[ ]
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
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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, 2013
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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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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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] |
U.S. GAAP
[X]
|
International Financial Reporting Standards as issued by the International Accounting Standards Board [ ] | Other [ ] |
[ ] Yes | [X] No |
·
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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;
|
·
|
"
Hong Kong
"
or
"
H.K.
"
refers to the Hong Kong Special Administrative Region of the People
'
s Republic of China;
|
·
|
"
U.S. GAAP
"
refers to generally accepted accounting principles in the United States; and
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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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·
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our future pricing strategies or policies;
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·
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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, wealth management and financial 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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·
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the market prospect of the securities investment advisory and wealth management services markets;
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·
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the market prospect and competition in other business areas that we have expanded or ventured into, including without limitation, futures contracts brokerage business and precious metals trading 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 and our precious metals trading business;
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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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·
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PRC governmental policies relating to mobile value-added services.
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For the year ended December 31,
|
||||||||||||||||||||
(in thousands of U.S. dollars, except per share or per ADS data)
|
2009
|
2010
|
2011
|
2012
|
2013
|
|||||||||||||||
Consolidated statement of operations and comprehensive income (loss) data:
|
||||||||||||||||||||
Net revenues
|
$ | 53,606 | $ | 59,716 | $ | 53,008 | $ | 29,599 | $ | 52,738 | ||||||||||
Cost of revenues
|
(8,147 | ) | (8,497 | ) | (8,771 | ) | (8,089 | ) | (10,570 | ) | ||||||||||
Gross profit
|
45,459 | 51,219 | 44,237 | 21,510 | 42,168 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
General and administrative
|
(16,982 | ) | (13,208 | ) | (11,228 | ) | (11,387 | ) | (15,210 | ) | ||||||||||
Product development
|
(10,754 | ) | (13,028 | ) | (13,314 | ) | (10,736 | ) | (9,033 | ) | ||||||||||
Sales and marketing
|
(26,095 | ) | (26,991 | ) | (21,337 | ) | (13,072 | ) | (30,588 | ) | ||||||||||
Loss from impairment of intangible assets
|
- | - | (4,078 | ) | - | - | ||||||||||||||
Loss from impairment of goodwill
|
- | - | (13,463 | ) | - | - | ||||||||||||||
Total operating expenses
|
(53,831 | ) | (53,227 | ) | (63,420 | ) | (35,195 | ) | (54,831 | ) | ||||||||||
Government subsidies
|
567 | 514 | 265 | 76 | 11 | |||||||||||||||
Loss from operations
|
(7,805 | ) | (1,494 | ) | (18,918 | ) | (13,609 | ) | (12,652 | ) | ||||||||||
Interest income
|
1,352 | 1,590 | 2,745 | 3,178 | 1,341 | |||||||||||||||
Interest expense
|
- | (142 | ) | (248 | ) | (518 | ) | (197 | ) | |||||||||||
Exchange gain, net
|
2 | 813 | 1,350 | 72 | 557 | |||||||||||||||
Equity method investment income
|
- | - | - | - | 2,774 | |||||||||||||||
Short-term investments income
|
41 | 1,138 | 1,032 | 435 | 132 | |||||||||||||||
Other expense, net
|
(258 | ) | (7 | ) | (7 | ) | (634 | ) | (29 | ) | ||||||||||
Loss from impairment of cost method investment
|
- | - | (1,480 | ) | - | - | ||||||||||||||
Income (loss) before income tax benefit (expense)
|
(6,668 | ) | 1,898 | (15,526 | ) | (11,076 | ) | (8,074 | ) | |||||||||||
Income tax benefit (expense)
|
446 | (264 | ) | (3,938 | ) | (884 | ) | (100 | ) | |||||||||||
Net income (loss)
|
(6,222 | ) | 1,634 | (19,464 | ) | (11,960 | ) | (8,174 | ) | |||||||||||
Less: net income (loss) attributable to the noncontrolling interests
|
(2 | ) | (326 | ) | (137 | ) | (105 | ) | 399 | |||||||||||
Net income (loss) attributable to China Finance Online Co. Limited
|
$ | (6,220 | ) | $ | 1,960 | $ | (19,327 | ) | $ | (11,855 | ) | $ | (8,573 | ) | ||||||
Net income (loss) per share attributable to China Finance Online Co. Limited
|
||||||||||||||||||||
-basic
|
$ | (0.06 | ) | $ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) | ||||||
-diluted
|
$ | (0.06 | ) | $ | 0.02 | $ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) | ||||||
Net income (loss) per ADS equivalent attributable to China Finance Online Co. Limited
|
||||||||||||||||||||
-basic(1)
|
$ | (0.30 | ) | $ | 0.09 | $ | (0.89 | ) | $ | (0.54 | ) | $ | (0.39 | ) | ||||||
-diluted(1)
|
$ | (0.30 | ) | $ | 0.09 | $ | (0.89 | ) | $ | (0.54 | ) | $ | (0.39 | ) |
(in thousands of U.S. dollars)
|
As of 31 December,
|
|||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
||||||||||||||||
Consolidated balance sheet data:
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 107,391 | $ | 106,773 | $ | 64,641 | $ | 40,906 | $ | 36,371 | ||||||||||
Current working capital(2)
|
81,255 | 90,146 | 90,098 | 70,360 | 56,677 | |||||||||||||||
Total assets
|
165,609 | 180,091 | 159,977 | 121,371 | 133,493 | |||||||||||||||
Short-term loan
|
- | 6,424 | 19,171 | 13,546 | - | |||||||||||||||
Deferred revenue, current
|
30,620 | 32,995 | 17,287 | 7,551 | 6,150 | |||||||||||||||
Total current liabilities
|
52,401 | 60,259 | 61,903 | 36,331 | 39,203 | |||||||||||||||
Deferred revenue, non-current
|
14,547 | 13,022 | 7,237 | 3,155 | 1,986 | |||||||||||||||
Total China Finance Online Co. limited shareholders' equity
|
97,407 | 105,900 | 90,941 | 79,965 | 75,771 |
(1)
|
Each ADS represents five ordinary shares.
|
(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, 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 | ||||||||||||
December 31, 2013
|
6.1896 | 6.2898 | 6.0969 | 6.0969 | ||||||||||||
Most recent six months:
|
||||||||||||||||
October 2013
|
6.1393 | 6.1458 | 6.1330 | 6.1425 | ||||||||||||
November 2013
|
6.1372 | 6.1482 | 6.1305 | 6.1325 | ||||||||||||
December 2013
|
6.1160 | 6.1352 | 6.0969 | 6.0969 | ||||||||||||
January 2014
|
6.1043 | 6.1109 | 6.0930 | 6.1050 | ||||||||||||
February 2014
|
6.1128 | 6.1224 | 6.1053 | 6.1214 | ||||||||||||
March 2014
|
6.1358 | 6.1521 | 6.1190 | 6.1521 | ||||||||||||
April 2014(through 15th)
|
6.1520 | 6.1571 | 6.1490 | 6.1571 |
(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.
|
·
|
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; |
·
|
we may not fully realize all of the anticipated benefits of any acquisition and investment transaction; |
·
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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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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;
|
·
|
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;
|
·
|
our ongoing business may be disrupted and our management
'
s attention may be diverted by transition or integration issues;
|
·
|
we may have legal and tax exposures or lose anticipated tax benefits as a result of unforeseen difficulties in our legal entity integration activities;
|
·
|
we may face contingencies related to intellectual property, financial disclosures and accounting practices or internal controls;
|
·
|
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;
|
·
|
we may incur additional amortization expense over the useful lives of certain intangible assets acquired in connection with acquisitions;
|
·
|
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;
|
·
|
we may issue common stock, potentially creating dilution for existing stockholders to complete acquisition and investment transactions;
|
·
|
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;
|
·
|
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.
|
·
|
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 serves 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.
|
·
|
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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·
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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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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.
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a.
|
Financial information and advisory 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.
|
·
|
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.
|
b.
|
Financial Services Business
|
c.
|
Advertising 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 brokerage firms which are also engaged in, or may in the future engage in the precious metal trading services;
|
·
|
competition from other internet companies and mutual fund sale distribution agencies that provide similar products of Yinglibao;
|
·
|
competition from independent wealth management service providers; and
|
·
|
competition in hiring competent personnel for our businesses.
|
·
|
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);
|
·
|
PBC (The People
'
s Bank of China);
|
·
|
CSRC (China Securities Regulatory Commission);
|
·
|
CBRC (China Banking Regulatory Commission);
|
·
|
Ministry of Culture;
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·
|
General Administration of Press and Publication (National Copyright Administration);
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·
|
National Development and Reform Commission (NDRC);
|
·
|
SAIC (State Administration of Industry and Commerce);
|
·
|
Ministry of Public Security;
|
·
|
Ministry of Commerce; and
|
·
|
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;
|
·
|
filing with the Beijing AIC and obtain electronic registration marks;
|
·
|
placing the registration marks on their websites
'
homepages; and
|
·
|
registering their website names with the Beijing AIC.
|
Name
|
Jurisdiction
of
Incorporation
|
Legal
Ownership
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
|
Zhengjin(Fujian)Precious Metals Investment Co., Ltd.*
|
PRC
|
Nil
|
Henghui (Tianjin) Precious Metals Management Co., Ltd. *
|
PRC
|
Nil
|
Zhengjin (Tianjin) Precious Metals Management Co., Ltd. *
|
PRC
|
Nil
|
Zhengjin (Shanghai) Precious Metals Management Co., Ltd. *
|
PRC
|
Nil
|
East Win Investment Consulting Co., Ltd.
|
PRC
|
Nil
|
Shenzhen Tahoe Investment and Development Co., Ltd.
|
PRC
|
Nil
|
Netinfo (Beijing) Technology Co., Ltd.
|
PRC
|
Nil
|
Sinoinfo (Dalian) Investment Consulting Co., Ltd.
|
PRC
|
Nil
|
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%
|
·
|
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, precious metal trading business and other financial services we may enter into;
|
·
|
PRC governmental policies relating to the precious metal trading industry and security advisory consulting 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 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 clients of our precious metals trading services;
|
·
|
the
trading volumes of our precious metals trading services;
|
·
|
the
market condition of precious metals markets;
|
·
|
the number of active paying individual subscribers; and
|
·
|
the service packages selected by our subscribers.
|
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Precious metals trading services revenues
|
$ | - | $ | - | $ | 30,124,245 | ||||||
Financial information and
advisory services revenues
|
43,100,486 | 20,826,995 | 11,122,400 | |||||||||
Advertising revenues
|
6,243,748 | 4,848,622 | 6,799,109 | |||||||||
Hong Kong brokerage services revenues
|
3,539,664 | 3,817,762 | 3,404,767 | |||||||||
Others
|
124,167 | 106,107 | 1,287,556 | |||||||||
Total revenue from external customers
|
$ | 53,008,065 | $ | 29,599,486 | $ | 52,738,077 |
·
|
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)
|
2011
|
2012
|
2013
|
|||||||||||||||||||||
Consolidated statement of comprehensive income (loss) data:
|
||||||||||||||||||||||||
Gross revenues
|
$ | 54,487 | 102.8 | % | $ | 30,239 | 102.2 | % | 53,336 | 101.1 | % | |||||||||||||
Business tax
|
(1,479 | ) | (2.8 | ) | (640 | ) | (2.2 | ) | (598 | ) | (1.1 | ) | ||||||||||||
Net revenues
|
53,008 | 100.0 | % | 29,599 | 100.0 | % | 52,738 | 100.0 | % | |||||||||||||||
Cost of revenues
|
(8,771 | ) | (16.5 | ) | (8,089 | ) | (27.3 | ) | (10,570 | ) | (20.0 | ) | ||||||||||||
Gross profit
|
44,237 | 83.5 | 21,510 | 72.7 | 42,168 | 80.0 | ||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
General and administrative
|
(11,228 | ) | (21.2 | ) | (11,387 | ) | (38.5 | ) | (15,210 | ) | (28.9 | ) | ||||||||||||
Product development
|
(13,314 | ) | (25.1 | ) | (10,736 | ) | (36.3 | ) | (9,033 | ) | (17.1 | ) | ||||||||||||
Sales and marketing
|
(21,337 | ) | (40.3 | ) | (13,072 | ) | (44.2 | ) | (30,588 | ) | (58.0 | ) | ||||||||||||
Loss from impairment of intangible assets
|
(4,078 | ) | (7.7 | ) | - | - | - | - | ||||||||||||||||
Loss from impairment of goodwill
|
(13,463 | ) | (25.4 | ) | - | - | - | - | ||||||||||||||||
Total operating expenses
|
(63,420 | ) | (119.7 | ) | (35,195 | ) | (119.0 | ) | (54,831 | ) | (104.0 | ) | ||||||||||||
Government subsidies
|
265 | 0.5 | 76 | 0.3 | 11 | - | ||||||||||||||||||
Loss from operations
|
(18,918 | ) | (35.7 | ) | (13,609 | ) | (46.0 | ) | (12,652 | ) | (24.0 | ) | ||||||||||||
Interest income
|
2,745 | 5.2 | 3,178 | 10.7 | 1,341 | 2.5 | ||||||||||||||||||
Interest expense
|
(248 | ) | (0.5 | ) | (518 | ) | (1.8 | ) | (197 | ) | (0.4 | ) | ||||||||||||
Exchange gain, net
|
1,350 | 2.5 | 72 | 0.2 | 557 | 1.1 | ||||||||||||||||||
Equity method investment income
|
- | - | - | - | 2,774 | 5.3 | ||||||||||||||||||
Short-term investment income
|
1,032 | 1.9 | 435 | 1.5 | 132 | 0.3 | ||||||||||||||||||
Other expense, net
|
(7 | ) | - | (634 | ) | (2.1 | ) | (29 | ) | (0.1 | ) | |||||||||||||
Loss from impairment of cost method investments
|
(1,480 | ) | (2.8 | ) | - | - | - | - | ||||||||||||||||
Loss before income tax expense
|
(15,526 | ) | (29.4 | ) | (11,076 | ) | (37.5 | ) | (8,074 | ) | (15.3 | ) | ||||||||||||
Income tax expense
|
(3,938 | ) | (7.4 | ) | (884 | ) | (3.0 | ) | (100 | ) | (0.2 | ) | ||||||||||||
Net loss
|
(19,464 | ) | (36.8 | ) | ( 11,960 | ) | (40.5 | ) | (8,174 | ) | (15.5 | ) | ||||||||||||
Less: net income (loss) attributable to noncontrolling interests
|
(137 | ) | (0.3 | ) | (105 | ) | (0.4 | ) | 399 | 0.8 | ||||||||||||||
Net loss attributable to China Finance Online Co. Limited
|
(19,327 | ) | (36.5 | %) | ( 11,855 | ) | (40.1 | %) | (8,573 | ) | (16.3 | %) |
For the year ended December 31
|
|||||||||
(in thousands of U.S. dollars)
|
2011
|
2012
|
2013
|
||||||
Net cash (used in) provided by operating activities
|
$ | (23,786 | ) | $ | (29,043 | ) | $ | 159 | |
Net cash (used in) provided by investing activities
|
(32,776 | ) | 10,959 | 7,578 | |||||
Net cash provided by (used in) financing activities
|
12,739 | (5,669 | ) | (12,138 | ) | ||||
Net decrease in cash and cash equivalents
|
(42,132 | ) | (23,735 | ) | (4,535 | ) | |||
Cash and cash equivalents at beginning of year
|
106,773 | 64,641 | 40,906 | ||||||
Cash and cash equivalents at end of year
|
$ | 64,641 | $ | 40,906 | $ | 36,371 |
·
|
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
|
$ | 6,586,304 | $ | 1,607,826 | $ | 8,194,130 | ||||||
1 - 3 years
|
5,854,742 | 712,758 | 6,567,500 | |||||||||
3 - 5 years
|
- | - | - |
Name
|
Age
|
Position
|
||
Zhiwei Zhao
|
50
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
|
Kheng Nam Lee(1)
|
66
|
|
Director
|
|
Rongquan Leng(1) (2)(3)
|
65
|
Director
|
||
Neo Chee Beng (1)(2) (3)
|
53
|
Director
|
||
Jun (Jeff) Wang
|
43
|
|
Director and Chief Financial Officer
|
(1)
|
Member, audit committee
|
|||||||
(2)
|
|
Member, compensation committee
|
||||||
(3)
|
|
Member, nominations committee
|
Number of
ordinary Shares to
|
Exercise price per
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
|
|||||||
1,800,000 | $ | 0.250 |
July 15, 2013
|
July 15, 2023
|
|||||||
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
|
|||||||
* | $ | 0.250 |
July 15, 2013
|
July 15, 2023
|
|||||||
Rongquan Leng
|
* | $ | 0.250 |
July 15, 2013
|
July 15, 2023
|
||||||
Neo Chee Beng
|
* | $ | 1.316 |
July 5, 2006
|
July 5, 2016
|
||||||
* | $ | 0.250 |
July 15, 2013
|
July 15, 2023
|
|||||||
Jun (Jeff) Wang
|
* | $ | 1.070 |
July 5, 2006
|
July 5, 2016
|
||||||
* | $ | 0.960 |
January 18, 2007
|
January 17, 2017
|
|||||||
* | $ | 1.426 |
February 22, 2010
|
February 21, 2020
|
|||||||
1,500,000 | $ | 0.250 |
July 15, 2013
|
July 15, 2023
|
*
|
Upon exercise of all options granted, would beneficially own less than 1% of our outstanding ordinary shares.
|
Name
|
Number
|
Percent
|
Selected Employees
|
|
|
Zhiwei Zhao
|
8,958,493
|
8.06%
|
Jun (Jeff) Wang
|
*
|
*
|
Caogang Li
|
*
|
*
|
All executive officers as a group (3 persons)
|
10,558,493
|
9.50%
|
·
|
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 share-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, 2013, would beneficially own less than 1% of our ordinary shares.
|
(1)
|
Mr. Zhiwei Zhao is considered the beneficial owner of 31,009,983 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 have been forfeited to the company; (ii) 11,000,000 ordinary shares from IDG Technology Venture Investment, Inc. as of December 31, 2013 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; (iii) 7,101,490 ordinary shares from Vertex Technology Fund (III) Ltd. as of December 31, 2013 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 August 6, 2013; and (iv) 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, 2013.
|
(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 (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.
|
(5)
|
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.
|
Trading Price
|
||
High
|
Low
|
|
Yearly highs and lows
|
||
Year 2009
|
13.54
|
6.97
|
Year 2010
|
9.10
|
6.20
|
Year 2011
|
7.27
|
1.43
|
Year 2012
|
2.91
|
1.02
|
Year 2013
|
6.45
|
1.14
|
Quarterly highs and lows
|
||
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
|
Second Quarter 2013
|
1.74
|
1.22
|
Third Quarter 2013
|
2.10
|
1.14
|
Fourth Quarter 2013
|
6.45
|
1.80
|
First Quarter 2014
|
8.20
|
4.12
|
Monthly highs and lows
|
||
October 2013
|
3.33
|
1.80
|
November 2013
|
4.16
|
2.46
|
December 2013
|
6.45
|
3.73
|
January 2014
|
8.20
|
5.40
|
February 2014
|
7.81
|
6.00
|
March 2014
|
6.98
|
4.12
|
·
|
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: |
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs issued
|
|||
♦ Share distributions, stock dividend, stock split, merger | |||||
♦ Exchange of securities or any other transaction or event affecting the ADSs or the deposited securities | |||||
(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
|
|||
(f) General depositary
services, particularly those
charged on an annual basis
|
Services performed by the depositary in administering the ADRs |
US$0.02 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the depositary by billing ADR Holders or by deducting such charge from one or more cash dividends or other cash distributions
|
|||
(g) Expenses of the Depositary
|
Expenses incurred on behalf of ADR Holders in connection with:
•
Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment
•
The depositary's or its custodian's compliance with applicable law, rule or regulation
|
Expenses payable at the sole discretion of the depositary by billing ADR Holders or by deducting such charges from one or more cash dividends or other cash distributions
|
• Stock transfer or other taxes and other governmental charges | ||||
• Cable, telex and facsimile transmission and delivery charges | ||||
• Fees for the transfer or registration of deposited securities in connection with the deposit or withdrawal of deposited securities | ||||
• Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency) | ||||
•
Any other charge payable by depositary or its agents in connection with the servicing of the shares or the deposited securities
|
For the Year Ended December 31,
|
||||||||
2013
|
2012
|
2011
|
||||||
Audit Fees
(1)
|
US$
|
433,000
|
US$
|
594,000
|
US$
|
799,050
|
||
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. (filed as Exhibit 4.4 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
4.5
|
Translation of Form Operation Agreement by and between our wholly owned subsidiary and certain significant VIEs controlled by the Company. (filed as Exhibit 4.5 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
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. (filed as Exhibit 4.6 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
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. (filed as Exhibit 4.7 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
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. (filed as Exhibit 4.8 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
4.9
|
Translation of Form Strategic Consulting and Service Agreement between our wholly owned subsidiary and certain significant VIEs. (filed as Exhibit 4.9 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference) (filed as Exhibit 4.10 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
4.10
|
Translation of Form Technical Support Agreement between our wholly owned subsidiary and certain significant VIEs (filed as Exhibit 4.10 to the Company’s Report on Form 20-F (File No.000-50975) filed on April 29, 2013, and incorporated herein by reference)
|
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 License 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.)
|
4.31*
|
Translation of Assets Purchase Agreement among Shenzhen Newrand and Shenzhen Champion Connection
|
4.32*
|
Translation of Purchase Agreement between Giant Bright and Champion Connection Network H.K. Limited
|
4.33*
|
Translation of Agreement for Change of Parties to the Contract
|
4.34*
|
Translation of Purchase Agreement between Giant Bright and Hadevan
|
4.35*
|
Translation of Assets Purchase Agreement among Shenzhen Genius and Shenzhen Champion Connection
|
4.36*
|
Translation of Purchase Agreement between Mainfame and Champion Connection Network H.K. Limited
|
4.37*
|
Translation of Cooperation Framework Agreement among Shanghai Stockstar Wealth Management, Golden Pioneer Network Technologies and Shanghai Excellence Advertising
|
4.38*
|
Translation of Capital Increase and Shareholders’ Agreement of Shenzhen Tahoe Investment and Development Co, Ltd.
