China Internet Cafe (OTC BB:CICC)

First Quarter 2012 Results

• For the quarter ended March 31, 2012, net revenue increased 10% to $7.13 million, compared to $6.5 million in the first quarter of 2011.
• Net income increased by approximately $1.04 million to approximately $0.33 million for the quarter ended March 31, 2012 from net loss of approximately $0.71 million during the same period in 2011.
• Earnings per share were $0.01 compared to negative $0.04 for the first quarter of 2011.

Customers continue to visit our cafes because of our convenient locations, high speed connectivity and new computers which offer a wide variety of games and movies, creating an excellent experience," said Mr. Dishan Guo, Chief Executive Officer of the Company. "We will continue to balance our growth between existing cafes, new cafe openings, and acquisitions. With approximately $22 million of cash and strong cash flows, we are evaluating several attractive options to deploy our capital organically and through acquisitions."

Business Updates

Management expects to open 1 new cafe during the second quarter of 2012. The average capital expenditure to open a new store varies by size and location but typically averages $250,000. With average annual revenue per store of $500,000 and a 28% net margin, the average payback period is less than 2 years.

The Company plans to drive same store sales by offering new loyalty programs such as online gaming competitions, while increasing the availability of high quality, value-added content such as movies, TV shows and video games. In 2012, a credit rewards program will allow loyal customers to earn extra gaming time and encourage credit consumption. For example, customers recharging 100 RMB into the IC card will receive a 20% credit back the following month. New cafes will be outfitted with private rooms that are equipped with surround sound and movie screening areas. It will also include team gaming and tournament play areas with LCD screens for spectator viewing to drive incremental player utilization and the average revenue per user.

Management is actively evaluating potential acquisitions outside Shenzhen in order to expand its geographic footprint and to eventually secure a national internet cafe license. The Company will follow a strict set of criteria for all acquisition candidates in order to maximize returns to shareholders. The Company believes it will consummate a transaction by the summer of 2012.

Fourth Quarter 2011 Results

• For the quarter ended December 31, 2011, net revenue increased 41% to $8.9 million, compared to $6.3 million in the fourth quarter of 2010.
• For the quarter ended December 31, 2011, EPS was $0.14 vs $0.07 in prior year quarter

"We are pleased to report a great fourth quarter, which achieved strong top line growth to finish a successful 2011 with positive momentum," said Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe. "During 2011, we opened 15 new stores, bringing the total number of internet cafes operating under the "Dragon Surf" brand name to 59. While we continue to expand our presence in Shenzhen, we have also worked to identify suitable acquisition targets in provinces beyond Guangdong, which will leverage our management expertise and operating infrastructure to capitalize on growth opportunities in other desirable geographic locations."

Third Quarter 2011 Results

• For the quarter ended September 30, 2011, net revenue increased 47% to $8.6 million, compared to $5.8 million in the third quarter of 2010.
• Non-GAAP adjusted net income for the period was $2.0 million, a 25% increase from the $1.6 million for the year ago period. Non-GAAP adjusted earnings per share were $0.09 compared to $0.08 for the third quarter of 2011 and 2010, respectively.

"We are seeing balanced growth in our new and existing cafes," explained Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe. "Revenues from our cafes opened one year or longer increased 1.3%, representing 66% of total sales. More customers are coming to our cafes because of our convenient locations, high speed connectivity and new games and movies at an affordable price. With strong economic growth and migrant flows in Shenzhen, we expect to maintain solid growth for the remainder of 2011 and into 2012."

On September 13, 2011, China Internet Cafe Holdings Group, Inc. (the “Company”) made a presentation to investors and potential investors at the Rodman & Renshaw Annual Global Investment Conference held at the Waldorf = Astoria Hotel in New York City.

Second Quarter 2011 Results

• For the quarter ended June 30, 2011, net revenue increased 88% to $8.6 million, compared to $4.6 million in the second quarter of 2010
• Adjusted earnings per share were $0.10 compared to $0.08 for the first quarter of 2011 and 2010, respectively.

"We are pleased to report robust growth for the first half of 2011," said Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe." We have experienced balanced improvements across our 57 stores, including 13 opened year-to-date in Shenzhen. By offering customers convenient locations, high speed connectivity with quality computers, in addition to new games and movies at an affordable price, we have created unique social gathering places where our younger customers continue to visit frequently. Our user base is supported by rapid computer adoption and increasing disposable income. CICC recently received two key awards from the National Internet Cafe Development Union and Guangdong Provincial Government, further denoting our achievements as both a visionary and a leader in our industry. With over $16 million in cash and strong cash flow, our growth strategy includes a balance of organic growth through existing cafes, complemented by targeted new cafe openings, and acquisitions."

