motor vehicle
|
5 years
|
Leasehold improvements
|
Shorter of the lease term or 5 years
|
Securities consulting license and related trademarks
|
15 years
|
Completed technology
|
5 years
|
Customer relationship
|
4-5 years
|
Value-added service license
|
3-4 years
|
Agreement with mobile operators
|
3 years
|
Intellectual property
|
10 years
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
3.
|
ACQUISITIONS
|
Useful life
|
|||||
Purchase price allocation:
|
|||||
Acquired intangible assets:
|
|||||
Securities consulting license
|
2,751,148 |
15 years
|
|||
Deferred tax liabilities
|
(687,787 | ) | |||
Total purchase price
|
2,063,361 |
Useful life
|
|||||
Purchase price allocation:
|
|||||
Cash and cash equivalents
|
$ | 14,073 | |||
Prepaid expenses and current assets
|
215,868 | ||||
Accounts receivable
|
949 | ||||
Property and equipment, net
|
625,258 | ||||
Rental deposit
|
8,998 | ||||
Acquired intangible assets:
|
|||||
Securities consulting license
|
2,065,168 |
15 years
|
|||
Completed technology
|
66,465 |
5 years
|
|||
Total assets acquired
|
2,996,779 | ||||
Accounts payable
|
(137,665 | ) | |||
Accrued expenses and other current liabilities
|
(1,608,027 | ) | |||
Income tax payable
|
(30,780 | ) | |||
Deferred tax liabilities
|
(532,908 | ) | |||
Noncontrolling interest
|
(871,960 | ) | |||
Total net assets
|
(184,561 | ) | |||
Goodwill
|
3,033,068 | ||||
Total
|
$ | 2,848,507 |
3.
|
ACQUISITIONS - continued
|
For the year ended December 31,
|
||||||||
2011
|
2012
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Revenues
|
$ | 55,119,450 | $ | 31,966,408 | ||||
Net loss attributable to China
Finance Online Co., Limited
|
(19,392,948 | ) | (13,641,361 | ) | ||||
Net loss per share attributable to
China Finance Online Co. Limited
|
||||||||
- basic
|
$ | (0.18 | ) | $ | (0.13 | ) | ||
- diluted
|
$ | (0.18 | ) | $ | (0.13 | ) |
4.
|
ACCOUNTS RECEIVABLE
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Accounts receivable-margin clients
|
$ | 12,888,630 | $ | 15,054,331 | ||||
Less: Allowance for doubtful accounts
|
- | - | ||||||
Accounts receivable- margin clients, net
|
$ | 12,888,630 | $ | 15,054,331 | ||||
Accounts receivable-others
|
1,597,290 | 5,012,320 | ||||||
Less: Allowance for doubtful accounts
|
(129,439 | ) | (41,893 | ) | ||||
Accounts receivable-others, net
|
$ | 1,467,851 | $ | 4,970,427 |
5.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Prepayment of advertising fees
|
$ | 149,041 | $ | 12,728 | ||||
Advertising deposit
|
47,612 | 47,729 | ||||||
Advances to suppliers
|
755,290 | 1,085,226 | ||||||
VAT refund receivable
|
1,127,326 | 89,843 | ||||||
Income tax and business tax refund receivable
|
11,792 | 3,914 | ||||||
Interest receivable
|
1,009,158 | 1,019,415 | ||||||
Other current assets
|
478,453 | 521,492 | ||||||
$ | 3,578,672 | $ | 2,780,347 |
6.
|
LOAN RECEIVABLE
|
As of December 31,
|
||||||||||||
2011
|
2012
|
Interest rate
|
Period
|
|||||||||
A (i)
|
$ | 1,929,955 | - |
10% per annum
|
December 2, 2011 to June 1, 2012
|
|||||||
B (i)
|
6,433,186 | - |
2% per month
|
December 23, 2011 to June 23, 2012
|
||||||||
C (ii)
|
1,202,362 | 1,205,604 |
6% per annum
|
December 1, 2011 to November 30, 2012
|
||||||||
$ | 9,565,503 | $ | 1,205,604 |
(i)
|
The principal and its return are pledged by the third parties' purchased securities.
|
(ii)
|
The principal and its return are guaranteed by a third party individual. There is an interest of 1.25% per month charged on overdue balance.
|
7.
|
SHORT-TERM INVESTMENTS
|
7.
|
SHORT-TERM INVESTMENTS - continued
|
As of December 31, 2011
|
||||||||||||||||
Costs
|
Gross unrealized
losses
|
Exchange
difference
|
Fair value
|
|||||||||||||
Available-for-sale securities
|
952,411 | (38,185 | ) | 9,356 | 923,582 | |||||||||||
Total
|
952,411 | (38,185 | ) | 9,356 | 923,582 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Beginning balance
|
- | $ | 923,582 | |||||
Purchases
|
16,090,819 | - | ||||||
Redemption
|
(15,876,624 | ) | 916,228 | |||||
Realized gain (loss)
|
481,850 | (45,567 | ) | |||||
Unrealized loss
|
(38,185 | ) | 38,185 | |||||
Exchange difference
|
265,722 | 28 | ||||||
Ending balance
|
923,582 | - |
Year ended December 31, 2012
|
||||||||||||||||
Proceeds
|
Costs
|
Losses
|
Exchange
difference
|
|||||||||||||
Available-for-sale securities
|
916,200 | 952,411 | (45,567 | ) | 9,384 | |||||||||||
Total
|
916,200 | 952,411 | (45,567 | ) | 9,384 |
Year ended December 31, 2011
|
||||||||||||||||
Proceeds
|
Costs
|
Gains
|
Exchange
difference
|
|||||||||||||
Available-for-sale securities
|
15,876,624 | 15,138,408 | 481,850 | 256,366 | ||||||||||||
Total
|
15,876,624 | 15,138,408 | 481,850 | 256,366 |
8.
|
COST METHOD INVESTMENT
|
9.
|
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Technology infrastructure
|
$ | 9,114,087 | $ | 9,605,535 | ||||
Computer equipment
|
1,949,393 | 1,911,447 | ||||||
Furniture, fixtures and equipment
|
3,172,635 | 3,200,237 | ||||||
Motor vehicle
|
699,538 | 731,672 | ||||||
Leasehold improvements
|
3,344,732 | 3,910,370 | ||||||
18,280,385 | 19,359,261 | |||||||
Less: accumulated depreciation
|
(11,750,566 | ) | (14,445,147 | ) | ||||
$ | 6,529,819 | $ | 4,914,114 |
10.
|
ACQUIRED INTANGIBLE ASSETS, NET
|
December 31 | ||||||||||||||||||||||||||||
2011 |
2012
|
|||||||||||||||||||||||||||
Gross carrying
amount
|
Accumulated
amortization
|
Impairment
|
Net carrying
amount
|
Gross carrying
amount
|
Accumulated
amortization
|
Net carrying
amount
|
||||||||||||||||||||||
Intangible assets not subject
to amortization:
|
||||||||||||||||||||||||||||
Trademarks
|
$ | 914,155 | - | $ | (914,155 | ) | - | - | - | - | ||||||||||||||||||
Stock exchange trading right
|
64,332 | - | (64,332 | ) | - | - | - | - | ||||||||||||||||||||
Futures exchange trading right
|
64,332 | - | (64,332 | ) | - | - | - | - | ||||||||||||||||||||
Intangible assets subject to
amortization:
|
||||||||||||||||||||||||||||
Completed technology
|
922,090 | (922,090 | ) | - | - | 66,820 | (7,276 | ) | 59,544 | |||||||||||||||||||
Customer relationship
|
744,338 | (744,338 | ) | - | - | - | - | - | ||||||||||||||||||||
Value-added service license
|
29,361 | (29,361 | ) | - | - | - | - | - | ||||||||||||||||||||
Agreement with mobile operators
|
13,173 | (13,173 | ) | - | - | - | - | - | ||||||||||||||||||||
Securities consulting license
and related trademarks
|
3,713,487 | (713,270 | ) | (3,000,217 | ) | - | 4,833,877 | (218,184 | ) | 4,615,693 | ||||||||||||||||||
Intellectual property
|
79,354 | (44,306 | ) | (35,048 | ) | - | - | - | - | |||||||||||||||||||
$ | 6,544,622 | $ | (2,466,538 | ) | $ | (4,078,084 | ) | - | $ | 4,900,697 | $ | (225,460 | ) | $ | 4,675,237 |
11.
|
GOODWILL
|
Southern
China
|
Eastern
China
|
Northern
China
|
Western
China
|
Hong Kong
|
Total
|
|||||||||||||||||||
Balance as of December 31, 2010
|
$ | 2,400,576 | $ | 8,892,249 | $ | 387,242 | - | $ | 1,269,520 | $ | 12,949,587 | |||||||||||||
Impairment
|
(2,507,499 | ) | (9,284,338 | ) | (403,561 | ) | - | (1,267,826 | ) | (13,463,224 | ) | |||||||||||||
Exchange difference
|
106,923 | 392,089 | 16,319 | - | (1,694 | ) | 513,637 | |||||||||||||||||
Balance as of December 31, 2011
|
- | - | - | - | - | - | ||||||||||||||||||
Acquisition (Note 3)
|
- | - | - | 3,033,068 | - | 3,033,068 | ||||||||||||||||||
Exchange difference
|
- | - | - | 16,213 | - | 16,213 | ||||||||||||||||||
Balance as of December 31, 2012
|
- | - | - | $ | 3,049,281 | - | $ | 3,049,281 |
11.
|
GOODWILL - continued
|
12.
|
BANK FACILITIES AND SHORT-TERM LOANS
|
13.
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Accrued bonus
|
$ | 3,006,519 | $ | 2,026,268 | ||||
Accrued refund of subscription fees
|
1,242,226 | 364,445 | ||||||
Accrued professional service fees
|
480,248 | 718,863 | ||||||
Withholding individual income tax-option exercise
|
61,683 | 61,683 | ||||||
Other taxes payable
|
381,095 | 291,870 | ||||||
Accrued raw data cost
|
375,837 | 364,889 | ||||||
Accrued office rental
|
8,739 | - | ||||||
Accrued bandwidth cost
|
26,017 | 44,983 | ||||||
Accrued welfare benefits
|
385,711 | 68,717 | ||||||
Others
|
488,974 | 1,446,912 | ||||||
$ | 6,457,049 | $ | 5,388,630 |
14.