|
8.1*
|
List of principal subsidiaries and significant PRC-incorporated affiliates
|
Date: May 6, 2014
|
CHINA FINANCE ONLINE CO. LIMITED
|
|
|
|
/s/ Jeff Wang
|
|
|
|
Name:
|
Jeff Wang
|
|
|
Title:
|
Chief Financial Officer
|
|
CHINA FINANCE ONLINE CO. LIMITED
Report of Independent Registered Public Accounting Firm
and Consolidated Financial Statements
For the years ended December 31, 2011, 2012 and 2013
|
December 31,
|
||||||||
Assets
|
2012
|
2013
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 40,905,996 | $ | 36,370,950 | ||||
Restricted cash
|
28,874,284 | 3,946 | ||||||
Prepaid expenses and other current assets
|
2,780,347 |
3,306,679
|
||||||
Advances to employees
|
1,056,423 |
-
|
||||||
Trust bank balances held on behalf of customers
|
8,811,691 | 9,999,366 | ||||||
Consideration receivable
|
- |
13,449,458
|
||||||
Accounts receivable - margin clients, net of allowance for doubtful accounts of nil and $135,275 in 2012 and 2013, respectively
|
15,054,331 | 5,976,641 | ||||||
Accounts receivable - others, net of allowance for doubtful accounts of $41,893 and $102,236 in 2012 and 2013, respectively
|
4,970,427 | 15,325,284 | ||||||
Loan receivable
|
1,205,604 |
10,333,120
|
||||||
Short-term investments
|
2,639,589 | - | ||||||
Deferred tax assets, current
|
391,625 | 1,114,438 | ||||||
Total current assets
|
106,690,317 | 95,879,882 | ||||||
Property and equipment, net
|
4,914,114 | 3,868,267 | ||||||
Acquired intangible assets, net
|
4,675,237 | 7,544,762 | ||||||
Cost method investment
|
802,202 | 1,138,899 | ||||||
Rental deposits
|
751,627 | 1,115,152 | ||||||
Goodwill
|
3,049,281 | 16,974,437 | ||||||
Guarantee fund deposits
|
287,443 | 6,877,073 | ||||||
Deferred tax assets, non-current
|
200,774 | 94,263 | ||||||
Total assets
|
$ | 121,370,995 | $ | 133,492,735 | ||||
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 $3,792,852 and $3,807,846 as of December 31, 2012 and December 31, 2013, respectively)
|
$ | 7,551,457 | $ | 6,150,118 | ||||
Accrued expenses and other current liabilities (including accrued expenses and othe rcurrent liabilities of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $2,731,088 and $7,460,581 as of December 31, 2012 and December 31, 2013, respectively)
|
5,388,630 | 9,696,462 | ||||||
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 $647,560 as of December 31, 2012 and December 31, 2013, respectively)
|
8,811,691 | 9,999,366 | ||||||
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, 2012 and December 31, 2013, respectively)
|
13,546,115 | - | ||||||
Accounts payable (including accounts payable of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $140,641 and $5,519,554 as of December 31, 2012 and December 31, 2013, respectively)
|
804,851 | 12,572,723 | ||||||
Income taxes payable (including income taxes payable of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $7,837 and $414,023 as of December 31, 2012 and December 31, 2013, respectively)
|
87,709 | 459,209 | ||||||
Deferred tax liabilities, current (including deferred tax liabilities, current of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $140,074 and $325,340 as of December 31, 2012 and December 31, 2013, respectively)
|
140,074 | 325,340 | ||||||
Total current liabilities
|
36,330,527 | 39,203,218 | ||||||
Deferred revenue, non-current (including deferred revenue, non-current of the consolidated variable interest entities without recourse to China Finance Online Co. Limited $1,062,318 and $632,829 as of December 31, 2012 and December 31, 2013, respectively)
|
3,155,108 | 1,986,078 | ||||||
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 1,168,809 and $1,886,190 as of December 31, 2012 and December 31, 2013, respectively)
|
1,168,809 | 1,886,190 | ||||||
Total liabilities
|
40,654,444 | 43,075,486 |
December 31,
|
||||||||
2012
|
2013
|
|||||||
Commitments and contingencies (Note 23)
|
||||||||
Equity:
|
||||||||
China Finance Online Co. Limited shareholder's equity: | ||||||||
Ordinary shares ($0.00013 par value; 500,000,000 shares authorized;
110,955,383 and 111,145,633 shares issued and outstanding as of December 31, 2012 and 2013, respectively)
|
14,328 | 14,353 | ||||||
Additional paid-in capital
|
81,163,244 | 84,346,266 | ||||||
Accumulated other comprehensive income
|
11,089,820 | 12,285,615 | ||||||
Retained deficits
|
(12,302,209 | ) | (20,875,337 | ) | ||||
Total China Finance Online Co. Limited shareholders' equity
|
79,965,183 | 75,770,897 | ||||||
Noncontrolling interest
|
751,368 | 14,646,352 | ||||||
Total equity
|
80,716,551 | 90,417,249 | ||||||
Total liabilities and equity
|
$ | 121,370,995 | $ | 133,492,735 |
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Net revenues
|
$ | 53,008,065 | $ | 29,599,486 | $ | 52,738,077 | ||||||
Cost of revenues
|
8,770,617 | 8,089,394 | 10,570,070 | |||||||||
Gross profit
|
44,237,448 | 21,510,092 | 42,168,007 | |||||||||
Operating expenses:
|
||||||||||||
General and administrative (including share-based compensation of $1,326,174, $765,937 and $2,985,112 for 2011, 2012 and 2013, respectively)
|
11,227,632 | 11,387,381 | 15,210,102 | |||||||||
Product development (including share-based compensation of $99,239, $12,017 and $39,574 for 2011, 2012 and 2013, respectively)
|
13,313,635 | 10,735,570 | 9,032,327 | |||||||||
Sales and marketing (including share-based compensation of $113,389,$24,771 and $10,436 for 2011, 2012 and 2013, respectively)
|
21,337,799 | 13,072,017 | 30,588,236 | |||||||||
Loss from impairment of intangible assets
|
4,078,084 | - | - | |||||||||
Loss from impairment of goodwill
|
13,463,224 | - | - | |||||||||
Total operating expenses
|
63,420,374 | 35,194,968 | 54,830,665 | |||||||||
Government subsidies
|
265,016 | 75,883 | 11,187 | |||||||||
Loss from operations
|
(18,917,910 | ) | (13,608,993 | ) | (12,651,471 | ) | ||||||
Interest income
|
2,744,665 | 3,177,544 | 1,340,563 | |||||||||
Interest expense
|
(247,818 | ) | (517,620 | ) | (196,458 | ) | ||||||
Exchange gain, net
|
1,349,924 | 71,516 | 556,757 | |||||||||
Equity method investment income
|
2,773,839 | |||||||||||
Short-term investment income
|
1,032,444 | 435,105 | 132,069 | |||||||||
Other expense, net
|
(7,256 | ) | (633,981 | ) | (29,131 | ) | ||||||
Loss from impairment of cost method investment
|
(1,479,571 | ) | - | - | ||||||||
Loss before income tax expense
|
(15,525,522 | ) | (11,076,429 | ) | (8,073,832 | ) | ||||||
Income tax expense
|
(3,938,433 | ) | (883,718 | ) | (100,058 | ) | ||||||
Net loss
|
$ | (19,463,955 | ) | $ | (11,960,147 | ) | $ | (8,173,890 | ) | |||
Less: net income (loss) attributable to the noncontrolling interest
|
(137,046 | ) | (104,940 | ) | 399,238 | |||||||
Net loss attributable to China Finance Online Co. Limited
|
$ | (19,326,909 | ) | $ | (11,855,207 | ) | $ | (8,573,128 | ) | |||
Net loss per share attributable to China Finance Online Co. Limited | ||||||||||||
Basic
|
$ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) | |||
Diluted
|
$ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) | |||
Weighted average shares used in calculating net income (loss) per share | ||||||||||||
Basic
|
108,961,642 | 108,983,249 | 109,019,513 | |||||||||
Diluted
|
108,961,642 | 108,983,249 | 109,019,513 | |||||||||
Other comprehensive income, net of tax:
|
||||||||||||
Changes in foreign currency translation adjustment
|
2,928,723 | 130,115 | 1,195,795 | |||||||||
Net unrealized income (loss) on available-for-sale securities, net of tax effects of ($5,728), $5,728 and nil for 2011, 2012 and 2013, respectively
|
(32,457 | ) | (13,110 | ) | - | |||||||
Reclassification adjustment of available-for-sale securities,net of tax effects of nil, nil and nil for 2011, 2012 and 2013, respectively
|
- | 45,567 | - | |||||||||
Other comprehensive income, net of tax
|
2,896,266 | 162,572 | 1,195,795 | |||||||||
Comprehensive loss
|
(16,567,689 | ) | (11,797,575 | ) | (6,978,095 | ) | ||||||
Less: net income (loss) attributable to the noncontrolling interest
|
(137,046 | ) | (104,940 | ) | 399,238 | |||||||
Comprehensive loss attributable to China Finance Online Co. Limited
|
$ | (16,430,643 | ) | $ | (11,692,635 | ) | $ | (7,377,333 | ) |
Ordinary shares
|
Additional
|
Accumulated other
comprehensive
|
Retained
earnings
|
Total China Finance
Online Co. Limited
|
Non
controlling
|
Total
|
||||||||||||||||||||||||||
Shares
|
Amount
|
paid-in capital
|
income (loss)
|
(deficits) | shareholders' equity |
interest
|
equity | |||||||||||||||||||||||||
Balance as of January 1, 2011
|
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 business combination
|
- | - | - | - | - | - | 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 | |||||||||||||||||||||||
Exercise of share options by employees
|
190,250 | 25 | 30,415 | - | - | 30,440 | - | 30,440 | ||||||||||||||||||||||||
Share-based compensation
|
- | - | 2,960,746 | - | - | 2,960,746 | 74,376 | 3,035,122 | ||||||||||||||||||||||||
Business combination
|
- | - | 191,861 | - | - | 191,861 | 13,421,370 | 13,613,231 | ||||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 1,195,795 | - | 1,195,795 | - | 1,195,795 | ||||||||||||||||||||||||
Net income (loss)
|
- | - | - | - | (8,573,128 | ) | (8,573,128 | ) | 399,238 | (8,173,890 | ) | |||||||||||||||||||||
Balance as of December 31, 2013
|
111,145,633 | 14,353 | 84,346,266 | 12,285,615 | (20,875,337 | ) | 75,770,897 | 14,646,352 | 90,417,249 |
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Operating activities:
|
||||||||||||
Net loss
|
$ | (19,463,955 | ) | $ | (11,960,147 | ) | $ | (8,173,890 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Share-based compensation
|
1,538,802 | 802,725 | 3,035,122 | |||||||||
Depreciation and amortization
|
3,481,973 | 3,062,461 | 2,164,992 | |||||||||
Provision of allowance for doubtful accounts
|
93,400 | 1,203 | 521,567 | |||||||||
Gain from equity method investment
|
- | - | (2,773,839 | ) | ||||||||
Gain from short-term investments
|
(1,032,444 | ) | (435,105 | ) | (132,069 | ) | ||||||
Deferred taxes
|
3,276,319 | 568,521 | (357,014 | ) | ||||||||
Loss on disposal of property and equipment
|
30,702 | 237,154 | 163,963 | |||||||||
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
|
2,156,795 | (3,495,881 | ) | (8,132,005 | ) | |||||||
Accounts receivable, margin clients
|
(4,773,915 | ) | (2,129,273 | ) | 8,933,007 | |||||||
Prepaid expenses and other current assets
|
321,279 | 471,699 | 1,131,750 | |||||||||
Advances to employees
|
- | (1,051,971 | ) | 1,071,769 | ||||||||
Trust bank balances held on behalf of customers
|
(9,009,643 | ) | 9,894,410 | (1,181,312 | ) | |||||||
Restricted cash
|
(468,176 | ) | 468,367 | 7,143 | ||||||||
Rental deposits
|
5,326 | (2,796 | ) | (273,402 | ) | |||||||
Guarantee deposit funds
|
- | - | (4,881,966 | ) | ||||||||
Deferred revenue
|
(23,245,520 | ) | (15,332,999 | ) | (2,866,258 | ) | ||||||
Account payable
|
(135,763 | ) | 516,086 | 11,666,365 | ||||||||
Accrued expenses and other current liabilities
|
(4,571,482 | ) | (715,741 | ) | (1,189,465 | ) | ||||||
Amounts due to customers for the trust bank balance held on their behalf
|
9,009,643 | (9,894,410 | ) | 1,181,312 | ||||||||
Income taxes payable
|
(20,662 | ) | (47,235 | ) | 242,886 | |||||||
Net cash used in operating activities
|
(23,786,442 | ) | (29,042,932 | ) | 158,656 | |||||||
Investing activities:
|
||||||||||||
Purchase of property and equipment
|
(726,468 | ) | (775,437 | ) | (833,921 | ) | ||||||
Purchase of intangible assets
|
(2,063,361 | ) | (578,624 | ) | ||||||||
Acquisition of businesses (net of cash acquired of nil, $14,073 and $121,044 for the years ended December 31, 2011, 2012 and 2013, respectively)
|
- | (2,834,434 | ) | (3,627,963 | ) | |||||||
Acquistioin of equity method investment
|
- | - | (21,525,608 | ) | ||||||||
Proceeds from transfer of equity method investment
|
- | - | 11,445,202 | |||||||||
Loan given to equity method investee
|
(20,461,773 | ) | ||||||||||
Repayment of loans given to equity method investee
|
10,247,235 | |||||||||||
Purchase of term deposits
|
(19,712,865 | ) | - | - | ||||||||
Proceeds from maturity of term deposits
|
19,903,236 | - | - | |||||||||
Purchase of short-term investments
|
(40,732,106 | ) | (28,277,746 | ) | (83,911,858 | ) | ||||||
Proceeds from sales of short-term investments
|
31,562,160 | 36,767,023 | 86,716,413 | |||||||||
Acquisition of cost method investment
|
- | (802,202 | ) | (309,698 | ) | |||||||
Restricted cash
|
(13,511,584 | ) | 542,818 | 29,282,705 | ||||||||
Loan receivable
|
(9,559,001 | ) | 8,379,638 | 994,459 | ||||||||
Proceeds from disposal of fixed assets
|
632 | 24,556 | 140,942 | |||||||||
Net cash (used in) provided by investing activities
|
(32,775,996 | ) | 10,960,855 | 7,577,511 | ||||||||
Financing activities:
|
||||||||||||
Proceeds from stock options exercised by employees
|
22,025 | 3,200 | 640 | |||||||||
Proceeds from capital injection of noncontrolling interest
|
- | - | 1,397,616 | |||||||||
Proceeds from short-term loan
|
12,716,763 | - | - | |||||||||
Repayment of short-term loan
|
- | (5,672,004 | ) | (13,536,161 | ) | |||||||
Net cash provided by (used in) financing activities
|
12,738,788 | (5,668,804 | ) | (12,137,905 | ) | |||||||
Effect of exchange rate changes
|
1,691,264 | 15,785 | (133,308 | ) | ||||||||
Net decrease in cash and cash equivalents
|
(42,132,386 | ) | (23,735,096 | ) | (4,535,046 | ) | ||||||
Cash and cash equivalents, beginning of year
|
106,773,478 | 64,641,092 | 40,905,996 | |||||||||
Cash and cash equivalents, end of year
|
64,641,092 | 40,905,996 | 36,370,950 | |||||||||
Supplemental disclosure of cash flow information | ||||||||||||
Income taxes paid
|
$ | 682,776 | $ | 375,107 | $ | 81,188 |
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Company name
|
Place of
incorporation or
establishment
|
Date of
incorporation or
acquisition
|
legal
ownership
interest
|
Principal
activity
|
||||
Subsidiaries:
|
||||||||
Fortune Software (Beijing) Co., Ltd. ("CFO Software")
|
Beijing, PRC
|
Dec. 7, 2004
|
100%
|
N/A
|
||||
Fortune (Beijing) Success Technology Co., Ltd. ("CFO Success")
|
Beijing, PRC
|
Oct. 16, 2007
|
100%
|
N/A
|
||||
Jujin Software (Shenzhen) Co., Ltd. ("CFO Jujin")
|
Shenzhen, PRC
|
Mar. 9, 2007
|
100%
|
N/A
|
||||
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%
|
N/A
|
||||
Zhengning Information & Technology (Shanghai) Co., Ltd.
("CFO Zhengning")
|
Shanghai, PRC
|
Jan. 31, 2007
|
100%
|
N/A
|
||||
iSTAR Financial Holdings Limited ("iSTAR Financial Holdings")
|
BVI
|
Jul. 16, 2007
|
85%
|
Investment holdings
|
||||
iSTAR International Securities Co. Limited ("iSTAR Securities")
|
Hong Kong, PRC
|
Nov. 23, 2007
|
85%
|
Brokerage service
|
||||
iSTAR International Futures Co. Limited ("iSTAR Futures")
|
Hong Kong, PRC
|
Apr. 16, 2008
|
85%
|
Brokerage service
|
||||
iSTAR International Wealth Management Co. Limited
("iSTAR Wealth Management")
|
Hong Kong, PRC
|
Oct. 8, 2008
|
85%
|
Securities advising
|
||||
iSTAR International Credit Co. Limited ("iSTAR Credit")
|
Hong Kong, PRC
|
Feb. 10, 2012
|
85%
|
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
|
||||
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 Tahoe Investment and Development Co., Ltd ("CFO Tahoe")
|
Shenzhen, PRC
|
Sep. 30, 2013
|
Nil
|
N/A
|
||||
Sinoinfo (Dalian) Investment Consulting Co., Ltd. ("CFO Sinoinfo")
|
Dalian, PRC
|
Jul. 1, 2013
|
Nil
|
Securities investment advising | ||||
Shenzhen Shangtong Software Co., Ltd. ("CFO Shenzhen Shangtong")
|
Shenzhen, PRC
|
Sep. 23, 2009
|
Nil
|
N/A
|
||||
Zhengjin (Fujian) Precious Metals Investment Co., Ltd.
("CFO Zhengjin Fujian")
|
Fujian, PRC
|
Jan. 6, 2013
|
Nil
|
Precious metals brokerage
|
||||
Zhengjin (Shanghai) Precious Metals Investment Co., Ltd.
("CFO Zhengjin Shanghai")
|
Shanghai, PRC
|
Dec. 12, 2013
|
Nil
|
Precious metals brokerage
|
||||
Zhengjin (Tianjin) Precious Metals Investment Co., Ltd.
("CFO Zhengjin Tianjin")
|
Tianjin, PRC
|
Jul. 23, 2013
|
Nil
|
Precious metals brokerage
|
||||
Henghui (Tianjin) Precious Metals Investment Co., Ltd.
("CFO Henghui")
|
Tianjin, PRC
|
Sep. 30, 2013
|
Nil
|
Precious metals brokerage
|
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
|
VIE name
|
Contractual arrangement
|
Date counterpart
|
||
CFO Fuhua
|
May 27, 2004
|
CFO Beijing
|
||
CFO Chongzhi
|
June 8, 2008
|
CFO Software
|
||
CFO Newrand
|
October 17, 2008
|
CFO Zhengyong
|
||
CFO Qicheng
|
November 20, 2009
|
CFO Chuangying
|
·
|
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,
|
||||||||
2012
|
2013
|
|||||||
Total assets
|
$ |
39,592,530
|
$ |
113,091,394
|
||||
Total liabilities
|
$ |
17,141,853
|
$ |
71,714,009
|
Year ended December 31,
|
||||||||||||
2011 | 2012 | 2013 | ||||||||||
Net revenue
|
$ | 27,837,567 | $ | 17,271,563 | $ | 58,549,393 | ||||||
Net Loss
|
$ | (7,573,823 | ) | $ | (6,948,118 | ) | $ | (5,469,402 | ) |
Year ended December 31,
|
||||||||||||
2011 | 2012 | 2013 | ||||||||||
Net cash used in operating activities
|
$ | (11,948,507 | ) | $ | (13,860,354 | ) | $ | (14,469,067 | ) | |||
Net cash (used in) provided by investing activities
|
(7,726,567 | ) | 3,449,449 | (9,440,165 | ) | |||||||
Net cash (used in) provided by financing activities
|
(37,146,641 | ) | 6,461,007 | 35,830,988 | ||||||||
Effect of exchange rate changes
|
$ | 895,082 | $ | 52,740 | $ | (46,900 | ) |
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 (years)
|
5
|
Computer equipment (years)
|
5
|
Furniture, fixtures and equipment (years)
|
5
|
Motor vehicle (years)
|
5
|
Leasehold improvements
|
Shorter of the lease term or 5 years
|
License and related trademarks (years)
|
|
15
|
||
Completed technology (years)
|
|
5
|
||
Customer relationship (years)
|
|
4
|
- | 5 |
Value-added service license (years)
|
|
3
|
- | 4 |
Agreement with mobile operators (years)
|
|
3
|
||
Intellectual property (years)
|
|
10
|
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
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|
3.
|
ACQUISITIONS
|
Useful life
(Years)
|
|||||
Purchase price allocation:
|
|||||
Cash and cash equivalents
|
$ | 5,279,425 | |||
Prepaid expenses and current assets
|
1,135,765 | ||||
Accounts receivable
|
2,143,957 | ||||
Property and equipment, net
|
47,770 | ||||
Rental deposit
|
72,431 | ||||
Acquired intangible assets:
|
|||||
Precious metal trading right
|
699,414 | ||||
Customer relationship
|
1,250,813 |
4.3
|
|||
Guarantee fund deposits
|
1,626,545 | ||||
Total assets acquired
|
12,256,120 | ||||
Accrued expenses and other current liabilities
|
(2,810,425 | ) | |||
Deferred tax liabilities
|
(487,557 | ) | |||
Total net assets
|
8,958,138 | ||||
Noncontrolling interest
|
(9,508,295 | ) | |||
Goodwill
|
7,056,338 | ||||
Total purchase price
|
$ | 6,506,181 |
3.
|
ACQUISITIONS - continued
|
Purchase price allocation:
|
||||
Property and equipment, net
|
$ | 199,803 | ||
Total assets acquired
|
199,803 | |||
Goodwill
|
6,544,150 | |||
Cash consideration
|
4,044,980 | |||
The fair value of 30% shares of CFO GB
|
1,760,861 | |||
The fair value of 30% shares of CFO MF | 804,142 | |||
Contingent consideration
of 5% shares of CFO MF
|
133,970
|
|||
Total purchase price
|
$ |
6,743,953
|
3.
|
ACQUISITIONS - continued
|
Useful life
(Years)
|
|||||
Purchase price allocation:
|
|||||
Cash and cash equivalents
|
$ | 121,044 | |||
Prepaid expenses and current assets
|
339,296 | ||||
Accounts receivable
|
4,912 | ||||
Acquired intangible assets:
|
|||||
Security consulting license
|
598,657 |
15
|
|||
Total assets acquired
|
1,063,909 | ||||
Accrued expenses and other current liabilities
|
(274,748 | ) | |||
Deferred tax liabilities
|
(149,664 | ) | |||
Income tax payable
|
612 | ||||
Total net assets
|
640,109 | ||||
Goodwill
|
168,887 | ||||
Total purchase price
|
$ | 808,996 |
Useful life
(Years)
|
|||||
Purchase price allocation:
|
|||||
Acquired intangible assets:
|
|||||
Securities consulting license
|
$ | 2,751,148 |
15
|
||
Deferred tax liabilities
|
(687,787 | ) | |||
Total purchase price
|
$ | 2,063,361 |
3.
|
ACQUISITIONS – continued
|
Useful life
(Years)
|
|||||
Purchase price allocation:
|
|||||
Cash and cash equivalents
|
$ | 14,073 | |||
Prepaid and other current assets
|
215,868 | ||||
Accounts receivable
|
949 | ||||
Property and equipment, net
|
625,258 | ||||
Rental deposit
|
8,998 | ||||
Acquired intangible assets
|
|||||
Security consulting license
|
2,065,168 |
15
|
|||
Core technology
|
66,465 |
5
|
|||
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 | ) | |||
Total net assets
|
687,399
|
||||
Noncontrolling interest
|
(871,960
|
) | |||
Goodwill
|
3,033,068 | ||||
Total purchase price
|
$ | 2,848,507 |
3.
|
ACQUISITIONS - continued
|
For the year ended December 31,
|
||||||||
2012
|
2013
|
|||||||
(unaudited) | (unaudited) | |||||||
Revenues
|
$ | 36,237,382 | $ | 60,646,859 | ||||
Net loss attributable to China Finance Online Co., Limited
|
(15,202,149 | ) | (9,978,159 | ) | ||||
Net loss per share attributable to China Finance Online Co. Limited
|
||||||||
- basic
|
$ | (0.14 | ) | $ | (0.09 | ) | ||
- diluted
|
$ | (0.14 | ) | $ | (0.09 | ) |
4.
|
ACCOUNTS RECEIVABLE
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Accounts receivable-margin clients
|
$ | 15,054,331 | $ | 6,111,916 | ||||
Less: Allowance for doubtful accounts
|
- | (135,275 | ) | |||||
Accounts receivable- margin clients, net
|
$ | 15,054,331 | $ | 5,976,641 | ||||
Accounts receivable-others
|
5,012,320 | 15,427,520 | ||||||
Less: Allowance for doubtful accounts
|
(41,893 | ) | (102,236 | ) | ||||
Accounts receivable-others, net
|
$ | 4,970,427 | $ | 15,325,284 |
5.
|
CONSIDERATION RECEIVABLE
|
6.
|
PREPAID EXPENSES AND OTHER CURRENT ASSETS
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Prepayment of advertising fees
|
$ | 12,728 | $ | 281,590 | ||||
Advertising deposit
|
47,729 | 250,837 | ||||||
Advances to suppliers
|
1,037,764 | 1,182,555 | ||||||
VAT refund receivable
|
89,843 | 141,292 | ||||||
Interest receivable
|
1,019,415 |
419,991
|
||||||
Prepayment of office rental
|
47,462 | 185,698 | ||||||
Other current assets
|
525,406 | 844,716 | ||||||
$ | 2,780,347 | $ |
3,306,679
|
7.
|
LOAN RECEIVABLE
|
As of December 31,
|
||||||||||||
2012
|
2013
|
Interest rate
|
Period
|
|||||||||
A(i)
|
1,205,604 | - |
6% per annum
|
December 1, 2011 to November 30, 2012
|
||||||||
B(ii)
|
- | 10,333,120 |
1.5% per month
|
October 9, 2013 to March 31, 2014
|
||||||||
$ | 1,205,604 | $ | 10,333,120 |
(i)
|
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. The Company collected $995,190 and wrote off the uncollected balances in 2013.
|
(ii)
|
The loan was made to the Langfang Developer, in which the Group also made an equity method investment during the year (Note 6). The principal and its return are pledged by the 100% equity interests of Langfang Developer, which was completed in April 2014 (Note 25).
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Beginning balance
|
$ | 9,565,503 | $ | 1,205,604 | ||||
Additions
|
- |
10,333,120
|
||||||
Collection
|
(8,363,140 | ) | (995,190 | ) | ||||
Write-offs
|
- | (209,956 | ) | |||||
Exchange difference
|
3,241 | (458 | ) | |||||
Ending balance
|
$ | 1,205,604 | $ |
10,333,120
|
8.
|
SHORT-TERM INVESTMENTS
|
8.
|
SHORT-TERM INVESTMENTS - continued
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Beginning balance
|
$ | 923,582 | $ | - | ||||
Purchases
|
81,664,295 | |||||||
Redemption
|
(916,228 | ) | (81,824,078 | ) | ||||
Realized gain(loss)
|
(45,567 | ) | 127,835 | |||||
Unrealized loss
|
38,185 | - | ||||||
Exchange difference
|
28 | 31,948 | ||||||
Ending balance
|
$ | - | $ | - |
Year ended December 31, 2013
|
||||||||||||||||
Proceeds
|
Costs
|
Gains
|
Exchange
difference
|
|||||||||||||
Available-for-sale securities
|
$ | 81,824,078 | $ | 81,664,295 | $ | 127,835 | $ | 31,948 | ||||||||
Total
|
$ | 81,824,078 | $ | 81,664,295 | $ | 127,835 | $ | 31,948 |
Year ended December 31, 2012
|
||||||||||||||||
Proceeds
|
Costs
|
Losses
|
Exchange
difference
|
|||||||||||||
Available-for-sale securities
|
$ | 916,228 | $ | 952,411 | $ | (45,567 | ) | $ | 9,384 | |||||||
Total
|
$ | 916,228 | $ | 952,411 | $ | (45,567 | ) | $ | 9,384 |
9.
|
FAIR VALUE MEASUREMENT
|
Fair value disclosure or measurement at December 31, 2012
|
||||||||||||||||
Fair value at
December 31, 2012
|
Quoted price in active
markets for identical
asset (Level 1)
|
Significant other
observable inputs
|
Significant
unobservable inputs
|
|||||||||||||
Fair value disclosure
|
||||||||||||||||
Short-term investment:
|
||||||||||||||||
Held-to-maturity securities
|
$ | 2,639,589 | - | $ | 2,639,589 | - | ||||||||||
Fair value measurement
|
||||||||||||||||
Trading securities
|
- | - | - | - | ||||||||||||
Available-for-sale securities
|
- | - | - | - | ||||||||||||
Total assets measured at fair value
|
- | - | - | - |
December 31,
|
||||||||
2012
|
2013
|
|||||||
Beginning balance
|
$ | 923,582 | $ | - | ||||
Purchases
|
- | 81,664,295 | ||||||
Redemption
|
(916,228 | ) | (81,824,078 | ) | ||||
Realized gain(loss)
|
(45,567 | ) | 127,835 | |||||
Unrealized loss
|
38,185 | - | ||||||
Exchange difference
|
28 | 31,948 | ||||||
Ending balance
|
$ | - | $ | - |
9.
|
FAIR VALUE MEASUREMENT- continued
|
10.
|
COST METHOD INVESTMENT
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Beginning balance
|
$ | - | $ | 802,202 | ||||
Purchases
|
802,202 | 309,698 | ||||||
Exchange difference
|
- | 26,999 | ||||||
Ending balance
|
$ | 802,202 | $ | 1,138,899 |
11.
|
EQUITY METHOD INVESTMENT
|
12.
|
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Technology infrastructure
|
$ | 9,605,535 | $ | 10,299,529 | ||||
Computer equipment
|
1,911,447 | 1,840,958 | ||||||
Furniture, fixtures and equipment
|
3,200,237 | 3,548,706 | ||||||
Motor vehicle
|
731,672 | 609,345 | ||||||
Leasehold improvements
|
3,910,370 | 4,173,025 | ||||||
19,359,261 | 20,471,563 | |||||||
Less: accumulated depreciation
|
(14,445,147 | ) | (16,603,296 | ) | ||||
$ | 4,914,114 | $ | 3,868,267 |
13.
|
ACQUIRED INTANGIBLE ASSETS, NET
|
December 31
|
||||||||||||||||||||||||
2012
|
2013
|
|||||||||||||||||||||||
Gross
carrying
amount
|
Accumulated
amortization
|
Net
carrying
amount
|
Gross
carrying
amount
|
Accumulated
amortization
|
Net
carrying
amount
|
|||||||||||||||||||
Intangible assets not subject to amortization:
|
||||||||||||||||||||||||
Precious metal trading right
|
$ | - | $ | - | $ | - | $ | 1,295,740 | $ | - | $ | 1,295,740 | ||||||||||||
Intangible assets subject to
amortization:
|
||||||||||||||||||||||||
Completed technology
|
66,820 | (7,276 | ) | 59,544 | 68,887 | (21,279 | ) | 47,608 | ||||||||||||||||
Customer relationship
|
1,261,297 | (72,767 | ) | 1,188,530 | ||||||||||||||||||||
Securities consulting license and related trademarks
|
4,833,877 | (218,184 | ) | 4,615,693 | 5,590,273 | (577,389 | ) | 5,012,884 | ||||||||||||||||
$ | 4,900,697 | $ | (225,460 | ) | $ | 4,675,237 | $ | 8,216,197 | $ | (671,435 | ) | $ | 7,544,762 |
14.
|
GOODWILL
|
Precious
Metals trading
|
Investment
advisory
services
|
Institutional
subscription
services
|
Hong Kong
Brokerage service
|
Southern
China
|
Eastern
China
|
Northern
China
|
Total
|
|||||||||||||||||||||||||
Balance as of December 31, 2011
|
||||||||||||||||||||||||||||||||
Goodwill
|
$ | - | $ | - | $ | - | $ | 1,269,520 | $ | 2,400,576 | $ | 8,892,249 | $ | 387,242 | $ | 12,949,587 | ||||||||||||||||
Accumulated impairment loss
|
- | - | - | (1,267,826 | ) | (2,507,499 | ) | (9,284,338 | ) | (403,561 | ) | (13,463,224 | ) | |||||||||||||||||||
Exchange difference
|
- | - | - | (1,694 | ) | 106,923 | 392,089 | 16,319 | 513,637 | |||||||||||||||||||||||
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
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 | |||||||||||||||||||
Acquisition of CFO Tahoe (Note 3)
|
7,056,338 | - | - | - | - | - | - | 7,056,338 | ||||||||||||||||||||||||
Acquisition of Champion
Connection's business (Note3)
|
- | 4,867,660 | 1,676,490 | - | - | - | - | 6,544,150 | ||||||||||||||||||||||||
Acquisition of CFO Netinfo (Note 3)
|
- | 168,887 | - | - | - | - | - | 168,887 | ||||||||||||||||||||||||
Exchange difference
|
59,141 | 96,640 | - | - | - | - | - | 155,781 | ||||||||||||||||||||||||
Balance as of December 31, 2013
|
$ | 7,115,479 | $ | 8,182,468 | $ | 1,676,490 | $ | - | $ | - | $ | - | $ | - | $ | 16,974,437 |
14.
|
GOODWILL- continued
|
15.
|
BANK FACILITIES AND SHORT-TERM LOANS
|
16.
|
Accounts payable
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Amount due to customers of H.K. brokerage business
|
$ | 584,607 | $ | 7,039,937 | ||||
Amount due to sales agents
|
- | 4,202,811 | ||||||
Consulting fees payable
|
- | 1,175,319 | ||||||
Others
|
220,244 | 154,656 | ||||||
$ | 804,851 | $ | 12,572,723 |
17.
