Company Exceeds Full Year 2007 Revenue Guidance Full Year Revenue
Increases 78% Year-Over-Year EBITDA Increases 101% Year-Over-Year
BEIJING, March 12 /Xinhua-PRNewswire/ -- eFuture Information
Technology Inc. (Nasdaq: EFUT, 'eFuture'), a leading front-end
supply chain management software and service company in China,
today announced its unaudited financial results for the fourth
quarter and full year ended December 31, 2007. Fourth Quarter of
2007 Financial Results Highlights -- Fourth quarter 2007 total
revenues were RMB49.9 million (US$6.8 million), an increase of
140.2% over the fourth quarter of 2006. -- Fourth quarter 2007
service fee income was RMB20.0 million (US$2.7 million), an
increase of 648.4% over the fourth quarter of 2006. -- Fourth
quarter 2007 gross profit was RMB22.7 million (US$3.1 million), an
increase of 74.3% over the fourth quarter of 2006. -- Fourth
quarter 2007 gross margin was 45.4%, compared to 62.6% in the
fourth quarter of 2006. -- Fourth quarter 2007 net loss was RMB22.0
million (US$3.4 million), a decrease of 368.6% over the fourth
quarter of 2006. Full Year 2007 Financial Results Highlights --
2007 total revenues were RMB85.5 million (US$11.7 million), an
increase of 78.7% over 2006. -- 2007 service fee income was RMB26.5
million (US$3.6 million), an increase of 301.3% over 2006. -- 2007
gross profit was RMB39.7 million (US$5.4 million), an increase of
58.5% over 2006. -- 2007 gross margin was 46.4%, compared to 52.3%
in 2006. -- 2007 EBITDA was RMB22.2 million, an increase of 101%
over 2006. -- 2007 net loss was RMB24.9 million (US$3.4 million), a
decrease of 407.1% over 2006; -- 2007 adjusted net income
(non-GAAP) was RMB18.9 million (US$2.6 million), an increase of 75%
over 2006. -- Diluted losses per share were RMB9.26 (US$1.27);
Non-GAAP adjusted diluted earnings per share were RMB6.32
(US$0.87). 'We delivered robust top-line growth and executed
according to plan in 2007,' said Adam Yan, eFuture's chairman and
Chief Executive Officer. 'During the year, we continued to grow
organically while making strategic acquisitions that provide us
with innovative new products that complement our core competencies.
We believe our recently added Software as a Service,
Business-to-Business and Business-to-Consumer business models and
rapidly growing customer base give us a unique competitive
advantage to further leverage our leading market position in
China's front-end supply chain management industry.' Full Year 2007
Operational Highlights -- Sales contracts in 2007 increased 135% to
RMB129.3 million from 2006. Total new orders increased 147% to 892
from 361 in 2006. -- eFuture acquired Nanjing Tangcheng Network
Technology Development Corporation in January 2007, a leading
regional independent software vendor focusing on Eastern China's
retail market. -- eFuture acquired Beijing Wangku Hutong
Information Technology Co., Ltd. in May 2007, allowing eFuture to
offer a leading Business-to-Business ('B2B') platform that connects
retailers and small- to medium-sized suppliers. -- eFuture acquired
Crownhead and its subsidiary Guangzhou Royalstone in August 2007,
significantly improving eFuture's market share among China's top
100 retailers and international retail accounts. -- eFuture
acquired a majority stake in Beijing bFuture Inc. in November 2007,
a company that provides Software as a Service ('SaaS') and
Business-to-Business ("B2B) supply chain management platform to
connect suppliers and retailers and a Business-to-Consumer ("B2C")
platform for retailers. Financial Results for Fourth Quarter and
Full Year 2007 eFuture reported total revenues of RMB49.9 million
(US$6.8 million) for the fourth quarter of 2007, a 140.2% increase
from RMB20.8 million in the fourth quarter of 2006. eFuture
reported total revenues of RMB85.5 million (US$11.7 million) in
2007, a 78.6% increase from RMB47.8 million in 2006. Software sales
in the fourth quarter of 2007 increased 30.0% to RMB20.1 million
(US$2.8 million) from RMB15.5 million in the fourth quarter of
2006. Software sales in 2007 increased 43.3% to RMB42.8 million
(US$5.9 million) from RMB29.8 million in 2006. Hardware sales in
the fourth quarter of 2007 increased 271% to RMB9.8 million (US$1.3
million) from RMB2.6 million in the fourth quarter 2006. Hardware
sales in 2007 increased 42.0% to RMB16.2 million (US$2.2 million)
from RMB11.4 million in 2006. Service fee income in the fourth
quarter of 2007 increased 648.4% to RMB20.0 million (US$2.7
million) from RMB2.7 million in the fourth quarter of 2006. Service
fee income in 2007 increased 301.3% to RMB26.5 million (US$3.6
million) from RMB6.6 million in 2006. Gross Margins Fourth quarter
of 2007 gross profit was RMB22.7 million (US$3.1 million), a 74.3%
increase from RMB13.0 million in the fourth quarter of 2006.
