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eFuture Announces Unaudited Second Quarter 2015 Financial Results

BEIJING, Aug. 14, 2015 (GLOBE NEWSWIRE) -- eFuture Information Technology Inc. (Nasdaq:EFUT) (the "Company" or "eFuture"), a leading software and solution provider and a mobile business enabler to China's rapidly growing retail and consumer goods industries, today announced its unaudited financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Financial Highlights

  • Total revenue increased 6% year-over-year to RMB32.8million (US$5.3 million).
  • Gross profit increased 10% year-over-year to RMB11.8 million (US$1.9 million).
  • Adjusted EBITDA was negative RMB2.8 million (US$0.4 million), compared to an adjusted EBITDA of negative RMB4.1 million in the second quarter 2014.
  • Operating loss was RMB5.6 million (US$0.9 million), compared to an operating loss of RMB5.9 million in the second quarter 2014.
  • Net loss was RMB6.0 million (US$1.0 million), compared to a net loss of RMB 4.4 million in the second quarter 2014.
  • Backlog as of June 30, 2015 decreased 5% year-over-year to RMB169.6 million (US$27.3 million).

Mr. David Ren, CEO, commented, "In the first half of this year, the Company reevaluated the direction of the organization, culture and the team's capabilities by analyzing its development history and experiences for success. As a result of this comprehensive analysis, the Company streamlined its business and product system, and adjusted its business strategy. We also cut businesses with no profit model to focus on pragmatic business opportunities. The Company will strengthen the software business transformation and vigorously expand its service-oriented business model to provide better solutions and services for the Chinese retail and distribution industry in the years to come."

"Driven by robust growth of the high margin software license business, the gross margin increased 2%, from 34% to 36% year over year. To help our clients prepare for a more mobilized future, we continue to invest in the omni-channel solution and retail mobile applications," Ms. Ping Yu, CFO, added.

SECOND QUARTER 2015 FINANCIAL RESULTS

Revenue

Total revenue for the second quarter 2015 increased 6% to RMB32.8 million (US$5.3million) from RMB31.0 million in the second quarter 2014.

Revenue Breakdown

2Q14 2Q15
RMB '000 RMB '000 USD '000 Y-o-Y Change
Software revenue 7,847 11,874 1,915 51%
Hardware revenue 1,342 3,714 599 177%
Service fee revenue 21,818 17,203 2,775 -21%
Total 31,007 32,791 5,289 6%

Software revenue for the second quarter 2015 increased 51% year-over-year to RMB11.9 million (US$1.9 million) from RMB7.8 million in the second quarter 2014. The increase was primarily attributable to the higher software license sales from new customers in the specialty store and grocery industries.

Hardware revenue in the second quarter 2015 increased 177% year-over-year to RMB3.7 million (US$0.6 million) from RMB 1.3 million in the second quarter 2014. The increase was a result of the completion of a few "one-off" large projects in the logistics and grocery industries.

Service fee revenue for the second quarter 2015 decreased 21% year-over-year to RMB17.2 million (US$2.7 million) from RMB21.8 million in the second quarter 2014. The decrease was primarily due to the completion of a few large customization projects in the second quarter 2014.

Cost of Revenue

Cost of revenue for the second quarter 2015 increased 3% to RMB21.0 million (US$3.4 million) from RMB20.4 million in the second quarter 2014.

Cost of Revenue Breakdown

2Q14 2Q15
RMB '000 RMB '000 USD '000 Y-o-Y Change
Cost of software revenue 1,409 2,186 353 55%
Cost of hardware revenue 1,308 3,441 555 163%
Cost of service fee revenue 16,703 13,611 2,195 -19%
Amortization of software costs 934 1,795 289 92%
Total 20,354 21,033 3,392 3%

Gross Profit and Gross Margin

Gross profit for the second quarter 2015 was RMB11.8 million (US$1.9 million), compared with RMB10.6 million in the second quarter 2014, and consolidated gross margin for the second quarter 2015 was 36%, compared with 34% in the second quarter 2014. These increases were primarily due to increases in the proportion of high margin software revenue.

