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China Information Technology, Inc. Announces First Half-year 2013 Results



  China Information Technology, Inc. Announces First Half-year 2013 Results

PR Newswire

SHENZHEN, China, Aug. 30, 2013

SHENZHEN, China, Aug. 30, 2013 /PRNewswire/ -- China Information Technology,
Inc. (the "Company") (Nasdaq: CNIT), a leading provider of information
technologies ("IT") and display technologies ("DT") based in China, today
announced its financial results for the first six months ended June 30, 2013.

First half-year 2013 Financial Highlights

  o Revenue year over year increased 26.1% to $37.3 million
  o Gross profit year over year decreased 11.2% to $7.7 million
  o Operating loss of $51.6 million, increased from an operating loss of $20.3
    million for the same period of 2012
  o Net loss of $50.5 million, increased from a net loss of $19.7 million in
    the comparable 2012 six-month period
  o Adjusted net loss of $5.2 million, decreased from adjusted net loss of
    $8.3 million in the first six months of 2012
  o Fully diluted net loss per share of $1.87, increased from fully diluted
    net loss per share of $0.73 in the six months ended June 30, 2012
  o Adjusted net loss per share of $0.19, decreased from adjusted net loss per
    share of $0.31 in the six months ended June 30, 2012

Mr. Jiang Huai Lin, Chairman and Chief Executive Officer of the Company,
commented, "The year of 2013 will continue to be a challenging transitional
year as the Company experienced financial losses in the first half of the
year. However, we believe our transition strategies have begun to see positive
results. Our revenue increased 26.1% year-over-year in the first-half 2013 as
our DT revenue increased by 95%, reflecting strong sales in our valued-added
display products with integrated proprietary software. We have also reduced
our adjusted net losses from $8.3 million to $5.2 million as we continued to
focus on quality of earnings."

"Our early-mover advantage in the highly-functional display technology arena
has generated robust results for the Company, especially in the area of
digital education, as reflected in numerous contracts we have secured in the
first half of the year, for example, a $4.5 million contract to provide our
IT-Pad products embedded with proprietary software to the educational
institutions in the city of Chongqing, and a $2.5 million contract to provide
our smart interactive products to a communication client in Shanxi Province."

"Moreover, we are one of the few companies in China that have a comprehensive
product suite for digital "smart" education. Building on our leading position
and a broad array of product offerings in China's smart education sector, we
have also introduced cloud-based services to China's education industry. Our
proprietary "Smart EduCloud," consisting of "one web" - Cloud Learning Web
(pubedu.com), "three apps" - Cloud Teaching, Cloud Learning and Mobile Campus
Info, as well as an integrated campus management system with interactive touch
display panel, which provides a reliable cloud platform that is able to link
every school, class and student into one integrated network and serves as an
important tool for the realization of China's smart education and digital
campus initiatives. According to Chinabaogao.com, the IT spending in China's
education industry reached RMB 43.9 billion in 2012, with a 20.9% annual
growth rate. Relying on our solid industry reputation and outstanding product
offering capabilities, we hope to capture important market opportunities as
more education industry initiatives roll out in China."

"Building on the success of cloud-based services in digital education, we will
continue to expand our cloud-computing expertise and introduce innovative
product offerings to serve other high growth sectors. We believe our
cloud-based business will be a forceful catalyst for sustaining growth
momentum and enhancing financial performance over the long run."

First half-year 2013 Results

The following table sets forth key components of the Company's results of
operations for the periods indicated, both in dollars and as a percentage of
sales revenue.

