| FOR IMMEDIATE RELEASE |  |
eFuture Announces Second Quarter 2009 Unaudited Financial Results
and First Quarter 2009 Unaudited Restated Financial Results
BEIJING, PRC — November 19, 2009 — eFuture Information Technology Inc. (Nasdaq: EFUT, the “Company” or “eFuture”), a leading provider of software and services in China’s rapidly growing retail and consumer goods industries, today announced its unaudited financial results for the fiscal quarter ended June 30, 2009 (the “Second Quarter”) and restatement of unaudited financial results for the fiscal quarter ended March 31, 2009 (the “First Quarter”).
As noted in previous press releases, the Company reviewed its accounting for certain matters in the First Quarter and has determined that a restatement of unaudited financial information for the First Quarter is appropriate. The Company previously released unaudited financial information for the First Quarter in a press release dated June 9, 2009 (the “Press Release”). Investors should no longer rely upon the financial information contained in the Press Release. Investors should rely solely upon the unaudited financial information for the First Quarter contained herein.
Second Quarter Financial Highlights:
| RMB | Unaudited Quarter Ended June 30, 2008 | Unaudited Quarter Ended June 30, 2009 | ||||||||||
| Reported | Adjusted | Reported | ||||||||||
| Profit and Loss (selected) | ||||||||||||
| Total Revenue | 24,160,436 | 24,160,436 | 22,205,838 | |||||||||
| Total Cost of Revenue | 10,368,762 | 10,368,762 | 12,387,931 | |||||||||
| Gross profit | 13,791,673 | 13,791,673 | 9,817,907 | |||||||||
| Total Expenses | 12,560,484 | 12,698,084 | 19,568,210 | |||||||||
| Income (loss) from operations | 1,231,189 | 1,093,589 | (9,750,303 | ) | ||||||||
| Net Income (loss) | 2,814,162 | 969,364 | (11,383,275 | ) | ||||||||
| Comprehensive Income/Loss | 0 | 0 | 0 | |||||||||
| Net Income per share | ||||||||||||
| - Basic | 0.94 | 0.32 | (3.39 | ) | ||||||||
| - Diluted | 0.94 | 0.32 | (3.39 | ) | ||||||||
| · | Total revenues decreased 8.09% year-over-year to RMB22.21 million (US$3.25 million). |
| - | Revenue from software license sales increased 21.81% year-over-year to RMB10.61 million (US$1.55 million). |
| - | Revenue from hardware sales was nil, compared to RMB2.92 million in the second quarter of 2008. |
| - | Service fee income decreased 7.49% year-over-year to RMB11.59 million (US$1.70 million). |
| · | Gross profit decreased 28.81% year-over-year to RMB9.82 million (US$1.44 million). Gross margin decreased to 44.21% from 57.08% in the second quarter of 2008. |
| · | Operating loss was RMB9.75 million (US$1.43 million), compared to net income of RMB1.09 million in the second quarter of 2008. |
| · | Net loss was RMB11.38 million (US$1.67 million), compared to net income of RMB0.97 million in the second quarter of 2008. |
| · | Diluted net loss per share was RMB3.39 (US$0.50), as compared to net income per share of RMB0.32 for the second quarter of 2008. |
| · | Operating cash flow was -RMB14.42 million (-US$2.11 million). |
| FOR IMMEDIATE RELEASE | |
| · | Adjusted net loss (non-GAAP) was RMB6.71 million (US$0.98 million), compared to an adjusted net income of RMB4.52 million in the second quarter of 2008. |
| · | Non-GAAP adjusted diluted loss per share was RMB1.98 (US$0.29). |
Mr. Adam Yan, Chairman and Chief Executive Officer of eFuture, said,
“Our results for the second quarter reflect the challenges we have faced from the market slow-down, especially in our logistics and department store and shopping mall business. However, these challenges were mitigated somewhat by healthy software license revenues driven by a rebound in demand in our Supermarket, Specialty Store and Key Accounts SBUs. We have continued to execute on our strategic, business and operational imperatives, which are to solidify our core enterprise software business, grow value-added services revenues, expand the scope and depth of our eService offering, including our B2B service and SaaS service for SCM and B2C eShopping platform and invest in building our presence in the second and third tier cities. We believe our business remains fundamentally sound, and we continue to be well positioned to capitalize on the growth opportunities in the software market for retail and consumer goods industries.”
Second Quarter Unaudited Financial Results
Revenue
Revenue for the Second Quarter decreased 8.09% to RMB22.21 million (US$3.25 million) from RMB24.16 million in the second quarter 2008 mainly due to a slow-down in hardware sales.
Software license revenues increased by 21.08% year-over-year to RMB10.6 million, primarily attributable to the recovery from Supermarket, Specialty Store and Key Account SBUs.
Service fee income decreased by 7.49% year-over-year, and as a percentage of revenue continued to increase and accounted for 55.21% of total revenue in the Second Quarter, as compared to 51.87% in the same period last year.
Revenue Breakdown
| 2008Q2 Restated | 2009Q2 | |||||||||||||||
| RMB ‘000 | RMB ‘000 | USD ‘000 | Y-o-Y Change | |||||||||||||
| Software license sales | 8,712 | 10,611 | 1,554 | 21.80 | % | |||||||||||
| Hardware sales | 2,916 | - | - | - | ||||||||||||
| Service fee income | 12,533 | 11,595 | 1,698 | (7.48 | %) | |||||||||||
| Total | 24,160 | 22,206 | 3,251 | (8.09 | %) | |||||||||||
| FOR IMMEDIATE RELEASE | |
Cost of Revenues
The cost of revenue for the Second Quarter increased 19.47% to RMB12.39 million (US$1.81 million) from RMB10.37 million in the second quarter 2008.
