eFuture Reports Fiscal Year 2008 Audited Financial Results

Restatement of 2007 Financial Statements 


BEIJING, Oct. 13  /PRNewswire-Asia/ -- 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 financial results for the full year ended December 31, 2008.  In connection with the Company's failure to file its Form 20-F by June 30, 2009, it failed to satisfy NASDAQ Marketplace Rule 5250(c)(1), which requires listed companies to file periodic financial reports with the Securities and Exchange Commission on or before the date they are required to be filed.  As the Company's July 15, 2009 press release anticipated, the Company received a notice of noncompliance from the NASDAQ Stock Market on October 7, 2009.  After filing its annual report on October 13, 2009, the Company received confirmation from the NASDAQ Stock Market that the Company had regained compliance with NASDAQ Marketplace Rule 5250(c)(1).

As noted in previous press releases, the Company reviewed its accounting for certain matters in 2007 and 2008 and has determined that restatements of those years are appropriate.  Accordingly, those reports should no longer be relied upon.  Instead, investors should rely only on the audited financials contained in the Company's Form 20-F filed on October 13, 2009.

The restatement of 2007 audited financials resulted in the following changes:

  -- 2007 total revenues increased by RMB850,632;
  -- 2007 gross profit increased by RMB493,280;
  -- 2007 operating expenses increased by RMB873,541;
  -- 2007 profit from operations decreased by RMB380,261; and
  -- 2007 net loss decreased by RMB5,954,433.

  Full Year 2008 Audited Financial Highlights:
  -- Total revenues increased 64.7% year-over-year to RMB139.9 million
     (US$20.5 million), from RMB84.9 million for the full year 2007.
     - Revenue from software license sales increased 57.4% year-over-year to
       RMB66.2 million (US$9.7 million), from RMB42.1 million in 2007.
     - Revenue from hardware sales increased 64.6% year-over-year to RMB26.7
       million (US$3.9 million), from RMB16.2 million in 2007.
     - Service fee income increased 76.4% to RMB47.0 million (US$6.9
       million), from RMB26.6 million in 2007.
  -- Gross profit increased 49.7% year-over-year to RMB57.8 million (US$8.5
     million), from RMB38.8 million in 2007.  Gross margin was 41.3%,
     compared to 45.4% in 2007.
  -- Operating loss was RMB10.0 million (US$1.5 million), as compared to an
     operating profit of RMB6.6 million in 2007.
  -- Net loss was RMB4.5 million (US$0.7 million), compared to net loss of
     RMB21.5 million in 2007.
  -- Diluted loss per share was RMB1.39 (US$0.20), compared to diluted loss
     per share of RMB8.01 in 2007.
  -- Operating cash flow as of December 31, 2008 increased 82.5%
     year-over-year to RMB31.0 million (US$4.6 million).
  -- Cash and cash equivalents as of December 31, 2008 was RMB60.8 million
     (US$8.9 million).
  -- Adjusted net income (non-GAAP) was RMB15.6 million (US$2.3 million), an
     increase of 315.9% from 2007.
  -- Non-GAAP adjusted diluted earnings per share were RMB5.0 (US$0.73).




Ms. Ping Yu, Chief Financial Officer of eFuture, stated, "Through the re- audit process, we identified material weaknesses and deficiencies in our internal controls, and as a result we are in the process of strengthening our internal controls, systems and procedures.  We believe that the conclusion of this process will enable us to ensure robust, consistent and accurate financial reporting moving forward.  Despite the adjustments made to our 2007 results, we believe our 2008 financial results have shown that we maintained a healthy financial footing and remain well positioned, and we reaffirm the upward revision of our 2009 revenue guidance of US$28 million to US$29 million."