(All amounts, other than percentages, in U.S. dollars)
                  Six Months Ended                               Period-Over-Period
                  June 30
                  2013                    2012                   Increase (Decrease)
                               %  of                   % of
                  Amount       Revenue    Amount       Revenue   Amount       %
Revenue         $ 37,283,072   100.00%  $ 29,563,597   100.00% $ 7,719,475    26.11%
Costs of          29,597,570   79.39%     20,906,512   70.72%    8,691,058    41.57%
revenue
Gross Profit      7,685,502    20.61%     8,657,085    29.28%    (971,583)    -11.22%
Administrative    (44,647,394) -119.75%   (14,530,262) -49.15%   (30,117,132) 207.27%
expenses
Research and
development       (1,458,136)  -3.91%     (2,717,033)  -9.19%    1,258,897    -46.33%
expenses
Selling           (4,092,764)  -10.98%    (3,874,778)  -13.11%   (217,986)    5.63%
expenses
Impairment of
property, plant   (9,122,945)  -24.47%    -            -         (9,122,945)  -
and equipment
Impairment of     -            -          (7,806,690)  -26.41%   7,806,690    -100.00%
goodwill
Loss from         (51,635,737) -138.5%    (20,271,678) -68.57%   (31,364,059) 154.72%
operations
Subsidy income    866,798      2.32%      611,455      2.07%     255,343      41.76%
Other income,     657,381      1.76%      337,307      1.14%     320,074      94.89%
net
Interest income   173,037      0.46%      121,311      0.41%     51,726       42.64%
Interest          (2,642,502)  -7.09%     (2,002,474)  -6.77%    (640,028)    31.96%
expense
Loss before       (52,581,023) -141.03%   (21,204,079) -71.72%   (31,376,944) 147.98%
Income Taxes
Income Tax
(expense) /       (411,550)    -1.10%     573,673      1.94%     (985,223)    -171.74%
benefit
Net Loss          (52,992,573) -142.14%   (20,630,406) -69.78%   (32,362,167) 156.87%
Less: Net Loss
attributable to   2,476,147    6.64%      919,194      3.11%     1,556,953    169.38%
non-controlling
interest
Net Loss
Attributable to $ (50,516,426) -135.49% $ (19,711,212) -66.67% $ (30,805,214) 156.28%
CNIT

Operating Segments

The Company reported financial and operating information in the following two
segments:

    IT segment: The IT segment includes revenue from products and services
    surrounding a variety of the Company's software core competencies,
    currently primarily in Geographic Information Systems ("GIS"), Digital
(1) Public Security Technologies ("DPST") and Digital Hospital Information
    Systems ("DHIS"). IT segment revenue is generated from the sales of
    software and system integration services, as well as hardware other than
    display products.
    DT segment: The DT segment includes revenue from products and services
    surrounding the Company's display technology core competencies, currently
(2) primarily in GIS, DPST, education, media, and consumer products. DT
    segment revenue is generated from sales of hardware and total solutions of
    hardware integrated with proprietary software and content, as well as
    services.

Revenue

Revenue is generated from the sales of software and hardware products, fully
integrated total solutions, and the related after-sales services. For the six
months ended June 30, 2013, revenue was $37.28 million, compared to $29.56
million for the six months ended June 30, 2012, an increase of $7.72 million,
or 26.11%. The increase was primarily due to the rapid sales growth of the
IT-Pad and DS-Pad lines of products as the Company continues to focus on
introducing value-added products and services that effectively integrate its
expertise of both hardware and software businesses. The government sector
continued to remain lackluster, thus leading to a decline in government
revenue, which off-set some of the non-government revenue growth.

Specifically, the Company's product sales increased by $12.72 million, or
101.87%, to $25.21 million for the six months ended June 30, 2013, as compared
to $12.49 million in the same period of 2012. Product sales constituted 67.62%
of total revenue during the six month period ended June 30, 2013, as compared
with 42.24% during the same period in 2012. The increase in product sales
primarily reflected the Company's success in introducing and selling
enhance-featured DT products, including the IT-Pad and DS-Pad lines in various
industry sectors, especially in the rapidly growing China digital education
market during the first half of 2013.

Software sales decreased by $1.30 million, or 15.29%, to $7.23 million for the
six months ended June 30, 2013, from $8.53 million for the same period in
2012. Software sales decreased to 19.38% of total revenue, from 28.85% during
the same period in the prior year. The decrease was mainly due to the
continued challenging government sector as various levels of the government
face austere fiscal constraints. In addition, the Company instituted more
stringent customer acceptance policies, which limited new projects to those
with more solid credit credentials and long-term business prospects in light
of the unfavorable government fiscal environment.