Consolidated gross margin for the fourth quarter of 2007 was 45.4%
compared to 62.6% in the fourth quarter of 2006 and 42.5% in the
third quarter of 2007. 2007 gross profit was RMB39.7 million
(US$5.4 million), a 58.5% increase from RMB25.0 million in 2006.
Consolidated gross margin for 2007 was 46.4% compared to 52.3% in
2006. Operating Expenses Research and development expenses for the
fourth quarter of 2007 were RMB0.19 million (US$0.03 million), or
0.4% of total revenues, compared to 2.5% of total revenues in the
fourth quarter of 2006 and 0.4% in the third quarter of 2007.
Research and development expenses in 2007 were RMB0.4 million
(US$0.05 million), or 0.5% of total revenues, compared to 1.1% in
2006. General and administrative expenses for the fourth quarter of
2007 were RMB9.8 million (US$1.3 million), or 19.6% of total
revenues, compared to 11.3% in the fourth quarter of 2006 and 19.8%
in the third quarter of 2007. General and administrative expenses
in 2007 were RMB18.6 million (US$2.6 million), or 21.8% of total
revenues, compared to 15.3% in 2006. Selling expenses for the
fourth quarter of 2007 were RMB4.0 million (US$0.5 million), or
8.0% of total revenues, compared to 9.8% in the fourth quarter 2006
and 19.5% in the third quarter of 2007. Selling expenses in 2007
were RMB11.8 million (US$1.6 million), or 13.8% of total revenues,
a compared to 19.3% in 2006. Total share-based compensation
expenses in 2007 were RMB2.7 million (US$0.4 million). Operating
profit in the fourth quarter of 2007 was RMB8.7 million (US$1.2
million), a 7.6% increase from RMB8.1 million in the fourth quarter
of 2006. Operating margin was 17.5% in the fourth quarter of 2007,
compared to 39.0% in the fourth quarter 2006 and 2.8% in the third
quarter 2007. 2007 operating profit was RMB8.9 million (US$1.2
million), a 10.8% increase from RMB8.0 million in 2006. Operating
margin was 10.3% in 2007, compared to 16.7% in 2006. The company's
2007 income tax rate was 15%, which has been the same for several
years. The Chinese government recently adopted a new Unified
Corporate Income Tax Law (the 'New Law'), which became effective on
January 1, 2008. The New Law established a single unified 25%
income tax rate for most companies with some preferential income
tax rates including 15% income tax rate to be applicable to
qualified 'New and Hi-Tech Enterprises.' The company expects that
it will apply for the 'New and High-Tech Enterprise" status that
will allow it a 15% tax rate for 2008 and onward under China's
Unified Enterprise Income Tax Law. Under applicable accounting
rules, until the company receives official approval for this
status, it must use the transition rule in its calculation of its
deferred tax balances, which means a gradual increase in rates over
the five-year transition period, that is 18% at 2008, 20% at 2009,
22% at 2010, 24% at 2011 and 25% at 2012. Net Income Fourth quarter
of 2007 net loss was RMB22.0 million (US$3.4 million) compared to
net income of RMB8.2 million in the fourth quarter of 2006. Net
margins were negative 44.0% in the fourth quarter 2007 compared to
39.4% in the fourth quarter of 2006 and negative 3.8% in the third
quarter of 2007. 2007 net loss was RMB24.9 million (US$3.4 million)
compared to net income of RMB8.1 million in 2006. Net margins were
negative 29.1% in 2007 compared to 16.9% in 2006. The net loss was
primarily due to the impact of four acquisitions, share- based
compensation expenses, foreign exchange losses and a one-time
conversion expense related to a US$10 million convertible note
completed in October 2007. The amortization of discount on notes
payable was RMB31.0 million (US$4.2 million), amortization of
acquired software technology was RMB7.3 million (US$1.0 million)
and foreign exchange losses were RMB4.6 million (US$0.6 million).