Operating Expenses

Research and development ("R&D") expenses for the second quarter 2015 increased 147% year-over-year to RMB1.1 million (US$0.2 million), or 3% of total revenue, compared with RMB0.4 million, or 1% of total revenue in the second quarter 2014. The increase in R&D expense was primarily attributable to an expenditure relating to the omni-channel platform project in the second quarter 2015.

General and administrative expenses ("G&A") for the second quarter 2015 increased 29% year-over-year to RMB8.1 million (US$1.3 million), representing 25% of total revenue, compared with RMB6.3 million, or 20% of total revenue in the second quarter 2014. The increase in G&A expenses was primarily attributable to higher rental costs and expenses resulting from moving offices, as well as annual salary increases.

Selling and distribution ("S&D") expenses for the second quarter 2015 decreased 17% year-over-year to RMB8.1 million (US$1.3 million), representing 25% of total revenue, compared with RMB9.8 million, or 32% of total revenue in the second quarter 2014. The decrease was primarily attributable to improved management efficiency.

Operating Loss

Operating loss in the second quarter 2015 was RMB5.6 million (US$0.9 million), compared to operating loss of RMB5.9 million in the second quarter 2014.

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

Second quarter 2015 net loss was RMB 6.0 million (US$0.9 million), compared with a net loss of RMB4.4 million in the second quarter 2014. Adjusted net loss for the second quarter 2015 was RMB3.7 million (US$0.6 million), compared with an adjusted net loss of RMB3.1 million in the second quarter 2014.

Basic and diluted loss per share in the second quarter 2015 was RMB1.25 (US$0.2), compared to basic and diluted loss per share of RMB1.06 in the second quarter 2014. Adjusted diluted loss per share was RMB0.76 (US$0.12), compared to adjusted diluted loss per share of RMB 0.74 in the second quarter 2014.

EBITDA

Adjusted EBITDA for the second quarter 2015 was negative RMB2.8 million (US$ 0.4 million), compared to negative RMB4.1 million in the second quarter 2014.

Balance Sheet and Cash Flow

As of June 30, 2015, cash and cash equivalents were RMB44.2 million (US$7.1 million), a decrease of RMB20.3 million from RMB64.6 million at December 31, 2014, an increase of RMB 9.2 million from RMB 35.2 million at March 31, 2015. The increase was primarily attributable to the issuance of ordinary shares through the private placement transaction in April 2015..

Total accounts receivable as of June 30, 2015 decreased 11% to RMB36.2 million (US$5.8 million) from RMB40.9 million as of December 31, 2014. The decrease was primarily due to the improved collection of trade receivables.

Inventory and work in process as of June 30, 2015 increased 149% to RMB36.3 million (US$5.9 million) from RMB14.6 million as of December 31, 2014. The increase was primarily attributable to a greater number of on-going projects, which had not reached the point of revenue recognition.

For the quarter ended June 30, 2015, net cash used in operating activities was RMB7.7 million (US$1.2 million). Net cash used in investing activities was RMB3.7 million (US$0.6 million). Net cash provided by financing activities was RMB 20.5 million (US$3.3 million).

THIRD QUARTER 2015 GUIDANCE

eFuture expects total revenue for the third quarter 2015 to be in the range of RMB36 million (US$5.8 million) to RMB41 million (US$6.6 million). Adjusted EBITDA for the third quarter 2015 is expected to be in the range of negative RMB2 million (US$0.3 million) to RMB1 million (US$0.2 million).

CURRENCY CONVENIENCE TRANSLATION

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.20 to US$1.00, the noon buying rate for U.S. dollars in effect on June 30, 2015 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 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.