"Our 2008 results demonstrate our ability to deliver consistent growth through the focused execution of our strategy.  Throughout the year, we made steady progress on a number of strategic and tactical initiatives, and our business remains fundamentally strong.  In 2008, we solidified our core enterprise software business, grew value-added services revenues, and expanded the scope and depth of our eService offering, including our B2B service and SaaS service for SCM and B2C eShopping platform.  We believe this progress was made possible by our continued execution, focused growth strategy consisting of both organic and acquisitive initiatives, affordable and flexible suite of solutions, a large and diversified install base, and the continued resilience of China's retail and consumer goods industry.  We will continue to focus on executing our growth strategy by investing in technology and business model innovations, expanding our client base within tier-2 and tier-3 cities in China, and actively pursuing domestic and international clients.  Alongside each of these initiatives, we will strive to maximize our operational efficiency and enhance earnings growth to increase long-term shareholder returns," said Mr. Adam Yan, Chairman and Chief Executive Officer of eFuture.

  Full Year 2008 Audited Financial Results

  Revenue



Total revenues increased 64.7% year-over-year to RMB139.9 million (US$20.5 million), from RMB84.9 million for 2007.  Service fee income increased 76.4% to RMB47.0 million (US$6.9 million), from RMB26.6 million in 2007, as a result of increased contribution from our B2B and SaaS services, and as a result of our expanded customer base.

The overall increases in revenue are primarily attributable to the significant growth across all product lines including software license sales driven by the re-alignment of the software business into seven vertical strategic business units and improved operating efficiency.

  Revenue Breakdown

                                   2007                   2008
                                    FY                     FY
                                   RMB        RMB         US$        Y-o-Y
                                  '000       '000        '000        change
  Software license sales         42,076     66,216       9,705       57.4 %
  Hardware sales                 16,198     26,656       3,907       64.6 %
  Service fee income             26,646     46,992       6,888       76.4 %
                       Total     84,921    139,864      20,500       64.7 %


  Cost of Revenues


The cost of revenue for fiscal year 2008 increased 77.2% to RMB82.1 million (US$12.0 million) from RMB46.3 million in 2007.

  Cost of Revenues Breakdown

                                   2007                 2008
                                    FY                   FY
                                    RMB        RMB       US$          Y-o-Y
                                   '000       '000      '000         change
  Cost of software license
   sales                          15,648     22,929      3,361       46.5 %
  Cost of hardware sales          12,601     21,989      3,223       74.5 %
  Cost of service fees             6,965     20,248      2,968      190.7 %
  Amortization of
   acquired technology             8,231     13,308      1,951       61.7 %
  Amortization of
   software costs                  2,889      3,633        532       25.7 %
                        Total     46,335     82,106     12,035       77.2 %




The increase in cost of revenue was primarily attributable to a proportionate increase in sales volume and, to a lesser extent, cost in hardware sales along with an increase in service fee income expenses. The increases in service fee income expenses were affected by several factors:

  1. The Company added senior technical personnel to major accounts to
     explore service expansion and additional opportunities to generate
     revenues. eFuture devoted its senior technical personnel to its major
     accounts according to the customers' anticipated programming needs in
     the next three years.  The company expects these efforts will deliver
     more value to these customers' future operations, but devoting senior
     personnel results in higher immediate expenses for the Company in
     return for anticipated longer-term revenues for the Company.

  2. eFuture increased its marketing efforts on major accounts to further
     explore customers' potential needs in their IT operating plans.

  3. The Company changed its allocation on the basis of labor costs from the
     previous method of allocating its costs of revenue based on
     out-of-pocket expenses on projects to the current method of allocating
     costs of revenue based on labor costs.  The Company does not expect
     this change to have a material impact for future projects.


  Gross Profit


Gross profit increased 49.7% to RMB57.8 million (US$8.5 million) for the fiscal year 2008 from RMB38.6 million in 2007.

Consolidated gross margin for 2008 was 41.3%, compared to 45.4% in 2007. The year-over-year decrease in gross margin was a result of increased amortization of acquired technology as a result of acquisitions made in 2007 and 2008, and increases in cost of hardware and cost of service fee income.

Operating Expenses

Research and development expenses in 2008 were RMB6.5 million (US$1.0 million), or 4.7% of total revenues, compared to 1.0% in 2007.