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Accrued bonus
|
$ | 2,026,268 | $ | 3,687,135 | ||||
Accrued refund of subscription fees
|
364,445 | - | ||||||
Accrued professional service fees
|
718,863 | 676,758 | ||||||
Withholding individual income tax-option exercise
|
61,683 | 61,683 | ||||||
Value added taxes and other taxes payable
|
242,861 | 915,601 | ||||||
Accrued raw data cost
|
364,889 | 565,747 | ||||||
Accrued welfare benefits
|
68,717 | 117,392 | ||||||
Acquisition consideration payable
|
- | 2,221,680 | ||||||
Accrued sales service fees
|
115,369 | 213,314 | ||||||
Others
|
1,425,535 | 1,237,152 | ||||||
$ | 5,388,630 | $ | 9,696,462 |
18.
|
STOCK OPTIONS AND NONVESTED SHARES
|
Years ended December 31,
|
|||||||||
2011
|
2013
|
||||||||
Weighted average risk free rate of return
|
2.02% | - | 2.24% | 1.40 | % | ||||
Weighted average expected option life (years)
|
6.14 | 6.14 | |||||||
Expected volatility rate
|
72.96% | - | 73.75% | 76.67 | % | ||||
Dividend yield
|
- | - |
18.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
(1)
|
Expected volatility
|
(2)
|
Risk-free interest rate
|
(3)
|
Expected option life
|
(4)
|
Dividend yield
|
(5)
|
Exercise price
|
18.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
2011
|
2012
|
2013
|
||||||||||||||||||||||
Number
of options
|
Weighted
average
exercise price
|
Number
of options
|
Weighted
average
exercise price
|
Number
of options
|
Weighted
average
exercise price
|
|||||||||||||||||||
Outstanding at beginning of year
|
13,103,238 | $ | 0.99 | 11,994,698 | $ | 0.96 | 11,144,998 | $ | 0.93 | |||||||||||||||
Granted
|
285,000 | 1.08 | - | - | 14,000,000 | 0.25 | ||||||||||||||||||
Exercised
|
(47,500 | ) | 0.47 | (20,000 | ) | 0.16 | (190,250 | ) | 0.16 | |||||||||||||||
Forfeited
|
(1,346,040 | ) | 1.28 | (829,700 | ) | 1.35 | (449,400 | ) | 1.25 | |||||||||||||||
Outstanding at end of year
|
11,994,698 | $ | 0.96 | 11,144,998 | $ | 0.93 | 24,505,348 | $ | 0.54 | |||||||||||||||
Shares exercisable at end of year
|
10,588,058 | $ | 0.91 | 10,856,838 | $ | 0.92 | 10,500,548 | $ | 0.93 |
Options outstanding
|
Option exercisable
|
||||||||||||||||||||||||||||
Stock option
with exercise
price of:
|
Number
outstanding
|
Weighted
average
remaining
contractual life
|
Weighted
average
exercise
price
|
Aggregate
intrinsic
value as of
December
31,
2013
|
Number
exercisable
|
Weighted
average
exercise
price
|
Aggregate
intrinsic value
as of December
31,
2013
|
||||||||||||||||||||||
$0.16 | 2,620,488 | 2,620,488 | |||||||||||||||||||||||||||
$1.04 | 200,000 | 200,000 | |||||||||||||||||||||||||||
$1.31 | 1,177,700 | 1,177,700 | |||||||||||||||||||||||||||
$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 | 2,386,000 | 2,386,000 | |||||||||||||||||||||||||||
$1.32 | 73,600 | 73,600 | |||||||||||||||||||||||||||
$1.26 | 493,560 | 493,560 | |||||||||||||||||||||||||||
$1.65 | 10,000 | 10,000 | |||||||||||||||||||||||||||
$1.426 | 2,137,000 | 2,137,000 | |||||||||||||||||||||||||||
$1.43 | 50,000 | 50,000 | |||||||||||||||||||||||||||
$0.87 | 30,000 | 25,200 | |||||||||||||||||||||||||||
$0.25 | 14,000,000 | - | |||||||||||||||||||||||||||
24,505,348 | 6.59 | $ | 0.54 | $ | 17,961,444 | 10,500,548 | $ | 0.93 | $ | 3,847,601 |
18.
|
STOCK OPTIONS AND NONVESTED SHARES - continued
|
19.
|
INCOME TAXES
|
19.
|
INCOME TAXES - continued
|
PRC entities
|
Chinese enterprise income tax rate
|
Qualification for preferential tax rate
|
CFO Success
|
Preferential tax rate of 12.5% from 2011 to 2012.
|
Software Enterprises
|
CFO Qicheng
|
Full tax exemption for the year 2011 and preferential tax rate of 12.5% from 2012 to 2014.
|
Software Enterprises
|
CFO Shenzhen Shangtong
|
Full tax exemption for the year 2011 and preferential tax rate of 12.5% from 2012 to 2014.
|
Software Enterprises
|
CFO Zhengning
|
Preferential tax rate of 12% for the year 2011.
|
Software Enterprises
|
CFO Stockstar
|
Transition tax rate 24% for the year 2011 and 25% from 2012 and thereafter.
|
Transition rules of the EIT Law
|
CFO Jujin
|
Transition tax rate 24% for the year 2011 and 25% from 2012 and thereafter.
|
Transition rules of the EIT Law
|
CFO Newrand
|
Transition tax rate 24% for the year 2011 and 25% from 2012 and thereafter.
|
Transition rules of the EIT Law
|
CFO Software
|
Preferential tax rate of 15% from 2011 to 2013.
|
HNTE
|
CFO Meining
|
Preferential tax rate of 15% from 2011 to 2013.
|
HNTE
|
CFO Genius
|
Transition tax rate 24% for 2011; And preferential tax rate of 15% from 2012 to 2014.
|
HNTE; Transition rules of EIT Law
|
19.
|
INCOME TAXES - continued
|
December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Current
|
$ | (662,114 | ) | $ | (315,197 | ) | $ | (478,966 | ) | |||
Deferred
|
(3,276,319 | ) | (568,521 | ) | 378,908 | |||||||
Total
|
$ | (3,938,433 | ) | $ | (883,718 | ) | $ | (100,058 | ) |
19.
|
INCOME TAXES - continued
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Current deferred tax assets:
|
||||||||
Deferred revenue - current
|
$ | 689,596 | $ | 618,648 | ||||
Accrued expenses and other liabilities
|
313,572 | 583,849 | ||||||
Net operating loss carrying forwards
|
949,476 | 4,442,678 | ||||||
1,952,644 | 5,645,175 | |||||||
Less: valuation allowance
|
(1,561,019 | ) | (4,530,737 | ) | ||||
Total current deferred tax assets
|
391,625 | 1,114,438 | ||||||
Non-current deferred tax assets:
|
||||||||
Deferred revenue - non-current
|
$ | 200,774 | $ | 381,522 | ||||
Net operating loss carrying forwards
|
8,101,455 | 8,370,153 | ||||||
8,302,229 | 8,751,705 | |||||||
Less: valuation allowance
|
(8,101,455 | ) | (8,657,442 | ) | ||||
Total non-current deferred tax assets
|
$ | 200,774 | $ | 94,263 | ||||
Current deferred tax liabilities:
|
||||||||
Account receivable and other assets
|
(140,074 | ) | (325,340 | ) | ||||
Total current deferred tax liabilities
|
$ | (140,074 | ) | $ | (325,340 | ) | ||
Non-current deferred tax liabilities:
|
||||||||
Intangible assets
|
(1,168,809 | ) | (1,886,190 | ) | ||||
Total non-current deferred tax liabilities
|
$ | (1,168,809 | ) | $ | (1,886,190 | ) |
19.
|
INCOME TAXES - continued
|
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Loss before tax
|
$ | (15,525,522 | ) | $ | (11,076,429 | ) | $ | (8,073,832 | ) | |||
Income tax expense calculated at 25%
|
(3,881,381 | ) | (2,769,107 | ) | (2,018,458 | ) | ||||||
Effect of tax holiday
|
(2,155,424 | ) | 2,206,739 | (266,396 | ) | |||||||
Effect of income tax rate difference in other jurisdictions
|
(203,633 | ) | 250,412 | 305,505 | ||||||||
Non-deductible expenses
|
4,950,474 | 851,680 | 267,748 | |||||||||
Non-taxable income
|
(40,165 | ) | (2,122 | ) | (439,861 | ) | ||||||
Change in valuation allowance
|
5,268,562 | 346,116 | 2,251,520 | |||||||||
Income tax expense (benefit
|
$ | 3,938,433 | $ | 883,718 | $ | 100,058 |
20.
|
NET LOSS PER SHARE
|
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Net loss attributable to China Finance Online Co. Limited
|
$ | (19,326,909 | ) | $ | (11,855,207 | ) | $ | (8,573,128 | ) | |||
Weighted average ordinary shares outstanding used in computing basic net income per share
|
108,961,642 | 108,983,249 | 109,019,513 | |||||||||
Weighted average ordinary shares outstanding used in computing diluted net income per share
|
108,961,642 | 108,983,249 | 109,019,513 | |||||||||
Net loss per share attributable to China Finance Online Co. Limited
|
||||||||||||
- basic
|
$ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) | |||
- diluted
|
$ | (0.18 | ) | $ | (0.11 | ) | $ | (0.08 | ) |
21.
|
MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION
|
22.
|
NONCONTROLLING INTERESTS
|
Precious
metal trading
services
|
Investment
advisory
services
|
Institutional
Subscription
Services
|
iSTAR Financial
holdings brokerage
services
|
Total
|
||||||||||||||||
Balance as of January 1, 2011
|
$ | - | $ | - | $ | - | $ | (56,802 | ) | $ | (56,802 | ) | ||||||||
Share-based compensation (Note 17)
|
- | - | - | 88,940 | 88,940 | |||||||||||||||
Net loss
|
- | - | - | (137,046 | ) | (137,046 | ) | |||||||||||||
Balance as of December 31, 2011
|
- | - | - | (104,908 | ) | (104,908 | ) | |||||||||||||
Acquisition of CFO East Win (Note3)
|
- | 871,960 | - | - | 871,960 | |||||||||||||||
Share-based compensation (Note 15)
|
- | - | - | 89,256 | 89,256 | |||||||||||||||
Net loss
|
- | (183,898 | ) | - | 78,958 | (104,940 | ) | |||||||||||||
Balance as of December 31, 2012
|
- | 688,062 | - | 63,306 | 751,368 | |||||||||||||||
Acquisition of CFO Tahoe (Note3)
|
9,508,295 | - | 9,508,295 | |||||||||||||||||
Acquisition of Champion Connection (Note3)
|
1,760,861 | 938,112 | - | 2,698,973 | ||||||||||||||||
Acquisition of Nontrolling interests of CFO East Win
|
-
|
586,954 | - | - | 586,954 | |||||||||||||||
Changes in ownership of subsidiaries
|
289,656 | (1,068,471 | ) | - | (778,815 | ) | ||||||||||||||
Capital injection from noncontrolling interests
|
1,405,963 | - | - | - | 1,405,963 | |||||||||||||||
Share-based compensation (Note 15)
|
- | - | - | 74,376 | 74,376 | |||||||||||||||
Net income (loss)
|
1,056,322 | (419,202 | ) | (64,585 | ) | (173,297 | ) | 399,238 | ||||||||||||
Balance as of December 31, 2013
|
$ | 11,970,580 | $ | 2,906,331 | $ | (194,944 | ) | $ | (35,615 | ) | $ | 14,646,352 |
23.
|
COMMITMENTS AND CONTINGENCIES
|
24.
|
SEGMENT AND GEOGRAPHIC INFORMATION
|
Precious metal
trading services
|
Subscription services and other related services
|
Brokerage services
in Hong Kong
|
Consolidated
|
|||||||||||||
Net revenues
|
$ | 30,124,245 | $ | 21,656,482 | $ | 3,404,767 | $ | 55,185,494 | ||||||||
Less: intersegment sales
|
- | (2,447,417 | ) | - | (2,447,417 | ) | ||||||||||
Net revenues from external customer
|
30,124,245 | 19,209,065 | 3,404,767 | 52,738,077 | ||||||||||||
Cost of revenues
|
2,613,287 | 7,018,379 | 938,404 | 10,570,070 | ||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
1,087,048 | 10,831,336 | 3,291,718 | 15,210,102 | ||||||||||||
Product development
|
784,083 | 8,248,244 | - | 9,032,327 | ||||||||||||
Sales and marketing
|
22,015,190 | 10,429,389 | 591,074 | 33,035,653 | ||||||||||||
Total segments operating expenses
|
23,886,321 | 29,508,969 | 3,882,792 | 57,278,082 | ||||||||||||
Less: intersegment operating expenses
|
(2,447,417 | ) | - | - | (2,447,417 | ) | ||||||||||
Total operating expenses
|
21,438,904 | 29,508,969 | 3,882,792 | 54,830,665 | ||||||||||||
Government subsidies
|
- | 11,187 | - | 11,187 | ||||||||||||
Income (loss) from operations
|
$ | 6,072,054 | $ | (17,307,096 | ) | $ | (1,416,429 | ) | $ | (12,651,471 | ) | |||||
Total segments assets
|
27,791,654 | 80,844,211 | 31,893,233 | 140,529,098 | ||||||||||||
Less: intersegment balances
|
- | (7,036,363 | ) | - | (7,036,363 | ) | ||||||||||
Total assets
|
$ | 27,791,654 | $ | 73,807,848 | $ | 31,893,233 | $ | 133,492,735 |
24.
|
SEGMENT AND GEOGRAPHIC INFORMATION - continued
|
Subscription
services
and other
related services
|
Brokerage services
in Hong Kong
|
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 |
Subscription
services
and other
related services
|
Brokerage services
in Hong Kong
|
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 |
24.
|
SEGMENT AND GEOGRAPHIC INFORMATION - continued
|
Years ended December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Precious metals trading services revenues
|
$ | - | $ | - | $ | 30,124,245 | ||||||
Financial information and advisory services revenues
|
43,100,486 | 20,826,995 | 11,122,400 | |||||||||
Advertising revenue
|
6,243,748 | 4,848,622 | 6,799,109 | |||||||||
Hong Kong brokerage services revenues
|
3,539,664 | 3,817,762 | 3,404,767 | |||||||||
Others
|
124,167 | 106,107 | 1,287,556 | |||||||||
Total revenue from external customers
|
$ | 53,008,065 | $ | 29,599,486 | $ | 52,738,077 |
25.
|
STATUTORY RESERVES AND RESTRICTED NET ASSETS
|
26.
|
SUBSEQUENT EVENT
|
i)
|
On
January 2, 2014, the Company granted restricted shares of an aggregate 1,100,240 ordinary shares to selected employees and executives.
|
ii)
|
On March 25, 2014, the Company extended the payment date of the consideration receivable and the maturity date of the loan made to the Langfang Developer to September 20, 2014. On April 14, 2014, the Langfang Developer’s 100% shares equity were pledged to the Company.
|
December 31,
|
||||||||
2012
|
2013
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 2,941,180 | $ | 721,271 | ||||
Amounts due from subsidiaries, VIEs and VIE’s subsidiaries
|
3,309,214 | 6,807,051 | ||||||
Prepaid expenses and other current assets
|
104,116 | 167,562 | ||||||
Dividends receivable
|
19,463,347 | 18,917,296 | ||||||
Total current assets
|
25,817,857 | 26,613,180 | ||||||
Investments in subsidiaries, VIEs and VIE’s subsidiaries
|
63,446,732 | 60,283,341 | ||||||
Rental deposits
|
66,622 | 66,893 | ||||||
Total assets
|
$ | 89,331,211 | $ | 86,963,414 | ||||
Liabilities and shareholders' equity
|
||||||||
Current liabilities:
|
||||||||
Accrued expenses and other current liabilities
|
251,649 | 286,041 | ||||||
Amounts due to subsidiaries, VIEs and VIE’s subsidiaries
|
9,114,380 | 10,906,476 | ||||||
Total current liabilities
|
$ | 9,366,029 | $ | 11,192,517 | ||||
Shareholders' equity
|
||||||||
Ordinary shares ($0.00013 par value; 500,000,000 shares authorized; 110,955,383 and 111,145,633 shares issued and outstanding as of December 31, 2012 and 2013, respectively)
|
14,328 | 14,353 | ||||||
Additional paid-in capital
|
81,163,243 | 84,346,266 | ||||||
Accumulated other comprehensive income
|
11,089,820 | 12,285,615 | ||||||
Retained deficits
|
(12,302,209 | ) | (20,875,337 | ) | ||||
Total shareholders' equity
|
79,965,182 | 75,770,897 | ||||||
Total liabilities and shareholders' equity
|
$ | 89,331,211 | $ | 86,963,414 |
December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Cost of revenues
|
$ | 43,976 | $ | 4,245 | $ | 2,584 | ||||||
Gross loss
|
(43,976 | ) | (4,245 | ) | (2,584 | ) | ||||||
Operating expenses:
|
||||||||||||
General and administrative
|
1,428,893 | 1,445,591 | 1,417,843 | |||||||||
Product development
|
75,482 | 68,961 | 62,914 | |||||||||
Sales and marketing
|
- | 43,018 | 160,112 | |||||||||
Stock-based compensation
|
945,868 | 207,677 | 2,539,274 | |||||||||
Loss from impairment of goodwill
|
50,534 | - | - | |||||||||
Total operating expenses
|
2,500,777 | 1,765,247 | 4,180,143 | |||||||||
Interest income
|
1,402 | 2,180 | 605 | |||||||||
Equity in deficits of subsidiaries, VIEs and VIE’s subsidiaries
|
(16,643,739 | ) | (9,674,955 | ) | (4,985,519 | ) | ||||||
Exchange gain, net
|
1,339,752 | (413,004 | ) | 594,513 | ||||||||
Other income
|
- | 64 | - | |||||||||
Loss from impairment of cost method investment
|
(1,479,571 | ) | - | - | ||||||||
Net loss
|
$ | (19,326,909 | ) | $ | (11,855,207 | ) | $ | (8,573,128 | ) | |||
Other comprehensive income, net of tax:
|
||||||||||||
Changes in foreign currency translation adjustment
|
2,928,723 | 130,115 | 1,195,795 | |||||||||
Net unrealized loss on available-for-sale securities, net of tax effects of ($5,728), $5,728 and nil for 2011, 2012 and 2013, respectively
|
(32,457 | ) | (13,110 | ) | - | |||||||
Reclassification adjustment of available-for-sale securities, net of tax effects of nil, nil and nil for 2011, 2012 and 2013, respectively
|
- | 45,567 | - | |||||||||
Other comprehensive income, net of tax
|
2,896,266 | 162,572 | 1,195,795 | |||||||||
Comprehensive loss
|
$ | (16,430,643 | ) | $ | (11,692,635 | ) | $ | (7,377,333 | ) |
Ordinary shares
|
Additional paid-in
|
Accumulated other
comprehensive
|
Retained
earnings
|
Total
shareholders'
|
||||||||||||||||||||
Shares
|
Amount
|
capital |
income (loss)
|
(deficits) | equity | |||||||||||||||||||
Balance as of January 1, 2011
|
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 | - | - | 505,792 | ||||||||||||||||||
Net unrealized loss 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 loss
|
- | - | - | - | (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 | |||||||||||||||||
Exercise of share options by employees
|
190,250 | 25 | 30,415 | - | - | 30,440 | ||||||||||||||||||
Share-based compensation
|
- | - | 2,539,274 | - | - | 2,539,274 | ||||||||||||||||||
Equity pick up from compensation of a subsidiary
|
- | - | 421,473 | - | - | 421,473 | ||||||||||||||||||
Acquisition of business combination
|
- | - | 191,861 | - | - | 191,861 | ||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | 1,195,795 | - | 1,195,795 | ||||||||||||||||||
Net loss
|
- | - | - | - | (8,573,128 | ) | (8,573,128 | ) | ||||||||||||||||
Balance as of December 31, 2013
|
111,145,633 | $ | 14,353 | $ | 84,346,266 | $ | 12,285,615 | $ | (20,875,337 | ) | $ | 75,770,897 |
December 31,
|
||||||||||||
2011
|
2012
|
2013
|
||||||||||
Operating activities:
|
||||||||||||
Net loss
|
$ | (19,326,909 | ) | $ | (11,855,207 | ) | $ | (8,573,128 | ) | |||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||||||
Stock-based compensation
|
945,868 | 207,677 | 2,539,274 | |||||||||
Loss from impairment of cost method investment
|
1,479,571 | - | - | |||||||||
Loss from impairment of goodwill
|
50,534 | - | - | |||||||||
Equity in earnings of subsidiaries, VIEs and VIE’s subsidiaries
|
16,643,739 | 9,674,955 | 4,985,519 | |||||||||
Changes in assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
(31,865 | ) | 26,907 | (63,446 | ) | |||||||
Amounts due from subsidiaries, VIEs and VIE’s subsidiaries
|
(902,476 | ) | 317,359 | (4,092,500 | ) | |||||||
Rental deposits
|
- | (66,622 | ) | (271 | ) | |||||||
Accrued expenses and other current liabilities
|
(52,029 | ) | (10,225 | ) | 34,392 | |||||||
Amounts due to subsidiaries, VIEs and VIE’s subsidiaries
|
307,870 | 8,095,649 | 1,779,098 | |||||||||
Net cash (used in) provided by operating activities
|
(885,697 | ) | 6,390,493 | (3,391,062 | ) | |||||||
Investing activities:
|
||||||||||||
Dividend receivable
|
759,301 | 4,171,269 | 1,140,713 | |||||||||
Capital injection to subsidiaries
|
- | (10,327,422 | ) | |||||||||
Net cash provided by (used in) investing activities
|
759,301 | (6,156,153 | ) | 1,140,713 | ||||||||
Financing activities:
|
||||||||||||
Proceeds from stock options exercised by employees
|
22,025 | 3,200 | 30,440 | |||||||||
Net cash provided by financing activities
|
22,025 | 3,200 | 30,440 | |||||||||
Effect of exchange rate changes
|
- | 1 | - | |||||||||
Net increase (decrease) in cash and cash equivalents
|
(104,371 | ) | 237,541 | (2,219,909 | ) | |||||||
Cash and cash equivalents, beginning of the year
|
2,808,010 | 2,703,639 | 2,941,180 | |||||||||
Cash and cash equivalents, end of the year
|
$ | 2,703,639 | $ | 2,941,180 | $ | 721,271 |
ARTICLE 1
|
INTERPRETATION
|
5
|
1.1
|
Definitions
|
5
|
1.2
|
Interpretation
|
7
|
ARTICLE 2
|
SUBJECT MATTER
|
7
|
ARTICLE 3
|
PURCHASE CONSIDERATION AND PAYMENT
|
8
|
3.1
|
Purchase Consideration
|
8
|
3.2
|
Terms of Payment
|
8
|
ARTICLE 4
|
CLOSING
|
9
|
4.1
|
Place, Date and Form of Closing
|
9
|
4.2
|
Failure in Closing
|
10
|
4.3
|
Allocation of Liabilities
|
10
|
ARTICLE 5
|
GOVERNING STRUCTURE AND BUSINESS OPERATION OF PLATFORM COMPANY
|
11
|
5.1
|
Governing Structure of Platform Company
|
11
|
5.2
|
Business Operation
|
12
|
ARTICLE 6
|
TRANSITION PERIOD
|
13
|
6.1
|
Undertakings for Transition Period
|
13
|
6.2
|
Handling the Business During Transition Period
|
15
|
ARTICLE 7
|
UNDERTAKINGS
|
15
|
7.1
|
Party A's Undertakings
|
15
|
7.2
|
Party B's and Party C's Undertakings
|
16
|
ARTICLE 8
|
TERMINATION EVENT
|
17
|
8.1
|
Cooperation Period
|
17
|
8.2
|
Termination Event
|
17
|
8.3
|
Effect of Termination Event
|
18
|
ARTICLE 9
|
CONFIDENTIALITY
|
20
|
9.1
|
Confidentiality Obligation
|
20
|
9.2
|
Exceptions to Confidentiality Obligation
|
20
|
9.3
|
Employees, Agents and Consultants
|
21
|
9.4
|
Survival after Termination
|
21
|
ARTICLE 10
|
REPRESENTATIONS AND WARRANTIES
|
22
|
10.1
|
Party A's Representations and Warranties
|
22
|
10.2
|
Party B's and Party C's Representations and Warranties
|
22
|
ARTICLE 11
|
LIABILITIES FOR BREACH OF CONTRACT
|
25
|
11.1
|
Event of Default
|
25
|
11.2
|
Event of Material Default
|
26
|
11.3
|
Liabilities for Breach of Contract
|
26
|
ARTICLE 12
|
GOVERNING LAW AND DISPUTE SETTLEMENT
|
26
|
12.1
|
Governing Law
|
26
|
12.2
|
Dispute Settlement
|
27
|
ARTICLE 13
|
MISCELLANEOUS
|
27
|
13.1
|
Notice
|
27
|
13.2
|
Costs and Taxes
|
27
|
13.3
|
Amendment
|
28
|
13.4
|
Severability
|
28
|
13.5
|
Entire Agreement
|
28
|
13.6
|
Waiver
|
28
|
13.7
|
Force Majeure
|
28
|
13.8
|
No Assignment
|
29
|
13.9
|
Successor and Assignee
|
29
|
13.10
|
No Third-party Beneficiary
|
29
|
13.11
|
Effectiveness and Counterparts
|
29
|
Appendix 1 List of the Subject Matter’s Assets
|
||
Appendix 2 List of Related Business
|
||
Appendix 3 List of the Subject Matter's Staff
|
(1)
|
Party A is a company with limited liability duly incorporated and validly existing under the Laws of China, and Party A is licensed to engage in securities investment consulting business and third-party fund sales business;
|
(2)
|
Party B is a company with limited liability duly incorporated and validly existing under the Laws of China, and is committed to provide financial information service for individual users and institutional users through the media of terminal software and based on the platform of Internet. Party B and its controlling shareholder (also actual controller), Mr. Zhou (i.e. Party C to this Agreement), and the team led by him, have abundant resources, rich operation and management experiences, and full R&D and marketing ability in the securities investment consulting business (including securities software business) (hereinafter referred to as "
Investment Consulting
Business
").