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 software and solution provider and a mobile business enabler to China's rapidly growing retail and consumer goods industries. eFuture's clients include over 1,000 active retailers with more than 50,000 physical stores across China, of which approximately 45% were ranked among the top 100 chain retailers during 2014. 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 effective implementation of and transition to an omni-channel model; 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 August 14, 2015, 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 6.20
CONDENSED CONSOLIDATED BALANCE SHEETS
Chinese Yuan (Renminbi) U.S. Dollars
December 31,
2014
June 30,
2015
June 30,
2015
(Audited) (Unaudited) (Unaudited)
ASSETS
Current assets
Cash and cash equivalents 64,558,916 44,231,409 7,134,098
Trade receivables,net of allowance for doubtful accounts of ¥4,502,766 and ¥6,327,762($1,020,607), respectively 40,889,759 36,198,908 5,838,534
Refundable value added tax 6,765,916 2,533,787 408,675
Advances to employees 1,117,272 1,196,945 193,056
Advances to suppliers -- 350,434 56,522
Other receivables 2,474,076 3,300,169 532,285
Prepaid expenses 1,554,052 2,381,668 384,140
Inventory and work in process,net of inventory provision of ¥4,356,091 and ¥3,032,954($489,186), respectively 14,560,195 36,294,015 5,853,873
Deferred tax assets, current portion 7,046,782 7,496,728 1,209,150
Total current assets 138,966,968 133,984,063 21,610,333
Non-current assets
Long-term investments,net of impairment of ¥240,000 and ¥240,000($38,710), respectively -- -- --
Property and equipment, net of accumulated depreciation of ¥9,515,986 and ¥10,368,066($1,672,269), respectively 3,279,483 3,711,682 598,658
Intangible assets, net of accumulated amortization of ¥80,190,029 and ¥82,935,992($13,376,773), respectively 40,294,260 42,393,756 6,837,703
Goodwill 80,625,667 80,625,667 13,004,140
Deferred tax assets 919,637 977,694 157,693
Total non-current assets 125,119,047 127,708,799 20,598,194
Total assets 264,086,015 261,692,862 42,208,527
LIABILITIES AND EQUITY
Current liabilities
Short-term loans 10,692,003 13,000,000 2,096,774
Trade payables 12,509,613 13,180,679 2,125,916
Other payables 17,978,021 12,919,809 2,083,840
Accrued expenses 24,685,555 11,182,904 1,803,694
Taxes payable 16,128,358 10,350,386 1,669,417
Advances from customers 51,661,078 60,747,030 9,797,908
Total current liabilities 133,654,628 121,380,808 19,577,549
Equity
Ordinary shares $0.0756 U.S. dollars par value; 6,613,756 shares, authorized;3,989,626 shares and 4,796,451 shares issued and outstanding, respectively 2,357,978 2,732,839 440,780
Additional paid-in capital 234,405,541 255,227,266 41,165,688
Statutory reserves 8,574,634 8,574,634 1,383,005
Accumulated deficits (114,906,766) (126,222,685) (20,358,498)
Total equity 130,431,387 140,312,054 22,630,975
Total liabilities and equity 264,086,015 261,692,862 42,208,524
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.20
CONDENSED CONSOLIDATED INCOME STATEMENTS
Six months ended Three months ended
Chinese Yuan (Renminbi) U.S. Dollars Chinese Yuan (Renminbi) U.S. Dollars
June 30,
2014
June 30,
2015
June 30,
2015
Y-o-Y
Change
June 30,
2014
June 30,
2015
June 30,
2015
Y-o-Y
Change
(Unaudited) (Unaudited) (Unaudited) % (Unaudited) (Unaudited) (Unaudited) %
Revenues
Software revenue 15,266,616 18,406,946 2,968,862 21% 7,846,492 11,873,793 1,915,128 51%
Hardware revenue 1,843,700 5,626,284 907,465 205% 1,342,132 3,713,848 599,008 177%
Service fee revenue 36,794,759 32,372,254 5,221,331 -12% 21,817,970 17,203,121 2,774,697 -21%
Total revenues 53,905,075 56,405,484 9,097,658 5% 31,006,594 32,790,762 5,288,833 6%
Cost of revenues