|
STOCK OPTIONS AND NONVESTED SHARES
|
14.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
(1)
|
Expected volatility
|
(2)
|
Risk-free interest rate
|
(3)
|
Expected option life
|
(4)
|
Dividend yield
|
(5)
|
Exercise price
|
14.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
2010
|
2011
|
2012
|
||||||||||||||||||||||
Number
of options
|
Weighted
average
|
Number
of options
|
Weighted
average
|
Number
of options
|
Weighted
average
|
|||||||||||||||||||
Outstanding at beginning of year
|
10,834,298 | $ | 0.87 | 13,103,238 | $ | 0.99 | 11,994,698 | $ | 0.96 | |||||||||||||||
Granted
|
3,562,000 | 1.43 | 285,000 | 1.08 | - | - | ||||||||||||||||||
Exercised
|
(637,720 | ) | 1.12 | (47,500 | ) | 0.47 | (20,000 | ) | 0.16 | |||||||||||||||
Forfeited
|
(655,340 | ) | 1.27 | (1,346,040 | ) | 1.28 | (829,700 | ) | 1.35 | |||||||||||||||
Outstanding at end of year
|
13,103,238 | $ | 0.99 | 11,994,698 | $ | 0.96 | 11,144,998 | $ | 0.93 | |||||||||||||||
Shares exercisable at end of year
|
9,316,838 | $ | 0.82 | 10,588,058 | $ | 0.91 | 10,856,838 | $ | 0.92 |
Options outstanding
|
Option exercisable
|
|||||||||||||||||
Stock option
with exercise price of:
|
Number
outstanding
|
Weighted
average
|
Weighted
average
|
Aggregate
intrinsic
|
Number
exercisable
|
Weighted
average
|
Aggregate
intrinsic
|
|||||||||||
$ | 0.16 | 2,810,738 | 2,810,738 | |||||||||||||||
$ | 1.04 | 200,000 | 200,000 | |||||||||||||||
$ | 1.31 | 1,279,100 | 1,279,100 | |||||||||||||||
$ | 1.32 | 27,000 | 27,000 | |||||||||||||||
$ | 1.12 | 400,000 | 400,000 | |||||||||||||||
$ | 1.16 | 200,000 | 200,000 | |||||||||||||||
$ | 1.07 | 700,000 | 700,000 | |||||||||||||||
$ | 0.96 | 2,389,000 | 2,389,000 | |||||||||||||||
$ | 1.32 | 73,600 | 73,600 | |||||||||||||||
$ | 1.26 | 553,560 | 553,560 | |||||||||||||||
$ | 1.65 | 10,000 | 10,000 | |||||||||||||||
$ | 1.43 | 2,222,000 | 2,044,240 | |||||||||||||||
$ | 1.43 | 50,000 | 34,000 | |||||||||||||||
$ | 1.14 | 200,000 | 120,000 | |||||||||||||||
$ | 0.87 | 30,000 | 15,600 | |||||||||||||||
11,144,998 |
3.74 years
|
$0.93
|
$191,130
|
10,856,838 |
$0.92
|
$191,130
|
14.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
14.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
Nonvested shares
|
Shares
|
Weighted-
average grant/
|
Aggregate
intrinsic
|
|||||||||
At the beginning of year 2010
|
3,343,453 | $ | 1.84 | 4,881,441 | ||||||||
Granted
|
- | - | - | |||||||||
Vested
|
(1,443,008 | ) | - | (2,117,855 | ) | |||||||
Forfeited
|
- | - | - | |||||||||
At the end of year 2010
|
1,900,445 | $ | 1.43 | 2,481,981 | ||||||||
Granted
|
- | - | - | |||||||||
Vested
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
At the end of year 2011
|
1,900,445 | $ | 0.69 | $ | 615,744 | |||||||
Granted
|
- | - | - | |||||||||
Vested
|
- | - | - | |||||||||
Forfeited
|
- | - | - | |||||||||
At the end of year 2012
|
1,900,445 | $ | 0.27 | $ | 433,301 |
14.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
15.
|
INCOME TAXES
|
15.
|
INCOME TAXES - continued
|
15.
|
INCOME TAXES - continued
|
December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Current
|
$ | (362,861 | ) | $ | (662,114 | ) | $ | (315,197 | ) | |||
Deferred
|
99,475 | (3,276,319 | ) | (568,521 | ) | |||||||
Total
|
$ | (263,386 | ) | $ | (3,938,433 | ) | $ | (883,718 | ) |
15.
|
INCOME TAXES - continued
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Current deferred tax assets:
|
||||||||
Deferred revenue - current
|
$ | 2,545,361 | $ | 689,596 | ||||
Accrued expenses and other liabilities
|
248,113 | 313,572 | ||||||
Unrealized Loss on short-term investments
|
5,728 | - | ||||||
Net operating loss carrying forwards
|
- | 949,476 | ||||||
2,799,202 | 1,952,644 | |||||||
Less: valuation allowance
|
(2,165,524 | ) | (1,561,019 | ) | ||||
Total current deferred tax assets
|
633,678 | 391,625 | ||||||
Non-current deferred tax assets:
|
||||||||
Deferred revenue - non-current
|
$ | 985,439 | $ | 200,774 | ||||
Net operating loss carrying forwards
|
6,922,639 | 8,101,455 | ||||||
7,908,078 | 8,302,229 | |||||||
Less: valuation allowance
|
(7,424,375 | ) | (8,101,455 | ) | ||||
Total non-current deferred tax assets
|
$ | 483,703 | $ | 200,774 | ||||
Current deferred tax liabilities:
|
||||||||
Account receivable and other assets
|
(45,333 | ) | (140,074 | ) | ||||
Total current deferred tax liabilities
|
$ | (45,333 | ) | $ | (140,074 | ) | ||
Non-current deferred tax liabilities:
|
||||||||
Intangible assets
|
- | (1,168,809 | ) | |||||
Total non-current deferred tax liabilities
|
$ | - | $ | (1,168,809 | ) |
15.
|
INCOME TAXES - continued
|
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Income (loss) before tax
|
1,897,545 | (15,525,522 | ) | (11,076,429 | ) | |||||||
Income tax expense calculated at 25%
|
474,386 | (3,881,381 | ) | (2,769,107 | ) | |||||||
Effect of tax holiday
|
(4,208,756 | ) | (2,155,424 | ) | 2,206,739 | |||||||
Effect of income tax rate difference in
|
||||||||||||
Other jurisdictions
|
184,062 | (203,633 | ) | 250,412 | ||||||||
Non-deductible expenses
|
2,718,810 | 4,950,474 | 851,680 | |||||||||
Non-taxable income
|
(611,009 | ) | (40,165 | ) | (2,122 | ) | ||||||
Change in valuation allowance
|
1,705,893 | 5,268,562 | 346,116 | |||||||||
Income tax expense (benefit)
|
263,386 | 3,938,433 | 883,718 |
16.
|
AMERICAN DEPOSITARY SHARES ("ADS") PLAN
|
17.
|
REPURCHASED SHARES
|
18.
|
NET INCOME (LOSS) PER SHARE
|
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Net income (loss) attributable to
China Finance Online Co. Limited
|
$ | 1,960,122 | $ | (19,326,909 | ) | $ | (11,855,207 | ) | ||||
Weighted average ordinary shares
outstanding used in computing basic
net income per share
|
108,247,552 | 108,961,642 | 108,983,249 | |||||||||
Plus: Incremental shares from assumed
conversions of stock options
and nonvested shares
|
5,877,470 | - | - | |||||||||
Weighted average ordinary shares
outstanding used in computing diluted
net income per share
|
114,125,022 | 108,961,642 | 108,983,249 | |||||||||
Net income (loss) per share attributable to
China Finance Online Co. Limited
|
||||||||||||
- basic
|
$ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | ||||
- diluted
|
$ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) |
19.
|
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION
|
20.
|
NONCONTROLLING INTERESTS
|
CFO Securities
Consulting
|
iSTAR
Financial Holdings
|
CFO
East Win
|
Total
|
|||||||||||||
Balance as of December 31, 2009
|
$ | 259,529 | - | - | $ | 259,529 | ||||||||||
Acquisition of noncontrolling interest of
CFO Securities Consulting
|
(5,233 | ) | - | - | (5,233 | ) | ||||||||||
Share-based compensation of
iSTAR Financial Holdings (Note 14)
|
- | 14,865 | - | 14,865 | ||||||||||||
Net loss
|
(254,296 | ) | (71,667 | ) | - | (325,963 | ) | |||||||||
Balance as of December 31, 2010
|
- | (56,802 | ) | - | (56,802 | ) | ||||||||||
Share-based compensation of
iSTAR Financial Holdings (Note 14)
|
- | 88,940 | - | 88,940 | ||||||||||||
Net loss
|
- | (137,046 | ) | - | (137,046 | ) | ||||||||||
Balance as of December 31, 2011
|
(104,908 | ) | - | (104,908 | ) | |||||||||||
Acquisition of noncontrolling interest of
CFO East Win (Note 3)
|
- | - | 871,960 | 871,960 | ||||||||||||
Share-based compensation of
iSTAR Financial Holdings (Note 14)
|
- | 89,256 | - | 89,256 | ||||||||||||
Net income (loss)
|
- | 78,958 | (183,898 | ) | (104,940 | ) | ||||||||||
Balance as of December 31, 2012
|
- | $ | 63,306 | $ | 688,062 | $ | 751,368 |
21.
|
COMMITMENTS AND CONTINGENCIES
|
22.
|
SEGMENT AND GEOGRAPHIC INFORMATION
|
Subscription
services and
|
Brokerage
services
|
Consolidated
|
||||||||||
Net revenues
|
$ | 25,781,724 | $ | 3,817,762 | $ | 29,599,486 | ||||||
Cost of revenues
|
7,297,061 | 792,333 | 8,089,394 | |||||||||
Operating expenses:
|
||||||||||||
General and administrative
|
8,515,833 | 2,871,548 | 11,387,381 | |||||||||
Product development
|
10,735,570 | - | 10,735,570 | |||||||||
Sales and marketing
|
12,500,788 | 571,229 | 13,072,017 | |||||||||
Total operating expenses
|
31,752,191 | 3,442,777 | 35,194,968 | |||||||||
Government subsidies
|
75,883 | - | 75,883 | |||||||||
Loss from operations
|
$ | (13,191,645 | ) | $ | (417,348 | ) | $ | (13,608,993 | ) | |||
Total assets
|
$ | 72,474,437 | $ | 48,896,558 | $ | 121,370,995 |
22.
|
SEGMENT AND GEOGRAPHIC INFORMATION - continued
|
Subscription
services and
|
Brokerage
services
|
Consolidated
|
||||||||||
Net revenues
|
$ | 49,468,401 | $ | 3,539,664 | $ | 53,008,065 | ||||||
Cost of revenues
|
8,462,096 | 308,521 | 8,770,617 | |||||||||
Operating expenses:
|
||||||||||||
General and administrative
|
8,319,593 | 2,908,039 | 11,227,632 | |||||||||
Product development
|
13,313,635 | - | 13,313,635 | |||||||||
Sales and marketing
|
20,714,263 | 623,536 | 21,337,799 | |||||||||
Loss from impairment of intangible assets
|
3,949,420 | 128,664 | 4,078,084 | |||||||||
Loss from impairment of goodwill
|
12,195,398 | 1,267,826 | 13,463,224 | |||||||||
Total operating expenses
|
58,492,309 | 4,928,065 | 63,420,374 | |||||||||
Government subsidies
|
265,016 | - | 265,016 | |||||||||
Loss from operations
|
$ | (17,220,988 | ) | $ | (1,696,922 | ) | $ | (18,917,910 | ) | |||
Total assets
|
$ | 106,811,438 | $ | 53,165,245 | $ | 159,976,683 |
22.
|
SEGMENT AND GEOGRAPHIC INFORMATION - continued
|
Subscription
services and
|
Brokerage
services
|
Consolidated
|
||||||||||
Net revenues
|
$ | 56,712,796 | $ | 3,003,246 | $ | 59,716,042 | ||||||
Cost of revenues
|
8,098,809 | 398,336 | 8,497,145 | |||||||||
Operating expenses:
|
||||||||||||
General and administrative
|
10,976,571 | 2,231,766 | 13,208,337 | |||||||||
Product development
|
13,027,879 | - | 13,027,879 | |||||||||
Sales and marketing
|
25,241,232 | 1,749,861 | 26,991,093 | |||||||||
Total operating expenses
|
49,245,682 | 3,981,627 | 53,227,309 | |||||||||
Government subsidies
|
514,113 | - | 514,113 | |||||||||
Loss from operations
|
(117,582 | ) | (1,376,717 | ) | (1,494,299 | ) | ||||||
Total assets
|
$ | 147,245,516 | $ | 32,845,066 | $ | 180,090,582 |
22.