Sales of system integration services decreased by $3.81 million, or 48.88%, to
$3.99 million for the six months ended June 30, 2013, from $7.80 million for
the same period in 2012. The decrease was mainly the result of the relatively
sluggish macro-economic growth in the first half 2013 and a lack of new large
system integration solutions engagements in connection with large IT
infrastructural projects. As a percentage of revenue, system integration sales
decreased from 26.39% during the six months ended June 30, 2012 to 10.70%
during the six months ended June 30, 2013.

Other revenue increased by $0.11 million, or 15.48%, from $0.74 million in the
six months ended June 30, 2012 to $0.86 million in the same period of 2013.
The increase was mainly due to the increase in maintenance services during the
current period.

The following table shows revenue, percentage of revenue, cost of revenue and
gross margin, by category:

              Six Months Ended June 30, 2013           Six Months Ended June 30, 2012
                         % of      Cost of    Gross               % of      Cost of    Gross
              Revenue    Revenue   Revenue    Margin   Revenue    Revenue   Revenue    Margin
Product     $ 25,210,925 67.62%  $ 20,604,248 18.27% $ 12,488,401 42.24%  $ 10,326,890 17.31%
Software      7,225,853  19.38%    5,222,113  27.73%   8,529,987  28.85%    4,368,267  48.79%
System 
              3,988,882  10.70%    2,999,223  24.81%   7,802,706  26.39%    5,757,173  26.22%
integration
Others        857,412    2.30%     771,986    9.96%    742,503    2.51%     454,182    38.83%
Total       $ 37,283,072 100%    $ 29,597,570 20.61% $ 29,563,597 100%    $ 20,906,512 29.28%
A breakdown of revenue, percentage of revenue, cost of revenue and gross margin by segments
is as follows:
              Six Months Ended June 30, 2013           Six Months Ended June 30, 2012
                         % of      Cost of    Gross               % of      Cost of    Gross
              Revenue    Revenue   Revenue    Margin   Revenue    Revenue   Revenue    Margin
IT Segment  $ 12,205,206 32.74%  $ 8,861,918  27.39% $ 16,716,253 56.54%  $ 10,357,992 38.04%
DT Segment    25,077,866 67.26%    20,735,652 17.31%   12,847,344 43.46%    10,548,520 17.89%
Total       $ 37,283,072 100%    $ 29,597,570 20.61% $ 29,563,597 100%    $ 20,906,512 29.28%

Cost of Revenue and Gross Profit

As indicated in the tables above, cost of revenue increased by $8.69 million,
or 41.57%, to $29.60 million for the six months ended June 30, 2013, as
compared with $20.91 million for the six months ended June 30, 2012. As a
percentage of revenue, cost of revenue increased to 79.39% during the six
months ended June 30, 2013, from 70.72% in the same period of 2012. As a
result, gross margin was 20.61% for the six months ended June 30, 2013, a
decrease of 867 basis points from 29.28% in the same period of 2012.

The decrease in gross profit margins, as displayed in the tables above,
resulted from several factors. First, in the six months ended June 30, 2013,
the Company continued its efforts to increase the DT solutions as a percentage
of total revenue. The percentage of DT revenue increased from 43.46% for the
six months ended June 30, 2012 to 67.26% for the same period of 2013. The
significant increase in contribution from DT revenue resulted in a decrease in
gross profit margin for the six months ended June 30, 2013, as the DT
solutions business has lower average gross margins than other segments of the
Company's business. Second, due to the sluggish government sector, the
percentage of software revenue decreased from 28.85% for the six months ended
June 30, 2012 to 19.38% for the same period of 2013. The decrease in
contribution from software revenue resulted in a decrease in gross profit
margin for the six months ended June 30, 2013 as on average, software projects
have higher average gross margins than other segments of the Company's
business. Third, the gross margin of software revenue decreased from the same
period last year mainly as a result of smaller-scale projects versus the
period last year.

