BEIJING, Nov. 19 /PRNewswire-Asia/ -- eFuture Information
Technology Inc. (Nasdaq: EFUT, the "Company" or "eFuture"), a
leading provider of software and services in China's rapidly
growing retail and consumer goods industries, today announced its
unaudited financial results for the fiscal quarter ended June 30,
2009 (the "Second Quarter") and restatement of unaudited financial
results for the fiscal quarter ended March 31, 2009 (the "First
Quarter"). As noted in previous press releases, the Company
reviewed its accounting for certain matters in the First Quarter
and has determined that a restatement of unaudited financial
information for the First Quarter is appropriate. The Company
previously released unaudited financial information for the First
Quarter in a press release dated June 9, 2009 (the "Press
Release"). Investors should no longer rely upon the financial
information contained in the Press Release. Investors should rely
solely upon the unaudited financial information for the First
Quarter contained herein. Second Quarter Financial Highlights: RMB
Unaudited Unaudited Quarter Ended Quarter Ended June 30, 2008 June
30, 2009 Reported Adjusted Reported Profit and Loss (selected)
Total Revenue 24,160,436 24,160,436 22,205,838 Total Cost of
10,368,762 10,368,762 12,387,931 Revenue Gross profit 13,791,673
13,791,673 9,817,907 Total Expenses 12,560,484 12,698,084
19,568,210 Income (loss) from operations 1,231,189 1,093,589
(9,750,303) Net Income 2,814,162 969,364 (11,383,275) (loss)
Comprehensive 0 0 0 Income/Loss Net Income per share - Basic 0.94
0.32 (3.39) - Diluted 0.94 0.32 (3.39) -- Total revenues decreased
8.09% year-over-year to RMB22.21 million (US$3.25 million). -
Revenue from software license sales increased 21.81% year-over-year
to RMB10.61 million (US$1.55 million). - Revenue from hardware
sales was nil, compared to RMB2.92 million in the second quarter of
2008. - Service fee income decreased 7.49% year-over-year to
RMB11.59 million (US$1.70 million). -- Gross profit decreased
28.81% year-over-year to RMB9.82 million (US$1.44 million). Gross
margin decreased to 44.21% from 57.08% in the second quarter of
2008. -- Operating loss was RMB9.75 million (US$1.43 million),
compared to net income of RMB1.09 million in the second quarter of
2008. -- Net loss was RMB11.38 million (US$1.67 million), compared
to net income of RMB0.97 million in the second quarter of 2008. --
Diluted net loss per share was RMB3.39 (US$0.50), as compared to
net income per share of RMB0.32 for the second quarter of 2008. --
Operating cash flow was -RMB14.42 million (-US$2.11 million). --
Adjusted net loss (non-GAAP) was RMB6.71 million (US$0.98 million),
compared to an adjusted net income of RMB4.52 million in the second
quarter of 2008. -- Non-GAAP adjusted diluted loss per share was
RMB1.98 (US$0.29). Mr. Adam Yan, Chairman and Chief Executive
Officer of eFuture, said, "Our results for the second quarter
reflect the challenges we have faced from the market slow-down,
especially in our logistics and department store and shopping mall
business. However, these challenges were mitigated somewhat by
healthy software license revenues driven by a rebound in demand in
our Supermarket, Specialty Store and Key Accounts SBUs. We have
continued to execute on our strategic, business and operational
imperatives, which are to solidify our core enterprise software
business, grow value-added services revenues, expand the scope and
depth of our eService offering, including our B2B service and SaaS
service for SCM and B2C eShopping platform and invest in building
our presence in the second and third tier cities. We believe our
business remains fundamentally sound, and we continue to be well
positioned to capitalize on the growth opportunities in the
software market for retail and consumer goods industries." Second
Quarter Unaudited Financial Results Revenue Revenue for the Second
Quarter decreased 8.09% to RMB22.21 million (US$3.25 million) from
RMB24.16 million in the second quarter 2008 mainly due to a
slow-down in hardware sales. Software license revenues increased by
21.08% year-over-year to RMB10.6 million, primarily attributable to
the recovery from Supermarket, Specialty Store and Key Account
SBUs. Service fee income decreased by 7.49% year-over-year, and as
a percentage of revenue continued to increase and accounted for
55.21% of total revenue in the Second Quarter, as compared to
51.87% in the same period last year. Revenue Breakdown 2008Q2
2009Q2 Restated RMB '000 RMB '000 USD '000 Y-o-Y Change Software
license sales 8,712 10,611 1,554 21.80% Hardware sales 2,916 -- --
-- Service fee income 12,533 11,595 1,698 (7.48%) Total 24,160
22,206 3,251 (8.09%) Cost of Revenues The cost of revenue for the
Second Quarter increased 19.47% to RMB12.39 million (US$1.81
million) from RMB10.37 million in the second quarter 2008. Cost of
Revenues Breakdown 2008Q2 2009Q2 Restated RMB '000 RMB USD Y-o-Y
'000 '000 Change Cost of software license sales 2,040 3,526 516
72.84 % Cost of hardware sales 2,549 -- -- -- Cost of service see
2,983 4,937 723 65.49 % Amortization of acquired technology 1,905
3,019 442 58.49 % Amortization of software costs 892 906 133 1.57 %
Total 10,369 12,388 1,814 19.47 % The increase in cost of revenue
was partially attributable to a one-time recognized cost from a few
unprofitable projects and the amortization of acquired technology
from Crownhead and Proadvancer. Gross Profit Second Quarter gross
profit decreased 28.81% year-over-year to RMB9.82 million (US$1.44
million), from RMB13.79 million in the second quarter of 2008.