|
SEGMENT AND GEOGRAPHIC INFORMATION - continued
|
Years ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Subscription fees
|
$ | 49,518,331 | $ | 43,100,486 | $ | 20,826,995 | ||||||
Advertising revenue
|
7,031,219 | 6,243,748 | 4,848,622 | |||||||||
Brokerage service revenue
|
3,003,246 | 3,539,664 | 3,817,762 | |||||||||
Others
|
163,246 | 124,167 | 106,107 | |||||||||
Total revenue from external customers
|
$ | 59,716,042 | $ | 53,008,065 | $ | 29,599,486 |
23.
|
STATUTORY RESERVES AND RESTRICTED NET ASSETS
|
23.
|
STATUTORY RESERVES AND RESTRICTED NET ASSETS - continued
|
24.
|
SUBSEQUENT EVENT
|
December 31,
|
||||||||
2011
|
2012
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 2,703,639 | $ | 2,941,180 | ||||
Amounts due from subsidiaries, VIEs and VIE’s subsidiaries
|
3,213,777 | 3,309,214 | ||||||
Prepaid expenses and other current assets
|
131,022 | 104,116 | ||||||
Dividends receivable
|
27,205,250 | 19,463,347 | ||||||
Total current assets
|
33,253,688 | 25,817,857 | ||||||
Investments in subsidiaries, VIEs and VIE’s subsidiaries
|
58,968,066 | 63,446,732 | ||||||
Rental Deposits
|
- | 66,622 | ||||||
Total assets
|
$ | 92,221,754 | $ | 89,331,211 | ||||
Liabilities and shareholders' equity
|
||||||||
Current liabilities:
|
||||||||
Accrued expenses and other current liabilities
|
261,874 | 251,649 | ||||||
Amounts due to subsidiaries, VIEs and VIE’s subsidiaries
|
1,018,731 | 9,114,380 | ||||||
Total current liabilities
|
$ | 1,280,605 | $ | 9,366,029 | ||||
Shareholders' equity
|
||||||||
Ordinary shares ($0.00013 par value; 500,000,000 shares authorized; 110,935,383 and
110,955,383 shares issued and outstanding as of December 31, 2011
and 2012, respectively)
|
14,325 | 14,328 | ||||||
Additional paid-in capital
|
80,446,578 | 81,163,243 | ||||||
Accumulated other comprehensive income
|
10,927,248 | 11,089,820 | ||||||
Retained deficits
|
(447,002 | ) | (12,302,209 | ) | ||||
Total shareholders' equity
|
90,941,149 | 79,965,182 | ||||||
Total liabilities and shareholders' equity
|
$ | 92,221,754 | $ | 89,331,211 |
December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Cost of revenues
|
$ | 139,276 | $ | 43,976 | $ | 4,245 | ||||||
Gross loss
|
(139,276 | ) | (43,976 | ) | (4,245 | ) | ||||||
Operating expenses:
|
||||||||||||
General and administrative
|
760,786 | 1,428,893 | 1,445,591 | |||||||||
Product development
|
53,202 | 75,482 | 68,961 | |||||||||
Sales and marketing
|
- | - | 43,018 | |||||||||
Share-based compensation
|
4,420,572 | 945,868 | 207,677 | |||||||||
Loss from impairment of goodwill
|
- | 50,534 | - | |||||||||
Total operating expenses
|
5,234,560 | 2,500,777 | 1,765,247 | |||||||||
Interest income
|
2,249 | 1,402 | 2,180 | |||||||||
Equity in earnings (deficits) of subsidiaries, VIEs and VIE’s subsidiaries
|
6,500,738 | (16,643,739 | ) | (9,674,955 | ) | |||||||
Exchange gain (loss)
|
830,971 | 1,339,752 | (413,004 | ) | ||||||||
Other income
|
- | - | 64 | |||||||||
Loss from impairment of cost method investment
|
- | (1,479,571 | ) | - | ||||||||
Net income (loss)
|
$ | 1,960,122 | $ | (19,326,909 | ) | $ | (11,855,207 | ) | ||||
Other comprehensive income, net of tax:
|
||||||||||||
Changes in foreign currency translation adjustment
|
$ | 1,688,217 | $ | 2,928,723 | $ | 130,115 | ||||||
Net unrealized income (loss) on available-for-sale securities,
net of tax effects of nil, ($5,728) and $5,728 for 2010, 2011 and 2012, respectively
|
- | (32,457 | ) | (13,110 | ) | |||||||
Reclassification adjustment of available-for-sale securities,
net of tax effects of nil, nil and nil
for 2010, 2011 and 2012, respectively
|
- | - | 45,567 | |||||||||
Other comprehensive income, net of tax
|
1,688,217 | 2,896,266 | 162,572 | |||||||||
Comprehensive income (loss)
|
$ | 3,648,339 | $ | (16,430,643 | ) | $ | (11,692,635 | ) |
Additional | Accumulated other | Total | ||||||||||||||||||||||
Ordinary shares
|
paid-in | comprehensive |
Retained
|
shareholders' | ||||||||||||||||||||
Shares
|
Amount
|
capital
|
income (loss)
|
earnings
|
equity
|
|||||||||||||||||||
Balance as of January 1, 2010
|
110,250,163 | $ | 14,237 | $ | 74,130,609 | $ | 6,342,765 | $ | 16,919,785 | $ | 97,407,396 | |||||||||||||
Exercise of share options by employees
|
637,720 | 82 | 717,175 | - | - | 717,257 | ||||||||||||||||||
Share-based compensation
|
- | - | 4,420,572 | - | - | 4,420,572 | ||||||||||||||||||
Equity pick up from compensation of a subsidiary
|
- | - | 84,234 | - | - | 84,234 | ||||||||||||||||||
Acquisition of noncontrolling interest
of CFO Securities Consulting
|
- | - | (377,893 | ) | - | - | (377,893 | ) | ||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 1,688,217 | - | 1,688,217 | ||||||||||||||||||
Net income
|
- | - | - | - | 1,960,122 | 1,960,122 | ||||||||||||||||||
Balance as of December 31, 2010
|
110,887,883 | 14,319 | 78,974,697 | 8,030,982 | 18,879,907 | 105,899,905 | ||||||||||||||||||
|
||||||||||||||||||||||||
Exercise of share options by employees
|
47,500 | 6 | 22,019 | - | - | 22,025 | ||||||||||||||||||
Share-based compensation
|
- | - | 945,868 | - | - | 945,868 | ||||||||||||||||||
Equity pick up from compensation of a subsidiary
|
- | - | 503,994 | - | - | 503,994 | ||||||||||||||||||
Net unrealized losses
on available-for-sale securities,
net of tax effects of $(5,728)
|
- | - | - | (32,457 | ) | - | (32,457 | ) | ||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 2,928,723 | - | 2,928,723 | ||||||||||||||||||
Net loss
|
- | - | - | - | (19,326,909 | ) | (19,326,909 | ) | ||||||||||||||||
Balance as of December 31, 2011
|
110,935,383 | 14,325 | 80,446,578 | 10,927,248 | (447,002 | ) | 90,941,149 | |||||||||||||||||
Exercise of share options by employees
|
20,000 | 3 | 3,197 | - | - | 3,200 | ||||||||||||||||||
Share-based compensation
|
- | - | 207,677 | - | - | 207,677 | ||||||||||||||||||
Equity pick up from compensation of a subsidiary
|
- | - | 505,791 | - | - | 505,791 | ||||||||||||||||||
Net unrealized losses on available-for-sale securities,
net of tax effects of $5,728
|
- | - | - | (13,110 | ) | - | (13,110 | ) | ||||||||||||||||
Reclassification adjustment of available-for-sale securities,
net of tax effects of nil
|
- | - | - | 45,567 | - | 45,567 | ||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 130,115 | - | 130,115 | ||||||||||||||||||
Net income
|
- | - | - | - | (11,855,207 | ) | (11,855,207 | ) | ||||||||||||||||
Balance as of December 31, 2012
|
110,955,383 | $ | 14,328 | $ | 81,163,243 | $ | 11,089,820 | $ | (12,302,209 | ) | $ | 79,965,182 |
December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Operating activities:
|
||||||||||||
Net income (loss)
|
$ | 1,960,122 | $ | (19,326,909 | ) | $ | (11,855,207 | ) | ||||
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
|
||||||||||||
Share-based compensation
|
4,420,572 | 945,868 | 207,677 | |||||||||
Loss from impairment of cost method investment
|
- | 1,479,571 | - | |||||||||
Loss from impairment of goodwill
|
- | 50,534 | - | |||||||||
Equity in earnings (deficits) of subsidiaries, VIEs and VIE’s subsidiaries
|
(6,500,738 | ) | 16,643,739 | 9,674,955 | ||||||||
Changes in assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(78,804 | ) | (31,865 | ) | 26,907 | |||||||
Amounts due from subsidiaries, VIEs and VIE’s subsidiaries
|
(1,845,474 | ) | (902,476 | ) | 317,359 | |||||||
Rental Deposits
|
- | - | (66,622 | ) | ||||||||
Accrued expenses and other current liabilities
|
(53,454 | ) | (52,029 | ) | (10,225 | ) | ||||||
Amounts due to subsidiaries, VIEs and VIE’s subsidiaries
|
568,289 | 307,870 | 8,095,649 | |||||||||
Net cash used in operating activities
|
(1,529,487 | ) | (885,697 | ) | 6,390,493 | |||||||
Investing activities:
|
||||||||||||
Dividend received from subsidiaries
|
- | 759,301 | 4,171,269 | |||||||||
Capital injection to subsidiaries
|
- | - | (10,327,422 | ) | ||||||||
Net cash provided by investing activities
|
- | 759,301 | (6,156,153 | ) | ||||||||
Financing activities:
|
||||||||||||
Proceeds from stock options exercised by employees
|
717,257 | 22,025 | 3,200 | |||||||||
Net cash provided by financing activities
|
717,257 | 22,025 | 3,200 | |||||||||
Effect of exchange rate changes
|
2 | - | 1 | |||||||||
Net increase (decrease) in cash and cash equivalents
|
(812,228 | ) | (104,371 | ) | 237,541 | |||||||
Cash and cash equivalents, beginning of the year
|
3,620,238 | 2,808,010 | 2,703,639 | |||||||||
Cash and cash equivalents, end of the year
|
$ | 2,808,010 | $ | 2,703,639 | $ | 2,941,180 |
1.
|
The Borrowers desire to establish VIE company. (the “Company”) whose registered capital will be RMB***, and Borrower A and Borrower B will respectively hold XX% and XX% of the equity interest in the Company.
|
2.
|
The Borrowers desire to borrow a loan (the “Loan”) from the Lender to invest in the Company.
|
3.
|
The Lender agrees to provide the Loan to Borrowers.
