eFuture Announces Unaudited Fourth Quarter and Full Year 2013 Financial Results

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| Source: eFuture Information Technology Inc.

BEIJING, March 17, 2014 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2013.

Full Year 2013 Financial Highlights

  • Total revenue increased 0.4% year-over-year to RMB199.2 million (US$32.9 million).
  • Gross profit increased 3% year-over-year to RMB81.0 million (US$13.4 million).
  • Adjusted EBITDA decreased 96% to RMB0.6 million (US$0.1 million).
  • Operating loss was RMB6.4 million (US$1.1 million), compared to an operating income of RMB1.5 million in 2012.
  • Net loss was RMB6.2 million (US$1.0 million), compared to a net loss of RMB4.5 million in 2012.
  • Adjusted net loss was RMB1.1 million (US$0.2 million), compared to an adjusted net income of RMB8.2 million in 2012.
  • Basic and diluted loss per share was RMB1.47 (US$0.24), as compared to basic and diluted loss per share of RMB1.10 in 2012.
  • Adjusted diluted loss per share was RMB0.26 (US$0.04), as compared to adjusted diluted earnings per share of RMB2.00 in 2012.

Fourth Quarter 2013 Financial Highlights

  • Total revenue decreased 7% year-over-year to RMB91.2 million (US$15.1 million).
  • Gross profit increased 6% year-over-year to RMB42.0 million (US$6.9 million).
  • Adjusted EBITDA was RMB9.9 million (US$1.6 million), compared to RMB18.5 million in the fourth quarter 2012.
  • Operating income was RMB8.4 million (US$1.4 million), compared to RMB16.1 million in the fourth quarter 2012.
  • Net income was RMB6.4 million (US$1.1 million), compared to RMB3.0 million in the fourth quarter 2012.
  • Adjusted net income was RMB7.4 million (US$1.2 million), compared to adjusted net income of RMB5.0 million in the fourth quarter 2012.
  • Basic and diluted earnings per share were RMB1.50 (US$0.25), as compared to RMB0.74 in the fourth quarter 2012.
  • Adjusted diluted earnings per share was RMB1.74 (US$0.29), as compared to adjusted diluted earnings per share of RMB1.20 in the fourth quarter 2012.

Mr. Adam Yan, Chairman and Chief Executive Officer of eFuture, commented on the results. "We are pleased with eFuture's 2013 performance which gave us a more diversified product portfolio, strengthened market leadership and stable revenue stream that allows us to continue the strategic imperative of investing in our future, transforming from a traditional software solutions provider to a shopping social network service, via myStore to transfer offline consumers to mobile consumers (O2M) for the retailers in China retail industry.

"Full year revenue increased modestly. We saw an overall segment growth in service fees, an increased number of clients from various industry segments and geographic locations, and an improved efficiency and profitability from within.

"2013 has been a critical, transformative year for eFuture as we capitalized on the enormous offline to mobile ("O2M") growth opportunities that have resulted from the consumer-led revolutionary change in China's retail industry. We witnessed a strong market response to the rollout of myStore and the results have far exceeded our expectations. As announced earlier this year, leading retailers such as Rainbow & Yonghui have contracted eFuture for our m-commerce and omni-channel solutions, while Yansha Youyi Shopping City, Chengde Kuan Guang Supermarket and others have joined myStore's open platform. Furthermore, the exceptional success of our exhibition that showcased our omni-channel myStore experience store at the 15th China Retail Industry Convention further underpins our success in securing the participation of over 20 retailers.

Mr Yan concluded, "myStore (a shopping social network service connecting consumers) has demonstrated its growing importance as a key business driver for eFuture through our in-house developed m-commerce and omni-channel solutions. In order to accelerate the Company's growth, we have made investments in R&D, sales and marketing personnel and branding initiatives which has affected our short term profitability but remains crucial to our long term prospects. I am excited about our 2014 outlook as we continue to lead the change in the retail industry by helping our clients provide a truly personalized shopping experience for each consumer through myStore."

FULL YEAR 2013 FINANCIAL RESULTS

Revenue

Total revenue for full year of 2013 increased slightly to RMB199.2 million (US$32.9 million) from RMB198.4 million in 2012.