Consolidated gross margin for the Second Quarter was 44.21%
compared with 57.08% in the second quarter of 2008. Operating
Expenses Research and development expenses for the Second Quarter
decreased 58.81% year-over-year to RMB92,179 (US$13,496) compared
with RMB223,792 in the second quarter of 2008. The year-over-year
decrease was a result of cost reallocation to cost of revenue and
to intangibles to be capitalised in future. General and
administrative expenses for the Second Quarter increased 22.35%
year-over-year to RMB10.03 million (US$1.47 million), or 45.18% of
total revenues, compared with RMB8.20 million, or 33.94% of total
revenue in the second quarter of 2008 and RMB7.88 million, or
56.97% of total revenue in the First Quarter. The increase in
general and administrative expenses as a percentage of revenues was
primarily due to the RMB2.7 million bad debt provision from Wangku,
our increased investment in the business expansion of bFuture.
Selling and distribution expenses for the Second Quarter increased
120.91% year-over-year to RMB9.44 million (US$1.38 million), or
42.53% of total revenues, compared with RMB4.27 million, or 17.69%
of total revenue in second quarter 2008 and RMB5.58 million, or
40.33% of total revenue in the First Quarter. The significant
increase was due to our continued investment in building our
regional sales/marketing teams to enhance our presence in tier 2
and 3 cities. Operating Income/Loss Operating loss in the Second
Quarter was RMB9.75 million (US$1.43 million), compared with an
operating income of RMB1.09 million in the second quarter of 2008.
Net Income/Loss and EBITDA As a result of the foregoing, Second
Quarter net loss was RMB11.38 million (US$1.67 million) compared
with a net income of RMB0.97 million in the second quarter of 2008.
Basic and diluted losses per share in the Second Quarter were both
RMB3.39 (US$0.50), compared to basic and diluted net income per
share of RMB0.32 in the second quarter of 2008. Adjusted net loss
(non-GAAP) for the Second Quarter was RMB6.71 million (US$0.98
million), compared to an adjusted net income of RMB4.52 million in
the second quarter of 2008. Second quarter 2009 adjusted non-GAAP
diluted loss per share was RMB1.98 (US$0.29). EBITDA (non-GAAP) for
the Second Quarter was -RMB4.79 million (-US$0.70 million),
compared with RMB4.73 million in the second quarter of 2008.
Balance Sheet and Cash Flow In the Second Quarter, net cash loss
from operating activities was RMB14.42 million (US$2.11 million),
while net cash used in investing activities was RMB7.20 million
(US$1.05 million). As of June 30, 2009, cash and cash equivalents
decreased 7.82% from March 31, 2009 to RMB39.20 million (US$5.74
million), mainly due to normal seasonal patterns in which cash flow
decreases in the first half while peaking in the second half of the
fiscal year. Total accounts receivable as of June 30, 2009
decreased 41.38% to RMB12.51million (US$1.83 million) from RMB21.33
million as of March 31, 2009. This decrease was mainly attributable
to improvement in collection and Wangku's increase in write off.
Inventories as of June 30, 2009 increased 11.37%
quarter-over-quarter to RMB7.65 million (US$1.12 million) due to
the increase in work-in process. Restatement of First Quarter 2009
Unaudited Financial Results RMB Unaudited Unaudited Quarter Ended
Quarter Ended March 31, 2008 March 31, 2009 Reported Adjusted
Reported Restated Profit and Loss (selected) Total Revenue
14,014,472 14,014,472 13,977,378 13,824,292 Total Cost of 9,300,139
9,300,139 8,992,326 9,315,216 Revenue Gross profit 4,714,333
4,714,333 4,985,052 4,509,077 Total Expenses 11,797,143 11,797,143
11,726,713 13,544,747 Income (loss) from operations (7,082,810)
(7,082,810) (6,741,662) (9,035,671) Net Income (loss) (9,225,286)
(6,340,016) (4,968,403) (7,469,813) Other Comprehensive Income/Loss
0 0 0 0 Net income (loss) per share Basic (3.14) (2.16) (1.96)
(2.22) Diluted (3.14) (2.16) (1.96) (2.22) The effects of the
restatement on some of the key items of our unaudited results of
the First Quarter are as follows: -- Total revenue slightly
decreased by 1.10% to RMB13.82 million -- Total cost of revenue has
increased by 3.59% to RMB9.32 million -- Gross profit decreased by
9.55% to RMB4.51 million -- Total expenses have increased by 15.50%
to RMB13.54 million -- Income loss has increased by 34.03% to
RMB9.04 million -- Recognized gains on derivatives of RMB1.30
million -- Foreign exchange loss reduced by 93.69% to RMB0.06
million -- Net Income loss has increased by 13.07% to RMB7.47
million -- Minority shareholder income was restated from RMB1.97
million to RMB0 million -- Net loss per common share, basic and
diluted was restated from RMB1.96 to RMB2.22 -- Non-GAAP adjusted
diluted loss per share was RMB0.82 (US$0.12). -- Operating cash
flow was restated from -RMB15.10 million to -RMB15.30 million The
comparison of the restated unaudited results of the First Quarter
against similarly calculated financial information for the results
of the first quarter of 2008, is as follows : -- Total revenues
decreased slightly more to 1.36% year-over-year to RMB13.82 million
(US$2.02 million). - Revenue from software license sales decreased
34.58% year-over-year to RMB4.95 million (US$0.72 million). -
Revenue from hardware sales decreased 0.99% year-over-year to
RMB1.40 million (US$0.20 million). - Service fee income was
restated from an increase of 51.3% to 48.40% year-over-year to
RMB7.48 million (US$1.09 million). -- Gross profit decreased 4.35%
year-over-year to RMB4.51 million (US$0.66 million). Gross margin
decreased to 32.62% from 33.64% in the first quarter of 2008. --
Operating loss was RMB9.04 million (US$1.32 million), compared to
an operating loss of RMB7.08 million in the first quarter of 2008.
