##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 (Mark One)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 Commission file number: 000-50975
 CHINA FINANCE ONLINE CO. LIMITED
  Not Applicable  (Translation of
Registrants name into English)
 Hong Kong  (Jurisdiction of
incorporation or organization)
 9th Floor of Tower C, Corporate Square
NO.35 Financial Street, Xicheng District
Beijing 100033, China
 Jun Wang, Chief Financial Officer
Telephone: + (86 10) 58325288
Email: ir@jrj.com
Facsimile: + (86 10)58325200
9/F, Tower C, Corporate Square
No.35 Financial Street, Xicheng District
Beijing 100033, China
   Title of each class
    
    Name of each exchange on which registeredNone
    
    None
  American Depositary Shares, each representing 5 ordinary shares, par value HK$0.001 per share *
 *
    
    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 None
  o þ
 o þ
 þ o
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued
    
    Other oBy the International Accounting Standards Board o
 o o
 o þ




---



##### 



CHINA FINANCE ONLINE CO. LIMITED
TABLE OF CONTENTS
 INTRODUCTIONPART IITEM 1 Identity of Directors, Senior Management and Advisers
    
    
    4ITEM 2 Offer Statistics and Expected Timetable
    
    
    5ITEM 3 Key Information
    
    
    5ITEM 4 Information on the Company
    
    
    36ITEM 5 Operating and Financial Review and Prospects
    
    
    59ITEM 6 Directors, Senior Management and Employees
    
    
    78ITEM 7 Major Shareholders and Related Party Transactions
    
    
    89ITEM 8 Financial Information
    
    
    98ITEM 9 The Offer and Listing
    
    
    98ITEM 10 Additional Information
    
    
    99ITEM 11 Quantitative and Qualitative Disclosures About Market Risk
    
    
    107ITEM 12 Description of Securities Other than Equity Securities
    
    
    107PART IIITEM 13 Defaults, Dividend Arrearages and Delinquencies
    
    
    110ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    110ITEM 15 Controls and Procedures
    
    
    110ITEM 16A Audit Committee Financial Expert
    
    
    112ITEM 16B Code of Ethics
    
    
    112ITEM 16C Principal Accountant Fee and Services
    
    
    113ITEM 16D Exemption from the Listing Standards for Audit Committees
    
    
    113ITEM 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    113ITEM 16F Change in Registrants Certifying Accountant
    
    
    113ITEM 16G Corporate Governance
    
    
    113PART IIIITEM 17 Financial Statements
    
    
    113ITEM 18 Financial Statements
    
    
    113ITEM 19 Exhibits
    
    
    114EX-4.2Exhibit 4.3Exhibit 4.4Exhibit 4.74Exhibit 4.75Exhibit 4.76Exhibit 4.78Exhibit 4.103Exhibit 4.104Exhibit 4.151Exhibit 4.152Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2Exhibit 15.1Exhibit 15.2
   2




---



##### Table of Contents



INTRODUCTION
  
    
    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;
 
    
    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;
 
    
    China or PRC refers to the Peoples Republic of China, excluding Taiwan, Hong Kong
and Macau;
 
    
    Hong Kong refers to the Hong Kong Special Administrative Region of the Peoples
Republic of China; and
 
    
    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.
  FORWARD-LOOKING INFORMATION
  
    
    our goals and strategies, including how we effect our goals and strategies;
 
    
    our future business developments, business prospects, financial condition and results
of operations;
 
    
    our future pricing strategies or policies;
 
    
    our plans to expand our service offerings;
 
    
    our plans to use acquisitions and strategic investments as part of our corporate
strategy;
 
    
    competition in the PRC financial data and information services industry;
  3




---



##### Table of Contents




    
    the expected growth of the online financial data and information services market;
 
    
    performance of Chinas securities markets;
 
    
    performance of Hong Kongs securities markets;
 
    
    growth in our registered user accounts and subscriber base;
 
    
    PRC governmental policies relating to taxes and how they will impact our business;
 
    
    PRC governmental policies relating to the Internet and Internet content providers;
 
    
    PRC governmental policies relating to the securities investment advisory companies to
provide advisory services on securities and related products;
 
    
    PRC governmental policies relating to the distribution of content, especially the
distribution of financial content over the Internet; and
 
    
    PRC governmental policies relating to mobile value-added services.
    
 PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
   4




---



##### Table of Contents



ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 A. Selected financial data.
  For the year ended December 31,(in thousands of U.S. dollars, except per share or per ADS data)
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Consolidated statement of operations
and comprehensive income (loss) data:Net revenues
    
    
    7,128
    
    
    
    25,903
    
    
    
    56,243
    
    
    
    53,606
    
    
    
    59,716Cost of revenues
    
    
    (1,468
    )
    
    
    (4,427
    )
    
    
    (9,367
    )
    
    
    (8,147
    )
    
    
    (8,497
    )Gross profit
    
    
    5,660
    
    
    
    21,476
    
    
    
    46,876
    
    
    
    45,459
    
    
    
    51,219Operating expenses:General and administrative
    
    
    (2,956
    )
    
    
    (7,784
    )
    
    
    (15,371
    )
    
    
    (16,982
    )
    
    
    (13,208
    )Product development
    
    
    (742
    )
    
    
    (2,269
    )
    
    
    (5,635
    )
    
    
    (10,754
    )
    
    
    (13,028
    )Sales and marketing
    
    
    (2,666
    )
    
    
    (6,924
    )
    
    
    (13,521
    )
    
    
    (26,095
    )
    
    
    (26,991
    )Total operating expenses
    
    
    (6,364
    )
    
    
    (16,977
    )
    
    
    (34,527
    )
    
    
    (53,831
    )
    
    
    (53,227
    )Government subsidies
    
    
    
    
    
    
    136
    
    
    
    437
    
    
    
    567
    
    
    
    514Income (loss) from operations
    
    
    (704
    )
    
    
    4,635
    
    
    
    12,786
    
    
    
    (7,805
    )
    
    
    (1,494
    )Interest income
    
    
    1,003
    
    
    
    1,105
    
    
    
    1,609
    
    
    
    1,352
    
    
    
    1,590Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (142
    )Exchange gain, net
    
    
    267
    
    
    
    424
    
    
    
    1,489
    
    
    
    2
    
    
    
    813Gain from trading securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    1,138Other income, net
    
    
    115
    
    
    
    9
    
    
    
    (169
    )
    
    
    (258
    )
    
    
    (7
    )Loss from impairment of cost method investment
    
    
    (1,322
    )
    
    
    (11,127
    )
    
    
    
    
    
    
    
    
    
    
    Income
(loss) before income tax benefit (provision)
    
    
    (641
    )
    
    
    (4,954
    )
    
    
    15,715
    
    
    
    (6,668
    )
    
    
    1,898Income tax benefit (provision)
    
    
    41
    
    
    
    809
    
    
    
    3,047
    
    
    
    446
    
    
    
    (264
    )Purchased pre-acquisition earning
    
    
    
    
    
    
    
    
    
    
    227
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (600
    )
    
    
    (4,145
    )
    
    
    18,989
    
    
    
    (6,222
    )
    
    
    1,634Less: net (loss) attributable to the noncontrolling interests
    
    
    
    
    
    
    (15
    )
    
    
    (31
    )
    
    
    (2
    )
    
    
    (326
    )Net income (loss) attributable to China Finance
Online Co. Limited
    
    $
    (600
    )
    
    $
    (4,130
    )
    
    $
    19,020
    
    
    $
    (6,220
    )
    
    
    1,960Net income (loss) per share attributable to China
Finance Online Co. Limited-basic
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.19
    
    
    $
    (0.06
    )
    
    $
    0.02-diluted
    
    $
    (0.01
    )
    
    $
    (0.04
    )
    
    $
    0.17
    
    
    $
    (0.06
    )
    
    $
    0.02Net income (loss) per ADS equivalent attributable
to China Finance Online Co. Limited-basic(1)
    
    $
    (0.03
    )
    
    $
    (0.22
    )
    
    $
    0.96
    
    
    $
    (0.30
    )
    
    $
    0.09-diluted(1)
    
    $
    (0.03
    )
    
    $
    (0.22
    )
    
    $
    0.84
    
    
    $
    (0.30
    )
    
    $
    0.09
  5




---



##### Table of Contents



For the year ended December 31,(in thousands of U.S. dollars)(1)
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Consolidated balance sheet data:Cash and cash equivalents
    
    $
    44,956
    
    
    $
    74,729
    
    
    $
    97,544
    
    
    $
    107,391
    
    
    $
    106,773Current working capital(2)
    
    
    38,011
    
    
    
    53,811
    
    
    
    78,226
    
    
    
    81,255
    
    
    
    90,146Total assets
    
    
    71,119
    
    
    
    103,885
    
    
    
    141,823
    
    
    
    165,609
    
    
    
    180,091Deferred revenue, current
    
    
    6,419
    
    
    
    20,457
    
    
    
    28,202
    
    
    
    30,620
    
    
    
    32,995Total current liabilities
    
    
    8,521
    
    
    
    31,034
    
    
    
    35,472
    
    
    
    52,401
    
    
    
    60,259Deferred revenue, non-current
    
    
    
    
    
    
    4,665
    
    
    
    8,786
    
    
    
    14,547
    
    
    
    13,022Total equity
    
    $
    62,453
    
    
    $
    67,834
    
    
    $
    96,942
    
    
    $
    97,667
    
    
    $
    105,843
 (1)
    
    Each ADS represents five ordinary shares.(2)
    
    Current working capital is the difference between total current assets and total current
liabilities.  6




---



##### Table of Contents



Exchange Rate Information
    Average(1)
    
    
    High
    
    
    Low
    
    
    Period-end(RMB per U.S.$1.00)December 31, 2006
    
    
    7.9693
    
    
    
    8.0705
    
    
    
    7.8051
    
    
    
    7.8087December 31, 2007
    
    
    7.5806
    
    
    
    7.8127
    
    
    
    7.2946
    
    
    
    7.2946December 31, 2008
    
    
    6.9193
    
    
    
    7.2946
    
    
    
    6.7800
    
    
    
    6.8225December 31, 2009
    
    
    6.8314
    
    
    
    6.8399
    
    
    
    6.8201
    
    
    
    6.8282December 31, 2010
    
    
    6.7668
    
    
    
    6.8284
    
    
    
    6.6227
    
    
    
    6.6227Most recent six months:November 2010
    
    
    6.6558
    
    
    
    6.6925
    
    
    
    6.6239
    
    
    
    6.6762December 2010
    
    
    6.6515
    
    
    
    6.6786
    
    
    
    6.6227
    
    
    
    6.6227January 2011
    
    
    6.6027
    
    
    
    6.6349
    
    
    
    6.5876
    
    
    
    6.5891February 2011
    
    
    6.5840
    
    
    
    6.5985
    
    
    
    6.5752
    
    
    
    6.5752March 2011
    
    
    6.5662
    
    
    
    6.5750
    
    
    
    6.5564
    
    
    
    6.5564April 2011
    
    
    6.5292
    
    
    
    6.5527
    
    
    
    6.4990
    
    
    
    6.4990May 2011 (through 16th)
    
    
    6.5006
    
    
    
    6.5108
    
    
    
    6.4948
    
    
    
    6.5108
 
 (1)
    
    Averages are calculated from month-end rates.  7




---



##### Table of Contents



B. Capitalization and indebtedness.
  C. Reasons for the offer and use of proceeds.
  D. Risk factors.
 Risks relating to our business
 Any prolonged or substantial slowdown in the Chinese economy could adversely affect Chinese
investors interests and engagement in the securities market, which may in turn have a
significantly negative impact on our business.
  Negative changes in Chinas securities markets, economic conditions, inflation, regulatory
policies, interests rates and other factors that could affect investors interests in investing in
Chinas securities markets could have an adverse effect on our business.
   8




---



##### Table of Contents



Downturns, disruptions and volatility in Hong Kong securities markets and negative developments in
the business, economic and market conditions that could affect investors investing in Hong Kong
securities markets could have a material and adverse impact on our business in the future.
  Our securities brokerage, futures trading, wealth management and securities advising business in
Hong Kong operate in a highly regulated industry and compliance failures could materially and
adversely affect our business.
   9




---



##### Table of Contents



Our business could be materially and adversely affected if new features and new research tools are
not accepted by users.
  We may not be able to successfully implement our growth strategies, which could materially and
adversely affect our business, financial condition and results of operations.
  www.jrj.com www.stockstar.com
  We face significant competition which could materially and adversely affect our business, financial
condition and results of operations .
   10




---



##### Table of Contents



Provisional
Regulations on Securities Investment Advisory Provisional Regulations on Issuance of Securities
Research Reports
 Our business could be materially and adversely affected if the stock exchanges from which we
receive data and information fail to deliver us reliable data and price quotes or other trading
related information, or if we cannot maintain our current business relationships with our
historical data providers on commercially reasonable terms.
   11




---



##### Table of Contents



www.JRJ.com www.JRJ.com
     12




---



##### Table of Contents



Our business would be adversely affected if we do not continue to maintain an effective
telemarketing and customer support force.
  Acquisitions present many risks, and we may not realize the financial and strategic goals that were
contemplated at the time of the acquisitions.
   13




---



##### Table of Contents




    
    the acquisition may not further our business strategy, or we may pay more than it is
worth;
 
    
    we may not realize the anticipated increase in our revenues if we are unable to sell
the acquired companys products to our customer base, or the acquired contract models of
acquired contract models companies;
 
    
    we may have difficulty identifying suitable acquisition opportunities and integrating
acquired companies with our existing operations or their products and services with our
existing products and services;
 
    
    we may have higher than anticipated costs in continuing support and development of
acquired products;
 
    
    we may have multiple and overlapping product lines that are offered, priced and
supported differently, which could cause customer confusion and delays;
 
    
    our due diligence process may fail to identify problems, such as issues with unlicensed
use of intellectual property;
 
    
    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;
 
    
    our ongoing business may be disrupted and our managements attention may be diverted by
transition or integration issues; and
 
    
    to the extent that we issue a significant amount of equity securities in connection
with future acquisitions, existing ADS holders and shareholders may be diluted and
earnings per share may decrease.
  14




---



##### Table of Contents



New regulations of the CSRC regulating securities investment advisory business bring both
opportunities and challenges to us. Any failure to comply with such new regulations could
materially and adversely affect our business and operating results.
  Provisional Regulations on Securities
Investment Advisory
 Provisional Regulations on Securities Investment Advisory
  Our securities investment advisory business conducted through our newly acquired PRC-incorporated
affiliates operates in a highly regulated industry and compliance failures could adversely affect
our business.
   15




---



##### Table of Contents



Our plan to make strategic investments may negatively affect our business due to the poor financial
condition and operating performance of those companies we invest in and other risks.
     16




---



##### Table of Contents



Our business could be materially and adversely affected if increased usage strains our server
systems or if we suffer from other system malfunctions.
   If we are not able to respond successfully to technological or industry developments, our business
may be materially and adversely affected.
  We may be subject to, and may expend significant resources in defending against, claims based on
the content and services that we provide through our website and research tools.
   17




---



##### Table of Contents



We may be subject to intellectual property infringement claims, which may force us to incur
substantial legal expenses and, if determined adversely against us, may materially disrupt our
business.
  Unauthorized use of our intellectual property by third parties, and the expenses incurred in
protecting our intellectual property rights, may materially and adversely affect our business.
  We depend on our key personnel and our business and growth prospects may be severely disrupted if
we lose their services.
    18




---



##### Table of Contents



PRCs new labor law restricts our ability to reduce our workforce in the PRC in the event of an
economic downturn and may increase our labor costs.
   Undetected programming errors or defects in our research tools could materially and adversely
affect our business, financial condition and results of operations.
   19




---



##### Table of Contents



If the current tax benefits we enjoy in PRC were no longer available, our effective tax rates for
our PRC operations could increase.
   
    
    providing CFO Software tax exemption for 2007 and a preferential tax rate of 7.5% for
2008, 2009 and 2010, and
 
    
    providing CFO Meining and CFO Genius a preferential tax rate of 15% for 2008, 2009 and
2010.
  
    
    providing CFO Success tax exemption for 2008 and 2009 and a preferential EIT rate of
12.5% for each of 2010, 2011 and 2012;
 
    
    providing CFO Shenzhen Shangtong and CFO Qicheng tax exemption for 2010 and 2011 and a
preferential EIT rate of 12.5% for each of 2012, 2013 and 2014; and
 
    
    providing CFO Zhengning a reduced tax rate of 10%, 11% and 12% for 2009, 2010 and 2011,
respectively, and an eventual transition to the standard tax rate of 25% in 2012.
    20




---



##### Table of Contents



Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative
impact on potential acquisitions we may pursue in the future.
    21




---



##### Table of Contents



Dividends we receive from our operating subsidiaries located in the PRC may be subject to PRC
withholding tax.
  We may be deemed a PRC resident enterprise under the EIT Law and be subject to the PRC taxation on
our worldwide income.
  Dividends payable by us to our foreign investors and gain on the sale of our ADSs or ordinary
shares may become subject to taxes under PRC tax laws.
   22




---



##### Table of Contents



We may become a passive foreign investment company, or PFIC, which could result in adverse U.S. tax
consequences to U.S. investors.
  Because there is limited business insurance coverage in China, any business disruption or
litigation we experience might result in our incurring substantial costs and the diversion of
resources.
  Risks relating to our industry
 The Internet infrastructure in China, which is not as well developed as in the United States or
other more developed countries, may limit our growth.
  The limited use of personal computers in China and the relatively high cost of Internet access with
respect to per capita gross domestic product may limit the development of the Internet in China and
impede our growth.
   23




---



##### Table of Contents



We depend largely on the infrastructure of the telecommunications operators in China, and any
interruption of their network infrastructure may result in severe disruptions to our business.
   Unexpected network interruptions, security breaches or computer virus attacks could have a material
adverse effect on our business, financial condition and results of operations.
  
    
    any breakdowns or system failures resulting in a sustained shutdown of all or a
material portion of our servers, including failures which may be attributable to sustained
power shutdowns, or efforts to gain unauthorized access to our systems causing loss or
corruption of data or malfunctions of software or hardware; and
 
    
    any disruption or failure in the national backbone network, which would prevent our
users from logging on to our website or accessing our services.
  Concerns about the security and confidentiality of information on the Internet may increase our
costs, reduce the use of our website and impede our growth.
   24




---



##### Table of Contents



Risks relating to regulation of our business and to our structure
 We primarily rely on contractual arrangements with Beijing Fuhua Innovation Technology Development
Co., Ltd., or CFO Fuhua, CFO Newrand, Shanghai Chongzhi Co., Ltd., or CFO Chongzhi, CFO Chuangying,
CFO Shenzhen Shangtong and CFO Qicheng, our significant PRC-incorporated affiliates, and their
shareholders for our China operations, which may not be as effective in providing operational
control as direct ownership. If the affiliates fail to perform their obligations under these
contractual arrangements or PRC laws impair the enforceability of these contracts, our business,
financial condition and results of operations may be materially and adversely affected.
      25




---



##### Table of Contents



If the PRC government finds that the agreements that establish the structure for operating our
internet business do not comply with PRC government restrictions on foreign investment in the
online financial data and information service industry, we could be subject to severe penalties .
  www.jrj.com www.stockstar.com
   
    
    revoking business and operating licenses of CFO Beijing, CFO Software, CFO Stockstar,
CFO Genius, CFO Jujin, CFO Zhengning, CFO Success, CFO Fuhua or CFO Meining;
 
    
    discontinuing or restricting our operations or those of CFO Beijing, CFO Software, CFO
Stockstar, CFO Genius, CFO Jujin, CFO Zhengning, CFO Success, CFO Fuhua or CFO Meining;
 
    
    imposing conditions or requirements with which we, CFO Beijing, CFO Software, CFO
Stockstar, CFO Genius, CFO Jujin, CFO Zhengning, CFO Success, CFO Fuhua or CFO Meining
could not satisfy;
 
    
    requiring us, CFO Beijing, CFO Software, CFO Stockstar, CFO Genius, CFO Jujin, CFO
Zhengning, CFO Success, CFO Fuhua or CFO Meining to restructure the relevant ownership
structure or operations;
  26




---



##### Table of Contents




    
    restricting or prohibiting our use of the proceeds of our initial public offering in
2004 to finance our business and operations in China; or
 
    
    taking other regulatory or enforcement actions, including levying fines that could be
harmful to our business.
  Contractual arrangements that we have entered into with our PRC-incorporated affiliates may be
subject to scrutiny by the PRC tax authorities and a finding that we or our PRC-incorporated
affiliates owe additional taxes could substantially reduce our consolidated net income.
  We rely principally on dividends and other distributions on equity paid by our wholly owned
operating subsidiaries to fund any cash and financing requirements we may have.
    27




---



##### Table of Contents



The PRC government may prevent us from distributing, and we may be subject to liability for,
content that it believes is inappropriate.
     Risks relating to doing business in the Peoples Republic of China
  The PRCs economic, political and social conditions, as well as government policies, could affect
the financial markets in China and our business.
   28




---



##### Table of Contents



The PRC legal system embodies uncertainties which could limit the legal protections available to
you and us.
  Restrictions on currency exchange may limit our ability to utilize our revenues effectively.
   29




---



##### Table of Contents



Fluctuations in exchange rates could result in foreign currency exchange losses.
    Risks relating to our shares and ADSs
 Stock prices of Internet-related companies, particularly companies with business operations
primarily in China, have fluctuated widely in recent years, and the trading prices of our ADSs are
likely to be volatile, which could result in substantial losses to investors.
     30




---



##### Table of Contents



If we grant employee share options and other share-based compensation in the future, our net income
could be materially and adversely affected.
     31




---



##### Table of Contents



The sale or availability for sale of substantial amounts of our ADSs could adversely affect their
market price.
   A significant percentage of our outstanding ordinary shares are held by a small number of our
shareholders, and these shareholders may have significantly greater influence on us and our
corporate actions by nature of the size of their shareholdings relative to our public shareholders.
  Provisions in our charter documents and Hong Kong law, and change in control agreements we have
entered into with each of our chief executive officer and chief financial officer, may discourage
our acquisition by a third party, which could limit your opportunity to sell your shares at a
premium.
  
    
    Our articles of association provide for a staggered board, which means that our
directors, excluding our chief executive officer, are divided into two classes, with half
of our board, excluding our chief executive officer, standing for election every two
years. Our chief
executive officer will at all time serve as a director, and will not retire as a director,
so long as he remains our chief executive officer. This means that, with our staggered
board, at least two annual shareholders meetings, instead of one, are generally required
in order to effect a change in a majority of our directors. Our staggered board can
discourage proxy contests for the election of our directors and purchases of substantial
blocks of our shares by making it more difficult for a potential acquirer to take control
of our board in a relatively short period of time.
  32




---



##### Table of Contents




    
    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 in this way to give us at least 120 days notice of the resolution, 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. 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.
 
    
    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.
 We are a Hong Kong company and because the legal and procedural protections afforded minority
shareholders under Hong Kong law differ from those under U.S. law, you may have difficulty
protecting your interests as our shareholder relative to shareholders of corporations organized in
the U.S.
  
    
    to recognize or enforce against us judgments of courts of the United States based on
the civil liability provisions of U.S. securities laws; or
  33




---



##### Table of Contents




    
    to allow original actions brought in Hong Kong, based on the civil liability provisions
of U.S. securities laws that are penal in nature.
   The voting rights of holders of ADSs must be exercised in accordance with the terms of the deposit
agreement, the American depositary receipts, and the procedures established by the depositary. The
process of voting through the depositary may involve delays that limit the time available to you to
consider proposed shareholders actions and also may restrict your ability to subsequently revise
your voting instructions.
    34




---



##### Table of Contents



You may not receive distributions on our ordinary shares or any value for them if such distribution
is illegal or if any required government approval cannot be obtained in order to make such
distribution available to you.
  You may be subject to limitations on transfer of your ADSs.
   35




---



##### Table of Contents



Your right as a holder of ADSs to participate in any future rights offerings may be limited, which
may cause dilution to your holdings.
   
 ITEM 4. INFORMATION ON THE COMPANY
 A. History and development of the company.
 www.jrj.com.cn, www.jrj.com,
     36




---



##### Table of Contents



www.stockstar.com www.stockstar.com
     37




---



##### Table of Contents



Provisional Regulations on Securities Investment Advisory
 www.jrj.com JRJ.com
  38




---



##### Table of Contents



http://iphone.wo.com.cn
   jrj.com
     39




---



##### Table of Contents



B. Business overview.
 http://www.jrj.com http://www.stockstar.com
   Comprehensiveness.
  Integration.
   40




---



##### Table of Contents



Interaction.
  Timeliness.
  User-friendliness.
     41




---



##### Table of Contents



Our websites
 www.jrj.com www.stockstar.com www.jrj.com www.stockstar.com
 
    
    attract visitors and market our subscription based 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 subscription services and brokerage services;
 
    
    store content and serve as an integral part of our information platform;
 
    
    serve as download platforms for our service offerings; and
 
    
    display online advertisements.
     Our subscription services
  Our features
   42




---



##### Table of Contents




    
    financial analysis tools that permit users to calculate and analyze quantitatively
financial data;
 
    
    current and historical financial data and information for Chinas and Hong Kongs
listed company stocks, bonds, mutual funds and stock index futures;
 
    
    categorized news and research reports; and
 
    
    online forums and bulletin boards.
  www.jrj.com www.stockstar.com
 Financial analysis tools.
  
    
    Securities market data analysis tools. Our securities market data service packages are
developed on the basis of Level II quotes licensed from the Shanghai and Shenzhen Stock
Exchanges. In June 2006, we entered into an agreement with SSE Infonet Ltd. Co, which is
associated with the Shanghai Stock Exchange. Under the definitive agreement, we are
certified by Shanghai Stock Exchange to develop service packages based on Level II quotes,
and upgrade the features and functions of our current products. The definitive agreement
was contemplated to continue through July 31, 2012.
   
    
    Technical Analysis.Technical analysis involves researching historical price and
volume data, patterns and trends to predict the performance of a given stock. This type of
analysis focuses on chart formations and formulas in identifying major and minor trends to
recognize buying opportunities and exit points.
  43




---



##### Table of Contents




    
    Fundamental Analysis.Fundamental analysis involves examining the companys financials
and operations, especially sales, earnings, growth potential, assets, debt, management,
products, and competition. Fundamental Analysis takes into consideration only those
variables that are directly related to the company itself, rather than the overall state
of the market or technical analysis data.
  Real-time and historical data.
   News.
  Research reports.
  Online forums.
   44




---



##### Table of Contents



Our research tools
   
    
    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 distinguish between listed
companies with investment potential and those prone to financial trouble by 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 market accepted
performance parameters, including price-to-earnings ratios and profit margins etc.
 
    
    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 we designed
to be easy to visualize and 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.
  45




---



##### Table of Contents




    
    Technical analysis. This feature allows investors interested in trends formulated by
historical trading data to perform technical analysis on listed companies. With over 60
markets accepted technical indicators and a complete database of historical data and
information on all of Chinas and Hong Kongs listed company stocks, our subscribers can
perform extensive chart analysis and pattern recognition on any stock listed on Chinas
stock exchanges.
 