|
ARTICLE 1. DEFINITIONS
|
3
|
ARTICLE 2. OPERATIONAL SUPPORT
|
3
|
ARTICLE 3. OBLIGATIONS OF PARTY B
|
3
|
ARTICLE 4. CONSIDERATION FOR PROVIDING OPERATIONAL SUPPORT
|
4
|
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
|
4
|
ARTICLE 6. CONFIDENTIALITY
|
4
|
ARTICLE 7. GOVERNING LAW AND OBLIGATIONS UPON DEFAULT
|
5
|
ARTICLE 8. DISPUTE RESOLUTION
|
5
|
ARTICLE 9. EFFECTIVENESS
|
5
|
ARTICLE 10. NO SUBSEQUENT OBLIGATION
|
5
|
ARTICLE 11. AMENDMENT
|
6
|
ARTICLE 12. COUNTERPARTS
|
6
|
ARTICLE 13. MISCELLANEOUS
|
6
|
EXHIBIT 1 CONSIDERATION FOR OPERATION GUARANTEE
|
7
|
1.
|
Party A and Party B are current shareholders of Party E which have made registrations at the Administration of Industry and Commerce authorities, and each holding XX% and XX% shares in Party E respectively;
|
2.
|
Party F is a limited liability company duly organized and validly existing under the laws of the People’s Republic of China, and provide technical support, strategic consultation and other relevant services to Party E;
|
3.
|
To finance the investment by Party A and Party B in Party E, Party F has entered into Loan Agreements (“Loan Agreement”) with Party A and Party B respectively on DATE, providing Party A and Party B with loans of RMB *** and RMB ***, respectively. Pursuant to the Loan Agreement, Party A and Party B has invested the full amount of the loans in Party E's registered capital;
|
4.
|
As the consideration for the loans provided by Party F to Party A and Party B, Party A and Party B entered into a Purchase Option and Cooperation Agreement (“Purchase Option Agreement”) with Party E and Party F on DATE, granting Party F the exclusive option to purchase all or part of shares/assets in Party E holding by both parties or either party of Party A and Party B at any time, in accordance with China laws;
|
5.
|
For making securities of the payment obligations of Party E under numerous agreements executed between Party A and Party B, Party A and Party B entered into a Share Pledge Agreement (“Pledge Agreement”) with Party F on DATE, pledging their respective shares in Party E to Party F;
|
6.
|
Party F is intended to exercise the purchase option to purchase entire shares in Party E holding by Party A and Party B in accordance with the Purchase Option Agreement, and designates Party C and Party D as the subject to exercise the aforesaid purchase option.
|
1.
|
Exercise of the Purchase Option
|
1.1.
|
Party F hereby authorizes Party C and Party D in accordance with the purchase option granted to Party C and Party D under Article 2.1 of the Purchase Option Agreement, and Party C and Party D agrees to accept the aforesaid authorization, on behalf of Party F, to purchase entire shares in Party E holding by Party A and Party B in accordance with the conditions stipulated in the Purchase Option Agreement.
|
1.2.
|
In accordance with Article 3 under the Purchase Option Agreement, the purchase price of entire shares in Party E holding by Party A and Party B, purchased by Party C and Party D in accordance with Party F’s authorization, shall be the sum of the loan principal lent by Party F to Party A and Party B, which is equivalent to RMB ***. (“Purchase Price”).
|
2.
|
Share Transfer
|
2.1.
|
Party A and Party B shall enter into a Share Transfer Agreement (“Share Transfer Agreement”) with Party C and Party D, in accordance with the content and form of Appendix II hereto, within thirty (30) days after receiving exercise notice from Party F (“Appendix I”), in accordance with Article 2.3 of the Purchase Option Agreement, and other documents required to make change registrations at industrial and commerce authorities.
|
3.
|
Loan Arrangements
|
3.1.
|
The purchase price of entire shares in Party E holding by Party A and Party B, purchased by Party C and Party D shall be contributed in full amount by Party F. However, Party C and Party D shall enter into a loan agreement with Party F to the satisfaction of Party F, in accordance with the content and form of Appendix III hereto.
|
3.2.
|
Party C and Party D agree and irrevocably instruct Party F to pay the aforesaid loan provided to Party C and Party D, which used to purchase Party A and Party B’s shares, directly to Party A and Party B, in accordance with the conditions and terms stated in the frame agreement.
|
3.3.
|
Party A and Party B agree to contribute their entire income obtained from selling the shares in Party E in accordance with the agreement, to perform its repayment obligations to Party F under the Loan Agreement. The Loan Agreement among Party A, Party B and Party F will be terminated when Party A and Party B pay off all the loans in accordance with Article 4.2 hereof.
|
4.
|
Payment and Obligation Set-off
|
4.1.
|
In accordance with article 3.2 hereof, the parties agree the purchase price shall be paid by Party F to Party A and Party B directly, at the day of share change registration procedures at industrial and commerce authorities are completed, concerning entire shares in Party E holding by Party A and Party B, purchased by Party C and Party D (“Registration Day”). Whereas Party A and Party B shall pay off all the loans when Party F exercises the purchase option, in accordance with article 3.1 of Loan Agreement, Party F agree the aforesaid payment made by Party F to Party A and Party B will then be set off by the loan principal which shall be paid by Party F to Party A and Party B under the Loan Agreement. As the aforesaid set-off is completed, Party C and Party D are not required to make any other payments to Party A and Party B for the purpose of paying for the purchase price, and Party A and Party B are not required to make any other payments to Party F for the purpose of repaying the loan.
|
4.2.
|
Notwithstanding the foregoing agreement, when the set-off is completed, Party A shall issue a receipt to Party C for all purchase price it received (“Party A’s Receipt”, as Appendix IV
|
hereto), Party B shall issue a receipt to Party D for all purchase price it received (“Party B’s Receipt”, as Appendix IV hereto), and shall expressly acknowledge Party C and Party D’s payment obligation under the Share Transfer Agreement has been carried out. Party F shall issue immediately a receipt to Party A and Party B for entire loan principal it received (“Party F’s receipt”, as Appendix V hereto) after Party A and Party B have issued the aforesaid Party A’s receipt and Party B’s receipt, shall expressly acknowledge Party A and Party B’s payment obligation under the Loan Agreement has been carried out, and the Loan Agreement entered into by and among Party A, Party B and Party F will be terminated upon the date of this Agreement.
|
5.
|
Change of Purchase Option Agreement
|
5.1.
|
The parties agree that, as one prerequisite to Party F’s contribution of purchase price to Party C and Party D, Party C and Party D shall enter into a new purchase option and cooperation agreement with Party E and Party F, in accordance with the content and form stipulated in Appendix VI hereto, at the date of the execution of the Share Transfer Agreement.
|
5.2.
|
Except as otherwise stated or agreed by the parties, all obligations of Party A and Party B under the original Purchase Option Agreement and Proxy on the voting rights issued to Party F will be terminated at the registration day.
|
6.
|
Change of Pledge Agreement
|
6.1.
|
The parties agree that, as one prerequisite to Party F’s contribution of purchase price to Party C and Party D, Party C and Party D shall enter into a new pledge agreement with Party F, in accordance with the content and form stipulated in Appendix VII hereto, at the date of the execution of the Share Transfer Agreement.
|
6.2.
|
The parties agree that, the Pledge Agreement entered into by Party C, Party D and Party F will be terminated upon the date of this Agreement.
|
6.3.
|
The original Pledge Agreement will be terminated at the Registration Day. Except as otherwise stated or agreed by the parties, all obligations of Party A and Party B under the original Pledge Agreement will be terminated at the Registration Day.
|
7.
|
Confidentiality
|
8.
|
Notification
|
8.1.
|
Any notice, request, requirement and other correspondences required by the Agreement or made in accordance with the Agreement, shall be made in written form and sent to the addresses of the parties first above written herein.
|
8.2.
|
Notices hereunder shall be sent to the other party’s address and/or number, by ways of personal delivery, prepaid registered airmail, acknowledged carrier or fax. Such notices shall be deemed to have been effectively given on the following dates: (1) notices delivered by person shall be deemed to have been effectively served on the date of personal delivery; (2) notices sent by prepaid registered airmail shall be deemed to have been effectively served on the seventh day after the day they were delivered for mailing (as indicated by the postmark); (3) notices sent by courier service shall be deemed to have been effectively served on the third day after they were delivered to an acknowledged courier; (4) notices sent by facsimile shall be deemed to have been effectively served on the first working day after being transmitted.
|
9.
|
Dispute Resolution
|
9.1.
|
Any dispute arises from the interpretation or performance of terms hereof by the parties, shall be settled through friendly consultation. If the parties fail to make a written agreement after consultation, the dispute shall be submitted for arbitration in accordance with the agreement. The arbitration shall be final and exclusive. Unless otherwise expressly stipulated herein, any party waives expressly its right to submit a dispute to court for a legal action, and the waiver is irrevocable.
|
9.2.
|
The arbitration shall be submitted to China International Economic and Trade Arbitration Committee (“Arbitration Committee”) to be arbitrated in accordance with then-in-force arbitration rules. The place of arbitration shall be Beijing. Unless otherwise stipulated in the arbitration award, the arbitration fee (including reasonable attorney fees and expenses) shall be borne by the losing party.
|
10.
|
Supplementary Provisions
|
10.1.
|
The failure or delay of any party hereof to exercise any right hereunder shall not be deemed as a waiver thereof, nor any single or partial exercise of any right preclude further exercise thereof in future by the party.
|
10.2.
|
The headings of articles herein are provided for the purpose of index. Such headings shall in no event be used or affected interpretations of the terms herein.
|
10.3.
|
The conclusion, effectiveness, interpretation of the agreement and the settlement of disputes in connection therewith, shall be governed by laws of Hong Kong Special Administration Region of the People’s Republic of China.
|
10.4.
|
Each party hereunder concludes the agreement with legal purpose. Each term hereof is severable and independent from the others. If at any time one or more of such terms is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining terms hereof shall not in any way be affected thereby; and the parties shall make every endeavor to negotiate and arrive at new terms to substitute the invalid, illegal and unenforceable terms, and preserve as near as possible business purposes of the original terms.
|
10.5.
|
Upon the effectiveness of the agreement, the parties shall fully perform the agreement. Any modifications of the agreement shall only be effective in written form, through consultations of the parties, and obtained necessary authorization and approval by Party D and Party E respectively.
|
10.6.
|
Matters not covered in the agreement shall be dealt with in a supplementary agreement, and annexed hereto. The supplementary agreement shall have the same legal force as the agreement.
|
10.7.
|
The agreement is executed in six original copies, which are equally authentic. Each party hereto shall hold one copy.
|
10.8.
|
The agreement shall be effective upon execution.
|
ARTICLE 1
|
Subject Matter of Transfer
|
1.1
|
Subject to the terms and conditions of this Agreement, Transferor A agrees to transfer and Transferee A agrees to acquire the equity interests representing the Transferor A’s equity interests of the registered capital (RMB ***
,
accounting for XX% of the total registered capital of the Company) that is contributed to the Company in full and all rights and interests attached to such equity interests.
|
1.2
|
Subject to the terms and conditions of this Agreement, Transferor B agrees to transfer and Transferee B agrees to acquire the equity interests representing the Transferor B’s equity interests of
|
ARTICLE 2
|
Consideration and Payment
|
2.1
|
Consideration
|
2.1.1
|
Transferee A shall make payment of RMB *** (“Consideration”) to Transferor A’s designated account as consideration for Transferor A’s transfer of the Shareholders’ Equity Interests to Transferee A in accordance with this Agreement.
|
2.1.2
|
Transferee B shall make payment of RMB *** (“Consideration”) to Transferor B’s designated account as consideration for Transferor B’s transfer of the Shareholders’ Equity Interests to Transferee B in accordance with this Agreement.
|
2.2
|
The date of payment: the Transferees shall make payment of the Consideration to the Transferors within 30 days as of the effective date of this Agreement.