The increase in research and development expenses is mainly due to our larger expenditures in software integration and upgrading. Management believes that these efforts to integrate multiple versions of similar software into full-featured single software versions will reduce eFuture's R&D costs in the long term and reduce the future software implementation costs.

General and administrative expenses in 2008 were RMB40.5 million (US$5.9 million), or 28.9% of total revenues, compared to 22.6% in 2007.

The year-over-year increase was mainly due to a RMB1.5 million increase in salaries and a RMB3.0 million increase in the maintenance costs of eight new branches in 2008. In addition, the expenses associated with the compliance of auditing and Sarbanes-Oxley Act compliance contributed RMB1.6 million to the general and administration expenses.

Selling expenses in 2008 were RMB20.8 million (US$3.0 million), or 14.9% of total revenues, as compared to 14.1% in 2007. The year-over year increase was mainly due to an expansion of our sales force and a proportionate increase in sales volume in year-over-year.

Total share-based compensation expenses in 2008 were RMB2.7 million (US$0.4 million).

Operating Income/Loss

2008 operating loss was RMB10.0 million (US$1.5 million), as compared to an operating profit of RMB6.6 million in 2007. The decrease in operating profit is a result of four principal factors:

  1. RMB5.7 million increase in spending for R&D expenses.  We believe this
     significant increase of 697.7% over our 2007 R&D expenses of RMB0.8
     million is important for our continued competitiveness in our industry.
  2. RMB4.2 million charge as a result of our decision to reflect our cost
     of revenue through allocation on the basis of labor costs, as compared
     to our previous method of allocating our costs of revenue based on
     out-of-pocket expenses on projects. We believe this change will result
     in more accurate estimates of costs of revenues by project going
     forward.
  3. RMB4.8 million charge due to an upward adjustment in our accounting for
     a depository reserve we must maintain in China for employee social
     security costs.
  4. RMB1.7 million charge relating to impairment of intangible assets. In
     2008, management identified impairment on certain internally generated
     software as well as software acquired through acquisitions, as they are
     not expected to generate future revenue, or be sellable to a third
     party.  These intangibles were significantly aged, and no further
     capital investment for upgrades is planned.


  Net Income/Loss and EBITDA


Net loss for the year ended December 31, 2008 was RMB4.51 million (US$0.7 million), improved significantly as compared to RMB21.5 million in 2007.

2008 basic and diluted losses per share were RMB1.39 (US$0.20) and RMB1.39 (US$0.20), respectively.

Adjusted net income (non-GAAP) for 2008 was RMB15.6 million (US$2.3 million), an increase of 315.9% from 2007.

2008 adjusted non-GAAP diluted earnings per share was RMB5.0 (US$0.73).

2008 EBITDA (non-GAAP) was RMB10.9 million (US$1.6 million), a decrease of 47.7% from 2007.

Balance Sheet and Cash Flow

In 2008, net cash generated from operating activities was RMB31.0 million (US$4.6 million), while net cash used in capital expenditures was RMB4.5 million (US$0.7 million).

As of December 31, 2008, cash and cash equivalents decreased 9.6% year- over-year to RMB60.8 million from RMB67.2 million in 2007, mainly due to the make-whole payments related to the conversion of US$4 million convertible notes, as well as payment for the acquisition obligations of Royalstone and Proadvancer in 2008.

Total accounts receivable as of December 31, 2008 increased 10.8% to RMB19.5 million (US$2.9 million) from RMB17.3 million as of December 31, 2007, mainly attributable to increases in total revenue.

Inventories as of December 31, 2008 decreased 49.9% to RMB2.9 million (US$0.4 million) from RMB5.7 million as of December 31, 2007. This decrease was mainly attributable to a change in allocation of the basis of labor costs from our previous method of allocating our costs of revenue based on out-of- pocket expenses on projects.  This change resulted in lower inventories and the recognition of greater cost of revenues in the same period.