    
    Securities market data analysis. This feature provides faster and more comprehensive
trading data and statistical information on market transactions. With our Securities
Market Data service packages developed on the basis of Level II quotes licensed from the
Shanghai and Shenzhen Stock Exchanges, our subscribers are provided with trading
transparency and unique insight into a stock prices movements, and can make more informed
investment decisions.
  Pricing policy
   Our brokerage services
  Our online advertisement services
 www.jrj.com www.stockstar.com
  46




---



##### Table of Contents



Customer support
  Our content providers
  Shanghai, Shenzhen and Hong Kong Stock Exchanges
    JRJ.com
 China Financial Futures Exchange
   47




---



##### Table of Contents



Data providers
  Financial Institutions, securities advisors and stock brokerages
  News and media conglomerates
  Chinese news publishers and media companies
   48




---



##### Table of Contents



Sales and marketing
   Product development
    
    
    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;
 
    
    develop additional research tools, features and content specifically targeting the
high-end subscribers; and
 
    
    design and build new financial instrument service products that fit our strategies.
 Technology and infrastructure
   49




---



##### Table of Contents



Growth Strategy
   
    
    leveraging our own website platform and other online and mobile platform to increase
registered user base;
 
    
    building competitiveness in product innovation and data quality to increase both the
registered users and paid subscribers;
 
    
    building our customer database by better understanding and in depth user data mining on
our registered users;
 
    
    reinforcing internet capacity through two of our industry-leading financial portal
sites and related web applications to improve users experience and stickiness.
 
    
    upgrading our existing service offerings and expanding our present service;
 
    
    encouraging our subscribers to migrate to newer and more comprehensive service
offerings.
  
    
    acquiring strategic resources and capabilities in order to strength entry barriers,
broaden product offering, expand business scale, diverse revenue resources and monetize
registered user base; and
 
    
    obtaining access to complementary resources and capabilities through strategic
partnerships that enable us to penetrate into a bigger market to solidify our leading
position and enhance our brand awareness.
 Competition
  
    
    publishers and distributors of traditional media, including print, radio and television
as well as radio and television programs and news focused on financial news and
information;
 
    
    internet portals providing information on business, finance and investing;
 
    
    financial information web pages offered by websites;
  50




---



##### Table of Contents




    
    stock research software vendors, especially those that develop and market stock
research software through stock brokerage companies; and
 
    
    stock brokerage companies, especially stock brokerage companies with online trading
capabilities.
  Provisional
Regulations on Securities Investment Advisory Provisional Regulations on Issuance of Securities
Research Reports
 Intellectual property
   www.jrj.com www.stockstar.com www.jrj.com.cn
 Regulation
  
    
    MIIT;
 
    
    CSRC;
  51




---



##### Table of Contents




    
    Ministry of Culture;
 
    
    General Administration of Press and Publication (National Copyright Administration);
 
    
    State Administration of Industry and Commerce;
 
    
    Ministry of Public Security;
 
    
    Ministry of Commerce; and
 
    
    State Administration of Radio, Film and Television
  Foreign ownership restriction on Internet content provision businesses
   Licenses and permits
     52




---



##### Table of Contents



Regulation of Internet content
    53




---



##### Table of Contents



Regulation of information security
   Intellectual property rights
   www.jrj.com www.stockstar.com
 Website name
  Privacy protection
   54




---



##### Table of Contents



Advertising regulation
  C. Organizational structure.
     55




---



##### Table of Contents



Jurisdiction
    
    Legalof
    
    OwnershipName
    
    Incorporation
    
    InterestFortune Software (Beijing) Co., Ltd.
    
    PRC
    
    
    100
    %China Finance Online (Beijing) Co., Ltd.
    
    PRC
    
    
    100
    %Beijing Fuhua Innovation Technology Development
Co., Ltd. *
    
    PRC
    
        NilFortune (Beijing) Success Technology Co., Ltd.
    
    PRC
    
    
    100
    %Beijing Chuangying Securities Advisory and
Investment Co., Ltd.*
    
    PRC
    
        NilShanghai Meining Computer Software Co., Ltd.*
    
    PRC
    
        NilZhengning Information & Technology (Shanghai)
Co., Ltd.
    
    PRC
    
    
    100
    %Shanghai Chongzhi Co., Ltd.*
    
    PRC
    
        NilFortune (Beijing) Qicheng Technology Co., Ltd*
    
    PRC
    
        NilShanghai Stockstar Securities Advisory and
Investment Co., Ltd. *
    
    PRC
    
        NilJujin Software (Shenzhen) Co., Ltd.
    
    PRC
    
    
    100
    %Shenzhen Genius Information Technology Co., Ltd.
    
    PRC
    
    
    100
    %Shenzhen Shangtong Software Co., Ltd. *
    
    PRC
    
        NilShenzhen Newrand Securities Advisory and
Investment Co., Ltd.*
    
    PRC
    
        NilShenzhen Newrand Securities Training Center*
    
    PRC
    
        NilStockstar Information Technology (Shanghai) Co.,
Ltd.
    
    PRC
    
    
    100
    %Daily Growth Financial Holdings Limited
    
    BVI
    
    
    85
    %Daily Growth Futures Limited
    
    Hong Kong
    
    
    85
    %Daily Growth Securities Limited
    
    Hong Kong
    
    
    85
    %Daily Growth Wealth Management Limited
    
    Hong Kong
    
    
    85
    %Daily Growth Investment Services Limited
    
    Hong Kong
    
    
    85
    %Hong Kong Genius Information Technology Co., Ltd.
    
    Hong Kong
    
    
    100
    %
 
 *
    
    Denotes variable interest entities or subsidiaries of variable interest entities  56




---



##### Table of Contents



Loan Agreement.
  Purchase Option Agreement .
  57




---



##### Table of Contents



Voting arrangement.
 Share Pledge Agreement .
   58




---



##### Table of Contents



D. Property and equipment.
  ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion of our financial condition and results of operations is based upon and
should be read in conjunction with our consolidated financial statements and their related notes
included in this annual report on Form 20-F . This report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including, without limitation, statements regarding our expectations, beliefs,
intentions or future strategies that are signified by the words expect, anticipate, intend,
believe, or similar language. All forward-looking statements included in this annual report are
based on information available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. Actual results could differ materially from those projected in the
forward-looking statements. In evaluating our business, you should carefully consider the
information provided under the caption Risk factors in this annual report on Form 20-F . We
caution you that our businesses and financial performance are subject to substantial risks and
uncertainties.
 A. Operating Results
 http://www.jrj.com http://www.stockstar.com
    59




---



##### Table of Contents



Key factors affecting our operating results and financial condition
  
    
    performance of Chinas securities markets, and user demand for market intelligence on
Chinas securities markets, as well as the overall performance of Chinas economy;
 
    
    termination of our TopView series of market data analysis products. On December 31,
2008, SSE Infonet Ltd. Co terminated the provision of TopView data to third-party software
vendors, including us. We subsequently terminated the offering of TopView products to our
customers. Our 2009 operating results were impacted from the TopView termination;
 
    
    contribution of alternative revenue resources such as revenues from online advertising;
 
    
    seasonality associated with the level of activity of our users and subscribers and the
trading activities of Chinas securities markets;
 
    
    tax refund from the PRC tax authorities for value-added-taxes we are required to pay on
the sale of subscriptions to our service packages;
 
    
    other tax incentives we receive from PRC tax authorities resulting from CFO Success,
CFO Zhengning, CFO Qicheng, and CFO Shenzhen Shangtong being the Software Enterprises;
CFO Software, CFO Meining and CFO Genius being the High and New Technology companies;
and CFO Stockstar, CFO Jujin, and CFO Newrand are entitled to enjoy a reduced tax rate;
 
    
    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, Daily Growth
Securities and the contractual arrangements with CFO Newrand, CFO Fuhua, CFO Chongzhi, CFO
Chuangying, CFO Securities Consulting, and CFO Shenzhen Shangtong and other VIEs; and
 
    
    PRC telecommunication and regulatory policies.
   60




---



##### Table of Contents



Gross revenues
   
    
    the number of registered user accounts on our websites;
 
    
    the number of active paying individual subscribers; and
 
    
    the service packages selected by our subscribers.
 www.jrj.com www.stockstar.com www.jrj.com www.stockstar.com
  Net revenues
   61




---



##### Table of Contents



Years ended December 31,2008
    
    
    2009
    
    
    2010Subscription fees
    
    $
    50,598,929
    
    
    $
    47,201,162
    
    
    $
    49,518,331Advertising revenue
    
    
    2,946,389
    
    
    
    3,985,699
    
    
    
    7,031,219Brokerage service revenue
    
    
    956,549
    
    
    
    2,228,630
    
    
    
    3,003,246Others
    
    
    1,740,901
    
    
    
    190,386
    
    
    
    163,246Total revenue from external customers
    
    $
    56,242,768
    
    
    $
    53,605,877
    
    
    $
    59,716,042
 Cost of revenues
 jrj.com stockstar.com
 Rent.
 Bandwidth Costs.
 Cost of raw data.
 
    
    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.
 Salary and compensation.
 Operating expenses
   62




---



##### Table of Contents



General and administrative expenses.
 Product development expenses.
 Sales and marketing expenses.
 Stock option plan and option agreements
   63




---



##### Table of Contents



64




---



##### Table of Contents



Critical accounting policies
  Revenue recognition
   Income taxes.
   65




---



##### Table of Contents



Stock-based compensation
   Cost method investment.
 Goodwill.
    66




---



##### Table of Contents




    
    The revenue growth is projected at a compound annual growth rate, or CAGR. For the
years 2011-2015, the CAGR of the four reporting units are approximately 7% for each of
2011 through 2014 and 10% for 2015 for Southern China; 5%, 5%, 7%, 8%, 10% for Eastern
China; 7%, 2%, 8%, 9%, 9% for Northern China and 24%, 19%, 12%, 7%, 7% 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 8%, 2%,
3%, and 3% of revenue for the four reporting units, respectively.
 
    
    The working capital requirement is estimated based on main accounts turnover days.
 
    
    A perpetual growth rate after 2015 is assumed to be at 3% per year for each of the four
reporting units.
 
    
    The weighted average cost of capital, or WACC, used in the calculation is 15%, 22%, 23%
and 17% for the four reporting units, respectively.
  Impairment of long-lived assets.
  67




---



##### Table of Contents



Results of operations
  (in thousands of U.S. dollars,
    
    For the year ended December 31,except as % of net revenues)
    
    2008
    
    
    2009
    
    
    2010Consolidated statement of
operations and comprehensive income
(loss) data:Gross revenues
    
    $
    57,146
    
    
    
    101.6
    %
    
    $
    55,108
    
    
    
    102.8
    %
    
    $
    61,408
    
    
    
    102.8
    %Business tax
    
    
    (903
    )
    
    
    (1.6
    )
    
    
    (1,502
    )
    
    
    (2.8
    )
    
    
    (1,692
    )
    
    
    (2.8
    )Net revenues
    
    
    56,243
    
    
    
    100
    %
    
    
    53,606
    
    
    
    100
    %
    
    
    59,716
    
    
    
    100
    %Cost of revenues
    
    
    (9,367
    )
    
    
    (16.7
    )
    
    
    (8,147
    )
    
    
    (15.2
    )
    
    
    (8,497
    )
    
    
    (14.2
    )Gross profit
    
    
    46,876
    
    
    
    83.3
    
    
    
    45,459
    
    
    
    84.8
    
    
    
    51,219
    
    
    
    85.8Operating expenses:General and administrative
    
    
    (15,371
    )
    
    
    (27.3
    )
    
    
    (16,982
    )
    
    
    (31.7
    )
    
    
    (13,208
    )
    
    
    (22.1
    )Product development
    
    
    (5,635
    )
    
    
    (10.0
    )
    
    
    (10,754
    )
    
    
    (20.1
    )
    
    
    (13,028
    )
    
    
    (21.8
    )Sales and marketing
    
    
    (13,521
    )
    
    
    (24.0
    )
    
    
    (26,095
    )
    
    
    (48.7
    )
    
    
    (26,991
    )
    
    
    (45.2
    )Total operating expenses
    
    
    (34,527
    )
    
    
    (61.4
    )
    
    
    (53,831
    )
    
    
    (100.4
    )
    
    
    (53,227
    )
    
    
    (89.1
    )Government subsidies
    
    
    437
    
    
    
    0.8
    
    
    
    567
    
    
    
    1.1
    
    
    
    514
    
    
    
    0.9Income (loss) from operations
    
    
    12,786
    
    
    
    22.7
    
    
    
    (7,805
    )
    
    
    (14.6
    )
    
    
    (1,494
    )
    
    
    (2.5
    )Interest income
    
    
    1,609
    
    
    
    2.9
    
    
    
    1,352
    
    
    
    2.5
    
    
    
    1,590
    
    
    
    2.7Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (142
    )
    
    
    (0.2
    )Exchange gain, net
    
    
    1,489
    
    
    
    2.6
    
    
    
    2
    
    
    
    
    
    
    
    813
    
    
    
    1.4Gain from trading securities
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    0.1
    
    
    
    1,138
    
    
    
    1.9Other expense, net
    
    
    (169
    )
    
    
    (0.3
    )
    
    
    (258
    )
    
    
    (0.5
    )
    
    
    (7
    )
    
    
    Income (loss) before income taxes
benefit (provision)
    
    
    15,715
    
    
    
    27.9
    
    
    
    (6,668
    )
    
    
    (12.4
    )
    
    
    1,898
    
    
    
    3.2Purchased pre-acquisition earning
    
    
    227
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit (provision)
    
    
    3,047
    
    
    
    5.4
    
    
    
    446
    
    
    
    0.8
    
    
    
    (264
    )
    
    
    (0.4
    )Net income (loss)
    
    
    18,989
    
    
    
    33.8
    
    
    
    (6,222
    )
    
    
    (11.6
    )
    
    
    1,634
    
    
    
    2.7Less: net loss attributable to
noncontrolling interests
    
    
    31
    
    
    
    0.1
    
    
    
    2
    
    
    
    
    
    
    
    326
    
    
    
    0.5Net income (loss) attributable to
China Finance Online Co. Limited
    
    $
    19,020
    
    
    
    33.8
    %
    
    $
    (6,220
    )
    
    
    (11.6
    %)
    
    
    1,960
    
    
    
    3.3
    %
 Year ended December 31, 2010 compared to year ended December 31, 2009
 Revenues
      68




---



##### Table of Contents



Cost of revenues
  Gross profit
  Operating expenses
  General and administrative.
 Product development.
 Sales and marketing.
 Income (loss) from operations
  Interest income
  Interest expense
  Gain from trading securities
  69




---



##### Table of Contents



Income tax benefit (provision)
     Net income / (loss) attributable to the Company
   70




---



##### Table of Contents



Year ended December 31, 2009 compared to year ended December 31, 2008
 Revenues
     Cost of revenues
  Gross profit
  Operating expenses
  General and administrative.
 Product development.
 Sales and marketing.
  71




---



##### Table of Contents



Income (loss) from operations
  Interest income
  Loss from impairment of cost method investment
      Income tax benefit
   72




---



##### Table of Contents



Net income / (loss) attributable to the Company
  B. Liquidity and capital resources.
 Cash flows and working capital
   For the year ended December 31(in thousands of U.S. dollars)
    
    2008
    
    
    2009
    
    
    2010Net cash provided by operating activities
    
    $
    27,849
    
    
    $
    16,231
    
    
    $
    4,585Net cash used in investing activities
    
    
    (7,410
    )
    
    
    (6,472
    )
    
    
    (14,376
    )Net cash provided by financing activities
    
    
    573
    
    
    
    189
    
    
    
    7,153Net increase (decrease) in cash and cash equivalents
    
    
    22,815
    
    
    
    9,847
    
    
    
    (618
    )Cash and cash equivalents at beginning of year
    
    
    74,729
    
    
    
    97,544
    
    
    
    107,391Cash and cash equivalents at end of year
    
    $
    97,544
    
    
    $
    107,391
    
    
    $
    106,773
    Capital resources
    73




---



##### Table of Contents



Restricted net assets
   C. Research and development.
  
    
    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 and content specifically targeting the
high-end subscribers.
 D. Trend information.
   74




---



##### Table of Contents



E. Off-balance sheet arrangements.
  F. Tabular disclosure of contractual obligations.
  Office Premises
    
    
    Data Purchase
    
    
    Total(in U.S. dollars)Less than 1 year
    
    
    2,566,811
    
    
    
    1,414,299
    
    
    
    3,981,0401  3 years
    
    
    1,620,586
    
    
    
    79,239
    
    
    
    1,699,8253  5 years
    
    
    
    
    
    
    
    
    
    
    
  G. Quantitative and qualitative disclosures about market risk.
 Interest rate risk
   Foreign currency risk
   75




---



##### Table of Contents



H. Recently issued accounting pronouncements not yet adopted.
  76




---



##### Table of Contents



77




---



##### Table of Contents



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A. Directors and senior management.
  Name
    
    Age
    
    PositionZhiwei Zhao
    
    
    47
    
    
    Chief Executive Officer and a member of the Board of DirectorsHugo Shong
    
    
    54
    
    
    Chairman of the Board of DirectorsKheng Nam Lee(1)
    
    
    63
    
    
    DirectorLing Wang(1)(2)(3)
    
    
    48
    
    
    DirectorFansheng Guo(1)(2)(3)
    
    
    55
    
    
    DirectorJun (Jeff) Wang
    
    
    40
    
    
    Chief Financial OfficerCaogang Li
    
    
    45
    
    
    Chief Operating OfficerKiang Dalaroy
    
    
    54
    
    
    Chief Strategy Officer
 
 (1)
    
    Member, audit committee(2)
    
    Member, compensation committee(3)
    
    Member, nominations committee   78




---



##### Table of Contents



Biographical Information
 Hugo Shong
 Zhiwei Zhao
 Kheng Nam Lee
 Ling Wang
 Fansheng Guo
 Jun (Jeff) Wang
  79




---



##### Table of Contents



Dr. Caogang Li
 Kiang Dalaroy
 B. Compensation of directors and executive officers.
   Directors and officers liability insurance
  Employees stock option plan
 
  80




---



##### Table of Contents



81




---



##### Table of Contents



:
 Number ofordinary Shares tobe issued upon
    
    
    Exercise price perexercise of options
    
    
    ordinary share
    
    
    Date of grant
    
    Date of expirationZhiwei Zhao
    
    
    400,000
    
    
    $
    1.120
    
    
    November 15, 2005
    
    November 15, 2015400,000
    
    
    $
    1.070
    
    
    July 5, 2006
    
    July 5, 2016800,000
    
    
    $
    0.960
    
    
    January 18, 2007
    
    January 17, 2017750,000
    
    
    $
    1.426
    
    
    February 22, 2010
    
    February 21, 2020Hugo Shong
    
    
    *
    
    
    $
    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, 2020Kheng 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, 2020Fansheng Guo
    
    
    *
    
    
    $
    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, 2020Ling Wang
    
    
    *
    
    
    $
    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, 2020Jun (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, 2020Caogang Li
    
    
    *
    
    
    $
    1.158
    
    
    November 30, 2005
    
    November 30, 2015*
    
    
    $
    0.96
    
    
    January 18, 2007
    
    January 17, 2017*
    
    
    $
    1.426
    
    
    February 22, 2010
    
    February 21, 2020
 *
    
    Upon exercise of all options granted, would beneficially own less than
1% of our outstanding ordinary shares.  82




---



##### Table of Contents



Equity Incentive Plan
   Name
    
    Number
    
    
    PercentSelected EmployeesZhiwei Zhao
    
    
    8,958,493
    
    
    
    8.16
    %Jun (Jeff) Wang
    
    
    *
    
    
    
    *Caogang Li
    
    
    *
    
    
    
    *All executive officers as a group (3 persons)
    
    
    10,558,493
    
    
    
    9.62
    %
    2010 Equity Incentive Plan of Daily Growth Holdings
   83




---



##### Table of Contents



C. Board practices.
  Board committees
  Audit committee.
 
    
    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;
  84




---



##### Table of Contents




    
    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.
 Compensation committee.
 
    
    determining and recommending the compensation of our senior management;
 
    
    reviewing and making recommendations to our board of directors regarding our
compensation policies and forms of compensation provided to our directors and officers;
 
    
    reviewing and determining bonuses for our officers and other employees;
 
    
    reviewing and determining stock-based compensation for our directors, officers,
employees and consultants;
 
    
    administering our equity incentive plans in accordance with the terms thereof; and
 
    
    such other matters that are specifically delegated to the compensation committee by our
board of directors from time to time.
 Nominations committee.
  85




---



##### Table of Contents



Corporate governance
   Duties of directors
   
    
    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.
 Terms of directors and executive officers
   86




---



##### Table of Contents



D. Employees.
    E. Share ownership.
   
    
    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.
  *
    
    Unless otherwise noted, the address of each shareholder is China Finance Online (Beijing) Co.,
Ltd., 9th Floor of Tower C, Corporate Square, No.35 Financial Street, Xicheng District, Beijing,
China 100033.
 Number of SharesBeneficially OwnedName
    
    Number
    
    
    Percent5% ShareholderIDG Technology Venture Investment, Inc.(1)
    
    
    15,670,507
    
    
    
    14.13
    %IDG Technology Venture Investments, LP (2)
    
    
    6,723,115
    
    
    
    6.06
    %Vertex Technology Fund (III) Ltd. (3)
    
    
    7,580,494
    
    
    
    6.84
    %Jianping Lu (4)
    
    
    7,156,121
    
    
    
    6.45
    %Ling Zhang (5)
    
    
    8,746,370
    
    
    
    7.89
    %C&F International Holdings Limited (6)
    
    
    10,558,493
    
    
    
    9.52
    %FMR LLC (7)
    
    
    14,332,020
    
    
    
    12.92
    %Directors and executive officersHugo Shong
    
    
    *
    
    
    
    *Kheng Nam Lee
    
    
    *
    
    
    
    *Ling Wang
    
    
    *
    
    
    
    *Fansheng Guo
    
    
    *
    
    
    
    *Zhiwei Zhao
    
    
    9,275,964
    
    
    
    8.37
    %Jun (Jeff) Wang
    
    
    *
    
    
    
    *Caogang Li
    
    
    *
    
    
    
    *All current directors and executive officers as
a group (7 persons)
    
    
    13,295,164
    
    
    
    11.99
    %
 
 *
    
    Upon exercise of all options currently exercisable
or vesting within 60 days of the date of this
annual report, would beneficially own less than 1%
of our ordinary shares.  87




---



##### Table of Contents



(1)
    
    Includes 15,670,507 ordinary shares held by IDG
Technology Venture Investment, Inc.. IDG Technology
Venture Investment, Inc. is the limited partner of
IDG Technology Venture Investments, LP and does not
control IDG Technology Venture Investments, LP. IDG
Technology Venture Investment, Inc., a
Massachusetts corporation, is wholly owned by
International Data Group Inc., a Massachusetts
corporation, which is controlled by Patrick
McGovern, the majority shareholder, founder and
chairman of International Data Group Inc. IDG
Technology Venture Investment, Inc. disclaims
beneficial ownership of all of the ordinary shares
owned by IDG Technology Venture Investments, LP.
The registered address of IDG Technology Venture
Investment, Inc. is 5 Speen Street, Framingham, MA
01701, U.S.A.(2)
    
    Includes 6,723,115 ordinary shares held by IDG
Technology Venture Investments, LP. The general
partner of IDG Technology Venture Investments, LP
is IDG Technology Venture Investments, LLC. Messrs.
Patrick McGovern 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.
IDG Technology Venture Investment, Inc. is a
limited partner of IDG Technology Venture
Investments, LP, and does not control IDG
Technology Venture Investments, LP. IDG Technology
Venture Investments, LP disclaims beneficial
ownership of all of the ordinary shares owned by
IDG Technology Venture Investment, Inc. The
registered address of IDG Technology Venture
Investments, LP is Corporation Service Company,
1013 Centre Road, Wilmington, County of New Castle,
Delaware 19805-1297, U.S.A.(3)
    
    Includes 7,580,494 ordinary shares held by Vertex
Technology Fund (III) Ltd as of December 31, 2010
in the form of 1,516,098 ADS and 4 ordinary shares.
Vertex Management (II) Pte Ltd is the fund manager
of Vertex Technology Fund (III) Ltd, and may be
deemed to have power to vote and dispose of the
shares held of record by Vertex Technology Fund
(III) Ltd. Vertex Venture Holdings Ltd, as the sole
shareholder of Vertex Technology Fund (III) Ltd,
and as the sole shareholder of Vickers Capital
Limited, which is the sole shareholder of Vertex
Management (II) Pte Ltd, may also be deemed to have
the power to vote and dispose of these shares. The
address of Vertex Technology Fund (III) Ltd is 250
North Bridge Road, #05-01 Raffles City Tower,
Singapore 179101.(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.(6)
    
    Includes 10,558,493 ordinary shares held by C&F
International Holdings Limited, a company
incorporated in British Virgin Islands. C&F
International Holdings Limited holds the ordinary
shares on behalf of and exclusively for the benefit
of the group of employees eligible for the 2007
Equity Incentive Plan. C&F International Holdings
Limited is 100% owned by C&F Global Limited, a
British Virgin Islands Company, which is in turn
owned by the selected employees.  88




---



##### Table of Contents



(7)
    *
    Fidelity Management & Research Company
(Fidelity), a wholly-owned subsidiary of FMR LLC
and an investment adviser registered under Section
203 of the Investment Advisers Act of 1940, is the
beneficial owner of 14,307,020 shares of the common
stock outstanding of China Finance Online Co.
Limited as a result of acting as investment adviser
to various investment companies. The registered
address is 82 Devonshire Street, Boston,
Massachusetts 02109. Edward C. Johnson 3d, Chairman
of FMR LLC, and FMR LLC, through its control of
Fidelity, and the funds each has sole power to
dispose of the 14,307,020 shares owned by the
Funds. Members of the family of Edward C. Johnson
3d, are the predominant owners, directly or through
trusts, of series B voting common shares of FMR
LLC, representing 49% of the voting power of FMR
LLC. The Johnson family group and all other series
B shareholders have entered into a shareholders
voting agreement under which all series B voting
common shares will be voted in accordance with the
majority vote of series B voting common shares.
Accordingly, members of the Johnson family may be
deemed, under the Investment Company Act of 1940,
to form a controlling group with respect to FMR
LLC. Neither FMR LLC nor Edward C. Johnson 3d has
the sole power to vote or direct the voting of the
shares owned directly by the Fidelity Funds, which
power resides with the Funds Boards of Trustees.
Fidelity carries out the voting of the shares under
written guidelines established by the funds boards
of trustees.*    Pyramis Global Advisors Trust Company (PGATC),
an indirect wholly-owned subsidiary of FMR LLC and
a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, is the beneficial
owner of 25,000 shares of the outstanding common
stock of the China Finance Online Co. Limited as a
result of its serving as investment manager of
institutional accounts owning such shares. The
registered address is 900 Salem Street, Smithfield,
Rhode Island, 02917. Edward C. Johnson 3d and FMR
LLC, through its control of Pyramis Global Advisors
Trust Company, each has sole dispositive power over
25,000 shares and sole power to vote or to direct
the voting of 0 shares of common stock owned by the
institutional accounts managed by PGATC as reported
above.*    As of March 31, 2011, FMR LLC holds 8,005,180
shares or 7.22% of the common stock outstanding of
China Finance Online Co. Limited according to the
13G filed with the SEC on April 8, 2011, including
7,980,180 shares held by Fidelity and 25,000 shares
held by PGATC.  
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 A. Major shareholders.
  B. Related party transactions .
 Contractual arrangements with CFO Fuhua and its shareholders.
   89