|
ARTICLE 3
|
Closing
|
3.1
|
For the purpose of this Agreement, the closing date in this Agreement means the completion date of changing the registration of equity interests of the Company (“Closing Date”). From the Closing Date, rights and obligation hereunder enjoyed and performed by the Transferors within the scope of the transferred equity intetests shall be enjoyed and borne by the Transferees.
|
3.2
|
The Parties shall take all necessary action to assist the Transferees and the Company in handling all necessary procedures for the transfer of equity interests until the Closing Date.
|
3.3
|
All procedure fees and taxes incurred from the transfer of equity interests shall be borne by the Parties separately in accordance with laws.
|
ARTICLE 4
|
Representations and Warranties
|
4.1
|
The Transferors hereby make unconditional and irrevocable representations and warranties as follows:
|
4.1.1
|
The Transferors are legal and actual owners of the shareholders’ equity interests which are free from lien, pledge, claim, or the securities or third party’s rights, and are not subject to any binding of priority right (including without limitation the right of first refusal and right of first purchase). The transferee will not be claimed by any third party after acquiring such shareholders’ equity interests.
|
4.1.2
|
The Company is duly incorporated and validly existing in accordance with laws of the People’s Republic of China. The transfer of equity interests hereunder will not contravene any provision of the articles of association of the Company.
|
4.1.3
|
The execution of this Agreement and closing of the transaction hereunder shall not lead to the Transferors’ breach, cancellation or termination of any agreement they have executed, or breach any agreement, undertaking or other formal documents.
|
4.1.4
|
The representations and warranties made by the Transferors herein and statement relevant to the transfer as of the date of this Agreement are true, accurate, complete, and without any concealment or misleading content.
|
4.2
|
The Transferees hereby make unconditional and irrevocable representations and warranties as follows:
|
4.2.1
|
The execution of this Agreement and closing of the transaction hereunder shall not lead to the Transferors’ breach, cancellation or termination of any agreement they have executed, or breach any agreement, undertaking or other formal documents.
|
4.2.2
|
The representations and warranties made by the Transferees herein and statement relevant to the transfer as of the date of this Agreement are true, accurate, complete, and without any concealment or misleading content.
|
ARTICLE 5
|
Notices
|
ARTICLE 6
|
Liability for Breach
|
6.1
|
After the date of this Agreement, in the event that any party breaches or fails to perform obligation hereunder shall take default liabilities and all economic losses of the other party incurred therefrom.
|
ARTICLE 7
|
Governing Law
|
7.1
|
The conclusion, effectiveness, interpretation, performance of the agreement and the settlement of disputes in connection therewith, shall be governed by laws of the People’s Republic of China.
|
7.2
|
In the event that some articles of this Agreement are deemed as invalid or unenforceable, and such articles will not affect validity of the other articles, the other articles shall remain valid; meanwhile, the Parties shall adjust the invalid or unenforceable articles in accordance with the current laws and regulations to valid articles and to comply with principles and spirits of this Agreement as much as possible.
|
ARTICLE 8
|
Effectiveness and Dispute Resolution
|
8.1
|
This Agreement shall become effective as of the execution date.
|
8.2
|
Any dispute arises from the interpretation or performance of terms hereof by the parties, shall be settled through friendly consultation. If the parties fail to make a written agreement after consultation, the dispute shall be submitted for arbitration in accordance with the agreement. The arbitration shall be final and exclusive. Unless otherwise expressly stipulated herein, any party waives expressly its right to submit a dispute to court for a legal action, and the waiver is irrevocable.
|
8.3
|
The arbitration shall be submitted to China International Economic and Trade Arbitration Committee (“Arbitration Committee”) to be arbitrated in accordance with then-in-force arbitration rules. The place of arbitration shall be Beijing. Unless otherwise stipulated in the arbitration award, the arbitration fee (including reasonable attorney fees and expenses) shall be borne by the losing party.
|
ARTICLE 9
|
Miscellaneous
|
9.1
|
The failure or delay of any party hereof to exercise any right hereunder shall not be deemed as a waiver thereof, nor any single or partial exercise of any right preclude further exercise thereof in future by the party.
|
9.2
|
The headings of articles herein are provided for the purpose of index. Such headings shall in no event be used or affected interpretations of the terms herein.
|
9.3
|
Each party hereunder concludes the agreement with legal purpose. Each term hereof is severable and independent from the others. If at any time one or more of such terms is or becomes invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining terms hereof shall not in any way be affected thereby; and the parties shall make every endeavor to negotiate and arrive at new terms to substitute the invalid, illegal and unenforceable terms, and preserve as near as possible business purposes of the original terms.
|
9.4
|
This Agreement shall be binding for each party’s legal successors.
|
9.5
|
Matters not covered in the Agreement shall be determined through negotiation by the Parties. The supplementary agreement shall be made in writing and be effective upon signature of the Parties.
|
9.6
|
The Agreement is executed in six original copies. Each party hereto shall hold one copy. The remaining two copies are for the relevant legal procedures. Each copy is equally authentic.
|
ARTICLE 1. DEFINITIONS
|
3
|
ARTICLE 2. TECHNICAL SUPPORT SERVICES
|
3
|
ARTICLE 3. STRATEGIC CONSULTING SERVICE FEE
|
3
|
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
|
4
|
ARTICLE 5. CONFIDENTIALITY
|
4
|
ARTICLE 6. GOVERNING LAW AND EVENTS OF DEFAULT
|
4
|
ARTICLE 7. DISPUTE RESOLUTION
|
4
|
ARTICLE 8. EFFECTIVENESS
|
5
|
ARTICLE 9. NO SUBSEQUENT OBLIGATION
|
5
|
ARTICLE 10. TRANSFER LIMITATION
|
5
|
ARTICLE 11. COMPENSATION
|
5
|
ARTICLE 12. AMENDMENT
|
5
|
ARTICLE 13. COUNTERPARTS
|
5
|
ARTICLE 14. MISCELLANEOUS
|
6
|
EXHIBIT 1 CONTENT OF THE STRATEGIC CONSULTING SERVICES
|
7
|
EXHIBIT 2 STRATEGIC CONSULTING SERVICE FEE
|
8
|
ARTICLE 1. DEFINITIONS
|
3
|
ARTICLE 2. TECHNICAL SUPPORT SERVICES
|
3
|
ARTICLE 3. TECHNICAL SUPPORT SERVICES FEE
|
3
|
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
|
4
|
ARTICLE 5. CONFIDENTIALITY
|
4
|
ARTICLE 6. GOVERNING LAW AND EVENTS OF DEFAULT
|
4
|
ARTICLE 7. DISPUTE RESOLUTION
|
4
|
ARTICLE 8. EFFECTIVENESS
|
5
|
ARTICLE 9. NO SUBSEQUENT OBLIGATION
|
5
|
ARTICLE 10. TRANSFER LIMITATION
|
5
|
ARTICLE 11. AMENDMENT
|
5
|
ARTICLE 12. COUNTERPARTS
|
5
|
ARTICLE 13. MISCELLANEOUS
|
5
|
EXHIBIT 1 CONTENT OF THE TECHNICAL SUPPORT SERVICES
|
6
|
EXHIBIT 2 TECHNICAL SUPPORT SERVICE FEE
|
7
|
1.
|
This Agreement shall take effect from 1 January 2013 and shall continue until 31 December of the same year and thereafter shall continue annually subject to Clause 7 hereof (“the Term”).
|
2.
|
(a)
|
For the sole purpose of enabling the Information Vendor and the Subsidiaries to disseminate the Information only to persons subscribing for the Services ("Subscribers") through the Systems and Services as set out in Schedule 3, the Company allows the Information Vendor and the Subsidiaries, on a non-exclusive basis, to receive the Information via an automated data feed, connected to an information provider as may be notified to the Company, throughout the Term on each and every business day during such time when the Indexes shall be calculated and disseminated. The Company reserves the right to designate an information provider through which the Information Vendor and the Subsidiaries shall receive the Information.
|
(b)
|
The Information Vendor shall pay to the Company the relevant fees and charges as set out in Schedule 4 in respect of the supply of the Information for the Term.
|
(c)
|
In the event, for whatever reasons, the Information Vendor and/or the Subsidiaries decide(s) not to use or refer to any of the Information supplied pursuant to this Agreement, no refund shall be made of any part of the fees and charges already paid pursuant to Clause 2(b) above.
|
(d)
|
For the avoidance of doubt, the Company shall be entitled to revise such fees and charges by giving the Information Vendor no less than three months' written notice prior to the due date of the revised fees and charges. Such revision includes without limitation the right to introduce additional fees and charges tocover any new or existing types of services or to modify the basis for calculating any fees and charges.
|
(e)
|
The Information Vendor undertakes that each of the Subsidiaries shall comply with the provisions as set out in Clauses 3 to 6 of the Agreement applicable to the Information Vendor and for such purpose, reference to “Information Vendor” in the aforesaid Clauses shall be construed as reference to “Subsidiaries” and such Clauses shall be interpreted accordingly.
|
(f)
|
If any of the Subsidiaries ceases to be a wholly-owned subsidiary of the Information Vendor, the Information Vendor undertakes to notify the Company as soon as practicable and not to disseminate the Information to such Subsidiaries except with the Company’s prior written approval.
|
3.
|
The Information Vendor shall be responsible for all technical matters involved in the reception of the Information and for all costs and expenses incurred or to be incurred in connection therewith.
|
4.
|
The Information Vendor acknowledges all rights (including intellectual property rights) in the Information and in all the names of the Indexes are owned by Hang Seng Data Services Limited and the Company and that the Information is supplied to the Information Vendor by the Company with authority of Hang Seng Data Services Limited. The Information Vendor further acknowledges that they have no proprietary or other right or interest in the Information other than as may be conferred by this Agreement. The Information Vendor hereby undertakes to the Company that it will not do any act which may invalidate or jeopardise the existence and/or ownership of such rights and that it will not use the Information in any way other than as is authorised by this Agreement.
|
5.
|
The Information Vendor shall not disseminate the Information or any part thereof unless the same shall be identical to the numerical figures supplied by the Company to the Information Vendor at the relevant time and the Information Vendor shall take all necessary action to prevent any of its employees and agents from doing so.
|
6.
|
(a)
|
The Information Vendor acknowledges and agrees that the Company does not warrant, represent or guarantee the accuracy, completeness and/or consistency of the Information and no warranty, representation or guarantee of any kind whatsoever relating to the Information is given or may be implied and that the Company is not liable to the Information Vendor, its Subscribers or other parties for any cause of action whatever its juristic nature (whether in contract, tort or statutory or
|
|
|
otherwise and whether or not similar to any of the foregoing) for or in respect of any loss or damage incurred or suffered by any of them arising from any act or omission on the part of the Company, its officers, employees or agents or in connection with the Information, its compilation, dissemination and/or ultimate use.
|
(b)
|
The Company shall not be liable for any failure to supply the Information or any part thereof due to any mechanical failure, power failure, malfunction, breakdown, interruption or inadequacy of equipment or installation in connection with the supply of the Information, Acts of God, government controls or restrictions or any other causes beyond the reasonable control of the Company.