-- Net loss increased to RMB7.47 million (US$1.09 million),
compared to a net loss of RMB6.34 million in the first quarter of
2008. -- Diluted net loss per share was RMB2.22 (US$0.33), as
compared to net loss per share of RMB2.16 for the first quarter of
2008. -- Adjusted net loss (non-GAAP) was RMB2.80 million (US$0.41
million), compared to an adjusted net loss of RMB0.77 million in
the first quarter of 2008. Miss Yu Ping, Chief Financial Officer of
eFuture, said, " I am very pleased to report that the accounting
adjustment process has been completed with the restatement of first
quarter 2009 financial results. The intent is to ensure adequate
reserve of social security benefits for our employees and to
enhance the accurate recognition of our revenue and cost base that
will enable us to better reflect our expanding business and
operational performance. We believe we are emerging from this
process in a more sound position than when we started and are
better positioned to ensure accurate and consistent financial
reporting moving forward." Notes on Restatement of First Quarter
Unaudited Financial Results The Company identified several errors
in its consolidated financial statements for the First Quarter. As
a result, certain amounts in the consolidated financial statements
were corrected from the amounts previously reported. The nature of
these errors included a net understatement of revenue on certain
software maintenance contracts, failure to apply step acquisition
accounting, improper timing of recognition for contingent
acquisition payments, improper calculation of deferred tax
liabilities, understatement of payroll accruals, and improper
recording of convertible notes. The convertible notes, issued on
March 13, 2007, contained a beneficial conversion feature and a
make-whole provision that were originally recorded at their
intrinsic values according to EITF 00-27 "Application of Issue No.
98-5 to Certain Convertible Instruments." The Series A Warrants,
Series B Warrants and Placement Agent Warrants issued in connection
with these notes were recorded as equity instruments at their grant
date fair value. It was subsequently determined that the make-whole
provision, beneficial conversion feature, and Series A and B
warrants contained provisions that triggered derivative treatment
under SFAS 133 "Accounting for Derivatives." Adjustments were
subsequently made to record the make-whole provision, beneficial
conversion feature, and optional early redemption right as a
bundled derivative liability. The Series A Warrants, Series B
Warrants and Placement Agent Warrants were considered separable
instruments and recorded as a separate derivative liability.
Changes in the fair values of these derivatives are recorded as
gains and losses on derivatives in the consolidated statement of
operations. Currency Convenience Translation For the convenience of
readers, certain RMB amounts in the restatement of the First
Quarter financial results have been translated into US dollars at
the rate of RMB6.8329 to US$1.00, the noon buying rate for US
dollars in effect on March 31, 2009 for cable transfers of RMB per
U.S. dollar as certified for customs purposes by the Federal
Reserve Bank of New York. And certain RMB amounts in the Second
Quarter financial results have been translated into US dollars at
the rate of RMB6.8302 to US$1.00, the noon buying rate for US
dollars in effect on June 30, 2009 for cable transfers of RMB per
U.S. dollar as certified for customs purposes by the Federal
Reserve Bank of New York. Third Quarter 2009 Results and Conference
Call eFuture expects to release unaudited financial results for the
third fiscal quarter of 2009 after the close of U.S. markets on
Monday, December 7, 2009. The earnings press release will be
available on the investor relations page of its website at
http://www.e-future.com.cn/eng/newslist.asp?lm=36&lmname=LM2 .
Following the earnings announcement, eFuture's senior management
will host a conference call on Tuesday, December 8, 2009 at 5:00 am
(Pacific) / 8:00 am (Eastern) / 9:00 pm (China) to discuss its
third quarter 2009 financial results and recent business activity.