Cost of Revenues Breakdown
| 2008Q2 Restated | 2009Q2 | |||||||||||||||
| RMB ‘000 | RMB ‘000 | USD ‘000 | Y-o-Y Change | |||||||||||||
| Cost of software license sales | 2,040 | 3,526 | 516 | 72.84 | % | |||||||||||
| Cost of hardware sales | 2,549 | - | - | - | ||||||||||||
| Cost of service see | 2,983 | 4,937 | 723 | 65.49 | % | |||||||||||
| Amortization of acquired technology | 1,905 | 3,019 | 442 | 58.49 | % | |||||||||||
| Amortization of software costs | 892 | 906 | 133 | 1.57 | % | |||||||||||
| Total | 10,369 | 12,388 | 1,814 | 19.47 | % | |||||||||||
The increase in cost of revenue was partially attributable to a one-time recognized cost from a few unprofitable projects and the amortization of acquired technology from Crownhead and Proadvancer.
Gross Profit
Second Quarter gross profit decreased 28.81% year-over-year to RMB9.82 million (US$1.44 million), from RMB13.79 million in the second quarter of 2008. Consolidated gross margin for the Second Quarter was 44.21% compared with 57.08% in the second quarter of 2008.
Operating Expenses
Research and development expenses for the Second Quarter decreased 58.81% year-over-year to RMB92,179 (US$13,496) compared with RMB223,792 in the second quarter of 2008. The year-over-year decrease was a result of cost reallocation to cost of revenue and to intangibles to be capitalised in future.
General and administrative expenses for the Second Quarter increased 22.35% year-over-year to RMB10.03 million (US$1.47 million), or 45.18% of total revenues, compared with RMB8.20 million, or 33.94% of total revenue in the second quarter of 2008 and RMB7.88 million, or 56.97% of total revenue in the First Quarter. The increase in general and administrative expenses as a percentage of revenues was primarily due to the RMB2.7 million bad debt provision from Wangku, our increased investment in the business expansion of bFuture.
Selling and distribution expenses for the Second Quarter increased 120.91% year-over-year to RMB9.44 million (US$1.38 million), or 42.53% of total revenues, compared with RMB4.27 million, or 17.69% of total revenue in second quarter 2008 and RMB5.58 million, or 40.33% of total revenue in the First Quarter. The significant increase was due to our continued investment in building our regional sales/marketing teams to enhance our presence in tier 2 and 3 cities.
| FOR IMMEDIATE RELEASE | |
Operating Income/Loss
Operating loss in the Second Quarter was RMB9.75 million (US$1.43 million), compared with an operating income of RMB1.09 million in the second quarter of 2008.
Net Income/Loss and EBITDA
As a result of the foregoing, Second Quarter net loss was RMB11.38 million (US$1.67 million) compared with a net income of RMB0.97 million in the second quarter of 2008.
Basic and diluted losses per share in the Second Quarter were both RMB3.39 (US$0.50), compared to basic and diluted net income per share of RMB0.32 in the second quarter of 2008. Adjusted net loss (non-GAAP) for the Second Quarter was RMB6.71 million (US$0.98 million), compared to an adjusted net income of RMB4.52 million in the second quarter of 2008.
Second quarter 2009 adjusted non-GAAP diluted loss per share was RMB1.98 (US$0.29).
EBITDA (non-GAAP) for the Second Quarter was –RMB4.79 million (-US$0.70 million), compared with RMB4.73 million in the second quarter of 2008.
Balance Sheet and Cash Flow
In the Second Quarter, net cash loss from operating activities was RMB14.42 million (US$2.11 million), while net cash used in investing activities was RMB7.20 million (US$1.05 million).
As of June 30, 2009, cash and cash equivalents decreased 7.82% from March 31, 2009 to RMB39.20 million (US$5.74 million), mainly due to normal seasonal patterns in which cash flow decreases in the first half while peaking in the second half of the fiscal year.
Total accounts receivable as of June 30, 2009 decreased 41.38% to RMB12.51million (US$1.83 million) from RMB21.33 million as of March 31, 2009. This decrease was mainly attributable to improvement in collection and Wangku’s increase in write off.
Inventories as of June 30, 2009 increased 11.37% quarter-over-quarter to RMB7.65 million (US$1.12 million) due to the increase in work-in process.
| FOR IMMEDIATE RELEASE | |
Restatement of First Quarter 2009 Unaudited Financial Results
| RMB | Unaudited Quarter Ended March 31, 2008 | Unaudited Quarter Ended March 31, 2009 | ||||||||||||||
| Reported | Adjusted | Reported | Restated | |||||||||||||
| Profit and Loss (selected) | ||||||||||||||||
| Total Revenue | 14,014,472 | 14,014,472 | 13,977,378 | 13,824,292 | ||||||||||||
| Total Cost of Revenue | 9,300,139 | 9,300,139 | 8,992,326 | 9,315,216 | ||||||||||||
| Gross profit | 4,714,333 | 4,714,333 | 4,985,052 | 4,509,077 | ||||||||||||
| Total Expenses | 11,797,143 | 11,797,143 | 11,726,713 | 13,544,747 | ||||||||||||
| Income (loss) from operations | (7,082,810 | ) | (7,082,810 | ) | (6,741,662 | ) | (9,035,671 | ) | ||||||||
| Net Income (loss) | (9,225,286 | ) | (6,340,016 | ) | (4,968,403 | ) | (7,469,813 | ) | ||||||||
| Other Comprehensive Income/Loss | 0 | 0 | 0 | 0 | ||||||||||||
| Net income (loss) per share | ||||||||||||||||
| - Basic | (3.14 | ) | (2.16 | ) | (1.96 | ) | (2.22 | ) | ||||||||
| - Diluted | (3.14 | ) | (2.16 | ) | (1.96 | ) | (2.22 | ) | ||||||||
The effects of the restatement on some of the key items of our unaudited results of the First Quarter are as follows:
| · | Total revenue slightly decreased by 1.10% to RMB13.82 million |
| · | Total cost of revenue has increased by 3.59% to RMB9.32 million |
| · | Gross profit decreased by 9.55% to RMB4.51 million |
| · | Total expenses have increased by 15.50% to RMB13.54 million |
| · | Income loss has increased by 34.03% to RMB9.04 million |
| · | Recognized gains on derivatives of RMB1.30 million |
| · | Foreign exchange loss reduced by 93.69% to RMB0.06 million |