---



##### Table of Contents



Loan Agreements.
  Purchase Option Agreement .
   90




---



##### Table of Contents



Voting arrangement.
 Share Pledge Agreement .
 Financing support.
 Indemnifications.
 Contractual Arrangements with CFO Chongzhi and Its Individual Shareholders
  
    
    a strategic consulting service agreement between CFO Software and CFO Chongzhi;
 
    
    a technical support agreement between CFO Software and CFO Chongzhi;
  91




---



##### Table of Contents




    
    an operation agreement between CFO Software and CFO Chongzhi;
 
    
    a loan agreement with Xun Zhao and Zhenfei Fan. We entered into a loan agreement with Xun
Zhao and Zhenfei Fan to extend to them a loan in the amount of $65,958 and $80,615,
respectively, for the sole purpose of financing their acquisition of equity interests in CFO
Chongzhi;
 
    
    a purchase option agreement among CFO Software, CFO Chongzhi, Xun Zhao and Zhenfei Fan;
 
    
    voting arrangements with each of Xun Zhao and Zhenfei Fan regarding their voting rights in
CFO Shangtong; and
 
    
    a share pledge agreement among CFO Software, Xun Zhao and Zhenfei Fan.
  Contractual Arrangements with CFO Newrand and Its Individual Shareholders
 Loans to Lin Yang and Linghai Ma .
 Purchase option agreement .
  92




---



##### Table of Contents



Contractual Arrangements with CFO Chuangying and Its Individual Shareholders
  
    
    a strategic consulting and service agreement between CFO Software and CFO Chuangying;
 
    
    a technical support agreement between CFO Software and CFO Chuangying;
 
    
    an operation agreement between CFO Software and CFO Chuangying;
 
    
    a loan agreement with Yang Yang and Zhenfei Fan. We entered into a loan agreement with
Yang Yang and Zhenfei Fan to extend to each of them a loan in the amount of $322,100 and
$263,500, respectively, for the sole purpose of financing their acquisition of equity
interests in CFO Chuangying;
 
    
    a purchase option agreement among CFO Software, CFO Chuangying, Yang Yang and Zhenfei Fan;
and
 
    
    voting arrangements with each of Yang Yang and Zhenfei Fan regarding their voting rights in
CFO Chuangying.
  Contractual Arrangements with CFO Shenzhen Shangtong and Its Individual Shareholders
  
    
    a strategic consulting service agreement between CFO Success and CFO Shenzhen Shangtong;
 
    
    a technical support agreement between CFO Success and CFO Shenzhen Shangtong;
 
    
    an operation agreement between CFO Success and CFO Shenzhen Shangtong;
 
    
    a loan agreement with Lin Yang and Shaoming Shi. We entered into a loan agreement with Lin
Yang and Shaoming Shi to extend to each of them a loan in the amount of $80,500 and $65,900,
respectively, for the sole purpose of financing their acquisition of equity interests in CFO
Shenzhen Shangtong;
  93




---



##### Table of Contents




    
    a purchase option agreement among CFO Success, CFO Shenzhen Shangtong, Lin Yang and
Shaoming Shi;
 
    
    voting arrangements with each of Lin Yang and Shaoming Shi regarding their voting rights in
CFO Shenzhen Shangtong; and
 
    
    a share pledge agreement among CFO Success, Lin Yang and Shaoming Shi.
 Contractual Arrangements with CFO Qicheng and Its Individual Shareholders
  
    
    a strategic consulting service agreement between CFO Chuangying and CFO Qicheng;
 
    
    a technical support agreement between CFO Chuangying and CFO Qicheng;
 
    
    an operation agreement between CFO Chuangying and CFO Qicheng;
 
    
    a loan agreement with Lin Yang and Yang Yang. We entered into a loan agreement with Lin
Yang and Yang Yang to extend to each of them a loan in the amount of $80,500 and $65,900,
respectively, for the sole purpose of financing their acquisition of equity interests in CFO
Qicheng;
 
    
    a purchase option agreement among CFO Chuangying, CFO Qicheng, Lin Yang and Yang Yang;
 
    
    voting arrangements with each of Lin Yang and Yang Yang regarding their voting rights in
CFO Qicheng; and
 
    
    a share pledge agreement among CFO Chuangying, Lin Yang and Yang Yang.
 Contractual Arrangements with other entities and their shareholders
   94




---



##### Table of Contents



Contractual Arrangements in connection with Information and Technology Support
 Information and Technology Support Agreement with CFO Newrand
 Information and Technology Support Agreement with CFO Securities Consulting
 Information and Technology Support Agreement with CFO Chuangying
 2004 Stock Incentive Plan
   95




---



##### Table of Contents



2007 Equity Incentive Plan
    2010 Equity Incentive Plan of Daily Growth Holdings
   96




---



##### Table of Contents



Other related party transactions
 Shareholders Agreement
       
    
    the fifth anniversary of the consummation of our initial public offering, or October 24,
2009;
 
    
    upon such holder holding less than 1% of our outstanding ordinary shares after our
initial public offering; and
 
    
    upon such holder becoming eligible to sell all of such holders registrable securities
pursuant to Rule 144 under the Securities Act within any three-month period without volume
limitations, under Rule 144(k), or under any comparable securities law of a jurisdiction
other than the United States for sale of registrable securities in such jurisdiction.
  97




---



##### Table of Contents



C. Interests of experts and counsel.
  
 ITEM 8. FINANCIAL INFORMATION
 A. Consolidated financial statements and other financial information.
  Legal Proceedings
  Dividend Policy
  B. Significant changes since December 31, 2010 .
  
 ITEM 9. THE OFFER AND LISTING
 A. Offering and listing details.
   98




---



##### Table of Contents



Sales PriceHigh
    
    
    LowYearly highs and lowsYear 2006
    
    
    9.68
    
    
    
    3.95Year 2007
    
    
    47.68
    
    
    
    4.53Year 2008
    
    
    26.15
    
    
    
    4.72Year 2009
    
    
    13.54
    
    
    
    6.97Year 2010
    
    
    9.10
    
    
    
    6.20Quarterly highs and lowsFirst Quarter 2009
    
    
    11.44
    
    
    
    6.97Second Quarter 2009
    
    
    13.54
    
    
    
    9.17Third Quarter 2009
    
    
    13.28
    
    
    
    8.64Fourth Quarter 2009
    
    
    9.25
    
    
    
    7.28First Quarter 2010
    
    
    9.01
    
    
    
    6.86Second Quarter 2010
    
    
    8.19
    
    
    
    6.20Third Quarter 2010
    
    
    8.28
    
    
    
    6.90Fourth Quarter 2010
    
    
    8.59
    
    
    
    6.53First Quarter 2011
    
    
    7.27
    
    
    
    4.32Monthly highs and lowsNovember 2010
    
    
    8.59
    
    
    
    7.32December 2010
    
    
    7.77
    
    
    
    6.53January 2011
    
    
    7.27
    
    
    
    5.65February 2011
    
    
    5.94
    
    
    
    5.07March 2011
    
    
    5.50
    
    
    
    4.32April 2011
    
    
    6.39
    
    
    
    4.22
 B. Plan of distribution.
  C. Markets.
  D. Selling shareholders.
  E. Dilution.
  F. Expenses of the issue.
  
 ITEM 10. ADDITIONAL INFORMATION
 A. Share capital.
   99




---



##### Table of Contents



B. Memorandum and articles of association.
  C. Material contracts.
  D. Exchange controls.
      100




---



##### Table of Contents



E. Taxation.
 Hong Kong taxation
 Profits tax.
  Stamp duty.
 U.S. federal income taxation
  
    
    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;
  101




---



##### Table of Contents




    
    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 resident of the United States for U.S. federal income tax purposes;
 
    
    a corporation, or other entity taxable as a corporation, 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 to be treated as a U.S. person.
  102




---



##### Table of Contents



U.S. Holders
 Dividends on ADSs
    Sales and other dispositions of ADSs
  Passive Foreign Investment Company
  
    
    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).
  103




---



##### Table of Contents




    
    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.
    104




---



##### Table of Contents



Non-U.S. Holders
  
    
    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.
   105




---



##### Table of Contents



U.S. information reporting and backup withholding rules
  Additional Reporting Requirements
  New Legislation Regarding Medicare Tax
   F. Dividends and paying agents.
  G. Statement by experts.
   106




---



##### Table of Contents



H. Documents on display.
  www.sec.gov
  http://ir.chinafinanceonline.com
 I. Subsidiaries information.
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 Debt Securities
  Warrants and Rights
  Other Securities
  American Depository Shares
  107




---



##### Table of Contents



Fees and Charges Payable by ADS Holders
  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
  108




---



##### Table of Contents



Category
    
    Depositary actions
    
    Associated fee(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
 Stock transfer or other taxes and other governmental charges
 Cable, telex and facsimile transmission and delivery charges
 fees for the transfer or registration of deposited securities in connection with the deposit or withdrawal of deposited securities
 Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency)
 Any other charge payable by depositary or its agents in connection with the servicing of the shares or the deposited securities
    
    Expenses payable at the sole discretion of the depositary by billing ADR Holders or by deducting such charges from one or more cash dividends or other cash distributions
   109




---



##### Table of Contents



Fees and Payments from the Depositary to US
  
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  
 ITEM 15. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
    110




---



##### Table of Contents



Managements Annual Report on Internal Control over Financial Reporting
     Report of the Independent Registered Public Accounting Firm
      111




---



##### Table of Contents



ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
    
 ITEM 16B. CODE OF ETHICS
  http://www.chinafinanceonline.com/list/en_CorporateGovernance.shtml.
  112




---



##### Table of Contents



ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  For the Year Ended December 31,2010
    
    
    2009
    
    
    2008Audit Fees(1)
    
    US$
    735,000
    
    
    US$
    735,000
    
    
    US$
    735,000Tax Fees(2)
    
    
    
    
    
    
    
    
    
    
    119,737
 
 (1)
    
    Audit Fees means the aggregate fees in each of the fiscal years listed for
professional services rendered by Deloitte Touche Tohmatsu CPA Ltd. for the audit of our annual
financial statements, review of interim financial statements and attestation services that are
provided in connection with statutory and regulatory filings or engagements.(2)
    
    Tax Fees means the aggregate fees billed in each of the fiscal years listed for
professional tax services rendered by Deloitte Touche Tohmatsu CPA Ltd. 
 ITEM 16D. EXEMPTION FROM THE LISTING STANDARD FOR AUDIT COMMITTEES
  
 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  
 ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  
 ITEM 16G. CORPORATE GOVERNANCE
  
 PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
   113




---



##### Table of Contents



ITEM 19. EXHIBITS
 Index to exhibits
 ExhibitNumber
    
    Description1.1
    
    
    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, 20042.3
    
    
    Shareholders Agreement of China Finance Online Co. Limited dated June 2000
among China Finance Online Co. Limited and certain of its shareholders
(incorporated by reference to Exhibit 4.2 from our Registration Statement
on Form F-1 (File No. 333-119166) filed with the Securities and Exchange
Commission on September 21, 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
    *
    
    Results of 2006 Annual General Meeting4.3
    *
    
    Results of 2009 Annual General Meeting4.4
    *
    
    Results of 2010 Annual General Meeting4.5
    
    
    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)4.6
    
    
    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)4.7
    
    
    Form of Option Agreement with outside consultants and strategic advisors
(incorporated by reference to Exhibit 10.2 from our Registration Statement
on Form F-1 (File No. 333-119166) filed with the Securities and Exchange
Commission on September 21, 2004)4.8
    
    
    Purchase Option and Cooperation Agreement dated May 27, 2004 among China
Finance Online Co. Limited, Jun Ning, Wu Chen and CFO Fuhua Innovation
Technology Development Co., Ltd. (incorporated by reference to Exhibit
10.3 from our Registration Statement on Form F-1 (File No. 333-119166)
filed with the Securities and Exchange Commission on September 21, 2004)4.9
    
    
    Share Pledge Agreement dated May 27, 2004 among Jun Ning, Wu Chen and
China Finance Online (Beijing) Co., Ltd. (incorporated by reference to
Exhibit 10.4 from our Registration Statement on Form F-1 (File No.
333-119166) filed with the Securities and Exchange Commission on September
21, 2004)4.10
    
    
    Proxy from Wu Chen to Jian Feng dated May 27, 2004 (incorporated by
reference to Exhibit 10.6 from our Registration Statement on Form F-1
(File No. 333-119166) filed with the Securities and Exchange Commission on
September 21, 2004)4.11
    
    
    Framework Agreement on Exercising Purchase Option dated November 20, 2006
by and among Jun Ning, Wu Chen, Zhiwei Zhao, CFO Fuhua Innovation
Technology Development Co., Ltd. and China Finance Online (Beijing) Co.,
Ltd. (incorporated by reference to Exhibit 4.7 from our 2006 Annual Report
on Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 29, 2007)4.12
    
    
    Purchase Option and Cooperation Agreement dated November 20, 2006 among
China Finance Online Co. Limited, Zhiwei Zhao, Wu Chen, Fuhua Innovation
Technology Development Co., Ltd. and China Finance Online (Beijing) Co.,
Ltd. (incorporated by reference to Exhibit 4.10 from our 2006 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 29, 2007)
  114




---



##### Table of Contents



ExhibitNumber
    
    Description4.13
    
    
    Share Pledge Agreement dated November 20, 2006 among Zhiwei Zhao, Wu Chen,
Fuhua Innovation Technology Development Co., Ltd. and China Finance Online
(Beijing) Co., Ltd. (incorporated by reference to Exhibit 4.11 from our
2006 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 29, 2007)4.14
    
    
    Equipment Lease Agreement between China Finance Online (Beijing) Co., Ltd.
and Fuhua Innovative Technology Development Co., Ltd. dated May 27, 2004
(incorporated by reference to Exhibit 10.7 from our Registration Statement
on Form F-1 (File No. 333-119166) filed with the Securities and Exchange
Commission on September 21, 2004)4.15
    
    
    Technical Support Agreement between China Finance Online (Beijing) Co.,
Ltd. and Fuhua Innovative Technology Development Co., Ltd. dated May 27,
2004 (incorporated by reference to Exhibit 10.8 from our Registration
Statement on Form F-1 (File No. 333-119166) filed with the Securities and
Exchange Commission on September 21, 2004)4.16
    
    
    Amended and Restated Strategic Consulting Agreement between China Finance
Online (Beijing) Co., Ltd. and Fuhua Innovative Technology Development
Co., Ltd. dated May 27, 2004 (incorporated by reference to Exhibit 10.9
from our Registration Statement on Form F-1 (File No. 333-119166) filed
with the Securities and Exchange Commission on September 21, 2004)4.17
    
    
    Framework Agreement on Exercising Purchase Option dated October 18, 2007
by and among China Finance Online Co. Limited, Wu Chen, Zhiwei Zhao, Jun
Wang, CFO Fuhua Innovation Technology Development Co., Ltd and China
Finance Online (Beijing) Co., Ltd. (incorporated by reference to Exhibit
4.15 from our 2007 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on June 5, 2008)4.18
    
    
    Loan Agreement between China Finance Online Co. Limited and Jun Wang dated
October 18, 2007 (incorporated by reference to Exhibit 4.16 from our 2007
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on June 5, 2008)4.19
    
    
    Share Transfer Contract (related to shares of Beijing Fuhua Innovation
Technology Development Co., Ltd.) dated October 18, 2007 by and between Wu
Chen and Jun Wang (incorporated by reference to Exhibit 4.17 from our 2007
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on June 5, 2008)4.20
    
    
    Share Pledge Agreement dated October 18, 2007 among Zhiwei Zhao, Jun Wang,
Fuhua Innovation Technology Development Co., Ltd. and China Finance Online
(Beijing) Co., Ltd. (incorporated by reference to Exhibit 4.18 from our
2007 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on June 5, 2008)4.21
    
    
    Purchase Option and Cooperation Agreement dated October 18, 2007 among
China Finance Online Co. Limited, Zhiwei Zhao, Jun Wang and CFO Fuhua
Innovation Technology Development Co., Ltd. (incorporated by reference to
Exhibit 4.19 from our 2007 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on June 5, 2008)4.22
    
    
    Purchase Option and Coopration Agreement dated March 3, 2008 among China
Finance Online Co. Limited, Zhiwei Zhao, Jun Wang and CFO Fuhua Innovation
Technology Development Co., Ltd. (incorporated by reference to Exhibit
4.20 from our 2007 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on June 5, 2008)4.23
    
    
    Capital Increase Agreement relating to CFO Fuhua Innovation Technology
Development Co., Ltd. dated March 3, 2008 among CFO Fuhua Innovation
Technology Development Co., Ltd., Jun Wang and Zhiwei Zhao (incorporated
by reference to Exhibit 4.21 from our 2007 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
June 5, 2008)
  115




---



##### Table of Contents



ExhibitNumber
    
    Description4.24
    
    
    Loan Agreement dated March 3, 2008 among China Finance Online (Beijing)
Co., Ltd., Jun Wang and Zhiwei Zhao (incorporated by reference to Exhibit
4.22 from our 2007 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on June 5, 2008)4.25
    
    
    Share Pledge Agreement dated March 3,2008 among Zhiwei Zhao, Jun Wang,
Fuhua Innovation Technology Development Co., Ltd. and China Finance Online
(Beijing) Co., Ltd. (incorporated by reference to Exhibit 4.23 from our
2007 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on June 5, 2008)4.26
    
    
    Loan Agreement dated August 21, 2007 among Fortune Software (Beijing) Co.,
Ltd., Wei Xiong and Zhenfei Fan (incorporated by reference to Exhibit 4.24
from our 2007 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on June 5, 2008)4.27
    
    
    Operation Agreement among dated August 21, 2007 by and between Fortune
Software (Beijing) Co., Ltd. and Beijing CFO Premium Technology Co.,
Ltd.(incorporated by reference to Exhibit 4.25 from our 2007 Annual Report
on Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.28
    
    
    Technical Support Agreement between Fortune Software (Beijing) Co., Ltd.
and Beijing CFO Premium Technology Co., Ltd. dated August 21, 2007
(incorporated by reference to Exhibit 4.26 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.29
    
    
    Strategic Consulting and Service Agreement between Fortune Software
(Beijing) Co., Ltd. and Beijing Premium Technology Co., Ltd. dated August
21, 2007 (incorporated by reference to Exhibit 4.27 from our 2007 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on June 5, 2008)4.30
    
    
    Purchase Option Agreement dated August 21, 2007 among Fortune Software.
Limited, Wei Xiong, Zhenfei Fan and Beijing Premium Technology Co., Ltd.
(incorporated by reference to Exhibit 4.28 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.31
    
    
    Framework Agreement among Fortune Software (Beijing) Co., Ltd., Wu Chen,
Jun Wang and Beijing Glory Co., Ltd. dated September 10, 2007
(incorporated by reference to Exhibit 4.29 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.32
    
    
    Loan Agreement dated September 1, 2007 among Fortune Software (Beijing)
Co., Ltd., Wu Chen and Zhiwei Zhao (incorporated by reference to Exhibit
4.30 from our 2007 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on June 5, 2008)4.33
    
    
    Share Transfer Contract (related to shares of Beijing Glory Co., Ltd.)
dated September 10, 2007 by and between Wu Chen and Jun Wang (incorporated
by reference to Exhibit 4.31 from our 2007 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
June 5, 2008)4.34
    
    
    Operation Agreement dated September 10, 2007 by and between Fortune
Software (Beijing) Co.,Ltd. and Beijing Glory Co., Ltd. (incorporated by
reference to Exhibit 4.32 from our 2007 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on June 5,
2008)4.35
    
    
    Technical Support Agreement between Fortune Software (Beijing) Co., Ltd.
and Beijing CFO Glory Co., Ltd. dated September 10, 2007 (incorporated by
reference to Exhibit 4.33 from our 2007 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on June 5,
2008)
  116




---



##### Table of Contents



ExhibitNumber
    
    Description4.36
    
    
    Strategic Consulting and Service Agreement between Fortune Software
(Beijing) Co., Ltd. and Beijing Glory Co., Ltd. dated September 10, 2007
(incorporated by reference to Exhibit 4.34 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.37
    
    
    Purchase Option Agreement dated September 10, 2007 among China Finance
Online Co. Limited, Jun Wang, Zhiwei Zhao and Beijing Glory Co., Ltd.
(incorporated by reference to Exhibit 4.3 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.38
    
    
    Framework Agreement for Exercise of Purchase Option dated June 2, 2009
among Wei Xiong, Zhenfei Fan, Zhiwei Zhao, Jun Wang, CFO Software and CFO
Premium (incorporated by reference to Exhibit 4.35 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.39
    
    
    Purchase Option Agreement dated June 2, 2009 among CFO Software, CFO
Premium, Zhiwei Zhao and Jun Wang (incorporated by reference to Exhibit
4.36 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 28, 2010)4.40
    
    
    Share Pledge Agreement dated June 2, 2009 among CFO Software, Zhiwei Zhao
and Jun Wang (incorporated by reference to Exhibit 4.37 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.41
    
    
    Loan Agreement dated January 21, 2009 among CFO Software, Yang Yang and
Zhenfei Fan (incorporated by reference to Exhibit 4.92 from our 2008
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 22, 2009)4.42
    
    
    Purchase Option Agreement dated January 21, 2009 among CFO Software, CFO
Chuangying (formerly known as Guangzhou Boxin Investment Advisory Co.,
Ltd.), Yang Yang and Zhenfei Fan (incorporated by reference to Exhibit
4.93 from our 2008 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 22, 2009)4.43
    
    
    Operation Agreement dated February 12, 2009 between CFO Software and CFO
Chuangying (incorporated by reference to Exhibit 4.40 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.44
    
    
    Technical Support Agreement dated February 12, 2009 between CFO Software
and CFO Chuangying (incorporated by reference to Exhibit 4.41 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.45
    
    
    Strategic Consulting and Service Agreement dated February 12, 2009 between
CFO Software and CFO Chuangying (incorporated by reference to Exhibit 4.42
from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 28, 2010)4.46
    
    
    Framework Agreement for Exercise of Purchase Option dated October 15, 2009
among Yang Yang, Zhenfei Fan, Zhiwei Zhao, Jun Wang, CFO Chuangying and
CFO Software (incorporated by reference to Exhibit 4.43 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.47
    
    
    Purchase Option Agreement dated October 15, 2009 among CFO Software, CFO
Chuangying, Zhiwei Zhao and Jun Wang (incorporated by reference to Exhibit
4.44 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 28, 2010)
  117




---



##### Table of Contents



ExhibitNumber
    
    Description4.48
    
    
    Loan Agreement dated August 3, 2009 among CFO Success, Lin Yang and
Shaoming Shi (incorporated by reference to Exhibit 4.45 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.49
    
    
    Share Pledge Agreement dated August 3, 2009 among CFO Success, Lin Yang
and Shaoming Shi (incorporated by reference to Exhibit 4.46 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.50
    
    
    Purchase Option Agreement dated August 3, 2009 among CFO Success, CFO
Shenzhen Shangtong, Lin Yang and Shaoming Shi (incorporated by reference
to Exhibit 4.47 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010)4.51
    
    
    Operation Agreement dated August 3, 2009 between CFO Success and CFO
Shenzhen Shangtong (incorporated by reference to Exhibit 4.48 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.52
    
    
    Technical Support Agreement dated August 3, 2009 between CFO Success and
CFO Shenzhen Shangtong (incorporated by reference to Exhibit 4.49 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.53
    
    
    Strategic Consulting and Service Agreement dated August 3, 2009 between
CFO Success and CFO Shenzhen Shangtong (incorporated by reference to
Exhibit 4.50 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.54
    
    
    Loan Agreement dated November 20, 2009 among CFO Chuangying, Yang Yang and
Lin Yang (incorporated by reference to Exhibit 4.51 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.55
    
    
    Share Pledge Agreement dated November 20, 2009 among CFO Chuangying, Yang
Yang and Lin Yang (incorporated by reference to Exhibit 4.52 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.56
    
    
    Purchase Option Agreement dated November 20, 2009 among CFO Chuangying,
CFO Qicheng, Yang Yang and Lin Yang (incorporated by reference to Exhibit
4.53 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 28, 2010)4.57
    
    
    Operation Agreement dated November 20, 2009 between CFO Chuangying and CFO
Qicheng (incorporated by reference to Exhibit 4.54 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.58
    
    
    Technical Support Agreement dated November 20, 2009 between CFO Chuangying
and CFO Qicheng (incorporated by reference to Exhibit 4.55 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)
  118




---



##### Table of Contents



ExhibitNumber
    
    Description4.59
    
    
    Strategic Consulting and Service Agreement dated November 20, 2009 between
CFO Chuangying and CFO Qicheng (incorporated by reference to Exhibit 4.56
from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 28, 2010)4.60
    
    
    Loan Agreement dated November 25, 2009 among CFO Chuangying, Yang Yang and
Lin Yang (incorporated by reference to Exhibit 4.57 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.61
    
    
    Share Pledge Agreement dated November 25, 2009 among CFO Chuangying, Yang
Yang and Lin Yang (incorporated by reference to Exhibit 4.58 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.62
    
    
    Purchase Option Agreement dated November 25, 2009 among CFO Chuangying,
CFO Yingchuang, Yang Yang and Lin Yang (incorporated by reference to
Exhibit 4.59 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.63
    
    
    Operation Agreement dated November 25, 2009 between CFO Chuangying and CFO
Yingchuang (incorporated by reference to Exhibit 4.60 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.64
    
    
    Technical Support Agreement dated November 25, 2009 between CFO Chuangying
and CFO Yingchuang (incorporated by reference to Exhibit 4.61 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.65
    
    
    Strategic Consulting and Service Agreement dated November 25, 2009 between
CFO Chuangying and CFO Yingchuang (incorporated by reference to Exhibit
4.62 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 28, 2010)4.66
    
    
    Loan agreement dated November 30, 2009 among CFO Chuangying, Ran Yuan and
Zhihong Wang (incorporated by reference to Exhibit 4.63 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.67
    
    
    Share Pledge Agreement dated November 25, 2009 among CFO Chongzhi, Ran
Yuan and Zhihong Wang (incorporated by reference to Exhibit 4.64 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.68
    
    
    Purchase Option Agreement dated November 30, 2009 among CFO Chongzhi, CFO
Decheng, Ran Yuan and Zhihong Wang (incorporated by reference to Exhibit
4.65 from our 2009 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 28, 2010)4.69
    
    
    Operation Agreement dated November 30, 2009 between CFO Chongzhi and CFO
Decheng (incorporated by reference to Exhibit 4.66 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.70
    
    
    Technical Support Agreement dated November 30, 2009 between CFO Chongzhi
and CFO Decheng (incorporated by reference to Exhibit 4.67 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)
  119




---



##### Table of Contents



ExhibitNumber
    
    Description4.71
    
    
    Strategic Consulting and Service Agreement dated November 30, 2009 between
CFO Chongzhi and CFO Decheng (incorporated by reference to Exhibit 4.68
from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 28, 2010)4.72
    