SHENZHEN, China, June 21, 2011 /PRNewswire-Asia/ -- China Internet Cafe Holdings Group, Inc. ("CICC" or the "Company") (OTCQB: CICC), one of the largest owners and chain operators of internet cafes in southern China, announced the grand opening of seven new internet cafes, bringing the total number of operating locations to 55 in Shenzhen.

The seven new locations were opened throughout Shenzhen in April and May 2011 for a total capital investment of $3.3 million with a combined capacity of over 1,600 computers. Selection for the new cafes were identified by the Company's dedicated team which sources prime locations within walking distance to factories, and within highly populated and dense geographies such as universities, industrial zones and business centers. Management expects to initially have approximately 226,000 registered users across the new locations in the first month of operation, with average revenue per computer of $0.55/hour. After the first month, China Internet Cafe estimates the total client base for the seven new cafes will grow to reach 10.8 million users.

"We are excited to have reached our 55th cafe opening, and expect these seven additional cafes to generate approximately $3.2 million during the next twelve months," said Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe. "Although the pace has been rapid, each cafe is carefully selected in areas with dense concentrations of our targeted customer base to maximize its revenue contribution. These customers include students and local workers who value our premium high speed Internet performance and reliability, and wide variety of high-end games and entertainment. Going forward we will continue to evaluate additional new locations to execute our growth plans."

• For the quarter ended March 31, 2011, net revenue increased 74% to $6.5 million, compared to $3.7 million in the first quarter of 2011.

"We delivered solid growth in the first quarter," said Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe. "Customers continue to visit our cafes because of our convenient locations, high speed connectivity and new computers which offer a wide variety of games and movies, creating an excellent experience. We will continue to balance our growth between existing cafes, new cafe openings, and acquisitions. With over $15 million of cash and strong cash flows, we are evaluating several attractive options to deploy our capital organically and through acquisitions."

• Gross profit for the first quarter of 2011 increased by $0.9 million, to $2.5 million, up 60% from the first quarter of 2010.
• Adjusted net income for the period was $1.7 million, a 45% increase from the $1.2 million for the year ago period. Adjusted earnings per share were $0.08 compared to $0.06 for the first quarter of 2011 and 2010, respectively.

For the quarter ended December 31, 2010, net revenue increased 74.5% to $6.3 million, compared to $3.6 million in the fourth quarter of 2009

"We are pleased to report a strong fourth quarter, which achieved record top line growth to finish a successful 2010 with positive momentum," said Mr. Dishan Guo, Chief Executive Officer of China Internet Cafe. "During the fourth quarter we opened 5 new stores, bringing the total number of internet cafes operating under the "Dragon Surf" brand name to 44. While we continue to expand our presence in Shenzhen, we have also worked to identify suitable acquisition targets in provinces beyond Guangdong, which will leverage our management expertise and operating infrastructure to capitalize on growth opportunities in other desirable geographic locations."

• Gross profit for the fourth quarter of 2010 increased 58.0% to $2.3 million, compared to $1.5 million in the fourth quarter of 2009.
• Net income for the fourth quarter of 2010 was $1.5 million, or $0.08 per diluted share, an increase of 36.4% compared to $1.1 million or $0.06 per share for the same period last year.

SUMMARY FINANCIALS

Business Outlook

In 2011 the China Internet Cafe will focus on organic growth of its owned and operated ("O&O") internet cafe outlets as it continues to expand its presence in Shenzhen, where population growth and the influx of migrant workers are expected to continue. CICC opened 16 new cafes in 2010, and increase of 57% from 28 in 2009. The average capital expenditures per cafe in 2010 were $0.25 million and are consistent with the strategy to open more high-end cafes with a larger number of total seats. With average revenue per store of $0.52 million per year and a 28% net margin, the average payback period is 1.5 to 2 years.

During the first quarter of 2011, the Company opened four new locations. During the second quarter of 2011, management expects to add seven new cafes. This includes a mix between small and large depending on the demographics surrounding each location.