Administrative Expenses

Administrative expenses consist primarily of compensation and benefits to the
Company's general management, finance and administrative staff, professional
advisor fees, audit fees and other expenses incurred in connection with
general operations. Administrative expenses increased by $30.11 million, or
207.27%, to $44.65 million for the six months ended June 30, 2013, from $14.53
million for the same period of 2012. Notable change that resulted in increased
administrative expenses was an increase of $32.72 million in additional
provision for doubtful accounts receivables. The large provision taken on
outstanding accounts receivables largely reflected the new Chinese government
fiscal environment where budgetary constraints may hinder or significantly
delay the payment by certain local government institutions for prior services
provided to them.

Research and Development Expenses

Research and development expenses consist primarily of personnel-related
expenses, as well as costs associated with new software and hardware
development and enhancement. Research and development expenses decreased by
$1.26 million, or 46.33%, to $1.46 million for the six months ended June 30,
2013, from $2.72 million for the same period of 2012. As a percentage of
revenue, research and development expenses accounted for approximately 3.91%
of total revenue for the six months ended June 30, 2013, compared with 9.19%
for the same period in 2012. Such decrease reflected the completion of the
more capital-intensive core technological developments in 2012 and the focus
more on the less capital-intensive product customization to various
industry-specific customers in the first half of 2013.

Selling Expenses

Selling expenses consist primarily of compensation and benefits to the sales
and marketing staff, sales and after-sales traveling costs, and other
sales-related costs. Selling expenses increased by $0.22 million, or 5.63%, to
$4.09 million for the six months ended June 30, 2013, from $3.87 million for
the same period of 2012. This increase was due to the Company's continued
marketing and selling efforts to expand domestically in different vertical
industries.

Impairment of property, plant and equipment

The impairment of property, plant and equipment was $9.1 million for the six
months ended June 30, 2013, reflecting the declining market value of certain
purchased GIS-related software in light of the protracted challenging
environment in the Chinese government software segment.

Subsidy Income

For the six months ended June 30, 2013 and 2012, in connection with research
and development activities in a designated locale, the Company received
approximately $866,798 and $611,455, respectively, as a subsidy from the local
governmental agency in China.

Income Tax Expense

Income tax expense for the six months ended June 30, 2013 increased by $0.99
million, from a tax benefit of $0.57 million for the same period in 2012. The
increase was mainly due to the increase of income before taxes from PRC
subsidiaries in the current period.

Non-controlling Interest

Net loss attributable to non-controlling interest of $2,476,147 for the six
months ended June 30, 2013 represented the loss of $1,660,333 retained by the
Company's variable interest entity, iASPEC Software Co., Ltd. ("iASPEC"),
under the Amended and Restated Management Services Agreement with iASPEC, a
loss of $689,244 from iASPEC's majority-owned subsidiary, Wuda Geoinformatics
Co., Ltd., representing its 47.46% non-controlling interest, and a loss of
$126,571 from iASPEC's majority-owned subsidiary, Shenzhen iASPEC Zhongtian
Software Company Ltd., representing its 21.79% non-controlling interest.

Net Loss Attributable to the Company

As a result of the cumulative effect of the foregoing factors, net loss was
$50.52 million for the six months ended June 30, 2013, as compared to a net
loss of $19.71 million for the same period in 2012.

Cash and Cash Equivalents

As of June 30, 2013, the Company had $8.06 million in cash and cash
equivalents and $18.23 million in restricted cash. For the six months period
ended June 30, 2013, net cash used in operating activities was $13.52 million,
as compared to net cash used in operating activities of $14.82 million in the
same period of last year.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for earnings that
exclude non-cash charges. The Company believes that these non-GAAP financial
measures are useful to investors because they exclude non-cash charges that
management excludes when it internally evaluates the performance of the
Company's business and makes operating decisions, including internal
budgeting, and performance measurement, as these measures provide a consistent
method of comparison to historical periods. Moreover, management believes
these non-GAAP measures reflect the essential operating activities of the
Company. Accordingly, management excludes the expense arising from certain
non-cash charges when making operational decisions. The Company also believes
that providing the non-GAAP measures that management uses to its investors is
useful to investors for a number of reasons. The non-GAAP measures provide a
consistent basis for investors to understand the Company's financial
performance in comparison to historical periods. In addition, it allows
investors to evaluate the Company's performance using the same methodology and
information as that used by the Company's management. Non-GAAP measures are
subject to inherent limitations because they do not include all of the
expenses included under GAAP and because they involve the exercise of judgment
of which charges are excluded from the non-GAAP financial measure. However,
the Company's management compensates for these limitations by providing the
relevant disclosure of the items excluded.