    
    Shanghai Stock Exchange Level-II Quotations License Agreement dated July
30, 2009 between SSE Infonet Ltd. and Fortune Software (Beijing) Co., Ltd.
(certain portions of the agreement have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment) (incorporated by reference to Exhibit 4.69 from
our 2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.73
    
    
    License Agreement relating to the distribution of TopView between Fortune
Software (Beijing) Co., Ltd. and Shanghai Stock Exchange Information
Network Co., Ltd. dated December 26, 2007 (incorporated by reference to
Exhibit 4.37 from our 2007 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on June 5, 2008)4.74
    *
    
    Shenzhen Stock Exchange Proprietary Information License Agreement dated
April 15, 2010 between Fortune Software (Beijing) Co., Ltd. and Shenzhen
Securities Information Co., Ltd. (certain portions of the agreement have
been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment) (incorporated
by reference to Exhibit 4.71 from our 2009 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
May 28, 2010); Appendix I to the Shenzhen Stock Exchange Proprietary
Information License Agreement, dated March 7, 2011 (certain portions of
Appendix I have been omitted and filed separately with the Securities and
Exchange Commission on May 31, 2011 pursuant to a request for confidential
treatment, which request is pending).4.75
    *
    
    Securities Information License Contract dated January 28, 2010 between SSE
Infonet Ltd. and CFO Software (certain portions of the agreement have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment) (incorporated by
reference to Exhibit 4.72 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010); Appendices II and III to the Securities Information License
Contract, dated January 5, 2011 (certain portions of Appendices II and III
have been omitted and filed separately with the Securities and Exchange
Commission on May 31, 2011 pursuant to a request for confidential
treatment, which request is pending).4.76
    *
    
    Shenzhen Stock Exchange Quotations (Web Based Plus Version) License
Agreement dated October 21, 2009 between Shenzhen Securities Information
Co., Ltd. and Fortune Software (Beijing) Co., Ltd. (incorporated by
reference to Exhibit 4.73 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010); Renewal of Shenzhen Stock Exchange Quotations (Web Based Plus
Version) License Agreement dated March 18, 2011.
  120




---



##### Table of Contents



ExhibitNumber
    
    Description4.77
    
    
    Basic Market Prices Agreement dated September 28, 2009 between HKEx
Information Services Limited and China Finance Online Co. Limited (certain
portions of the agreement have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment) (incorporated by reference to Exhibit 4.74 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.78
    *
    
    China Financial Futures Exchange Futures Information License Agreement
dated April 8, 2009 between CFO Software and China Financial Futures
Exchange (certain portions of the agreement have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment) (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 the Supplemental
Agreement have been omitted and filed separately with the Securities and
Exchange Commission on May 31, 2011 pursuant to a request for confidential
treatment, which request is pending).4.79
    
    
    Lease Contract for Housing Unit of Corporate Square dated August 9, 2007
between Fortune Software (Beijing) Co. Ltd. and China Galaxy Securities
Company Limited (incorporated by reference to Exhibit 4.46 from our 2007
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on June 5, 2008)4.80
    
    
    Lease Contract for Housing Unit of Corporate Square dated August 9, 2007
between Beijing Fuhua Innovation Technology Development Co., Ltd. and
China Galaxy Securities Company Limited (incorporated by reference to
Exhibit 4.47 from our 2007 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on June 5, 2008)4.81
    
    
    Lease Contract for Housing Unit of Corporate Square dated August 1, 2007
between China Finance Online (Beijing) Co., Ltd. and China Galaxy
Securities Company Limited (incorporated by reference to Exhibit 4.48 from
our 2007 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on June 5, 2008)4.82
    
    
    Lease Contract for Housing Unit of Corporate Square dated August 1, 2007
between Beijing Fuhua Innovation Technology Development Co., Ltd. and
China Galaxy Securities Company Limited (incorporated by reference to
Exhibit 4.49 from our 2007 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on June 5, 2008)4.83
    
    
    Lease Contract for Housing Unit of Corporate Square dated August 1, 2007
between Fortune Software (Beijing) Co. Ltd. and China Galaxy Securities
Company Limited (incorporated by reference to Exhibit 4.50 from our 2007
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on June 5, 2008)4.84
    
    
    Lease Contract dated June 26, 2009 between China National Precision
Machinery I&E Corp. Beijing Aerospace CPMIEC Building and CFO Wisdom (Unit
619) (incorporated by reference to Exhibit 4.81 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.85
    
    
    Lease Contract dated June 26, 2009 between China National Precision
Machinery I&E Corp. Beijing Aerospace CPMIEC Building and CFO Wisdom (Unit
621) (incorporated by reference to Exhibit 4.82 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.86
    
    
    Lease Contract dated June 26,2009 between China National Precision
Machinery I&E Corp. Beijing Aerospace CPMIEC Building and CFO Wisdom (Unit
622) (incorporated by reference to Exhibit 4.83 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)
  121




---



##### Table of Contents



ExhibitNumber
    
    Description4.87
    
    
    Lease Contract dated June 26, 2009 between China National Precision
Machinery I&E Corp. Beijing Aerospace CPMIEC Building and CFO Success
(Unit 623) (incorporated by reference to Exhibit 4.84 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.88
    
    
    Lease Contract dated June 26,2009 between China National Precision
Machinery I&E Corp. Beijing Aerospace CPMIEC Building and CFO Software
(Unit 626) (incorporated by reference to Exhibit 4.85 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.89
    
    
    Lease Contract dated March 30, 2009 between Beijing Jintai Hengye Co.,
Ltd. House Lease Branch and CFO Wisdom (Unit 1106) (incorporated by
reference to Exhibit 4.86 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010)4.90
    
    
    Suntrans Office Building Lease Contract dated April 30, 2009 between
Beijing Suntrans Real Estate Development Co. Ltd. and CFO Chuangying
(Unit 1125-1136) (incorporated by reference to Exhibit 4.87 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.91
    
    
    Suntrans Office Building Lease Contract dated April 30, 2009 between
Beijing Suntrans Real Estate Development Co. Ltd. CFO Yingchuang (Unit
1137-1140) (incorporated by reference to Exhibit 4.88 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.92
    
    
    Suntrans Office Building Lease Contract dated April 30, 2009 between
Beijing Suntrans Real Estate Development Co. Ltd. and CFO Qicheng (Unit
1141-1144) (incorporated by reference to Exhibit 4.89 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.93
    
    
    Suntrans Office Building Lease Contract dated April 30, 2009 between
Beijing Suntrans Real Estate Development Co. Ltd. and CFO Wisdom (Unit
1145-1148) (incorporated by reference to Exhibit 4.90 from our 2009 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 28, 2010)4.94
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among William Wang, FNG
International Holdings Limited and China Finance Online Co. Limited
(incorporated by reference to Exhibit 4.51 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.95
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Tsang Kin-Woo, FNG
International Holdings Limited and China Finance Online Co., Limited
(incorporated by reference to Exhibit 4.52 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.96
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Wong Chan Miu-Wan Stella,
FNG International Holdings Limited and China Finance Online Co. Limited
(incorporated by reference to Exhibit 4.53 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)
  122




---



##### Table of Contents



ExhibitNumber
    
    Description4.97
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Shun Kin Enterprises
Limited, FNG International Holdings Limited and China Finance Online Co.
Limited (incorporated by reference to Exhibit 4.54 from our 2007 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on June 5, 2008)4.98
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Midopa Enterprises Limited,
FNG International Holdings Limited and China Finance Online Co. Limited
(incorporated by reference to Exhibit 4.55 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.99
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Hung Yung, FNG International
Holdings Limited and China Finance Online Co. Limited (incorporated by
reference to Exhibit 4.56 from our 2007 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on June 5,
2008)4.100
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Chu Ping-Im, FNG
International Holdings Limited and China Finance Online Co. Limited
(incorporated by reference to Exhibit 4.57 from our 2007 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on June 5, 2008)4.101
    
    
    Agreement for the Sale and Purchase of Shares in Daily Growth Investment
Company Limited dated September 7, 2007 among Eternal Growth Investment
Limited, FNG International Holdings Limited and China Finance Online Co.
Limited (incorporated by reference to Exhibit 4.58 from our 2007 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on June 5, 2008)4.102
    
    
    Form of indemnification agreement for directors and officers (incorporated
by reference to Exhibit 10.18 from our Registration Statement on Form F-1
(File No. 333-119166) filed with the Securities and Exchange Commission on
September 21, 2004)4.103
    
    
    Labor Contract of Zhao Zhiwei dated June 21, 20104.104
    
    
    Labor Contract of Jeff Wang dated May 24, 20114.105
    
    
    Form of Amended Change in Control Agreement dated October 15, 2008
(incorporated by reference to Exhibit 4.55 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.106
    
    
    Engagement Letter between China Finance Online Co. Limited and Deloitte
Touche Tohmatsu CPA. Ltd dated February 26, 2008 (incorporated by
reference to Exhibit 4.67 from our 2007 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on June 5,
2008)4.107
    
    
    Loan Agreement dated May 8, 2008 among Fortune Software (Beijing) Co.,
Ltd., Lin Yang and Shaoming Shi (incorporated by reference to Exhibit 4.57
from our 2008 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 22, 2009)4.108
    
    
    Operation Agreement dated June 8, 2008 between Fortune Software (Beijing)
Co., Ltd. and Shanghai Shangtong Information Technology Co., Ltd.
(incorporated by reference to Exhibit 4.58 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.109
    
    
    Technical Support Agreement dated June 8, 2008 between Fortune Software
(Beijing) Co., Ltd. and Shanghai Shangtong Information Technology Co.,
Ltd. (incorporated by reference to Exhibit 4.59 from our 2008 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 22, 2009)
  123




---



##### Table of Contents



ExhibitNumber
    
    Description4.110
    
    
    Strategic Consulting Service Agreement dated June 8, 2008 between Fortune
Software (Beijing) Co., Ltd. and Shanghai Shangtong Information Technology
Co., Ltd. (incorporated by reference to Exhibit 4.60 from our 2008 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 22, 2009)4.111
    
    
    Purchase Option and Cooperation Agreement dated June 8, 2008 among Fortune
Software(Beijing) Co., Ltd., Lin Yang, Shaoming Shi and Shanghai Shangtong
Information Technology Co., Ltd. (incorporated by reference to Exhibit
4.61 from our 2008 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 22, 2009)4.112
    
    
    Share Pledge Agreement dated June 8, 2008 among Lin Yang, Shaoming Shi and
Fortune Software(Beijing) Co., Ltd. (incorporated by reference to Exhibit
4.62 from our 2008 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 22, 2009)4.113
    
    
    Framework Agreement on Exercising Purchase Option dated January 5, 2010 by
and among Shaoming Shi, Lin Yang, Juanjuan Wang, Minghua Wang, Shanghai
Shangtong Co., Ltd. and Fortune Software (Beijing) Co., Ltd. (incorporated
by reference to Exhibit 4.110 from our 2009 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
May 28, 2010)4.114
    
    
    Purchase Option and Cooperation Agreement dated January 5, 2010 among
Fortune Software(Beijing) Co., Ltd., Juanjuan Wang, Minghua Wang and
Shanghai Shangtong Co., Ltd. (incorporated by reference to Exhibit 4.111
from our 2009 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 28, 2010)4.115
    
    
    Share Pledge Agreement dated January 5, 2010 among Juanjuan Wang, Minghua
Wang and Fortune Software(Beijing) Co., Ltd. (incorporated by reference to
Exhibit 4.112 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.116
    
    
    Loan Agreement dated May 8, 2008 among Fortune Software (Beijing) Co.,
Ltd., Zhenfei Fan and Xun Zhao (incorporated by reference to Exhibit 4.63
from our 2008 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 22, 2009)4.117
    
    
    Operation Agreement dated June 8, 2008 between Fortune Software (Beijing)
Co., Ltd. and Shanghai Chongzhi Information Technology Co., Ltd. (also
known as Shanghai Chongzhi Co., Ltd.) (incorporated by reference to
Exhibit 4.64 from our 2008 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 22, 2009)4.118
    
    
    Technical Support Agreement dated June 8, 2008 between Fortune Software
(Beijing) Co., Ltd. and Shanghai Chongzhi Co., Ltd. (incorporated by
reference to Exhibit 4.65 from our 2008 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 22,
2009)4.119
    
    
    Strategic Consulting Service Agreement dated June 8, 2008 between Fortune
Software (Beijing) Co., Ltd. and Shanghai Chongzhi Co., Ltd. (incorporated
by reference to Exhibit 4.66 from our 2008 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
May 22, 2009)4.120
    
    
    Purchase Option and Cooperation Agreement dated June 8, 2008 among Fortune
Software(Beijing) Co., Ltd., Zhenfei Fan, Xun Zhao and Shanghai Chongzhi
Co., Ltd. (incorporated by reference to Exhibit 4.67 from our 2008 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 22, 2009)
  124




---



##### Table of Contents



ExhibitNumber
    
    Description4.121
    
    
    Share Pledge Agreement dated June 8, 2008 among Zhenfei Fan, Xun Zhao and
Fortune Software(Beijing) Co., Ltd. (incorporated by reference to Exhibit
4.68 from our 2008 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 22, 2009)4.122
    
    
    Framework Agreement on Exercising Purchase Option dated January 8, 2010 by
and among Zhenfei Fan, Xun Zhao, Zhengyan Wu, Shanghai Chongzhi Co., Ltd.,
and Fortune Software (Beijing) Co., Ltd. (incorporated by reference to
Exhibit 4.119 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.123
    
    
    Purchase Option and Cooperation Agreement dated January 8, 2010 among
Fortune Software(Beijing) Co., Ltd., Zhengyan Wu, Xun Zhao and Shanghai
Chongzhi Co., Ltd. (incorporated by reference to Exhibit 4.120 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.124
    
    
    Share Pledge Agreement dated January 8, 2010 among Zhengyan Wu, Xun Zhao
and Fortune Software(Beijing) Co., Ltd. (incorporated by reference to
Exhibit 4.121 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.125
    
    
    Loan Agreement dated August 21, 2008 among Fortune Software (Beijing) Co.,
Ltd., Shaoming Shi and Lin Yang (incorporated by reference to Exhibit 4.69
from our 2008 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 22, 2009)4.126
    
    
    Operation Agreement dated October 15, 2008 by and between Fortune Software
(Beijing) Co., Ltd. and Zhongcheng Futong Co., Ltd. (formerly known as
Beijing Tongxinshengshi Environment Engineering Co., Ltd.)(incorporated by
reference to Exhibit 4.70 from our 2008 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 22,
2009)4.127
    
    
    Technical Support Agreement dated October 15, 2008 between Fortune
Software (Beijing) Co., Ltd. and Zhongcheng Futong Co., Ltd. (incorporated
by reference to Exhibit 4.71 from our 2008 Annual Report on Form 20-F
(File No.000-50975) filed with the Securities and Exchange Commission on
May 22, 2009)4.128
    
    
    Strategic Consulting Service Agreement dated October 15, 2008 between
Fortune Software (Beijing) Co., Ltd. and Zhongcheng Futong Co., Ltd.
(incorporated by reference to Exhibit 4.72 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.129
    
    
    Purchase Option Agreement dated October 15, 2008 among Fortune
Software(Beijing) Co., Ltd., Shaoming Shi, Lin Yang and Zhongcheng Futong
Co., Ltd. (incorporated by reference to Exhibit 4.73 from our 2008 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 22, 2009)4.130
    
    
    Framework Agreement on Exercising Purchase Option dated January 5, 2010 by
and among Shaoming Shi, Lin Yang, Dongmei Wang, Wei Cui, Zhongcheng
Futong Co., Ltd. and Fortune Software (Beijing) Co., Ltd. (incorporated by
reference to Exhibit 4.127 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010)
  125




---



##### Table of Contents



ExhibitNumber
    
    Description4.131
    
    
    Purchase Option and Cooperation Agreement dated January 5, 2010 among
Fortune Software(Beijing) Co., Ltd., Dongmei Wang, Wei Cui and Zhongcheng
Futong Co., Ltd. (incorporated by reference to Exhibit 4.128 from our 2009
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 28, 2010)4.132
    
    
    Share Pledge Agreement dated January 5, 2010 among Dongmei Wang, Wei Cui
and Fortune Software(Beijing) Co., Ltd. (incorporated by reference to
Exhibit 4.129 from our 2009 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 28, 2010)4.133
    
    
    Share Transfer Agreement dated August 19, 2008 among Lin Yang, Shaoming
Shi, Xin Wang and Zhihua Yang (incorporated by reference to Exhibit 4.74
from our 2008 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 22, 2009)4.134
    
    
    Loan Agreement dated August 21, 2008 among Fortune Software (Beijing) Co.,
Ltd., Shaoming Shi and Lin Yang (incorporated by reference to Exhibit 4.75
from our 2008 Annual Report on Form 20-F (File No.000-50975) filed with
the Securities and Exchange Commission on May 22, 2009)4.135
    
    
    Operation Agreement dated October 15, 2008 by and between Fortune Software
(Beijing) Co., Ltd. and Huifu Jinyuan Co., Ltd., (formerly known as Wisdom
Door (Beijing) International Culture Spread Co., Ltd.) (incorporated by
reference to Exhibit 4.76 from our 2008 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 22,
2009)4.136
    
    
    Technical Support Agreement dated October 15, 2008 by and between Fortune
Software (Beijing) Co., Ltd. and Huifu Jinyuan Co., Ltd., (incorporated by
reference to Exhibit 4.77 from our 2008 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 22,
2009)4.137
    
    
    Strategic Consulting Service Agreement dated October 15, 2008 between
Fortune Software (Beijing) Co., Ltd. and Huifu Jinyuan Co., Ltd.,
(incorporated by reference to Exhibit 4.78 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.138
    
    
    Purchase Option Agreement dated October 15, 2008 among Fortune
Software(Beijing) Co., Ltd., Shaoming Shi, Lin Yang and Huifu Jinyuan Co.,
Ltd., (incorporated by reference to Exhibit 4.79 from our 2008 Annual
Report on Form 20-F (File No.000-50975) filed with the Securities and
Exchange Commission on May 22, 2009)4.139
    
    
    Share Transfer Agreement dated September 25, 2008 among Lin Yang, Shaoming
Shi, Yiming Li and Xu Wang (incorporated by reference to Exhibit 4.80 from
our 2008 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 22, 2009)4.140
    
    
    Loan Agreement dated October 17, 2008 between Fortune Software (Beijing)
Co., Ltd. and Lin Yang (incorporated by reference to Exhibit 4.81 from our
2008 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 22, 2009)4.141
    
    
    Loan Agreement dated October 17, 2008 among Fortune Software (Beijing)
Co., Ltd., Fortune (Beijing) Success Technology Co., Ltd. and Linghaima
(incorporated by reference to Exhibit 4.82 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.142
    
    
    Purchase Option Agreement dated October 17, 2008 among Fortune Software
(Beijing) Co., Ltd., Shenzhen Newrand Securities Investment and Advisory
Co., Ltd. and Lin Yang (incorporated by reference to Exhibit 4.83 from our
2008 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 22, 2009)
  126




---



##### Table of Contents



ExhibitNumber
    
    Description4.143
    
    
    Purchase Option Agreement dated October 17, 2008 among Fortune Software
(Beijing) Co., Ltd., Fortune (Beijing) Success Technology Co., Ltd.,
Shenzhen Newrand Securities Investment and Advisory Co., Ltd. and Linghai
Ma (incorporated by reference to Exhibit 4.84 from our 2008 Annual Report
on Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.144
    
    
    Share Transfer Agreement dated September 16, 2008 among Linhai Ma, Lin
Yang, Shenzhen Guoxuan Capital Holding Co., Ltd., Labor Union Committee of
Shenzhen Newrand Securities Investment Advisory Co., Ltd., Zhaowen Li and
Shiqin Wang (incorporated by reference to Exhibit 4.85 from our 2008
Annual Report on Form 20-F (File No.000-50975) filed with the Securities
and Exchange Commission on May 22, 2009)4.145
    
    
    Securities Investment and Consultancy Information and Technical Support
Agreement dated October 17, 2009 between Shenzhen Newrand Securities
Investment and Advisory Co., Ltd. and Shenzhen Genius Information
Technology Co., Ltd. (incorporated by reference to Exhibit 4.142 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.146
    
    
    Securities Investment and Consultancy Information and Technical Support
Agreement dated January 27, 2010 between Shanghai Securities Consulting
Co.,Ltd. and Shanghai Meining Computer Software Co., Ltd. (incorporated by
reference to Exhibit 4.143 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010)4.147
    
    
    Securities Investment and Consultancy Information and Technical Support
Agreement dated January 27, 2010 between Beijing Chuangying Securities
Advisory and Investment Co., Ltd. and Beijing Fuhua Innovation Technology
Development Co., Ltd. (incorporated by reference to Exhibit 4.144 from our
2009 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 28, 2010)4.148
    
    
    Loan Agreement dated January 21, 2009 among Fortune Software (Beijing)
Co., Ltd., Yang Yang and Zhenfei Fan (incorporated by reference to Exhibit
4.92 from our 2008 Annual Report on Form 20-F (File No.000-50975) filed
with the Securities and Exchange Commission on May 22, 2009)4.149
    
    
    Lease Contract dated January 10, 2008 between Shanghai Lushi Food Co.,
Ltd. and Shanghai Meining Computer Software Co., Ltd. (incorporated by
reference to Exhibit 4.96 from our 2008 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 22,
2009)4.150
    
    
    Lease Contract dated April 10, 2008 between Shenzhen Zhiguangda Industrial
Development Co., Ltd. and Shenzhen Genius Information Technology Co., Ltd.
(incorporated by reference to Exhibit 4.99 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.151
    *
    
    Renewal of Lease Contract dated May 1, 2011 between Shenzhen Zhiguangda
Industrial Development Co., Ltd. and Shenzhen Genius Information
Technology Co., Ltd.4.152
    *
    
    Lease Contract dated June 1, 2010 between Shanghai Zhangjiang
Micro-electronics Port Co. Ltd. and Zhengning Information & Technology
(Shanghai) Co., Ltd. (certain portions of Appendices II and III have been
omitted and filed separately with the Securities and Exchange Commission
on May 31, 2011 pursuant to a request for confidential treatment, which
request is pending).4.153
    
    
    Entrusted Loan Contract dated May 7, 2008 among Fortune (Beijing) Success
Technology Co., Ltd., Beijing Glory Co., Ltd. and China Bohai Bank Co.,
Ltd. Beijing Branch (incorporated by reference to Exhibit 4.100 from our
2008 Annual Report on Form 20-F (File No.000-50975) filed with the
Securities and Exchange Commission on May 22, 2009)
  127




---



##### Table of Contents



ExhibitNumber
    
    Description4.154
    
    
    Entrusted Loan Contract dated December 11, 2007 among Beijing Glory Co.,
Ltd., Fortune Software (Beijing) Co., Ltd. and China Construction Bank
(incorporated by reference to Exhibit 4.101 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)4.155
    
    
    Entrusted Loan Contract dated April 11, 2008 between Beijing Premium
Technology Co., Ltd., Zhengning Information Technology (Shanghai) Co.,
Ltd. and China Construction Bank Corporation (incorporated by reference to
Exhibit 4.102 from our 2008 Annual Report on Form 20-F (File No.000-50975)
filed with the Securities and Exchange Commission on May 22, 2009)4.156
    
    
    Entrusted Loan Contract dated January 12, 2009 among CFO Success, CFO
Glory and Hua Xia Bank Co, Ltd. Beijing Zizhuqiao Branch (incorporated by
reference to Exhibit 4.151 from our 2009 Annual Report on Form 20-F (File
No.000-50975) filed with the Securities and Exchange Commission on May 28,
2010)4.157
    
    
    Issuer Information Feed Service Agreement dated February 13, 2009 between
HKEx Information Service Limited and Fortune Software (Beijing) Co., Ltd.
(incorporated by reference to Exhibit 4.103 from our 2008 Annual Report on
Form 20-F (File No.000-50975) filed with the Securities and Exchange
Commission on May 22, 2009)8.1
    *
    
    List of principle subsidiaries and significant PRC-incorporated affiliates12.1
    *
    
    CEO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) (17
CFR 240.13a-14(a)) or Rule 15d-1(a) (17 CFR 240.15d-14(a))12.2
    *
    
    CFO Certification Pursuant to Rule 13a-14(a) (17 CFR 240.13a-14(a)) or
Rule 15d-1(a) (17 CFR 240.15d-14(a))13.1
    *
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    *
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    *
    
    Consent of Deloitte Touche Tohmatsu CPA Ltd.15.2
    *
    
    Written Consent of American Appraisal China Limited
  128




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
SIGNATURE
  Date: May 31, 2011
    CHINA FINANCE ONLINE CO. LIMITED/s/ Jeff WangName:
    Jeff WangTitle:
    Chief Financial Officer  129




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 CONTENTS
    
    PAGEREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F  1CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2010
    
    
    F  2CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
    
    
    F  4CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
    
    
    F  5CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
    
    
    F  6NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    F  7FINANCIAL STATEMENT SCHEDULE 1  FINANCIAL INFORMATION OF PARENT COMPANY
    
    
    F  47




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  SHAREHOLDERS OF CHINA FINANCE ONLINE CO. LIMITED
      
  F-1




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except share-related data)
 December 31,2009
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    107,391,084
    
    
    $
    106,773,478Restricted cash
    
    
    
    
    
    
    14,533,347Prepaid expenses and other current assets
    
    
    4,281,137
    
    
    
    4,077,398Trust bank balances held on behalf of customers
    
    
    13,310,238
    
    
    
    9,625,461Accounts receivable  margin clients, net of allowance for doubtful accounts
of nil and nil in 2009 and 2010, respectively
    
    
    2,724,456
    
    
    
    8,095,396Accounts receivable  others, net of allowance for doubtful accounts
of $31,440 and $36,039 in 2009 and 2010, respectively
    
    
    2,644,696
    
    
    
    3,634,653Trading securities
    
    
    67,588
    
    
    
    31,272Deferred tax assets, current
    
    
    3,236,810
    
    
    
    3,634,120Total current assets
    
    
    133,656,009
    
    
    
    150,405,125Property and equipment, net
    
    
    10,268,480
    
    
    
    8,276,275Acquired intangible assets, net
    
    
    4,779,101
    
    
    
    4,349,181Cost method investment
    
    
    1,479,571
    
    
    
    1,479,571Rental deposits
    
    
    725,261
    
    
    
    718,800Goodwill
    
    
    12,602,699
    
    
    
    12,949,587Other assets
    
    
    219,473
    
    
    
    231,107Deferred tax assets, non-current
    
    
    1,878,843
    
    
    
    1,680,936Total assets
    
    $
    165,609,437
    
    
    $
    180,090,582Liabilities and shareholders equityCurrent liabilities:Deferred revenue, current (including deferred revenue, current of the consolidated
variable interest entities without recourse to China Finance Online Co. Limited
$9,089,776 and $13,340,978 as of December 31, 2009 and December 31, 2010,
respectively)
    
    $
    30,620,060
    
    
    $
    32,994,717Accrued expenses and other current liabilities (including accrued expenses and
other current liabilities of the consolidated variable interest entities without recourse
to China Finance Online Co. Limited $1,272,280 and $2,659,121 as of December 31, 2009
and December 31, 2010, respectively)
    
    
    8,244,867
    
    
    
    10,838,363Amounts due to customers for the trust bank balances held on their behalf
    
