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EFuture Announces Unaudited Second Quarter 2013 Financial Results

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.

             
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.1374
CONDENSED CONSOLIDATED INCOME STATEMENTS      
             
  Six months ended Three months ended
  Chinese Yuan (Renminbi)  U.S. Dollars  Chinese Yuan (Renminbi)  U.S. Dollars 
  June 30, June 30, June 30, June 30, June 30, June 30,
  2012 2013 2013 2012 2013 2013
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues            
Software revenue 23,959,998 19,525,176 3,181,343 15,547,970 12,878,852 2,098,421
Hardware revenue 5,437,075 16,529,625 2,693,262 3,197,530 12,312,332 2,006,115
Service fee revenue 33,176,389 31,520,022 5,135,729 20,575,521 19,862,293 3,236,272
Total Revenues 62,573,462 67,574,823 11,010,334 39,321,021 45,053,477 7,340,808
             
Cost of revenues            
Cost of software revenue 9,311,775 3,844,497 626,405 7,496,784 3,457,435 563,339
Cost of hardware revenue 4,846,704 13,926,242 2,269,078 3,075,419 10,204,267 1,662,637
Cost of service fee revenue 20,932,907 25,273,484 4,117,946 12,562,596 16,661,945 2,714,821
Amortization of acquired technology 3,357,021 286,000 46,600 1,628,134 71,500 11,650
Amortization of software costs 1,237,791 1,687,854 275,011 620,063 823,048 134,104
Total Cost of Revenues 39,686,198 45,018,077 7,335,040 25,382,996 31,218,195 5,086,550
             
Gross Profit 22,887,264 22,556,746 3,675,293 13,938,025 13,835,282 2,254,258
             
Operating Expenses            
Research and development expenses 1,821,617 1,375,538 224,124 1,302,677 549,396 89,516
General and administrative expenses 15,265,635 13,638,864 2,222,254 8,721,773 7,609,556 1,239,866
Selling and distribution expenses 16,424,878 20,041,710 3,265,505 9,286,396 10,881,272 1,772,945
Total Operating Expenses 33,512,130 35,056,112 5,711,883 19,310,846 19,040,224 3,102,327
             
Loss from operations (10,624,866) (12,499,366) (2,036,590) (5,372,821) (5,204,942) (848,070)
             
Other income (expenses)            
 Interest income 293,768 222,655 36,278 100,732 63,738 10,385
 Gains on derivative liabilities 3,168 -- -- -- -- --
 Other income/(expenses) (1,104) (19,544) (3,186) 13,480 (19,990) (3,257)
 Foreign currency exchange loss 7,679 (68,221) (11,116) 10,027 (55,887) (9,106)
Loss before income tax (10,321,355) (12,364,486) (2,014,613) (5,248,582) (5,217,081) (850,047)
Less: Income tax benefit (4,915,476) (1,389,857) (226,457) (4,737,298) (282,751) (46,070)
Net loss (5,405,879) (10,974,629) (1,788,156) (511,284) (4,934,330) (803,977)
Loss per share            
 Basic (1.31) (2.58) (0.42) (0.12) (1.16) (0.19)
 Diluted (1.31) (2.58) (0.42) (0.12) (1.16) (0.19)
Basic Weighted-average Shares Outstanding 4,130,221 4,252,107 4,252,107 4,130,221 4,253,412 4,253,412
Fully-Diluted Weighted-average Shares Outstanding 4,170,781 4,252,107 4,252,107 4,242,781 4,253,412 4,253,412
       
     
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES Exchange rate 6.1374
 CONDENSED CONSOLIDATED BALANCE SHEETS    
       