2007 adjusted net income (non-GAAP) was RMB18.9 million (US$2.6
million), an increase of 75% over 2006. 2007 adjusted net income
(non-GAAP) was RMB18.9 million (US$2.6 million), an increase of 75%
over 2006. Fourth quarter of 2007 basic and diluted losses per
share were RMB8.18 (US$1.13) and RMB8.18 (US$1.13), respectively.
2007 basic and diluted losses per share were RMB9.26 (US$1.27) and
RMB9.26 (US$1.27), respectively. EBITDA EBITDA (non-GAAP) for the
fourth quarter of 2007 was RMB17.5 million (US$2.4 million), an
increase of 92.7% from the fourth quarter of 2006. Fourth quarter
of 2007 adjusted net income (non-GAAP) was RMB14.5 million (US$2.0
million), an increase of 64.7% from the fourth quarter of 2006 and
a 385.1% increase from the third quarter of 2007. 2007 EBITDA
(non-GAAP) was RMB22.2 million (US$3.0 million), an increase of
101.0% from 2006. 2007 adjusted net income (non-GAAP) was RMB19.0
million (US$2.6 million), an increase of 75.0% from 2006. Fourth
quarter of 2007 adjusted non-GAAP diluted earnings per share was
RMB4.85 (US$0.67). 2007 adjusted non-GAAP diluted earnings per
share was RMB6.32 (US$0.87). Other Select Data As of December 31,
2007, the company had RMB67.2 million (US$9.2 million) in cash and
cash equivalents and short-term investments. Net cash generated
from operating activities and capital expenditures in 2007 were
RMB17.0 million (US$2.3 million) and RMB16.6 million (US$2.3
million), respectively. As of December 31, 2007 the company had 588
employees. Business Outlook for 2008 The company currently has
deferred contracts with unrecognized revenues of approximately
US$7.3 million. eFuture expects its 2008 total revenues to be in
the range of approximately US$17 to US$18 million, representing
annual growth of 45 to 54% over 2007. This forecast is a current
and preliminary view and is subject to change. Conference Call
Information eFuture's management will hold an earnings conference
call at 8:30 p.m. on March 12, 2008 U.S. Eastern Time (8:30 a.m. on
March 13, 2008 Beijing/Hong Kong Time). Dial-in details for the
earnings conference call are as follows: U.S. and International:
+86-10-58511260 China: +86-10-58511259 Additionally, an archived
webcast of this conference call will be available at
http://www.e-future.com.cn/ . About eFuture Information Technology
Inc. eFuture is a leading provider of front-end supply chain
management software and services in China. eFuture provides
one-stop-shop software and service solutions to manufacturers,
distributors, wholesalers, logistics companies and retailers in
China's front-end supply chain market, especially in the retail and
Fast Moving Consumer Goods ('FMCG') industries. eFuture currently
serves more than 900 clients, including Fortune 500 companies, over
700 retailers and over 200 distributors operating in China. eFuture
is also one of IBM's premier business partners in Asia Pacific and
is a strategic partner with Oracle, Microsoft, JDA, Motorola and
Samsung Network China. The company has 20 branch offices across
China. For more information about eFuture, please visit
http://www.e-future.com.cn/ Safe Harbor for Forward Looking
Statements 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,' 'may,' 'might,' 'plans,' 'projects,' 'results,' 'should,'
'expects,' 'anticipates,' 'future,' 'intends,' 'plans,' 'believes,'
'estimates' and similar statements which do not relate solely to
historical matters and are intended to identify forward-looking
statements. Among other things, 2008 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 first 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 hire, train and retain qualified managerial
and other employees; the company's ability to develop new
software's and pilot new business model at desirable locations in a
timely and cost-effective manner; the expected growth of the
Chinese economy software market in retail and consumer goods
industries; changes in Chinese laws, including tax laws; and
Chinese governmental policies relating to private managers and
operators of software and applicable tax rates. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected by the
forward-looking statements. eFuture cautions that while
forward-looking statements reflect management's good faith beliefs