|
(3)
|
Party A intends to purchase and integrate the assets, software, technologies, personnel and relevant business of Party B and Party C in the Investment Consulting Business, and to carry out the Investment Consulting Business and the Funds Distribution Business taking the platform company as the cooperation platform in accordance with the terms and conditions of this Agreement ("
Transaction
").
|
(4)
|
Party C, as the controlling shareholder and actual controller of Party B, agrees to fully cooperate therewith and commits to consummate the Transaction.
|
1.1
|
Definitions
|
This Agreement
|
The Assets Purchase Agreement signed by the Parties, as well as all appendices, amendments and supplementations thereto.
|
||
Party A
|
Shenzhen Newrand Securities Advisory and Investment Co., Ltd.
|
||
Affiliate
|
A party controls, commonly controls or materially influences another party, or two or more than two parties are controlled by, or under the common control of or materially influenced by the same party. For the purpose of this definition, Material Influence shall mean having the power to participate in deciding the financial and business operation policies of a company, but such power cannot make the party control or with other parties commonly control the decision of such policies.
|
||
Control
|
(Including controlling, controlled and under common control) The power to directly or indirectly direct or cause to direct the decision of management, financial and business operation policies of an entity, whether through the voting securities, contract or any other means.
|
||
Parties
|
The Parties to this Agreement, and their respective successors, assignees and legal representatives.
|
||
Party
|
Any of the Parties.
|
||
BVI Company
|
Giant Bright International Holdings Limited.
|
||
Platform Company
|
Zhengyong Information Technology (Shanghai) Co., Ltd.
|
||
Champion Group
|
Shenzhen Champion Connection Co., Ltd. and all or any of its subsidiaries, branches and other affiliated offices, as well as other companies (if any) directly or indirectly controlled by Mr. Zhou
|
||
Licensed Companies
|
The companies that licensed to the Investment Consulting Business designated by the platform company for the cooperation hereunder, including Newrand, East Win, Stockstar Advisory and Sinoinfo.
|
STOCKSTAR ADVISORY
|
Shanghai Stockstar Securities Advisory and Investment Co., Ltd.
|
||
East Win
|
East Win Investment Consulting Co. Limited
|
||
Huizhi Fortune
|
Beijing Huizhi Fortune Technology Co., Ltd., a wholly owned subsidiary of East win
|
||
Sinoinfo
|
Sinoinfo (Dalian) Investment Consulting Co., Ltd.
|
||
Newrand Training School
|
Shenzhen Newrand Securities Investment Training Center wholly owned by Newrand.
|
||
Domain Assets
|
All websites listed in Appendix 1 hereto, as well as all lawful resources and rights in the domains of such websites.
|
||
Intellectual Property Rights
|
(a) Trademarks, marks, trade names, designs and invention rights, copyrights (including computer software copyright in object and source codes) and databases, know-hows, proprietary information and other proprietary materials, and proprietary intellectual properties, whether registered or not, including application to registration or right to apply for registration; (b) and right to sue against any past, current or future infringement of the aforesaid rights.
|
||
Related Businesses
|
All businesses owned or possibly owned by Party B and attached to the target assets as of the date of this Agreement (including but not limited to the businesses listed in Appendix 2 - List of Relevant Businesses).
|
||
Purchase Consideration
|
The price of assets purchase in the Transaction as agreed by the Parties in Article 3.1 of this Agreement.
|
||
Target Employees
|
The employees who are listed in Appendix 3 hereto and are working at Party B as of the date of this Agreement, but will resign from Party B (i.e. terminate employment contract and relevant agreements or de facto employment with Party B), and will sign the employment contract, confidentiality agreement, non-competition agreement and relevant agreements.
|
||
Closing Date
|
Shall have the meaning as defined in Article 4.1(2) hereof. In case of any statutory holiday, the Closing Date shall be postponed accordingly.
|
Terms of Payment
|
Shall have the meaning as defined in Article 3.2 hereof.
|
||
Termination of Purchase
|
Shall have the meaning as defined in Article 8.2.1 hereof.
|
||
Governing Law
|
Any and all binding and applicable laws, regulations, rules, provisions, notices, interpretations, orders or decrees of government authorities or legislative authorities, or judgments, decisions or interpretations of judicial authorities.
|
||
Government Authorities
|
Government, court, governmental agency, regulatory or official authority, department, agency or organization, whether collectively or any of them.
|
||
Business Day
|
Any day when the commercial banks in China are open to the public, excluding Saturday, Sunday and public holidays.
|
||
Effective Date
|
The date when this Agreement is duly executed.
|
||
Year
|
Calendar year, i.e. from January 1 to December 31.
|
1.2
|
Interpretation
|
(1)
|
The Whereas Clause, appendices and annexes hereof and hereto are the integral parts of this Agreement, and shall have the same effect as the body of this Agreement. Reference to this Agreement shall mean this Assets Purchase Agreement, as supplemented, amended, modified or changed from time to time, including the Whereas Clause, notes, appendices and annexes.
|
(2)
|
The headings of all articles, appendices and annexes are inserted for convenience only and shall not affect or limit the meaning or interpretation of this Agreement.
|
(3)
|
Reference to "within", "above", "below", "no less than" and "no more than" herein shall include the given number.
|
(4)
|
Reference to any applicable law shall be construed as including any amendment, supplementation or replacement thereto or thereof from time to time.
|
3.1
|
Purchase Consideration
|
3.2
|
Terms of Payment
|
(1)
|
This Agreement has been duly executed by the Parties or their authorized representatives and is in full force and effect;
|
(2)
|
Party B has completed the reorganization as described in Article 7.2(4) hereof;
|
(3)
|
Party B has completed the closing of the target assets as described in Article 4.1(3) hereof;
|
(4)
|
There is no material adverse effect. As of the date when the Closing Conditions are satisfied, there exists or occurs no event, circumstance or change which would cause any adverse effect of whatever nature on the Target Assets and Relevant Businesses herein (including but not limited to any customer complaint), or no event, circumstance or material change which would cause any adverse effect of whatever nature on the performance of this Agreement; and
|
(5)
|
The Parties have obtained relevant approvals or licenses;
|
(a)
|
The Transaction has obtained the necessary approvals from the relevant Government Authorities, if applicable;
|
(b)
|
Party B's creditors, relevant third parties or interested parties have granted Party B the necessary consents or approvals regarding Party B's Target Assets and transfer of Relevant Businesses; and
|
(c)
|
Party B's shareholders' meeting has adopted a resolution which approves the Transaction, execution of this Agreement and assumption of the obligations hereunder by Party B and its shareholders.
|
4.1
|
Place, Date and Form of Closing
|
(1)
|
Place of Closing
|
(2)
|
Date of Closing
|
(3)
|
Form of Closing
|
(a)
|
Closing in respect of fixed assets: Party B shall physically deliver all fixed assets listed in
Appendix 1
hereto and all relevant documents and materials (including but not limited to user's manual, application software, and user's database) to Party A and/or its designated Affiliate(s);
|
(b)
|
Closing in respect of intellectual properties: Party B shall transfer the title of all Domain Assets listed in Appendix 1 hereto to Party A and/or its designated Affiliate(s), so that Party A and/or its designated Affiliate(s) become(s) the owner of such Domain Assets.
|
(c)
|
Closing in respect of Relevant Businesses: Party B shall transfer all business materials, documents, customer resources and business contracts relating to the businesses attached to the Target Assets to Party A and/or its designated Affiliate(s); as per the actual business needs, Party B shall procure the counterparties of such business contracts to enter into new business contracts or changes of the parties to such business contracts with Party A and/or its designated Affiliate(s) according to Party A's requirements.
|
(d)
|
Closing in respect of Target Employees: Party B shall terminate the employment contracts and relevant agreements with the Target Employees, and issue a confirmation in respect of termination of employment. The Target Employees will sign the employment contract, non-disclosure agreement, non-competition agreement and relevant agreements with Party A and/or its designated Affiliate(s) in the form and substance required by Party A and/or its designated Affiliate(s).
|
4.2
|
Failure in Closing
|
(1)
|
If either Party (Party B and Party C as one party, and Party A as the other party) fails to fulfill any closing matter as specified above, the other Party may refuse to perform its obligation which shall be performed by it at the time of Closing. Subject to the agreement of the Parties through negotiation, the Parties may also agree on the date, place, arrangement and conditions of postponed Closing in writing.
|
(2)
|
If the Closing cannot be completed on the Closing Date hereunder due to any reason of Party B and/or Party C, Party A and/or its designated Affiliate(s) may choose to:
|
(a)
|
Claim the liabilities for breach of contract against Party B and/or Party C according to the Article 10 of this Agreement; or
|
(b)
|
Terminate the Transaction according to other provisions of this Agreement, and claim liabilities for breach of contract against Party B and/or Party C.
|
4.3
|
Allocation of Liabilities
|
(1)
|
Whether Party A and/or its designated Affiliate(s) has/have actually taken over the Target Assets according to other provisions of this Agreement, before the owner of the Target Assets is changed from Party B into Party A and/or its designated Affiliate(s) (in case of Target Assets with ownership certificate, it is the date when the change of ownership is completed; in case of Target Assets without ownership certificate, it is the date when Party B physically delivers the Target Assets to Party A and/or its designated Affiliate(s)), Party B shall still perform all obligations relating to the Target Assets. Party B and Party C shall be fully responsible for all liabilities and obligations relating to the Target Assets arising from any circumstance or occurrence before the owner of any Target Asset is changed from Party B to Party A and/or one of Affiliates designated by Party A or before the completion of the formalities for change of ownership.
|
(2)
|
Whether Party A and/or its designated Affiliate(s) has/have actually taken over the Target Assets according to other provisions of this Agreement, before Party B and its counterparties of business contracts enter into new business contracts or changes of the parties to business contracts with Party A and/or its designated Affiliate(s) according to Party A's requirements ("Transfer of Business Contracts"), Party B shall still perform its obligations under the business contracts. Party B and Party C shall be fully responsible for all liabilities and obligations relating to the performance of such business contracts incurred before the Transfer of Business Contracts or arising from any circumstance or occurrence before the Transfer of Business Contracts.
|
(3)
|
Whether Party A and/or its designated Affiliate(s) has/have actually taken over the Target Assets according to other provisions of this Agreement, before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees, Party B shall still perform its obligations relating to the Target Employees. Party B and Party C shall be fully responsible for all liabilities and obligations relating to the Target Employees incurred before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees, or arising from any circumstance or occurrence before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees.
|
5.1
|
Governing Structure of Platform Company
|
(1)
|
The Parties hereby confirm that, in order to carry out Investment Consulting Business and Fund Distribution Business, the Platform Company will indirectly control four Licensed Companies (i.e. Party A, East Win, Stockstar Advisory and Sinoinfo) and relevant companies (i.e. Newrand Training School and Huizhi Fortune) through the form of agreement control. For avoidance of doubt, any and all rights and interests received and owned in the shares of www.9666.cn held by East Win shall not belong to the Platform Company, and the Platform Company and its actual controller are not entitled to the distribution of its incomes;
|
(2)
|
The Platform Company shall have a board of directors composed of three directors, of whom two shall be appointed by the former shareholders of the Platform Company, and the remaining one shall be served by Party C (i.e. Mr. Zhou). Party C shall serve as the chairman of the board of the Platform Company, and lead the Platform Company and its Licensed Companies to operate and develop the Investment Consulting Business and Fund Distribution Business. For avoidance of doubt, the Fund Distribution Business (including but not limited to cash treasure business) independently developed and operated by China Finance Online Co. Ltd. and its subsidiaries (including the entities controlled through agreement, other than the Platform Company and its Licensed Companies defined herein) shall not be integrated into the business of the Platform Company and/or its Licensed Companies; if the license is required, the Licensed Companies shall give support accordingly. In respect of the fund distribution license held by Newrand, the websites of JRJC and STOCKSTAR shall be authorized to use the license for the Internet wealth management business based on website resources. During this period, unless it is otherwise agreed by the Parties, the costs and expenses incurred from maintaining the fund distribution license shall be borne by China Finance Online Co. Ltd..
|
5.2
|
Business Operation
|
(1)
|
Party C hereby particularly undertakes that Party C and the team led by it shall take all efforts to operate and develop the Platform and its Licensed Companies, and ensure that all licenses of the Investment Consulting Business may pass the annual inspection of each year during the period of cooperation.
|
(2)
|
If the Platform Company or any Licensed Company intends to provide any security or lending funds to any Party or its Affiliate(s), it shall be subject to the consent of the Parties.
|
(3)
|
The Parties hereby confirm that no dividends will be paid prior to expiration of the trial operation period as defined in Article 8.1 hereof.
|
(4)
|
After expiration of the trial operation period and all licenses of the Investment Consulting Business have passed the annual inspection of each year corresponding to the trial operation period, with the approval of the board of directors and the shareholders' meeting of the Platform Company, the Platform Company may distribute 50% of the distributable profits of the year; the remaining 50% distributable profits of the year shall be retained to the next year and will be distributed till all licenses of the Investment Consulting Business have passed the annual inspection of the next year. For avoidance of doubt and for example, with respect to distribution of profits in year 2016, if the annual inspection of year 2015 is passed in 2016, 50% of the profits in year 2016 may be distributed in 2016, and the remaining 50% of the profits in year 2016 will be distributed in 2017 only if the annual inspection of year 2016 is passed;
|
(5)
|
If any license of the Investment Consulting Business has not passed the annual inspection of the previous year, the profits received by the Platform Company from operations of the year will not be distributed, and such profits will be used by the Licensed Company that holds the said license of the Investment Consulting Business as the compensation for such license (Party C is not entitled to any distribution in such compensation). For avoidance of doubt, if the annual inspection on the license for year 2015 in 2016 is not passed, the profits of year 2016 shall belong to the Licensed Company as compensation. Other years are similar by analogy. Moreover, the performance incentives of Party C and the core operational management team of the year shall be canceled. The specific reward and punishment policies shall be decided by the board of directors of the Platform Company.
|
6.1
|
Undertakings for Transition Period
|
(1)
|
Unless it is otherwise requested by Party A and/or its designated Affiliate(s) in writing or agreed in writing and in advance by Party A and/or its designated Affiliate(s), Party B and Party C undertakes that they will not carry out any of the following activities after the date of this Agreement and before completion of the Closing ("
Transition Period
"):
|
(a)
|
Enter into or make any contract or undertaking which would cause any adverse effect on Party A and/or its designated Affiliate(s);
|
(b)
|
Transfer the Target Assets to any third party or otherwise dispose of the Target Assets, including but not limited to mortgage, lien, pledge, suretyship or any other encumbrance upon the Target Assets;
|
(c)
|
Release or waive any right or claim to the Target Assets, or renounce or waive any right in any litigation or arbitration proceeding;
|
(d)
|
Contact, negotiate or communicate with any third party with respect to the Target Assets, or enter into any agreement, letter of intent or any other document regarding the Target Assets with any third party, and none of Party B's personnel, directors, shareholders or any Affiliate may carry out any of the aforesaid activities with any third party.
|
(2)
|
During the Transition Period, Party B and Party C shall procure to:
|
(a)
|
With their best efforts keep the normal operation of the Target Assets and carry out business operations for the benefits of Party A and/or its designated Affiliate(s), so as to maintain the ongoing operation of the Businesses (including but not limited to the goodwill of the Relevant Businesses);
|
(b)
|
Comply with all applicable laws, regulatory and administrative requirements of the jurisdictions where the Businesses are carried out;
|
(c)
|
Take all reasonable actions to protect the effectiveness of all intellectual property rights relating to the Target Assets;
|
(d)
|
Give all reasonable cooperation to Party A and/or its designated Affiliate(s) with regard to the management and operation of the Target Assets. Party B and Party C shall negotiate with Party A and/or its designated Affiliate(s), and cause other relevant parties to negotiate with Party A and/or its designated Affiliate(s), with regard to any action which would reasonably cause any material effect to any Target Asset. Party B and Party C shall provide Party A and/or its designated Affiliate(s) with, and cause other relevant parties to provide Party A and/or its designated Affiliate(s) with any information reasonably requested in writing for this purpose;
|
(e)
|
Ensure the smooth progress of the incorporation of the Target Assets and the businesses and technologies of Party A and/or its designated Affiliate(s), give full assistance to Party A and/or its designated Affiliate(s) in taking over the Target Assets, and take best efforts to carry out normal operations without causing any adverse effect to the operation between both Parties;
|
(f)
|
Timely notify Party A and/or its designated Affiliate(s) upon occurrence of any of the following circumstances:
|
i.
|
Any breach which would cause any material adverse effect to Party B or the Target Assets;
|
ii.
|
There is or would be any action, arbitration or any other legal proceeding or decision which would cause any material adverse effect to the Target Assets;
|
iii.
|
Any circumstance which would cause any representation or warranty made by Party B herein to become untrue or inaccurate after the date of this Agreement.
|
6.2
|
Handling the Business during Transition Period
|
(a)
|
From the Closing Date, all incomes received by Party B from the Relevant Businesses shall belong to Party A and/or its designated Affiliate(s), and all financial records and documents relating to the Businesses shall be taken over by Party A.
|
(b)
|
From the date when the owners of the Domain Assets and fixed assets are changed to Party A and/or its designated Affiliate(s), the incomes from the Domain Assets and fixed assets shall belong to Party A and/or its designated Affiliate(s).
|
(c)
|
In order to ensure the normal operation of the Target Assets defined herein and the relevant businesses attached thereto and no adverse effect caused thereby, the Parties hereby agree that, from the Closing Date, notwithstanding other provisions of this Agreement and whether the transfer of the Target Assets has been completed or not, Party A and/or its designated Affiliate(s) will actually take over, manage and integrate all assets hereunder, all relevant businesses relating thereto and all intellectual property rights therein, and Party B shall give full assistance to Party A and/or its designated Affiliate(s) in that regard.
|
7.1
|
Party A's Undertakings
|
(1)
|
Party A will not violate any obligation, representation or warranty hereunder by any act or omission, or carry out any activity which would adversely affect any right of Party B or Party C hereunder.
|
(2)
|
Party A hereby undertakes that, unless it is for performance of its obligations hereunder, it will not engage in any business competing with the Platform Company and the Licensed Companies from the Closing Date (for avoidance of doubt, if Party A or its Affiliate(s) engage(s) in and develops wealth management business based on non-securities business, and Party A or its Affiliate(s) engage(s) in any wealth management related business through the proposed cooperation with PBC School of Finance, Tsinghua University, it shall not be deemed as a breach of this undertaking).
|
(3)
|
Party A's domestic Affiliate(s) shall provide the Platform Company and the Licensed Companies with the advertising resources on the websites of JRJC and STOCKSTAR. With respect to the advertisements of Investment Consulting Business, the websites of JRJC and STOCKSTAR may only be used to cooperate with the Platform Company. However, to assess the performance of the management of the Platform Company, the advertisement costs of the Platform Company shall be calculated in a simulated manner on the basis of the fair market price. For avoidance of doubt, to distribute the profits of the Platform Company, only the actual advertisement costs (if any) of the aforesaid advertisement resources shall be taken into account.
|
7.2
|
Party B's and Party C's Undertakings
|
(1)
|
Party B and Party C will not violate any obligation, representation or warranty hereunder by any act or omission, or carry out any activity which would adversely affect any right of Party A and/or its designated Affiliate(s) hereunder.
|
(2)
|
Party C shall be jointly and severally liable to Party A and/or its designated Affiliate(s) for Party B's performance of obligations hereunder and/or for Party B's breach of this Agreement.
|
(3)
|
The real properties of Champion Group and any and all credits, debts and liabilities relating thereto shall not be incorporated into the Platform Company or the Licensed Companies.
|
(4)
|
Party B and Party C shall take best efforts to reorganize the equity structure of Champion Group, procure other investors to withdraw their investments from Champion Group.
|
(5)
|
Any and all disputes, liabilities, refund obligations and debts between Party B, Party C and their employees who are to be transferred to the Platform Company as one party, and the former users as another party incurred prior to the Closing Date and due to any reason before the Closing Date, as well as the business incomes (including but not limited to cash and undistributed profits), shall not be incorporated into the Platform Company and the Licensed Companies.
|
(6)
|
Party B and Party C hereby undertake that, from the date of this Agreement, they will not engage in or assist or encourage other persons to engage in any activity competing with Party A and/or its designated Affiliate(s), or provide consulting service or advice to any firm, corporation, institution and/or individual competing with Party A and/or its designated Affiliate(s), or directly or indirectly engage in any operation, management and/or technical activity of such firm, corporation, institution and/or individual, or hold, purchase or sell any kind of interests in such firm, corporation, institution and/or individual.
|
(7)
|
Party B and Party C hereby undertake that they will, and will procure all their employees to be transferred to the Licensed Companies (including but not limited to Mr. Zhou) to, take all efforts to the Platform Company and the Licensed Companies, and strictly comply with the non-competition obligation from the Closing Date.
|
(8)
|
Party B and Party C hereby undertake that they will, and will procure all their employees to, keep confidentiality of all trade secrets of Party A and/or its designated Affiliate(s) received from the execution and performance of this Agreement.
|
(9)
|
Party B and Party C hereby undertake that they will take all necessary actions and complete all necessary formalities to enable Party A and/or its designated Affiliate(s) to obtain and validly and lawfully own all Target Assets during the Closing Period and the Transition Period defined herein.
|
8.1
|
Cooperation Period
|
(1)
|
The Parties hereby confirm and agree that the trial operation period during which the Parties cooperate with each other to carry out the Investment Consulting Business and the Fund Distribution Business according to this Agreement shall be from July 1, 2013 to December 31, 2014 ("
Trial Operation Period
").
|
(2)
|
Renewal. Upon expiration of the Trial Operation Period, unless it is terminated or expires according to this Agreement, the cooperation under this Agreement shall continue till it is terminated by the Parties through negotiation.
|
8.2
|
Termination Event
|
(1)
|
Upon occurrence of one or more than one of the following circumstances, Party A and/or its designated Affiliate(s) may (but is not obliged to) unilaterally terminate the Transaction:
|
(a)
|
Party B and/or Party C violates any representation or warranty, or contact, negotiate or communicate with or enter into any agreement with any third party in respect of the Target Assets after the date of this Agreement;
|
(b)
|
Party B and/or Party C fails to complete the Closing on or before the Closing Date or within the longer period agreed by Party A and Party B;
|
(c)
|
Any act of Party B and/or Party C constitutes an Event of Material Default as defined in Article 11.2 hereof.
|
(2)
|
Upon occurrence of one or more than one of the following circumstances, Party B and/or Party C may (but is not obliged to) unilaterally terminate the Transaction:
|
(a)
|
Party A is bankrupt or announced inability to pay prior to fulfillment of the payment obligation hereunder;
|
(b)
|
Any act of Party A constitutes an Event of Material Default as defined in Article 11.2 hereof.
|
(3)
|
Upon occurrence of any of the following circumstances, any Party may terminate this Agreement:
|
(a)
|
The Platform Company suffers loss in any year during the Trial Operation Period;
|
(b)
|
During the Trial Operation Period, any license of Investment Consulting Business of any Licensed Company fails to pass the annual inspection by the regulatory authority for the previous year (in particular refer to failure to pass the annual inspection for year 2012 in 2013 or failure to pass the annual inspection for year 2013 in 2014) due to any operational reason (including but not limited to compliance or complaint rate), other than failure to pass the annual inspection on the license of Investment Consulting Business of East Win due to any reason relating to www.9666.cn, which is not attributable to Party B and shall not be deemed as a circumstance mentioned above.
|
8.3
|
Effect of Termination Event
|
(1)
|
Termination of Purchase
|
(a)
|
If Party A and/or its designated Affiliate(s) terminate(s) the Transaction according to Article 8.2(1) ("
Party A's Termination of Purchase
"), Party B shall, within five (5) business days upon issuance of the purchase termination notice by Party A and/or its designated Affiliate(s), fully and unconditionally refund the Purchase Consideration paid by Party A and/or its designated Affiliate(s) to Party A and/or its designated Affiliate(s), and indemnify Party A and/or its designated Affiliate(s) against all actual losses; Party A and/or its designated Affiliate(s) shall, within five (5) business days upon receipt of the refund from Party B, return the Target Assets they received (other than the Target Assets which have been destroyed or lost during the normal course of business) to Party B.
|
(b)
|
If Party B terminates the Transaction according to Article 8.2(2) ("
Party B's Termination of Purchase
"), Party B shall, within five (5) business days upon issuance of its purchase termination notice, fully and unconditionally refund the Purchase Consideration paid by Party A and/or its designated Affiliate(s) to Party A and/or its designated Affiliate(s); Party A and/or its designated Affiliate(s) shall, within five (5) business days upon receipt of the refund from Party B, return the Target Assets they received (other than the Target Assets which have been destroyed or lost during the normal course of business) to Party B, and indemnify Party B against all actual losses.
|
(2)
|
Continue to Perform
|
(a)
|
Upon occurrence of any Termination Event as defined in Article 8.2(1), if Party A and/or its designated Affiliate(s) do(es) not terminate the purchase but continue(s) performing this Agreement, Party B shall continue fulfilling its obligations hereunder; and, such continued performance will not exempt Party B from the liabilities for breach or compensation to Party A and/or its designated Affiliate(s) according to other provisions of this Agreement.
|
(b)
|
Upon occurrence of any Termination Event as defined in Article 8.2(2), if Party B does not terminate the purchase but continues performing this Agreement, Party A and/or its designated Affiliate(s) shall continue fulfilling their obligations hereunder; and, such continued performance will not exempt Party A and/or its designated Affiliate(s) from the liabilities for breach or compensation to Party B according to other provisions of this Agreement.
|
9.1
|
Confidentiality Obligation
|
(1)
|
Each Party shall keep confidentiality of all provisions of this Agreement, and shall not disclose the provisions hereof to any third party or permit any Affiliate (current or future) to disclose the same to any third party, unless the disclosure to any government authority is required by any compulsory order, provided that such disclosure shall be only limited to the scope of compulsory order, or unless the disclosure is required by any law or any rule or regulation issued under such law.
|
(2)
|
Each party shall (and cause its affiliates to) use all reasonable efforts and take all necessary actions to keep confidentiality of the following information, and procure its officers, employees, agents, professional consultants and other persons to keep confidentiality of the following information:
|
(a)
|
Customer, operation, assets or business information about the other Parties possessed or received by the Party before or after the Date of this Agreement;
|
(b)
|
Customer, operation, assets or business information about the other Parties possessed or received by the Party before or after the Date of this Agreement through the following ways:
|
i.
|
Participation in negotiation relating to this Agreement;
|
ii.
|
Becoming a Party to this Agreement;
|
iii.
|
Exercise or performance of its rights or obligations hereunder.
|
(3)
|
No Party may use the above mentioned information (collectively as "Confidential Information") for any purpose (other than the circumstances mentioned in Article 9.2) or disclose the same to any third party. Each Party shall perform its obligations under this Article 9 at least as the strictness of confidentiality and procedures generally applicable to its own confidential information. The Party receiving the Confidential Information shall not use such information for any purpose other than performance of this Agreement and the activities contemplated herein.
|
9.2
|
Exceptions to Confidentiality Obligation
|
(1)
|
The confidentiality obligation under Article 9.1 shall not be applied to the following information:
|
(a)
|
Disclosure to any Affiliate of a Party for any reasonable purpose relating to this Agreement (provided that it complies with Article 9.3);
|
(b)
|
Information independently developed by a Party or received from a third party who has the right to disclose such information;
|
(c)
|
Disclosure as required by any binding judgment, decree or requirement made by any law, rule of any securities exchange or any government authority;
|
(d)
|
Disclosure as reasonably required by any tax authority for the taxation purpose of any Party;
|
(e)
|
Disclosure to any professional consultant of a Party as reasonably required for the purpose of this Agreement under confidentiality basis (provided that it complies with Article 9.3);
|
(f)
|
Information is or becomes publicly known without breach of this Article 9.
|
9.3
|
Employees, Agents and Consultants
|
(1)
|
Each Party shall inform its officers, employees, agents or professional consultants or advisers that provide advice for the matters herein or other persons receiving the information disclosed by the Party, of the confidential nature of such information and procure them to:
|
(a)
|
Keep confidentiality of such information;
|
(b)
|
Not disclose such Confidential Information to any third party (excluding the persons receiving such information according to the provisions of this Agreement).
|
(2)
|
If any person receiving the confidential information violates the provisions of this Article 9, the disclosing Party shall be liable for such violation.
|
(3)
|
Each Party shall procure the above-mentioned persons or Parties to perform its confidentiality obligation by entering into a non-disclosure agreement with such persons or Parties, or by taking other appropriate measures.
|
9.4
|
Survival after Termination
|
10.1
|
Party A's Representations and Warranties
|
(1)
|
Validity.