  Chinese Yuan (Renminbi)  U.S. Dollars 
  December 31, June 30, June 30,
  2012 2013 2013
  (Audited) (Unaudited) (Unaudited)
ASSETS      
Current assets      
Cash and cash equivalents 79,373,365 39,500,773 6,436,076
Trade receivables, net of allowance for doubtful accounts of ¥2,811,934 and ¥3,772,900 ($614,739), respectively 25,182,508 22,486,828 3,663,901
Refundable value added tax 5,000,709 3,329,809 542,544
Advances to employees 1,365,995 1,317,284 214,632
Advances to suppliers -- 44,432 7,240
Other receivables due from previously consolidated entities 405,000 105,000 17,108
Other receivables 2,174,556 2,174,564 354,314
Prepaid expenses 1,134,602 2,694,415 439,016
Inventory and work in process, net of inventory provision of ¥2,467,133 and ¥4,784,984($779,644), respectively 19,299,732 24,356,480 3,968,534
Total current assets 133,936,467 96,009,585 15,643,364
Non-current assets      
Long-term investments, net of impairment of ¥240,000 and ¥240,000($39,105), respectively -- -- --
Property and equipment, net of accumulated depreciation of ¥7,472,485 and ¥7,422,273 ($1,209,351), respectively 4,357,965 3,791,985 617,849
Intangible assets, net of accumulated amortization of ¥72,771,017 and ¥74,744,871 ($12,178,589), respectively 22,216,204 29,616,455 4,825,570
Goodwill 80,625,667 80,625,667 13,136,779
Deferred tax assets 7,899,110 9,246,093 1,506,516
Total non-current assets 115,098,946 123,280,200 20,086,714
Total assets 249,035,413 219,289,785 35,730,079
       
LIABILITIES AND EQUITY      
Current liabilities      
Trade payables 17,548,846 9,189,857 1,497,353
Other payables 16,920,421 16,116,574 2,625,961
Accrued expenses 25,196,276 8,276,807 1,348,585
Taxes payable 16,128,906 13,036,023 2,124,030
Advances from customers 47,519,612 57,040,155 9,293,863
Deferred tax liabilities, current portion 42,900 -- --
Total current liabilities 123,356,961 103,659,416 16,889,792
       
Equity      
Ordinary shares, $0.0756 U.S. dollars par value; 6,613,756 shares authorized; 3,937,221 shares and 3,913,676 shares issued and outstanding, respectively 2,353,068 2,322,703 378,451
Additional paid-in capital 231,195,613 230,550,073 37,564,779
Treasury stocks (1,602,451) -- --
Statutory reserves 5,914,384 5,914,384 963,663
Accumulated deficits (112,182,162) (123,156,791) (20,066,607)
Total equity 125,678,452 115,630,369 18,840,286
Total liabilities and equity 249,035,413 219,289,785 35,730,079
       
             
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES  Exchange rate 6.1374
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, June 30, June 30, June 30, June 30, June 30,
  2012 2013 2013 2012 2013 2013
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:            
Net loss (5,405,879) (10,974,629) (1,788,156) (511,284) (4,934,330) (803,977)
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:            
Depreciation of property and equipment 990,631 983,493 160,246 503,731 489,600 79,773
Amortization of intangible assets 4,594,812 1,973,854 321,611 2,248,197 894,548 145,754
Gains on derivative liabilities (3,168) -- -- -- -- --
Loss on disposal of property and equipment -- 1,421 232 -- 1,421 232
Allowance for doubtful accounts 1,637,030 1,927,957 314,133 1,055,758 332,674 54,204
Provision for loss in inventory and work in process 1,410,854 3,556,875 579,541 1,410,854 3,556,875 579,541
Compensation expenses 3,732,144 926,546 150,967 2,599,100 458,549 74,714
Deferred income taxes (4,915,476) (1,389,883) (226,461) (4,737,298) (282,778) (46,075)
Foreign exchange loss (gain) (7,322) 47,298 7,707 (9,652) 37,033 6,034
Changes in assets and liabilities:            
Trade receivables (4,051,993) 794,759 129,494 (7,417,252) 974,749 158,821
Refundable value added tax 4,452,227 1,670,900 272,249 5,440,076 (686,364) (111,833)
Advances to employees 63,151 32,606 5,313 385,041 98,620 16,069
Advances to suppliers 57,340 (44,432) (7,240) 84,187 (25,218) (4,109)
Other receivables (4,657,468) 289,061 47,098 1,233,487 293,561 47,831
Prepaid expenses (1,327,523) (1,559,813) (254,149) (1,281,636) (1,379,833) (224,824)
Inventory and work in process (5,326,911) (8,613,623) (1,403,464) (523,345) 890,187 145,043
Trade payables (635,591) (8,358,989) (1,361,976) 990,449 (2,562,469) (417,517)
Other payables (943,525) (803,847) (130,975) 483,215 3,960,143 645,248
Accrued expenses (6,608,277) (16,919,469) (2,756,781) (1,211,518) (3,314,047) (539,976)
Taxes payable (2,764,211) (3,092,883) (503,940) (381,626) (1,366,062) (222,580)
Advances from customers 3,293,021 9,520,543 1,551,234 2,788,124 4,339,511 707,060
Net cash provided by (used in) operating activities (16,416,134) (30,032,255) (4,893,319) 3,104,507 1,776,370 289,434
             