The following table presents the non-GAAP financial measures contained in this
press release and the most directly comparable GAAP measures and provides a
reconciliation of the non-GAAP measures to the most directly comparable GAAP
measures.

Six Months Ended June 30, 2013 Reconciliation of Net Income and EPS
to Exclude Amortization of Intangible Assets, Goodwill Impairment, Provision
for Losses on Accounts
Receivable and Other Asset Write-downs (unaudited)
                                        Six Months            Six Months
                                        Ended                 Ended
                                        June, 30 2013         June, 30 2012
Net loss attributable to the Company   $ (50,516,426)        $ (19,711,212)
Amortization of intangible assets      489,228               653,129
Provision for losses on accounts
receivable and                         35,680,106            2,987,132
   other
Impairment of property, plant and      9,122,945             -
equipment
Impairment of goodwill                 -                     7,806,690
Adjusted net loss                      $  (5,224,147)        $  (8,264,261)
Weighted Average Number of Shares
Outstanding
Basic                                  27,007,608            27,028,065
Diluted                                27,007,608            27,028,065
Adjusted Earnings per share
Basic                                  $    (0.19)           $   (0.31)
Diluted                                $    (0.19)           $   (0.31)

About China Information Technology, Inc.

China Information Technology, Inc., through its subsidiaries and other
consolidated entities, specializes in geographic information systems (GIS),
digital public security technology (DPST), and hospital information systems
(HIS), as well as high-end digital display products and solutions in China.
Headquartered in Shenzhen, China, the Company's integrated solutions include
specialized software, hardware, systems integration, and related services to
help its customers improve efficiency in information management. To learn more
about the Company, please visit its corporate website at
http://www.chinacnit.com.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating
to the business of China Information Technology, Inc., and its subsidiary
companies. All statements, other than statements of historical fact included
herein, are "forward-looking statements". These forward-looking statements,
often identified by the use of forward-looking terminology such as "believes,"
"expects" or similar expressions, involve known and unknown risks and
uncertainties. Although the Company believes that the expectations reflected
in these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may prove to be
incorrect. Investors should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of factors,
including those discussed in the Company's periodic reports that are filed
with the Securities and Exchange Commission and available on its website
(http://www.sec.gov). All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking statements.

For further information, please contact:

China Information Technology, Inc. 
Iris Yan
Tel: +86 755 8370 4767
Email: IR@chinacnit.com
http://www.chinacnit.com 

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2013 (UNAUDITED) AND DECEMBER 31, 2012
Expressed in U.S. dollars (Except for share amounts)
                                                June 30         December 31
                                                2013            2012
                                                (unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents                       $ 8,057,386     $ 10,747,998
Restricted cash                                   18,229,410      10,347,015
Accounts receivable, net of allowance for
doubtful                                          51,263,474      85,958,886
accounts of $30,596,000 and $29,518,000,
respectively
Bills receivable                                  1,922,482       1,531,772
Advances to suppliers                             5,169,338       6,089,210
Amounts due from related parties                  446,265         1,212,226
Inventories                                       20,038,353      16,797,673
Other receivables and prepaid expenses            11,759,369      8,801,985
Deferred tax assets                               2,027,171       2,297,617
TOTAL CURRENT ASSETS                              118,913,248     143,784,382
Deposit for purchase of land use rights           18,012,490      19,085,878
Long-term investments                             2,633,747       2,580,096
Property, plant and equipment, net                54,166,921      66,269,320
Land use rights, net                              13,240,178      13,122,363
Intangible assets, net                            15,024,712      14,416,976
Goodwill                                          28,260,306      27,622,490
Deferred tax assets                               350,638         540,384
TOTAL ASSETS                                    $ 250,602,240   $ 287,421,889
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans                           $ 64,017,774    $ 50,813,046
Accounts payable                                  15,924,864      20,289,783
Bills payable                                     32,544,846      33,686,488
Advances from customers                           4,967,274       3,754,442
Accrued payroll and benefits                      2,511,100       2,945,323
Other payables and accrued expenses               12,237,016      6,907,622
Income tax payable                                3,388,359       3,660,926
TOTAL CURRENT LIABILITIES                         135,591,233     122,057,630
Long-term bank loans                              56,329          74,175
Amounts due to related parties, long-term         12,993          12,728
portion
Deferred tax liabilities                          1,126,022       1,263,423
TOTAL LIABILITIES                               $ 136,786,577   $ 123,407,956
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock, par $0.01; authorized capital
100,000,000 shares;
                                                $ 286,326       $ 286,326
  shares issued and outstanding, 27,007,608
shares
Treasury stock, 584,231 shares                    (1,011,091)     (1,011,091)
Additional paid-in capital                        101,261,307     101,261,307
Reserve                                           14,532,587      14,532,587
(Accumulated deficit) Retained earnings           (44,712,403)    5,804,023
Accumulated other comprehensive income            24,398,326      21,811,064
Total equity of the Company                       94,755,052      142,684,216
Non-controlling interest                          19,060,611      21,329,717
Total equity                                      113,815,663     164,013,933
TOTAL LIABILITIES AND EQUITY                    $ 250,602,240   $ 287,421,889