Cost of software revenue 4,748,741 4,249,884 685,465 -11% 1,408,785 2,185,634 352,522 55%
Cost of hardware revenue 1,730,406 5,025,018 810,487 190% 1,308,346 3,440,818 554,971 163%
Cost of service fee revenue 25,218,999 22,925,475 3,697,657 -9% 16,702,671 13,611,394 2,195,386 -19%
Amortization of software costs 1,867,877 2,745,962 442,897 47% 933,939 1,794,741 289,474 92%
Total cost of revenues 33,566,023 34,946,339 5,636,506 4% 20,353,741 21,032,587 3,392,353 3%
Gross profit 20,339,052 21,459,145 3,461,152 6% 10,652,853 11,758,175 1,896,480 10%
Operating expenses
Research and development expenses 746,818 1,880,540 303,313 152% 437,538 1,080,889 174,337 147%
General and administrative expenses 11,269,130 14,353,042 2,315,007 27% 6,326,461 8,142,260 1,313,268 29%
Selling and distribution expenses 19,733,112 16,295,217 2,628,261 -17% 9,827,055 8,124,196 1,310,354 -17%
Total operating expenses 31,749,060 32,528,799 5,246,580 2% 16,591,054 17,347,345 2,797,959 5%
Loss from operations (11,410,008) (11,069,654) (1,785,429) (5,938,201) (5,589,170) (901,479)
Other income (expenses)
Interest income 410,543 182,201 29,387 328,158 47,594 7,676
Interest expenses -- (486,228) (78,424) -- (241,058) (38,880)
Other income 134,972 8,803 1,420 134,972 (28,945) (4,669)
Foreign currency exchange gain (loss) 18,674 (59,043) (9,523) 391 (66,815) (10,777)
Loss before income tax (10,845,819) (11,423,921) (1,842,568) (5,474,680) (5,878,394) (948,128)
Less: Income tax expense (benefit) (1,305,483) (108,002) (17,420) (1,030,760) 143,779 23,190
Net loss (9,540,336) (11,315,919) (1,825,148) (4,443,920) (6,022,173) (971,318)
Loss per share
Basic (2.27) (2.50) (0.40) (1.06) (1.25) (0.20)
Diluted (2.27) (2.50) (0.40) (1.06) (1.22) (0.20)
Basic weighted average shares outstanding 4,205,828 4,527,425 4,527,425 4,206,176 4,835,636 4,835,636
Fully diluted weighted average shares outstanding 4,206,303 4,594,382 4,594,382 4,206,176 4,925,815 4,925,815
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.20
NON-GAAP MEASURES OF PERFORMANCE
Six months ended Three months ended
Chinese Yuan (Renminbi) U.S. Dollars Chinese Yuan (Renminbi) U.S. Dollars
June 30,
2014
June 30,
2015
June 30,
2015
June 30,
2014
June 30,
2015
June 30,
2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA
Operating loss (GAAP basis) (11,410,008) (11,069,654) (1,785,429) (5,938,201) (5,589,170) (901,479)
Adjustments for non-GAAP measures of performance:
Add back amortization of intangibles 1,867,877 2,745,962 442,897 933,939 1,794,741 289,474
Add back share-based compensation expenses 600,607 1,267,494 204,435 379,520 576,306 92,953
Adjusted non-GAAP operating loss (8,941,524) (7,056,198) (1,138,097) (4,624,742) (3,218,123) (519,052)
Add back depreciation 964,047 861,198 138,903 475,454 452,823 73,036
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) (7,977,477) (6,195,000) (999,194) (4,149,288) (2,765,300) (446,016)
NON-GAAP OPERATING LOSS AND ADJUSTED EBITDA, as a percentage of revenue
Operating loss (GAAP BASIS) -21% -20% -20% -19% -17% -17%
Adjustments for non-GAAP measures of performance:
Amortization of intangibles 3% 5% 5% 3% 5% 5%
Share-based compensation expenses 1% 2% 2% 1% 2% 2%
Adjusted non-GAAP operating loss -17% -13% -13% -15% -10% -10%
Depreciation 2% 2% 2% 2% 1% 1%
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) -15% -11% -11% -13% -8% -8%
NON-GAAP EARNINGS PER SHARE
Net loss (9,540,336) (11,315,919) (1,825,148) (4,443,920) (6,022,173) (971,318)
Amortization of intangibles 1,867,877 2,745,962 442,897 933,939 1,794,741 289,474
Share-based compensation expenses 600,607 1,267,494 204,435 379,520 576,306 92,953
Adjusted net loss (7,071,852) (7,302,463) (1,177,816) (3,130,461) (3,651,126) (588,891)
Adjusted non-GAAP diluted loss per share (1.68) (1.61) (0.26) (0.74) (0.76) (0.12)