The conference call may be accessed by calling: United States toll
free 1-866-519-4004 China (Landline) 800-819-0121 China (Mobile)
400-620-8038 United Kingdom toll free 0808-234-6646 Hong Kong toll
free 800-930-346 Conference ID 43021457 Please dial-in 10 minutes
before the call is scheduled to begin. A replay of the conference
call may be accessed by phone at the following numbers until 11:00
pm (Eastern), December 15, 2009: United States toll free
1-866-214-5335 China North 10-800-7140386 China South
10-800-1400386 United Kingdom toll free 0800-731-7846 Hong Kong
toll free 800-901-596 Conference ID 43021457 Additionally, a live
and archived webcast of the conference call will be available on
the investor relations section of eFuture's website at
http://www.e-future.com.cn/ENG/newshow.asp?id=513 . Use of Non-GAAP
Financial Measures To supplement eFuture's unaudited consolidated
financial results presented in accordance with U.S. GAAP, eFuture
uses the following non-GAAP measures defined as non-GAAP financial
measures by the SEC: adjusted EBITDA excluding amortization of
acquired software technology, amortization of intangibles,
share-based compensation expenses, depreciation, adjusted net
income excluding amortization of acquired software technology,
amortization of intangibles, share-based compensation expenses and
accretion on convertible notes, adjusted basic and diluted earnings
per share excluding amortization of acquired software technology,
amortization of intangibles, share-based compensation expenses and
accretion on convertible notes. The presentation of these non-GAAP
financial measures is not intended to be considered in isolation or
as a substitute for the financial information prepared and
presented in accordance with U.S. GAAP. eFuture believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding its performance and liquidity by excluding
expenses that may not be indicative of its operating performance
from a cash perspective or be indicative of its operating
performance. eFuture believes that both management and investors
benefit from referring to these non-GAAP financial measures in
assessing the Company's performance and when planning and
forecasting future periods. These non-GAAP financial measures also
facilitate management's internal comparisons to eFuture's
historical performance and liquidity. eFuture computes its non-GAAP
financial measures using the same consistent method from quarter to
quarter. The Company believes these non-GAAP financial measures are
useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its
financial and operational decision-making. The accompanying
paragraphs have more details on the reconciliations between GAAP
financial measures that are most directly comparable to non-GAAP
financial measures. eFuture's management also believes that EBITDA,
defined as earnings before interest, income tax expense,
depreciation and amortization is a useful financial metric to
assess its operating and financial performance before the impact of
investing and financing transactions and income taxes. In addition,
eFuture's management believes that EBITDA is widely used by other
companies in the software industry and may be used by investors as
a measure of its financial performance. Given the significant
investments that eFuture has made in property, equipment,
depreciation and amortization expense comprises a meaningful
portion of the Company's cost structure. eFuture's management
believes that EBITDA will provide investors with a useful tool for
comparability between periods because it eliminates depreciation
and amortization expense attributable to capital expenditures. The
presentation of EBITDA should not be construed as an indication
that the Company's future results will be unaffected by other
charges and gains eFuture considers to be outside the ordinary
course of its business. The use of EBITDA and adjusted EBITDA has
certain limitations. Depreciation and amortization expense for
various long-term assets, income tax expense, interest expense and
interest income have been and will be incurred and are not
reflected in the presentation of EBITDA. Further, share-based
compensation expenses have been and will be incurred and are not
reflected in the presentation of adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of
eFuture's financial results. The term EBITDA or adjusted EBITDA is
not defined under U.S. GAAP, and EBITDA or adjusted EBITDA is not a
measure of net income, operating income, operating performance or
liquidity presented in accordance with U.S. GAAP. When assessing
eFuture's operating and financial performance, you should not
consider this data in isolation or as a substitute for its net
income, operating income or any other operating performance measure
that is calculated in accordance with U.S. GAAP. In addition, the
Company's EBITDA and adjusted EBITDA may not be comparable to
EBITDA or similarly titled measures utilized by other companies
since such other companies may not calculate EBITDA in the same
manner as eFuture does. Statement Regarding Unaudited Financial
Information The unaudited financial information set forth above is
subject to adjustments that may be identified when audit work is
performed on the Company's year-end financial statements, which
could result in significant differences from this unaudited
financial information. About eFuture Information Technology Inc.