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
Expressed in U.S. dollars (Except for share amounts)
(Unaudited)
                                        Six Months         Six Months
                                        Ended June 30,     Ended June 30,
                                        2013               2012
Revenue – Products                    $ 25,210,925       $ 12,488,401
Revenue – Software                      7,225,853          8,529,987
Revenue - System integration            3,988,882          7,802,706
Revenue – Others                        857,412            742,503
TOTAL REVENUE                           37,283,072         29,563,597
Cost - Products sold                    20,604,248         10,326,890
Cost - Software sold                    5,222,113          4,368,267
Cost - System integration               2,999,223          5,757,173
Cost – Others                           771,986            454,182
TOTAL COST                              29,597,570         20,906,512
GROSS PROFIT                            7,685,502          8,657,085
Administrative expenses                 44,647,394         14,530,262
Research and development expenses       1,458,136          2,717,033
Selling expenses                        4,092,764          3,874,778
Impairment of property, plant and       9,122,945          -
equipment
Impairment of goodwill                  -                  7,806,690
LOSS FROM OPERATIONS                    (51,635,737)       (20,271,678)
Subsidy income                          866,798            611,455
Other income, net                       657,381            337,307
Interest income                         173,037            121,311
Interest expense                        (2,642,502)        (2,002,474)
LOSS BEFORE INCOME TAXES                (52,581,023)       (21,204,079)
Income tax (expense)benefit             (411,550)          573,673
NET LOSS                                (52,992,573)       (20,630,406)
Less: Net loss attributable to the      2,476,147          919,194
     non-controlling interest
NET LOSS ATTRIBUTABLE TO THE          $ (50,516,426)     $ (19,711,212)
     COMPANY
WEIGHTED AVERAGE NUMBER OF
     SHARES OUTSTANDING
Basic                                   27,007,608         27,028,065
Diluted                                 27,007,608         27,028,065
LOSS PER SHARE-BASIC AND DILUTED
Basic                                 $ (1.87)           $ (0.73)
Diluted                               $ (1.87)           $ (0.73)

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
Expressed in U.S. dollars
(Except for share amounts)
(Unaudited)
                                    Six Months Ended     Six Months Ended
                                    June 30,             June 30,
                                    2013                 2012
Net loss                          $ (52,992,573)       $ (20,630,406)
Other comprehensive income:
Foreign currency translation gain   2,794,303            1,741,709
Comprehensive loss                  (50,198,270)         (18,888,697)
Comprehensive income attributable
to the                              2,269,106            837,960
     non-controlling interest
Comprehensive loss attributable   $ (47,929,164)       $ (18,050,737)
to the Company