    
    13,310,238
    
    
    
    9,625,461Short-term loan
    
    
    
    
    
    
    6,424,093Accounts payable (including accounts payable of the consolidated variable interest
entities without recourse to China Finance Online Co. Limited $12,046 and $31,498
as of December 31, 2009 and December 31, 2010, respectively)
    
    
    101,646
    
    
    
    221,084Income taxes payable (including income taxes payable of the consolidated variable
interest entities without recourse to China Finance Online Co. Limited $122,783 and $93,956
as of December 31, 2009 and December 31, 2010, respectively)
    
    
    123,880
    
    
    
    155,394Total current liabilities
    
    
    52,400,691
    
    
    
    60,259,112Deferred revenue, non-current (including deferred revenue, non-current of the consolidated
variable interest entities without recourse to China Finance Online Co. Limited $4,852,430 and
$4,961,948 as of December 31, 2009 and December 31, 2010, respectively)
    
    
    14,547,248
    
    
    
    13,021,678Deferred tax
liabilities, non-current (including deferred tax liabilities,
non-current of the consolidated variable interest entities without
recourse to China Finance Online Co. Limited $983,934 and $947,758 as
of December 31, 2009 and December 31, 2010, respectively)
    
    
    994,573
    
    
    
    966,689Total liabilities
    
    
    67,942,512
    
    
    
    74,247,479
  F-2




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 CONSOLIDATED BALANCE SHEETS  continued
(In U.S. dollars, except share-related data)
 December 31,2009
    
    
    2010Commitments (Note 20)Equity:China Finance Online Co. Limited shareholders equity:Ordinary shares ($0.00013 par value; 500,000,000 shares authorized
as of December 31, 2009 and 2010, respectively; 110,250,163 and 110,887,883
shares issued and outstanding as of December 31, 2009 and 2010, respectively)
    
    
    14,237
    
    
    
    14,319Additional paid-in capital
    
    
    74,130,609
    
    
    
    78,974,697Accumulated other comprehensive income
    
    
    6,342,765
    
    
    
    8,030,982Retained earnings
    
    
    16,919,785
    
    
    
    18,879,907Total China Finance Online Co. Limited shareholders equity
    
    
    97,407,396
    
    
    
    105,899,905Noncontrolling interest
    
    
    259,529
    
    
    
    (56,802
    )Total equity
    
    
    97,666,925
    
    
    
    105,843,103Total liabilities and equity
    
    $
    165,609,437
    
    
    $
    180,090,582
   F-3




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollars, except share-related data)
 Years ended December 31,2008
    
    
    2009
    
    
    2010Net revenues
    
    $
    56,242,768
    
    
    $
    53,605,877
    
    
    $
    59,716,042Cost of revenues
    
    
    9,367,143
    
    
    
    8,146,724
    
    
    
    8,497,145Gross profit
    
    
    46,875,625
    
    
    
    45,459,153
    
    
    
    51,218,897Operating expenses:General and administrative (including share-based
compensation of $7,767,874, $6,436,536 and $4,152,437
for 2008, 2009 and 2010, respectively)
    
    
    15,371,171
    
    
    
    16,982,032
    
    
    
    13,208,337Product development (including share-based compensation of
$59,200, $56,505 and $151,255 for 2008, 2009 and 2010, respectively)
    
    
    5,635,173
    
    
    
    10,754,380
    
    
    
    13,027,879Sales and marketing (including share-based compensation
of $213,076, $107,675 and $215,979 for 2008, 2009
and 2010, respectively)
    
    
    13,520,295
    
    
    
    26,095,233
    
    
    
    26,991,093Total operating expenses
    
    
    34,526,639
    
    
    
    53,831,645
    
    
    
    53,227,309Government subsidies
    
    
    436,946
    
    
    
    567,373
    
    
    
    514,113Income (loss) from operations
    
    
    12,785,932
    
    
    
    (7,805,119
    )
    
    
    (1,494,299
    )Interest income
    
    
    1,609,112
    
    
    
    1,352,307
    
    
    
    1,590,218Interest expense
    
    
    
    
    
    
    
    
    
    
    (142,169
    )Exchange gain, net
    
    
    1,489,076
    
    
    
    1,874
    
    
    
    812,969Gain from trading securities
    
    
    
    
    
    
    40,574
    
    
    
    1,138,147Other expense, net
    
    
    (168,536
    )
    
    
    (257,674
    )
    
    
    (7,321
    )Income (loss) before income tax benefit (expense)
    
    
    15,715,584
    
    
    
    (6,668,038
    )
    
    
    1,897,545Income tax benefit (expense)
    
    
    3,047,129
    
    
    
    446,164
    
    
    
    (263,386
    )Purchased pre-acquisition earning
    
    
    226,769
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    18,989,482
    
    
    $
    (6,221,874
    )
    
    $
    1,634,159Less: net loss attributable to the noncontrolling interest
    
    
    (30,633
    )
    
    
    (2,131
    )
    
    
    (325,963
    )Net income (loss) attributable to China Finance Online Co. Limited
    
    $
    19,020,115
    
    
    $
    (6,219,743
    )
    
    $
    1,960,122Net income (loss) per share attributable to China Finance
Online Co. LimitedBasic
    
    $
    0.19
    
    
    $
    (0.06
    )
    
    $
    0.02Diluted
    
    $
    0.17
    
    
    $
    (0.06
    )
    
    $
    0.02Weighted average shares used in calculating net income (loss) per shareBasic
    
    
    98,957,993
    
    
    
    105,203,564
    
    
    
    108,247,552Diluted
    
    
    112,984,532
    
    
    
    105,203,564
    
    
    
    114,125,022
   F-4




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 CONSOLIDATED STATEMENTS OF EQUITY
AND COMPREHENSIVE INCOME
(In U.S. dollars, except share-related data)
 Accumulated other
    
    
    
    
    
    
    Total China Finance
    
    
    Non
    
    
    
    
    
    
    TotalOrdinary shares
    
    
    Additional
    
    
    comprehensive
    
    
    Retained
    
    
    Online Co. Limited
    
    
    controlling
    
    
    Total
    
    
    comprehensiveShares
    
    
    Amount
    
    
    paid-in capital
    
    
    income (loss)
    
    
    earnings
    
    
    shareholders equity
    
    
    interest
    
    
    equity
    
    
    income (loss)Balance as of January 1, 2008
    
    
    109,754,433
    
    
    
    14,172
    
    
    
    58,727,378
    
    
    
    4,501,432
    
    
    
    4,119,413
    
    
    
    67,362,395
    
    
    
    471,431
    
    
    
    67,833,826Exercise of share options by employees
    
    
    
    
    
    
    
    
    
    
    531,449
    
    
    
    
    
    
    
    
    
    
    
    531,449
    
    
    
    
    
    
    
    531,449Exercise of share options by non-employees
    
    
    260,000
    
    
    
    34
    
    
    
    41,566
    
    
    
    
    
    
    
    
    
    
    
    41,600
    
    
    
    
    
    
    
    41,600Share-based compensation
    
    
    
    
    
    
    
    
    
    
    8,040,150
    
    
    
    
    
    
    
    
    
    
    
    8,040,150
    
    
    
    
    
    
    
    8,040,150Acquisition of noncontrolling interest
of Daily Growth Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (440,798
    )
    
    
    (440,798
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,946,646
    
    
    
    
    
    
    
    1,946,646
    
    
    
    
    
    
    
    1,946,646
    
    
    
    1,946,646Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,020,115
    
    
    
    19,020,115
    
    
    
    (30,633
    )
    
    
    18,989,482
    
    
    
    18,989,482Balance as of December 31, 2008
    
    
    110,014,433
    
    
    
    14,206
    
    
    
    67,340,543
    
    
    
    6,448,078
    
    
    
    23,139,528
    
    
    
    96,942,355
    
    
    
    
    
    
    
    96,942,355
    
    
    
    20,936,128Exercise of share options by employees
    
    
    185,730
    
    
    
    24
    
    
    
    181,357
    
    
    
    
    
    
    
    
    
    
    
    181,381
    
    
    
    
    
    
    
    181,381Exercise of share options by non-employees
    
    
    50,000
    
    
    
    7
    
    
    
    7,993
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    8,000Share-based compensation
    
    
    
    
    
    
    
    
    
    
    6,600,716
    
    
    
    
    
    
    
    
    
    
    
    6,600,716
    
    
    
    
    
    
    
    6,600,716Acquisition of CFO Securities Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261,660
    
    
    
    261,660Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,313
    )
    
    
    
    
    
    
    (105,313
    )
    
    
    
    
    
    
    (105,313
    )
    
    
    (105,313
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,219,743
    )
    
    
    (6,219,743
    )
    
    
    (2,131
    )
    
    
    (6,221,874
    )
    
    
    (6,221,874
    )Balance as of December 31, 2009
    
    
    110,250,163
    
    
    
    14,237
    
    
    
    74,130,609
    
    
    
    6,342,765
    
    
    
    16,919,785
    
    
    
    97,407,396
    
    
    
    259,529
    
    
    
    97,666,925
    
    
    
    (6,327,187
    )Exercise of share options by employees
    
    
    637,720
    
    
    
    82
    
    
    
    717,175
    
    
    
    
    
    
    
    
    
    
    
    717,257
    
    
    
    
    
    
    
    717,257Share-based compensation
    
    
    
    
    
    
    
    
    
    
    4,504,806
    
    
    
    
    
    
    
    
    
    
    
    4,504,806
    
    
    
    14,865
    
    
    
    4,519,671Acquisition of noncontrolling interest
of CFO Securities Consulting
    
    
    
    
    
    
    
    
    
    
    (377,893
    )
    
    
    
    
    
    
    
    
    
    
    (377,893
    )
    
    
    (5,233
    )
    
    
    (383,126
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,688,217
    
    
    
    
    
    
    
    1,688,217
    
    
    
    
    
    
    
    1,688,217
    
    
    
    1,688,217Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,960,122
    
    
    
    1,960,122
    
    
    
    (325,963
    )
    
    
    1,634,159
    
    
    
    1,634,159Balance as of December 31, 2010
    
    
    110,887,883
    
    
    
    14,319
    
    
    
    78,974,697
    
    
    
    8,030,982
    
    
    
    18,879,907
    
    
    
    105,899,905
    
    
    
    (56,802
    )
    
    
    105,843,103
    
    
    
    3,322,376
   F-5




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars)
 Years ended December 31,2008
    
    
    2009
    
    
    2010Operating activities:Net income (loss)
    
    $
    18,989,482
    
    
    $
    (6,221,874
    )
    
    $
    1,634,159Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Share-based compensation
    
    
    8,040,150
    
    
    
    6,600,716
    
    
    
    4,519,671Depreciation and amortization
    
    
    2,139,145
    
    
    
    2,987,094
    
    
    
    3,610,026Provision of allowance for doubtful accounts
    
    
    
    
    
    
    
    
    
    
    238,077Gain from trading securities
    
    
    
    
    
    
    (40,574
    )
    
    
    (1,138,147
    )Deferred taxes
    
    
    (3,200,390
    )
    
    
    (917,284
    )
    
    
    (99,475
    )Loss on disposal of property and equipment
    
    
    37,659
    
    
    
    182,235
    
    
    
    53,547Purchased pre-acquisition earning
    
    
    (226,769
    )
    
    
    
    
    
    
    Changes in assets and liabilities:Accounts receivable, others
    
    
    (711,933
    )
    
    
    (722,778
    )
    
    
    (971,341
    )Accounts receivable, margin clients
    
    
    (580,453
    )
    
    
    (1,774,224
    )
    
    
    (5,390,473
    )Prepaid expenses and other current assets
    
    
    (5,567,706
    )
    
    
    4,648,114
    
    
    
    157,930Advances to employees
    
    
    1,597,941
    
    
    
    160,634
    
    
    
    Trust bank balances held on behalf of customers
    
    
    854,063
    
    
    
    (11,305,861
    )
    
    
    3,642,887Rental deposits
    
    
    (74,487
    )
    
    
    (133,601
    )
    
    
    20,021Deferred revenue
    
    
    9,943,656
    
    
    
    8,206,417
    
    
    
    (540,386
    )Account payable
    
    
    (182,528
    )
    
    
    (113,289
    )
    
    
    108,382Accrued expenses and other current liabilities
    
    
    (2,482,122
    )
    
    
    3,387,725
    
    
    
    2,355,637Amounts due to customers for the trust bank balance held on their behalf
    
    
    (854,063
    )
    
    
    11,305,861
    
    
    
    (3,642,887
    )Income taxes payable
    
    
    126,961
    
    
    
    (18,097
    )
    
    
    27,067Net cash provided by operating activities
    
    
    27,848,606
    
    
    
    16,231,214
    
    
    
    4,584,695Investing activities:Purchase of property and equipment
    
    
    (5,006,365
    )
    
    
    (4,514,342
    )
    
    
    (906,296
    )Acquisition of businesses (net of cash acquired of $1,521,109, $8,282 and
nil for the years ended December 31, 2008, 2009, and 2010, respectively)
    
    
    (2,403,620
    )
    
    
    (1,932,472
    )
    
    
    (89,335
    )Consideration paid for acquiring noncontrolling interest of CFO Securities
Consulting
    
    
    
    
    
    
    
    
    
    
    (383,126
    )Purchase of trading securities
    
    
    
    
    
    
    (267,782
    )
    
    
    (5,616,027
    )Proceeds from sales of trading securities
    
    
    
    
    
    
    240,775
    
    
    
    6,830,374Restricted cash
    
    
    
    
    
    
    
    
    
    
    (14,216,294
    )Proceeds from disposal of fixed assets
    
    
    
    
    
    
    1,468
    
    
    
    4,936Net cash used in investing activities
    
    
    (7,409,985
    )
    
    
    (6,472,353
    )
    
    
    (14,375,768
    )Financing activities:Proceeds from stock options exercised by employees
    
    
    531,449
    
    
    
    181,381
    
    
    
    717,257Proceeds from exercise of options granted to non-employee
    
    
    41,600
    
    
    
    8,000
    
    
    
    Proceeds from short-term loan
    
    
    
    
    
    
    
    
    
    
    6,435,586Net cash provided by financing activities
    
    
    573,049
    
    
    
    189,381
    
    
    
    7,152,843Effect of exchange rate changes
    
    
    1,803,516
    
    
    
    (101,377
    )
    
    
    2,020,624Net increase (decrease) in cash and cash equivalents
    
    
    22,815,186
    
    
    
    9,846,865
    
    
    
    (617,606
    )Cash and cash equivalents, beginning of year
    
    
    74,729,033
    
    
    
    97,544,219
    
    
    
    107,391,084Cash and cash equivalents, end of year
    
    
    97,544,219
    
    
    
    107,391,084
    
    
    
    106,773,478Supplemental disclosure of cash flow informationIncome taxes paid
    
    $
    169,270
    
    
    $
    515,782
    
    
    $
    377,970
   F-6




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 1.
    
    ORGANIZATION AND PRINCIPAL ACTIVITIES
 China Finance Online Co. Limited (China Finance Online or the Company) was incorporated
in Hong Kong on November 2, 1998. China Finance Online and its subsidiaries including its
variable interest entities (collectively, the Group) are principally providing vertically
integrated financial services including news, data, analytics and brokerage through web
portals, software systems, and mobile handsets.
 Details of China Finance Onlines significant subsidiaries and variable interest entities as
of December 31, 2010 were as follows:
 Place of
    
    Date of
    
    legalincorporation or
    
    incorporation or
    
    ownership
    
    
    PrincipalCompany name
    
    establishment
    
    acquisition
    
    interest
    
    
    activitySubsidiaries:China Finance Online (Beijing) Co., Ltd. (CFO Beijing)
    
    Beijing, PRC
    
    Jul. 9, 1998
    
    
    100
    %
    
    Subscription serviceFortune Software (Beijing) Co., Ltd. (CFO Software)
    
    Beijing, PRC
    
    Dec. 7, 2004
    
    
    100
    %
    
    Subscription serviceFortune (Beijing) Success Technology Co., Ltd. (CFO Success)
    
    Beijing, PRC
    
    Oct. 16, 2007
    
    
    100
    %
    
    Subscription serviceShenzhen Genius Information Technology Co., Ltd. (CFO Genius)
    
    Shenzhen, PRC
    
    Sep. 21, 2006
    
    
    100
    %
    
    Subscription serviceJujin Software (Shenzhen) Co., Ltd. (CFO Jujin)
    
    Shenzhen, PRC
    
    Mar. 9, 2007
    
    
    100
    %
    
    Subscription serviceStockstar Information Technology (Shanghai) Co., Ltd. (CFO Stockstar)
    
    Shanghai, PRC
    
    Oct. 1, 2006
    
    
    100
    %
    
    Subscription serviceZhengning Information & Technology (Shanghai) Co., Ltd.
(CFO Zhengning)
    
    Shanghai, PRC
    
    Jan. 31, 2007
    
    
    100
    %
    
    Subscription serviceDaily Growth Financial Holdings Limited (Daily Growth Holdings)
    
    BVI
    
    Jul. 16, 2007
    
    
    85
    %
    
    Investment holdingsDaily Growth Securities Limited (Daily Growth Securities) (Note 3)
    
    Hong Kong, PRC
    
    Nov. 23, 2007
    
    
    85
    %
    
    Brokerage serviceDaily Growth Futures Limited (Daily Growth Futures)
    
    Hong Kong, PRC
    
    Apr. 16, 2008
    
    
    85
    %
    
    Brokerage serviceDaily Growth Wealth Management Limited
(Daily Growth Wealth Management)
    
    Hong Kong, PRC
    
    Oct. 8, 2008
    
    
    85
    %
    
    Securities advisingDaily Growth Investment Services Limited
(Daily Growth Investment Services)
    
    HongKong, PRC
    
    Jun. 30, 2009
    
    
    85
    %
    
    N/AHong Kong Genius Information Technology Co., Ltd. (CFO HK Genius)
    
    HongKong, PRC
    
    May. 18, 2010
    
    
    100
    %
    
    N/AVariable interest entities:Beijing Fuhua Innovation Technology Investment Co., Ltd. (CFO Fuhua)
    
    Beijing, PRC
    
    Dec. 31, 2000
    
        Nil    
    
    Web portal and advertising serviceShanghai Chongzhi Co., Ltd., (CFO Chongzhi)
    
    Shanghai, PRC
    
    Jun. 6, 2008
    
        Nil    
    
    Subscription serviceFortune (Beijing) Qicheng Technology Co., Ltd. (CFO Qicheng)
    
    Beijing, PRC
    
    Dec. 18, 2009
    
        Nil    
    
    N/ABeijing Chuangying Securities Advisory and Investment Co., Ltd.
(CFO Chuangying) (Note 3)
    
    Beijing, PRC
    
    Jan. 9, 2009
    
        Nil    
    
    Securities investment advisingShenzhen Newrand Securities Advisory and Investment Co., Ltd.
(CFO Newrand ) (Note 3)
    
    Shenzhen, PRC
    
    Oct. 17, 2008
    
        Nil    
    
    Securities investment advisingShenzhen Shangtong Software Co., Ltd. (CFO Shenzhen Shangtong)
    
    Shenzhen, PRC
    
    Sep. 23, 2009
    
        Nil    
    
    Subscription serviceSubsidiaries of variable interest entities:Shanghai Meining Computer Software Co., Ltd. (CFO Meining)
    
    Shanghai, PRC
    
    Oct. 1, 2006
    
        Nil    
    
    Web portal, subscription and SMSShenzhen Newrand Securities Training Center (CFO Newrand Training)
    
    Shenzhen, PRC
    
    Oct. 17, 2008
    
        Nil    
    
    Securities investment trainingShanghai Stockstar Securities Advisory and Investment Co., Ltd
(former name: Shanghai Securities Consulting Co., Ltd)
(CFO Securities Consulting) (Note 3)
    
    Shanghai, PRC
    
    Nov. 5, 2009
    
        Nil    
    
    Securities investment advising
 PRC regulations prohibit direct foreign ownership of business entities providing
certain services in PRC, such as internet content service and securities investment advisory
service. In order to comply with these regulations, China Finance Online, through its
subsidiaries, entered into contractual arrangements with the Companys variable interest
entities (VIEs) and their equity owners who are PRC citizens as follows:
 The Group made loans to the shareholders of the VIEs solely for the purposes of capitalizing
the VIEs. Pursuant to the loan agreements, these loans can only be repaid by transferring
all of their interests in the VIEs to the Group or a third party designated by the Group.
  F-7




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 1.
    
    ORGANIZATION AND PRINCIPAL ACTIVITIES  continued
 The Group has entered into agreements with the VIEs and their shareholders that provide the
Group with the substantial ability to control the VIEs. Pursuant to these contractual
arrangements:
 
    
    the shareholders of the VIEs have granted the Group or individuals designated by the
Group an irrevocable proxy to exercise all their voting rights as shareholders of the
VIEs, including the right to appoint directors, the general manager and other senior
management of the VIEs;
 
    
    the VIEs will not enter into any transaction that may materially affect its assets,
liabilities, equity or operations without the Groups prior written consent;
 
    
    the VIEs will not distribute any dividends;
 
    
    the Group may purchase the entire equity interest in, or all the assets of the VIEs
at a price equal to the total principal amount of the loan lent by the Group to the
owners of the VIEs when and if such purchase is permitted by PRC law or the current
shareholders of the VIEs cease to be directors or employees of the VIEs;
 
    
    the shareholders of the VIEs will not transfer, sell, pledge, dispose of or create
any encumbrance on their equity interest in the VIEs without the prior written consent
of the Group.
 The Group has entered into a series of contractual arrangements with each VIE and its
individual shareholders, pursuant to which the Group provides services to the VIEs in
exchange for fees. The principal services agreements that the Group has entered into with
VIEs include:
 
    
    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;
 
    
    operating support services agreement, pursuant to which the amount of the fee to be
charged is 40% of each VIEs income before tax;
 Through the above contractual arrangements, the Group has the right to determine the amount
of these fees and they are intended to transfer substantially all of the economic benefits
of each VIE to the Company.
  F-8




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 1.
    
    ORGANIZATION AND PRINCIPAL ACTIVITIES  continued
 Details of significant VIEs and their counterparts which substantially control the VIEs as
of December 31, 2010 were as follows:
 VIE Name
    
    Contractual Arrangement Date
    
    CounterpartCFO Fuhua
    
    May 27, 2004
    
    CFO BeijingCFO Chongzhi
    
    June 8, 2008
    
    CFO SoftwareCFO Newrand
    
    October 17, 2008
    
    CFO Software and CFO SuccessCFO Chuangying
    
    January 21, 2009
    
    CFO SoftwareCFO Shenzhen Shangtong
    
    August 3, 2009
    
    CFO SuccessCFO Qicheng
    
    November 20, 2009
    
    CFO Chuangying
 Risks in relation to the VIE structure
 The Company believes that the contractual arrangements entered with the VIEs are in
compliance with PRC law and are legally enforceable. However, uncertainties in the PRC
legal system could limit the Companys ability to enforce these contractual arrangements and
if the shareholders of the VIEs were to reduce their interests in the Company, their
interests may diverge from that of the Company and that may potentially increase the risk
that they would seek to act contrary to the contractual terms, for example by influencing
the VIEs not to pay the service fees when required to do so.
 Adoption of authoritative pronouncement regarding VIEs
 In June 2009, the Financial Accounting Standards Board (FASB) issued an authoritative
pronouncement to amend the accounting rules for VIEs. The amendments effectively replace
the quantitative-based risks-and-rewards calculation for determining which reporting entity,
if any, has a controlling financial interest in a variable interest entity with an approach
focused on identifying which reporting entity has (1) the power to direct the activities of
a variable interest entity that most significantly affect the entitys economic performance
and (2) the obligation to absorb losses of, or the right to receive benefits from, the
entity. Additionally, an enterprise is required to assess whether it has an implicit
financial responsibility to ensure that a variable interest entity operates as designed when
determining whether it has the power to direct the activities of the variable interest
entity that most significantly impact the entitys economic performance. The new guidance
also requires additional disclosures about a reporting entitys involvement with variable
interest entities and about any significant changes in risk exposure as a result of that
involvement.
 The new guidance is effective at the start of a reporting entitys first fiscal year
beginning after November 15, 2009, and all interim and annual periods thereafter. The new
VIE model requires that, upon adoption, a reporting entity should determine whether an
entity is a VIE, and whether the reporting entity is the VIEs primary beneficiary, as of
the date that the reporting entity first became involved with the entity, unless an event
requiring reconsideration of those initial conclusions occurred after that date. When
making this determination, a reporting entity must assume that new guidance had been
effective from the date of its first involvement with the entity. The Group adopted the new
guidance on January 1, 2010.
  F-9




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 1.
    