| · | Net Income loss has increased by 13.07% to RMB7.47 million |
| · | Minority shareholder income was restated from RMB1.97 million to RMB0 million |
| · | Net loss per common share, basic and diluted was restated from RMB1.96 to RMB2.22 |
| · | Non-GAAP adjusted diluted loss per share was RMB0.82 (US$0.12). |
| · | Operating cash flow was restated from –RMB15.10 million to -RMB15.30 million |
The comparison of the restated unaudited results of the First Quarter against similarly calculated financial information for the results of the first quarter of 2008, is as follows :
| · | Total revenues decreased slightly more to 1.36% year-over-year to RMB13.82 million (US$2.02 million). |
| - | Revenue from software license sales decreased 34.58% year-over-year to RMB4.95 million (US$0.72 million). |
| - | Revenue from hardware sales decreased 0.99% year-over-year to RMB1.40 million (US$0.20 million). |
| - | Service fee income was restated from an increase of 51.3% to 48.40% year-over-year to RMB7.48 million (US$1.09 million). |
| · | Gross profit decreased 4.35% year-over-year to RMB4.51 million (US$0.66 million). Gross margin decreased to 32.62% from 33.64% in the first quarter of 2008. |
| · | Operating loss was RMB9.04 million (US$1.32 million), compared to an operating loss of RMB7.08 million in the first quarter of 2008. |
| FOR IMMEDIATE RELEASE | |
| · | Net loss increased to RMB7.47 million (US$1.09 million), compared to a net loss of RMB6.34 million in the first quarter of 2008. |
| · | Diluted net loss per share was RMB2.22 (US$0.33), as compared to net loss per share of RMB2.16 for the first quarter of 2008. |
| · | Adjusted net loss (non-GAAP) was RMB2.80 million (US$0.41 million), compared to an adjusted net loss of RMB0.77 million in the first quarter of 2008. |
Miss Yu Ping, Chief Financial Officer of eFuture, said, “ I am very pleased to report that the accounting adjustment process has been completed with the restatement of first quarter 2009 financial results. The intent is to ensure adequate reserve of social security benefits for our employees and to enhance the accurate recognition of our revenue and cost base that will enable us to better reflect our expanding business and operational performance. We believe we are emerging from this process in a more sound position than when we started and are better positioned to ensure accurate and consistent financial reporting moving forward.”
Notes on Restatement of First Quarter Unaudited Financial Results
The Company identified several errors in its consolidated financial statements for the First Quarter. As a result, certain amounts in the consolidated financial statements were corrected from the amounts previously reported.
The nature of these errors included a net understatement of revenue on certain software maintenance contracts, failure to apply step acquisition accounting, improper timing of recognition for contingent acquisition payments, improper calculation of deferred tax liabilities, understatement of payroll accruals, and improper recording of convertible notes.
The convertible notes, issued on March 13, 2007, contained a beneficial conversion feature and a make-whole provision that were originally recorded at their intrinsic values according to EITF 00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments.” The Series A Warrants, Series B Warrants and Placement Agent Warrants issued in connection with these notes were recorded as equity instruments at their grant date fair value.
It was subsequently determined that the make-whole provision, beneficial conversion feature, and Series A and B warrants contained provisions that triggered derivative treatment under SFAS 133 “Accounting for Derivatives.” Adjustments were subsequently made to record the make-whole provision, beneficial conversion feature, and optional early redemption right as a bundled derivative liability. The Series A Warrants, Series B Warrants and Placement Agent Warrants were considered separable instruments and recorded as a separate derivative liability. Changes in the fair values of these derivatives are recorded as gains and losses on derivatives in the consolidated statement of operations.
| FOR IMMEDIATE RELEASE | |
Currency Convenience Translation
For the convenience of readers, certain RMB amounts in the restatement of the First Quarter financial results have been translated into US dollars at the rate of RMB6.8329 to US$1.00, the noon buying rate for US dollars in effect on March 31, 2009 for cable transfers of RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.
And certain RMB amounts in the Second Quarter financial results have been translated into US dollars at the rate of RMB6.8302 to US$1.00, the noon buying rate for US dollars in effect on June 30, 2009 for cable transfers of RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York.
Third Quarter 2009 Results and Conference Call
eFuture expects to release unaudited financial results for the third fiscal quarter of 2009 after the close of U.S. markets on Monday, December 7, 2009.
The earnings press release will be available on the investor relations page of its website at http://www.e-future.com.cn/eng/newslist.asp?lm=36&lmname=LM2.
Following the earnings announcement, eFuture’s senior management will host a conference call on Tuesday, December 8, 2009 at 5:00 am (Pacific) / 8:00 am (Eastern) / 9:00 pm (China) to discuss its third quarter 2009 financial results and recent business activity. The conference call may be accessed by calling:
United States toll free | 1-866-519-4004 |
China (Landline) | 800-819-0121 |
China (Mobile) | 400-620-8038 |
United Kingdom toll free | 0808-234-6646 |
Hong Kong toll free | 800-930-346 |
Conference ID | 43021457 |
Please dial-in 10 minutes before the call is scheduled to begin.