Revenue Breakdown

     
  FY12 FY13
  RMB '000 RMB '000 USD '000 Y-o-Y Change
Software license sales 79,535 68,211 11,268 (14%)
Hardware sales 28,461 28,155 4,651 (1%)
Service fee income 90,359 102,859 16,991 14%
Total 198,355 199,225 32,910 0.4%

Software license revenue for 2013 decreased 14% year-over-year to RMB68.2 million (US$11.3 million) from RMB79.5 million in 2012. The decrease was due to the postponement of the new shops opening schedules of our clients as a result of macroeconomic uncertainties.

Hardware revenue for 2013 decreased 1% year-over-year to RMB28.2 million (US$4.7 million) from RMB28.5 million in 2012.

Service fee income for 2013 increased 14% year-over-year to RMB102.9 million (US$17.0 million) from RMB90.4 million in 2012. The increase was mainly contributed by a number of new clients and additional revenue from existing clients to increase the customization and enhancement of their IT systems.

Cost of Revenue

Cost of revenue for 2013 decreased 1% to RMB118.2 million (US$19.5 million) from RMB119.8 million in 2012.

Cost of Revenue Breakdown

     
  FY12 FY13
  RMB '000 RMB '000 USD '000 Y-o-Y Change
Cost of software license sales 26,652 11,929 1,971 (55%)
Cost of hardware sales 23,863 23,188 3,830 (3%)
Cost of service fee 62,410 79,442 13,123 27%
Amortization of acquired technology 4,157 286 47 (93%)
Amortization of software costs 2,767 3,367 556 22%
Total 119,849 118,212 19,527 (1%)

Gross Profit and Gross Margin

Gross profit increased 3% year-over-year to RMB81.0 million (US$13.4 million) from RMB78.5 million in 2012, and consolidated gross margin for 2013 was 41%, compared with 40% in 2012.

Operating Expenses 

Research and development ("R&D") expenses for 2013 increased 94% year-over-year to RMB7.2 million (US$1.2 million), or 4% of total revenue, compared with RMB3.7 million, or 2% of total revenue in 2012. The increase was primarily attributable to some capitalized R&D projects which were found to be unable to generate sufficient future cashflow for the company. The capitalized R&D cost was reverted as an expense item in 2013.

General and administrative expenses ("G&A") for 2013 increased 3% year-over-year to RMB33.8 million (US$5.6 million), representing 17% of total revenue, compared with RMB32.8 million, or 17% of total revenue in 2012.

Selling and distribution ("S&D") expenses for 2013 increased 15% year-over-year to RMB46.4 million (US$7.7 million), representing 23% of total revenue, compared with RMB40.4 million, or 20% of total revenue in 2012. The increase was primarily attributable to the increase in staff costs, including statutory welfare benefits and investments in marketing events for the promotion of myStore-led omni channel solutions.

Operating Loss

Operating loss in 2013 was RMB6.4 million (US$1.1 million), compared with an operating income of RMB1.5 million in 2012.

Net Loss/Adjusted Net Loss and Loss Per Share/Adjusted Loss Per Share

2013 net loss was RMB6.2 million (US$1.0 million), compared with a net loss of RMB4.5 million in 2012. Adjusted net loss for 2013 was RMB1.1 million (US$0.2 million), compared with an adjusted net income of RMB8.2 million in 2012.

Basic and diluted loss per share in 2013 was RMB1.47 (US$0.24), compared to basic and diluted loss per share of RMB1.10 in 2012. Adjusted diluted loss per share was RMB0.26 (US$0.04), compared to an adjusted diluted earnings per share of RMB2.00 in 2012.

EBITDA

Adjusted EBITDA for 2013 was RMB0.6 million (US$0.1 million), compared to RMB16.2 million in 2012.

FOURTH QUARTER 2013 FINANCIAL RESULTS

Revenue

Total revenue for the fourth quarter 2013 decreased 7% to RMB91.2 million (US$15.1 million) from RMB98.3 million in the fourth quarter 2012.