2009 Guidance

In 2009, eFuture plans to focus upon continued execution on its growth strategy, which consists of a combined organic and acquisitive approach. eFuture will continue to solidify its core enterprise software business and forge into new frontiers of eService and investing.

eFuture maintains its upward revision of guidance for 2009 and anticipates total revenues to be in the range of approximately US$28 million to US$29 million, representing annual growth of 38% to 40% over 2008. Adjusted EBITDA (non-GAAP) is expected to be in the range of approximately US$5.1 million to US$6.1 million. This forecast is a current and preliminary view and is subject to change.

Currency Convenience Translation

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.8225 to US$1.00, the noon buying rate for US dollars in effect on December 31, 2008 for cable transfers of RMB per US 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 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.

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, 2008 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.

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 October 13, 2009, and the Company undertakes no duty to update such information or any other forward-looking information, except as required under applicable law.

  For more information, please contact:

  Investor Contact:
   Troe Wen, Company Secretary
   eFuture Information Technology Inc.
   Tel:   [phone] x8804
   Email: 

  Investor Relations (US):
   Mahmoud Siddig
   Taylor Rafferty
   Tel:   [phone]
   Email: 

  Investor Relations (HK):
   Ruby Yim
   Taylor Rafferty
   Tel:   [phone]
   Email: 

  Media Contact:
   Jason Marshall
   Taylor Rafferty
   Tel:   [phone]
   Email: 



             E-FUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                      Chinese Yuan (Renminbi)  U.S. Dollars
                                            December 31,       December 31,
                                          2007         2008         2008
                                       (Restated)
  ASSETS
  Current assets
  Cash and cash equivalents            67,227,348   60,787,734   $8,909,891
  Trade receivables, less allowance
   for doubtful accounts of
   RMB4,695,898 and
   RMB4,743,679 ($695,299),
   respectively                        17,259,965   19,468,029    2,853,504

  Refundable value added tax            3,691,035    2,755,702      403,914
  Deposits                                156,695           --           --
  Advances to employees                 3,576,947    3,205,953      469,909
  Advances to suppliers                   657,724      198,752       29,132
  Notes receivable - related party      3,000,000           --           --
  Other receivables                       576,965    2,229,535      326,791
  Prepaid expenses                        862,653      735,083      107,744
  Inventory and work in process         5,749,951    2,879,250      422,023
  Total current assets                102,759,283   92,260,038   13,522,908
  Non-current assets
  Long-term investments                 4,264,433      654,192       95,887
  Deferred loan costs                   7,557,383    1,182,588      173,336
  Property and equipment, net of
   accumulated depreciation of
   RMB5,191,489 and
   RMB3,020,838 ($442,776),
   respectively                         2,065,040    3,605,458      528,466

  Intangible assets, net of
   accumulated amortization of
   RMB19,799,245 and
   RMB34,704,373 ($5,086,753),
   respectively                        47,217,193   49,875,082    7,310,382

  Goodwill                             45,013,827   91,284,735   13,379,954
  Total non-current assets            106,117,876  146,602,055   21,488,025
  Total assets                        208,877,159  238,862,093  $35,010,933


                                      Chinese Yuan (Renminbi)  U.S. Dollars
                                                December 31,    December 31,
                                             2007         2008         2008
                                        (Restated)
  LIABILITIES AND SHAREHOLDERS'
   EQUITY
  Current liabilities
  Trade accounts payable                3,845,873    5,646,259     $827,594
  Other payable                           844,753   11,097,702    1,626,632
  Accrued expenses                      4,626,683    6,873,703    1,007,505
  Accrued interest                        278,420           --           --
  Taxes payable                         8,976,305    7,933,734    1,162,878
  Advances from customers              13,025,978   22,839,530    3,347,678
  Royalstone acquisition obligation    19,818,925    6,416,970      940,560
  Health field acquisition obligation   3,300,000      594,000       87,065
  Proadvancer System acquisition
   obligation                                  --   29,958,518    4,391,135
  BFuture acquisition obligation               --      392,877       57,585
  Deferred tax, current portion         1,098,063    1,553,197      227,658
  Total current liabilities            55,815,000   93,306,490   13,676,290
  Long-term liabilities
  3%-10% RMB6,822,500 ($1,000,000)
   convertible note payable, net of
   RMB6,796,432 ($996,179) of
   unamortized discount                    90,771       26,068        3,821