    ORGANIZATION AND PRINCIPAL ACTIVITIES  continued
 Adoption of authoritative pronouncement regarding VIEs  continued
 The Company has consolidated its VIEs under the authoritative literature prior to the
amendment discussed above because it was the primary beneficiary of those entities. Because
the Company, through its wholly owned subsidiary, has (1) the power to direct the activities
of the VIE that most significantly affect the entitys economic performance and (2) the
right to receive benefits from the VIE, it continues to consolidate the VIE upon the
adoption of the new guidance which therefore, other than for additional disclosures,
including those for prior periods, had no accounting impact.
 The following financial statement amounts and balances of the VIEs and their subsidiaries
were included in the accompanying consolidated financial statements as of and for the years
ended:
 Year ended December 31,2009
    
    
    2010Total assets
    
    $
    66,591,127
    
    
    $
    84,004,604Total liabilities
    
    
    16,333,249
    
    
    
    22,035,259
 Year ended December 31,2008
    
    
    2009
    
    
    2010Net revenue
    
    $
    11,790,437
    
    
    $
    16,766,910
    
    
    $
    25,737,779Net income
    
    
    2,380,554
    
    
    
    2,354,387
    
    
    
    3,614,094
 Year ended December 31,2008
    
    
    2009
    
    
    2010Net cash provided by (used in)
operating activities
    
    $
    16,539,572
    
    
    $
    (24,061,646
    )
    
    $
    9,078,975Net cash (used in) provided by
investing activities
    
    
    (533,240
    )
    
    
    (1,560,927
    )
    
    
    178,192Net cash provided by financing activities
    
    
    31,573,849
    
    
    
    14,785,320
    
    
    
    1,477,018Effect of exchange rate changes
    
    
    1,945,739
    
    
    
    (59,929
    )
    
    
    1,922,878
 There are no consolidated VIEs assets that are collateral for the VIEs obligations and can
only be used to settle the VIEs obligations.
  F-10




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of presentation
 The consolidated financial statements of the Group have been prepared in accordance with
accounting principles generally accepted in the United States of America (U.S. GAAP).
 Basis of consolidation
 The consolidated financial statements include the financial statements of China Finance
Online, its subsidiaries and its variable interest entities. All inter-company transactions
and balances have been eliminated upon consolidation.
 Cash and cash equivalents
 Cash and cash equivalents consist of cash on hand and highly liquid investments which are
unrestricted as to withdrawal or use, and which have remaining maturities of three months or
less when purchased.
 Restricted cash
 Restricted cash represents the security deposit for the credit standby letter issued by a
bank to provide guarantee for the short-term loan borrowed by CFO HK Genius. The
restriction period is one year.
 Fair value
 Fair value is the price that would be received from selling an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
When determining the fair value measurements for assets and liabilities required or
permitted to be recorded at fair value, the Group considers the principal or most
advantageous market in which it would transact and it considers assumptions that market
participants would use when pricing the asset or liability.
 Authoritative literature provides a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three broad levels. The level in the
hierarchy within which the fair value measurement in its entirety falls is based upon the
lowest level of input that is significant to the fair value measurement as follows:
 Level 1-inputs are based upon unadjusted quoted prices for identical instruments traded in
active markets.
 Level 2-inputs are based upon quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not active and
model-based valuation techniques for which all significant assumptions are observable in the
market or can be corroborated by observable market data for substantially the full term of
the assets or liabilities.
 Level 3-inputs are generally unobservable and typically reflect managements estimates of
assumptions that market participants would use in pricing the asset or liability. The fair
values are therefore determined using model-based techniques that include option pricing
models, discounted cash flow models, and similar techniques.
  F-11




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Trust bank balances held on behalf of customers
 Daily Growth Securities and Daily Growth Futures receive fund from customers for purpose of
buying or selling securities on behalf of its customers and deposits the fund in its
interest-bearing bank account. Such bank balance represents an asset of the Group for the
amounts due to customers for the trust bank balance held on their behalf and payable to
customers on demand. The Group also recognizes a corresponding liability.
 Use of estimates
 The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities
and revenue and expenses in the financial statements and accompanying notes. Significant
accounting estimates reflected in the Groups financial statements include cost method
investment, goodwill and impairment of long-lived assets, income taxes and stock-based
compensation. Actual results could differ from those estimates.
 Trading securities
 Trading securities are securities that are bought and held principally for the purpose of
selling them in the near term and are reported at fair value, with unrealized gains and
losses recognized in earnings.
 Property and equipment, net
 Property and equipment, net are carried at cost less accumulated depreciation. Depreciation
is calculated on a straight-line basis over the following estimated useful lives:
 Technology infrastructure
    
    5 yearsComputer equipment
    
    5 yearsFurniture, fixtures and equipment
    
    5 yearsMotor vehicle
    
    5 yearsLeasehold improvements
    
    Shorter of the lease term or 5 years
  F-12




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Acquired intangible assets, net
 Acquired intangible assets are estimated by management based on the fair value of assets
acquired. Identifiable intangible assets are carried at cost less accumulated amortization.
Amortization of definite-lived intangible assets is computed using the straight-line method
over the estimated average useful lives, which are as follows:
 Securities consulting license and related trademarks
    
    15 yearsCompleted technology
    
    5 yearsCustomer relationship
    
    4-5 yearsValue-added service license
    
    3-4 yearsAgreement with mobile operators
    
    3 yearsIntellectual property
    
    10 years
 Certain trademarks resulting from the acquisitions of business and certain trading rights
bought by the Company are determined to have indefinite lives. If an intangible asset is
determined to have an indefinite life, it is not amortized until its useful life is
determined to be no longer indefinite.
 An intangible asset that is not subject to amortization is tested for impairment at least
annually if events or changes in circumstances indicate that the asset might be impaired.
Such impairment test consists of a comparison of the fair values of the assets with their
carrying amounts and an impairment loss is recognized if and when the carrying amounts
exceed the fair values.
 The estimates of fair values of intangible assets not subject to amortization are determined
using various discounted cash flow valuation methodologies. Significant assumptions are
inherent in this process, including estimates of discount rates. Discount rate assumptions
are based on an assessment of the risk inherent in the respective intangible assets. During
the years ended December 31, 2008, 2009 and 2010, the Group did not record any impairment
losses associated with intangible assets.
 Impairment of long-lived assets
 The Group reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may no longer be recoverable.
When these events occur, the Group compares the carrying value of the long-lived assets to
the estimated undiscounted future cash flows expected to result from the use of the assets
and their eventual disposition. If the sum of the expected undiscounted cash flow is less
than the carrying amount of the assets, the Group would recognize an impairment loss based
on the fair value of the assets. There were no impairment losses in the years ended
December 31, 2008, 2009 and 2010.
  F-13




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Business combinations
 Business combinations are recorded using the purchase method of accounting. On January 1,
2009, the Company adopted a new accounting pronouncement with prospective application which
made certain changes to the previous authoritative literature on business combinations.
From January 1, 2009, the assets acquired, the liabilities assumed, and any noncontrolling
interest of the acquiree at the acquisition date, if any, are measured at their fair values
as of that date. Goodwill is recognized and measured as the excess of the total
consideration transferred plus the fair value of any noncontrolling interest of the
acquiree, if any, at the acquisition date over the fair values of the identifiable net
assets acquired. Previously, any noncontrolling interest was reflected at historical cost.
Common forms of the consideration made in acquisitions include cash and common equity
instruments. Consideration transferred in a business acquisition is measured at the fair
value as at the date of acquisition.
 Where the consideration in an acquisition includes contingent consideration the payment of
which depends on the achievement of certain specified conditions post-acquisition, from
January 1, 2009, the contingent consideration is recognized and measured at its fair value
at the acquisition date and if recorded as a liability it is subsequently carried at fair
value with changes in fair value reflected in earnings. For periods prior to January 1,
2009, contingent consideration was not recorded until the contingency was resolved.
 Goodwill
 The excess of the purchase price over the fair value of net assets acquired is recorded on
the consolidated balance sheet as goodwill.
 The Company completes a two-step goodwill impairment test. The first step is to compare the
fair values of each reporting unit to its carrying amount, including goodwill. If the fair
value of each reporting unit exceeds its carrying amount, goodwill is not considered to be
impaired and the second step will not be required. If the carrying amount of a reporting
unit exceeds its fair value, the second step is to compare the implied fair value of
goodwill to the carrying value of a reporting units goodwill. The implied fair value of
goodwill is determined in a manner similar to accounting for a business combination with the
allocation of the assessed fair value determined in the first step to the assets and
liabilities of the reporting unit. The excess of the fair value of the reporting unit over
the amounts assigned to the assets and liabilities is the implied fair value of goodwill.
An impairment loss is recognized for any excess in the carrying value of goodwill over the
implied fair value of goodwill.
 The Group performs goodwill impairment tests annually on December 31 by comparing the
carrying value to the fair value of each reporting unit. Based on the Groups assessment,
there was no impairment of goodwill for the years ended December 31, 2008, 2009 and 2010.
  F-14




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Revenue recognition
 The Group generates revenue primarily from annual subscription fees from subscribers to
their financial data and information services including their downloadable proprietary
research tools. The Group recognizes revenues when all of the following criteria are met:
(1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the fee is
fixed or determinable and (4) collectibility is probable. Upon receipt of the upfront cash
payments from the subscriber, the Group will activate the subscribers account and provide
the subscriber the access code. This will commence a certain subscription period according
to the customer demand and the full payment will be deferred and recognized ratably over the
subscription period. The Group recognizes revenue ratably over the life of the arrangement.
 The Group derives its advertising fees from advertising sales on their website principally
for a fixed period of time, generally less than one year. Revenues from advertising
arrangements are recognized ratably over the period the advertising is displayed.
 The Group also derives commission from its brokerage services provided by the subsidiaries,
Daily Growth Securities and Daily Growth Futures which buy or sell securities and futures on
their customers behalf. The commission income is recognized on a trade date basis as
transactions occur.
  F-15




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Business taxes and value added taxes
 Revenue is recorded net of business taxes when incurred. The Group is subject to business
taxes of 3%-5% on taxable services provided to its customers. During the years ended
December 31, 2008, 2009, and 2010, business taxes totaled $903,330, $1,501,799, and
$1,692,069, respectively.
 The Groups PRC subsidiaries are subject to value added tax at a rate of 17% on
subscription-based revenue. Value added tax payable on subscription-based revenue is
computed net of value added tax paid on purchases. In respect of subscription-based
revenue, however, if the net amount of value added tax payable exceeds 3% of
subscription-based revenue, the excess portion of value added tax can be refunded
immediately. The Group therefore is subject to an effective net value added tax burden of
3% from subscription-based revenue and records value added tax on a net basis. Net amount
of value added tax is recorded either in the line item of other current liabilities or
prepaid expenses and other current assets on the face of consolidated balance sheet.
 Subscription-based revenue includes the benefit of the rebate of value added taxes on sale
of the downloadable software received from the Chinese tax authorities as part of the PRC
government policy of encouraging software development in the PRC. In 2008, 2009 and 2010,
the Group recognized $4,834,336, $4,424,737, and $3, 711, 613, respectively, in value added
tax refunds.
 Government subsidies
 The Group records government subsidies when granted by local government authority and are
not subject to future return. The government subsidies include R&D subsidy, business tax
refund, innovation fund and high-tech company subsidy. Government subsidies granted totaled
$436,946, $567,373 and $514,113 for the years ended December 31, 2008, 2009 and 2010,
respectively.
 Deferred revenue
 Payments received in advance of service are recorded as deferred revenue until earned and
when the relevant revenue recognition requirements have been met.
 Cost method investment
 For investments in an investee over which the Group does not have significant influence, the
Group carries the investment at cost and recognizes income as any dividends declared from
distribution of investees earnings. The Group reviews the cost method investments for
impairment whenever events or changes in circumstances indicate that the carrying value may
no longer be recoverable. An impairment loss is recognized in earnings equal to the
difference between the investments cost and its fair value at the balance sheet date of the
reporting period for which the assessment is made. The fair value of the investment would
then become the new cost basis of the investment.
  F-16




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Foreign currency translation
 The functional and reporting currency of the Company is the United States dollar (U.S.
dollar). The financial records of the Groups subsidiaries and VIEs located in the PRC,
Hong Kong and British Virgin Island are maintained in their local currencies, the Renminbi
(RMB), Hong Kong Dollars (HK$), and U.S. Dollars (US$), respectively, which are also
the functional currencies of these entities.
 Monetary assets and liabilities denominated in currencies other than the functional currency
are translated into the functional currency at the rates of exchange ruling at the balance
sheet date. Transactions in currencies other than the functional currency during the year
are converted into functional currency at the applicable rates of exchange prevailing when
the transactions occurred. Transaction gains and losses are recognized in the statements of
operations.
 The Groups entities with functional currency of RMB and HK$ translate their operating
results and financial position into the US$, the Groups reporting currency. Assets and
liabilities are translated using the exchange rates in effect on the balance sheet date.
Revenues, expenses, gains and losses are translated using the average rate for the year.
Translation adjustments are report as cumulative translation adjustments and are shown as a
separate component of other comprehensive income.
 Foreign currency risk
 The RMB is not a freely convertible currency. The State Administration for Foreign
Exchange, under the authority of the Peoples Bank of China, controls the conversion of
Renminbi into foreign currencies. The value of the RMB is subject to changes in central
government policies and to international economic and political developments affecting
supply and demand in the China Foreign Exchange Trading System market. Cash and cash
equivalents of the Group included aggregate amounts of $79,921,228, $93,753,238 and
$92,922,206 at December 31, 2008, 2009 and 2010 which were denominated in RMB.
 Cost of raw data
 Cost of raw data is expensed as incurred and is recorded in cost of revenues.
 Product development expenses
 Costs of product development, including investment in data capability, are expensed as
incurred until technological feasibility has been established, at which time any additional
costs would be capitalized. The Group essentially completed its development concurrently
with the establishment of technological feasibility, and, accordingly, no costs have been
capitalized.
  F-17




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Advertising costs
 The Group expenses advertising costs as incurred. Total advertising expenses were
$1,102,779, $4,819,561, and $6,077,608 for the years ended December 31, 2008, 2009 and 2010,
respectively, and have been included as part of sales and marketing expenses in the
accompanying consolidated statements of operations.
 Income taxes
 Current income taxes are provided for in accordance with the laws of the relevant tax
authorities. Deferred income taxes are recognized for temporary differences between the tax
basis of assets and liabilities and their reported amounts in the financial statements, net
operating loss carry forwards and credits by applying enacted statutory tax rates applicable
to future years. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Current income taxes are provided for in accordance with
the laws of the relevant tax authorities.
 The impact of an uncertain income tax position on the income tax return is recognized at the
largest amount that is more-likely-than not to be sustained upon audit by the relevant tax
authority. An uncertain income tax position will not be recognized if it has less than a
50% likelihood of being sustained. Interest and penalties on income taxes will be
classified as a component of the provisions for income taxes.
 Comprehensive income (loss)
 Comprehensive income (loss) includes net income (loss) and foreign currency translation
adjustments. Comprehensive income (loss) is reported as a component of the consolidated
statements of equity and comprehensive income (loss).
 Fair value of financial instruments
 Financial instruments include cash and cash equivalents, restricted cash, accounts
receivable, trading securities, cost method investment, accounts payable and short-term
loan.
 The carrying values of cash and cash equivalents, restricted cash, accounts receivable,
trading securities, accounts payable and short-term loan approximate their fair value due to
their short-term maturities.
 The carrying value of the cost method investment was $1,479,571 as of December 31, 2009 and
2010, which approximate the fair value of the investment based on the valuation performed by
the Company, with the assistance of American Appraisal China Limited, an independent
valuation firm.
 The Group does not use derivative instruments to manage risks.
  F-18




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Share-based compensation
 Share-based compensation with employees is measured based on the grant date fair value of
the equity instrument. The Group recognizes the compensation costs net of an estimated
forfeiture rate using the straight-line method, over the requisite service period of the
award, which is generally the vesting period of the award. The estimate of forfeitures will
be adjusted over the requisite service period to the extent that actual forfeitures differ,
or are expected to differ, from such estimates. Changes in estimated forfeitures will be
recognized through a cumulative catch-up adjustment in the period of change and will also
impact the amount of share-based compensation expense to be recognized in future periods.
 Share awards issued to nonemployees are measured at fair value at the earlier of the
commitment date or the date the services is completed and recognized over the period the
service is provided or as goods is received.
 Noncontrolling interest
 Effective January 1, 2009, the Group adopted an authoritative pronouncement issued by the
FASB regarding noncontrolling interest in the accompanying consolidated financial
statements. The pronouncement requires noncontrolling interest to be separately presented
as a component of equity in the accompanying consolidated financial statements. The
presentation regarding noncontrolling interest was retroactively applied for all the
presented periods.
 Net income (loss) per share
 Basic net income (loss) per share attributable to China Finance Online Co. Limited is
computed by dividing net income (loss) attributable to China Finance Online Co. Limited by
the weighted average number of ordinary shares outstanding during the period. Diluted net
income (loss) per ordinary share attributable to China Finance Online Co. Limited reflects
the potential dilution that could occur if securities or other contracts to issue ordinary
 shares were exercised or converted into ordinary shares. The dilutive effect of the stock
options and nonvested shares is computed using treasury stock method.
 Concentrations of credit risk
 Financial instruments that potentially expose the Group to concentrations of credit risk
consist principally of cash and cash equivalents, restricted cash and accounts receivable.
The Group places its cash and cash equivalents and restricted cash with financial
institutions with high-credit ratings and quality.
  F-19




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Concentrations of credit risk  continued
 The Group conducts ongoing credit evaluations of its customers and generally does not
require collateral or other security from its customers except for the accounts
receivable-margin clients which represents the margin loan to customers for securities
purchase. The accounts receivable-margin client was collateralized by the securities the
margin client purchased. The Group manages its credit risk by collecting up-front fee from
its customers and billing at regular intervals during the contract period. The Group
assesses the adequacy of allowance for doubtful accounts primarily based upon the age of the
receivables and factors surrounding the credit risk of specific customers.
 Details of clients accounting for 10% or more of accounts receivable are as follows:
 Year ended December 31,2009
    
    
    2010Amount
    
    
    %
    
    
    Amount
    
    
    %Client A
    
    $
    
    
    
    
    
    
    
    $
    1,498,895
    
    
    
    12.8Client B
    
    $
    1,027,365
    
    
    
    19.1
    
    
    $
    1,444,874
    
    
    
    12.3Client C
    
    $
    617,365
    
    
    
    11.5
    
    
    $
    
    
    
    
    
 These clients are all margin clients who have collateralized the securities they purchase to
the Group.
 There were no customers with 10% or more of the Groups revenues during 2008, 2009, or 2010.
 Recently issued accounting pronouncements not yet adopted
 On January 21, 2010, the FASB issued authoritative guidance to improve disclosures about
fair value measurements. This guidance amends previous guidance on fair value measurements
to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and
separate disclosures about purchases, sales, issuances, and settlements relating to Level 3
measurement on a gross basis rather than as a net basis as currently required. This
guidance also clarifies existing fair value disclosures about the level of disaggregation
and about inputs and valuation techniques used to measure fair value. This guidance is
effective for annual and interim periods beginning after December 15, 2009, except for the
requirement to provide the Level 3 activities of purchases, sales, issuances, and
settlements on a gross basis, which will be effective for annual and interim periods
beginning after December 15, 2010. Early application is permitted and in the period of
initial adoption, entities are not required to provide the amended disclosures for any
previous periods presented for comparative purposes. The Group does not expect the adoption
of this pronouncement will have a significant effect on its consolidated financial position
or results of operations.
  F-20




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Recently issued accounting pronouncements not yet adopted  continued
 In April 2010, the FASB issued an authoritative pronouncement regarding the milestone method
of revenue recognition. The scope of this pronouncement is limited to arrangements that
include milestones relating to research or development deliverables. The pronouncement
specifies guidance that must be met for a vendor to recognize consideration that is
contingent upon achievement of a substantive milestone in its entirety in the period in
which the milestone is achieved. The guidance applies to milestones in arrangements within
the scope of this pronouncement regardless of whether the arrangement is determined to have
single or multiple deliverables or units of accounting. The pronouncement will be effective
for fiscal years, and interim periods within those years, beginning on or after June 15,
2010. Early application is permitted. Companies can apply this guidance prospectively to
milestones achieved after adoption. However, retrospective application to all prior periods
is also permitted. The Group does not expect the adoption of this pronouncement will have
a significant impact on its consolidated financial position or results of operations.
 In December 2010, the FASB issued an authoritative pronouncement on when to perform Step 2
of the goodwill impairment test for reporting units with zero or negative carrying amounts.
The amendments in this update modify Step 1 so that for those reporting units, an entity is
required to perform Step 2 of the goodwill impairment test if it is more likely than not
that a goodwill impairment exists. In determining whether it is more likely than not that
goodwill impairment exists, an entity should consider whether there are any adverse
qualitative factors indicating that an impairment may exist. The qualitative factors are
consistent with existing guidance, which requires that goodwill of a reporting unit be
tested for impairment between annual tests if an event occurs or circumstances change that
would more likely than not reduce the fair value of a reporting unit below its carrying
amount. For public entities, the guidance is effective for impairment tests performed
during entities fiscal years (and interim periods within those years) that begin after
December 15, 2010. Early adoption will not be permitted. For nonpublic entities, the
guidance is effective for impairment tests performed during entities fiscal years (and
interim periods within those years) that begin after December 15, 2011. Early application
for nonpublic entities is permitted; nonpublic entities that elect early application will
use the same effective date as that for public entities. The Group does not expect the
adoption of this pronouncement will have a significant effect on its consolidated financial
position or results of operations.
  F-21




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  continued
 Recently issued accounting pronouncements not yet adopted  continued
 In December 2010, the FASB issued an authoritative pronouncement on disclosure of
supplementary pro forma information for business combinations. The objective of this
guidance is to address diversity in practice regarding the interpretation of the pro forma
revenue and earnings disclosure requirements for business combinations. The amendments in
this update specify that if a public entity presents comparative financial statements, the
entity should disclose revenue and earnings of the combined entity as though the business
combination(s) that occurred during the current year had occurred as of the beginning of the
comparable prior annual reporting period only. The amendments also expand the supplemental
pro forma disclosures to include a description of the nature and amount of material,
nonrecurring pro forma adjustments directly attributable to the business combination
included in the reported pro forma revenue and earnings. The amendments affect any public
entity as defined by Topic 805 that enters into business combinations that are material on
an individual or aggregate basis. The amendments will be effective for business
combinations consummated in periods beginning after December 15, 2010, and should be applied
prospectively as of the date of adoption. Early adoption is permitted. The Group does not
expect the adoption of this pronouncement will have a significant effect on its consolidated
financial position or results of operations.
 3.
    
    ACQUISITIONS
 To expand its market share during 2008, 2009 and 2010, China Finance Online made a number of
acquisitions of businesses. Each acquisition has been recorded using the purchase method of
accounting, and accordingly the acquired assets and liabilities were recorded at their fair
values on the dates of acquisitions and the results of their operations have been included
in the Groups results of operations since the dates of their acquisitions.
 Acquisition of CFO Chuangying
 On January 9, 2009, CFO Software, one subsidiary of the Company, entered into a series of
contractual arrangements with CFO Chuangying, which is a China Securities Regulatory
Commission or CSRC licensed securities investment advisory firm. As a result of the
contractual arrangements, the Group became the primary beneficiary of CFO Chuangying. (see
Note 1). For the acquisition, the total cash consideration was $585,112, of which, $563,145
was paid in 2009 and the remaining consideration of $21,967 was paid in 2010. The purchase
price was allocated to assets acquired and liabilities assumed as of the acquisition day as
follows and the goodwill was allocated to subscription services and other related services
operating segment.
 Useful lifePurchase price allocation:Acquired intangible assets:Securities consulting license
    
    $
    549,758
    
    
    15 yearsTotal assets acquired
    
    
    549,758Deferred tax liabilities
    
    
    (137,440
    )Total net assets
    
    
    412,318Goodwill
    
    
    172,794Total
    
    
    585,112
  F-22




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 3.
    
    ACQUISITIONS  continued
 Acquisition of CFO Securities Consulting
 On November 5, 2009, CFO Chongzhi, one VIE of the Group acquired 80% of the equity interest
of CFO Securities Consulting, which is a CSRC licensed securities investment advisory firm.
For the acquisition, the total cash consideration was $1,328,040, of which, $1,260,672 was
paid in 2009 and the remaining consideration of $67,368 was paid in 2010. Following an
independent valuation performed by American Appraisal China Limited, the Group allocated the
purchase price to assets acquired and liabilities assumed as of the acquisition day as
follows and the goodwill was allocated to subscription services and other related services
operating segment.
 Useful lifePurchase price allocation:Cash and cash equivalents
    
    $
    8,282Other account receivables
    
    
    222,317Acquired intangible assets:Trademark
    
    
    350,191
    
    
    15 yearsSecurities consulting license
    
    
    900,596
    
    
    15 yearsTotal assets acquired
    
    
    1,481,386Deferred tax liabilities
    
    
    (312,697
    )Noncontrolling interest
    
    
    (261,660
    )Total net assets
    
    
    907,029Goodwill
    
    
    421,011Total
    
    
    1,328,040
 On November 9, 2010, CFO Chongzhi contributed additional capital of $3,762,227 (equivalent
to RMB25,000,000) in CFO Securities Consulting, consequently, the Groups beneficial
interest in CFO Securities Consulting increased from 80% to 92.5%. On November 17, 2010 and
December 20, 2010 CFO Chongzhi acquired the remaining 5% and 2.5% equity interest in CFO
Securities Consulting for total cash consideration of $383,126. The difference of $377,893
between the carrying value of noncontrolling interest and the total cash consideration was
recorded as additional paid-in capital on the consolidated balance sheet. Since then, the
Group became the 100% beneficiary of CFO Securities Consulting.
 The Net income attributable to China Finance Online Co. Limited and transfers from the
noncontrolling interest as of December 31, 2010 is as below:
 2010Net income attributable to China Finance Online Co. Limited
    
    $
    1,960,122Transfers from the noncontrolling interestDecrease in China Finance Online Co. Limiteds paid-in capital for
purchase of CFO Securities Consultings common shares
    
    
    (377,893
    )Net income attributable to China Finance Online Co. Limited
and transfers from the noncontrolling interest
    
    
    1,582,229
  F-23




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 3.
    
    ACQUISITIONS  continued
 Acquisition of CFO Newrand
 On October 17, 2008, CFO software, entered into a series of contractual arrangements with
CFO Newrand, which is a CSRC licensed securities investment advisory firm. As a result of
the contractual arrangements, the Group became the primary beneficiary of CFO Newrand. (see
Note 1). For the acquisition, the total cash consideration was $3,826,296, of which,
$3,709,037 was paid in 2008 with the remaining consideration of $117,259 paid in 2009. The
purchase price was allocated to assets acquired and liabilities assumed as of the
acquisition day as follows and the goodwill was allocated to subscription services and other
related services operating segment.
 Useful lifePurchase price allocation:Cash and cash equivalents
    
    $
    1,521,109Acquired intangible assets:Securities consulting license
    
    
    1,183,926
    
    
    15 yearsTrade mark
    
    
    440,496
    
    
    15 yearsTotal assets acquired
    
    
    3,145,531Deferred tax liabilities
    
    
    (406,106
    )Total net assets
    
    
    2,739,425Goodwill
    
    
    1,086,871Total
    
    
    3,826,296
 Acquisitions of Huifu Jinyuan Co., Ltd & Zhongcheng Futong Co., Ltd
 On October 22, 2008 and October 29, 2008, CFO Software entered into a series of contractual
arrangements with Huifu Jinyuan Co., Ltd (CFO Huifu) and Zhongcheng Futong Co., Ltd (CFO
Zhongcheng ), respectively. As a result of the contractual arrangements, the Group became
the primary beneficiary of CFO Huifu and CFO Zhongcheng. For the forementioned
acquisitions, the total cash considerations were $255,974, and $202,359 was recorded on the
consolidated balance sheet as goodwill which was allocated to subscription services and
other related services operating segment.
 Acquisition of Daily Growth Securities
 In March 2008, the Group injected further capital of $11,565,000 (equivalent to
HK$90,000,000) in Daily Growth Securities; consequently, the Groups equity interest in
Daily Growth Securities increased from 85% to 98.5%. On May 15, 2008, the Company acquired
the remaining 1.5% equity interest in Daily Growth Securities for a cash consideration of
$678,073 including $61,405 in transaction costs and recorded $456,501 as goodwill on the
consolidated balance sheet by which Daily Growth Securities became wholly owned by the
Company.
  F-24




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 3.
    
    ACQUISITIONS  continued
 The following summarized unaudited pro forma results of operations for the years ended
December 31, 2008 and 2009 assuming that all significant acquisitions during the year ended
December 31, 2008 and 2009 occurred as of January 1, 2008 and 2009, respectively. These pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of the results of operations
which actually would have resulted had the significant acquisitions occurred as of January
1, 2008 and 2009, nor is it indicative of future operating results.
 For the years ended December 312008
    
    
    2009(unaudited)
    
    
    (unaudited)Revenues
    
    $
    56,371,385
    
    
    $
    53,605,878Net income (loss) attributable to China
Finance Online Co., Limited
    
    $
    18,858,118
    
    
    $
    (6,318,295
    )Net income (loss) per share attributable
to China Finance Online Co. Limited- basic
    
    $
    0.19
    
    
    $
    (0.06
    )- diluted
    
    $
    0.17
    
    
    $
    (0.06
    )
 Fair value of acquired assets
 The Group measured the fair value for the assets acquired, with the assistance of American
Appraisal, an independent valuation firm, using discounted cash flow techniques, and these
assets were classified as Level 3 assets because the Group used unobservable inputs to value
them, reflecting the Groups assessment of the assumptions market participants would use in
valuing these purchased intangible assets.
  F-25




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 4.
    