A replay of the conference call may be accessed by phone at the following numbers until 11:00 pm (Eastern), December 15, 2009:
United States toll free | 1-866-214-5335 |
China North | 10-800-7140386 |
China South | 10-800-1400386 |
United Kingdom toll free | 0800-731-7846 |
Hong Kong toll free | 800-901-596 |
Conference ID | 43021457 |
Additionally, a live and archived webcast of the conference call will be available on the investor relations section of eFuture’s website at http://www.e-future.com.cn/ENG/newshow.asp?id=513.
| FOR IMMEDIATE RELEASE | |
Use of Non-GAAP Financial Measures
To supplement eFuture’s unaudited consolidated financial results presented in accordance with U.S. GAAP, eFuture uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC: adjusted EBITDA excluding amortization of acquired software technology, amortization of intangibles, share-based compensation expenses, depreciation, adjusted net income excluding amortization of acquired software technology, amortization of intangibles, share-based compensation expenses and accretion on convertible notes, adjusted basic and diluted earnings per share excluding amortization of acquired software technology, amortization of intangibles, share-based compensation expenses and accretion on convertible notes.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.
eFuture believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding expenses that may not be indicative of its operating performance from a cash perspective or be indicative of its operating performance. eFuture believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to eFuture’s historical performance and liquidity. eFuture computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. The accompanying paragraphs have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
eFuture’s management also believes that EBITDA, defined as earnings before interest, income tax expense, depreciation and amortization is a useful financial metric to assess its operating and financial performance before the impact of investing and financing transactions and income taxes. In addition, eFuture’s management believes that EBITDA is widely used by other companies in the software industry and may be used by investors as a measure of its financial performance. Given the significant investments that eFuture has made in property, equipment, depreciation and amortization expense comprises a meaningful portion of the Company’s cost structure. eFuture’s management believes that EBITDA will provide investors with a useful tool for comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures. The presentation of EBITDA should not be construed as an indication that the Company’s future results will be unaffected by other charges and gains eFuture considers to be outside the ordinary course of its business.
The use of EBITDA and adjusted EBITDA has certain limitations. Depreciation and amortization expense for various long-term assets, income tax expense, interest expense and interest income have been and will be incurred and are not reflected in the presentation of EBITDA. Further, share-based compensation expenses have been and will be incurred and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of eFuture’s financial results. The term EBITDA or adjusted EBITDA is not defined under U.S. GAAP, and EBITDA or adjusted EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing eFuture’s operating and financial performance, you should not consider this data in isolation or as a substitute for its net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, the Company’s EBITDA and adjusted EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as eFuture does.
| FOR IMMEDIATE RELEASE | |
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company’s year-end financial statements, which could result in significant differences from this unaudited financial information.
About eFuture Information Technology Inc.
eFuture Information Technology Inc. (NASDAQ: EFUT) is a leading provider of software and services in China’s rapidly growing retail and consumer goods industries. eFuture provides integrated software and services to manufacturers, distributors, wholesalers, logistics companies and retailers in China’s front-end supply chain (from factory to consumer) market, especially in the retail and fast moving consumer goods industries. eFuture currently serves over 15 Fortune 500 companies, over 1,000 retailers and over 5,000 suppliers operating in China. eFuture is one of IBM’s premier business partners in Asia Pacific and is a strategic partner with Oracle, Microsoft, JDA, Motorola and Samsung Network China. eFuture has more than 600 employees and 20 branch offices across China. For more information about eFuture, please visit http://www.e-future.com.cn/.
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, 2009 financial outlook and quotations from management in this announcement, as well as strategic and operational plans, contain forward-looking statements. eFuture may also make written or oral forward-looking statements in periodic reports to the Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to second parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: eFuture’s anticipated growth strategies; eFuture’s future business development, results of operations and financial condition; expected changes in the Company’s revenues and certain cost or expense items; eFuture’s ability to attract customers and leverage its brand; trends and competition in the software industry; the Company’s ability to control expenses and maintain profit margins; the Company’s ability to hire, train and retain qualified managerial and other employees; the Company’s ability to develop new software and pilot new business models at desirable locations in a timely and cost-effective manner; the performance of third parties under contracts with the Company; the expected growth of the Chinese economy software market in retail and consumer goods industries; and Chinese governmental policies relating to private managers and operators of software and applicable tax rates.