Party A is a limited liability company duly established and validly existing under the laws of the People’s Republic of China, and has the legal personality.
|
(2)
|
Lawful Authorization.
As of the date of this Agreement, with respect to the purchase contemplated herein, Party A has obtained all effective internal and external authorizations and the signatory that executes this Agreement for and on behalf of Party A and/or its designated Affiliate(s) is the legal representative or duly authorized representative of Party A and/or its designated Affiliate(s).
|
(3)
|
Enforceability.
This Agreement is lawfully and validly binding on and can be enforced against Party A in accordance with all terms and conditions hereof.
|
10.2
|
Party B's and Party C's Representations and Warranties
|
(1)
|
Validity
|
(a)
|
Party B is a limited liability company duly established and validly existing under the laws of the People’s Republic of China, and has the legal personality;
|
(b)
|
Party B has obtained all necessary licenses and approvals for the Target Assets and the operation of the Relevant Businesses, and it does not violate any law or regulation at any aspect.
|
(2)
|
Lawful Authorization.
Party B's execution and performance of this Agreement:
|
(a)
|
Has obtained all necessary corporate authorizations, including but not limited to the resolution of shareholders' meeting;
|
(b)
|
Within its corporate authority and business scope;
|
(c)
|
Will not violate its articles of association; and
|
(d)
|
Will not conflict with any law, or any contractual restriction which has any binding force or effect on it.
|
(3)
|
Enforceability.
This Agreement is lawfully and validly binding on and can be enforced against Party B in accordance with all terms and conditions hereof.
|
(4)
|
About Target Assets.
|
(a)
|
As of the date of this Agreement, Party B is the lawful owner of the Target Assets listed in Appendix 1 hereto, and Party B has fully paid the price for purchasing such assets, and Party B may transfer such assets to Party A and/or its designated Affiliate(s). Party B has not set any mortgage, lien, pledge or any other third-party interest upon such assets, and there is not any circumstance or event which would cause adverse effect upon acceptance of such assets by Party A and/or its designated Affiliate(s) and upon their ownership of such assets, including but not limited to any litigation, arbitration or seizure, attachment or detention by any administrative or judicial authority.
|
(b)
|
Party B does not have any debt upon the Target Assets during the related periods, and Party B has not made any commitment of security or suretyship for any debt, or entered into any relevant contract or agreement.
|
(5)
|
About Target Employees.
Party B will terminate the employment contracts and relevant agreements or de facto employment with the Target Employees. Any past, current or future dispute between Party B and its employees (including Target Employees) is irrelevant to Party A and/or its designated Affiliate(s), including but not limited to dispute over compensation, labor, social insurances, housing provident fund or individual income tax.
|
(6)
|
About Related Businesses.
|
(a)
|
Party B has the right to operate the Related Businesses listed in Appendix 2 hereto, and whether it is agreed by the counterparties to the Related Businesses or not, Party B has the right to transfer the incomes from the Related Businesses to Party A and/or its designated Affiliate(s). Party B hereby undertakes that there is not any circumstance or event which would cause adverse effect to acquisition and ongoing operation of the above mentioned Related Businesses, and, other than the events expressly disclosed in details to Party A and/or its designated Affiliate(s), Party B has not breached any contract involving the Related Businesses to which it is a party or received any customer complaint or claim (if any, it has been properly settled). Other than those disclosed herein, any customer dispute, complaint or claim occurs and persists after the Closing Date due to any act or omission of Party B prior to the Closing Date shall be settled by Party B and its shareholders; if such dispute, complaint or claim causes any damage to or material adverse effect on the reputation of Party A and/or its designated Affiliate(s), Party B and its shareholders shall indemnify Party A and/or its designated Affiliate(s) against such damage.
|
(b)
|
The businesses contracts listed in Appendix 2 hereto and all unfulfilled contracts have been duly executed and are effective, and Party B does not owe any due and outstanding debt under such contracts.
|
(7)
|
About Intellectual Property Rights.
|
(a)
|
Party B has full, sufficient and complete titles to the intellectual property rights in the Target Assets, and such intellectual property rights are free from any effect or restriction of any lien, mortgage, pledge or any other third-party right set upon the Target Assets. Party B has not granted any third party a license to the intellectual property rights in Party B's Target Assets, or entered into any agreement or contract in that regard.
|
(b)
|
With respect to any intellectual property right not owned by Party B but necessary for operation of the Target Assets and the Related Businesses, Party B has obtained the lawful use right without any interference, or Party B is able to obtain the use right of such intellectual property rights at a normal and reasonable market price.
|
(c)
|
The Target Assets listed in Appendix 1 hereto do not infringe any intellectual property right lawfully owned by any third party whether in or outside China.
|
(d)
|
Where the intellectual property rights in the Target Assets have been registered, Party B shall complete the formalities for change and transfer thereof with the competent authorities within the period specified herein, and transfer them to Party A and/or its designated Affiliate(s) and make Party A and/or its designated Affiliate(s) become the owners thereof; where they are not registered, Party B shall cause them to be registered with the competent authorities in the name of Party A and/or its designated Affiliate(s) within the period specified herein.
|
(8)
|
Complete and Accurate Disclosure.
|
(a)
|
Party B hereby warrants that it has fully disclosed to Party A and/or its designated Affiliate(s) all materials and information relating to the Transaction as well as all responsibilities and obligations of Party B, and all such materials, information, responsibilities and obligations are accurate, complete and true. Party B shall be solely responsible for the responsibilities and obligations relating to the information which is not disclosed to Party A and/or its designated Affiliate(s).
|
(b)
|
This Agreement, all appendices hereto and all information provided by Party B to Party A and/or its designated Affiliate(s) before the date of this Agreement are true, accurate and complete, and are not misleading. Party B has not provided any false or misleading representation, warranty or prediction to Party A and/or its designated Affiliate(s) in respect of the Target Assets and the Related Businesses.
|
(c)
|
Party B has provided Party A and/or its designated Affiliate(s) with all substantial financial materials and documents regarding the Target Assets. Such materials and documents may sufficiently and truly reflect the debts, obligations and liabilities relating to the Target Assets.
|
(9)
|
About Taxes.
Party B has paid all due and payable taxes relating to the Target Assets and the Related Businesses according to the form and time period provided for in the tax laws. With respect to any undue taxes, sufficient provision has been set aside by Party B in the accounting books. Party B does not have any defaulted or due and outstanding taxes on the Target Assets, and has not committed any tax evasion or fraud. Party B has complied with the tax laws and regulations at all material aspects.
|
11.1
|
Event of Default
|
11.2
|
Event of Material Default
|
11.3
|
Liabilities for Breach of Contract
|
(1)
|
In case of any Event of Material Default, the non-breaching party may terminate this Agreement and claim all damages against the breaching party.
|
(2)
|
If Party B or Party C has any Event of Default, Party A and/or its designated Affiliate(s) may claim their damages resulting from such event against Party B and/or Party C.
|
(3)
|
If Party A and/or its designated Affiliate(s) terminate(s) the purchase according to Article 8.2(1), Party B shall, in addition to the refund obligation under Article 8.3(1)(a), indemnify Party A and/or its designated Affiliate(s) against all actual damages within five (5) business days upon receipt of the termination notice from Party A and/or its designated Affiliate(s).
|
(4)
|
If Party B or Party C terminates the sale according to Article 8.2(2), Party A and/or its designated Affiliate(s) shall, in addition to return of the received Target Assets to Party B according to Article 8.3(1)(b), indemnify Party B against all actual damages within five (5) business days upon receipt of the termination notice from Party B, including but not limited to the damages resulting from Party B's failure in normal business operation, divulgence of trade secrets or customer loss due to such event.
|
12.1
|
Governing Law
|
12.2
|
Dispute Settlement
|
(1)
|
Any dispute or claim arising from or in connection with the interpretation, breach, termination or validity of this Agreement shall be first settled by the Parties through friendly negotiation. In case of any dispute, a Party shall immediately negotiate with the other Party upon receiving a written request from any other Party for negotiation. If the dispute is settled through negotiation, the representatives of the Parties in negotiation shall sign a written agreement, and the Parties hereto agree and undertake to effectuate and comply with such agreement. In case no settlement can be reached through negotiation within thirty (30) days, any Party may submit the dispute to the competent court.
|
(2)
|
Survival.
The dispute settlement provision of Article 12.1 shall survive after termination of this Agreement.
|
13.1
|
Notice
|
(1)
|
All notices, requests, orders and other communications required or proposed hereunder shall be in written forms, and shall become effective on the following date if sent by any of the following means: (a) in case of personal delivery, on the date of delivery; (b) in case of fax, on the date indicated on the confirmation of fax transmission; or (c) in case of EMS or any other courier service, on the fourth (4) business day after it is handed over to the courier service provider, or earlier delivery date as indicated on a written confirmation sent by the courier service provider to the sender. All notices, requests, orders and other communications shall be sent to the addresses notified by a Party from time to time.
|
13.2
|
Costs and Taxes
|
(1)
|
Each Party shall pay all costs and expenses incurred by it from the Transaction hereunder, including the costs and expenses from drafting, execution, delivery and performance of this Agreement and all matters relating hereto.
|
(2)
|
Each Party shall pay all taxes imposed on it relating to the Transaction hereunder.
|
13.3
|
Amendment
|
13.4
|
Severability
|
13.5
|
Entire Agreement
|
13.6
|
Waiver
|
13.7
|
Force Majeure
|
(1)
|
"Force Majeure" shall mean any objective event which is unforeseeable, inevitable and uncontrollable, including but not limited to earthquake, typhoon, fire, floods, strike, war or insurrection. If the performance of any Party's obligation hereunder is frustrated by any event of force majeure, such obligation shall be suspended during the period of frustration caused by such event, and the period for performance of the obligation shall be extended accordingly without any penalty. However, the Party claiming any event of force majeure must immediately notify the other Parties in writing, and, within seven (7) business days upon occurrence of the event, or within seven (7) business days after the telecommunication is restored in case of interruption of telecommunication, provide the other Parties with the details of the force majeure by both fax and courier service, as well as a certificate proving the occurrence and lasting period of such event.
|
(2)
|
If the Party claiming any event of force majeure fails to give the above mentioned notice or provide the appropriate certificate, the liability for the Party's failure in performance of the obligations hereunder shall not be exempted. The Party affected by any event of force majeure shall make reasonable efforts to minimize the consequence of such event, and resume its performance of the affected obligation(s) as soon as possible after the event ends. If the Party affected by any event of force majeure fails to resume its performance of the affected obligation(s), it shall assume liability to the other Parties.
|
(3)
|
Upon occurrence of any event of force majeure, the Parties shall seek fair solutions through negotiation and make all reasonable efforts to minimize the consequence of such event.
|
13.8
|
No Assignment
|
13.9
|
Successor and Assignee
|
13.10
|
No Third-party Beneficiary
|
13.11
|
Effectiveness and Counterparts
|
(1)
|
This Agreement shall become effective as of being duly executed by the authorized representatives of the Parties.
|
(2)
|
This Agreement may be executed in one or several counterparts, and each counterpart after execution and delivery shall be deemed as an original copy, but all such counterparts shall constitute only one identical instrument of this Agreement.
|
(3)
|
This Agreement shall be executed in three originals, one for each Party.
|
(1)
|
The Investor, Shenzhen Champion Connection Co., Ltd. ("Champion") and Mr. Zhou entered into an Call Option Agreement in June 2013 ("Call Option Agreement"), whereby the Investor or its designated qualified entity may purchase all or part of shares of Champion held by the Investor as a shareholder of Champion, as well as the exclusive option to all or part of assets of Champion at any time ("Call Option"), subject to the requirements of the applicable laws of China;
|
(2)
|
The Investor undertakes that it is committed to developing the investment consulting business of the Company and its subsidiaries and affiliates, and will procure Champion to sell its assets, software, technologies, personnel and related businesses in the field of investment consulting business as a package to Shenzhen Newrand Securities Advisory and Investment Co., Ltd. ("Newrand", an affiliate of the Company), and for this purpose agrees to transfer the Call Option under the Call Option Agreement to the Company. Therefore, the Company agrees to issue a certain amount of the common shares of the Company and pay a certain amount of cash to the Investor, as the consideration for the above mentioned Call Option and the Investor's procuring Newrand to purchase the assets of Champion;
|
a)
|
On or before the Closing (as defined below), as the consideration for the Investor's transfer of the Call Option and procuring Newrand to purchase the assets of Champion, the Company shall already approve the Investor to purchase and will issue 3,000 common shares to the Investor at the par value of US$ 1.00 per share, and these shares account for thirty percent (30%) ("
Shares
") of all issued and outstanding share capital of the Company immediately after the Closing.
|
b)
|
Subject to the terms and conditions of this Agreement, at the time of Closing, the Investor agrees to purchase while the Company agrees to sell and issue to the Investor the amount of Shares corresponding to the Investor listed in Schedule A under this Agreement at the price of US$ 1.00.
|
a)
|
The Company agrees to, in accordance with this Article 7.1 and always subject to Article 7.2, issue an extra amount of shares accounting for five percent (5%) of then issued and outstanding share capital to the Investor or its designated assignees at the zero price or nominal price when the following Milestones are reached.
|
b)
|
For the purpose of this Agreement, "Milestones" refer to the following events (each as "Milestone"):
|
i.
|
Zhengyong Information Technology (Shanghai) Co., Ltd ("Platform Company"), together with Licensed Companies (as defined below) and other related Affiliates, generates a general income of RMB 300,000,000 (calculated only in accordance with balance of deposits in the account) in FY2015, 2016 or 2017 ("Qualified Year") on business cooperation ("Cooperated Business");
|
ii.
|
In any qualified year, the AT gross profit of (x) the Platform Company, (y) the Licensed Company and (z) other related Affiliates are no less than RMB 40,000,000; and
|
iii.
|
The investment consulting license and the securities business license held by any Licensed Company pass the annual inspection of relevant competent authorities both in the qualified year and the fiscal year subsequent to this qualified year, and related written certificates have been sent to the Company.
|
a)
|
Notwithstanding any provision hereof to the contrary, if (i) the Assets Purchase Agreement is terminated before its expiration date; (ii) the Investor or its affiliate materially breached the Assets Purchase Agreement or made any material misrepresentation therein; (iii) the investment consulting business is terminated during the term of this Agreement due to any cause not attributable to any group company; or (iv) the investment consulting license held by any Licensed Company is revoked, unable to be renewed or becomes effective, the Company may issue a repurchase notice ("
Repurchase Notice
") to the Investor, to repurchase the Shares held and received by the Investor according to Article 1 hereof at the zero price or nominal price (as adjusted in case of share split, consolidation, dividend, reclassification or similar event) ("
Repurchased Shares
").
|
b)
|
The Investor shall make its best efforts to complete the necessary steps for transferring the Repurchased Shares to the Company, including but not limited to execution of the transfer instrument and surrendering the share certificate representing such shares to the Company for cancellation within five days upon receipt of the Repurchase Notice.
|
c)
|
For avoidance of doubt, notwithstanding any provision of this Agreement to the contrary, after the Company exercises its Call Option contemplated in this Article 7, the Company's obligation to issue any Milestone Shares to the Investor shall be terminated.
|
Name
姓名
|
Number of
Subscribed Shares
认购股票数
|
Total Subscription
Price of Shares
认购股票总价格
|
||||||
Champion Connection Network H.K Limited
|
3,000 | US$3000 | ||||||
TOTAL
总计
|
3,000 | US$3000 |
(1)
|
Company:
|
(2)
|
Original Investor:
|
(3)
|
New Investor:
|
(1)
|
The Company and the Original Investor entered into a Purchase Agreement in July 2013 ("Purchase Agreement"), whereby the Company has approved the Original Investor to subscribe and will issue 3,000 common shares to the Original Investor at the par value of US$ 1,00 per share, and these shares account for thirty percent (30%) of all issued and outstanding share capital of the Company after the Closing ("
Shares
");
|
(2)
|
The Original Investor intends to transfer its rights and obligations under the Purchase Agreement to the New Investor, and the New Investor hereby agrees to accept the rights and obligations of the Original Investor under the Purchase Agreement, and the Company hereby accepts and confirms the transfer mentioned above.
|
1
|
All rights and obligations of the Original Investor under the Purchase Agreement shall be succeeded by the New Investor.
|
2
|
As from the Effective Date of this Agreement, (1) all rights and obligations of the Original Investor under the Purchase Agreement shall be terminated; (2) the rights and obligations of the Original Investor under the Purchase Agreement shall be succeeded by the New Investor, and the Purchase Agreement shall continue to be effective and binding on the Company and the New Investor.
|
3
|
Information about the bank account designated by the New Investor to receive cash amounts under the Purchase Agreement is as the followings:
|
4
|
This Agreement shall be governed by and construed in accordance with the applicable laws of Hong Kong Special Administrative Region, the People’s Republic of China.
|
5
|
If a dispute relating to this Agreement cannot be settled by the Parties, it shall be submitted to Hong Kong International Arbitration Center ("HKIAC") for final settlement according to then effective UNCITRAL Arbitration Rules ("UNCITRAL Rules"), which shall be incorporated into this Article 4 by citation, subject to the following provisions: the arbitral tribunal shall be composed of one (1) arbitrator appointed by HKIAC according to the UNCITRAL Rules. The arbitration shall be in Chinese. Notwithstanding any provision of this Agreement or the UNCITRAL Rules, the arbitral tribunal may not issue any award of injunctive relief or similar relief in respect of this Agreement, unless the following conditions are satisfied: (i) such award can be obviously appealed and reviewed at the courts in Hong Kong; and (ii) if such award is affirmed, it will not cause any damage or restriction to or attach any condition on the right or ability of any Party or its Affiliates to operate business or carry out or dispose of other investments.
|
6
|
This Agreement is executed in the form of fax or electronic signature page, and may be executed in three (3) or more counterparts, and each of counterparts shall be deemed as an original copy, but all counterparts shall constitute one (1) instrument.
|
7
|
Any amendment to the provisions hereof or waiver of compliance with any provision hereof (whether generally or specifically, and whether retroactive or not) shall be of no effect and force, unless the same is agreed by the Parties in writing.
|
(1)
|
The Investor, East Win Investment Consulting Co., Ltd ("East Win") and Mr. Ma entered into an Call Option Agreement in June 2013 ("Call Option Agreement"), whereby the Investor or its designated qualified entity may purchase all or part of shares of East Win held by the Investor as a shareholder of East Win, as well as the exclusive option to all or part of assets of East Win at any time ("Call Option"), subject to the requirements of the applicable laws of China;
|
(2)
|
The Investor undertakes that it will transfer 30% shares of East Win actually held by it to a domestic individual designated by the Company, and agrees to transfer its Call Option under the Call Option Agreement to the Company. The Call Option under the Call Option Agreement shall be owned by the Company after it is duly transferred. For this purpose, the Company agrees to issue a certain amount of the common shares of the Company to the Investor, as the consideration for the above mentioned Call Option and the shares transferred by the Investor;
|
a)
|
On or before the Closing (as defined below), as the consideration for the Investor's transfer of the Call Option as well as transfer of 30% shares of East Win to a domestic individual designated by the Company, the Company shall have already approved the Investor to purchase and will issue 1,000 common shares to the Investor at the par value of US$ 1.00 per share, and these shares account for ten percent (10%) of all issued and outstanding share capital of the Company immediately after the Closing ("
Shares
").
|
b)
|
Subject to the terms and conditions of this Agreement, at the time of Closing, the Investor agrees to purchase while the Company agrees to sell and issue to the Investor the amount of Shares corresponding to the Investor listed in Schedule A at the price of US$ 1.00.
|
a)
|
Notwithstanding any provision hereof to the contrary, if (i) the Assets Purchase Agreement is terminated before its expiration date; (ii) the Investor or its affiliate materially breached the Assets Purchase Agreement or made any material misrepresentation therein; (iii) the investment consulting business is terminated during the term of this Agreement due to any cause not attributable to any group company; or (iv) the investment consulting license held by any Licensed Company is revoked, unable to be renewed or is no longer valid, the Company may issue a repurchase notice ("
Repurchase Notice
") to the Investor, to repurchase the Shares held and received by the Investor according to Article 1 hereof at the zero price or nominal price (as adjusted in case of share split, consolidation, dividend, reclassification or similar event) ("
Repurchased Shares
").
|
b)
|
The Investor shall make its best efforts to complete the necessary steps for transferring the Repurchased Shares to the Company, including but not limited to execution of the transfer instrument and surrendering the share certificate representing such shares to the Company for cancellation within five days upon receipt of the Repurchase Notice.
|
c)
|
For avoidance of doubt, notwithstanding any provision of this Agreement to the contrary, after the Company exercises its Call Option contemplated in this Article 7, the Company's obligation to issue any Milestone Shares to the Investor shall be terminated.
|
Name
姓名
|
Number of
Subscribed Shares
认购股票数
|
Total Subscription
Price of Shares
认购股票总价格
|
||||||
Hadevan Investment Co., Ltd.
|
1,000 | US$1000 | ||||||
TOTAL
总计
|
1,000 | US$1000 |
ARTICLE 1
|
INTERPRETATION
|
5
|
|
1.1
|
Definitions
|
5
|
|
1.2
|
Interpretation
|
7
|
|
ARTICLE 2
|
SUBJECT MATTER
|
8
|
|
ARTICLE 3
|
PURCHASE CONSIDERATION AND PAYMENT
|
8
|
|
3.1
|
Purchase Consideration
|
8
|
|
3.2
|
Terms of Payment
|
8
|
|
ARTICLE 4
|
CLOSING
|
9
|
|
4.1
|
Place, Date and Form of Closing
|
9
|
|
4.2
|
Failure in Closing
|
10
|
|
4.3
|
Allocation of Liabilities
|
11
|
|
ARTICLE 5
|
Company's Governing Structure and Distribution of Incomes
|
12
|
|
5.1
|
Governing Structure of Shenzhen Genius
|
12
|
|
5.2
|
Profit Distribution
|
12
|
|
ARTICLE 6
|
TRANSITION PERIOD
|
12
|
|
6.1
|
Undertakings for Transition Period
|
12
|
|
6.2
|
Handling the Business During Transition Period
|
14
|
|
ARTICLE 7
|
UNDERTAKINGS
|
15
|
|
7.1
|
Party A's Undertakings
|
15
|
|
7.2
|
Party B's and Party C's Undertakings
|
15
|
|
ARTICLE 8
|
TERMINATION EVENT
|
17
|
|
8.1
|
Termination Event
|
17
|
|
8.2
|
Effect of Termination Event
|
17
|
|
ARTICLE 9
|
CONFIDENTIALITY
|
19
|
|
9.1
|
Confidentiality Obligation
|
19
|
|
9.2
|
Exceptions to Confidentiality Obligation
|
20
|
|
9.3
|
Employees, Agents and Consultants
|
20
|
|
9.4
|
Survival after Termination
|
21
|
|
ARTICLE 10
|
REPRESENTATIONS AND WARRANTIES |
21
|
|
10.1
|
Party A's Representations and Warranties
|
21
|
|
10.2
|
Party B's and Party C's Representations and Warranties
|
22
|
|
ARTICLE 11
|
Liabilities for Breach of Contract |
25
|
|
11.1
|
Event of Default
|
25
|
|
11.2
|
Event of Material Default
|
26
|
|
11.3
|
Liabilities for Breach of Contract
|
26
|
|
ARTICLE 12
|
GOVERNING LAW AND DISPUTE SETTLEMENT
|
26
|
|
12.1
|
Governing Law
|
26
|
|
12.2
|
Dispute Settlement
|
27
|
|
ARTICLE 13
|
MISCELLANEOUS
|
27
|
13.1
|
Notice
|
25
|
13.2
|
Costs and Taxes
|
25
|
13.3
|
Amendment
|
25
|
13.4
|
Severability
|
26
|
13.5
|
Entire Agreement
|
26
|
13.6
|
Waiver
|
26
|
13.7
|
Force Majeure
|
26
|
13.8
|
No Assignment
|
27
|
13.9
|
Successor and Assignee
|
27
|
13.1
|
No Third-party Beneficiary
|
27
|
13.11
|
Effectiveness and Counterparts
|
27
|
Appendix 1 List of the Subject Matter’s Assets
|
|
|
Appendix 2 List of Related Business
|
|
|
Appendix 3 List of the Subject Matter's Staff
|
|
(1)
|
Party A is a limited liability company duly established and validly existing under the laws of China, and is positioned to provide relevant financial data and financial information services to the institutions;
|
(2)
|
Party B is a company with limited liability duly incorporated and validly existing under the Laws of China, and is committed to provide financial information service for individual users and institutional users through the media of terminal software and based on the platform of Internet. Party B and its controlling shareholder (also actual controller), Mr. Zhou (i.e. Party C to this Agreement), and the team led by him, have abundant resources, rich operation and management experiences, and full R&D and marketing ability in the institutional information business (hereinafter referred to as "
Institutional Business
").
|
(3)
|
Party A intends to purchase and integrate the assets, software, technologies, personnel and relevant business of Party B and Party C in the Institutional Business, and to carry out the Institutional Business by taking Party A as the cooperation platform, taking the integrated database as the backstage and using the uniform brand of "Genius Finance" (hereinafter referred to as "the
Transaction
").