at the time made, they are not guarantees of future performance and
are affected by actual events. Accordingly, investors should use
caution in relying on forward-looking statements, which are based
on results and trends at the time they are made, to anticipate
future results or trends. 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 March 13, 2008,
and the company undertakes no duty to update such information or
any other forward-looking information, except as required under
applicable law. This announcement contains translations of certain
amounts from Chinese Renminbi ('RMB') into U.S. dollars ('US$') at
specified rates solely for the convenience of the reader. Unless
otherwise noted, all currency translations are made at a rate of
RMB7.2946 to US$1.00, the effective noon buying rate on December
31, 2007. 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 EDITDA
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. For investor
and media inquiries, please contact: eFuture Information Technology
Inc. Tel: +86-10-5165-0998 x8804 Email: Justin Knapp Ogilvy Public
Relations Worldwide, Beijing Tel: +86-10-8520-6556 Email: E-FUTURE
INFORMATION TECHNOLOGY INC. AND SUBSIDIARY CONDENSED CONSOLIDATED
BALANCE SHEETS USD-RMB=7.2946 Chinese Yuan (Renminbi) U.S. Dollars
December 31, December 31, 2006 2007 2007 (Audited) (Unaudited)
(Unaudited) ASSETS Current assets Cash and cash equivalents
61,464,737 67,227,348 9,216,043 Trade receivables, less allowance
for doubtful accounts of RMB2,109,910 and RMB4,695,898,
respectively 4,452,959 15,036,184 2,061,276 Refundable value added
tax 2,470,941 3,691,035 505,996 Deposits 44,943 156,695 21,481
Advances to employees 1,198,601 3,576,947 490,355 Advances to
suppliers 443,030 657,724 90,166 Other receivables 171,120
1,986,655 272,346 Short-term investments -- 343,046 47,027 Prepaid
expenses 534,755 862,653 118,259 Inventory 4,121,136 5,749,951
788,248 Total current assets 74,902,222 99,288,239 13,611,197
Non-current assets Long-term investments -- 5,352,170 733,717
Deferred loan costs, net of RMB1,238,854 of amortization --
9,532,324 1,306,765 Property and equipment, net of accumulated
depreciation of RMB4,690,856 and RMB5,191,489, respectively
1,014,581 2,065,040 283,092 Intangible assets, net of accumulated
amortization of RMB8,678,751 and RMB24,040,161 respectively
7,108,244 47,906,228 6,567,355 Goodwill -- 43,928,283 6,022,028
Total non-current assets 8,122,825 108,784,046 14,912,957 Total
assets 83,025,047 208,072,285 28,524,153 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable
1,230,782 3,845,873 527,222 Accrued expenses 3,941,618 4,667,470
639,853 Accrued interest -- 4,872 668 Taxes payable 5,182,615
7,763,517 1,064,283 Deferred Tax 5,130,030 703,264 Advances from
customers 8,121,043 13,659,546 1,872,556 Royalstone acquisition
obligation, current portion -- 16,075,637 2,203,772 Make-whole
obligation, current portion -- 1,164,116 159,586 Convertible note
payable, current portion -- 3,648,825 500,209 Total current
liabilities 18,476,058 55,959,886 7,671,413 Long-term liabilities
Royalstone acquisition obligation, net of current portion --
6,093,683 835,369 Make-whole obligation, net of current portion --
9,290,082 1,273,556 12% RMB75,108,000 ($10,000,000) convertible
note payable, net of RMB53,379,624 unamortized discount based on an
imputed interest rate of 28.9%, net of current portion -- 7,670,228
1,051,494 Minority shareholder interests -- 96,073 13,170 Total
long-term liabilities -- 23,150,066 3,173,589 Shareholders' equity
Ordinary shares, $0.0756 U.S. dollars (RMB0.6257) par value;
6,613,756 shares authorized; 2,633,500 shares and 2,633,500 shares
outstanding (2,833,580 shares pro forma), respectively 1,647,781
1,812,055 248,410 Additional paid-in capital 77,726,236 167,047,433
22,900,150 Statutory reserves 3,084,020 3,084,020 422,781
Accumulated foreign currency translation adjustment (491,079) -- --
Accumulated deficit (17,417,969) (42,981,175) (5,892,191) Total
shareholders' equity 64,548,989 128,962,333 17,679,151 Total
liabilities and shareholders' equity 83,025,047 208,072,285
28,524,153 E-FUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INCOME STATEMENTS USD-RMB=7.2946 U.S.