| FOR IMMEDIATE RELEASE | |
Further information regarding these and other risks is included in eFuture’s annual report on Form 20-F and other documents filed with the SEC. All information provided in this press release and in the attachments is as of November 19, 2009, and the Company undertakes no duty to update such information or any other forward-looking information, except as required under applicable law.
Investor Contact: Troe Wen, Company Secretary eFuture Information Technology Inc. +86-10-5293-7699 ir@e-future.com.cn | Investor Relations (US): Mahmoud Siddig Taylor Rafferty +1 212 889 4350 eFuture@Taylor-Rafferty.com |
Investor Relations (HK): Ruby Yim Taylor Rafferty +852 3196 3712 eFuture@Taylor-Rafferty.com | Media Contact: Jason Marshall Taylor Rafferty +1 212 889 4350 eFuture@Taylor-Rafferty.com |
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2009 (Reported) | March 31, 2009 (Reported) | March 31, 2008 (Reported) | March 31, 2008 (Reported) | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | ¥ | 42,460,982 | ¥ | 42,524,982 | ¥ | 59,283,677 | ¥ | 59,283,677 | ||||||||
| Trade receivables, less allowance for doubtful accounts | 23,184,359 | 21,333,449 | 13,845,503 | 13,845,503 | ||||||||||||
| Refundable value added tax | 1,677,975 | 1,578,129 | 2,351,243 | 2,351,243 | ||||||||||||
| Deposits | - | - | 209,660 | 209,660 | ||||||||||||
| Advances to employees | 3,957,154 | 4,778,897 | 2,815,950 | 2,815,950 | ||||||||||||
| Advances to suppliers | 1,186,250 | 1,395,298 | 657,724 | 657,724 | ||||||||||||
| Notes receivable - related party | - | - | - | - | ||||||||||||
| Other receivables | 1,396,544 | 3,673,343 | 5,681,883 | 5,681,883 | ||||||||||||
| Prepaid expenses | 993,138 | 455,515 | 880,875 | 880,875 | ||||||||||||
| Inventory | 14,093,665 | 6,869,625 | 13,771,667 | 13,771,667 | ||||||||||||
| Total current assets | 88,950,066 | 82,609,237 | 99,498,181 | 99,498,181 | ||||||||||||
| Non-current assets | ||||||||||||||||
| Long-term investments | 654,192 | 654,192 | 4,901,912 | 4,901,912 | ||||||||||||
| Long term deferred expense | - | 285,000 | - | - | ||||||||||||
| Deferred loan costs | 673,888 | 1,097,696 | 4,539,826 | 7,252,043 | ||||||||||||
| Deferred assets | 6,552,316 | - | 171,583 | 171,583 | ||||||||||||
| Property and equipment, net of accumulated depreciation | 3,509,836 | 1,969,249 | 1,969,249 | |||||||||||||
| Intangible assets, net of accumulated amortization | 57,915,045 | 48,988,255 | 42,288,011 | 42,288,011 | ||||||||||||
| Goodwill | 69,595,844 | 91,284,735 | 46,814,929 | 46,814,929 | ||||||||||||
| Total non-current assets | 138,547,142 | 145,819,714 | 100,685,509 | 103,397,726 | ||||||||||||
| Total assets | ¥ | 227,497,208 | ¥ | 228,428,951 | ¥ | 200,183,690 | ¥ | 202,895,907 | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Trade accounts payable | ¥ | 4,667,102 | ¥ | 2,290,929 | ¥ | 4,052,516 | ¥ | 4,052,516 | ||||||||
| Other payable | 3,454,587 | 12,784,897 | 2,209,216 | 2,209,216 | ||||||||||||
| Accrued expenses | 3,893,034 | 4,708,929 | 3,566,471 | 3,566,471 | ||||||||||||
| Accrued interest | - | (27,332 | ) | 76,619 | 69,872 | |||||||||||
| Taxes payable | 6,000,035 | 5,782,023 | 5,101,258 | 5,101,258 | ||||||||||||
| Deferred Revenues | 7,228,517 | - | - | - | ||||||||||||
| Deferred Tax | 4,698,487 | - | 4,826,454 | 4,826,454 | ||||||||||||
| Advances from customers | 23,014,933 | 26,400,130 | 15,564,504 | 15,564,504 | ||||||||||||
| Royalstone acquisition obligation, current portion | 6,415,374 | 6,426,752 | 15,860,198 | 15,860,198 | ||||||||||||
| Health Field acquisition obligation | 552,855 | 553,908 | 3,175,318 | 3,175,318 | ||||||||||||
| Proadvancer System acquisition obligation | 14,555,799 | 30,004,186 | - | - | ||||||||||||
| BFuture acquisition obligation | - | 392,877 | - | - | ||||||||||||
| Make-whole obligation, current portion | - | - | 707,312 | - | ||||||||||||
| Convertible note payable, current portion | 322,397 | - | 2,785,890 | - | ||||||||||||
| Deferred tax, current portion | - | 1,164,898 | - | - | ||||||||||||
| Total current liabilities | 74,803,120 | 90,482,197 | 57,925,757 | 54,425,808 | ||||||||||||
| Long-term liabilities | ||||||||||||||||
| Royalstone acquisition obligation, net of current portion | - | - | 6,093,683 | 6,093,683 | ||||||||||||
| Make-whole obligation, net of current portion | 719,094 | - | 9,290,082 | - | ||||||||||||
| 3% - 10% convertible note payable, net of unamortized discount | 674,517 | 31,073 | 6,770,666 | 135,076 | ||||||||||||
| Derivative liabilities | - | 3,828,952 | - | (3,776,075 | ) | |||||||||||
| Deferred tax | - | 5,458,232 | - | - | ||||||||||||
| Minority shareholder interests | 1,972,733 | - | (375,070 | ) | (375,070 | ) | ||||||||||
| Total long-term liabilities | 3,366,345 | 9,318,257 | 21,779,360 | 2,077,613 | ||||||||||||
| Shareholders’ equity | ||||||||||||||||