    ACCOUNTS RECEIVABLE
 December 31,2009
    
    
    2010Accounts receivable-margin clients
    
    
    2,724,456
    
    
    
    8,095,396Less: Allowance for doubtful accounts
    
    
    
    
    
    
    Accounts receivable- margin clients, net
    
    $
    2,724,456
    
    
    $
    8,095,396Accounts receivable-others
    
    
    2,676,136
    
    
    
    3,670,692Less: Allowance for doubtful accounts
    
    
    (31,440
    )
    
    
    (36,039
    )Accounts receivable-others, net
    
    $
    2,644,696
    
    
    $
    3,634,653
 Accounts receivable- margin clients represent the receivables derived in the brokerage
service in Daily Growth Securities, which is pledged by the customers purchased securities.
 Accounts receivable-others represent the receivables derived in other ordinary business
without any collateral or other security from its customers.
 5.
    
    PREPAID EXPENSES AND OTHER CURRENT ASSETS
 Prepaid expenses and other current assets consist of the following:
 December 31,2009
    
    
    2010Prepayment of advertising fees
    
    $
    526,492
    
    
    $
    170,018Advertising deposit (note i)
    
    
    261,460
    
    
    
    134,341Prepayment to sales agents
    
    
    212,294
    
    
    
    84,350Advances to suppliers
    
    
    805,212
    
    
    
    1,209,399VAT refund receivable
    
    
    817,532
    
    
    
    975,066Income tax prepayment and business tax refund receivable
    
    
    175,434
    
    
    
    81,031Interest receivable
    
    
    409,194
    
    
    
    632,061Other current assets
    
    
    1,073,519
    
    
    
    791,132$
    4,281,137
    
    
    $
    4,077,398
 Notes:(i)
    
    The advertising deposit represents amounts of deposit paid to advertising
agent, which is expected to be refunded within a year.
  F-26




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 6.
    
    TRADING SECURITIES
 The Group purchased trading securities in 2009 and 2010. The Group measured the trading
securities at fair value based on quoted market prices in an active market. As a result the
Group has determined the valuation of its trading securities falls within Level 1 of the
fair value hierarchy. As of December 31, 2010, the fair value of trading securities was
$31,272. Gains and losses on the trading securities are recognized in the consolidated
statement of operations for the years ended December 31, 2009 and 2010 were $40,574 and
$1,138,147, respectively.
 7.
    
    COST METHOD INVESTMENT
 In December 2005, the Group purchased 9,800,000 Series B preferred shares in Moloon for
$15,000,000, which represents a 25% interest in Moloon on an if-converted basis. China
Finance Onlines investment in these preferred shares was not in-substance common stock, and
accordingly, the investment has been recorded as a cost method investment.
 In April 2006, the Group sold part of its investment in Moloon to a third party for a cash
consideration of $1,187,500 and reduced the Groups investment in Moloons preferred shares
to 9,100,000 shares.
 Moloon is a Chinese wireless technology and service provider. In 2006, China Mobile
Communication Corporation, primarily through which Moloon provided its MVAS service to its
customers, announced policy changes which had a substantial negative impact on Moloons MVAS
business. Following an independent valuation prepared by American Appraisal China Limited,
the Group determined that its investment in Moloon was impaired and recorded an impairment
loss of $1,322,000.
 Thereafter, in 2007 Moloon adopted new strategies to transform itself into a provider of
mobile online gaming services in China. However, despite the new strategies Moloons
financial conditions have deteriorated and, following an independent valuation prepared by
American Appraisal China Limited, the Group determined that its investment in Moloon was
further impaired and recorded an additional impairment loss of $11,127,000 in 2007, reducing
the carrying balance of such investment to $1,479,571. There was no further impairment of
the Groups cost method investment in Moloon for the year ended December 31, 2008 and 2009.
 In August 2010, Moloon was wholly acquired by Ocean Butterflies Holdings Inc., a private and
independent music and entertainment production company incorporated in the Cayman Islands
(Ocean Butterflies Holdings ), in the form of shares exchange between Moloon and Ocean
Butterflies Holdings (the Share Swap Transaction). As a result of the Share Swap
Transaction, the Group holds 7,439,479 ordinary shares of Ocean Butterflies Holdings, which
represents 16.82% of shares in Ocean Butterflies Holdings. The investment is still recorded
as a cost method investment.
 Following an independent valuation performed by American Appraisal China Limited, there was
no impairment of the Groups cost method investment in Ocean Butterflies Holdings Inc. for
the year ended December 31, 2010.
  F-27




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 8.
    
    PROPERTY AND EQUIPMENT, NET
 Property and equipment, net consisted of:
 December 31,2009
    
    
    2010Technology infrastructure
    
    $
    7,759,146
    
    
    $
    8,196,351Computer equipment
    
    
    1,874,318
    
    
    
    1,786,148Furniture, fixtures and equipment
    
    
    2,384,253
    
    
    
    2,776,313Motor vehicle
    
    
    645,517
    
    
    
    665,547Leasehold improvements
    
    
    2,667,512
    
    
    
    3,122,79615,330,746
    
    
    
    16,547,155Less: accumulated depreciation
    
    
    (5,062,266
    )
    
    
    (8,270,880
    )$
    10,268,480
    
    
    $
    8,276,275
 Depreciation expense for the years ended December 31, 2008, 2009, and 2010 were $1,794,368,
$2,495,028, and $3,048,634, respectively.
 9.
    
    ACQUIRED INTANGIBLE ASSETS, NET
 Acquired intangible assets, net, arose from the acquisitions of CFO Genius, CFO Meining,
CFO-Stockstar, CFO Newrand, Daily Growth Securities, CFO Zhongcheng, CFO Chuangying and CFO
Securities Consulting and from the establishment of Daily Growth Futures during 2006 through
2010 and consisted of the following:
 December 31,2009
    
    
    2010Intangible assets not subject to amortization:Trademarks
    
    $
    843,561
    
    
    $
    869,736Stock exchange trading right
    
    
    64,475
    
    
    
    64,241Futures exchange trading right
    
    
    64,475
    
    
    
    64,241Intangible assets subject to amortization:Completed technology
    
    
    850,883
    
    
    
    877,286Customer relationship
    
    
    686,857
    
    
    
    708,170Value-added service license
    
    
    27,094
    
    
    
    27,934Agreement with mobile operators
    
    
    12,155
    
    
    
    12,533Securities consulting license and related trademarks
    
    
    3,426,717
    
    
    
    3,533,047Intellectual property
    
    
    73,226
    
    
    
    75,4986,049,443
    
    
    
    6,232,686Less: Accumulated amortization
    
    
    (1,270,342
    )
    
    
    (1,883,505
    )$
    4,779,101
    
    
    $
    4,349,181
  F-28




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 9.
    
    ACQUIRED INTANGIBLE ASSETS, NET  continued
 Amortization expense for the years ended December 31, 2008, 2009 and 2010 was $344,777,
$492,066 and $561,392, respectively. Future amortization expenses of acquired intangible
assets with determinable lives are $444,708, $243,086, $243,086, $243,086 and $2,176,997 for
2011, 2012, 2013, 2014 and 2015 and thereafter, respectively.
 10.
    
    GOODWILL
 Changes in goodwill for the years ended December 31, 2008, 2009 and 2010 were as follows:
 Southern
    
    
    Eastern
    
    
    NorthernChina
    
    
    China
    
    
    China
    
    
    Hong Kong
    
    
    TotalBalance as of December 31, 2008
    
    
    2,330,274
    
    
    
    8,210,504
    
    
    
    202,759
    
    
    
    1,274,975
    
    
    
    12,018,512Acquisition (Note 3)
    
    
    
    
    
    
    421,011
    
    
    
    172,794
    
    
    
    
    
    
    
    593,805Exchange difference
    
    
    (1,945
    )
    
    
    (6,886
    )
    
    
    35
    
    
    
    (822
    )
    
    
    (9,618
    )Balance as of December 31, 2009
    
    
    2,328,329
    
    
    
    8,624,629
    
    
    
    375,588
    
    
    
    1,274,153
    
    
    
    12,602,699Exchange difference
    
    
    72,247
    
    
    
    267,620
    
    
    
    11,654
    
    
    
    (4,633
    )
    
    
    346,888Balance as of December 31, 2010
    
    
    2,400,576
    
    
    
    8,892,249
    
    
    
    387,242
    
    
    
    1,269,520
    
    
    
    12,949,587
 The Group performs the annual impairment tests on December 31 of each year. Based on
impairment test performed, no impairment of goodwill was recorded during the years ended
December 31, 2008, 2009 and 2010, respectively.
 11.
    
    BANK FACILITIES AND SHORT-TERM LOANS
 The Group obtained a term loan facility amount up to $2,569,637 and a revolving loan
facility amount up to $10,150,067 from a bank. The facilities are guaranteed by a standby
letter of credit, which is secured by the Groups restricted cash of $14,533,347. As of
December 31, 2010, $6,424,093 of loans was outstanding under such loan facilities. The
outstanding loans have the interest margin, which is 1.8%, plus Hong Kong Interbank Offered
Rate ranging from 0.08% to 0.24%. The facilities will be matured in July 2011.
  F-29




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 12.
    
    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 Accrued expenses and other current liabilities consist of:
 December 31,2009
    
    
    2010Accrued bonus
    
    $
    4,355,130
    
    
    $
    5,402,453Accrued professional service fees
    
    
    436,834
    
    
    
    476,282Withholding individual income tax-option exercise
    
    
    144,979
    
    
    
    61,653Value added taxes payable
    
    
    444,278
    
    
    
    879,983Other taxes payable
    
    
    487,461
    
    
    
    685,246Accrued raw data cost
    
    
    308,566
    
    
    
    593,698Accrued office rental
    
    
    131,603
    
    
    
    64,536Accrued bandwidth cost
    
    
    519,763
    
    
    
    99,593Accrued welfare benefits
    
    
    288,123
    
    
    
    252,898Accrued refund of subscription fees (i)
    
    
    
    
    
    
    1,328,554Acquisition consideration payable
    
    
    89,335
    
    
    
    Others
    
    
    1,038,795
    
    
    
    993,467$
    8,244,867
    
    
    $
    10,838,363
 (i)
    
    In October 2010, the CSRC promulgated the Provisional Regulations on Securities Investment
Advisory and Provisional Regulations on Issuance of Securities Research Reports (collectively
referred to as the New Regulations), which will be effective on January 1, 2011.
The New Regulations allow securities investment advisory companies to provide advisory services for securities and
related products under the framework of the provisional regulations and receive service compensation.
The New Regulations prohibit the activities of those participants without licenses, thus benefitting
the Company which has the licenses.
  F-30




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 The New Regulations also allow the customer to terminate the service with securities investment
advisory company within five days after the service agreement is signed and request refund
of the subscription fee. It further emphasizes that the customer must take full responsibility
of its own investment decision, rather than the advisory company.The Company has noticed
certain customers claimed for refund of the subscription fee which were received by the
Company in 2010, in excuse of not fully realizing the risks associated with their own investment
decisions prior to the implementation of the New Regulations. In consideration of the transitory
period of the New Regulations and the Companys business from a long-term perspective, the
Company made a $1,328,554 accrual based on the actual requests from customers and the estimation of
future refund in the year of 2011. The estimated refund was recorded as reduction of revenue in relation
to the subscription fee of 2010 or deferred revenue depending on whether or not the service has been
provided.
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES
 As of December 31, 2010, the Company and its subsidiary Daily Growth Holding have three
share-based compensation plans, which are described below. The compensation cost that has
been charged against income for those plans was $8,040,150, $6,600,716, and $4,519,671 for
2008, 2009, and 2010, respectively.
  F-31




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES  continued
 2004 Stock incentive plan
 In January 2004, the Company adopted the 2004 stock incentive plan (the 2004 Plan) which
allows the Company to offer a variety of incentive awards to employees, directors, officers
and other eligible persons in the Group, and consultants and advisors outside the Group.
Options to purchase 5,688,488 ordinary shares are authorized under the Plan. In September
2004 and December 2006, the Company increased the total number of ordinary shares available
for issuance under the 2004 Plan by an additional 10,000,000 shares. In June 2009, the
shareholders approved the increase in the number of ordinary shares available for issuance
under the 2004 Plan by 3,000,000 ordinary shares. In June 2010, the Companys shareholders
approved the increase in the number of ordinary shares available for issuance under the 2004
Plan by 3,000,000 ordinary shares annually until December 31, 2014. As a result the total
number of ordinary shares authorized under the 2004 Plan was 21,688,488 as of December 31,
2010.
 Options to employees
 In 2008, the Company granted totaling 2,820,840 stock options to officers and employees at
an exercise price that equaled the trading price of the stock upon the stock option grant.
These options vest over 3 years.
 In 2009, the Company granted totaling 10,000 stock options to an employee at an exercise
price that equaled the trading price of the stock upon the stock option grant. These
options vest over 3 years.
 In 2010, the Company granted totaling 3,562,000 stock options to employees at an exercise
price that equaled the trading price of the stock upon the stock option grant. These
options vest over 3 years.
 The fair value of employee options was estimated on the basis of the Black-Scholes Option
Pricing model with the following assumptions:
 Years ended December 31,2009
    
    
    2010Weighted average risk free rate of return
    
    
    2.03
    %
    
    
    1.11%-2.47
    %Weighted average expected option life
    
    5.98 years
    
    
    5.98 yearsExpected volatility rate
    
    
    57.92
    %
    
    
    54.37%-57.06
    %Dividend yield
    
    
    
    
    
    
    
  F-32




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES  continued
 2004 Stock incentive plan
 Options to employees  continued
 (1)
    
    Expected volatility
 The volatility of the underlying ordinary shares during the life of the options was
estimated based on the historical stock price volatility of the Company and listed
comparable companies over a period comparable to the expected term of the options.
 (2)
    
    Risk-free interest rate
 Risk-free interest rate was estimated based on the yield to maturity of treasury
bonds of the United States with a maturity period close to the expected term of the
options.
 (3)
    
    Expected option life
 The Group used the simplified method to estimate the expected life.
 (4)
    
    Dividend yield
 The dividend yield was estimated by the Company based on its expected dividend policy
over the expected term of the options.
 (5)
    
    Exercise price
 Options are generally granted at an exercise price equal to the fair market value of
the Companys shares at the date of grant.
 In October and December 2008, ten employees of the Company surrendered their rights to
purchase in total of 970,000 ordinary shares of the Company at the exercise price ranged
from $2.44 to $3.134 pursuant to the 2004 Plan. On December 1, 2008, the Company granted
new options to purchase 970,000 ordinary shares at the exercise price of $1.26 to the ten
employees which will vest in 3 years pursuant to the 2004 Plan. The foregoing was accounted
for as a modification of the share based compensation awards. An incremental compensation
cost of $76,200 arising from the modification was measured at the excess of the fair value
of the new options at the grant date over the fair value of the options surrendered by the
ten employees at the date of modification. The total unrecognized compensation cost of
$1,122,361, which was the sum of the remaining unrecognized share based compensation amount
of $1,046,161 of the original awards and the incremental cost resulting from the
modification as of the modification date, was recognized over the requisite service period
of the newly granted option awards.
 Options to non-employees
 The Company granted 6,919,500 and 350,000 stock options to non-employees in 2004 and 2005,
respectively. All of the options have vested as of December 31, 2008.
  F-33




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES  continued
 2004 Stock incentive plan
 Summary of stock options to employees and non-employees
  2008
    
    
    2009
    
    
    2010Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    average
    
    
    Number
    
    
    average
    
    
    Number
    
    
    averageof options
    
    
    exercise price
    
    
    of options
    
    
    exercise price
    
    
    of options
    
    
    exercise priceOutstanding at beginning of year
    
    
    10,557,568
    
    
    $
    0.84
    
    
    
    11,439,978
    
    
    $
    0.91
    
    
    
    10,834,298
    
    
    $
    0.87Granted
    
    
    2,820,840
    
    
    $
    1.79
    
    
    
    10,000
    
    
    $
    1.65
    
    
    
    3,562,000
    
    
    $
    1.43Exercised
    
    
    (829,670
    )
    
    $
    0.69
    
    
    
    (236,480
    )
    
    $
    0.80
    
    
    
    (637,720
    )
    
    $
    1.12Forfeited
    
    
    (138,760
    )
    
    $
    1.00
    
    
    
    (69,360
    )
    
    $
    1.22
    
    
    
    (655,340
    )
    
    $
    1.27Cancelled
    
    
    (970,000
    )
    
    $
    2.81
    
    
    
    (309,840
    )
    
    $
    2.03
    
    
    
    
    
    
    
    Outstanding at end of year
    
    
    11,439,978
    
    
    $
    0.91
    
    
    
    10,834,298
    
    
    $
    0.87
    
    
    
    13,103,238
    
    
    $
    0.99Shares exercisable at end of year
    
    
    7,903,538
    
    
    $
    0.80
    
    
    
    9,439,258
    
    
    $
    0.82
    
    
    
    9,316,838
    
    
    $
    0.82
 The following table summarizes information with respect to stock options outstanding at
December 31, 2010:
 Options outstanding
    
    
    Option exercisableAggregate
    
    
    
    
    
    
    
    
    
    
    AggregateWeighted
    
    
    Weighted
    
    
    intrinsic
    
    
    
    
    
    
    Weighted
    
    
    intrinsicaverage
    
    
    average
    
    
    value as of
    
    
    
    
    
    
    average
    
    
    value as ofNumber
    
    
    remaining
    
    
    exercise
    
    
    December 31,
    
    
    Number
    
    
    exercise
    
    
    December 31,outstanding
    
    
    contractual life
    
    
    price
    
    
    2010
    
    
    exercisable
    
    
    price
    
    
    2010Ordinary shares$0.16
    
    
    2,845,738
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,845,738$1.04
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000$1.31
    
    
    1,435,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,435,100$1.32
    
    
    27,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,000$1.12
    
    
    400,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400,000$1.16
    
    
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000$1.07
    
    
    700,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700,000$0.96
    
    
    2,699,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,699,000$1.25
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000$1.32
    
    
    123,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,600$1.26
    
    
    886,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    582,800$1.65
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600$1.426
    
    
    3,426,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $1.43
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,103,238
    
    
    5.31 years
    
    
    $
    0.99
    
    
    $
    4,563,063
    
    
    
    9,316,838
    
    
    $
    0.82
    
    
    $
    4,549,079
 The weighted-average grant-date fair value of options granted during the years 2008, 2009
and 2010 was $1.04, $0.91 and $0.78, respectively. The total intrinsic value of options
exercised during the years ended December 31, 2008, 2009 and 2010 was $594,813, $155,880,
and $115,985, respectively.
  F-34




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES  continued
 2004 Stock incentive plan
 Summary of stock options to employees and non-employees  continued
 As of December 31, 2010, 3,760,100 ordinary shares were available for future grant of
awards. The Company recognized share-based compensation expenses of $1,217,980, $1,290,446
and $ 1,765,437 for stock option in the years ended December 31, 2008, 2009 and
2010, respectively.
 As of December 31, 2010, there was $1,342,249 unrecognized share-based compensation expenses
relating to the stock options, which is expected to be recognized over a weighted average
period of 2 years.
 2007 Equity incentive plan
 In July 2007, the Company adopted the 2007 Equity incentive plan (the 2007 Plan) and
granted nonvested shares covering 10,558,493 ordinary shares of the Company to the employees
who were eligible for the 2007 Plan. The vesting of the nonvested shares are subject to
achieving certain operating performance targets and rendering service to the Company for the
requisite service period stated in the 2007 Plan.
 The grant date fair value of a nonvested share was measured at the quoted market price of
the Companys equity shares. The nonvested shares shall become vested during the three
years following the grant date from July 2007 to June 2010 based on the Companys certain
operating performance targets for the years 2008 and 2009. Based on the Companys operating
performance during 2008 and 2009, 4,329,024, 2,886,016 and 1,443,008 shares were vested in
2008, 2009 and 2010.
 The Company recognized a compensation expense of $6,822,170, $5,310,270 and $2,655,135 for
the nonvested shares in 2008, 2009 and 2010, respectively.
 In 2009, in light of the significant global economic downturn and its impact on the Groups performance, the board approved the Amended Restricted Stock Issuance and Allocation Agreement
(the Amended Agreement), which was executed on July 1, 2010 to extend the performance period and the vesting term. Under the Amended Agreement,
there were 1,900,445 granted nonvested shares, which were not vested due to the operating
performance targets for 2008 and 2009 were not achieved, became eligible for vesting if the
Company can achieve the new performance targets for 2010, 2011 or 2012. The change of
performance target was accounted for as a modification of the terms of the nonvested share
award, and no other terms or conditions of the award were modified. Immediately before the
modification, the share based compensation expense of the 1,900,445 nonvested shares that
expected to be recognized over the vesting period was zero. As the Company continues to
believe that it is not probable that the new performance targets will be achieved,
therefore, there is no incremental compensation cost associated with the modification.
 There was no share based compensation expense recognized in 2010 after the modification date
due to the new performance target of 2010 was not achieved.
  F-35




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 13.
    
    STOCK OPTIONS AND NONVESTED SHARES  continued
 2007 Equity incentive plan
 A summary of the status of the nonvested shares as of December 31, 2008, 2009 and 2010, and
changes during the year ended December 31, 2010 is presented below.
 Weighted-average grant/
    
    
    Aggregatemodification
    
    
    intrinsicNonvested shares
    
    Shares
    
    
    date fair value
    
    
    valueAt the beginning of year 2008
    
    
    10,558,493
    
    
    
    1.84
    
    
    
    46,246,199Granted
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (4,329,024
    )
    
    
    
    
    
    
    (6,086,608
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    At the end of year 2008
    
    
    6,229,469
    
    
    
    1.84
    
    
    
    8,758,633Granted
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (2,886,016
    )
    
    
    
    
    
    
    (5,520,949
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    At the end of year 2009
    
    
    3,343,453
    
    
    
    1.84
    
    
    
    4,881,441Granted
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (1,443,008
    )
    
    
    
    
    
    
    (2,117,855
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    At the end of year 2010
    
    
    1,900,445
    
    
    
    1.43
    
    
    
    2,481,981
 2010 Equity incentive plan of Daily Growth Holding
 In November 2010, Daily Growth Holdings, a subsidiary of the Company, implemented the 2010
equity incentive plan (the plan) under which the Company transferred 1,500 nonvested shares which representing 15% of total Daily Growth Holdings equity interest to its
management group as a share incentive. If the grantees left the
Company before the third anniversary of the grant date when the nonvested shares become vested,
they should transfer the shares to the Company at no
consideration. Therefore, the total share based compensation expenses are recognized ratably
over the three years of vesting period. In addition, as the grantees are entitled to all
the shareholders rights, including the dividend rights since the date of grant, the 15%
share of the earnings of Daily Growth Holdings is recognized as noncontrolling interest on
the Companys consolidated financial statements since November 1, 2010, the date of grant.
 The fair value of the share incentive was determined to be $1,188 per share. The Group
recognized $99,099 share based compensation cost for the year ended December 31, 2010.
 As of December 31, 2010, there was $1,683,378 unrecognized compensation cost relating to
nonvested shares, which is expected to be recognized over a weighted average period of 3
years.
  F-36




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 14.
    
    INCOME TAXES
 Hong Kong
 China Finance Online, Daily Growth Securities, Daily Growth Futures, Daily Growth Wealth
Management, Daily Growth Investment Services, CFO HK Genius and other five subsidiaries were
established in Hong Kong. These companies were subject to Hong Kong profit tax at 16.5%.
These companies have not recorded tax provision for Hong Kong profits tax as there were no
assessable profits arising in or derived from Hong Kong.
 British Virgin Islands
 Companies that were incorporated in the BVI are not subject to taxation in their country of
incorporation. Subsidiaries incorporated in the BVI include Daily Growth Holdings and other
five subsidiaries.
 PRC
 The Groups PRC entities are subject to 25% PRC Enterprise Income Tax (EIT) on the taxable
income in accordance with the relevant PRC income tax laws, except for certain entities that
enjoy preferential tax rates, which are lower than the statutory rates, as described below.
 Under the EIT Law and its implementing rules, an enterprise which qualifies as a high and
new technology enterprise (the HNTE) is entitled to a tax rate of 15%. CFO Software, CFO
Meining and CFO Genius obtained the HNTE status in 2008.
 Under the EIT law and its implementing rules, enterprises that obtain status of Software
Enterprises are entitled to be exempted from EIT tax for the first two profit-making years
and enjoy a preferential 12.5% tax rate, which is half of the standard EIT rate of 25% for
the three years thereafter.
 A summary of the main PRC entities that subject to tax preferential policies for the year
ended December 31, 2010 is as follows:
 PRC entities
    
    Chinese enterprise income tax rate
    
    Qualification for preferential tax rateCFO Success
    
    Full tax exemption for the year 2008 and 2009 and a preferential tax rate of 12.5% from 2010 to 2012.
    
    Software EnterprisesCFO Qicheng
    
    Full tax exemption for the years 2010 and 2011, and preferential tax rate of 12.5% from 2012 to 2014
    
    Software EnterprisesCFO Shenzhen Shangtong
    
    Full tax exemption for the years 2010 and 2011, and preferential tax rate of 12.5% from 2012 to 2014
    
    Software EnterprisesCFO Zhengning
    
    Full exemption for the year 2008 and preferential tax rate of 10%, 11% and 12% from 2009 to 2011.
    
    Software EnterprisesCFO Stockstar
    
    Transition tax rate 22%, 24% for 2010, 2011 and 25% from 2012 and thereafter.
    
    Transition rules of the EIT LawCFO Jujin
    
    Transition tax rate 22%, 24% for 2010, 2011 and 25% from 2012 and thereafter.
    
    Transition rules of the EIT LawCFO New land
    
    Transition tax rate 22%, 24% for 2010, 2011 and 25% from 2012 and thereafter.
    
    Transition rules of the EIT LawCFO Software
    
    Preferential tax rate of 7.5% from 2008 to 2010.
    
    HNTE and local tax policy to apply 50% reduced tax rateCFO Meining
    
    Preferential tax rate of 15% from 2008 to 2010.
    
    HNTECFO Genius
    
    Preferential tax rate of 15% from 2008 to 2010.
    
    HNTE
  F-37




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 14.
    
    INCOME TAXES  continued
 PRC continued
 The HNTE status obtained by CFO Software, CFO Meining and CFO Genius in 2008 under the EIT
Law is valid for three years and qualifying entities can then apply to renew for an
additional three years provided their business operations continue to qualify for the HNTE
status. The Group assumed its qualifying entities will continue to obtain the renewal in
the future. Accordingly, in calculating deferred tax assets and liabilities, the Group
assumed its qualifying entities will continue to renew the HNTE status at the conclusion of
the initial three year period.
 CFO Chongzhi, CFO
Zhongcheng and Shanghai Shangtong Co., Ltd. (CFO-Shangtong) are approved by the local tax
authority in 2009 and 2010 to file their income tax by adopting the deemed-profit method.
Under this method, the three entities filed their income tax by calculating as 2.5% of the
gross revenues. This method is subject to be reevaluated by the local tax authority in the
future.
 The EIT Law includes a provision specifying that legal entities organized outside of the PRC
will be considered residents for PRC Income tax purposes if the place of effective
management or control is within the PRC. The implementation rules to the EIT Law provide
that non-resident legal entities will be considered PRC residents if substantial and overall
management and control over the manufacturing and business operations, personnel,
accounting, properties, etc, occurs within the PRC. Despite the present uncertainties
resulting from the limited PRC tax guidance on the issue, the Group does not believe that
currently the legal entities organized outside of the PRC within the Group should be treated
as residents for EIT law purposes. If the PRC tax authorities subsequently determine that
the Company and its subsidiaries registered outside the PRC should be deemed a resident
enterprise, the Company and its subsidiaries registered outside the PRC will be subject to
the PRC income tax at a rate of 25%.
 If the Company were to be non-resident for PRC tax purpose, dividends paid to it out of
profits earned after January 1, 2008 would be subject to a withholding tax. In the case of
dividends paid by PRC subsidiaries the withholding tax would be 10% not considering the
arrangements for the Avoidance of Double Taxation on income and Prevention of Fiscal
Evasion with respect to Taxes on Income between mainland and Hong Kong.
  F-38




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 14.
    