Dollars 2006 2007 December 31, (Audited) (Unaudited) 2007 Revenues
Software sales 29,832,720 42,759,916 5,861,859 Hardware sales
11,403,473 16,198,402 2,220,602 Service fee income 6,607,337
26,511,794 3,634,441 Total Revenues 47,843,530 85,470,112
11,716,902 Cost of revenues Cost of software 7,665,866 16,165,274
2,216,060 Cost of hardware 10,548,649 12,587,418 1,725,580 Cost of
service fee income 1,887,676 6,857,161 940,032 Amortization of
acquired technology 7,312,292 1,002,425 Amortization of software
costs 2,727,198 2,891,118 396,337 Total Cost of Revenue 22,829,388
45,813,263 6,280,435 Gross Profit 25,014,142 39,656,849 5,436,467
Expenses Research and development 527,219 436,925 59,897 General
and administrative 7,298,980 18,629,586 2,553,887 Selling and
distribution expenses 9,210,975 11,755,513 1,611,536 Total Expenses
17,037,174 30,822,024 4,225,321 Profit from operations 7,976,968
8,834,825 1,211,146 Interest income 141,230 3,400,927 466,225
Interest expense (13,471) (534,224) (73,236) Amortization of
discount on notes payable -- (30,979,932) (4,246,968) Amortization
of loan costs -- (1,860,116) (254,999) Income (loss) on investments
-- 938,235 128,620 Foreign exchange loss -- (4,581,329) (628,044)
Minority shareholder income -- (106,352) (14,579) Net loss
8,104,726 (24,887,967) (3,411,834) Earnings per ordinary share
Basic 4.80 (9.26) (1.27) Diluted 4.43 (9.26) (1.27) E-FUTURE
INFORMATION TECHNOLOGY INC. AND SUBSIDIARY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS USD-RMB=7.2946 Chinese Yuan (Renminbi)
U.S. Dollars December 31, December 31, 2006 2007 2007 (Audited)
(Unaudited) (Unaudited) Cash flows from operating activities: Net
income (loss) 8,104,726 (24,887,967) (3,411,834) Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities: Depreciation 679,876 500,633 68,631
Amortization of intangible assets 2,727,198 10,203,410 1,398,762
Amortization of discount on notes payable -- 30,979,932 4,246,968
Amortization of deferred loan costs -- 1,860,116 254,999 Change in
assets and liabilities: Accounts receivable (664,562) (10,583,225)
(1,450,830) Refundable value added tax 72,593 (1,220,094) (167,260)
Deposits 466,458 (111,752) (15,320) Advances to employees (162,781)
(2,378,346) (326,042) Advances to suppliers (334,840) (214,694)
(29,432) Other receivables 60,552 (1,790,535) (245,460) Prepaid
expenses (66,189) (291,819) (40,005) Inventories 25,277 (1,627,325)
(223,086) Trade payables 208,096 2,615,091 358,497 Accrued expenses
(101,711) 703,954 96,503 Accrued interest -- 4,872 668 Taxes
payable (482,309) 2,580,902 353,810 Deferred Tax -- 5,130,030
703,264 Deferred revenue (559,085) -- -- Advances from customers
2,675,539 5,538,503 759,261 Net cash provided by operating
activities 12,648,840 17,011,686 2,332,093 Cash flows from
investing activities: Purchases of property and equipment (537,340)
(1,521,967) (208,643) Payments for software (3,818,599)
(15,086,896) (2,068,228) Long-term investments -- (6,344,448)
(869,746) Payment to purchase net assets of Royalstone --
(49,862,311) -- Loan to Guarantor 800,000 -- -- Net cash used in
investing activities (3,555,939) (72,815,621) (9,982,127) Cash
flows from financing activities: Issuance of ordinary shares for