| Ordinary shares, $0.0756 U.S. dollars par value; 6,613,756 shares | ||||||||||||||||
| authorized;3,362,241 shares outstanding | 2,038,631 | 2,039,196 | 1,839,898 | 1,839,898 | ||||||||||||
| Additional paid-in capital | 224,849,534 | 173,819,877 | 169,131,602 | 197,548,234 | ||||||||||||
| Statutory reserves | 3,084,020 | 3,084,020 | 3,084,020 | 3,084,020 | ||||||||||||
| Accumulated deficit | (80,644,442 | ) | (50,314,596 | ) | (53,576,948 | ) | (56,079,667 | ) | ||||||||
| Total shareholders’ equity | 149,327,743 | 128,628,497 | 120,478,573 | 146,392,486 | ||||||||||||
| Total liabilities and shareholders’ equity | ¥ | 227,497,208 | ¥ | 228,428,951 | ¥ | 200,183,690 | ¥ | 202,895,907 | ||||||||
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INCOME STATEMENTS
March 31, 2009 (Reported) | March 31, 2009 (Reported) | March 31, 2008 (Reported) | March 31, 2008 (Reported) | |||||||||||||
| Revenues | ||||||||||||||||
| Software sales | ¥ | 4,956,292 | ¥ | 4,949,335 | ¥ | 7,565,110 | ¥ | 7,565,110 | ||||||||
| Hardware sales | 1,395,170 | 1,395,170 | 1,409,113 | 1,409,113 | ||||||||||||
| Service fee income | 7,625,916 | 7,479,788 | 5,040,249 | 5,040,249 | ||||||||||||
| Total Revenues | 13,977,378 | 13,824,292 | 14,014,472 | 14,014,472 | ||||||||||||
| Cost of Revenue | ||||||||||||||||
| Cost of software | 1,298,681 | 1,092,129 | 1,845,125 | 1,845,125 | ||||||||||||
| Cost of hardware | 1,367,984 | 1,370,114 | 1,204,786 | 1,204,786 | ||||||||||||
| Cost of service fee income | 2,311,579 | 2,952,121 | 1,493,129 | 1,493,129 | ||||||||||||
| Amortization of acquired technology | 3,110,375 | 2,996,500 | 3,860,243 | 3,860,243 | ||||||||||||
| Amortization of software costs | 903,707 | 904,352 | 896,856 | 896,856 | ||||||||||||
| Total Cost of Revenue | 8,992,326 | 9,315,216 | 9,300,139 | 9,300,139 | ||||||||||||
| Gross Profit | 4,985,052 | 4,509,077 | 4,714,333 | 4,714,333 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | 242,261 | 93,566 | 167,288 | 167,288 | ||||||||||||
| General and administrative | 5,742,794 | 7,876,101 | 7,870,673 | 7,870,673 | ||||||||||||
| Selling and distribution expenses | 5,741,659 | 5,575,080 | 3,759,182 | 3,759,182 | ||||||||||||
| Total Operating Expenses | 11,726,713 | 13,544,747 | 11,797,143 | 11,797,143 | ||||||||||||
| Profit from operations | (6,741,662 | ) | (9,035,671 | ) | (7,082,810 | ) | (7,082,810 | ) | ||||||||
| Interest income | 180,273 | 180,273 | 112,611 | 112,611 | ||||||||||||
| Interest expense | (110,484 | ) | (145,097 | ) | (314,520 | ) | (307,773 | ) | ||||||||
| Interest expense- amortization of discount on notes payable | (199,648 | ) | (6,648 | ) | (488,504 | ) | (29,348 | ) | ||||||||
| Interest expense- amortization of deferred loan costs | (55,387 | ) | (86,062 | ) | (242,378 | ) | (403,212 | ) | ||||||||
| Income on investments | - | - | (558,389 | ) | (558,389 | ) | ||||||||||
| Gain on derivative liabilities | - | 1,290,861 | - | 3,776,075 | ||||||||||||
| Loss on extinguishment of convertible notes | - | - | - | - | ||||||||||||
| Foreign currency exchange gain/(loss) | (883,409 | ) | (55,769 | ) | (805,787 | ) | (2,001,661 | ) | ||||||||
| Outside business receives | 6,320 | - | - | - | ||||||||||||
| Outside business disburses | - | - | - | - | ||||||||||||
| Loss before taxation | (7,803,997 | ) | (7,858,113 | ) | (9,379,777 | ) | (6,494,507 | ) | ||||||||
| Income tax | - | 388,299 | - | - | ||||||||||||
| Minority interest in loss of consolidated subsidiary | 1,197,422 | - | 154,491 | 154,491 | ||||||||||||
| Net loss | ¥ | (6,606,575 | ) | ¥ | (7,469,813 | ) | ¥ | (9,225,286 | ) | ¥ | (6,340,016 | ) | ||||
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2009 (Reported) | June 30, 2008 (Reported) | June 30, 2008 (Reported) | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ¥ | 39,198,012 | ¥ | 58,822,685 | ¥ | 58,822,685 | ||||||
| Trade receivables, less allowance for doubtful accounts | 12,506,545 | 22,261,041 | 22,261,041 | |||||||||
| Refundable value added tax | 2,242,320 | 2,564,891 | 2,564,891 | |||||||||
| Deposits | - | 209,660 | 209,660 | |||||||||
| Advances to employees | 4,114,868 | 4,288,058 | 4,288,058 | |||||||||
| Advances to suppliers | 1,082,244 | 817,830 | 817,830 | �� | ||||||||
| Notes receivable - related party | - | - | - | |||||||||
| Other receivables | 3,896,064 | 4,034,326 | 4,034,326 | |||||||||
| Prepaid expenses | 2,147,132 | 1,098,565 | 1,098,565 | |||||||||
| Inventory | 7,650,692 | 18,729,440 | 18,729,440 | |||||||||
| Total current assets | 72,837,877 | 112,826,496 | 112,826,496 | |||||||||
| Non-current assets | ||||||||||||
| Long-term investments | 654,192 | 767,119 | 767,119 | |||||||||
| Long term deferred expense | 817,382 | - | - | |||||||||
| Deferred loan costs | 1,011,697 | 4,261,251 | 1,367,605 | |||||||||
| Deferred assets | - | 171,083 | 171,083 | |||||||||
| Property and equipment, net of accumulated depreciation | 4,028,150 | 3,847,802 | 3,847,802 | |||||||||
| Intangible assets, net of accumulated amortization | 48,052,877 | 43,540,399 | 43,540,399 | |||||||||
| Goodwill | 91,284,735 | 46,357,407 | 46,357,407 | |||||||||
| Total non-current assets | 145,849,033 | 98,945,061 | 96,051,415 | |||||||||
| Total assets | ¥ | 218,686,910 | ¥ | 211,771,556 | ¥ | 208,877,910 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Trade accounts payable | ¥ | 2,601,091 | ¥ | 4,433,913 | ¥ | 4,433,913 | ||||||
| Other payable | 13,724,591 | 8,833,770 | 8,833,770 | |||||||||
| Accrued expenses | 5,520,983 | 3,348,548 | 3,348,548 | |||||||||
