Company Exceeds Full Year 2007 Revenue Guidance
Full Year Revenue Increases 78% Year-Over-Year
EBITDA Increases 101% Year-Over-Year
BEIJING, March 13 /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: ir@e-future.com.cn
Justin Knapp
Ogilvy Public Relations Worldwide, Beijing
Tel: +86-10-8520-6556
Email: justin.knapp@ogilvy.com
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
