ADDITIONAL INFORMATION—FINANCIAL STATEMENT SCHEDULE I
TAOMEE HOLDINGS LIMITED
FINANCIAL INFORMATION OF PARENT COMPANY

BALANCE SHEETS
(In USD, except share and per share data, unless otherwise stated)

	As of December 31,
	2013			2014
Assets
Current assets:
Cash and cash equivalents	$	35,106,326		$	27,573,723
Short-term investment		2,992,343			—
Other current assets		772,412			122,905
Amounts due from subsidiaries		9,800,000			10,100,000

Total current assets		48,671,081			37,796,628
Investment in subsidiaries		64,434,458			69,491,249
Investments in joint venture		11,720,661			9,955,663

Total assets		124,826,200			117,243,540


Liabilities and equity
Current liabilities:
Accrued expenses and other current liabilities	$	788,831		$	253,108
Amounts due to subsidiaries		1,989,218			1,986,840

Total current liabilities		2,778,049			2,239,948
Long-term liabilities		278,017			152,706

Total liabilities		3,056,066			2,392,654


Equity:
Taomee Holdings Limited shareholders' equity
Ordinary shares ($0.00002 par value; 875,000,000 shares authorized; 741,126,859 and 751,088,350 shares issued; 735,913,039 and 708,350,670 shares outstanding as of December 31, 2013 and 2014, respectively)		14,823			15,022
Treasury stock (at cost)		(1,198,904	)		(11,521,316	)
Additional paid-in capital		73,757,483			76,308,327
Accumulated other comprehensive income		4,342,755			4,188,419
Retained earnings		44,853,977			45,860,434

Taomee Holdings Limited shareholders' equity		121,770,134			114,850,886
Total liabilities and equity	$	124,826,200		$	117,243,540

FINANCIAL INFORMATION FOR PARENT COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
(In USD, except share and per share data, unless otherwise stated)

	For the years ended December 31,
	2012			2013			2014
Total revenues		—			—			—
Total cost of revenues		(255,315	)		(289,921	)		(294,132	)

Gross profit		(255,315	)		(289,921	)		(294,132	)

Operating expenses:
Product development expenses		(498,500	)		(360,853	)		(448,179	)
Sales and marketing expenses		(128,978	)		(56,938	)		(16,394	)
General and administrative expenses		(1,674,529	)		(1,691,514	)		(3,052,836	)

Total operating expenses		(2,302,007	)		(2,109,305	)		(3,517,409	)

Loss from operations		(2,557,322	)		(2,399,226	)		(3,811,541	)
Interest income		765,544			892,353			483,718
Other income (expenses), net		860,337			800,988			(398,536	)
Impairment loss on investment in equity investees		—			—			(1,400,000	)

Loss before income taxes		(931,441	)		(705,885	)		(5,126,359	)

Income tax expense		—			(31,351	)		(12,746	)
Share of gain in subsidiary, net of taxes		9,095,284			5,581,239			6,109,173
Share of gain in joint venture, net of taxes		698,024			597,257			36,389
Net income attributable to Taomee Holdings Limited	$	8,861,867		$	5,441,260		$	1,006,457

FINANCIAL INFORMATION FOR PARENT COMPANY

STATEMENTS OF COMPREHENSIVE INCOME OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014

(In USD, except share and per share data, unless otherwise stated)

	For the years ended December 31,
	2012		2013		2014
Net income attributable to Taomee Holdings Limited	$	8,861,867	$	5,441,260	$	1,006,457
Other comprehensive income, net of tax of nil
Foreign currency translation adjustments		189,354		1,787,185		(154,336	)

Comprehensive income attributable to Taomee Holdings Limited	$	9,051,221	$	7,228,445	$	852,121

FINANCIAL INFORMATION FOR PARENT COMPANY

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014

	For the years ended December 31,
	2012			2013			2014
Operating activities:
Net income attributable to Taomee Holdings Limited	$	8,861,867		$	5,441,260		$	1,006,457
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Share-based compensation		2,252,552			2,142,445			2,228,431
Share of profit in subsidiaries		(9,370,537	)		(6,578,897	)		(4,554,504	)
Share of profit in equity investment		(698,024	)		(597,257	)		(36,389	)
Deferred income taxes		—			31,351			12,746
Gain on disposal of short-term investment		—			—			(15,043	)
Impairment on investment in equity investees		—			—			1,400,000
Changes in assets and liabilities:
Amount due from subsidiaries		—			(9,800,000	)		(300,000	)
Prepayments and other current assets		(256,109	)		389			649,507
Accrued expenses and other current liabilities		(513,883	)		108,389			(535,723	)
Amounts due to subsidiaries		1,574			345,341			(2,378	)
Long-term liabilities		403,371			(125,354	)		(125,311	)

Net cash provided by (used in) operating activities		680,811			(9,032,333	)		(272,207	)


Investing activities:
Cash paid to acquire equity investees		(6,205,000	)		(3,550,003	)		—
Purchases of short-term investment		—			(2,992,343	)		—
Disposal of short-term investment		—			—			3,007,386

Net cash provided by (used in) investing activities		(6,205,000	)		(6,542,346	)		3,007,386


Financing activities:
Issuance cost of ordinary shares		(340,713	)		—			—
Proceeds from exercise of share options		275,825			1,046,021			648,663
Repurchase of ordinary shares		(1,681,520	)		(2,144,386	)		(10,322,412	)

Net cash used in financing activities		(1,746,408	)		(1,098,365	)		(9,673,749	)

Effect of exchange rate changes on cash and cash equivalents		664,840			800,988			(594,033	)

Net decrease in cash and cash equivalents		(6,605,757	)		(15,872,056	)		(7,532,603	)

Cash and cash equivalents, beginning of the year		57,584,139			50,978,382			35,106,326

Cash and cash equivalents, end of the year	$	50,978,382		$	35,106,326		$	27,573,723

FINANCIAL INFORMATION OF PARENT COMPANY

Note to Schedule I

1.	Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.
2.	The condensed financial information of Taomee Holdings Limited has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries.
3.	Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The statements of changes in equity have been omitted from the financial information of parent company as they are the same as the Group's consolidated statements of changes in equity. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the Consolidated Financial Statements of the Company.
4.	As of December 31, 2014, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately disclosed in the Consolidated Financial Statement, if any.

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