Cash flows from investing activities:            
Purchases of property and equipment (1,624,614) (424,584) (69,180) (294,252) (284,494) (46,354)
Payments for intangible assets (6,945,895) (9,374,105) (1,527,374) (3,727,404) (5,572,009) (907,878)
Cash received from disposal of property and equipment -- 5,650 921 -- 3,750 611
Net cash used in investing activities (8,570,509) (9,793,039) (1,595,633) (4,021,656) (5,852,753) (953,621)
             
Cash flows from financing activities:            
Net cash used in financing activities -- -- -- -- -- --
             
Effect of exchange rate changes on cash and cash equivalents 7,322 (47,298) (7,707) 9,652 (37,033) (6,034)
             
Net decrease in cash and cash equivalents (24,979,321) (39,872,592) (6,496,659) (907,496) (4,113,416) (670,221)
             
Cash and cash equivalents at beginning of period 57,157,078 79,373,365 12,932,735 33,085,253 43,614,189 7,106,297
Cash and cash equivalents at end of period 32,177,757 39,500,773 6,436,076 32,177,757 39,500,773 6,436,076
             
Supplemental cash flow information            
Income tax paid 1,571,915 3,796,612 618,603 762,910 3,666,041 597,328
             
             
             
EFUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARIES   Exchange rate 6.1374
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, June 30, June 30, June 30, June 30, June 30,
  2012 2013 2013 2012 2013 2013
  (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA            
             
Operating loss (GAAP Basis) (10,624,866) (12,499,366) (2,036,590) (5,372,821) (5,204,942) (848,070)
             
Adjustments for non-GAAP measures of performance:            
Add back amortization of acquired software technology 3,357,021 286,000 46,600 1,628,134 71,500 11,650
Add back amortization of intangibles 1,237,791 1,687,854 275,011 620,063 823,048 134,104
Add back share-based compensation expenses 3,732,144 926,546 150,967 2,599,100 458,549 74,714
Adjusted non-GAAP operating loss (2,297,910) (9,598,966) (1,564,012) (525,524) (3,851,845) (627,602)
Add back depreciation 990,631 983,493 160,246 503,731 489,600 79,773
             
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) (1,307,279) (8,615,473) (1,403,766) (21,793) (3,362,245) (547,829)
             
NON-GAAP OPERATING INCOME (LOSS) AND ADJUSTED EBITDA, as a percentage of revenue            
             
Operating loss (GAAP BASIS) -17% -18% -18% -14% -12% -12%
             
Adjustments for non-GAAP measures of performance:            
Amortization of acquired software technology 5% 0% 0% 4% 0% 0%
Amortization of intangibles 2% 2% 2% 2% 2% 2%
Share-based compensation expenses 6% 1% 1% 7% 1% 1%
Adjusted non-GAAP operating loss -4% -14% -14% -1% -9% -9%
Depreciation 2% 1% 1% 1% 1% 1%
             
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) -2% -13% -13% 0% -7% -7%
             
NON-GAAP EARNINGS PER SHARE            
Net loss from continuing operations (5,405,879) (10,974,629) (1,788,156) (511,284) (4,934,330) (803,977)
Amortization of acquired software technology 3,357,021 286,000 46,600 1,628,134 71,500 11,650
Amortization of intangibles 1,237,791 1,687,854 275,011 620,063 823,048 134,104
Share-based compensation expenses 3,732,144 926,546 150,967 2,599,100 458,549 74,714
Adjusted Net Income/(Loss) 2,921,077 (8,074,229) (1,315,578) 4,336,013 (3,581,233) (583,510)
             
Adjusted non-GAAP diluted earnings/(loss) per share 0.70 (1.90) (0.31) 1.02 (0.84) (0.14)
Shares used to compute non-GAAP diluted earnings/ (loss) per share 4,170,781 4,252,107 4,252,107 4,242,781 4,253,412 4,253,412
             
CONTACT: Investor Contact:
         Troe Wen, Company Secretary
         eFuture Information Technology Inc.
         +86 10 52937699
         ir@e-future.com.cn

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