eFuture Information Technology Inc. (NASDAQ:EFUT) is a leading
provider of software and services in China's rapidly growing retail
and consumer goods industries. eFuture provides integrated software
and services to manufacturers, distributors, wholesalers, logistics
companies and retailers in China's front-end supply chain (from
factory to consumer) market, especially in the retail and fast
moving consumer goods industries. eFuture currently serves over 15
Fortune 500 companies, over 1,000 retailers and over 5,000
suppliers operating in China. eFuture is one of IBM's premier
business partners in Asia Pacific and is a strategic partner with
Oracle, Microsoft, JDA, Motorola and Samsung Network China. eFuture
has more than 600 employees and 20 branch offices across China. For
more information about eFuture, please visit
http://www.e-future.com.cn/ . Safe Harbor This announcement
contains forward-looking statements. These statements are made
under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar statements. Among other things, 2009
financial outlook and quotations from management in this
announcement, as well as strategic and operational plans, contain
forward-looking statements. eFuture may also make written or oral
forward-looking statements in periodic reports to the Securities
and Exchange Commission (the "SEC"), in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
second parties. Statements that are not historical facts, including
statements about the Company's beliefs and expectations, are
forward-looking statements. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: eFuture's anticipated growth strategies; eFuture's
future business development, results of operations and financial
condition; expected changes in the Company's revenues and certain
cost or expense items; eFuture's ability to attract customers and
leverage its brand; trends and competition in the software
industry; the Company's ability to control expenses and maintain
profit margins; the Company's ability to hire, train and retain
qualified managerial and other employees; the Company's ability to
develop new software and pilot new business models at desirable
locations in a timely and cost-effective manner; the performance of
third parties under contracts with the Company; the expected growth
of the Chinese economy software market in retail and consumer goods
industries; and Chinese governmental policies relating to private
managers and operators of software and applicable tax rates.
Further information regarding these and other risks is included in
eFuture's annual report on Form 20-F and other documents filed with
the SEC. All information provided in this press release and in the
attachments is as of November 19, 2009, and the Company undertakes
no duty to update such information or any other forward-looking
information, except as required under applicable law. For more
information, please contact: Investor Contact: Troe Wen, Company
Secretary eFuture Information Technology Inc. Tel: +86-10-5293-7699
Email: Investor Relations (US): Mahmoud Siddig Taylor Rafferty Tel:
+1-212-889-4350 Email: Investor Relations (HK): Ruby Yim Taylor
Rafferty Tel: +852-3196-3712 Email: Media Contact: Jason Marshall
Taylor Rafferty Tel: +1-212-889-4350 Email: EFUTURE INFORMATION
TECHNOLOGY INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE
SHEETS March March March March 31, 2009 31, 2009 31, 2008 31, 2008
(Reported) (Restated) (Reported) (Restated) ASSETS Current assets
Cash and cash RMB RMB RMB RMB equivalents 42,460,982 42,524,982
59,283,677 59,283,677 Trade receivables, less allowance for
doubtful accounts 23,184,359 21,333,449 13,845,503 13,845,503
Refundable value added tax 1,677,975 1,578,129 2,351,243 2,351,243
Deposits -- -- 209,660 209,660 Advances to employees 3,957,154
4,778,897 2,815,950 2,815,950 Advances to suppliers 1,186,250
1,395,298 657,724 657,724 Notes receivable - related party -- -- --
-- Other receivables 1,396,544 3,673,343 5,681,883 5,681,883
Prepaid expenses 993,138 455,515 880,875 880,875 Inventory
14,093,665 6,869,625 13,771,667 13,771,667 Total current assets
88,950,066 82,609,237 99,498,181 99,498,181 Non-current assets
Long-term investments 654,192 654,192 4,901,912 4,901,912 Long term
deferred expense -- 285,000 -- -- Deferred loan costs 673,888
1,097,696 4,539,826 7,252,043 Deferred assets 6,552,316 -- 171,583
171,583 Property and equipment, net of accumulated depreciation
3,155,857 3,509,836 1,969,249 1,969,249 Intangible assets, net of
accumulated amortization 57,915,045 48,988,255 42,288,011
42,288,011 Goodwill 69,595,844 91,284,735 46,814,929 46,814,929
Total non-current assets 138,547,142 145,819,714 100,685,509
103,397,726 Total assets RMB RMB RMB RMB 227,497,208 228,428,951