  Derivative liabilities               46,521,310    5,111,417      749,200
  Minority shareholder interests               --      204,414       29,962
  Deferred tax                          3,237,309    5,458,232      800,033
  Total long-term liabilities          49,849,390   10,800,131    1,583,016
  Shareholders' equity
  Ordinary shares, $0.0756 U.S.
   dollars par value; 6,613,756
   shares authorized; 2,924,702
   shares and 3,362,241 shares
   outstanding, respectively            1,811,589    2,039,196      298,893

  Additional paid-in capital          137,261,443  173,054,651   25,365,284
  Statutory reserves                    3,084,020    3,084,020      452,037
  Accumulated deficit                 (38,944,283) (43,422,395)  (6,364,587)
  Total shareholders' equity          103,212,769  134,755,472   19,751,627
  Total liabilities and shareholders'
   equity                             208,877,159  238,862,093  $35,010,933


             E-FUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
                   CONDENSED CONSOLIDATED INCOME STATEMENTS

                                 Chinese Yuan (Renminbi)        U.S. Dollars
                                                                For the Year
                                                                   Ended
                             For the Years Ended December 31,   December 31,


                              2006         2007         2008         2008
  Revenues                              (Restated)
  Software sales           29,832,720   42,076,411   66,215,769  $9,705,499
  Hardware sales           11,403,473   16,198,402   26,655,967   3,907,067
  Service fee income        6,607,337   26,646,180   46,991,766   6,887,764
  Total Revenues           47,843,530   84,920,993  139,863,502  20,500,330

  Cost of revenues
  Cost of software          7,665,866   15,648,282   22,928,605   3,360,733
  Cost of hardware         10,548,649   12,601,230   21,989,087   3,223,025
  Cost of service fee
   income                   1,887,676    6,965,367   20,247,922   2,967,816
  Amortization of acquired
   technology                      --    8,231,375   13,308,030   1,950,609
  Amortization of software
   costs                    2,727,198    2,889,118    3,632,744     532,465
  Total Cost of Revenue    22,829,389   46,335,372   82,106,388  12,034,648

  Gross Profit             25,014,141   38,585,621   57,757,114   8,465,682

  Operating Expenses
  Research and development    527,219      816,479    6,512,776     954,602
  General and
   administrative           7,298,980   19,192,286   40,488,964   5,934,623
  Selling and distribution
   expenses                 9,210,975   12,014,601   20,792,618   3,047,654
  Total Operating Expenses 17,037,174   32,023,366   67,794,358   9,936,879

  Profit/(loss) from
   operations               7,976,967    6,562,255  (10,037,244) (1,471,197)

  Interest income             141,230    3,533,326    1,424,029     208,725
  Interest expense            (13,471)  (2,813,489)  (1,246,780)   (182,744)
  Interest expenses -
   amortization of
   discount on notes
   payable                         --      (22,415)     (33,212)     (4,868)
  Interest expenses -
   amortization of
   deferred loan costs             --   (2,114,685)    (978,204)   (143,379)
  Income/(loss) on
   investments                     --      985,085   (3,552,902)   (520,763)
  Gain on derivatives              --   10,324,874   33,122,465   4,854,887
  Loss on extinguishment
   of convertible notes            --  (39,504,662) (22,529,233) (3,302,196)
  Foreign currency
   exchange gain                   --      544,173      368,127      53,958
  Profit/(loss) before tax  8,104,726  (22,505,538)  (3,462,954)   (507,577)
  Income tax
   expense/(benefit)               --      946,704     (810,744)   (118,834)
  Minority interest in
   profit/(loss) of
   consolidated subsidiary         --       32,520     (204,414)    (29,962)
  Net Income/(loss)         8,104,726  (21,526,314)  (4,478,112)   (656,374)
  Other comprehensive
   income/(loss)
  Foreign currency
   translation adjustment    (491,079)     491,079           --          --
  Comprehensive
   Income/(loss)            7,613,647  (21,035,235)  (4,478,112)  $(656,374)