Revenue Breakdown

     
  4Q12 4Q13
  RMB '000 RMB '000 USD '000 Y-o-Y Change
Software license sales 42,311 35,031 5,787 (17%)
Hardware sales 17,157 8,647 1,428 (50%)
Service fee income 38,829 47,473 7,842 22%
Total 98,297 91,151 15,057 (7%)

Software license revenue for the fourth quarter 2013 decreased 17% year-over-year to RMB35.0 million (US$5.8 million) from RMB42.3 million in the fourth quarter 2012. The decrease was due to the postponement of our clients' new shops opening schedule as a result of macroeconomic uncertainties.

Hardware revenue in the fourth quarter 2013 decreased 50% year-over-year to RMB8.6 million (US$1.4 million) from RMB17.2 million in the fourth quarter 2012. The decrease was a result of the Company's strategy to focus on higher margin projects.

Service fee income for the fourth quarter 2013 increased 22% year-over-year to RMB47.5 million (US$7.8 million) from RMB38.8 million in the fourth quarter 2012, which was primarily attributable to existing clients' incremental spending on us to help them further enhance and customize their IT systems.

Cost of Revenue

Cost of revenue for the fourth quarter 2013 decreased 16% to RMB49.1 million (US$8.1 million) from RMB58.8 million in the fourth quarter 2012.

Cost of Revenue Breakdown

     
  4Q12 4Q13
  RMB '000 RMB '000 USD '000 Y-o-Y Change
Cost of software license sales 13,464 5,917 977 (56%)
Cost of hardware sales 14,200 6,806 1,125 (52%)
Cost of service fee 30,167 35,554 5,873 18%
Amortization of acquired technology 114 -- -- --
Amortization of software costs 846 848 140 0.3%
Total 58,791 49,125 8,115 (16%)

Gross Profit and Gross Margin

Gross profit increased 6% year-over-year to RMB42.0 million (US$6.9 million) from RMB39.5 million in the fourth quarter 2012, and consolidated gross margin for the fourth quarter 2013 was 46%, compared with 40% in the fourth quarter 2012. The improvement in gross margin was mainly due to a better control on cost, improved efficiency in project delivery and the Company's strategy to focus on higher margin projects.

Operating Expenses

Research and development ("R&D") expenses for the fourth quarter 2013 was RMB4.7 million (US$0.8 million), representing 5% of total revenue, compared to RMB1.3 million, or 1% of total revenue in the fourth quarter 2012. The increase was primarily attributable to some capitalized R&D projects which was found to be unable to generate sufficient future cashflow for the company. The capitalized R&D cost was reverted as an expense item in 2013.

General and administrative expenses ("G&A") for the fourth quarter 2013 increased 40% year-over-year to RMB13.4 million (US$2.2 million), representing 15% of total revenue, compared with RMB9.6 million, or 10% of total revenue in the fourth quarter 2012. The increase was primarily attributable to an increased accrual of additional social welfare benefits for staff.  

Selling and distribution ("S&D") expenses for the fourth quarter 2013 increased 24% year-over-year to RMB15.5 million (US$2.6 million), representing 17% of total revenue, compared with RMB12.5 million, or 13% of total revenue in the fourth quarter 2012. The increase was primarily attributable to the increase of staff costs, including statutory welfare benefits and year-end bonuses as well as increased investment in marketing events for the promotion of myStore-led omni channel solutions.

Operating Income

Operating income in the fourth quarter 2013 was RMB8.4 million (US$1.4 million), decreased by 48% from RMB16.1 million in the fourth quarter 2012.

Net Income /Adjusted Net Income and Earnings Per Share/Adjusted Earnings Per Share

Fourth quarter 2013 net income was RMB6.4 million (US$1.1 million), compared net income of RMB3.0 million in the fourth quarter 2012. Adjusted net income for the fourth quarter 2013 was RMB7.4 million (US$1.2 million), compared with RMB5.0 million in the fourth quarter 2012.

Basic and diluted earnings per share in the fourth quarter 2013 was RMB1.50 (US$0.25), compared to basic and diluted earnings per share of RMB0.74 in the fourth quarter 2012. Adjusted diluted earnings per share was RMB1.74 (US$0.29), compared to RMB1.20 in the fourth quarter 2012.

EBITDA

Adjusted EBITDA for the fourth quarter 2013 was RMB9.9 million (US$1.6 million), compared to RMB18.5 million in the fourth quarter 2012.