200,183,690 202,895,907 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Trade accounts payable RMB RMB RMB RMB
4,667,102 2,290,929 4,052,516 4,052,516 Other payable 3,454,587
12,784,897 2,209,216 2,209,216 Accrued expenses 3,893,034 4,708,929
3,566,471 3,566,471 Accrued interest -- (27,332) 76,619 69,872
Taxes payable 6,000,035 5,782,023 5,101,258 5,101,258 Deferred
Revenues 7,228,517 -- -- -- Deferred Tax 4,698,487 -- 4,826,454
4,826,454 Advances from customers 23,014,933 26,400,130 15,564,504
15,564,504 Royalstone acquisition obligation, current portion
6,415,374 6,426,752 15,860,198 15,860,198 Health Field acquisition
obligation 552,855 553,908 3,175,318 3,175,318 Proadvancer System
acquisition obligation 14,555,799 30,004,186 -- -- BFuture
acquisition obligation -- 392,877 -- -- Make-whole obligation,
current portion -- -- 707,312 -- Convertible note payable, current
portion 322,397 -- 2,785,890 -- Deferred tax, current portion --
1,164,898 -- -- Total current liabilities 74,803,120 90,482,197
57,925,757 54,425,808 Long-term liabilities Royalstone acquisition
obligation, net of current portion -- -- 6,093,683 6,093,683
Make-whole obligation, net of current portion 719,094 -- 9,290,082
-- 3% - 10% convertible note payable, net of unamortized discount
674,517 31,073 6,770,666 135,076 Derivative liabilities --
3,828,952 -- (3,776,075) Deferred tax -- 5,458,232 -- -- Minority
shareholder interests 1,972,733 -- (375,070) (375,070) Total
long-term liabilities 3,366,345 9,318,257 21,779,360 2,077,613
Shareholders' equity Ordinary shares, $0.0756 U.S. dollars par
value; 6,613,756 shares authorized;3,362,241 shares outstanding
2,038,631 2,039,196 1,839,898 1,839,898 Additional paid-in capital
224,849,534 173,819,877 169,131,602 197,548,234 Statutory reserves
3,084,020 3,084,020 3,084,020 3,084,020 Accumulated deficit
(80,644,442) (50,314,596) (53,576,948) (56,079,667) Total
shareholders' equity 149,327,743 128,628,497 120,478,573
146,392,486 Total liabilities and RMB RMB RMB RMB shareholders'
equity 227,497,208 228,428,951 200,183,690 202,895,907 EFUTURE
INFORMATION TECHNOLOGY INC. AND SUBSIDIARY CONDENSED CONSOLIDATED
INCOME STATEMENTS March March 31, March March 31, 31, 2009 2009 31,
2008 2008 (Reported) (Restated) (Reported) (Restated) Revenues
Software sales RMB RMB RMB RMB 4,956,292 4,949,335 7,565,110
7,565,110 Hardware sales 1,395,170 1,395,170 1,409,113 1,409,113
Service fee income 7,625,916 7,479,788 5,040,249 5,040,249 Total
Revenues 13,977,378 13,824,292 14,014,472 14,014,472 Cost of
Revenue Cost of software 1,298,681 1,092,129 1,845,125 1,845,125
Cost of hardware 1,367,984 1,370,114 1,204,786 1,204,786 Cost of
service fee income 2,311,579 2,952,121 1,493,129 1,493,129
Amortization of acquired technology 3,110,375 2,996,500 3,860,243
3,860,243 Amortization of software costs 903,707 904,352 896,856
896,856 Total Cost of Revenue 8,992,326 9,315,216 9,300,139
9,300,139 Gross Profit 4,985,052 4,509,077 4,714,333 4,714,333
Operating Expenses Research and development 242,261 93,566 167,288
167,288 General and administrative 5,742,794 7,876,101 7,870,673
7,870,673 Selling and distribution expenses 5,741,659 5,575,080
3,759,182 3,759,182 Total Operating Expenses 11,726,713 13,544,747
11,797,143 11,797,143 Profit from operations (6,741,662)
(9,035,671) (7,082,810) (7,082,810) Interest income 180,273 180,273
112,611 112,611 Interest expense (110,484) (145,097) (314,520)
(307,773) Interest expense- amortization of discount on notes
payable (199,648) (6,648) (488,504) (29,348) Interest expense-
amortization of deferred loan costs (55,387) (86,062) (242,378)
(403,212) Income on investments -- -- (558,389) (558,389) Gain on
derivative liabilities -- 1,290,861 -- 3,776,075 Loss on
extinguishment of convertible notes -- -- -- -- Foreign currency
exchange gain/(loss) (883,409) (55,769) (805,787) (2,001,661)
Outside business receives 6,320 -- -- -- Outside business disburses
-- -- -- -- Loss before taxation (7,803,997) (7,858,113)
(9,379,777) (6,494,507) Income tax -- 388,299 -- -- Minority
interest in loss of consolidated subsidiary 1,197,422 -- 154,491
154,491 Net loss RMB RMB RMB RMB (6,606,575) (7,469,813)
(9,225,286) (6,340,016) EFUTURE INFORMATION TECHNOLOGY INC. AND
SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS June June June 30,
2009 30, 2008 30, 2008 (Reported) (Reported) (Restated) ASSETS
Current assets Cash and cash equivalents RMB RMB RMB 39,198,012
58,822,685 58,822,685 Trade receivables, less allowance for
doubtful accounts 12,506,545 22,261,041 22,261,041 Refundable value
added tax 2,242,320 2,564,891 2,564,891 Deposits -- 209,660 209,660
Advances to employees 4,114,868 4,288,058 4,288,058 Advances to
suppliers 1,082,244 817,830 817,830 Notes receivable - related
party -- -- -- Other receivables 3,896,064 4,034,326 4,034,326
Prepaid expenses 2,147,132 1,098,565 1,098,565 Inventory 7,650,692