|
(4)
|
Party C, as the controlling shareholder and actual controller of Party B, agrees to fully cooperate therewith and commits to consummate the Transaction.
|
1.1
|
DEFINITIONS
|
This Agreement
|
The Assets Purchase Agreement signed by the Parties, as well as all appendices, amendments and supplementations thereto.
|
Party A
|
Shenzhen Genius Information Technology Co., Ltd.
|
Affiliate
|
A party controls, commonly controls or materially influences another party, or two or more than two parties are controlled by, or under the common control of or materially influenced by the same party. For the purpose of this definition, Material Influence shall mean having the power to participate in deciding the financial and business operation policies of a company, but such power cannot make the party control or with other parties commonly control the decision of such policies.
|
Control
|
(Including controlling, controlled and under common control) The power to directly or indirectly direct or cause to direct the decision of management, financial and business operation policies of an entity, whether through the voting securities, contract or any other means.
|
Parties
|
The Parties to this Agreement, and their respective successors, assignees and legal representatives.
|
Party
|
Any of the Parties.
|
BVI Company
|
Mainfame Group Limited.
|
Champion Group
|
Shenzhen Champion Connection Co., Ltd. and all or any of its subsidiaries, branches and other affiliated offices, as well as other companies (if any) directly or indirectly controlled by Mr. Zhou.
|
Domain Assets
|
All websites listed in Appendix 1 hereto, as well as all lawful resources and rights in the domains of such websites.
|
1.2
|
Interpretation
|
(1)
|
The Whereas Clause, appendices and annexes hereof and hereto are the integral parts of this Agreement, and shall have the same effect as the body of this Agreement. Reference to this Agreement shall mean this Assets Purchase Agreement, as supplemented, amended, modified or changed from time to time, including the Whereas Clause, notes, appendices and annexes.
|
(2)
|
The headings of all articles, appendices and annexes are inserted for convenience only and shall not affect or limit the meaning or interpretation of this Agreement.
|
(3)
|
Reference to "within", "above", "below", "no less than" and "no more than" herein shall include the number.
|
(4)
|
Reference to any applicable law shall be construed as including any amendment, supplementation or replacement thereto or thereof from time to time.
|
3.1
|
Purchase Consideration
|
3.2
|
Terms of Payment
|
(1)
|
This Agreement has been duly executed by the Parties or their authorized representatives and is in full force and effect;
|
(2)
|
Party B has completed the reorganization as described in Article 7.2(4) hereof;
|
(3)
|
Party B has completed the closing of the target assets as described in Article 4.1(3) hereof;
|
(4)
|
There is no material adverse effect. As of the date when the Closing Conditions are satisfied, there exists or occurs no event, circumstance or change which would cause any adverse effect of whatever nature on the Target Assets and Related Businesses herein (including but not limited to any customer complaint), or no event, circumstance or material change which would cause any adverse effect of whatever nature on the performance of this Agreement; and
|
(5)
|
The Parties have obtained relevant approvals or licenses;
|
(a)
|
The Transaction has obtained the necessary approvals from the relevant Government Authorities, if applicable;
|
(b)
|
Party B's creditors, relevant third parties or interested parties have granted Party B the necessary consents or approvals regarding Party B's Target Assets and transfer of Related Businesses; and
|
(c)
|
Party B's shareholders' meeting has adopted a resolution which approves the Transaction, execution of this Agreement and assumption of the obligations hereunder by Party B and its shareholders.
|
4.1
|
Place, Date and Form of Closing
|
(1)
|
Place of Closing
|
(2)
|
Date of Closing
|
(3)
|
Form of Closing
|
(a)
|
Closing in respect of fixed assets: Party B shall physically delivery all fixed assets listed in
Appendix 1
hereto and all relevant documents and materials (including but not limited to user's manual, application software, and user's database) to Party A and/or its designated Affiliate(s);
|
(b)
|
Closing in respect of intellectual properties: Party B shall transfer the title of all Domain Assets listed in Appendix 1 hereto to Party A and/or its designated Affiliate(s), so that Party A and/or its designated Affiliate(s) become(s) the owner of such Domain Assets.
|
(c)
|
Closing in respect of Related Businesses: Party B shall transfer all business materials, documents, customer resources and business contracts relating to the businesses attached to the Target Assets to Party A and/or its designated Affiliate(s); as per the actual business needs, Party B shall procure the parties of such business contracts to enter into new business contracts or amendments to such business contracts with Party A and/or its designated Affiliate(s) according to Party A's requirements.
|
(d)
|
Closing in respect of Target Employees: Party B shall terminate the employment contracts and relevant agreements with the Target Employees, and issue a confirmation in respect of termination of employment. The Target Employees will sign the employment contract, non-disclosure agreement, non-competition agreement and relevant agreements with Party A and/or its designated Affiliate(s) in the form and substance required by Party A and/or its designated Affiliate(s).
|
4.2
|
Failure in Closing
|
(1)
|
If either Party (Party B and Party C as one party, and Party A as the other party) fails to fulfill any closing matter as specified above, the other Party may refuse to perform its obligation which shall be performed by it at the time of Closing. Subject to the agreement of the Parties through negotiation, the Parties may also agree on the date, place, arrangement and conditions of postponed Closing in writing.
|
(2)
|
If the Closing cannot be completed on the Closing Date hereunder due to any reason of Party B and/or Party C, Party A and/or its designated Affiliate(s) may choose to:
|
(a)
|
Claim the liabilities for breach of contract against Party B and/or Party C according to the Article 10 of this Agreement; or
|
(b)
|
Terminate the Transaction according to other provisions of this Agreement, and claim liabilities for breach of contract against Party B and/or Party C.
|
4.3
|
Allocation of Liabilities
|
(1)
|
Whether Party A and/or its designated Affiliate(s)has/have actually taken over the Target Assets according to other provisions of this Agreement, before the owner of the Target Assets is changed from Party B into Party A and/or its designated Affiliate(s) (in case of Target Assets with ownership certificate, it is the date when the change of ownership is completed; in case of Target Assets without ownership certificate, it is the date when Party B physically delivers the Target Assets to Party A and/or its designated Affiliate(s)), Party B shall still perform all obligations relating to the Target Assets. Party B and Party C shall be fully responsible for all liabilities and obligations relating to the Target Assets and arising from any circumstance or occurrence before the owner of any Target Asset is changed from Party B to Party A and/or one of Affiliates designated by Party A or before the completion of the formalities for change of ownership..
|
(2)
|
Whether Party A and/or its designated Affiliate(s) has/have actually taken over the Target Assets according to other provisions of this Agreement, before Party B and its counterparties of business contracts enter into new business contracts or amendments to business contracts with Party A and/or its designated Affiliate(s) according to Party A's requirements ("Transfer of Business Contracts"), Party B shall still perform its obligations under the business contracts. Party B and Party C shall be fully responsible for all liabilities and obligations incurred before the Transfer of Business Contracts or arising from any circumstance or occurrence before the Transfer of Business Contracts, and relating to the performance of such business contracts.
|
(3)
|
Whether Party A and/or its designated Affiliate(s)has/have actually taken over the Target Assets according to other provisions of this Agreement, before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees, Party B shall still perform its obligations relating to the Target Employees. Party B and Party C shall be fully responsible for all liabilities and obligations relating to the Target Employees incurred before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees, or arising from any circumstance or occurrence before Party B terminates the employment contracts and relevant agreements or de facto employment with the Target Employees.
|
5.1
|
Governing Structure of Shenzhen Genius
|
(1)
|
Shenzhen Genius shall have a board of directors composed of three directors, of whom two shall be appointed by the former shareholders, and the remaining one shall be served by Party C (i.e. Mr. Zhou). Party C shall serve as the chairman of Party A.
|
(2)
|
It is hereby confirmed by the Parties that composition, appointment and dismissal of the management team of Shenzhen Genius shall be decided by the board of directors, or otherwise decided by the Parties through negotiation.
|
5.2
|
Profit Distribution
|
6.1
|
Undertakings for Transition Period
|
(1)
|
Unless it is otherwise requested by Party A and/or its designated Affiliate(s) in writing or agreed in writing and in advance by Party A and/or its designated Affiliate(s), Party B and Party C undertakes that they will not carry out any of the following activities after the date of this Agreement and before completion of the Closing ("Transition Period"):
|
(a)
|
Enter into or make any contract or undertaking which would cause any adverse effect on Party A and/or its designated Affiliate(s);
|
(b)
|
Transfer the Target Assets to any third party or otherwise dispose of the Target Assets, including but not limited to mortgage, lien, pledge, suretyship or any other encumbrance upon the Target Assets;
|
(c)
|
Release or waive any right or claim to the Target Assets, or renounce or waive any right in any litigation or arbitration proceeding;
|
(d)
|
Contact, negotiate or communicate with any third party with respect to the Target Assets, or enter into any agreement, letter of intent or any other document regarding the Target Assets with any third party, and none of Party B's personnel, directors, shareholders or any Affiliate may carry out any of the aforesaid activities with any third party.
|
(2)
|
During the Transition Period, Party B and Party C shall procure to:
|
(a)
|
With their best efforts keep the normal operation of the Target Assets and carry out business operations for the benefits of Party A and/or its designated Affiliate(s), so as to maintain the ongoing operation of the Businesses (including but not limited to the goodwill of the Related Businesses);
|
(b)
|
Comply with all applicable laws, regulatory and administrative requirements of the jurisdictions where the Businesses are carried out;
|
(c)
|
Take all reasonable actions to protect the effectiveness of all intellectual property rights relating to the Target Assets;
|
(d)
|
Give all reasonable cooperation to Party A and/or its designated Affiliate(s) with regard to the management and operation of the Target Assets. Party B and Party C shall negotiate with Party A and/or its designated Affiliate(s), and cause other relevant parties to negotiate with Party A and/or its designated Affiliate(s), with regard to any action which would reasonably cause any material effect to any Target Asset. Party B and Party C shall provide Party A and/or its designated Affiliate(s) with, and cause other relevant parties to provide Party A and/or its designated Affiliate(s) with any information reasonably requested in writing for this purpose;
|
(e)
|
Ensure the smooth progress of the incorporation of the Target Assets and the businesses and technologies of Party A and/or its designated Affiliate(s), give full assistance to Party A and/or its designated Affiliate(s) in taking over the Target Assets, and take best efforts to carry out normal operations without causing any adverse effect to the operation between both Parties;
|
(f)
|
Timely notify Party A and/or its designated Affiliate(s) upon occurrence of any of the following circumstances:
|
i.
|
Any breach which would cause any material adverse effect to Party B or the Target Assets;
|
ii.
|
There is or would be any action, arbitration or any other legal proceeding or decision which would cause any material adverse effect to the Target Assets;
|
iii.
|
Any circumstance which would cause any representation or warranty made by Party B herein to become untrue or inaccurate after the date of this Agreement.
|
6.2
|
Handling the Business during Transition Period
|
(a)
|
From the Closing Date, all incomes received by Party B from the Related Businesses shall belong to Party A and/or its designated Affiliate(s), and all financial records and documents relating to the Businesses shall be taken over by Party A.
|
(b)
|
From the date when the owners of the Domain Assets and fixed assets are changed to Party A and/or its designated Affiliate(s), the incomes from the Domain Assets and fixed assets shall belong to Party A and/or its designated Affiliate(s).
|
(c)
|
In order to ensure the normal operation of the Target Assets defined herein and the Related Businesses attached thereto and no adverse effect caused thereby, the Parties hereby agree that, from the Closing Date, notwithstanding other provisions of this Agreement and whether the transfer of the Target Assets has been completed or not, Party A and/or its designated Affiliate(s) will actually take over, manage and integrate all assets hereunder, all Related Businesses relating thereto and all intellectual property rights therein, and Party B shall give full assistance to Party A and/or its designated Affiliate(s) in that regard.
|
7.1
|
Party A's Undertakings
|
(1)
|
Party A will not violate any obligation, representation or warranty hereunder by any act or omission, or carry out any activity which would adversely affect any right of Party B or Party C hereunder.
|
(2)
|
Party A's Hong Kong subsidiary ("Genius Hong Kong Subsidiary") shall be canceled in year 2013. For avoidance of doubt, Genius Hong Kong Subsidiary and its employees, assets, businesses and incomes shall not be included in the cooperation between the Parties as the resources of the Institutional Business of Party A's existing team; Party B and Party C are not entitled to any rights and interests received from and enjoyed in 100% shares of Genius Hong Kong Subsidiary held by Party A.
|
7.2
|
Party B's and Party C's Undertakings
|
(1)
|
Party B and Party C will not violate any obligation, representation or warranty hereunder by any act or omission, or carry out any activity which would adversely affect any right of Party A and/or its designated Affiliate(s) hereunder.
|
(2)
|
Party C shall be jointly and severally liable to Party A and/or its designated Affiliate(s) for Party B's performance of obligations hereunder and/or for Party B's breach of this Agreement.
|
(3)
|
Party B and Party C shall take best efforts to reorganize the shareholding structure of Champion Group, procure other investors to withdraw their investments from Champion Group.
|
(4)
|
Any and all disputes, liabilities, refund obligations and debts between Party B, Party C and their employees who are to be transferred to Party A as one party, and the former users as the other party incurred prior to the Closing Date and due to any reason before the Closing Date, as well as the incomes from the Institutional Business (including but not limited to cash and undistributed profits), shall not be incorporated into the subject of the Transaction.
|
(5)
|
Party B and Party C hereby undertake that, from the date of this Agreement, they will not engage in or assist or encourage other persons to engage in any activity competing with Party A and/or its designated Affiliate(s), or providing consulting service or advice to any firm, corporation, institution and/or individual competing with Party A and/or its designated Affiliate(s), or directly or indirectly engage in any operation, management and/or technical activity of such firm, corporation, institution and/or individual, or hold, purchase or sell any kind of interests in such firm, corporation, institution and/or individual.
|
(6)
|
Party B and Party C hereby undertake that they will, and will procure all their employees to be transferred to Party A (including but not limited to Mr. Zhou) to, use all efforts in Party A, and strictly comply with the non-competition obligation from the Closing Date.
|
(7)
|
Party B and Party C hereby undertake that they will, and will procure all their employees to, keep confidentiality of all trade secrets of Party A and/or its designated Affiliate(s) received from the execution and performance of this Agreement.
|
(8)
|
Party B and Party C hereby undertake that they will take all necessary actions and complete all necessary formalities to enable Party A and/or its designated Affiliate(s) to obtain and validly and lawfully own all Target Assets during the Closing Period and the Transition Period defined herein.
|
8.1
|
Termination Event
|
(1)
|
Upon occurrence of one or more than one of the following circumstances, Party A and/or its designated Affiliate(s) may (but is not obliged to) unilaterally terminate the Transaction:
|
(a)
|
Party B and/or Party C violates any representation or warranty, or contact, negotiate or communicate with or enter into any agreement with any third party in respect of the Target Assets after the date of this Agreement;
|
(b)
|
Party B and/or Party C fails to complete the Closing on or before the Closing Date or within the longer period agreed by Party A and Party B;
|
(c)
|
Any act of Party B and/or Party C constitutes an Event of Material Default as defined in Article 11.2 hereof.
|
(2)
|
Upon occurrence of one or more than one of the following circumstances, Party B and/or Party C may (but is not obliged to) unilaterally terminate the Transaction:
|
(a)
|
Party A is bankrupt or announced inability to pay prior to fulfillment of the payment obligation hereunder;
|
(b)
|
Any act of Party A constitutes an Event of Material Default as defined in Article 11.2 hereof.
|
8.2
|
Effect of Termination Event
|
(1)
|
Termination of Purchase
|
b
|
If Party A and/or its designated Affiliate(s) terminate(s) the Transaction according to Article 8.2(1) ("
Party A's Termination of Purchase
"), Party B shall, within five (5) business days upon issuance of the purchase termination notice by Party A and/or its designated Affiliate(s), fully and unconditionally refund the Purchase Consideration paid by Party A and/or its designated Affiliate(s) to Party A and/or its designated Affiliate(s), and indemnify Party A and/or its designated Affiliate(s) against all actual losses; Party A and/or its designated Affiliate(s) shall, within five (5) business days upon receipt of the refund from Party B, return the Target Assets they received (other than the Target Assets which have been destroyed or lost during the normal course of business) to Party B.
|
(b)
|
If Party B terminates the Transaction according to Article 8.2(2) ("
Party B's Termination of Purchase
"), Party B shall, within five (5) business days upon issuance of its purchase termination notice, fully and unconditionally refund the Purchase Consideration paid by Party A and/or its designated Affiliate(s) to Party A and/or its designated Affiliate(s); Party A and/or its designated Affiliate(s) shall, within five (5) business days upon receipt of the refund from Party B, return the Target Assets they received (other than the Target Assets which have been destroyed or lost during the normal course of business) to Party B, and indemnify Party B against all actual losses.
|
(2)
|
Continue to Perform
|
(a)
|
Upon occurrence of any Termination Event as defined in Article 8.1(1), if Party A and/or its designated Affiliate(s) do(es) not terminate the purchase but continue performing this Agreement, Party B shall continue fulfilling its obligations hereunder; and, such continued performance will not exempt Party B from the liabilities for breach or compensation to Party A and/or its designated Affiliate(s) according to other provisions of this Agreement.
|
(b)
|
Upon occurrence of any Termination Event as defined in Article 8.1(2), if Party B does not terminate the purchase but continues performing this Agreement, Party A and/or its designated Affiliate(s) shall continue fulfilling their obligations hereunder; and, such continued performance will not exempt Party A and/or its designated Affiliate(s) from the liabilities for breach or compensation to Party B according to other provisions of this Agreement.
|
9.1
|
Confidentiality Obligation
|
(1)
|
Each Party shall keep confidentiality of all provisions of this Agreement, and shall not disclose the provisions hereof to any third party or permit any affiliate (current or future) to disclose the same to any third party, unless the disclosure to any government authority is required by any compulsory order, provided that such disclosure shall be only limited to the scope of compulsory order, or unless the disclosure is required by any law or any rule or regulation issued under such law.
|
(2)
|
Each Party shall (and cause its affiliates to) use all reasonable efforts and take all necessary actions to keep confidentiality of the following information, and procure its officers, employees, agents, professional consultants and other persons to keep confidentiality of the following information:
|
(a)
|
Customer, operation, assets or business information about the other Parties possessed or received by the Party before or after the Date of this Agreement;
|
(b)
|
Customer, operation, assets or business information about the other Parties possessed or received by the Party before or after the Date of this Agreement through the following ways:
|
i.
|
Participation in negotiation relating to this Agreement;
|
ii.
|
Becoming a Party to this Agreement;
|
iii.
|
Exercise or performance of its rights or obligations hereunder.
|
(3)
|
No Party may use the above mentioned information (collectively as "Confidential Information") for any purpose (other than the circumstances mentioned in Article 9.2) or disclose the same to any third party. Each Party shall perform its obligations under this Article 9 at least as the strictness of confidentiality and procedures generally applicable to its own confidential information. The Party receiving the Confidential Information shall not use such information for any purpose other than performance of this Agreement and the activities contemplated herein.
|
9.2
|
Exceptions to Confidentiality Obligation
|
(1)
|
The confidentiality obligation under Article 9.1 shall not be applied to the following information:
|
(a)
|
Disclosure to any Affiliate of a Party for any reasonable purpose relating to this Agreement (provided that it complies with Article 9.3);
|
(b)
|
Information independently developed by a Party or received from a third party who has the right to disclose such information;
|
(c)
|
Disclosure as required by any binding judgment, decree or requirement made by any law, rule of any securities exchange or any government authority;
|
(d)
|
Disclosure as reasonably required by any tax authority for the taxation purpose of any Party;
|
(e)
|
Disclosure to any professional consultant of a Party as reasonably required for the purpose of this Agreement under confidentiality basis (provided that it complies with Article 9.3);
|
(f)
|
Information is or becomes publicly known without breach of this Article 9.
|
9.3
|
Employees, Agents and Consultants
|
(1)
|
Each Party shall inform its officers, employees, agents or professional consultants or advisers that provide advice for the matters herein or other persons receiving the information disclosed by the Party, of the confidential nature of such information, and procure them to :
|
(a)
|
Keep confidentiality of such information;
|
(b)
|
Not disclose such Confidential Information to any third party (excluding the persons receiving such information according to the provisions of this Agreement).
|
(2)
|
If any person receiving the confidential information violates the provisions of this Article 9, the disclosing Party shall be liable for such violation.
|
(3)
|
Each Party shall procure the above-mentioned persons or parties to perform its confidentiality obligation by entering into a non-disclosure agreement with such persons or parties, or by taking other appropriate measures.
|
9.4
|
Survival after Termination
|
10.1
|
Party A's Representations and Warranties
|
(1)
|
Validity.
Party A is a limited liability company duly established and validly existing under the laws of the People’s Republic of China, and has the legal personality.
|
(2)
|
Lawful Authorization.
As of the date of this Agreement, with respect to the purchase contemplated herein, Party A has obtained all effective internal and external authorizations, and the signatory that executes this Agreement for and behalf of Party A and/or its designated Affiliate(s) is the legal representative or duly authorized representative of Party A and/or its designated Affiliate(s).
|
(3)
|
Enforceability.
This Agreement is lawfully and validly binding on and can be enforced against Party A in accordance with all terms and conditions hereof.
|
10.2
|
Party B's and Party C's Representations and Warranties
|
(1)
|
Validity
|
(a)
|
Party B is a limited liability company duly established and validly existing under the laws of the People’s Republic of China, and has the legal personality;
|
(b)
|
Party B has obtained all necessary licenses and approvals for the Target Assets and the operation of the Related Businesses, and it does not violate any law or regulation at any aspect.
|
(2)
|
Lawful Authorization.
Party B's execution and performance of this Agreement:
|
(a)
|
Has obtained all necessary corporate authorizations, including but not limited to the resolution of shareholders' meeting;
|
(b)
|
Within its corporate authority and business scope;
|
(c)
|
Will not violate its articles of association; and
|
(d)
|
Will not conflict with any law, or any contractual restriction which has any binding force or effect on it.
|
(3)
|
Enforceability.
This Agreement is lawfully and validly binding on and can be enforced against Party B in accordance with all terms and conditions hereof.
|
(4)
|
About Target Assets.
|
(a)
|
As of the date of this Agreement, Party B is the lawful owner of the Target Assets listed in Appendix 1 hereto, and Party B has fully paid the price for purchasing such assets, and Party B may transfer such assets to Party A and/or its designated Affiliate(s). Party B has not set any mortgage, lien, pledge or any other third-party interest upon such assets, and there is not any circumstance or event which would cause adverse effect upon acceptance of such assets by Party A and/or its designated Affiliate(s) and upon their ownership of such assets, including but not limited to any litigation, arbitration or seizure, attachment or detention by any administrative or judicial authority.
|
(b)
|
Party B does not have any debt upon the Target Assets during the related periods, and Party B has not made any commitment of security or suretyship for any debt, or entered into any relevant contract or agreement.
|
(5)
|
About Target Employees.
Party B will terminate the employment contracts and relevant agreements or de facto employment with the Target Employees. Any past, current or future dispute between Party B and its employees (including Target Employees) is irrelevant to Party A and/or its designated Affiliate(s), including but not limited dispute over compensation, labor, social insurances, housing provident fund or individual income tax.
|
(6)
|
About Related Businesses.
|
(a)
|
Party B has the right to operate the Related Businesses listed in Appendix 2 hereto, and whether it is agreed by the counterparties to the Related Businesses or not, Party B has the right to transfer the incomes from the Related Businesses to Party A and/or its designated Affiliate(s). Party B hereby undertakes that there is not any circumstance or event which would cause adverse effect to acquisition and ongoing operation of the above mentioned Related Businesses, and, other than the events expressly disclosed in details to Party A and/or its designated Affiliate(s), Party B has not breached any contract involving the Related Businesses to which it is a party or received any customer complaint or claim (if any, it has been properly settled). Other than those disclosed herein, any customer dispute, complaint or claim occurs and persists after the Closing Date due to any act or omission of Party B prior to the Closing Date shall be settled by Party B and its shareholders; if such dispute, complaint or claim causes any damage to or material adverse effect on the reputation of Party A and/or its designated Affiliate(s), Party B and its shareholders shall indemnify Party A and/or its designated Affiliate(s) against such damage.
|
(b)
|
The businesses contracts listed in Appendix 2 hereto and all unfulfilled contracts have been duly executed and are effective, and Party B does not owe any due and outstanding debt under such contracts.
|
(7)
|
About Intellectual Property Rights.
|
(a)
|
Party B has full, sufficient and complete titles to the intellectual property rights in the Target Assets, and such intellectual property rights are free from any effect or restriction of any lien, mortgage, pledge or any other third-party right set upon the Target Assets. Party B has not granted any third party a license to the intellectual property rights in Party B's Target Assets, or entered into any agreement or contract in that regard.
|
(b)
|
With respect to any intellectual property right not owned by Party B but necessary for operation of the Target Assets and the Related Businesses, Party B has obtained the lawful use right without any interference, or Party B is able to obtain the use right of such intellectual property rights at a normal and reasonable market price.
|
(c)
|
The Target Assets listed in Appendix 1 hereto do not infringe any intellectual property right lawfully owned by any third party whether in or outside China.
|
(d)
|
Where the intellectual property rights in the Target Assets have been registered, Party B shall complete the formalities for change and transfer thereof with the competent authorities within the period specified herein, and transfer them to Party A and/or its designated Affiliate(s) and make Party A and/or its designated Affiliate(s) become(s) the owners thereof; where they are not registered, Party B shall cause them to be registered with the competent authorities in the name of Party A and/or its designated Affiliate(s) within the period specified herein.
|
(8)
|
Complete and Accurate Disclosure.
|
(a)
|
Party B hereby warrants that it has fully disclosed to Party A and/or its designated Affiliate(s) all materials and information relating to the Transaction as well as all responsibilities and obligations of Party B, and all such materials, information, responsibilities and obligations are accurate, complete and true. Party B shall be solely responsible for the responsibilities and obligations relating to the information which is not disclosed to Party A and/or its designated Affiliates.
|
(b)
|
This Agreement, all appendices hereto and all information provided by Party B to Party A and/or its designated Affiliate(s) before the date of this Agreement are true, accurate and complete, and are not misleading. Party B has not provided any false or misleading representation, warranty or prediction to Party A and/or its designated Affiliate(s) in respect of the Target Assets and the Related Businesses.
|
(c)
|
Party B has provide Party A and/or its designated Affiliate(s) with all substantial financial materials and documents regarding the Target Assets. Such materials and documents may sufficiently and truly reflect the debts, obligations and liabilities relating to the Target Assets.
|
(9)
|
About Taxes.