Balance Sheet and Cash Flow

As of December 31, 2013, cash and cash equivalents were RMB62.6 million (US$10.3 million), a decrease of RMB16.8 million from RMB79.4 million as of December 31, 2012. The decrease was primarily attributable to the increased staff cost in 2013 and other related travelling expenses.

Total accounts receivable as of December 31, 2013 increased 11% to RMB27.8 million (US$4.6 million) from RMB25.2 million as of December 31, 2012. The increase was a result of a relatively slower collection of cash from customers at the end of the year.

Inventory and work in processes as of December 31, 2013 increased 4% to RMB20.1 million (US$3.3 million) from RMB19.3 million as of December 31, 2012. The increase was primarily attributable to delayed projects which had not reached the point of revenue recognition.

For the full year ended December 31, 2013, net cash used in operating activities was RMB0.6 million (US$0.1 million). Net cash used in investing activities was RMB16.1 million (US$2.7 million).

FIRST QUARTER 2014 GUIDANCE

eFuture expects total revenue for the first quarter 2014 to be in the range of RMB22.5 million (US$3.7 million) to RMB26.5 million (US$4.4 million). Adjusted EBITDA for the first quarter 2014 is expected to be in the range of minus RMB3.2 million (US$0.5 million) to RMB5 million (US$0.8 million).

CONFERENCE CALL INFORMATION

eFuture's management will host a conference call on March 18, 2014 at 8:00 a.m. (Eastern)/ 5:00 a.m. (Pacific)/ 8:00 p.m. (Beijing/Hong Kong) to discuss its quarterly and fiscal year results and recent business activities.

To access the conference call, please dial:

Toll Free:   
U.S. 1855 298 3404
Hong Kong 800 905 927
China 4001 200 539 
Toll:  
International +61 2 8524 5042
Hong Kong +852 5808 3202
U.S.  +1 631 5142 526
Passcode: eFuture 

Please dial in at least 10 minutes before the call to ensure timely participation.

The Company will also broadcast a live audio webcast of the conference call. The webcast will be available at http://ir.e-future.com.cn.

Following the earnings conference call, an archive of the call will be available by dialing:

Toll Free:   
U.S. 1866 846 0868
China  4001 842 240
Hong Kong  800 966 697
International Toll: +61 2 9641 7900
Replay Passcode: 677 9888
Replay End Date March 25, 2014 23:59 US ET

CURRENCY CONVENIENCE TRANSLATION

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.0537 to US$1.00, the noon buying rate for US dollars in effect on December 31, 2013 for cable transfers of RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.

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 U.S. Securities and Exchange Commission: (i) adjusted EBITDA excluding amortization of acquired software technology, amortization of intangibles, impairment of intangible assets, share-based compensation expenses and depreciation; (ii) adjusted net income excluding amortization of acquired software technology, amortization of intangibles, impairment of intangible assets, share-based compensation expenses and accretion on convertible notes; and (iii) 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. 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, 2013 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 revenue and certain cost or expense items; eFuture's ability to attract clients 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 will be 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 18, 2013, and the Company undertakes no duty to update such information or any other forward-looking information, except as required under applicable law.

– FINANCIAL TABLES TO FOLLOW –

       
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate   6.0537
CONDENSED CONSOLIDATED INCOME STATEMENTS      
             
  Year ended Three months ended
  Chinese Yuan (Renminbi)  U.S. Dollars  Chinese Yuan (Renminbi)  U.S. Dollars 
  December December December December December December
  31, 31, 31, 31, 31, 31,
  2012 2013 2013 2012 2013 2013
  (Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues            
Software revenue 79,535,451 68,211,303 11,267,705 42,311,087 35,031,256 5,786,751
Hardware revenue 28,460,810 28,155,097 4,650,891 17,156,646 8,647,042 1,428,390
Service fee revenue 90,358,608 102,859,022 16,991,100 38,829,098 47,472,820 7,841,951
Total Revenues 198,354,869 199,225,422 32,909,695 98,296,831 91,151,118 15,057,092
             