18,729,440 18,729,440 Total current assets 72,837,877 112,826,496
112,826,496 Non-current assets Long-term investments 654,192
767,119 767,119 Long term deferred expense 817,382 -- -- Deferred
loan costs 1,011,697 4,261,251 1,367,605 Deferred assets -- 171,083
171,083 Property and equipment, net of accumulated depreciation
4,028,150 3,847,802 3,847,802 Intangible assets, net of accumulated
amortization 48,052,877 43,540,399 43,540,399 Goodwill 91,284,735
46,357,407 46,357,407 Total non-current assets 145,849,033
98,945,061 96,051,415 Total assets RMB RMB RMB 218,686,910
211,771,556 208,877,910 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities Trade accounts payable RMB RMB RMB 2,601,091
4,433,913 4,433,913 Other payable 13,724,591 8,833,770 8,833,770
Accrued expenses 5,520,983 3,348,548 3,348,548 Accrued interest
(27,321) 74,874 68,145 Taxes payable 5,965,735 4,817,410 4,817,410
Deferred Revenues -- 3,206,685 3,206,685 Deferred Tax -- 4,716,502
4,716,502 Advances from customers 23,617,532 20,819,237 20,819,237
Royalstone acquisition obligation, current portion 6,424,213
15,360,066 15,360,066 Health Field acquisition obligation 553,689
3,102,981 3,102,981 Proadvancer System acquisition obligation
29,992,330 -- -- BFuture acquisition obligation 392,877 -- --
Make-whole obligation, current portion -- 479,561 -- Convertible
note payable, current portion -- 2,890,708 -- Deferred tax, current
portion 776,599 -- -- Total current liabilities 89,542,319
72,084,256 68,707,259 Long-term liabilities Royalstone acquisition
obligation, net of current portion -- 6,093,683 6,093,683
Make-whole obligation, net of current portion -- 9,290,082 -- 3% -
10% convertible note payable, net of unamortized discount 31,238
6,770,666 27,134 Derivative liabilities 5,502,956 -- (7,552,150)
Deferred tax 5,458,232 -- -- Minority shareholder interests 359,045
(3,496,172) (3,496,172) Total long-term liabilities 11,351,471
18,658,259 (4,927,505) Shareholders' equity Ordinary shares,
$0.0756 U.S. dollars par value; 6,613,756 shares
authorized;3,362,241 shares outstanding 2,039,196 1,849,061
1,849,061 Additional paid-in capital 174,572,189 170,675,900
199,092,532 Statutory reserves 3,084,020 3,084,020 3,084,020
Accumulated deficit (61,902,285) (54,579,940) (58,927,456) Total
shareholders' equity 117,793,120 121,029,041 145,098,157 Total
liabilities and shareholders' equity RMB RMB RMB 218,686,910
211,771,556 208,877,910 EFUTURE INFORMATION TECHNOLOGY INC. AND
SUBSIDIARY CONDENSED CONSOLIDATED INCOME STATEMENTS June 30, June
30, 2009 2008 June 30, 2008 (Reported) (Reported) (Restated)
Revenues Software sales RMB RMB RMB 10,611,112 8,711,537 8,711,537
Hardware sales -- 2,915,871 2,915,871 Service fee income 11,594,726
12,533,027 12,533,027 Total Revenues 22,205,838 24,160,436
24,160,436 Cost of Revenue Cost of software 3,526,283 2,039,796
2,039,796 Cost of hardware -- 2,549,247 2,549,247 Cost of service
fee income 4,937,353 2,983,426 2,983,426 Amortization of acquired
technology 3,018,653 1,904,687 1,904,687 Amortization of software
costs 905,642 891,606 891,606 Total Cost of Revenue 12,387,931
10,368,762 10,368,762 Gross Profit 9,817,907 13,791,673 13,791,673
Operating Expenses Research and development 92,179 223,792 223,792
General and administrative 10,032,444 8,061,899 8,199,499 Selling
and distribution expenses 9,443,587 4,274,793 4,274,793 Total
Operating Expenses 19,568,210 12,560,484 12,698,084 Profit from
operations (9,750,303) 1,231,189 1,093,589 Interest income 162,491
873,560 873,560 Interest expense (174,914) (504,649) (504,668)
Interest expense- amortization of discount on notes payable (204)
(857,519) (598) Interest expense- amortization of deferred loan
costs (87,176) (278,575) (408,432) Income on investments -- 47,802
47,802 Gain on derivative liabilities (1,673,706) -- 3,776,075 Loss
on extinguishment of convertible notes -- -- (22,529,228) Foreign
currency exchange gain/(loss) 12,059 711,914 16,893,223 Outside
business receives -- 23,400 -- Outside business disburses --
(161,000) -- Loss before taxation (11,511,752) 1,086,122 (758,676)
Income tax 283,108 (140,695) (140,695) Minority interest in loss of
consolidated subsidiary (154,631) 1,868,735 1,868,735 Net loss RMB
RMB RMB (11,383,275) 2,814,162 969,364 EFUTURE INFORMATION
TECHNOLOGY INC. AND SUBSIDIARY NON-GAAP MEASURES OF PERFORMANCE
March 31,2009 June 30,2009 RMB RMB US$ (Unaudited) (Unaudited)
(Unaudited) NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA
Operating income (loss) (GAAP Basis) (9,035,671) (9,750,303)
(1,426,964) Adjustments for non-GAAP measures of performance: Add
back amortization of acquired software technology 2,996,500
3,018,653 441,782 Add back amortization of intangibles 904,352
905,642 132,541 Add back share-based compensation expenses 765,226