Party B has paid all due and payable taxes relating to the Target Assets and the Related Businesses according to the form and time period provided for in the tax laws. With respect to any undue taxes, sufficient provision has been set aside by Party B in the accounting books. Party B does not have any defaulted or due and outstanding taxes on the Target Assets, and has not committed any tax evasion or fraud. Party B has complied with the tax laws and regulations at all material aspects.
|
11.1
|
Event of Default
|
11.2
|
Event of Material Default
|
11.3
|
Liabilities for Breach of Contract
|
(1)
|
In case of any Event of Material Default, the non-breaching party may terminate this Agreement and clam all damages against the breaching party.
|
(2)
|
If Party B or Party C has any Event of Default, Party A and/or its designated Affiliate(s) may claim their damages resulting from such event against Party B and/or Party C.
|
(3)
|
If Party A and/or its designated Affiliate(s) terminate(s) the purchase according to Article 8.1(1), Party B shall, in addition to the refund obligation under Article 8.3(1)(a), indemnify Party A and/or its designated Affiliate(s) against all actual damages within five (5) business days upon receipt of the termination notice from Party A and/or its designated Affiliate(s).
|
(4)
|
If Party B or Party C terminates the sale according to Article 8.2(2), Party A and/or its designated Affiliate(s) shall, in addition to return of the received Target Assets to Party B according to Article 8.3(1)(b), indemnify Party B against all actual damages within five (5) business days upon receipt of the termination notice from Party B, including but not limited to the damages resulting from Party B's failure in normal business operation, divulgence of trade secrets or customer loss due to such event.
|
12.1
|
Governing Law
|
12.2
|
Dispute Settlement
|
(1)
|
Any dispute or claim arising from or in connection with the interpretation, breach, termination or validity of this Agreement shall be first settled by the Parties through friendly negotiation. In case of any dispute, a Party shall immediately negotiate with the other Party upon receiving a written request from any other Party for negotiation. If the dispute is settled through negotiation, the representatives of the Parties in negotiation shall sign a written agreement, and the Parties hereto agree and undertake to effectuate and comply with such agreement. In case no settlement can be reached through negotiation within thirty (30) days, any Party may submit the dispute to arbitration.
|
(2)
|
The dispute shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC) in Beijing for arbitration in accordance with the CIETAC arbitration rules. The award of the arbitration tribunal is final and binding upon the Parties. Any Party may apply to the competent court for enforcement of the award.
|
(3)
|
Survival.
The dispute settlement provision of Article 12.2 shall survive after termination of this Agreement.
|
13.1
|
Notice
|
(1)
|
All notices, requests, orders and other communications required or proposed hereunder shall be in written forms, and shall become effective on the following date if sent by any of the following means: (a) in case of personal delivery, on the date of delivery; (b) in case of fax, on the date indicated on the confirmation of fax transmission; or (c) in case of EMS or any other courier service, on the fourth (4) business day after it is handed over to the courier service provider, or earlier delivery date as indicated on a written confirmation sent by the courier service provider to the sender. All notices, requests, orders and other communications shall be sent to the addresses notified by a Party from time to time.
|
13.2
|
Costs and Taxes
|
(1)
|
Each Party shall pay all costs and expenses incurred by it from the Transaction hereunder, including the costs and expenses from drafting, execution, delivery and performance of this Agreement and all matters relating hereto.
|
(2)
|
Each Party shall pay all taxes imposed on it relating to the Transaction hereunder.
|
13.3
|
Amendment
|
13.4
|
Severability
|
13.5
|
Entire Agreement
|
13.6
|
Waiver
|
13.7
|
Force Majeure
|
(1)
|
“Force Majeure” shall mean any objective event which unforeseeable, inevitable and uncontrollable, including but not limited to earthquake, typhoon, fire, floods, strike, war or insurrection. If the performance of any Party's obligation hereunder is frustrated by any event of force majeure, such obligation shall be suspended during the period of frustration caused by such event, and the period for performance of the obligation shall be extended accordingly without any penalty. However, the Party claiming any event of force majeure must immediately notify the other Parties in writing, and, within seven (7) business days upon occurrence of the event, or within seven (7) business days after the telecommunication is restored in case of interruption of telecommunication, provide the other Parties with the details of the force majeure by both fax and courier service, as well as a certificate providing the occurrence and lasting period of such event.
|
(2)
|
If the Party claiming any event of force majeure fails to give the above mentioned notice or provide the appropriate certificate, the liability for the Party's failure in performance of the obligations hereunder shall not be exempted. The Party affected by any event of force majeure shall make reasonable efforts to minimize the consequence of such event, and resume its performance of the affected obligation(s) as soon as possible after the event ends. If the Party affected by any event of force majeure fails to resume its performance of the affected obligation(s), it shall assume liability to the other Parties.
|
(3)
|
Upon occurrence of any event of force majeure, the Parties shall seek fair solutions through negotiation and make all reasonable efforts to minimize the consequence of such event.
|
13.8
|
No Assignment
|
13.9
|
Successor and Assignee
|
13.10
|
No Third-party Beneficiary
|
13.11
|
Effectiveness and Counterparts
|
(1)
|
This Agreement shall become effective as of being duly executed by the authorized representatives of the Parties.
|
(2)
|
This Agreement may be executed in one or several counterparts, and each counterpart after execution and delivery shall be deemed as an original copy, but all such counterparts shall constitute only one identical instrument of this Agreement.
|
(3)
|
This Agreement shall be executed in three originals, one for each Party.
|
(1)
|
The Investor, Shenzhen Champion Connection Co., Ltd. ("Champion") and Mr. Zhou entered into an Call Option Agreement in June 2013 ("Call Option Agreement"), whereby the Investor or its designated qualified entity may purchase all or part of shares of Champion held by the Investor as a shareholder of Champion, as well as the exclusive option to all or part of assets of Champion at any time ("Call Option"), subject to the requirements of the applicable laws of China;
|
(2)
|
The Investor undertakes that it is committed to developing the institutional customer business of the Company and its subsidiaries and affiliates, and will procure Champion to sell its assets, software, technologies, personnel and related businesses in the field of institutional customer business as a package to Shenzhen Genius Information Technology Co., Ltd. ("Shenzhen Genius", an affiliate of the Company), and for this purpose agrees to transfer the Call Option under the Call Option Agreement to the Company. Therefore, the Company agrees to issue a certain amount of the common shares of the Company and pay a certain amount of cash to the Investor, as the consideration for the above mentioned Call Option and the Investor's commitment of procuring Shenzhen Genius to purchase the assets of Champion;
|
a)
|
On or before the Closing (as defined below), as the consideration for the Investor's transfer of the Call Option and procuring Shenzhen Genius to purchase the assets of Champion, the Company shall have already approved the Investor to purchase and have issued 3,000 common shares to the Investor at the par value of US$ 1.00 per share ("
Shares
"), and these shares account for thirty percent (30%) ("
Purchased Shares
") of all issued and outstanding share capital of the Company immediately after the Closing.
|
b)
|
Subject to the terms and conditions of this Agreement, at the time of Closing, the Investor agrees to purchase while the Company agrees to sell and issue to the Investor the amount of Purchased Shares at the price of US$ 1.00.
|
a)
|
If the Assets Purchase Agreement is terminated before December 31, 2014 or another expiration date stipulated therein (the period from the cooperation commencement date and the agreed termination date is referred to "
Cooperation Period
" hereinafter), or the business cooperation contemplated in the Assets Purchase Agreement is otherwise terminated (each as "
Early Termination
"), the Company may issue a repurchase notice ("
Repurchase Notice
") to the Investor, to repurchase 1,500 shares held by the Investor at the zero price or nominal price, accounting for 50% of the Purchased Shares (as adjusted in case of share split, consolidation, dividend, reclassification or similar event) ("
Repurchased Shares
"). The Investor shall make its best efforts to complete the necessary steps for transferring the Repurchased Shares to the Company, including but not limited to execution of the transfer instrument and surrendering the share certificate representing such Purchased Shares to the Company for cancellation within five days upon receipt of the Repurchase Notice.
|
b)
|
If no Early Termination occurs during the Cooperation Period, the Company agrees to issue extra shares accounting for five percent (5%) of all issued and outstanding share capital of the Company to the Investor or its designated assignee at the zero price or nominal price within 10 days upon expiration of the Cooperation Period, and pay to the Investor (i) a copy of the updated shareholder register of the Company; and (ii) a share certificate representing that such extra shares are held by the Investor.
|
ARTICLE 1
|
INTERPRETATION
|
2
|
1.1
|
Definitions
|
2
|
1.2
|
Interpretation
|
3
|
ARTICLE 2
|
SCOPE AND FORM OF COOPERATION
|
3
|
2.1
|
Scope of Cooperation
|
3
|
2.2
|
Form of Cooperation
|
3
|
2.3
|
Transaction Structure
|
4
|
ARTICLE 3
|
COOPERATION CONDITIONS AND PRINCIPLES
|
4
|
3.1
|
Cooperation Conditions
|
4
|
3.2
|
Cooperation Principles
|
5
|
3.3
|
Transitional Arrangement
|
5
|
ARTICLE 4
|
MANAGEMENT OF PLATFORM COMPANY
|
6
|
4.1
|
Board of Directors
|
6
|
4.2
|
Management Team
|
6
|
4.3
|
Profit Distribution
|
6
|
ARTICLE 5
|
CONFIDENTIALITY
|
6
|
ARTICLE 6
|
BREACH AND LIABILITIES
|
6
|
ARTICLE 7
|
GOVERNING LAW AND DISPUTE SETTLEMENT
|
7
|
7.1
|
Governing Law
|
7
|
7.2
|
Dispute Settlement
|
7
|
ARTICLE 8
|
MISCELLANEOUS
|
7
|
8.1
|
Effectiveness
|
7
|
8.2
|
Amendment
|
8
|
8.3
|
Counterparts
|
8
|
(1)
|
Party A is a limited liability company duly established and validly existing under the laws of China, and its Chinese affiliate Zhengjin (Fujian) Precious Metals Investment Co., Ltd. ("
Fujian Zhengjin
") is a member of Haixi Precious Metals Exchange and holds a license for trading precious metals; the current shareholder of Fujian Zhengjin is Beijing Huifu Jinyuan Technology Co., Ltd. ("
Huifu Jinyuan
"); moreover, Party A's Chinese affiliate is applying for a license for trading precious metals in Tianjin;
|
(2)
|
Both Party B and Party C are limited liability companies duly established and validly existing under the laws of China; Party B, Party C and the teams led by them have abundant resources, rich operation and management experiences, and full R&D and marketing ability in the business of precious metals. Party B and Party C intend to jointly invest in and establish a company for the business of precious metals, and intend to acquire 70% shares of Zhongjun Yangguang Investment Management Co., Ltd. ("
Zhongjun Yangguang
") through the said company. Party B and Party C hereby represent to Party A that Zhongjun Yangguang is acquiring 78.57% shares of Henghui (Tianjin) Precious Metals Management Co., Ltd. ("
Henghui Precious Metals
"), a member of the precious metals exchange, and the concerned parties have signed a share purchase agreement for this purpose;
|
(3)
|
The Parties intend to contribute and integrate their respective advantageous resources in the business of precious metals, and jointly build a precious metals platform company and carry out the business of precious metals in Shenzhen according to the terms and conditions of this Agreement.
|
1.1
|
Definitions
|
Platform Company
|
Shenzhen Tahoe Investment and Development Co., Ltd., the tentative name for a platform company to be established by Party B and Party C in Shenzhen and of which its capital to be increased by Party A for the business of precious metals and for the cooperation under this Agreement.
|
Licensed Companies
|
Certain domestic companies holding the license for the business of precious metals as stipulated herein, including Fujian Zhengjin, Tianjin Company and Henghui Precious Metals.
|
Fujian Zhengjin
|
Zhengjin (Fujian) Precious Metals Investment Co., Ltd., currently a member of Haixi Precious Metals Exchange.
|
Tianjin Company
|
A company to be established in Tianjin and intending to apply for the membership of Tianjin Precious Metals Exchange.
|
Henghui Precious Metals
|
Henghui (Tianjin) Precious Metals Management Co., Ltd., currently a member of Tianjin Precious Metals Exchange.
|
Affiliate
|
A party controls, commonly controls or materially influences another party, or two or more than two parties are controlled by, or under the common control of or materially influenced by the same party. For the purpose of this definition, Material Influence shall mean having the power to participate in deciding the financial and business operation policies of a company, but such power can not make the party control or with other parties commonly control the decision of such policies.
|
Control
|
(Including controlling, controlled and under common control) The power to directly or indirectly direct or cause to direct the decision of management, financial and business operation policies of an entity, whether through the voting securities, contract or any other means.
|
Closing Date
|
The date when the Parties have contributed, integrated and reorganized their respective resources to the Platform Company and the Licensed Companies in accordance with the terms and conditions of this Agreement, and commenced the Related Business. The specific Closing date shall be confirmed by the Parties.
|
1.2
|
Interpretation
|
1.2.1
|
The Whereas Clause hereof is an integral part of this Agreement, and shall have the same effect as the body of this Agreement. Reference to this Agreement shall mean this Cooperation Framework Agreement, as supplemented, amended, modified or changed from time to time, including the Whereas Clause and notes.
|
1.2.2
|
The headings of all articles hereof are inserted for convenience only and shall not affect or limit the meaning or interpretation of this Agreement.
|
2.1
|
Scope of Cooperation
|
2.2
|
Form of Cooperation
|
(1)
|
Party B and Party C shall at first jointly establish a Platform Company in Shenzhen (tentative name: Shenzhen Tahoe Investment and Development Co., Ltd.), whereby the capital contributed by Party B and Party C to the Platform Company shall be 3:1.
|
(2)
|
Party A shall procure its Affiliates to sell their shares of Huifu Jinyuan to the Platform Company, so that the Platform Company will indirectly hold 100% shares of Fujian Zhengjin. Once Tianjin Company has obtained the license for the business of precious metals, Party A shall procure its Affiliates to transfer and reorganize their 100% shares of Tianjin Company to the Platform Company.
|
(3)
|
Party B and Party C shall procure the Platform Company to acquire 70% shares of Zhongjun Yangguang. Party B and Party C hereby represent to Party A that Zhongjun Yangguang has entered into a share purchase agreement with the existing shareholders of Henghui Precious Metals, whereby Zhongjun Yangguang shall purchase 78.57% shares of Henghui Precious Metals, so that the Platform Company will indirectly hold 55% shares of Henghui Precious Metals. Party B and Party C shall procure the Zhongjun Yangguang to purchase 78.57% shares of Henghui Precious Metals as mentioned above, and complete the registration for such change with the administration for industry and commerce.
|
(4)
|
Upon completion of the aforesaid reorganization, Party A shall increase the capital of the Platform Company. Immediately upon completion of the capital increase, the shares held by Party A, Party B and Party C in the Platform Company shall be 6:3:1.
|
2.3
|
Transaction Structure
|
3.1
|
Cooperation Conditions
|
3.1.1
|
The resources to be contributed or completed by Party A include:
|
(1)
|
Fujian Zhengjin and its license for the business of precious metals, and for this purpose, Party A shall procure the shareholders of Huifu Jinyuan (i.e. Beijing Zhongjin Jiade Technology Co., Ltd. and Beijing Guorong Shengyuan Technology Co., Ltd.) transfer their 100% shares of Huifu Jinyuan to the Platform Company at the price of RMB Twenty-one Million One Hundred Thousand Yuan Net. For this purpose, the Parties hereby agree that, after the Platform Company is established, the Parties shall procure Beijing Zhongjin Jiade Technology Co., Ltd. and Beijing Guorong Shengyuan Technology Co., Ltd. to sign a Huifu Jinyuan Share Transfer Agreement with the Platform Company; from the date when the Huifu Jinyuan Share Transfer Agreement is entered into, the rights and obligations of all shareholders of Huifu Jinyuan shall be enjoyed and assumed by the Platform Company.
|
(2)
|
Once Tianjin Company has obtained the license for the business of precious metals, Party A shall procured its Affiliates to transfer and reorganize their 100% shares of Tianjin Company to the Platform Company; and
|
(3)
|
Party A shall transfer and integrate its other resources in the business of precious metals (including but not limited to manpower, equipment, monetary and other resources) into the Platform Company.
|
3.1.2
|
The resources to be contributed or completed by Party B and Party C include:
|
(1)
|
Henghui Precious Metals and its license for the business of precious metals: Party B and Party C shall procure the Platform Company to purchase 70% shares of Zhongjun Yangguang, and procure Zhongjun Yangguang to purchase 78.57% shares of Henghui Precious Metals and complete the registration for such change with the administration for industry and commerce, so that the Platform Company will indirectly holds 55% shares of Henghui Precious Metals; and
|
(2)
|
Party B and Party C shall transfer and integrate their other resources in the business of precious metals (including but not limited to manpower, equipment and other resources) into the Platform Company;
|
(3)
|
From the date of this Agreement, neither Party B nor Party C may engage in any business competing with the Platform Company or the Licensed Companies, except for performance of their obligations defined herein; and
|
(4)
|
Party B and Party C shall procure all their employees to be transferred to the Platform Company and the Licensed Companies to take all efforts to the Platform Company and the Licensed Companies, and strictly comply with the non-competition obligation from the Closing Date.
|
3.2
|
Cooperation Principles
|
3.2.1
|
Each Party and/or its Affiliates shall duly perform the arrangements herein in accordance with the applicable laws and the provisions of this Agreement (including the Schedule attached hereto).
|
3.2.2
|
Each Party hereby acknowledges and agrees that the transaction arrangements hereunder are unanimously accepted by the Parties through equal negotiation and based on their true will. Each Party shall (and shall procure its Affiliates to) make its best efforts to procure the fulfillment of the transaction arrangements hereunder.
|
3.2.3
|
Party B and Party C shall jointly and severally perform their responsibilities and obligations hereunder, and be jointly and severally liable to Party A.
|
3.3
|
Transitional Arrangement
|
3.3.1
|
To distribute profit or dispose of assets in respect of Huifu Jinyuan and/or Fujian Zhengjin, or any other activity detrimental to the interests of Huifu Jinyuan and/or Fujian Zhengjin and/or their shareholders;
|
3.3.2
|
To sell, pledge, transfer or otherwise dispose of any share of Huifu Jinyuan and/or Fujian Zhengjin to any third party, unless it is for the performance of this Agreement.
|
4.1
|
Board of Directors
|
4.2
|
Management Team
|
4.3
|
PROFIT DISTRIBUTION
|
7.1
|
Governing Law
|
7.2
|
Dispute Settlement
|
7.2.1
|
Any dispute or claim arising from or in connection with the interpretation, breach, termination or validity of this Agreement shall be first settled by the Parties through friendly negotiation. In case of any dispute, a Party shall immediately negotiate with the other Party upon receiving a written request from any other Party for negotiation. If the dispute is settled through negotiation, the representatives of the Parties in negotiation shall sign a written agreement, and the Parties hereto agree and undertake to effectuate and comply with such agreement. If no settlement can be reached through negotiation within thirty (30) days, any Party may submit the dispute to the competent court for final settlement.
|
7.2.2
|
The dispute shall be submitted to the competent court of the place where the Platform Company resides.
|
7.2.3
|
Survival. The dispute settlement provision of Article 7.2 shall survive after termination of this Agreement.
|
8.1
|
Effectiveness
|
8.1.1
|
This Agreement shall become effective as of being duly executed by the authorized representatives of the Parties. The effective date hereof shall be the date when this Agreement is duly executed.
|
8.1.2
|
The purpose of this Agreement is to set forth the principles in respect of the Transactions accepted by the Parties. The Parties shall negotiate and execute certain specific legal documents relating to the Transaction according to the principles set forth herein.
|
8.1.3
|
Such specific legal documents executed by the Parties in the future shall not go beyond the framework of principles set forth herein. Any term or condition of any specific legal document that conflicts with the provisions hereof shall be invalid.
|
8.2
|
Amendment
|
8.3
|
Counterparts
|
Article 1
|
INTERPRETATION
|
2
|
1.1
|
Definitions
|
2
|
1.2
|
Interpretation
|
3
|
Article 2
|
CAPITAL INCREASE
|
3
|
2.1
|
Subscription of Capital
|
3
|
2.2
|
Payment and Verification of Subscribed Capital
|
4
|
2.3
|
Use of Increased Capital
|
4
|
Article 3
|
CLOSING CONDITIONS
|
4
|
3.1
|
Closing Conditions
|
4
|
Article 4
|
UNDERTAKINGS OF THE COMPANY AND ORGINAL SHAREHOLDER
|
5
|
4.1
|
Undertakings of the Company and Original Shareholder
|
5
|
Article 5
|
RIGHTS OF SHAREHOLDERS AND RESTRICTION
|
6
|
5.1
|
Right of First Refusal
|
6
|
5.2
|
Co-sale Right
|
7
|
5.3
|
Restriction on Disposition
|
8
|
Article 6
|
SHAREHOLDERS' MEETING
|
8
|
6.1
|
Powers of Shareholders' Meeting
|
8
|
6.2
|
Convening and Holding of the Shareholders' Meeting
|
9
|
Article 7
|
BOARD OF DIRECTORS
|
10
|
7.1
|
Composition of Board of Directors
|
10
|
7.2
|
Powers of Board of Directors
|
10
|
7.3
|
Convening and Holding the Meetings of Board of Directors
|
11
|
Article 8
|
SUPERVISOR
|
12
|
8.1
|
Appointment and Term of Supervisor
|
12
|
8.2
|
Powers of Supervisor
|
12
|
Article 9
|
MANAGEMENT
|
12
|
9.1
|
Organization of Management Agencies
|
12
|
9.2
|
Power of the Board of Directors to Dismiss Officers
|
13
|
9.3
|
Powers of General Manager
|
13
|
Article 10
|
BUSINESS OPERATION AND PROFIT DISTRIBUTION
|
13
|
10.1
|
Support of Funds
|
13
|
10.2
|
Profit Distribution
|
14
|
Article 11
|
TERMINATION, DISSOLUTION AND LIQUIDATION
|
14
|
11.1
|
Termination and Dissolution
|
14
|
11.2
|
Liquidation
|
15
|
Article 12
|
CONFIDENTIALITY
|
16
|
12.1
|
Confidentiality Obligation
|
16
|
12.2
|
Exceptions to Confidentiality
|
16
|
Article 13
|
REPRESENTATIONS AND WARRANTIES
|
17
|
13.1
|
Representations and Warranties
|
17
|
Article 14
|
BREACH AND LIABILITIES
|
18
|
14.1
|
Breach
|
18
|
14.2
|
Liabilities for Breach
|
18
|
Article15
|
FORCE MAJEURE
|
18
|
15.1
|
Event of Force Majeure
|
18
|
15.2
|
Notice of Force Majeure
|
19
|
15.3
|
Consequence of Force Majeure
|
19
|
Article 16
|
GOVERNING LAW AND DISPUTE SETTLEMENT
|
19
|
16.1
|
Governing Law
|
19
|
16.2
|
Dispute Settlement
|
19
|
Article 17
|
MISCELLANEOUS
|
19
|
17.1
|
Entire Agreement
|
19
|
17.2
|
No Waiver
|
19
|
17.3
|
Severability
|
19
|
17.4
|
Assignment
|
20
|
17.5
|
Supplementation and Amendment
|
20
|
17.6
|
Effectiveness
|
20
|
17.7
|
Notice
|
20
|
17.8
|
Counterparts
|
20
|
(1)
|
Golden Pioneer (Beijing) Network Technologies Co., Ltd.
(hereinafter referred to as "
Golden Pioneer
")
|
(2)
|
Shanghai Excellence Advertising
Co., Ltd.
(hereinafter referred to as "
Excellence
")
|
(3)
|
Shanghai Stockstar Wealth Management Co., Ltd.
("hereinafter referred to as
Shanghai Wealth
")
|
(4)
|
Shenzhen Tahoe Investment and Development Co., Ltd.
(hereinafter referred to as "the
Company
")
|
(1)
|
Shenzhen Tahoe Investment and Development Co., Ltd. ( is a limited liability company jointly invested in by Golden Pioneer and Excellence, and duly established and validly existing under the laws of China, and as of the date of this Agreement, its paid-up capital is RMB 10 Million, of which, Golden Pioneer lawfully holds RMB 7.5 million in its paid-up capital (paid in RMB 7.5 Million), accounting for 75% of total paid-up capital, and Excellence lawfully holds RMB 2.5 million in its paid-up capital (paid in RMB 2.5 Million), accounting for 25% of total paid-up capital.
|
(2)
|
As of the date of this Agreement, the Company has purchased 70% shares of Zhongjun Yangguang Investment Management Co., Ltd. ("
Zhongjun Yangguang
"), and purchased 78.57% shares of Tianjin Henghui Precious Metals Trading Co., Ltd. ("
Henghui Precious Metals
"), a member of the precious metals exchange, through Zhongjun Yangguang;
|
(3)
|
The Company intends to increase its paid-up capital, and Shanghai Wealth agrees to subscribe the increased paid-up capital ("
Capital Increase
") in accordance with the terms and conditions of this Agreement.
|
1.1
|
Definitions
|
This Agreement
|
This Capital Increase and Shareholders' Agreement entered into by and among the Parties, as well as all appendices, amendments and supplementations thereto.
|
Board of Directors
|
The Board of Directors of the Company.
|
Parties/Party
|
The Parties to this Agreement, and their respective successors, assignees and authorized representatives; Party shall mean any of them.
|
The Company
|
Shenzhen Tahoe Investment and Development Co., Ltd.
|
Affiliate
|
A party controls or commonly controls another party, or two or more than two parties are controlled by, or under the common control by the same party.
|
Articles of Association
|
The Articles of Association of Shenzhen Tahoe Investment and Development Co., Ltd. (, as amended from time to time (the company name shall be the name registered with the administration for industry and commerce).
|
Business Day
|
Any day when the commercial banks in China are open to the public, excluding Saturday, Sunday and public holidays.
|
Control
|
(Including controlling, controlled and under common control) The power to directly or indirectly direct or cause to direct the decision of management, financial and business operation policies of an entity, whether through the voting securities, contract or any other means.
|
Taxes
|
All taxes imposed by the Parties by any competent government authority according to the applicable laws, regulations and rules of China, and all charges, interests, fines and surcharges relating to such taxes.
|
Closing Date
|
Shall have the meaning as defined in Article 2.2 hereof.
|
Right of First Refusal
|
Shall have the meaning as defined in Article 5.1 hereof.
|
Effective Date
|
The date when this Agreement is duly executed.
|
Material
|
Any effect on the result and/or prospect of the overall business, assets (including non-fixed assets), liabilities, financial conditions, properties and operations reaches 5% or more of the absolute amount of net profit or net loss on the accounting date of the Company.
|
China
|
The People’s Republic of China, and for the purpose of this Agreement only, it shall exclude Hong Kong, Macao and Taiwan.
|
1.2
|
Interpretation
|
1.2.1
|
The Whereas Clause and appendices hereof and hereto are the integral parts of this Agreement, and shall have the same effect as the body of this Agreement. Reference to this Agreement shall include all supplementations, amendments, modifications and changes hereto from time to time, as well as the Whereas Clause, notes and all appendices hereof and hereto.
|
1.2.2
|
The headings of all articles and appendices are inserted for convenience only and shall not affect or limit the meaning or interpretation of this Agreement.
|
1.2.3
|
If certain action or step is taken during or after a specific period, the reference date shall not be included in such period. If the last day of the period is not a business day, the period shall expire on the next business day.
|
2.1
|
Subscription of Capital
|
Name of Shareholders
|
Amount of Subscribed Capital
(RMB 10,000)
|
Form of Contribution
|
Percentage
|
Golden Pioneer
|
750.00
|
Cash
|
30.00%
|
Excellence
|
250.00
|
Cash
|
10.00%
|
ShangHAI Wealth
|
1,500.00
|
Cash
|
60.00%
|
Total
|
2,500.00
|
100.00%
|
2.2
|
PAYMENT AND VERIFICATION OF SUBSCRIBED CAPITAL
|
(
1
)
|
Payment of Capital by Shanghai Wealth
.