Cost of revenues            
Cost of software revenue 26,651,708 11,927,850 1,970,340 13,463,689 5,916,841 977,393
Cost of hardware revenue 23,862,880 23,188,160 3,830,411 14,200,204 6,806,205 1,124,305
Cost of service fee revenue 62,409,787 79,442,432 13,122,955 30,167,197 35,553,928 5,873,091
Amortization of acquired technology 4,157,333 286,000 47,244 114,480  --   -- 
Amortization of software costs 2,767,041 3,367,180 556,219 845,902 848,065 140,090
Total Cost of Revenues 119,848,749 118,211,622 19,527,169 58,791,472 49,125,039 8,114,878
             
Gross Profit 78,506,120 81,013,800 13,382,526 39,505,359 42,026,079 6,942,214
             
Operating Expenses            
Research and development expenses 3,737,959 7,247,250 1,197,160 1,305,367 4,677,451 772,660
General and administrative expenses 32,799,689 33,794,971 5,582,532 9,562,760 13,411,506 2,215,423
Selling and distribution expenses 40,448,601 46,366,677 7,659,229 12,545,370 15,496,872 2,559,901
Total Operating Expenses 76,986,249 87,408,898 14,438,921 23,413,497 33,585,829 5,547,984
             
Loss from operations 1,519,871 (6,395,098) (1,056,395) 16,091,862 8,440,250 1,394,230
             
Other income (expenses)            
 Interest income 497,457 332,299 54,892 143,108 53,707 8,872
 Gains on derivative liabilities 3,168  --   --   --   --   -- 
 Other income (2,027,354) 449,787 74,300 (2,829,809) 118,401 19,558
 Foreign currency exchange gain/(loss) (5,328) (106,124) (17,530) (21,234) (22,703) (3,750)
Income/(Loss) before income tax (12,186) (5,719,136) (944,734) 13,383,927 8,589,655 1,418,910
Less: Income tax benefit 4,497,430 504,059 83,265 10,350,057 2,207,438 364,643
Net Income (loss) (4,509,616) (6,223,195) (1,027,999) 3,033,870 6,382,217 1,054,267
Loss per share            
 Basic (1.10) (1.47) (0.24) 0.74 1.50 0.25
 Diluted (1.10) (1.47) (0.24) 0.74 1.50 0.25
Basic Weighted-average Shares Outstanding 4,098,772 4,245,926 4,245,926 4,082,729 4,245,926 4,245,926
Fully-Diluted Weighted-average Shares Outstanding 4,098,919 4,245,926 4,245,926 4,153,046 4,245,926 4,245,926
             
             
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.0537
 CONDENSED CONSOLIDATED BALANCE SHEETS    
       
  Chinese Yuan (Renminbi)  U.S. Dollars 
  December 31, December 31, December 31,
  2012 2013 2013
  (Audited) (Unaudited) (Unaudited)
ASSETS      
Current assets      
Cash and cash equivalents 79,373,365 62,620,652 10,344,195
Trade receivables, net of allowance for doubtful accounts of ¥2,811,934 and ¥3,682,874 ($608,367), respectively 25,182,508 27,843,939 4,599,491
Refundable value added tax 5,000,709 2,047,262 338,184
Advances to employees 1,365,995 1,448,741 239,315
Other receivables due from previously consolidated entities 405,000  --   -- 
Other receivables 2,174,556 2,094,282 345,951
Prepaid expenses 1,134,602 1,237,347 204,395
Inventory and work in process, net of inventory provision of ¥2,467,133 and ¥2,996,684 ($495,017), respectively 19,299,732 20,052,837 3,312,493
Total current assets 133,936,467 117,345,060 19,384,023
Non-current assets      
Long-term investments, net of impairment of ¥240,000 and ¥240,000 ($39,645), respectively -- -- --
Property and equipment, net of accumulated depreciation of ¥7,472,485 and ¥8,134,647 ($1,343,748), respectively 4,357,965 3,498,773 577,956
Intangible assets, net of accumulated amortization of ¥72,771,017 and ¥76,424,197 ($12,624,378), respectively 22,216,204 33,601,807 5,550,623
Goodwill 80,625,667 80,625,667 13,318,411
Deferred tax assets 7,899,110 8,412,627 1,389,667
Total non-current assets 115,098,946 126,138,874 20,836,658
Total assets 249,035,413 243,483,934 40,220,681
       