    INCOME TAXES  continued
 PRC continued
 Aggregate undistributed earnings of the Groups subsidiaries located in PRC that are taxable
upon distribution to the Group are considered to be indefinitely reinvested because the
Group does not have any present plan to pay any cash dividends on its ordinary shares in the
foreseeable future and intends to retain most of its available funds and any future earnings
for use in the operation and expansion of its business. Accordingly, no deferred tax
liability has been accrued for the Chinese dividend withholding taxes that would be payable
upon the distribution of those amounts to the Company as of December 31, 2010.
 Income tax (provision) benefit was as follows:
 December 31,2008
    
    
    2009
    
    
    2010Current
    
    $
    (153,261
    )
    
    $
    (471,120
    )
    
    $
    (362,861
    )Deferred
    
    
    3,200,390
    
    
    
    917,284
    
    
    
    99,475Total
    
    $
    3,047,129
    
    
    $
    446,164
    
    
    $
    (263,386
    )
 The principal components of deferred income taxes were as follows:
 December 31,2009
    
    
    2010Current deferred tax assets:Deferred revenue  current
    
    $
    2,852,510
    
    
    $
    2,785,595Accrued expenses and other liability
    
    
    200,775
    
    
    
    828,746Net operating loss carrying forwards
    
    
    183,525
    
    
    
    19,779Total current deferred tax assets
    
    
    3,236,810
    
    
    
    3,634,120Non-current deferred tax assets:Deferred revenue  non-current
    
    $
    1,829,496
    
    
    $
    1,680,936Net operating loss carrying forwards
    
    
    2,321,949
    
    
    
    4,038,3544,151,445
    
    
    
    5,719,290Less: valuation allowance
    
    
    (2,272,602
    )
    
    
    (4,038,354
    )Total non-current deferred tax assets
    
    $
    1,878,843
    
    
    $
    1,680,936Non-current deferred tax liabilities:Intangible assets
    
    
    (994,573
    )
    
    
    (966,689
    )Total non-current deferred tax liabilities
    
    $
    (994,573
    )
    
    $
    (966,689
    )
  F-39




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 14.
    
    INCOME TAXES  continued
 PRC continued
 A valuation allowance of $2,272,602 and $4,038,354 was established as of December 31, 2009
and 2010, respectively, for the entities that have incurred losses because the Group
believes that it is more likely than not that the related deferred tax assets will not be
realized in the future. At December 31, 2010, operating loss carry forwards includes
approximately $13.2 million which will expire by 2015, and $7.3 million which will carry
forward indefinitely.
 A reconciliation between the statutory PRC enterprise income tax rate of 25% and the
effective tax rate is as follows:
 Years ended December 31,2008
    
    
    2009
    
    
    2010%
    
    
    %
    
    
    %Statutory tax rate in PRC
    
    
    25.0
    
    
    
    (25.0
    )
    
    
    25.0Effect of tax holiday
    
    
    (74.3
    )
    
    
    (38.2
    )
    
    
    (221.8
    )Effect of different income tax rates in
other jurisdictions
    
    
    1.3
    
    
    
    2.6
    
    
    
    9.7Non-deductible expenses
    
    
    39.0
    
    
    
    45.9
    
    
    
    143.2Non-taxable income
    
    
    (7.9
    )
    
    
    (14.4
    )
    
    
    (32.2
    )Change in valuation allowance
    
    
    (2.2
    )
    
    
    22.4
    
    
    
    89.9Effective tax rate
    
    
    (19.1
    )
    
    
    (6.7
    )
    
    
    13.8
 During the years ended December 31, 2008, 2009 and 2010, if the China Finance Onlines
subsidiaries in the PRC were neither in the tax holiday period nor had they been
specifically allowed special tax concessions, they would have recorded additional income tax
expense of $11,660,280, $2,373,822 and 4,208,756, respectively. The impact of the tax
holidays on basic net income per ordinary share was an increase of $0.12, $0.02 and $0.04,
for the years ended December 31, 2008, 2009 and 2010, respectively.
 The Group did not identify significant unrecognized tax benefits for the years ended
December 31, 2008, 2009 and 2010. The Group did not incur any interest and penalties
related to potential underpaid income tax expenses and also believed that the adoption of
pronouncement issued by FASB regarding accounting for uncertainty in income taxes did not
have a significant impact on the unrecognized tax benefits within 12 months from December
31, 2010.
 Since September 2010, the relevant tax authorities of the Groups subsidiaries and VIEs have
not conducted a tax examination. In accordance with relevant PRC tax administration laws,
tax years from 2005 to 2010 of the Groups PRC subsidiaries and VIEs remain subject to tax
audits as of December 31, 2010, at the tax authoritys discretion.
  F-40




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 15.
    
    AMERICAN DEPOSITARY SHARES (ADS) PLAN
 In October 2005, the Group issued 2,000,000 ordinary shares to its American Depositary
Receipt bank and in exchange received 400,000 ADSs for purposes of future exercise of share
options by employees.
 As of December 31, 2006, all 400,000 ADSs had been issued to employees who exercised their
options. In January 2006, the Group issued 3,000,000 ordinary shares to its American
Depositary Receipt bank and in exchange received 600,000 ADSs for purposes of future
exercise of share options by employees.
 As of December 31, 2007, 905,256 American depositary shares (ADSs) had been issued to
employees and the remaining 94,744 ADSs continued to be held by the Group for future
exercises. These 94,744 ADSs represent 473,720 ordinary shares of the Group.
 As of December 31, 2008, the remaining ADSs carried from 2007 were used for option exercise.
No ADS is outstanding for potential option exercises.
 In June 2009, the shareholders approved the increase in the number of ordinary shares
available for issuance under the 2004 Plan by 3,000,000 ordinary shares.
 In June 2010, the shareholders approved the increase in the number of ordinary shares
available for issuance under the 2004 Plan by 3,000,000 ordinary shares annually until
December 31, 2014.
 16.
    
    REPURCHASED SHARES
 In year 2005, the Group repurchased 10,708,030 ordinary shares at prices ranging from $1.13
to $1.41 per share, including brokerage commission, for a total consideration of
$13,200,394. In year 2007, the Group granted 10,558,493 nonvested shares to employees out
of the repurchased shares. Therefore there were 149,537 repurchased shares at the end of
2007. In year 2008 and 2009, 95,950 and 750 repurchased shares were used for options
exercised by employees, respectively. Therefore, the number of the remaining repurchased
share as of December 31, 2008, 2009 and 2010 was 53,587, 52,837 and 52,837, respectively.
  F-41




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 17.
    
    NET INCOME (LOSS) PER SHARE
 The following table sets forth the computation of basic and diluted income (loss) per share
for the years indicated:
 Years ended December 31,2008
    
    
    2009
    
    
    2010Net income (loss) attributable to
China Finance
Online Co. Limited
    
    $
    19,020,115
    
    
    $
    (6,219,743
    )
    
    $
    1,960,122Weighted average ordinary shares
outstanding used in computing basic
net income per share
    
    
    98,957,993
    
    
    
    105,203,564
    
    
    
    108,247,552Plus: Incremental shares from assumed
conversions of stock options
and nonvested shares
    
    
    14,026,539
    
    
    
    
    
    
    
    5,877,470Weighted average ordinary shares
outstanding used in computing diluted
net income per share (note)
    
    
    112,984,532
    
    
    
    105,203,564
    
    
    
    114,125,022Net income (loss) per share attributable to
China Finance Online Co. Limited- basic
    
    $
    0.19
    
    
    $
    (0.06
    )
    
    $
    0.02- diluted
    
    $
    0.17
    
    
    $
    (0.06
    )
    
    $
    0.02
 As of December 31, 2008 and 2010, 1,491,776 options and zero nonvested shares, and 767,083
options and zero nonvested shares were excluded in computation of diluted net income per
share,respectively, because their effects were anti-dilutive. For year 2009, all of the
options and nonvested shares were anti-dilutive because the Group was in the loss position.
 18.
    
    MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION
 Full time employees of the Group in the PRC participate in a government-mandated defined
contribution plan pursuant to which certain pension benefits, medical care, unemployment
insurance, employee housing fund and other welfare benefits are provided to employees.
Chinese labor regulations require the Group to accrue for these benefits based on certain
percentages of the employees salaries. The total provisions for such employee benefits
were $1,913,046, $3,228,517 and $3,898,237 for the years ended December 31, 2008, 2009 and
2010 respectively.
  F-42




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 19.
    
    NONCONTROLLING INTEREST
 Daily Growth
    
    
    CFO Securities
    
    
    Daily GrowthSecurities
    
    
    Consulting
    
    
    Holdings
    
    
    TotalBalance as of December 31, 2007
    
    
    471,431
    
    
    
    
    
    
    
    
    
    
    
    471,431Acquisition of noncontrolling interest of Daily Growth
Securities (Note 3)
    
    
    (440,798
    )
    
    
    
    
    
    
    
    
    
    
    (440,798
    )Net loss
    
    
    (30,633
    )
    
    
    
    
    
    
    
    
    
    
    (30,633
    )Balance as of December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of CFO Securities Consulting (Note 3)
    
    
    
    
    
    
    261,660
    
    
    
    
    
    
    
    261,660Net loss
    
    
    
    
    
    
    (2,131
    )
    
    
    
    
    
    
    (2,131
    )Balance as of December 31, 2009
    
    
    
    
    
    
    259,529
    
    
    
    
    
    
    
    259,529Acquisition of noncontrolling intetres of CFO Securities
Consulting (Note 3)
    
    
    
    
    
    
    (5,233
    )
    
    
    
    
    
    
    (5,233
    )Share-based compensation of Daily
Growth Holdings (Note 13)
    
    
    
    
    
    
    
    
    
    
    14,865
    
    
    
    14,865Net loss
    
    
    
    
    
    
    (254,296
    )
    
    
    (71,667
    )
    
    
    (325,963
    )Balance as of December 31, 2010
    
    
    
    
    
    
    
    
    
    
    (56,802
    )
    
    
    (56,802
    )
 20.
    
    COMMITMENTS
 The Group leases certain office premises and purchases data under non-cancelable leases.
Rent expense under operating leases for 2008, 2009 and 2010 were $2,038,449, $2,970,407 and
$3,067,950, respectively.
 Future minimum payments under non-cancelable operating leases and data purchase agreements
were as follows:
 Year ending2011
    
    
    3,981,0402012
    
    
    1,331,6882013
    
    
    276,7282014
    
    
    91,409Total
    
    $
    5,680,865
 21.
    
    SEGMENT AND GEOGRAPHIC INFORMATION
 The Group has two operating segments (1) online financial data subscription service and
other related services, (2) brokerage service. Operating segments are defined as components
of an enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision-makers in deciding how to allocate resources and
in assessing performance. The Groups chief executive officer and chief operating officer
have been identified as the chief operating decision makers. The Groups chief operating
decision makers direct the allocation of resources to operating segments based on the
profitability and cash flows of each respective segment.
  F-43




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 21.
    
    SEGMENT AND GEOGRAPHIC INFORMATION  continued
 The Group evaluates performance based on several factors, including net revenue, cost of
revenue, operating expenses, income from operation. The accounting policies of the business
segments are the same as those described in Note 2: Summary of Significant Accounting
Policies. The following tables show the operations of the Groups operating segments:
 For the year ended December 31, 2010
 Subscriptionservices andother related
    
    
    Brokerageservices
    
    
    services
    
    
    ConsolidatedNet revenue
    
    $
    56,712,796
    
    
    $
    3,003,246
    
    
    $
    59,716,042Cost of revenue
    
    
    8,098,809
    
    
    
    398,336
    
    
    
    8,497,145Operating expenses:General and administrative
    
    
    10,976,571
    
    
    
    2,231,766
    
    
    
    13,208,337Product development
    
    
    13,027,879
    
    
    
    
    
    
    
    13,027,879Sales and marketing
    
    
    25,241,232
    
    
    
    1,749,861
    
    
    
    26,991,093Total operating expenses
    
    
    49,245,682
    
    
    
    3,981,627
    
    
    
    53,227,309Government subsidies
    
    
    514,113
    
    
    
    
    
    
    
    514,113Loss from operations
    
    
    (117,582
    )
    
    
    (1,376,717
    )
    
    
    (1,494,299
    )Total assets
    
    
    147,245,516
    
    
    
    32,845,066
    
    
    
    180,090,582
 For the year ended December 31, 2009
 Subscriptionservices andother related
    
    
    Brokerageservices
    
    
    services
    
    
    ConsolidatedNet revenue
    
    $
    51,377,247
    
    
    $
    2,228,630
    
    
    $
    53,605,877Cost of revenue
    
    
    7,498,892
    
    
    
    647,832
    
    
    
    8,146,724Operating expenses:General and administrative
    
    
    15,302,683
    
    
    
    1,679,349
    
    
    
    16,982,032Product development
    
    
    10,754,380
    
    
    
    
    
    
    
    10,754,380Sales and marketing
    
    
    25,762,671
    
    
    
    332,562
    
    
    
    26,095,233Total operating expenses
    
    
    51,819,734
    
    
    
    2,011,911
    
    
    
    53,831,645Government subsidies
    
    
    567,373
    
    
    
    
    
    
    
    567,373Loss from operations
    
    
    (7,374,006
    )
    
    
    (431,113
    )
    
    
    (7,805,119
    )Total assets
    
    
    137,075,374
    
    
    
    28,534,063
    
    
    
    165,609,437
  F-44




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 21.
    
    SEGMENT AND GEOGRAPHIC INFORMATION  continuedFor the year ended December 31, 2008
 Subscriptionservices andother related
    
    
    Brokerageservices
    
    
    services
    
    
    ConsolidatedNet revenue
    
    $
    55,286,219
    
    
    $
    956,549
    
    
    $
    56,242,768Cost of revenue
    
    
    (9,181,922
    )
    
    
    (185,221
    )
    
    
    (9,367,143
    )Operating expenses:General and administrative
    
    
    (14,055,716
    )
    
    
    (1,315,455
    )
    
    
    (15,371,171
    )Product development
    
    
    (5,635,173
    )
    
    
    
    
    
    
    (5,635,173
    )Sales and marketing
    
    
    (13,342,967
    )
    
    
    (177,328
    )
    
    
    (13,520,295
    )Total operating expenses
    
    
    (33,033,856
    )
    
    
    (1,492,783
    )
    
    
    (34,526,639
    )Government subsidies
    
    
    436,946
    
    
    
    
    
    
    
    436,946Income (loss) from operations
    
    
    13,507,387
    
    
    
    (721,455
    )
    
    
    12,785,932Total assets
    
    
    124,128,214
    
    
    
    17,695,097
    
    
    
    141,823,311
 Enterprise wide disclose
 The Group derives revenue from external customers for each of the following services during
the years presented:
 Years ended December 31,2008
    
    
    2009
    
    
    2010Subscription fees
    
    $
    50,598,929
    
    
    $
    47,201,162
    
    
    $
    49,518,331Advertising revenue
    
    
    2,946,389
    
    
    
    3,985,699
    
    
    
    7,031,219Brokerage service revenue
    
    
    956,549
    
    
    
    2,228,630
    
    
    
    3,003,246Others
    
    
    1,740,901
    
    
    
    190,386
    
    
    
    163,246Total revenue from external customers
    
    $
    56,242,768
    
    
    $
    53,605,877
    
    
    $
    59,716,042
 Substantially all of the Companys revenues for the years ended December 31, 2008, 2009 and
2010 were generated from the PRC and Hong Kong.
 As of December 31, 2008, 2009 and 2010, respectively, substantially all of long-lived assets
of the Group are located in the PRC and Hong Kong.
  F-45




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
(In U.S. dollars)
 22.
    
    STATUTORY RESERVES AND RESTRICTED NET ASSETS
 PRC legal restrictions permit payments of dividends by the Groups PRC entities only out of
their retained earnings, if any, determined in accordance with PRC regulations. Prior to
payment of dividends, pursuant to the laws applicable to the PRC Domestic Enterprises and
PRC Foreign Investment Enterprises, the PRC entities must make appropriations from after-tax
profit to non-distributable statutory reserve funds as determined by the Board of Directors
of the Group. These reserve funds include the (1) general reserve, (2) enterprise expansion
fund and (3) staff bonus and welfare fund. Subject to certain cumulative limits, the general
reserve fund requires annual appropriations of not less than 10% of after-tax profit (as
determined under accounting principles and financial regulations applicable to PRC
enterprises at each year-end); the other two funds are to be made at the discretion of the
board of directors of each of the Groups subsidiaries.
 These reserve funds can only be used for specific purposes and are not distributable as cash
dividends.
 The appropriation to these reserves by the Groups PRC subsidiaries were $3,335,073, $nil
and $221,679 in 2008, 2009 and 2010.
 The balance of the statutory reserves was 5,485,798 and 5,707,477 as of December 31 2009 and
2010. Such reserves have been included in the retained earnings of the Companys
consolidated balance sheet.
 As a result of these PRC laws and regulations and the requirement that distributions by PRC
entities can only be paid out of distributable profits computed in accordance with PRC GAAP,
the PRC entities are restricted from transferring a portion of their net assets to the
Group. Amounts restricted include paid-in capital and the statutory reserves of the
Companys PRC subsidiaries and VIEs. As of December 31, 2010, the aggregate amounts
restricted which represented the amount of net assets of the relevant subsidiaries and VIEs
in the Group not available for distribution was $74,864,472. As a result of the above
restrictions, parent-only financials are presented on financial statement Schedule I.
 23.
    
    SUBSEQUENT EVENT
 Grant of share option
 On February 1st, 2011, the Company granted 200,000 options to an employee with an
exercise price of $1.14 per share.
  F-46




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 
 Additional Information  Financial Statement Schedule I
Financial information of Parent Company
Balance sheets
(In U.S. dollars, except share-related data)
 December 31,2009
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,620,238
    
    
    $
    2,808,010Amounts due from subsidiaries
    
    
    19,016,051
    
    
    
    3,637,539Prepaid expenses and other current assets
    
    
    20,352
    
    
    
    99,156Dividends receivable
    
    
    25,836,613
    
    
    
    26,638,314Total current assets
    
    
    48,493,254
    
    
    
    33,183,019Investments in subsidiaries
    
    
    47,893,966
    
    
    
    72,211,545Cost method investment
    
    
    1,479,571
    
    
    
    1,479,571Goodwill
    
    
    50,534
    
    
    
    50,534Total assets
    
    $
    97,917,325
    
    
    $
    106,924,669Liabilities and shareholders equityCurrent liabilities:Accrued expenses and other current liabilities
    
    
    367,357
    
    
    
    313,903Amounts due to subsidiaries
    
    
    142,572
    
    
    
    710,861Total current liabilities
    
    $
    509,929
    
    
    $
    1,024,764Shareholders equityOrdinary shares ($0.00013 par value; 500,000,000 shares authorized as of
December 31, 2009 and 2010, respectively; 110,250,163 and 110,887,883 shares
issued and outstanding as of December 31, 2009 and 2010, respectively)
    
    
    14,237
    
    
    
    14,319Additional paid-in capital
    
    
    74,130,609
    
    
    
    78,974,697Accumulated other comprehensive income
    
    
    6,342,765
    
    
    
    8,030,982Retained earnings
    
    
    16,919,785
    
    
    
    18,879,907Total shareholders equity
    
    
    97,407,396
    
    
    
    105,899,905Total liabilities and shareholders equity
    
    $
    97,917,325
    
    
    $
    106,924,669
  F-47




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 Financial information of Parent Company
Statements of operations
(In U.S. dollars)
 December 31,2008
    
    
    2009
    
    
    2010Cost of revenues
    
    $
    
    
    
    $
    
    
    
    $
    139,276Gross profit
    
    
    
    
    
    
    
    
    
    
    (139,276
    )Operating expenses:General and administrative
    
    
    577,934
    
    
    
    1,071,533
    
    
    
    760,786Product development
    
    
    
    
    
    
    
    
    
    
    53,202Share-based compensation
    
    
    8,040,150
    
    
    
    6,600,716
    
    
    
    4,420,572Total operating expenses
    
    
    8,618,084
    
    
    
    7,672,249
    
    
    
    5,234,560Interest income
    
    
    50,970
    
    
    
    4,510
    
    
    
    2,249Equity in earnings of subsidiaries and VIEs
    
    
    25,997,391
    
    
    
    1,469,390
    
    
    
    6,500,738Exchange gain (loss)
    
    
    1,589,838
    
    
    
    (21,394
    )
    
    
    830,971Net income (loss)
    
    $
    19,020,115
    
    
    $
    (6,219,743
    )
    
    $
    1,960,122
  F-48




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 Financial Information of Parent Company
Parent Company Statement of Shareholders Equity and Comprehensive Income
(In U.S. dollars, except share data)
 Additional
    
    
    Accumulated other
    
    
    
    
    
    
    TotalOrdinary shares
    
    
    paid-in
    
    
    comprehensive
    
    
    Retained
    
    
    shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    capital
    
    
    income (loss)
    
    
    earnings
    
    
    equity
    
    
    incomeBalance as of January 1, 2008
    
    
    109,754,433
    
    
    
    14,172
    
    
    
    58,727,378
    
    
    
    4,501,432
    
    
    
    4,119,413
    
    
    
    67,362,395Exercise of share options by employees
    
    
    
    
    
    
    
    
    
    
    531,449
    
    
    
    
    
    
    
    
    
    
    
    531,449Exercise of share options by non-employees
    
    
    260,000
    
    
    
    34
    
    
    
    41,566
    
    
    
    
    
    
    
    
    
    
    
    41,600Share-based compensation
    
    
    
    
    
    
    
    
    
    
    8,040,150
    
    
    
    
    
    
    
    
    
    
    
    8,040,150Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,946,646
    
    
    
    
    
    
    
    1,946,646
    
    
    
    1,946,646Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,020,115
    
    
    
    19,020,115
    
    
    
    19,020,115Balance as of December 31, 2008
    
    
    110,014,433
    
    
    
    14,206
    
    
    
    67,340,543
    
    
    
    6,448,078
    
    
    
    23,139,528
    
    
    
    96,942,355
    
    
    
    20,966,761Exercise of share options by employees
    
    
    185,730
    
    
    
    24
    
    
    
    181,357
    
    
    
    
    
    
    
    
    
    
    
    181,381Exercise of share options by non-employees
    
    
    50,000
    
    
    
    7
    
    
    
    7,993
    
    
    
    
    
    
    
    
    
    
    
    8,000Share-based compensation
    
    
    
    
    
    
    
    
    
    
    6,600,716
    
    
    
    
    
    
    
    
    
    
    
    6,600,716Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105,313
    )
    
    
    
    
    
    
    (105,313
    )
    
    
    (105,313
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,219,743
    )
    
    
    (6,219,743
    )
    
    
    (6,219,743
    )Balance as of December 31, 2009
    
    
    110,250,163
    
    
    
    14,237
    
    
    
    74,130,609
    
    
    
    6,342,765
    
    
    
    16,919,785
    
    
    
    97,407,396
    
    
    
    (6,325,056
    )Exercise of share options by employees
    
    
    637,720
    
    
    
    82
    
    
    
    717,175
    
    
    
    
    
    
    
    
    
    
    
    717,257Share-based compensation
    
    
    
    
    
    
    
    
    
    
    4,420,572
    
    
    
    
    
    
    
    
    
    
    
    4,420,572Equity pick up from compensation of a subsidiary
    
    
    
    
    
    
    
    
    
    
    84,234
    
    
    
    
    
    
    
    
    
    
    
    84,234Acquisition of noncontrolling interest of CFO
Securities Consulting
    
    
    
    
    
    
    
    
    
    
    (377,893
    )
    
    
    
    
    
    
    
    
    
    
    (377,893
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,688,217
    
    
    
    
    
    
    
    1,688,217
    
    
    
    1,688,217Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,960,122
    
    
    
    1,960,122
    
    
    
    1,960,122Balance as of December 31, 2010
    
    
    110,887,883
    
    
    
    14,319
    
    
    
    78,974,697
    
    
    
    8,030,982
    
    
    
    18,879,907
    
    
    
    105,899,905
    
    
    
    3,648,339
  F-49




---



##### Table of Contents



CHINA FINANCE ONLINE CO. LIMITED
 Financial information of Parent Company
Statements of cash flows
(In U.S. dollars, except share-related data)
 December 31,2008
    
    
    2009
    
    
    2010Operating activities:Net income (loss)
    
    $
    19,020,115
    
    
    $
    (6,219,743
    )
    
    $
    1,960,122Adjustments to reconcile net income (loss) to
net cash used in operating activities:Share-based compensation
    
    
    8,040,150
    
    
    
    6,600,716
    
    
    
    4,420,572Equity in earnings of subsidiaries
    
    
    (25,997,391
    )
    
    
    (1,469,390
    )
    
    
    (6,500,738
    )Changes in assets and liabilities:Prepaid expenses and other current assets
    
    
    84,695
    
    
    
    28,525
    
    
    
    (78,804
    )Amounts due from subsidiaries
    
    
    (15,071,573
    )
    
    
    (105,742
    )
    
    
    (1,845,474
    )Accrued expenses and other current liabilities
    
    
    (1,541,036
    )
    
    
    31,836
    
    
    
    (53,454
    )Amounts due to subsidiaries
    
    
    (47,217
    )
    
    
    129,250
    
    
    
    568,289Net cash used in operating activities
    
    
    (15,512,257
    )
    
    
    (1,004,548
    )
    
    
    (1,529,487
    )Investing activities:Net cash provided by investing activities
    
    
    
    
    
    
    
    
    
    
    Financing activities:Proceeds from stock options exercised by employees
    
    
    531,449
    
    
    
    181,381
    
    
    
    717,257Proceeds from exercise of options granted to non-employee
    
    
    41,600
    
    
    
    8,000
    
    
    
    Net cash provided by financing activities
    
    
    573,049
    
    
    
    189,381
    
    
    
    717,257Effect of exchange rate changes
    
    
    (2
    )
    
    
    (2
    )
    
    
    2Net decrease in cash and cash equivalents
    
    
    (14,939,210
    )
    
    
    (815,169
    )
    
    
    (812,228
    )Cash and cash equivalents, beginning of the year
    
    
    19,374,617
    
    
    
    4,435,407
    
    
    
    3,620,238Cash and cash equivalents, end of the year
    
    $
    4,435,407
    
    
    $
    3,620,238
    
    
    $
    2,808,010
  Basis for preparation
   F-50