|
(c)
|
The Information Vendor hereby undertakes to indemnify the Company and to keep the Company indemnified and to hold the Company harmless in all respects against any loss, damage, cost, claim, expense, demand, liability or other consequences of whatsoever nature which the Company may at any time or from time to time incur or suffer as a result of entering into this Agreement with the Information Vendor or the supply of the Information or any part thereof to the Information Vendor pursuant to the terms and conditions hereunder provided that the Company shall notify the Information Vendor in writing immediately upon any claim made against the Company in circumstances in which the Company is entitled to claim under this indemnity and furnish the Information Vendor with copies of such claim and provided further that no settlement nor compromise of any claim shall be made by the Company without the agreement of the Information Vendor in writing and that the Information Vendor shall have the right (but not the obligation) to participate actively at its own cost and expense in the defence of such claim.
|
|
(d)
|
The Information Vendor covenants to and undertakes with the Company that the Information Vendor shall not disseminate the Information to any person (a "Recipient") on a real-time basis unless the Recipient has entered into the Information Vendor's standard agreement for such purpose. In addition, the Information Vendor covenants and undertakes with the Company that:-
|
(i)
|
such standard agreement shall contain (a) a prohibition against the Recipient redisseminating the levels of the Indexes or any of them to any other person unless the Recipient has signed an application for the supply and use of the Information in such form as required by the Company from time to time together with the relevant licence fee made payable to "Hang Seng Indexes Company Limited" and obtained the prior consent from the Company. For the purpose of this Clause 6(d), redissemination shall mean the dissemination of the Information by a Recipient to any other person after any edition, including but not limited to the addition, deletion or change of the layout of the Information as supplied by the Information Vendor to the Recipient; and (b)
|
|
a provision to the effect that breach of the foregoing shall render the standard agreement between the Information Vendor and the Recipient terminated; and
|
(i)
|
the Information Vendor shall notify the Company and submit to the Company the signed application and licence fee referred to in 6(d)(i) as soon as practicable after it has agreed to enter into such standard agreement with any Recipient and, in any case, shall not enter into such standard agreement until the Company has informed the Information Vendor that a particular Recipient's application was successful.
|
|
(e)
|
Without prejudice to the foregoing, nothing contained in this Agreement shall allow or be construed to allow the Information Vendor to disseminate the Information to any person which contravenes or is inconsistent with any local legal or regulatory requirement.
|
7.
|
This Agreement shall terminate:-
|
|
(a)
|
upon the expiry of three months' notice in writing given by either party to the other; or
|
|
(b)
|
immediately upon notice in writing given by the Company to the Information Vendor in the event of (i) any breach by the Information Vendor of any of the terms hereof and such breach has not been rectified or remedied by the Information Vendor within 14 days after notice in writing of the same has been given by the Company to the Information Vendor, or (ii) the filing of a petition by the Information Vendor to be wound up or the filing of a winding-up petition against the Information Vendor or (iii) the appointment of a receiver of all or any of the property or assets of the Information Vendor; or
|
|
(c)
|
immediately upon and simultaneous with the termination for whatever reason of all or any of the licence agreements pursuant to which the Company or the Information Vendor is authorised to disseminate the Information; or
|
|
(d)
|
immediately upon notice in writing given by the Company to the Information Vendor in the event that for whatever reason the Company ceases to calculate and disseminate the Information.
|
8.
|
The communication details of each party are as follows:-
|
9.
|
Other than as required by the terms of this Agreement, both parties shall keep the contents of this Agreement confidential and shall not disclose the same to any other person except as required by applicable law or an order from a court of competent jurisdiction or as requested by any regulatory authority or unless mutually agreed otherwise.
|
10.
|
This Agreement constitutes the entire agreement between the parties inter se in respect of the matters referred to herein to the exclusion of all other agreements or arrangements, whether oral or written, express or implied, and therefore supersedes any prior agreements or arrangements between the parties in respect of such matters.
|
11.
|
Unless otherwise expressly agreed in writing, the failure of either party to require performance by the defaulting party of any provision of this Agreement shall in no way affect its right to require performance of that or any other provision of this Agreement by the defaulting party and any waiver by either party of any breach by the defaulting party of any provision of this Agreement shall not be construed as a waiver of any continuing or later breach of such provision, a waiver of the provision itself or a waiver of any other right under this Agreement.
|
12.
|
The Information Vendor may not assign any of its rights and obligations under this Agreement without the prior consent in writing of the Company but, subject thereto, this Agreement shall be binding on and shall enure for the benefit of each party's successors and permitted assigns.
|
13.
|
Nothing in this Agreement shall be taken to constitute a partnership between the parties and neither of the parties shall have any authority to bind the other party.
|
14.
|
This Agreement shall be governed by and construed in accordance with the laws of Hong Kong Special Administrative Region.
|
Yours faithfully,
For and on behalf of
Hang Seng Indexes Company Limited
_____________________________
Name: Anita Mo
Title: Director
Date: March 26, 2009
|
Name: Zhiwei Zhao
Title: Chief Executive Officer
Date: March 05, 2009
|
1.
|
Daily Growth Securities Limited
|
2.
|
Fortune Software (Beijing) Co., Ltd
|
3.
|
Fortune (Beijing) Wisdom Technology Co., Ltd
|
4.
|
Fortune (Beijing) Success Technology Co., Ltd
|
5.
|
Jujin Software (Shenzhen) Co., Ltd
|
6.
|
Juda Software (Shenzhen) Co., Ltd
|
7.
|
Zhengning Information Technology Co., Ltd
|
8.
|
Shenzhen Genius Information Technology Co., Ltd
|
1.
|
Hang Seng Index & Sub-indexes
|
2.
|
Hang Seng Composite Index Series
|
3.
|
Hang Seng China Enterprises Index
|
4.
|
Hang Seng Freefloat Index Series
|
5.
|
Hang Seng Total Return Index Series
|
6.
|
Hang Seng China H-Financials Index
|
7.
|
Hang Seng China AH Index Series
|
8.
|
Hang Seng China 50 Index
|
9.
|
Hang Seng Short and Leveraged Index Series
|
10.
|
Hang Seng REIT Index
|
11.
|
Hang Seng China A Industry Top Index
|
12.
|
Hang Seng Dividend Point Index Series
|
13.
|
Hang Seng Corporate Sustainability Index Series
|
14.
|
Hang Seng Risk Adjusted Index Series
|
15.
|
HSI Volatility Index
|
1.
|
Terminals
(
Genius Finance, Mega Trend, Grand Reference, Value Engine
,
)
|
2.
|
Pagers / PDA
(
Mobile Star, Mobile Fortune
)
|
3.
|
Mobile Phones
(
Mobile Star, Mobile Fortune
)
|
4.
|
Free-to-the-public Website (www.dgg.com.hk)
|
5.
|
Fee-based Website
(
Web Mega Trend, Web Grand Reference, Web Value Engine
)
|
6.
|
WAP Services (wap.dgg.com.hk)
|
1.
|
ANNUAL FEE
|
2.
|
QUARTERLY FEE
|
|
-
|
The Information Vendor has to pay a fee on a quarterly basis and a minimum of *** per quarter will be charged if the total quarterly fee incurred is less than ***
.
|
|
-
|
The services of per device, per user ID and per channel are calculated on the average number of each month-end in the quarter, while the service of per quote is calculated on the accumulated number of quotes in the quarter.
|
|
-
|
When the services of both per user ID and per website are used together, the Information Vendor is only required to pay the higher of per user ID or per website.
|
|
-
|
Information Vendor should keep at least 3-years' record of the number of devices. The Company reserves the right to audit such materials at any time.
|
|
-
|
PER DEVICE
|
-
|
A quarterly fee of subscribers will be charged on per fee-based user ID.
|
-
|
The quarterly fee of terminals and display boards will apply to all local and overseas real-time subscribers.
|
-
|
Fee:
|
(a) |
Terminals / Display Boards
|
Fee
|
First 2,000
|
*** per device per month
|
2,001 – 10,000
|
*** per device per month
|
Over 10,000
|
*** per device per month
|
(b |
Pagers / PDA
|
Fee
|
First 2,000
|
*** per device per month
|
2,001 - 10,000
|
*** per device per month
|
Over 10,000
|
*** per device per month
|
|
-
|
PER USER ID
|
|
-
|
A quarterly fee of subscribers will be charged on per fee-based user ID.
|
|
-
|
The quarterly fee will apply to all local and overseas real-time subscribers.
|
User ID
|
Fee
|
First 2,000
|
*** per user ID per month
|
2,001 – 10,000
|
*** per user ID per month
|
Over 10,000
|
*** per user ID per month
|
|
-
|
PER CHANNEL
|
|
-
|
A quarterly fee of websites, WAP content provider service, television broadcasting and downloadable applications developed / adapted for mobile devices such as Apple iPhones or iPads (“Mobile Aps”) will be charged on per channel basis.
|
|
-
|
Information Vendor must provide a hyperlink next to the index level in their websites connected to the Company's website at www.hsi.com.hk
|
-
|
(a)
Websites / WAP / Mobile Aps
|
|
*** per channel per month, provided that Mobile Aps for Apple iPhone and iPad shall be grouped together and charged as one channel.
|
|
(b)
Television Broadcasting
|
|
(i)
|
A flat charge of *** per month for one TV channel
|
|
(ii)
|
A flat charge of *** per month for two or more TV channels
|
|
-
|
PER QUOTE
|
|
-
|
A quarterly fee of mobile phones, voice response system and WAP mobile phone operator service will be charged on per quote.
|
3.
|
FEES FOR DISSEMINATION OF DELAYED DATA
|
4.
|
(a)
|
Taxes (including value added tax), duties and levies which may be imposed from time to time in relation to the fees and charges shall be paid by the Information Vendor and are not covered by the fees and charges. The Information Vendor shall provide to the Company written evidence of payment of any taxes, duties and levies upon the Company’s request.
|
(b)
|
The fees as set out in this paragraph 2 shall be payable by the Information Vendor within 30 days after the payment is due at each quarter-end together with a statement of the details of the calculation basis.
|
(c)
|
Interest will be payable on overdue fees charged under this Schedule at 20% per annum on a daily basis until the Company actually receives payment of such overdue fees in full.
|
1.
|
This Agreement shall take effect from 1 January 2013 and shall continue until 31 December of the same year and thereafter shall continue annually subject to Clause 7 hereof (“the Term”).
|
2.
|
(a)
|
For the sole purpose of enabling the Information Vendor and the Subsidiaries to disseminate the Information only to persons subscribing for the Services ("Subscribers") through the Systems and Services as set out in Schedule 3, the Company allows the Information Vendor and the Subsidiaries, on a non-exclusive basis, to receive the Information via an automated data feed, connected to an information provider as may be notified to the Company, throughout the Term on each and every business day during such time when the Indexes shall be calculated and disseminated. The Company reserves the right to designate an information provider through which the Information Vendor and the Subsidiaries shall receive the Information.
|
(b)
|
The Information Vendor shall pay to the Company the relevant fees and charges as set out in Schedule 4 in respect of the supply of the Information for the Term.
|
(c)
|
In the event, for whatever reasons, the Information Vendor and/or the Subsidiaries decide(s) not to use or refer to any of the Information supplied pursuant to this Agreement, no refund shall be made of any part of the fees and charges already paid pursuant to Clause 2(b) above.
|
(d)
|
For the avoidance of doubt, the Company shall be entitled to revise such fees and charges by giving the Information Vendor no less than three months' written notice prior to the due date of the revised fees and charges. Such revision includes without limitation the right to introduce additional fees and charges tocover any new or existing types of services or to modify the basis for calculating any fees and charges.
|
(e)
|
The Information Vendor undertakes that each of the Subsidiaries shall comply with the provisions as set out in Clauses 3 to 6 of the Agreement applicable to the Information Vendor and for such purpose, reference to “Information Vendor” in the aforesaid Clauses shall be construed as reference to “Subsidiaries” and such Clauses shall be interpreted accordingly.