LIABILITIES AND EQUITY      
Current liabilities      
Trade payables 17,548,846 11,999,261 1,982,137
Other payables 16,920,421 18,381,881 3,036,470
Accrued expenses 25,196,276 22,237,200 3,673,324
Taxes payable 16,128,906 15,876,761 2,622,654
Advances from customers 47,519,612 54,070,691 8,931,842
Deferred tax liabilities, current portion 42,900  --   -- 
Total current liabilities 123,356,961 122,565,794 20,246,427
       
Equity      
Ordinary shares, $0.0756 U.S. dollars par value; 6,613,756 shares authorized; 3,977,221 shares and 3,913,676 shares issued and outstanding, respectively 2,353,068 2,322,703 383,683
Additional paid-in capital 231,195,613 231,086,410 38,172,756
Treasury stocks (1,602,451)  --   -- 
Statutory reserves 5,914,384 5,914,384 976,987
Accumulated deficits (112,182,162) (118,405,357) (19,559,172)
Total equity 125,678,452 120,918,140 19,974,254
Total liabilities and equity 249,035,413 243,483,934 40,220,681
       
       
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES  Exchange rate   6.0537
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS      
             
  Year ended Three months ended
  Chinese Yuan (Renminbi)  U.S. Dollars  Chinese Yuan (Renminbi)  U.S. Dollars 
  December December December December December December
   31,  31,  31,  31, 31,  31,
  2012 2013 2013 2012 2013 2013
  (Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:            
             
Net income/(loss) (4,509,616) (6,223,195) (1,027,999) 3,033,870 6,382,217 1,054,267
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:            
Depreciation of property and equipment 1,956,728 1,897,003 313,363 464,283 451,211 74,535
             
Amortization of intangible assets 6,924,374 3,653,180 603,462 960,382 848,065 140,090
             
Gain on derivative liabilities (3,168)  --   --   --   --   -- 
Loss on disposal of property and equipment 6,959 9,008 1,488 6,959 7,587 1,253
             
Allowance for doubtful accounts 2,290,370 1,874,355 309,621 (10,489) (295,827) (48,867)
Provision for loss in inventory and work in process 2,602,925 529,551 87,476 1,192,071 (3,027,324) (500,078)
             
Compensation expenses 5,784,391 1,462,883 241,651 985,823 163,081 26,939
             
Deferred income taxes (8,892,940) (556,417) (91,914) (3,040,312) 1,146,986 189,469
             
Foreign exchange loss (gain) 5,329 35,280 5,828 20,734 (46,915) (7,750)
             
Changes in assets and liabilities:            
             
Trade receivables (7,568,236) (4,713,391) (778,597) (2,572,738) (3,041,821) (502,473)
             
Refundable value added tax 1,950,214 2,953,447 487,875 (3,098,040) 1,383,536 228,544
             
Advances to employees 383,432 (82,746) (13,669) 315,968 (89,093) (14,717)
             
Advances to suppliers 57,340  --   --   --  29,511 4,875
             
Other receivables 508,497 662,879 109,500 4,498,953 372,339 61,506
             
Prepaid expenses 330,617 (102,745) (16,972) 677,082 798,253 131,862
             
Inventory and work in process 6,098,833 (1,282,656) (211,880) 14,654,422 9,623,516 1,589,692
             
Trade payables 5,048,244 (5,549,585) (916,726) 4,118,122 4,316,276 712,998
             
Other payables 4,395,121 1,461,460 241,416 6,072,546 4,128,437 681,969
             
Accrued expenses 10,732,163 (2,959,076) (488,805) 16,594,966 15,556,481 2,569,748
             
Taxes payable 11,923,172 (252,145) (41,651) 14,969,214 6,717,175 1,109,598
             
Advances from customers (2,134,102) 6,551,079 1,082,162 (17,938,083) (15,602,155) (2,577,293)
Net cash provided by (used in) operating activities 37,890,647 (631,831) (104,371) 41,905,733 29,821,536 4,926,167
             
Cash flows from investing activities:            
Purchases of property and equipment (2,117,218) (1,052,469) (173,855) (131,409) (413,779) (68,351)
             