The Company plans to drive same store sales by offering new loyalty programs such as online gaming competition and focusing on increasing the availability of high quality value-added content such movies, TV shows and video games. In 2011, a credit rewards program will allow loyal customers to earn extra gaming time and encourage credit consumption. For example, customers using 300-499 credits within a month will receive a 5% credit back the following month. New cafes will be outfitted with private rooms with surround sound, equipped movie screening areas, and team gaming and tournament play areas with LCD screens for spectator viewing to drive incremental revenue and increase the average revenue per user.

Management is currently evaluating acquisitions outside Shenzhen in order to expand its geographic footprint and to eventually secure a national internet cafe license. The Company continues to carry out stringent due diligence on potential targets, with a disciplined focus on accretive opportunities. As such, management is confident it will consummate a transaction before the beginning of September 2011.

Beginning in the second half of 2011 China Internet Cafe plans to launch a unique franchise model which will leverage the company's operating expertise. The franchisee will have no up-front costs aside from the build-out, will own the cafe and receive 60% of annual income. China Internet Cafe will grant the franchisee the right to use CICC's internet cafe operating license and Junlong brand, assist the franchisee with securing the appropriate store location, train the management team, and assist with implementing all operating and finance software in exchange for 40% of each franchise store's net income.

SHENZHEN, China, Feb. 23, 2011 /PRNewswire-Asia/ -- China Internet Cafe Holdings Group, Inc.  announced that the Company closed a private placement financing with investors with gross proceeds of $6.35 million to fund the expansion of the Company's internet cafe portfolio.

SHENZHEN, China, Dec. 16, 2010 /PRNewswire-Asia-FirstCall/ -- China Unitech Group, Inc. ("China Unitech" today announced that it has added five new internet cafes in Shenzhen, bringing the total number of internet cafes under the Company's operation to 48.

From October to December 2010, China Unitech added five internet cafes in Shenzhen with a total capital investment of $1.5 million. Comprised of 815.6 square meters on average, these internet cafes are located in Bao'an, Henggang, Pingshan, and Shajing, Shenzhen. With estimated average payback period of 2 years, management expects these stores to contribute an aggregate of approximately $2.4 million annually in total. Currently, one of the internet cafes is ready for operation, while the remaining ones are in the process of construction. China Unitech believes construction and renovation of the four other internet cafes will be completed by March 2011. For 2010, China Unitech expects to achieve approximately $19 million in revenue.

"Following our recent successful introduction of seven additional new internet cafes in the third quarter of this year, we are pleased that we further expanded our network in Shenzhen by adding five facilities to be operated under the "Dragon Surf" brand name, which we believe will enable us to expedite penetration in our existing market. In order to increase capacity, we are planning to add a total of 1332 computer units to these new internet cafes. We believe the investment in additional equipment will contribute favorably to our revenue and profitability over time," commented Mr. Dishan Guo, Chief Executive Officer of China Unitech Group, Inc. "As one of the biggest internet café operators in Shenzhen, we plan to continue to look for opportunities to strengthen our network in our key market, while identifying suitable acquisition targets to enter provinces beyond Guangdong, which will qualify us to become a national internet café operator in China."

GeoTeam Note:  CUIG reported 2009 revenues of $14.0 million, net income of $4.4 milion and EPS of $0.23.  Guidance implies that it will report 2010 vs 2009 fourth quarter

• revenues of about $5.0 million vs. $3.6 million
• net income of about $1.4 million vs. $1.1 million
• EPS of about $0.07 vs. $0.06

Third Quarter 2010 Highlights

• Revenue increased 61.4% to $5.8 million year-over-year

• Gross profit increased 83.5% year-over-year to $2.7 million

• Operating income increased 52.7% to $2.2 millionyear-over-year

• Net income was $1.6 millionin the third quarter of 2010, up 41.4% year-over-year

• EPS was $0.08 vs. $06

• Cash flow provided by operating activities was $6.1 millionfor the nine months ended September 30, 2010, as compared to $3.6 million for the same period last year

• Acquired one internet cafe in and opened 6 additional internet cafes in the third quarter of 2010

"We are pleased to report another quarter of momentous financial performance with significant surges in our top line and bottom line, representing an increase of 61.4% and 41.4%, respectively, year-over-year. During the third quarter, we successfully added 7 additional new stores, bringing the total number of internet cafes under the "Dragon Surf" brand name to 43. While we continued to expand our presence in Shenzhen, we executed innovative ways to attract and sustain customers, resulting in improved average occupation rate. This has demonstrated Junlong's seasoned capability and Junlong is well on the way to becoming a major national internet cafe operator in the future," commented Mr. Dishan Guo, Chief Executive Officer of China Unitech Group, Inc.