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SIX MONTHS ENDED JUNE 30, 2013
Expressed in U.S. dollars
(Except for share amounts)
(Unaudited)
                                                                                                Retained        Accumulated
             Common stock              Treasury stock              Additional                   Earnings        other            Non
             Par value $0.01           Par value $0.01             Paid-in                      (               comprehensive    controlling
                                                                                                Accumulated
             Shares        Amount      Shares       Amount         Capital        Reserve       Deficit)        income           interest       Total
BALANCE AS
AT DECEMBER  27,591,839  $ 286,326     (584,231)  $ (1,011,091)  $ 101,261,307  $ 14,532,587  $ 5,804,023     $ 21,811,064     $ 21,329,717   $ 164,013,933
31, 2012
Net loss
for the      -                 -      -             -              -              -             (50,516,426)    -                (2,476,147)    (52,992,573)
period
Foreign
currency     -                 -      -             -              -              -             -               2,587,262        207,041        2,794,303
translation
gain
BALANCE AS
AT JUNE 30,  27,591,839  $ 286,326     (584,231)  $ (1,011,091)  $ 101,261,307  $ 14,532,587  $ (44,712,403)  $ 24,398,326     $ 19,060,611   $ 113,815,663
2013

 

CHINA INFORMATION TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2013 AND 2012
Expressed in U.S. dollars
(Unaudited)
                                               Six Months        Six Months
                                               Ended             Ended
                                               June 30, 2013     June 30, 2012
OPERATING ACTIVITIES
Net loss                                     $ (52,992,573)    $ (20,630,406)
Adjustments to reconcile net loss to cash
provided by operating
   activities:
Impairment of goodwill                         -                 7,806,690
Provision for losses on accounts receivable    35,680,106        2,987,132
and other
Depreciation                                   4,929,656         5,908,392
Amortization of intangible assets and land     1,211,730         1,069,074
use rights
Impairment of property, plant and equipment,   9,122,945         (16,211)
net
(Recovery) provision for inventory allowance   (1,433,684)       1,797,899
Change in deferred income tax                  351,802           (749,980)
Changes in operating assets and liabilities
Increase in restricted cash                    (6,325,755)       (3,616,807)
Decrease (increase) in accounts receivable     377,404           (3,499,148)
Decrease (increase) in advances to suppliers   724,276           (2,435,348)
(Increase) decrease in other receivables and   (2,774,225)       1,434,685
prepaid expenses
Increase in inventories                        (1,514,168)       (3,248,245)
(Decrease) increase in accounts payable and    (6,559,336)       1,004,619
bills payable
Increase (decrease) in advances from           1,122,859         (1,391,310)
customers
Decrease (increase) in amounts due to/from     841,430           (1,790,111)
related parties
Increase in accrued expenses and other         4,061,813         749,559
liabilities
Decrease in income tax payable                 (342,935)         (199,312)
Net cash used in operating activities          (13,518,655)      (14,818,828)
INVESTING ACTIVITIES
Proceeds from sales of property and            16,992            18,561
equipment
Purchases of property, plant and equipment     (138,228)         (618,936)
Capitalized and purchased software             (1,355,726)       (890,360)
development costs
Deposit for land-use-rights                    1,458,730         -
Dividends received                             -                 79,318
Net cash used in investing activities          (18,232)          (1,411,417)
FINANCING ACTIVITIES
Borrowings under short-term loans              67,900,348        57,923,863
Capital injection to Zhongtian by minority     -                 283,612
shareholders
Repayment of short-term loans                  (55,817,665)      (49,300,962)
Repayment of long-term loans                   (17,788)          (17,788)
Purchase of treasury stock                     -                 (315,577)
(Increase) decrease in restricted cash in      (1,261,026)       949,277
relation to bank borrowings
Net cash provided by financing activities      10,803,869        9,522,425
Effect of exchange rate changes on cash and    42,406            66,779
cash equivalents
NET DECREASE IN CASH AND CASH EQUIVALENTS      (2,690,612)       (6,641,041)
CASH AND CASH EQUIVALENTS, BEGINNING           10,747,998        14,019,634
CASH AND CASH EQUIVALENTS, ENDING            $ 8,057,386       $ 7,378,593

SOURCE China Information Technology, Inc.

Website: http://www.chinacpby.com
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