ChinaNet Online Holdings, Inc. Reports Record Results for Second Quarter 2009

BEIJING, Aug 17 (MARKET WIRE) --
ChinaNet Online Holdings, Inc. ("ChinaNet") (OTCBB: CHNT), a leading
full-service media development, advertising and communications company
for small and medium companies (SMEs) in the People's Republic of China
("China"), today announced higher revenues, net income and cash flow for
the second quarter 2009.

Second quarter and year-to-date 2009 highlights (all comparisons
are
year-over-year):

-- Revenues increased 79 percent to $9.4 million in the second quarter
2009
-- Net income increased 76.4 percent to $1.3 million
-- Second quarter 2009 diluted earnings per share increased 80 percent to
$0.09
-- Six-month 2009 revenues increased 186.1 percent to $19.2 million
-- Net income increased 453 percent to $2.6 million for the six months
ended June 30, 2009
-- Six-month 2009 diluted earnings per share increased 533 percent to
$0.19
-- Gross margins improved 970 basis points to 40.2 percent for the second
quarter 2009
-- YTD cash flow from operations increased 428.5 percent to $2.7 million

SUMMARY FINANCIALS

Second Quarter 2009 Results
Q2 2009 Q2 2008 CHANGE
------------- ------------- ------------
Net Sales $ 9.4 million $ 5.2 million +79.0%
------------- ------------- ------------
Gross Profit $ 3.8 million $ 1.6 million +135.9%
------------- ------------- ------------
Net Income $ 1.3 million $ 0.7 million +73.1%
------------- ------------- ------------
EPS (Fully Diluted) $ 0.09 $ 0.05 +80.0%
------------- ------------- ------------

Six Month 2009 Results
1H 2009 1H 2008 CHANGE
-------------- -------------- -------------
Net Sales $ 19.2 million $ 6.7 million +186.1%
-------------- -------------- -------------
Gross Profit $ 7.3 million $ 1.7 million +325.0%
-------------- -------------- -------------
Net Income $ 2.6 million $ 0.5 million +453.3%
-------------- -------------- -------------
EPS (Fully Diluted) $ 0.19 $ 0.03 +533.3%
-------------- -------------- -------------

Second Quarter 2009 Financial Results

Revenues for the second quarter of 2009 increased 79 percent to
approximately $9.4 million compared to $5.2 million for the second quarter
of 2008. The increase resulted from significant increases in Internet
advertising and TV advertising. For the second quarter of 2009 Internet
advertising comprised approximately 44.6 percent of total revenues, an
increase of 45.7 percent year-over-year to $4.2 million. Growth was the
result our successful brand building efforts for the www.28.com website
which offers customers a comprehensive suite of client service
technologies, assisted by the efforts of a more experienced sales team.
During the second quarter of 2009 revenues generated by TV advertising
increased 177.1 percent year-over-year to approximately $4.7 million or
50.6 percent of total revenues. As of June 30, 2009, the number of active
customers for the Company's Internet advertising business was 650 and the
number of customers being serviced by its TV advertising business was 275.
Approximately 75 customers were being serviced by both platforms.

Cost of sales for the three months ended June 30, 2009 was approximately
$5.6 million or 59.8 percent of revenues as compared to $3.6 million or
69.5 percent of revenues for the three months ended June 30, 2008. The
costs associated with the Company's advertising services include costs for
purchasing resources from other well-known portal websites in China for
Internet advertising and purchasing TV advertisement time from about ten
different provincial TV stations. Overall, the 55.5 percent increase in
cost of sales was less than the corresponding rise in revenues for the
second quarter of 2009.

For the second quarter of 2009 the gross profit was $3.8 million,
representing gross margins of 40.2 percent, compared to the second quarter
of 2008 with $1.6 million in gross profit and a gross margin of 30.5
percent. Gross profit grew by 135.9 percent on a year-over-year basis. The
increase in gross profit was a result of increased revenues and leverage
in the business model.

Operating expenses for the three months ended June 30, 2009 were
approximately $1.9 million, up 195.6 percent from $0.6 million in the same
period of 2008. Selling expenses for the period increased to approximately
$1.2 million from $0.4 million in the second quarter of 2008 primarily as
a result of brand development expenses for www.28.com, increased payrolls
for staff incentives and an expanded sales force, and increased marketing
expenses. General and administrative expenses were $0.6 million and $0.2
million in the second quarter 2009 and 2008, respectively, with the
increase primarily due to non-recurring expenses associated with the US
public company listing and non-cash equity compensation for services.

Operating income for the second quarter of 2009 totaled approximately $1.9
million, a 95.8 percent increase from the $1.0 million reported for the
second quarter of 2008. Operating margins were 20.0 percent and 18.2
percent for the second quarter of 2009 and 2008, respectively.