cash, net of offering costs paid 47,128,495 1,051,776 -- Issue
convertible notes -- 65,095,829 8,923,838 Repayment of short term
loan (2,800,000) -- -- Short-term loan -- -- -- Net cash provided
by (used in) financing activities 44,328,495 66,147,605 9,068,024
Effect of exchange rate changes on cash (791,476) (4,581,329)
(628,044) Net increase in cash 52,629,920 5,762,340 789,946 Cash
and cash equivalents at beginning of period 8,834,817 61,465,008
8,426,097 Cash and cash equivalents at end of period 61,464,737
67,227,348 9,216,043 Supplemental cash flow information Interest
paid 66,593 534,224 73,236 E-FUTURE INFORMATION TECHNOLOGY INC. AND
SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATION INFORMATION
USD-RMB=7.2946 Three Months Ended December September 31,2006
30,2007 December 31,2007 RMB RMB RMB US$ (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Revenues Software sales 15,458,263
9,355,671 20,102,369 2,755,788 Hardware sales 2,645,727 3,916,065
9,816,609 1,345,736 Service fee income 2,671,152 3,170,679
19,990,060 2,740,392 Total Revenues 20,775,143 16,442,414
49,909,039 6,841,916 Cost of revenues Cost of software 3,767,124
2,443,772 9,115,847 1,249,671 Cost of hardware 2,674,197 3,648,418
7,181,112 984,442 Cost of service fee income 672,801 877,264
4,950,478 678,650 Amortization of acquired technology -- 2,229,127
5,083,165 696,839 Amortization of software costs 649,035 253,309
904,237 123,960 Total Cost of Revenue 7,763,156 9,451,891
27,234,840 3,733,562 Gross Profit 13,011,987 6,990,523 22,674,199
3,108,354 Expenses Research and development 527,219 62,440 194,161
26,617 General and administrative 2,350,887 3,260,031 9,771,856
1,339,601 Selling and distribution expenses 2,025,579 3,199,809
3,986,337 546,478 Total Expenses 4,903,685 6,522,281 13,952,354
1,912,696 Profit from operations 8,108,301 468,242 8,721,844
1,195,658 Interest income 111,693 1,091,635 632,092 86,652 Interest
expense (38,658) (572,068) 752,002 103,090 Amortization of discount
on notes payable -- (1,138,014) (27,867,111) (3,820,238)
Amortization of loan costs -- (534,108) (622,974) (85,402) Income
(loss) on investments -- 363,638 798,088 109,408 Foreign exchange
loss -- (301,585) (4,279,744) (586,700) Minority shareholder income
-- -- (106,352) (14,579) Net Income(loss) 8,181,335 (622,260)
(21,972,155) (3,411,834) Earnings per ordinary share Basic 4.85
(0.24) (8.18) (1.13) Diluted 4.48 (0.24) (8.18) (1.13) E-FUTURE
INFORMATION TECHNOLOGY INC. AND SUBSIDIARY NON-GAAP MEASURES OF
PERFORMANCE USD-RMB=7.2946 December 31,2006 December 31,2007 RMB
RMB US$ (Unaudited) (Unaudited) (Unaudited) NON-GAAP OPERATING
INCOME (LOSS) AND ADJUSTED EBITDA Operating income (loss) (GAAP
Basis) 7,976,968 8,834,825 1,211,146 Adjustments for non-GAAP
measures of performance: Add back amortization of acquired software
technology -- 7,312,292 1,002,425 Add back amortization of
intangibles 2,727,198 2,891,118 396,337 Add back share-based
compensation expenses -- 2,663,105 365,079 Adjusted non-GAAP
operating income 10,704,166 21,701,340 2,974,987 Add back
depreciation 342,842 500,633 68,631 Adjusted EBITDA (Earnings
before interest, taxes, depreciation and amortization) 11,047,008
22,201,973 3,043,618 NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED
EBITDA, as a percentage of revenue Operating income (loss) (GAAP
BASIS) 23% 10% 18% Adjustments for non-GAAP measures of
performance: Amortization of acquired software technology -- 9% 9%
Amortization of intangibles 6% 3% 3% Share-based compensation
expenses -- 3% Adjusted non-GAAP operating income 29% 25% 30%
Depreciation 0.7% 0.6% 0.6% Adjusted EBITDA (Earnings before
interest, taxes, depreciation and amortization) 30% 26% 30%
NON-GAAP EARNINGS PER SHARE Net Income(Loss) 8,104,726 (24,887,967)
(3,411,834) Amortization of acquired software technology --
7,312,292 1,002,425 Amortization of intangibles 2,727,198 2,891,118
396,337 Accretion on convertible notes -- 30,979,932 4,246,968
Share-based compensation expenses 2,663,105 365,079 Adjusted Net
income 10,831,924 18,958,481 2,598,975 Adjusted non-GAAP diluted
earnings per share 5.92 6.32 0.87 Shares used to compute non- GAAP
diluted earnings per share 1,831,258 2,997,921 2,997,921 E-FUTURE
INFORMATION TECHNOLOGY INC. AND SUBSIDIARY NON-GAAP MEASURES OF
PERFORMANCE USD-RMB=7.2946 Three Months Ended December September
31,2006 30,2007 December 31,2007 RMB RMB RMB US$
(Unaudited)(Unaudited) (Unaudited) (Unaudited) NON-GAAP OPERATING
INCOME (LOSS) AND ADJUSTED EBITDA Operating income (loss) (GAAP
Basis) 8,108,301 468,242 8,721,844 1,195,658 Adjustments for non-
GAAP measures of performance: Add back amortization of acquired
software technology -- 2,229,127 5,083,165 696,839 Add back
amortization of intangibles 649,035 253,309 904,237 123,960 Add
back share-based compensation expenses -- -- 2,663,105 365,079
Adjusted non-GAAP operating income 8,757,336 2,950,678 17,372,351
2,381,536 Add back depreciation 342,842 337,034 163,599 22,427
Adjusted EBITDA (Earnings before interest, taxes, depreciation and
amortization) 9,100,178 3,287,712 17,535,950 2,403,963 NON-GAAP
OPERATING INCOME (LOSS) AND ADJUSTED EBITDA, as a percentage of
revenue Operating income (loss) (GAAP BASIS) 39% 3% 17% 17%
Adjustments for non- GAAP measures of performance: Amortization of
acquired software technology -- 14% 10% 10% Amortization of
intangibles 3% 2% 2% 2% Share-based compensation expenses -- -- 5%
Adjusted non-GAAP operating income 42% 18% 35% 29% Depreciation 2%
2% 0% 0.3% Adjusted EBITDA (Earnings before interest, taxes,
depreciation and amortization) 44% 20% 35% 30% NON-GAAP EARNINGS
PER SHARE Net Income(Loss) 8,181,335 (622,260) (21,972,155)
(3,012,112) Amortization of acquired software technology --
2,229,127 5,083,165 696,839 Amortization of intangibles 649,035
253,309 904,237 123,960 Accretion on convertible notes -- 1,138,014
27,867,111 3,820,238 Share-based compensation expenses -- --
2,663,105 365,079 Adjusted Net income 8,830,370 2,998,189
14,545,464 1,994,004 Adjusted non-GAAP diluted earnings per share
4.82 1.09 4.85 0.67 Shares used to compute non-GAAP diluted
earnings per share 1,831,258 2,762,094 2,997,921 2,997,921
DATASOURCE: eFuture Information Technology Inc. CONTACT: eFuture
Information Technology Inc., +86-10-5165-0998 x8804, or ; or Justin
Knapp of Ogilvy Public Relations Worldwide, Beijing,
+86-10-8520-6556, or , for EFUT Web Site:
http://www.e-future.com.cn/
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