|
(f)
|
If any of the Subsidiaries ceases to be a wholly-owned subsidiary of the Information Vendor, the Information Vendor undertakes to notify the Company as soon as practicable and not to disseminate the Information to such Subsidiaries except with the Company’s prior written approval.
|
3.
|
The Information Vendor shall be responsible for all technical matters involved in the reception of the Information and for all costs and expenses incurred or to be incurred in connection therewith.
|
4.
|
The Information Vendor acknowledges all rights (including intellectual property rights) in the Information and in all the names of the Indexes are owned by Hang Seng Data Services Limited and the Company and that the Information is supplied to the Information Vendor by the Company with authority of Hang Seng Data Services Limited. The Information Vendor further acknowledges that they have no proprietary or other right or interest in the Information other than as may be conferred by this Agreement. The Information Vendor hereby undertakes to the Company that it will not do any act which may invalidate or jeopardise the existence and/or ownership of such rights and that it will not use the Information in any way other than as is authorised by this Agreement.
|
5.
|
The Information Vendor shall not disseminate the Information or any part thereof unless the same shall be identical to the numerical figures supplied by the Company to the Information Vendor at the relevant time and the Information Vendor shall take all necessary action to prevent any of its employees and agents from doing so.
|
6. |
(a)
|
The Information Vendor acknowledges and agrees that the Company does not warrant, represent or guarantee the accuracy, completeness and/or consistency of the Information and no warranty, representation or guarantee of any kind whatsoever relating to the Information is given or may be implied and that the Company is not liable to the Information Vendor, its Subscribers or other parties for any cause of action whatever its juristic nature (whether in contract, tort or statutory or
|
|
otherwise and whether or not similar to any of the foregoing) for or in respect of any loss or damage incurred or suffered by any of them arising from any act or omission on the part of the Company, its officers, employees or agents or in connection with the Information, its compilation, dissemination and/or ultimate use.
|
(b)
|
The Company shall not be liable for any failure to supply the Information or any part thereof due to any mechanical failure, power failure, malfunction, breakdown, interruption or inadequacy of equipment or installation in connection with the supply of the Information, Acts of God, government controls or restrictions or any other causes beyond the reasonable control of the Company.
|
(c)
|
The Information Vendor hereby undertakes to indemnify the Company and to keep the Company indemnified and to hold the Company harmless in all respects against any loss, damage, cost, claim, expense, demand, liability or other consequences of whatsoever nature which the Company may at any time or from time to time incur or suffer as a result of entering into this Agreement with the Information Vendor or the supply of the Information or any part thereof to the Information Vendor pursuant to the terms and conditions hereunder provided that the Company shall notify the Information Vendor in writing immediately upon any claim made against the Company in circumstances in which the Company is entitled to claim under this indemnity and furnish the Information Vendor with copies of such claim and provided further that no settlement nor compromise of any claim shall be made by the Company without the agreement of the Information Vendor in writing and that the Information Vendor shall have the right (but not the obligation) to participate actively at its own cost and expense in the defence of such claim.
|
(d)
|
The Information Vendor covenants to and undertakes with the Company that the Information Vendor shall not disseminate the Information to any person (a "Recipient") on a real-time basis unless the Recipient has entered into the Information Vendor's standard agreement for such purpose. In addition, the Information Vendor covenants and undertakes with the Company that:-
|
(i)
|
such standard agreement shall contain (a) a prohibition against the Recipient redisseminating the levels of the Indexes or any of them to any other person unless the Recipient has signed an application for the supply and use of the Information in such form as required by the Company from time to time together with the relevant licence fee made payable to "Hang Seng Indexes Company Limited" and obtained the prior consent from the Company. For the purpose of this Clause 6(d), redissemination shall mean the dissemination of the Information by a Recipient to any other person after any edition, including but not limited to the addition, deletion or change of the layout of the Information as supplied by the Information Vendor to the Recipient; and (b)
|
|
a provision to the effect that breach of the foregoing shall render the standard agreement between the Information Vendor and the Recipient terminated; and
|
(ii)
|
the Information Vendor shall notify the Company and submit to the Company the signed application and licence fee referred to in 6(d)(i) as soon as practicable after it has agreed to enter into such standard agreement with any Recipient and, in any case, shall not enter into such standard agreement until the Company has informed the Information Vendor that a particular Recipient's application was successful.
|
(e)
|
Without prejudice to the foregoing, nothing contained in this Agreement shall allow or be construed to allow the Information Vendor to disseminate the Information to any person which contravenes or is inconsistent with any local legal or regulatory requirement.
|
7.
|
This Agreement shall terminate:-
|
(a)
|
upon the expiry of three months' notice in writing given by either party to the other; or
|
(b)
|
immediately upon notice in writing given by the Company to the Information Vendor in the event of (i) any breach by the Information Vendor of any of the terms hereof and such breach has not been rectified or remedied by the Information Vendor within 14 days after notice in writing of the same has been given by the Company to the Information Vendor, or (ii) the filing of a petition by the Information Vendor to be wound up or the filing of a winding-up petition against the Information Vendor or (iii) the appointment of a receiver of all or any of the property or assets of the Information Vendor; or
|
(c)
|
immediately upon and simultaneous with the termination for whatever reason of all or any of the licence agreements pursuant to which the Company or the Information Vendor is authorised to disseminate the Information; or
|
(d)
|
immediately upon notice in writing given by the Company to the Information Vendor in the event that for whatever reason the Company ceases to calculate and disseminate the Information.
|
8.
|
The communication details of each party are as follows:-
|
9.
|
Other than as required by the terms of this Agreement, both parties shall keep the contents of this Agreement confidential and shall not disclose the same to any other person except as required by applicable law or an order from a court of competent jurisdiction or as requested by any regulatory authority or unless mutually agreed otherwise.
|
10.
|
This Agreement constitutes the entire agreement between the parties inter se in respect of the matters referred to herein to the exclusion of all other agreements or arrangements, whether oral or written, express or implied, and therefore supersedes any prior agreements or arrangements between the parties in respect of such matters.
|
11.
|
Unless otherwise expressly agreed in writing, the failure of either party to require performance by the defaulting party of any provision of this Agreement shall in no way affect its right to require performance of that or any other provision of this Agreement by the defaulting party and any waiver by either party of any breach by the defaulting party of any provision of this Agreement shall not be construed as a waiver of any continuing or later breach of such provision, a waiver of the provision itself or a waiver of any other right under this Agreement.
|
12.
|
The Information Vendor may not assign any of its rights and obligations under this Agreement without the prior consent in writing of the Company but, subject thereto, this Agreement shall be binding on and shall enure for the benefit of each party's successors and permitted assigns.
|
13.
|
Nothing in this Agreement shall be taken to constitute a partnership between the parties and neither of the parties shall have any authority to bind the other party.
|
14.
|
This Agreement shall be governed by and construed in accordance with the laws of Hong Kong Special Administrative Region.
|
15.
|
The Information Vendor has entered into a licence agreement with the Company dated 27 February 2009 (the “Existing Agreement”). The Information Vendor and the Company agree that the Existing Agreement shall be terminated and replaced by this Agreement with effect on and from the Effective Date of this Agreement but without prejudice to any and all rights
|
|
and remedies of the respective parties regarding any obligations and liabilities of the other parties under the Existing Agreement which have accrued prior to the termination of the Existing Agreement.
|
Yours faithfully,
For and on behalf of
Hang Seng Indexes Company Limited
_____________________________
Name:
Title:
Date:
|
Name:
Title:
Date:
|
1.
|
Hang Seng Index & Sub-indexes
|
2.
|
Hang Seng Composite Index Series
|
3.
|
Hang Seng China Enterprises Index
|
4.
|
Hang Seng Freefloat Index Series
|
5.
|
Hang Seng Total Return Index Series
|
6.
|
Hang Seng China H-Financials Index
|
7.
|
Hang Seng China AH Index Series
|
8.
|
Hang Seng China 50 Index
|
9.
|
Hang Seng Short and Leveraged Index Series
|
10.
|
Hang Seng REIT Index
|
11.
|
Hang Seng China A Industry Top Index
|
12.
|
Hang Seng Dividend Point Index Series
|
13.
|
Hang Seng Corporate Sustainability Index Series
|
14.
|
Hang Seng Risk Adjusted Index Series
|
15.
|
HSI Volatility Index
|
1.
|
Terminals
(
Mega Trend, Grand Reference, Value Engine
,
)
|
2.
|
Pagers / PDA
(
Mobile Star, Mobile Fortune
)
|
3.
|
Mobile Phones
(
Mobile Star, Mobile Fortune
)
|
4.
|
Free-to-the-public Website (
www.jrj.com.cn
, www.stockstar.com)
|
5.
|
Fee-based Website
(
Web Mega Trend, Web Grand Reference, Web Value Engine
)
|
6.
|
WAP Services (wap.jrj.com.hk)
|
1.
|
ANNUAL FEE
|
2.
|
QUARTERLY FEE
|
|
-
|
The Information Vendor has to pay a fee on a quarterly basis and a minimum of *** per quarter will be charged if the total quarterly fee incurred is less than ***
.
|
|
-
|
The services of per device, per user ID and per channel are calculated on the average number of each month-end in the quarter, while the service of per quote is calculated on the accumulated number of quotes in the quarter.
|
|
-
|
When the services of both per user ID and per website are used together, the Information Vendor is only required to pay the higher of per user ID or per website.
|
|
-
|
Information Vendor should keep at least 3-years' record of the number of devices. The Company reserves the right to audit such materials at any time.
|
|
-
|
PER DEVICE
|
-
|
A quarterly fee of terminals, display boards, pagers and PDA will be charged on per device.
|
-
|
The quarterly fee of terminals and display boards will apply to all local and overseas real-time subscribers.
|
-
|
Fee:
|
(a) |
Terminals / Display Boards
|
Fee
|
First 2,000
|
*** per device per month
|
2,001 – 10,000
|
*** per device per month
|
Over 10,000
|
*** per device per month
|
(b |
Pagers / PDA
|
Fee
|
First 2,000
|
*** per device per month
|
2,001 - 10,000
|
*** per device per month
|
Over 10,000
|
*** per device per month
|
|
-
|
PER USER ID
|
|
-
|
A quarterly fee of subscribers will be charged on per fee-based user ID.
|
|
-
|
The quarterly fee will apply to all local and overseas real-time subscribers.
|
User ID
|
Fee
|
First 2,000
|
*** per user ID per month
|
2,001 – 10,000
|
*** per user ID per month
|
Over 10,000
|
*** per user ID per month
|
|
-
|
PER CHANNEL
|
|
-
|
A quarterly fee of websites, WAP content provider service, television broadcasting and downloadable applications developed / adapted for mobile devices such as Apple iPhones or iPads (“Mobile Aps”) will be charged on per channel basis.
|
|
-
|
Information Vendor must provide a hyperlink next to the index level in their websites connected to the Company's website at www.hsi.com.hk
|
-
|
(a)
Websites / WAP / Mobile Aps
|
|
*** per channel per month, provided that Mobile Aps for Apple iPhone and iPad shall be grouped together and charged as one channel.
|
|
(b)
Television Broadcasting
|
|
(i)
|
A flat charge of *** per month for one TV channel
|
|
(ii)
|
A flat charge of *** per month for two or more TV channels
|
|
-
|
PER QUOTE
|
|
-
|
A quarterly fee of mobile phones, voice response system and WAP mobile phone operator service will be charged on per quote.