Within 15 Business Days after all Closing Conditions as listed in Article 3.1 below are fully satisfied ("
Closing Date
"), Shanghai Wealth shall fully pay the subscribed capital as specified in Article 2.1 (i.e. RMB 40 million) to the Company.
|
(
2
)
|
Capital Verification Report.
Upon payment of the subscribed capital by Shangzheng Wealth, the Company shall appoint a certified public accountant to verify the capital and issue a capital verification report.
|
2.3
|
Use of Increased Capital
|
3.1
|
Closing Conditions
|
(1)
|
Internal Review and Approval.
The Company has obtained all internal corporate approvals necessary for the Capital Increase, including but not limited to the resolutions of the shareholders' meeting and the board of directors for the Capital Increase, and the shareholders' meeting of Shanghai Wealth has approved the execution and performance of this Agreement by Shanghai Wealth.
|
(2)
|
Execution, Effectiveness and Performance of Transaction Documents.
(a) The Company and the Original Shareholder have duly executed and delivered the transaction documents required for the Capital Increase; (b) such transaction documents are true, complete, effective and legally binding; (c) the Company and the Original Shareholder have at all material aspects complied and performed all obligations under the transaction documents to which they are the parties.
|
(3)
|
Share Purchase.
The change regarding purchase of 78.57% shares of Henghui Precious Metals via Zhongjun Yangguang has been duly registered with the administration for industry and commerce.
|
(4)
|
Representations and Warranties.
As of the Closing Date, the representations and warranties made by the Company, the Original Shareholder and the Actual Controller herein are true, accurate and complete at all material aspects:
|
(5)
|
No Material Adverse Change
.
As of the Closing Date, there is not any material adverse change to the legal status, business or financial condition of the Company.
|
(6)
|
No Material Ruling.
As of the Closing Date, there is no judgment of court, decision of government authority or statutory provision (a) inhibits or restricts any transaction hereunder; (b) inhibits or restricts the completion of any transaction hereunder; (c) in accordance with the law, completion of any transaction hereunder will cause any material penalty or legal liability imposed on the Company and/or Original Shareholder and/or Actual Controller and/or Shanghai Wealth; or (iv) restricts the business operation of the Company and thus causes any material adverse change.
|
(7)
|
No Action.
As of the Closing Date, there is no action, arbitration or administrative proceeding, if a decision against the Company and/or Original Shareholder and/or Actual Controller would be generated from such action, arbitration or administrative proceeding, and such decision would (a) cause a material adverse effect on the performance of their obligations under this Agreement or other transaction documents; or (b) cause a substantial adverse effect on the transaction under this Agreement.
|
4.1
|
Undertakings of the Company and the Original Shareholders
|
(1)
|
Registration of Change with Administration for Industry and Commerce.
Within 5 Business Days after the Closing Date, the Company shall register the change regarding the Capital Increase and the Transaction Documents with the administration for industry and commerce.
|
(2)
|
Restriction on Share Transfer
. When Shanghai Wealth is holding the shares of the Company, without the written consent of Shanghai Wealth, the Original Shareholders shall not sell, transfer or otherwise dispose of the shares of the Company directly or indirectly held by it to any third party, and the Original Shareholders undertake and warrant that their shareholders also will not dispose of any of their shares in the Original Shareholders.
|
(3)
|
No Separation of Service by the Members of Key Management Team.
The Company and the Original Shareholder hereby undertake and warrant that, within three years from the Closing Date, no members of the key management team of the Company shall be separated of service (unless it is previously approved by the director appointed by Shanghai Wealth in writing), and they shall procure the members of the key management team to devote their main efforts and time to the business operation and development of the Company.
|
(4)
|
Allocation of Liabilities.
All liabilities and obligations (including civil debts or administrative debts, such as tax liabilities) arising prior to the Closing Date or from any fact or circumstance occurred prior to the Closing or from any untrue representation and warranty and in connection with the Company, shares and assets of the Company shall be borne by the Original Shareholders, and the Original Shareholders shall indemnify the Company against all losses and damages incurred therefrom. The Original Shareholders, actual controller and the Company shall jointly and severally indemnify Shanghai Wealth and its shareholders, employees, directors, officers, consultants and/or agents and the directors of investors (collectively as "
Indemnitees
") against from all damages, losses and expenses arising from any liability or claim of any person in connection with the liabilities and obligation listed in the preceding sentence, unless such liability or claim is caused by any intentional misconduct or gross negligence of the Indemnitees.
|
5.1
|
Right of First Refusal
|
5.1.1
|
If any Party ("
Transferor
") intends to transfer or sell all or part of its capital in the Company (collectively as "
Transfer
") to any third party ("
Proposed Transferee
"), the Transferor shall fully comply with the provisions of this Article 5 and other provisions of this Agreement; otherwise, the Transfer of such capital shall be void ab initio.
|
(1)
|
The Transferor shall send a written transfer notice ("
Transfer Notice
") to other shareholders ("
Non-transferor
") in advance, listing (a) the capital to be transferred ("
Offered Interest
"); (b) proposed transfer price or method for determining the price; (c) other terms and conditions; and (d) identity of the Proposed Transferee. Under the equivalent conditions, the Non-transferor shall have the priority over the Proposed Transferee to purchase all or part of the Offered Interest ("
Right of First Refusal
").
|
(2)
|
If the Non-transferor gives a written notice to the Transferor stating that it will purchase all or part of the Offered Interest ("
Purchase Notice
") within thirty (30) days upon issuance of the Transfer Notice by the Transferor, the Transferor and the Non-transferor shall complete the purchase and sale of the Offered Interest according to the following terms and conditions:
|
(a)
|
Within ten (10) days upon receiving the Purchase Notice from the Non-transferor, the Transferor shall inform the Non-transferor of the closing date of the purchase of the Offered Interest ("
Transfer Closing Date
"), which shall be no later than ninety (90) days after the Purchase Notice is issued at all events. However, the said period of ninety (90) days shall not include the period required for obtaining the government approval (if applicable).
|
(b)
|
On the Transfer Closing Date, the Non-transferor shall purchase the part of Offered Interest indicated in its written notice to the Transferor according to the terms specified in the Transfer Notice.
|
(c)
|
If the purchase of such part of Offered Interest cannot be completed on the Transfer Closing Date according to Article 5.1.1(2)(a), and failure to complete the transaction is not caused by any action or inaction of the Transferor, it shall be deemed that the Non-transferor has waived its Right of First Refusal.
|
(3)
|
If all Non-transferors explicitly or impliedly waive their Right of First Refusal to all or part of the Offered Interest, the Transferor may transfer the all or the remaining part of the Offered Interest to the Proposed Transferee, provided that such transfer shall be no favorable than the terms and conditions specified in the Transfer Notice. Any such transfer must be completed within ninety (90) days upon issuance of the Transfer Notice. However, the said period of ninety (90) days shall not include the period required for obtaining the government approval (if applicable).
|
5.1.2
|
The Right of First Refusal defined in Article 5.1.1 shall not apply to the following circumstances:
|
(1)
|
Transfer of shares due to exercise of the Co-sale Right under Article 5.2;
|
(2)
|
Transfer of shares by a Party to its Affiliate; or
|
(3)
|
Transfer of shares to the qualified officers or employees according to the share incentive plan approved by the shareholders' meeting or the board of directors of the Company.
|
5.2
|
Co-sale Right
|
5.2.1
|
When any Party ("
Transferor
") intends to transfer or sell all or part of its capital in the Company (collectively as "
Transfer
") to any third party ("
Proposed Transferee
"), if Shanghai Wealth does not exercise its Right of First Refusal under Article 5.1 to purchase all Offered Interest, Shanghai Wealth shall have the right to transfer its capital in the Company to the Proposed Transferee together with the Transferor pro rata ("
Co-sale Right
") according to the following transfer conditions:
|
(1)
|
The Transferor shall send a notice to Shanghai Wealth at least thirty (30) days prior to the Transfer Closing Date, listing the proportion of the capital to be sold, transfer conditions and identity of the Proposed Transferee, and stating that the Proposed Transferee has been informed of the right listed in Article 5.2, and that the Proposed Transferee agrees to purchase the capital and interests therein held by the Non-transferor in the Company according to the conditions listed in this Article 5.2.
|
(2)
|
Within twenty-one (21) days after the Transferor issues the notice specified in Article 5.2.1(1)(1), the Non-transferor shall issue a written notice ("
Co-sale Notice
") to the Transferor, stating that it wishes to exercise the Co-sale Right and listing the amount of its capital to be sold. The amount of capital to be sold by the Non-transferor through the Co-sale Right shall be no more than the amount calculated according to the following formula: total amount of capital to be sold X {all capital held by the Non-transferor in the Company / (all capital held by the Transferor in the Company + all capital held by the Non-transferor in the Company)}.
|
(3)
|
The Transferor shall permit the Non-transferor to sell the Non-transferor's capital as indicated in the Co-sale Notice to the Proposed Transferee according to the same terms and conditions; otherwise, the Transferor shall not sell all or part of the Offered Interest to the Proposed Transferee.
|
5.2.2
|
The Co-sale Right defined in Article 5.2.1 shall not apply to the following circumstances:
|
(1)
|
Transfer of shares by a Party to its Affiliate; or
|
(2)
|
Transfer of shares to the qualified officers or employees according to the share incentive plan approved by the shareholders' meeting or the board of directors of the Company.
|
5.3
|
Restriction on Disposition
|
5.3.1
|
Without the prior written consent of other shareholders, no shareholder may set any pledge or any other form of security, encumbrance or restriction on its shares of the Company.
|
5.3.2
|
Within three years from the date of establishment of the Company ("
Lock-up Period
"), no Party may sell, transfer or otherwise dispose of any of its capital or shares of the Company to any third party (other than its Affiliates), except transfer or capital increase unanimously agreed by all shareholders.
|
6.1
|
Powers of Shareholders' Meeting
|
6.1.1
|
The shareholder's meetings of the Company after the Capital Increase shall be composed of all shareholders, i.e. Golden Pioneer, Excellence and Shanghai Wealth. The shareholders' meeting is the supreme authority of the Company and shall have the following powers:
|
(1)
|
To decide the Company’s operation strategies and investment plans;
|
(2)
|
To elect and change the directors and supervisors served by any persons other than the representatives of employees, and determine the remuneration thereof;
|
(3)
|
To review and approve the reports submitted by the Board of Directors;
|
(4)
|
To review and approve the reports of the board of supervisors or the supervisors;
|
(5)
|
To review and approve the Company’s proposed annual financial budget and final accounts;
|
(6)
|
To review and approve the Company's plans of profit distribution and loss recovery;
|
(7)
|
To decide the increase or reduction of the Company’s paid-up capital;
|
(8)
|
To decide issuance of corporate bonds;
|
(9)
|
To adopt a resolution regarding the merger, division, change in corporate form, dissolution or liquidation of the Company;
|
(10)
|
To review and approve the share incentive plan and implementing plan of the Company;
|
(11)
|
To amend the Articles of Association;
|
(12)
|
Other powers granted by the Articles of Association.
|
6.1.2
|
A resolution made at a shareholders' meeting regarding amendment to the articles of association, increase or reduction of the paid-up capital, merger, division, dissolution or change of corporate form of the Company may be adopted with the votes from the shareholders representing 2/3 or more of the voting powers; a resolution regarding other matters may be adopted with the votes from the shareholders representing the majority of the voting powers. When the shareholders' meeting is voting on any related transaction, the related shareholder involving such related transaction shall not participate in the voting of such matter.
|
6.2
|
Convening and Holding of the Shareholders' Meeting
|
6.2.1
|
The shareholders' meetings include regular meetings and extraordinary meetings. The regular meetings shall be regularly held in accordance with the Articles of Association. Where an extraordinary meeting is proposed by the shareholders representing 1/10 of the voting rights or more, or by 1/3 or more of directors or by the supervisor of the Company, the extraordinary meeting shall be held.
|
6.2.2
|
The meetings of the board of directors shall be convened by the board of directors and presided over by the chairman. Where the chairman is unable perform his/her duty or reluctant to perform his/her duty, the majority of directors shall jointly elect a director to preside over the meetings.
|
6.2.3
|
Each shareholder may exercise his voting right at the shareholders' meetings in proportion of its subscribed capital. The minutes of each shareholders’ meeting shall be maintained in detail and signed by all shareholders attended the meeting. Where a shareholder appoints its proxy to attend the meeting, it shall issue a power of attorney, and the minutes shall be signed by its proxy.
|
7.1
|
Composition of Board of Directors
|
7.1.1
|
Immediately upon completion of the Capital Increase, the board of directors of the Company shall be composed of three directors, of which, one shall be appointed by Shanghai Wealth, one by Excellence and one served by Mr. Zhou Chuifu appointed by Golden Pioneer. The Company shall have one chairman, which shall be served by Mr. Zhou Chuifu and through the election by the board of directors.
|
7.1.2
|
The term of a director shall be three years, and the director may resume office if he is reappointed by the appointing party. Subject to other provisions of this Agreement and the Articles of Association, if any Party intends to replace its appointed director, it shall notify other shareholders and all members of the board of directors in writing at least thirty (30) days in advance.
|
7.1.3
|
The chairman is the legal representative of the Company. Where the chairman is unable to perform his/her duties for any reason, the director appointed by Shanghai Wealth shall perform his/her duties for his/her behalf.
|
7.2
|
Powers of Board of Directors
|
7.2.1
|
The board of directors is accountable to the shareholders' committee, and shall exercise the following powers:
|
(1)
|
To convene the shareholder's meeting and report to the shareholder’s meeting;
|
(2)
|
To implement the resolutions of the shareholders' meeting;
|
(3)
|
To decide the operation plans and investment plans of the Company;
|
(4)
|
To formulate the Company's annual financial budget and final accounts;
|
(5)
|
To formulate plans for profit distribution and recovery of losses of the Company;
|
(6)
|
To formulate the plan for increase or reduction of the Company’s paid-up capital or the plan for issuance of corporate bonds;
|
(7)
|
To formulate the plans for merger, division, change of corporate form or dissolution of the Company;
|
(8)
|
To formulate the share incentive plan and implementing plan of the Company;
|
(9)
|
To formulate the liquidation plan of the Company;
|
(10)
|
To decide the setup of internal management organs of the Company;
|
(11)
|
To decide the appointment or dismissal of the Company’s general manager and his/her duties, powers and remuneration, and, according to the nomination of the general manager, decide the appointment or dismissal of the chief financial officer and vice general manager and their duties, powers and remuneration;
|
(12)
|
To formulate the basic management systems of the Company;
|
(13)
|
To decide the external investments (including but not limited to establishment or cancellation of branches or subsidiaries) for the Company, or set mortgage, lien, pledge or any other security or third-party right on the assets of the Company, or provide any guaranty to any other person;
|
(14)
|
To decide receiving any loan from any shareholder or any third party for the Company, or provide any loan to any other person;
|
(15)
|
To appoint or replace the accountants' firm which provide audit service for the Company;
|
(16)
|
To debrief the working report of the general manager and inspect the performance of duties by the general manager, and review and approve the reports of the business operation and management team, as well as the audited financial report of the Company;
|
(17)
|
All major matters involving intellectual properties of the Company;
|
(18)
|
Other powers granted by the Articles of Association.
|
7.2.2
|
Each director shall have one vote in the voting at the meetings of the board of directors. The resolutions of the board of directors may become effective only if it is unanimously agreed by two or more than two directors.
|
7.3
|
Convening and Holding the Meetings of Board of Directors
|
7.3.1
|
The meetings of the board of directors shall be convened and presided over by the chairman. Where the chairman is unable perform his/her duties or reluctant to perform his/her duties, the majority of directors shall jointly elect a director to convene and preside over the meetings.
|
7.3.2
|
No meeting of the board of directors may be held unless the quorum is reached. The quorum shall be two or more than two directors.
|
7.3.3
|
The minutes of each meeting of the board of directors shall be maintained in writing and signed by all directors attending the meeting. Where a director appoints his/her proxy to attend the meeting, he/she shall issue a power of attorney, and the minutes shall be signed by his/her proxy.
|
8.1
|
Appointment and Term of Supervisor
|
8.2
|
Powers of Supervisor
|
(1)
|
To inspect the Company's financial conditions and accounts;
|
(2)
|
To supervise over the performance of duties by the directors and officers, and give a proposal of dismissal if any director or officer violates any law, administrative regulation, the Articles of Association or any decision of the shareholders;
|
(3)
|
To demand remedies from the director or officer when the acts of such director or officer are harmful to the Company’s interests;
|
(4)
|
To give proposals at shareholder's meetings and the meetings of the board of directors;
|
(5)
|
To propose any extraordinary shareholder’s meeting, and if the board of directors fails to perform its duties to convene and preside over any shareholder’s meeting, to convene and preside over the shareholder’s meeting;
|
(6)
|
Other powers granted by the laws, administrative regulations, the Articles of Association or the shareholders' meeting.
|
9.1
|
Organization of Management Agencies
|
9.1.1
|
The Company shall set up a management team, which shall be responsible for the daily operation and management of the Company. The management team shall be composed of one general manager, one chief financial officer and several deputy general managers. The general manager shall be appointed and dismissed by the board of directors, and be accountable to the board of directors. The chief financial officer shall be nominated by the general manager, and appointed or dismissed with the approval of the board of directors.
|
9.1.2
|
Unless he/she becomes incapacitated, retires or is dismissed by the board of directors according to Article 9.2, the term of the general manager and the chief financial officer shall be three (3) years or any other term decided by the board of directors, and may be re-appointed by the board of directors according to Article 9.1.
|
9.2
|
Power of the Board of Directors to Dismiss Officers
|
9.3
|
Powers of General Manager
|
9.3.1
|
The general manager shall have the following powers and be accountable to the board of directors:
|
(1)
|
To take charge of the business operation and management of the Company, and organize the implementation of all resolutions adopted by the board of directors;
|
(2)
|
To organize and carry out the annual operation plans and investment plans of the Company;
|
(3)
|
To formulate the plan of internal management structure of the Company;
|
(4)
|
To formulate the basic management system of the Company;
|
(5)
|
To formulate the detailed rules and regulations of the Company;
|
(6)
|
To propose the board of directors to appoint or dismiss the Company’s chief financial officer and the vice general manager;
|
(7)
|
To decide the appointment or dismissal of the officers and employees (other than the members of the management team who shall be appointed or dismissed by the board of directors);
|
(8)
|
To attend all meetings of the board of directors as a non-voting person; and
|
(9)
|
Other powers granted by the Articles of Association or the board of directors.
|
10.1
|
Support of Funds
|
10.2
|
Profit Distribution
|
(1)
|
This Agreement is effective and the Parties are still the shareholders of the Company;
|
(2)
|
The Company shall not distribute its profits unless there are distributable incomes in the current financial year; The Company shall not distribute its profits unless all losses of the previous financial years have been recovered by the Company; The profits of the previous financial years and the current financial year may be distributed together.
|
(3)
|
The distributable profits shall be profits of the current year, deducting the income taxes paid according to the laws and regulations of China and the Articles of Association and the reserve funds withdrawn according to the applicable laws, and plus the accumulated undistributed profits of the previous years.
|
11.1
|
Termination and Dissolution
|
11.1.1
|
Upon occurrence of any of the following circumstances, the Company shall be dissolved and this Agreement shall be terminated according to this Agreement, the Articles of Association and the applicable laws and regulations:
|
(1)
|
The operation period of the Company expires and the shareholders' meeting decides not to extend the operation period, or upon occurrence of any other circumstance for termination or dissolution according to the Articles of Association;
|
(2)
|
Without detrimental to the interests of other shareholders, the Parties agree to terminate this Agreement before expiration of the term hereof;
|
(3)
|
Occurrence and persistence of any of the following conditions or circumstances:
|
(a)
|
The Company suffers material losses and is unable to continue its business operation;
|
(b)
|
The Company is unable to continue its business operation due to any event of force majeure;
|
(c)
|
Business operation is prohibited by any administrative authority due to material violation of any applicable law or regulation of China;
|
(d)
|
The Company sells, transfers, exchanges or assigns all or substantial part of its assets to any other person;
|
(e)
|
Any Party materially violates any provision of this Agreement, therefore it is not necessary or possible to continue performance of this Agreement, or any Party delays to perform its obligations hereunder and fails to make correction within 90 days; or
|
(4)
|
The business license of the Company is suspended, or the Company is ordered to shut down, or the Company is revoked according to law;
|
(5)
|
Upon occurrence of any other cause for termination of this Agreement as provided for in this Agreement, the Articles of Association or any applicable law or regulation.
|
11.1.2
|
After the shareholders' meeting adopts a resolution to dissolve the Company, the Company and the Parties shall take all reasonable steps to dissolve the Company according to the officially published laws and regulations, and the shareholders' meeting shall submit an application for deregistration to the competent administration for industry and commerce.
|
11.2
|
Liquidation
|
11.2.1
|
Liquidation Group
|
11.2.2
|
Liquidation Procedures
|
11.2.3
|
Legal Actions
|
11.2.4
|
Liquidation Expenses
|
(1)
|
Expenses incurred from management, sale and distribution of the assets of the Company;
|
(2)
|
Costs of public announcement, action and arbitration; and
|
(3)
|
Other costs incurred from liquidation process.
|
11.2.5
|
Remaining Assets
|
11.2.6
|
Announcement
|
12.1
|
Confidentiality Obligation
|
12.2
|
Exceptions to Confidentiality
|
(1)
|
The information has been known by the public (unless it is known by the public due to violation of the confidentiality obligation hereunder);
|
(2)
|
The information has been known by the receiving party from any lawful source prior to disclosure of such information by the disclosing party;
|
(3)
|
The information independently developed by the receiving party through any lawful source (excluding any information generated from integration, analysis, compilation or processing of the information disclosed by the disclosing party);
|
(4)
|
The information known or received by the receiving party from any third party who is not subject to the confidentiality obligation;
|
(5)
|
The information disclosed by the receiving party with the written consent of the disclosing party; and
|
(6)
|
Upon completion of the transaction hereunder, each Party and its Affiliates may disclose the names of the Company and its subsidiaries, name of the chairman and general manager of the Company and its subsidiaries, brief description of the Company and its subsidiaries, logos of the Company and its subsidiaries as well as the total investment of Shanghai Wealth in the Company (excluding the information about the shareholders of the Company, such as the Company's products, trade secrets and technical secrets, and shareholding proportion of the shareholders), on the web pages and marketing materials around the world for the purpose of advertisement and promotion.
|
13.1
|
Representations and Warranties
|
13.1.1
|
Lawful Qualification. It is a Chinese citizen with full capacity of civil action, or a company duly established and validly existing under the laws of China.
|
13.1.2
|
Lawful Authority. It has full capacity of rights and action, and all lawful authorities to execute this Agreement and perform its obligations hereunder. Its authorized signatory has the valid power of attorney, resolution of the board of directors or any other necessary document issued by the Party stating that the signatory is fully authorized to execute this Agreement.
|
13.1.3
|
Validity. Its execution and performance of this Agreement will not conflict with its Articles of Association, business license or any law, regulation, rule or authorization or approval, or any contract, agreement or commitment to which it is a party or binds the Party, or cause to violate any such document or constitute a default under any such document. Effectiveness and Enforceability. As of the effective date of this Agreement, this Agreement is legally effective and binding on the Party and is enforceable according to the terms and conditions of this Agreement.
|
13.1.4
|
True Disclosure and No Misrepresentation. All documents, statements and information provided and disclosed by the Party or its representatives to the other Parties or their representatives regarding the transactions contemplated herein are true, accurate and complete, and free from any intentionally omitted, falsified or misleading information.
|
14.1
|
Breach
|
14.2
|
Liabilities for Breach
|
14.2.1
|
The Breaching Party shall indemnify the other Parties against all actual losses, damages, expenses and liabilities resulting from its Breach. If the Parties all have certain fault, the liabilities and losses shall be allocated among them as per the actual circumstances. For avoidance of doubt, the Breaching Party at all events is not required to indemnify the other Parties against any indirect or accidental losses or damages or any profit loss resulting from its Breach.
|
14.2.2
|
If any Party fails to pay or fully pay its subscribed capital within the time period prescribed herein, it shall fully pay such capital to the Company and also pay to the non-breaching party the liquidated damages at 0.1% of the defaulted amount for each day of delay.
|
15.1
|
Event of Force Majeure
|
(1)
|
War, blockade, embargo or government decree directly affects the business operation of the Company and the Transaction contemplated herein;
|
(2)
|
Civil commotion directly affects the business operation of the Company and the Transaction contemplated herein;
|
(3)
|
Floods, hurricane, earthquake, explosion or any other natural disaster directly affects the business operation of the Company and the Transaction contemplated herein;
|
(4)
|
Any other event of force majeure which is accepted by the Parties and directly affects the business operation of the Company and the Transaction contemplated herein.
|
15.2
|
Notice of Force Majeure
|
15.3
|
Consequence of Force Majeure
|
16.1
|
Governing Law
|
16.2
|
Dispute Settlement
|
16.2.1
|
Any dispute shall be submitted to the competent court of the place where the Company resides at.
|
16.2.2
|
During the course of dispute settlement, the Parties shall continue performing the provisions of this Agreement, other than those involved in the dispute.
|
17.1
|
Entire Agreement
|
17.2
|
No Waiver
|
17.3
|
Severability
|
17.3.1
|
Other provisions shall remain full force and effect;
|
17.3.2
|
If any provision hereof is prohibited or held as illegal or unenforceable according to any applicable law, such provision shall be severed from this Agreement and shall be deemed as invalid to the maximum extent permitted by the such law and without changing the scope of the remaining provisions hereof; and
|
17.3.3
|
The Parties agree to negotiate in good faith to replace such prohibited, illegal or unenforceable provision with any non-prohibited, lawful and enforceable provision to the practicable extent and with substantial same effect (as to the legal and commercial extent), so as to realize the commercial purpose of this Agreement.
|
17.4
|
Assignment
|
17.4.1
|
Have the financial strength to perform this Agreement and complete any transaction or arrangement contemplated or referred to herein;
|
17.4.2
|
Have the capacity to exercise and perform the rights, obligations and liabilities hereunder (including performance of this Contract and completion of any transaction or arrangement contemplated or referred to herein); and
|
17.4.3
|
Accept and perform all obligations of the assigning Party hereunder.
|
17.5
|
Supplementation and Amendment
|
17.6
|
Effectiveness
|
17.7
|
Notice
|
17.8
|
Counterparts
|
|
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%
|
|
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 Credit Co. Limited
|
Hong Kong
|
85%
|
|
Sinoinfo (Dalian) Investment Consulting Co., Ltd.
|
PRC
|
Nil
|
|
Zhengjin (Fujian) Precious Metals Investment Co., Ltd.
|
PRC
|
Nil
|
|
Zhengjin (Shanghai) Precious Metals Investment Co., Ltd.
|
PRC
|
Nil
|
|
Zhengjin (Tianjin) Precious Metals Investment Co., Ltd.
|
PRC
|
Nil
|
|
Henghui (Tianjin) Precious Metals Investment Co., Ltd.
|
PRC
|
Nil
|
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.
|
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www.GrantThornton.com
|