| Accrued interest | -27,321 | 74,874 | 68,145 | |||||||||
| Taxes payable | 5,965,735 | 4,817,410 | 4,817,410 | |||||||||
| Deferred Revenues | - | 3,206,685 | 3,206,685 | |||||||||
| Deferred Tax | - | 4,716,502 | 4,716,502 | |||||||||
| Advances from customers | 23,617,532 | 20,819,237 | 20,819,237 | |||||||||
| Royalstone acquisition obligation, current portion | 6,424,213 | 15,360,066 | 15,360,066 | |||||||||
| Health Field acquisition obligation | 553,689 | 3,102,981 | 3,102,981 | |||||||||
| Proadvancer System acquisition obligation | 29,992,330 | - | - | |||||||||
| BFuture acquisition obligation | 392,877 | - | - | |||||||||
| Make-whole obligation, current portion | - | 479,561 | - | |||||||||
| Convertible note payable, current portion | - | 2,890,708 | - | |||||||||
| Deferred tax, current portion | 776,599 | - | - | |||||||||
| Total current liabilities | 89,542,319 | 72,084,256 | 68,707,259 | |||||||||
| Long-term liabilities | ||||||||||||
| Royalstone acquisition obligation, net of current portion | - | 6,093,683 | 6,093,683 | |||||||||
| Make-whole obligation, net of current portion | - | 9,290,082 | - | |||||||||
| 3% - 10% convertible note payable, net of unamortized discount | 31,238 | 6,770,666 | 27,134 | |||||||||
| Derivative liabilities | 5,502,956 | - | (7,552,150 | ) | ||||||||
| Deferred tax | 5,458,232 | - | - | |||||||||
| Minority shareholder interests | 359,045 | (3,496,172 | ) | (3,496,172 | ) | |||||||
| Total long-term liabilities | 11,351,471 | 18,658,259 | (4,927,505 | ) | ||||||||
| Shareholders’ equity | ||||||||||||
| Ordinary shares, $0.0756 U.S. dollars par value; 6,613,756 shares | ||||||||||||
| authorized;3,362,241 shares outstanding | 2,039,196 | 1,849,061 | 1,849,061 | |||||||||
| Additional paid-in capital | 174,572,189 | 170,675,900 | 199,092,532 | |||||||||
| Statutory reserves | 3,084,020 | 3,084,020 | 3,084,020 | |||||||||
| Accumulated deficit | (61,902,285 | ) | (54,579,940 | ) | (58,927,456 | ) | ||||||
| Total shareholders’ equity | 117,793,120 | 121,029,041 | 145,098,157 | |||||||||
| Total liabilities and shareholders’ equity | ¥ | 218,686,910 | ¥ | 211,771,556 | ¥ | 208,877,910 | ||||||
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INCOME STATEMENTS
June 30, 2009 (Reported) | June 30, 2008 (Reported) | June 30, 2008 (Restated) | ||||||||||
| Revenues | ||||||||||||
| Software sales | ¥ | 10,611,112 | ¥ | 8,711,537 | ¥ | 8,711,537 | ||||||
| Hardware sales | - | 2,915,871 | 2,915,871 | |||||||||
| Service fee income | 11,594,726 | 12,533,027 | 12,533,027 | |||||||||
| Total Revenues | 22,205,838 | 24,160,436 | 24,160,436 | |||||||||
| Cost of Revenue | ||||||||||||
| Cost of software | 3,526,283 | 2,039,796 | 2,039,796 | |||||||||
| Cost of hardware | - | 2,549,247 | 2,549,247 | |||||||||
| Cost of service fee income | 4,937,353 | 2,983,426 | 2,983,426 | |||||||||
| Amortization of acquired technology | 3,018,653 | 1,904,687 | 1,904,687 | |||||||||
| Amortization of software costs | 905,642 | 891,606 | 891,606 | |||||||||
| Total Cost of Revenue | 12,387,931 | 10,368,762 | 10,368,762 | |||||||||
| Gross Profit | 9,817,907 | 13,791,673 | 13,791,673 | |||||||||
| Operating Expenses | ||||||||||||
| Research and development | 92,179 | 223,792 | 223,792 | |||||||||
| General and administrative | 10,032,444 | 8,061,899 | 8,199,499 | |||||||||
| Selling and distribution expenses | 9,443,587 | 4,274,793 | 4,274,793 | |||||||||
| Total Operating Expenses | 19,568,210 | 12,560,484 | 12,698,084 | |||||||||
| Profit from operations | (9,750,303 | ) | 1,231,189 | 1,093,589 | ||||||||
| Interest income | 162,491 | 873,560 | 873,560 | |||||||||
| Interest expense | (174,914 | ) | (504,649 | ) | (504,668 | ) | ||||||
| Interest expense- amortization of discount on notes payable | (204 | ) | (857,519 | ) | (598 | ) | ||||||
| Interest expense- amortization of deferred loan costs | (87,176 | ) | (278,575 | ) | (408,432 | ) | ||||||
| Income on investments | - | 47,802 | 47,802 | |||||||||
| Gain on derivative liabilities | (1,673,706 | ) | - | 3,776,075 | ||||||||
| Loss on extinguishment of convertible notes | - | - | (22,529,228 | ) | ||||||||
| Foreign currency exchange gain/(loss) | 12,059 | 711,914 | 16,893,223 | |||||||||
| Outside business receives | - | 23,400 | - | |||||||||
| Outside business disburses | - | (161,000 | ) | - | ||||||||
| Loss before taxation | (11,511,752 | ) | 1,086,122 | (758,676 | ) | |||||||
| Income tax | 283,108 | (140,695 | ) | (140,695 | ) | |||||||
| Minority interest in loss of consolidated subsidiary | (154,631 | ) | 1,868,735 | 1,868,735 | ||||||||
| Net loss | ¥ | (11,383,275 | ) | ¥ | 2,814,162 | ¥ | 969,364 | |||||
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
NON-GAAP MEASURES OF PERFORMANCE
March 31, 2009 | June 30, 2009 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA | ||||||||||||
| Operating income (loss) (GAAP Basis) | (9,035,671 | ) | (9,750,303 | ) | (1,426,964 | ) | ||||||
| Adjustments for non-GAAP measures of performance: | ||||||||||||
| Add back amortization of acquired software technology | 2,996,500 | 3,018,653 | 441,782 | |||||||||
| Add back amortization of intangibles | 904,352 | 905,642 | 132,541 | |||||||||
| Add back share-based compensation expenses | 765,226 | 752,311 | 110,101 | |||||||||
| Adjusted non-GAAP operating income | (4,369,593 | ) | (5,073,697 | ) | (742,540 | ) | ||||||
| Add back depreciation | 145,241 | 286,790 | 41,972 | |||||||||
| Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) | (4,224,353 | ) | (4,786,907 | ) | (700,567 | ) | ||||||
| NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA, as a percentage of revenue | ||||||||||||
| Operating income (loss) (GAAP BASIS) | -65 | % | -44 | % | -44 | % | ||||||
| Adjustments for non-GAAP measures of performance: | ||||||||||||
| Amortization of acquired software technology | 22 | % | 14 | % | 14 | % | ||||||
| Amortization of intangibles | 7 | % | 4 | % | 4 | % | ||||||
| Share-based compensation expenses | 6 | % | 3 | % | 3 | % | ||||||
| Adjusted non-GAAP operating income | -32 | % | -23 | % | -23 | % | ||||||
| Depreciation | 1.1 | % | 1.3 | % | 1.3 | % | ||||||
| Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) | -31 | % | -22 | % | -22 | % | ||||||
| NON-GAAP EARNINGS PER SHARE | ||||||||||||
| Net Income(Loss) | (7,469,813 | ) | (11,383,275 | ) | (1,665,951 | ) | ||||||
| Amortization of acquired software technology | 2,996,500 | 3,018,653 | 441,782 | |||||||||
| Amortization of intangibles | 904,352 | 905,642 | 132,541 | |||||||||
| Accretion on convertible notes | 6,648 | 204 | 30 | |||||||||
| Share-based compensation expenses | 765,226 | 752,311 | 110,101 | |||||||||
| Adjusted Net income | (2,797,088 | ) | (6,706,465 | ) | (981,497 | ) | ||||||
| Adjusted non-GAAP diluted earnings per share | (0.82 | ) | (1.98 | ) | (0.29 | ) | ||||||
| Shares used to compute non-GAAP diluted earnings per share | 3,394,099 | 3,384,625 | 3,384,625 | |||||||||
|
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Chinese Yuan (Renminbi) | U.S. Dollars | |||||||||||
| December 31, | June 30, | June 30, | ||||||||||
| 2008 | 2009 | 2009 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | (4,478,112 | ) | (18,853,088 | ) | (2,760,254 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
| Depreciation | 891,183 | 432,031 | 63,253 | |||||||||
| Amortization of intangible assets | 16,940,774 | 7,802,991 | 1,142,425 | |||||||||
| Impairment of intangible assets | 2,143,290 | - | - | |||||||||
| Amortization of discount on notes payable | 33,212 | 6,852 | 1,003 | |||||||||
| Amortization of deferred loan costs | 978,204 | 173,237 | 25,363 | |||||||||
| Gain on derivatives | (33,122,465 | ) | 382,845 | 56,052 | ||||||||
| Loss on extinguishment of convertible notes | 22,529,233 | - | - | |||||||||
| Investment (income)/loss | 3,552,902 | - | - | |||||||||
| Loss on disposition of property and equipment | 385,995 | - | - | |||||||||
| Provision for doubtful debt | 2,340,706 | (601,051 | ) | (87,999 | ) | |||||||
| Provision for loss in inventory and work in process | 1,449,542 | - | - | |||||||||
| Compensation expense for options issued to employees | 3,109,903 | 1,517,537 | 222,181 | |||||||||
| Deferred taxes | 481,774 | (776,598 | ) | (113,701 | ) | |||||||
| Foreign exchange loss | (2,222,996 | ) | - | - | ||||||||
| Minority interest | 204,414 | 154,631.08 | 22,639 | |||||||||
| Change in assets and liabilities: | ||||||||||||
| Accounts receivable | (2,526,441 | ) | 7,562,535 | 1,107,220 | ||||||||
| Refundable value added tax | 935,333 | 513,382 | 75,163 | |||||||||
| Deposits | 156,695 | - | - | |||||||||
| Advances to employees | 370,994 | (1,138,969 | ) | (166,755 | ) | |||||||
| Advances to suppliers | 991,888 | (883,492 | ) | (129,351 | ) | |||||||
| Other receivables | 136,565 | (4,798,228 | ) | (702,502 | ) | |||||||
| Prepaid expenses | 305,014 | (1,497,998 | ) | (219,320 | ) | |||||||
| Inventories | 1,421,159 | (4,725,723 | ) | (691,886 | ) | |||||||
| Trade payables | 1,230,861 | (3,086,149 | ) | (451,839 | ) | |||||||
| Other payables | 7,269,063 | 6,781,730 | 992,904 | |||||||||
| Accrued expenses | 2,360,449 | (1,351,672 | ) | (197,896 | ) | |||||||
| Accrued interest | (278,420 | ) | (27,321 | ) | (4,000 | ) | ||||||
| Taxes payable | (1,084,826 | ) | (2,781,130 | ) | (407,181 | ) | ||||||
| Advances from customers | 4,542,952 | 778,002 | 113,906 | |||||||||
| Net cash provided by operating activities | 31,048,845 | (14,415,643 | ) | (2,110,574 | ) | |||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (1,618,331 | ) | (861,635 | ) | (126,151 | ) | ||||||
| Payments for intangible assets | (2,930,247 | ) | (6,338,725 | ) | (928,044 | ) | ||||||
| Long-term investments | - | - | - | |||||||||
| Acquisition of business | (28,278,247 | ) | - | - | ||||||||
| Loan to Guarantor | - | - | - | |||||||||
| Amounts due from a related party | - | - | - | |||||||||
| Net cash used in investing activities | (32,826,825 | ) | (7,200,360 | ) | (1,054,195 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Issuance of ordinary shares for cash, net of | ||||||||||||
| offering costs paid | - | - | - | |||||||||
| Proceeds from exercise of warrants | 3,657,908 | - | - | |||||||||
| Issuance of convertible notes | - | - | - | |||||||||
| Payment of make-whole obligation | (8,054,079 | ) | - | - | ||||||||
| Repayment of short-term loans | - | - | - | |||||||||
| Net cash provided by (used in) financing activities | (4,396,171 | ) | - | - | ||||||||
| Effect of exchange rate changes on cash | (265,463 | ) | 26,281 | 3,848 | ||||||||
| Net increase (decrease) in cash | (6,439,614 | ) | (21,589,722 | ) | (3,160,921 | ) | ||||||
| Cash and cash equivalents at beginning of period | 67,227,348 | 60,787,734 | 8,899,847 | |||||||||
| Cash and cash equivalents at end of period | 60,787,734 | 39,198,012 | 5,738,926 | |||||||||
| Supplemental cash flow information | ||||||||||||
| Interest paid | 1,525,200 | 210,130.87 | 30,765.00 | |||||||||