Business Outlook

The Company plans to complete acquisitions in Guizhou, Yunnan and Sichuan provinces in the future in order to qualify as a national internet cafe operator.

"For the remainder of 2010, we continue to look for acquisition opportunities to expand our presence outside of Guangdong province as this move would enable us to qualify as one of few national internet cafe operators in China. While we are lagging behind our initial timeline for completing cross provincial acquisitions, we continue to carry out stringent due diligence on potential targets. Despite the delay, we anticipate healthy and stable top line growth in the last quarter of 2010 supported by our acquisitions completed thus far and the strong market demand for internet cafe services," commented Mr. Guo.

Second Quarter 2010 Results:

• For the quarter ended June 30, 2010, net revenue increased 27.4% to $4.6 million, compared to $3.6 millionin the second quarter of 2009.
  
• Net income increased 25.3% to $1.4 million, compared to $1.1 million for the same period last year.

"We are pleased to report strong second quarter financial results, characterized by double-digit growth in both our top and bottom line. Recently, we acquired two internet cafes and opened six independently managed locations under our "Dragon Surf" brand name. Located in the Longgang and Yantian districts of Shenzhen, these internet cafes contributed favorably to our year-over-year revenue growth of 27.4%. As a leading internet cafe operator, we are committed to providing a safe, entertaining and interactive place for internet users in China," commented Mr. Dishan Guo, Chief Executive Officer of China Unitech Group, Inc.

Business Outlook

For the remainder of the year, the Company plans to focus on geographic expansion and expects continued growth in the demand for internet cafes due to the increased population of migrant workers.

"In the second half of this year, we plan to expand our presence to Guizhou, Yunnan and Sichuan provinces, which will enable us to qualify as one of the few national internet cafe operators by the end of 2010. This will mark a significant milestone for us in our quest to expand our footprint outside of Guangdong province. We also plan to open additional, independently managed internet cafes in strategic locations in Shenzhen in order to accelerate penetration of our existing geographic markets. We anticipate market demand for internet cafes to remain strong, which in turn will support our top line performance during the remaining months of this year," commented Mr. Guo.

On July 2, 2010 China Unitech Group consummated a reverse merger transaction with Classic Bond.

 Company Snapshot:

Classic Bond is a holding company that owns 100% of the outstanding capital stock of Zhonghefangda, a PRC company that operates a chain of internet cafés. 

 **Also upon the closing of the reverse acquisition, our board of directors increased its size from one to five members

Industry Snapshot:

• Internet cafés have been booming in China in the recent years. According to the "Survey of China Internet Café Industry" by the Ministry of Culture in 2005, China had 110,000 internet cafés, with more than 1,000,000 employees and contributing RMB 18,500,000,000 to China's GDP. According to an article entitled “China Surpasses U.S. in Number of Internet Users” written by David Barboza in the New York Times July 26, 2008 issue, the number of internet users in the China reached about 253 million in June 2008, thereby, putting China ahead of the United States as the world’s biggest internet market. Within the Chinese internet market, internet cafés have been a fast growing segment.
  
• According to Pearl Research, a business intelligence and consulting firm, China’s online game market rose 63% in 2008 to $2.8 billion. Given the relatively low rate of computer ownership in China as compared to Western countries, internet cafés have become the primary distribution point for games in China. A substantial number of game players access online games through internet cafés and these players are crucial for survival of internet cafés.  Given the pivotal position of internet cafés, many online game companies have been making great efforts to support internet cafés to expand their customer base.
  
• Besides games, internet cafés are able to develop partnerships with other online information providers. These companies provide games as well as other information services. These providers have significant revenues and profits.

Post Merger Share Calculation:

•   6,173,600: Pre reverse merger outstanding shares 
•   5,173,600: Shares cancelled as part of the Share Exchange
• 19,000,000: Newly issued shares of Common Stock

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  20,000,000

Financial Snapshot:

• Our revenue is generated from sales of prepaid IC cards. Sales revenue increased $516,402, or 16.11%, to $3,721,105 for the three months ended March 31, 2010 from $3,204,703 for the same period in 2009. The increase was mainly because of the revenue generated by the cafes opened in 2009 which became operative in the first quarter of 2010.
  
• Our net income increased $172,075, or 17.36%, to $1,163,259 during the three months ended March 31, 2010 from $991,184 during the same period in 2009.