752,311 110,101 Adjusted non-GAAP operating income (4,369,593)
(5,073,697) (742,540) Add back depreciation 145,241 286,790 41,972
Adjusted EBITDA (Earnings before interest, taxes, depreciation and
amortization) (4,224,353) (4,786,907) (700,567) NON-GAAP OPERATING
INCOME (LOSS) AND ADJUSTED EBITDA, as a percentage of revenue
Operating income (loss) (GAAP BASIS) -65% -44% -44% Adjustments for
non-GAAP measures of performance: Amortization of acquired software
technology 22% 14% 14% Amortization of intangibles 7% 4% 4%
Share-based compensation expenses 6% 3% 3% Adjusted non-GAAP
operating income -32% -23% -23% Depreciation 1.1% 1.3% 1.3%
Adjusted EBITDA (Earnings before interest, taxes, depreciation and
amortization) -31% -22% -22% NON-GAAP EARNINGS PER SHARE Net
Income(Loss) (7,469,813) (11,383,275) (1,665,951) Amortization of
acquired software technology 2,996,500 3,018,653 441,782
Amortization of intangibles 904,352 905,642 132,541 Accretion on
convertible notes 6,648 204 30 Share-based compensation expenses
765,226 752,311 110,101 Adjusted Net income (2,797,088) (6,706,465)
(981,497) Adjusted non-GAAP diluted earnings per share (0.82)
(1.98) (0.29) Shares used to compute non-GAAP diluted earnings per
share 3,394,099 3,384,625 3,384,625 EFUTURE INFORMATION TECHNOLOGY
INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Chinese Yuan (Renminbi) U.S. Dollars December 31, June 30, June 30,
2008 2009 2009 (Unaudited) (Unaudited) (Unaudited) Cash flows from
operating activities: Net income (loss) (4,478,112) (18,853,088)
(2,760,254) Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities: Depreciation 891,183
432,031 63,253 Amortization of intangible assets 16,940,774
7,802,991 1,142,425 Impairment of intangible assets 2,143,290 -- --
Amortization of discount on notes payable 33,212 6,852 1,003
Amortization of deferred loan costs 978,204 173,237 25,363 Gain on
derivatives (33,122,465) 382,845 56,052 Loss on extinguishment of
convertible notes 22,529,233 -- -- Investment (income)/loss
3,552,902 -- -- Loss on disposition of property and equipment
385,995 -- -- Provision for doubtful debt 2,340,706 (601,051)
(87,999) Provision for loss in inventory and work in process
1,449,542 -- -- Compensation expense for options issued to
employees 3,109,903 1,517,537 222,181 Deferred taxes 481,774
(776,598) (113,701) Foreign exchange loss (2,222,996) -- --
Minority interest 204,414 154,631 22,639 Change in assets and
liabilities: Accounts receivable (2,526,441) 7,562,535 1,107,220
Refundable value added tax 935,333 513,382 75,163 Deposits 156,695
-- -- Advances to employees 370,994 (1,138,969) (166,755) Advances
to suppliers 991,888 (883,492) (129,351) Other receivables 136,565
(4,798,228) (702,502) Prepaid expenses 305,014 (1,497,998)
(219,320) Inventories 1,421,159 (4,725,723) (691,886) Trade
payables 1,230,861 (3,086,149) (451,839) Other payables 7,269,063
6,781,730 992,904 Accrued expenses 2,360,449 (1,351,672) (197,896)
Accrued interest (278,420) (27,321) (4,000) Taxes payable
(1,084,826) (2,781,130) (407,181) Advances from customers 4,542,952
778,002 113,906 Net cash provided by operating activities
31,048,845 (14,415,643) (2,110,574) Cash flows from investing
activities: Purchases of property and equipment (1,618,331)
(861,635) (126,151) Payments for intangible assets (2,930,247)
(6,338,725) (928,044) Long-term investments -- -- -- Acquisition of
business (28,278,247) -- -- Loan to Guarantor -- -- -- Amounts due
from a related party -- -- -- Net cash used in investing activities
(32,826,825) (7,200,360) (1,054,195) Cash flows from financing
activities: Issuance of ordinary shares for cash, net of offering
costs paid -- -- -- Proceeds from exercise of warrants 3,657,908 --
-- Issuance of convertible notes -- -- -- Payment of make-whole
obligation (8,054,079) -- -- Repayment of short-term loans -- -- --
Net cash provided by (used in) financing activities (4,396,171) --
-- Effect of exchange rate changes on cash (265,463) 26,281 3,848
Net increase (decrease) in cash (6,439,614) (21,589,722)
(3,160,921) Cash and cash equivalents at beginning of period
67,227,348 60,787,734 8,899,847 Cash and cash equivalents at end of
period 60,787,734 39,198,012 5,738,926 Supplemental cash flow
information Interest paid 1,525,200 210,130.87 30,765.00
DATASOURCE: eFuture Information Technology Inc. CONTACT: Investor
Contact: Troe Wen, Company Secretary, eFuture Information
Technology Inc., +86-10-5293-7699, , Investor Relations (US):
Mahmoud Siddig, Taylor Rafferty, +1-212-889-4350, or , Investor
Relations (HK): Ruby Yim, Taylor Rafferty, +852-3196-3712, or ,
Media Contact: Jason Marshall, Taylor Rafferty, +1-212-889-4350, or
, all for eFuture Information Technology Inc. Web site:
http://www.e-future.com.cn/
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