|
3.
|
FEES FOR DISSEMINATION OF DELAYED DATA
|
4.
|
(a)
|
Taxes (including value added tax), duties and levies which may be imposed from time to time in relation to the fees and charges shall be paid by the Information Vendor and are not covered by the fees and charges. The Information Vendor shall provide to the Company written evidence of payment of any taxes, duties and levies upon the Company’s request.
|
|
(b)
|
The fees as set out in this paragraph 2 shall be payable by the Information Vendor within 30 days after the payment is due at each quarter-end together with a statement of the details of the calculation basis.
|
|
(c)
|
Interest will be payable on overdue fees charged under this Schedule at 20% per annum on a daily basis until the Company actually receives payment of such overdue fees in full.
|
By: | Shanghai Stock Exchange | |
Information Network Co., Ltd.
|
2.2
|
Designated bank and account by Party A:
|
Party A: Shanghai Stock Exchange Information | Party B: Beijing Fuhua Innovation Network |
Co., Ltd. | Technology Development Co., Ltd. |
(Signature or Seal) /s/ Rong Zihe | (Signature or Seal) /s/ |
[COMPANY SEAL] | [COMPANY SEAL] |
Date of Execution: December 25, 2012 | Date of Execution: |
Product/ Service Type
|
Product/Service Name
|
Description
|
Quantity
|
Select
|
Satellite System
|
Shanghai Broadband Satellite VSAT
|
Subscribe by Party B from Shanghai Stock Communication Co., Ltd.
|
One Set
|
Yes
|
Ground
System
|
INTERNET Transmission
|
Provided by Party A, ***
|
One Set
|
Yes
|
Dedicated Line Transmission
|
Provided by Party A, ***
|
One Set
|
No
|
|
Notes:
|
None
|
Party A: Shanghai Stock Exchange Information | Party B: Beijing Fuhua Innovation Network |
Co., Ltd. | Technology Development Co., Ltd. |
(Signature or Seal) /s/ Rong Zihe | (Signature or Seal) /s/ |
[COMPANY SEAL] | [COMPANY SEAL] |
Date of Execution: December 25, 2012 | Date of Execution: |
1.
|
Investment Amount: The Investor shall invest RMB135,000,000 (the “Investment Amount) to Langfang Real Estate, RMB48,039,216 of which shall be contributed as the registered capital of Langfang Real Estate and the remaining RMB86,960,784 shall be contributed as the capital reserve. After the capital increase, the Investor shall own 49% of the equity interest of Langfang Real Estate.
|
Shareholder
|
Contributed Registered Capital
|
Shareholding Percentage
|
Investor
|
RMB48,039,216
|
49.00%
|
***
|
RMB12,500,000
|
12.75%
|
***
|
RMB12,500,000
|
12.75%
|
***
|
RMB12,500,000
|
12.75%
|
***
|
RMB12,500,000
|
12.75%
|
Total
|
RMB98,039,216
|
100.00%
|
2.
|
Usage of Investment Proseeds: all the funds invested by the Investor shall be used solely for the Project to purchase a land of 400,000 square meters in size located in *** (the “Project Land”) or be used for any other purpose jointly agreed by the parties. Such funds shall be deposited in an account with representatives of the Investor and Langfang Real Estate as co-signors.
|
3.
|
Conditions Precedent to the Investor’s Obligation at Closing.
|
(1)
|
No encumbrance
. Langfang Real Estate or other competent parties shall have entered into title termination agreement and compensation agreement with the previous owner or authorized land-user of all of or part of the Project Land and the compensation terms shall be in compliance with the laws and regulations of the People’s Republic of China (“PRC”).
|
(2)
|
Listing for biding
. The transfer of the Project Land shall have been duly authorized and approved and the Project Land shall have been listed for bidding by the relevant land administration bureau. Langfang Real Estate shall have obtained the real estate developer qualification and there is no restriction on Langfang Real Estate to bid.
|
(3)
|
Follow-up financing
. Langfang Real Estate shall have entered into a letter of intent of investment or loan with a third party investor regarding follow-up financing for the Project.
|
(4)
|
Equity Interest Pledge
. The Original Shareholders shall have pledged all of their equity interest in Langfang Real Estate to the Investor.
|
4.
|
Representation and Warranties of Langfang Real Estate.
|
(1)
|
The business and operation of Langfang Real Estate are in compliance with the laws and regulations of PRC in all material aspects. The Original Shareholders shall not have taken any action which may adversely affect Langfang Real Estate’s ability to consummate the contemplated transaction under the Investment Contract.
|
(2)
|
Langfang Real Estate shall have obtained all necessary permits, approvals, licenses and authorizations and shall have not violated any of its obligation under such permits, approvals, licenses and authorizations.
|
5.
|
Rights of the Investor
|
(1)
|
Information Right.
|
(2)
|
Right of First Offer
|
(3)
|
Right of First Refusal
|
(4)
|
Right of Co-sale
|
(5)
|
Anti-dilution
|
(6)
|
Put Option
|
(i)
|
One calendar year has elapsed after the closing of the investment;
|
(ii)
|
Langfang Real Estate fails to obtain the follow-up financing within 6 months after the closing;
|
(iii)
|
Langfang Real Estate fails to comply with any law or regulation that may cause material damage to the Investor; or
|
(iv)
|
Langfang Real Estate or the Originals Shareholders have made material misrepresentations or Langfang Real Estate failed to obtain the land use right of the Project Land within 12 months after the closing.
|
(7)
|
Call Option
|
(i)
|
Langfang Real Estate fails to legally obtain the land use right of the Project Land within 12 months after the closing;
|
(ii)
|
Langfang Real Estate or the Original Shareholders have made material misrepresentations;
|
(iii)
|
Langfang Real Estate or the Original Shareholders fails to comply with the provisions on the use of proceeds under the Investment Contract; or
|
(iv)
|
For any reason the Investor cannot exercise its right of put option or the Original Shareholders fail to pay the purchase price for the put option within 20 working days since the exercise of put option.
|
6.
|
Governance of Langfang Real Estate after the Closing
|
(1)
|
The following matters require the approval of shareholders with more than 2/3 voting power in Langfang Real Estate:
|
(i)
|
Amendment to the articles of association of Langfang Real Estate;
|
(ii)
|
Capital increase, any equity financing and issuance of any new equity securities;
|
(iii)
|
Repurchase of any equity interest of Langfang Real Estate;
|
(iv)
|
Any equity incentive plan;
|
(v)
|
Winding up or liquidation of Langfang Real Estate;
|
(vi)
|
Amendment to the size of the board or supervisors committee;
|
(vii)
|
Any material change of the business of Langfang Real Estate; or
|
(viii)
|
Other matters which may adversely affect the rights of the Investor.
|
(2)
|
The Board shall consist of 3 members, two of which shall be appointed by the Original Shareholders and one of which shall be appointed by the Investor. Resolutions regarding the following matters shall be approved by the director appointed by the Investor:
|
(i)
|
Material borrowings, lendings, donations, investment or guarantee;
|
(ii)
|
Equity incentive plan, compensation plan and appointment or removal of officers;
|
(iii)
|
Alteration of the accounting policy of the Company and the engagement of auditors;
|
(iv)
|
Material asset expenses or disposal; or
|
(v)
|
Any above action taken by any subsidiary of Langfang Real Estate.
|
(3)
|
The Investor shall have the right to appoint the sole supervisor of Langfang Real Estate. In case of termination or liquidation of Langfang Real Estate, the liquidation committee shall consist of 3 members and the Investor is entitled to appoint 2 members.
|
7.
|
Adjustment of the Investment Amount
|
8.
|
Termination of the Investment Contract
|
(1)
|
The Investor may terminate the Investment Contract at any time before the closing if:
|
(i)
|
Langfang Real Estate decides to quit the bid or loses the qualification for the bid of the Project Land before the closing;
|
(ii)
|
The transfer of the Project Land has not been duly authorized or approved, or the Project Land has not been listed for bidding by the relevant land administration bureau six monthsd after the execution of the Investment Contract; or
|
(iii)
|
Langfang Real Estate or the Original Shareholders have made any material misrepresentation in the Investment Contract.
|
(2)
|
The Investor may terminate the Investment Contract after the closing if:
|
(i)
|
Langfang Real Estate fails to win the bid of the Project Land within 6 months after the closing;
|
(ii)
|
Langfang Real Estate or the Original Shareholders have made any material misrepresentation in the Investment Contract;
|
(iii)
|
Langfang Real Estate fails to legally obtain the land use right of the Project Land within 12 months after the closing; or
|
(iv)
|
Langfang Real Estate and the Original Shareholders fail to comply with the provisions on the use of proceeds under the Investment Contract.
|
|
Jurisdiction
of
|
Legal
Ownership
|
|
Name
|
|
Incorporation
|
Interest
|
Fortune Software (Beijing) Co., Ltd.
|
|
PRC
|
100%
|
China Finance Online (Beijing) Co., Ltd.
|
|
PRC
|
100%
|
Beijing Fuhua Innovation Technology Development Co., Ltd. *
|
|
PRC
|
Nil
|
Fortune (Beijing) Success Technology Co., Ltd.
|
PRC
|
100%
|
|
Beijing Chuangying Advisory and Investment Co., Ltd.*
|
PRC
|
Nil
|
|
Shanghai Meining Computer Software Co., Ltd.*
|
PRC
|
Nil
|
|
Zhengning Information & Technology (Shanghai) Co., Ltd.
|
PRC
|
100%
|
|
Shanghai Chongzhi Co., Ltd.*
|
PRC
|
Nil
|
|
Fortune (Beijing) Qicheng Technology Co., Ltd.*
|
PRC
|
Nil
|
|
Shanghai Stockstar Securities Advisory and Investment Co., Ltd. *
|
PRC
|
Nil
|
|
Jujin Software (Shenzhen) Co., Ltd.
|
PRC
|
100%
|
|
Shenzhen Genius Information Technology Co., Ltd.
|
PRC
|
100%
|
|
Shenzhen Shangtong Software Co., Ltd.
*
|
PRC
|
Nil
|
|
Shenzhen Newrand Securities Advisory and Investment Co., Ltd.*
|
PRC
|
Nil
|
|
Stockstar Information Technology (Shanghai) Co., Ltd.
|
|
PRC
|
100%
|
iSTAR Financial Holdings Limited
|
BVI
|
85%
|
|
iSTAR International Securities Co. Limited
|
Hong Kong
|
85%
|
|
iSTAR International Futures Co. Limited
|
Hong Kong
|
85%
|
|
iSTAR International Wealth Management Co. Limited
|
Hong Kong
|
85%
|
|
iSTAR International Investment Services Co. Limited
|
Hong Kong
|
85%
|
|
iSTAR International Credit Co. Limited
|
Hong Kong
|
85%
|
|
Hong Kong Genius Information Technology Co., Ltd.
|
Hong Kong
|
100%
|
1.
|
I have reviewed this annual report on Form 20-F of China Finance Online Co. Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect,
|
|
the company’s internal control over financial reporting.
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 20-F of China Finance Online Co. Limited;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect,
|
|
the company’s internal control over financial reporting.
|
5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
By:
|
/s/ Zhao Zhiwei
|
|
Name: Zhao Zhiwei
|
||
Title: Chief Executive Officer
|
By:
|
/s/ Jeff Wang
|
|
Name: Jeff Wang
|
||
Title: Chief Financial Officer
|