For the second quarter of 2009, net income was approximately $1.3 million,
a 73.1 percent increase, compared to approximately $0.7 million for the
second quarter of 2008. Diluted earnings per share were $0.09 compared to
$0.05 for the second quarter of 2009 and 2008, respectively, based on 13.9
million and 13.8 million shares, respectively. The Company had an
effective tax rate of 30.4 percent and 21.4 percent for the second
quarters of 2009 and 2008, respectively.

"We are very pleased to report strong revenue and net income growth in the
second quarter and year-to-date. While operating margins were modestly
impacted by non-recurring and non-cash expenses we were able to show the
inherent operating leverage in our business model and are enthusiastic
about the recent reverse merger with Emazing Interactive, Inc., a US
public company," commented Mr. Handong Cheng, Chairman and CEO of the
Company. "We continue to see strong growth in both our Internet and TV
advertising business, which was driven by both existing and new
customers. With the Chinese government's strong support for developing
small and medium companies, we believe ChinaNet's advertising platform is
well positioned to capitalize on this large growth opportunity with
enhanced profitability."

Six Month Results

For the six months ended June 30, 2009, revenues increased approximately
186.1 percent to $19.2 million compared to the same period in 2008. Gross
profit was $7.3 million for the first six months of 2009, representing an
increase of 324.0 percent from the first six months of 2008. Gross margins
were 38.0 percent for the first six months of 2009 compared to 25.6
percent for the same year ago period.

Income from operations was $3.5 million for the first six months of 2009,
representing an increase of 395 percent over the first six months of 2008.
Operating margins were 18.4 percent for the first six months of 2009
compared to 10.6 percent for the first six months of 2008. The Company
incurred cash expenses, in addition to non-cash equity compensation
expenses, related to going public. Net income was $2.6 million for the six
months ended June 30, 2009, an increase of approximately 453 percent from
$0.5 million in the same period in 2008. Fully diluted earnings per share
were $0.19 compared to $0.03 for the first six months of 2009 and 2008
respectively, based on 13.8 million and 13.8 million shares, respectively.

"The management team has also been focused on the roll-out of our bank
kiosk advertising platform through an exclusive arrangement with the China
Construction Bank," Mr. Chen continued. "To date, we have deployed 200
kiosks which provide online access for customers while displaying
advertising for both PRC and global based companies alike. Our first large
customer is Hengan Standard Life, an insurance company, and we are
actively in discussions with several of the largest insurers in China, as
well as Toyota, Nissan, and the big three Chinese telecommunications
providers. We are pursuing a roll-out of more than 3,000 kiosks in banks
located throughout Guandong, Hu Bei, Shanghi and Si Chuan provinces. We
estimate a payback of less than one year for all equipment deployed with
higher margins and recurring advertising revenue."

Balance Sheet and Cash Flow

The Company had a current ratio of 2.3 to 1 and $3.5 million in cash and
equivalents on June 30, 2009. Accounts receivables were $2.1 million on
June 30, 2009, compared to $1.0 million on December 31, 2008. The
Company's receivables were owed by approximately 230 customers. Since the
end of the quarter we have collected at least half of this balance. For
the first six months of 2009, the Company generated $2.7 million in cash
from operations versus $0.5 million for the same period in 2008, with the
variance principally coming from the increase in net income and prudent
asset management.

About ChinaNet Online Holdings, Inc.

The Company, a parent company of ChinaNet Online Media Group Ltd., ("China
Net" or "Zhong Wang Zai Xian"), is a leading full-service media
development, advertising and communications company for small and medium
companies (SME) in China. The Company provides Internet advertising and
other services for Chinese SMEs via its portal website 28.com, TV
commercials and program production via the China-Net TV, and in-house LCD
advertising on banking kiosks targeting Chinese banking patrons.

Safe Harbor

This release contains certain "forward-looking statements" relating to the
business of ChinaNet Online Holdings, Inc., which can be identified by the
use of forward-looking terminology such as "believes," "expects,"
"anticipates," "estimates" or similar expressions. Such forward-looking
statements involve known and unknown risks and uncertainties, including
business uncertainties relating to government regulation of our industry,
market demand, reliance on key personnel, future capital requirements,
competition in general and other factors that may cause actual results to
be materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and uncertainties
are or will be described in greater detail in our filings with the
Securities and Exchange Commission. These forward-looking statements are
based on ChinaNet's current expectations and beliefs concerning future
developments and their potential effects on the company. There can be no
assurance that future developments affecting ChinaNet will be those
anticipated by ChinaNet. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond the control of the
Company) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by such
forward-looking statements. ChinaNet undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required
under applicable securities laws.