Payments for intangible assets (11,949,602) (15,038,783) (2,484,230) (1,198,416) (1,938,142) (320,159)
Cash received from disposal of property and equipment 240 5,650 933 240  --   -- 
Net cash used in investing activities (14,066,580) (16,085,602) (2,657,152) (1,329,585) (2,351,921) (388,510)
             
Cash flows from financing activities:            
             
Cash paid for share repurchase (1,602,451)  --   --  (247,774)  --   -- 
Net cash used in financing activities (1,602,451)  --   --  (247,774)  --   -- 
             
Effect of exchange rate changes on cash and cash equivalents (5,329) (35,280) (5,828) (20,734) 46,915 7,750
             
Net decrease in cash and cash equivalents 22,216,287 (16,752,713) (2,767,351) 40,307,640 27,516,530 4,545,407
             
Cash and cash equivalents at beginning of period 57,157,078 79,373,365 13,111,546 39,065,725 35,104,122 5,798,788
Cash and cash equivalents at end of period 79,373,365 62,620,652 10,344,195 79,373,365 62,620,652 10,344,195
             
Supplemental cash flow information            
             
Income tax paid 1,571,915 3,796,612 627,156 1,571,915  --   -- 
             
             
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate   6.0537
NON-GAAP MEASURES OF PERFORMANCE      
             
  Year ended Three months ended
  Chinese Yuan (Renminbi)  U.S. Dollars  Chinese Yuan (Renminbi)  U.S. Dollars 
  December December December December December December
  31, 31, 31, 31, 31, 31,
  2012 2013 2013 2012 2013 2013
  (Audited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA            
             
Operating income/(loss) (GAAP Basis) 1,519,871 (6,395,098) (1,056,395) 16,091,862 8,440,250 1,394,230
             
Adjustments for non-GAAP measures of performance:            
Add back amortization of acquired software technology 4,157,333 286,000 47,244 114,480  --   -- 
Add back amortization of intangibles 2,767,041 3,367,180 556,219 845,902 848,065 140,090
Add back share-based compensation expenses 5,784,391 1,462,883 241,651 985,823 163,081 26,939
Adjusted non-GAAP operating income/(loss) 14,228,636 (1,279,035) (211,281) 18,038,067 9,451,396 1,561,259
Add back depreciation 1,956,728 1,897,003 313,363 464,283 451,211 74,535
             
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) 16,185,364 617,968 102,082 18,502,350 9,902,607 1,635,794
             
NON-GAAP OPERATING INCOME/(LOSS) AND ADJUSTED EBITDA, as a percentage of revenue            
             
Operating income/(loss) (GAAP BASIS) 1% -3% -3% 16% 9% 9%
             
Adjustments for non-GAAP measures of performance:            
Amortization of acquired software technology 2% 0% 0% 0% 0% 0%
Amortization of intangibles 1% 2% 2% 1% 1% 1%
Share-based compensation expenses 3% 1% 1% 1% 0% 0%
Adjusted non-GAAP operating loss 7% -1% -1% 18% 10% 10%
Depreciation 1% 1% 1% 0% 0% 0%
             
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) 8% 0% 0% 19% 11% 11%
             
NON-GAAP EARNINGS PER SHARE            
Net income/(loss) from continuing operations (4,509,616) (6,223,195) (1,027,999) 3,033,870 6,382,217 1,054,267
Amortization of acquired software technology 4,157,333 286,000 47,244 114,480  --   -- 
Amortization of intangibles 2,767,041 3,367,180 556,219 845,902 848,065 140,090
Share-based compensation expenses 5,784,391 1,462,883 241,651 985,823 163,081 26,939
Adjusted Net Income/(Loss) 8,199,149 (1,107,132) (182,885) 4,980,075 7,393,363 1,221,296
             
Adjusted non-GAAP diluted earnings/(loss) per share 2.00 (0.26) (0.04) 1.20 1.74 0.29
Shares used to compute non-GAAP diluted earnings/ (loss) per share 4,098,919 4,245,926 4,245,926 4,151,935 4,245,926 4,245,926
             
Investor Contact:
Troe Wen, Company Secretary
eFuture Information Technology Inc.
+86 10 52937699