Shares used to compute non-GAAP diluted loss per share 4,205,828 4,527,425 4,527,425 4,206,176 4,835,636 4,835,636
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.20
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended Three months ended
Chinese Yuan (Renminbi) U.S. Dollars Chinese Yuan (Renminbi) U.S. Dollars
June 30,
2014
June 30,
2015
June 30,
2015
June 30,
2014
June 30,
2015
June 30,
2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss (9,540,336) (11,315,919) (1,825,148) (4,443,920) (6,022,173) (971,318)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation of property and equipment 964,047 861,198 138,903 475,454 452,823 73,036
Amortization of intangible assets 1,867,877 2,745,962 442,897 933,939 1,794,741 289,474
Loss (gain) on disposal of property and equipment (783) 239 39 (783) -- --
Allowance for doubtful accounts 1,445,075 1,658,653 267,525 449,669 (830,182) (133,900)
Compensation expenses 600,607 1,267,494 204,435 379,520 576,306 92,953
Deferred income taxes (1,305,483) (508,003) (81,936) (1,030,759) (256,222) (41,326)
Foreign exchange loss 6,471 59,043 9,523 24,754 66,815 10,777
Changes in assets and liabilities:
Trade receivables 2,816,722 2,377,198 383,419 (1,152,787) 77,977 12,577
Refundable value added tax (305,667) 4,232,129 682,601 1,123,867 (1,462,514) (235,889)
Advances to employees (220,220) (79,673) (12,850) (257,262) 425,384 68,610
Advances to suppliers (411,219) (350,434) (56,522) (411,219) (350,434) (56,522)
Other receivables (42,048) (171,093) (27,596) 252,236 254,623 41,068
Prepaid expenses 303,797 (827,616) (133,486) 295,800 777,983 125,481
Inventory and work in process (16,545,985) (21,733,820) (3,505,456) (6,435,055) (7,516,976) (1,212,415)
Trade payables (3,073,691) 671,066 108,236 397,303 1,583,548 255,411
Other payables (4,549,779) (5,058,212) (815,841) (168,420) (238,416) (38,454)
Accrued expenses (12,403,990) (13,502,651) (2,177,847) (239,920) (2,294,940) (370,152)
Taxes payable (8,176,375) (5,733,372) (924,737) (3,706,783) (1,979,640) (319,297)
Advances from customers 8,906,116 9,085,952 1,465,475 3,676,846 7,221,586 1,164,772
Net cash used in operating activities (35,411,366) (36,321,859) (5,858,366) (5,584,022) (7,719,711) (1,245,114)
Cash flows from investing activities:
Purchases of property and equipment (877,554) (1,338,287) (215,853) (213,615) (1,249,702) (201,565)
Payments for intangible assets (10,316,403) (4,845,457) (781,526) (6,981,477) (2,413,260) (389,235)
Cash received from disposal of property and equipment 3,300 50 8 3,300 -- --
Net cash used in investing activities (11,190,657) (6,183,694) (997,371) (7,191,792) (3,662,962) (590,800)
Cash flows from financing activities:
Proceeds from short-term loans -- 2,307,997 372,258 -- 543,097 87,596
Proceeds from exercise of options by employees 55,805 178,880 28,852 -- 178,880 28,852
Issuance of ordinary shares -- 19,750,212 3,185,518 -- 19,750,212 3,185,518
Net cash provided by financing activities 55,805 22,237,089 3,586,628 -- 20,472,189 3,301,966
Effect of exchange rate changes on cash and cash equivalents (6,471) (59,043) (9,523) (24,754) (66,815) (10,777)
Net decrease in cash and cash equivalents (46,552,689) (20,327,507) (3,278,632) (12,800,568) 9,022,701 1,455,274
Cash and cash equivalents at beginning of period 62,620,652 64,558,916 10,412,728 28,868,531 35,208,708 5,678,824
Cash and cash equivalents at end of period 16,067,963 44,231,409 7,134,098 16,067,963 44,231,409 7,134,098
Supplemental cash flow information
Interest paid -- 461,628 74,456 -- 245,230 39,553
Income tax paid 3,736,424 3,042,230 490,682 3,511,237 2,756,463 444,591

CONTACT: Investor Contact: Troe Wen, Company Secretary eFuture Information Technology Inc. +86 10 50916128 ir@e-future.com.cn

Source:eFuture Information Technology Inc.