CHINANET ONLINE HOLDINGS, INC. (UNAUDITED)
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXPECT PER SHARE)

June 30, December 31,
2009 2008
------------ ------------
(US $) (US $)
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 3,502 $ 2,679
Accounts receivable 2,124 978
Other receivables 324 -
Prepayment and deposit to suppliers 3,347 4,072
Due from related parties 129 109
Due from directors 81 -
Due from Control Group 248 243
Inventories 2 1
Other current assets 22 46
------------ ------------
Total current assets 9,779 8,128

Property and equipment, net 658 678
Other long-term assets 44 7
------------ ------------
$ 10,481 $ 8,813
============ ============

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 160 $ 37
Advances from customers 580 608
Other payables 166 1,333
Accrued Payroll and other accruals 189 66
Due to related parties 72 346
Due to Control Group 1,187 1,149
Due to director - 10
Taxes payable 2,169 1,746
------------ ------------
Total current liabilities $ 4,523 $ 5,295

Long-term borrowing from director 128 128

Stockholders' equity:

Common stock ($0.001 par value; authorized-
50,000,000 shares; issued and outstanding-
15,774,300 shares and 13,790,800 shares at
June 30, 2009 and December 31, 2008
respectively) 16 14
Additional paid-in capital 447 599
Appropriated retained earnings 304 304
Unappropriated retained earnings 4,954 2,370
Accumulated other comprehensive income 109 103
------------ ------------
Total stockholders' equity $ 5,830 $ 3,390

------------ ------------
$ 10,481 $ 8,813
============ ============

CHINANET ONLINE HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(THOUSANDS EXPECT PER SHARE DATA)

For the six months For the three months
ended June 30, ended June 30,
------------------------- -------------------------
2009 2008 2009 2008
------------ ----------- ------------ -----------
(US $) (US $) (US $) (US $)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Sales $ 19,178 $ 6,703 $ 9,381 $ 5,241
Cost of sales 11,889 4,988 5,611 3,643
------------ ----------- ------------ -----------
Gross margin 7,289 1,715 3,770 1,598

Operating expenses
Selling expenses 2,629 582 1,166 388
General and
administrative
expenses 916 356 568 220
Research and
development expenses 214 64 164 34
------------ ----------- ------------ -----------
3,759 1,002 1,898 642
------------ ----------- ------------ -----------

Income from
operations 3,530 713 1,872 956

Other income
(expenses):
Interest income 5 2 2 1
Other income 6 - 2 -
Other expenses - (15) - (15)
------------ ----------- ------------ -----------
11 (13) 4 (14)
------------ ----------- ------------ -----------

Income before income
tax expense 3,541 700 1,876 942
Income tax expense 957 233 571 202
------------ ----------- ------------ -----------

Net income 2,584 467 1,305 740

Other comprehensive
income
Foreign currency
translation gain 6 40 - 14
------------ ----------- ------------ -----------
Comprehensive income 2,590 507 1,305 754
============ =========== ============ ===========
Earnings (loss) per
share
Earnings per common
stock
Basic and diluted $ 0.19 $ 0.03 $ 0.09 $ 0.05
============ =========== ============ ===========

Weighted average number
of common shares
outstanding:
Basic and diluted
shares 13,845,593 13,790,800 13,899,784 13,790,800
============ =========== ============ ===========

CHINANET ONLINE HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)

For the six months ended
June 30,
2009 2008
----------- -----------
(US $) (US $)
(Unaudited) (Unaudited)

Cash flows from operating activities
Net income $ 2,584 $ 467
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation and Amortization 85 22
Share-based compensation expenses 150 -
Changes in operating assets and liabilities
Accounts receivable (1,145) (1,122)
Other receivables (89) 197
Prepayment and deposit to suppliers 731 (172)
Due from related parties (22) (161)
Due from/due to Control Group 32 372
Other current assets 22 (87)
Accounts payable 123 146
Advances from customers (29) 386
Accrued payroll and other accruals 123 10
Due to related parties (274) 325
Taxes payable 420 130
----------- -----------
Net cash provided by operating activities 2,711 513
----------- -----------

Cash flows from investing activities
Purchases of vehicles and office equipment (64) (26)
Purchases of Intangible and other long-term
assets (37) -
----------- -----------
Net cash used in investing activities (101) (26)
----------- -----------

Cash flows from financing activities
Increase of long-term borrowing from director - 124
Increase of short-term loan to third parties (235) -
Increase/(decrease) in due to director (90) 269
Increase/(decrease) in other payables (1,169) 964
Cancellation and retirement of common stock (300) -
----------- -----------
Net cash provided by (used in) financing
activities (1,794) 1,357
----------- -----------

Effect of exchange rate fluctuation on cash and
cash equivalents 7 73

----------- -----------
Net increase in cash and cash equivalents 823 1,917

Cash and cash equivalents at beginning of year 2,679 317
----------- -----------
Cash and cash equivalents at end of year $ 3,502 $ 2,234
=========== ===========

Supplemental disclosure of cash flow information

Interest paid $ - $ -
=========== ===========
Income taxes paid $ 831 $ 68
=========== ===========

For further information, contact:
Mark Elenowitz
TriPoint Capital Advisors
US +1-917-512-0822

Ted Haberfield
HC International, Inc.
US +1-760-755-2716
Email Contact
www.hcinternational.net

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