  Earnings/(loss) per
   ordinary share
   Basic                         4.80        (8.01)       (1.39)     $(0.20)
   Diluted                       4.43        (8.01)       (1.39)     $(0.20)
  Basic Weighted-average
   Shares Outstanding       1,689,434    2,687,380    3,214,466   3,214,466
  Fully-Diluted Weighted-
   average Shares
   Outstanding              1,831,258    2,687,380    3,214,466   3,214,466



             E-FUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
                       NON-GAAP MEASURES OF PERFORMANCE

                                  December 31, 2007    December 31, 2008
                                           RMB         RMB          US$
                                       (Unaudited)  (Unaudited) (Unaudited)
  NON-GAAP OPERATING INCOME (LOSS) AND
   ADJUSTED EBITDA

  Operating income (loss) (GAAP Basis)   6,562,255  (10,037,244) (1,471,197)

  Adjustments for non-GAAP measures of
   performance:
  Add back amortization of acquired
   software technology                   8,231,375   13,308,030   1,950,609
  Add back amortization of intangibles   2,889,118    3,632,744     532,465
  Add back share-based compensation
   expenses                              2,663,105    3,109,903     455,830
  Adjusted non-GAAP operating income    20,345,853   10,013,433   1,467,707
  Add back depreciation                    500,633      891,183     130,624

  Adjusted EBITDA (Earnings before
   interest, taxes, depreciation and
   amortization)                        20,846,486   10,904,616   1,598,331

  NON-GAAP OPERATING INCOME (LOSS) AND
   ADJUSTED EBITDA, as a percentage of
   revenue

  Operating income (loss) (GAAP BASIS)          8%          -7%         -7%

  Adjustments for non-GAAP measures of
   performance:
  Amortization of acquired software
   technology                                  10%          10%         10%
  Amortization of intangibles                   3%           3%          3%
  Share-based compensation expenses             3%           2%          2%
  Adjusted non-GAAP operating income           24%           7%          7%
  Depreciation                                0.6%         0.6%        0.6%

  Adjusted EBITDA (Earnings before
   interest, taxes, depreciation and
   amortization)                               25%           8%          8%

  NON-GAAP EARNINGS PER SHARE
  Net Income(Loss)                     (21,035,235)  (4,478,112)   (656,374)
  Amortization of acquired software
   technology                            8,231,375   13,308,030   1,950,609
  Amortization of intangibles            2,889,118    3,632,744     532,465
  Accretion on convertible notes            22,415       33,212       4,868
  Share-based compensation expenses      2,663,105    3,109,903     455,830
  Adjusted Net income                   (7,229,222)  15,605,777   2,287,398

  Adjusted non-GAAP diluted earnings
   per share                                 (2.41)        4.99        0.73
  Shares used to compute non-GAAP
   diluted earnings per share            2,997,921    3,124,463   3,124,463



             E-FUTURE INFORMATION TECHNOLOGY INC. AND SUBSIDIARY
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                Chinese Yuan (Renminbi)        U.S. Dollars
                                                               For the Year
                                                                   Ended
                            For the Years Ended December 31,   December 31,
                             2006        2007         2008         2008
                                       (Restated)
  Cash flows from
   operating activities:
  Net income (loss)        8,104,726  (21,035,235)  (4,478,112)   $(656,374)
  Adjustments to
   reconcile net income
   (loss) to net cash
   provided by (used in)
   operating activities:
  Depreciation               679,876      500,633      891,183      130,624
  Amortization of
   intangible assets       2,727,198   11,120,493   16,940,774    2,483,074
  Impairment of
   intangible assets              --           --    2,143,290      314,150
  Amortization of
   discount on notes
   payable                        --       22,413       33,212        4,868
  Amortization of
   deferred loan costs            --    2,114,685      978,204      143,379
  Gain on derivatives             --  (10,324,873) (33,122,465)  (4,854,887)
  Loss on extinguishment
   of convertible notes           --   39,504,662   22,529,233    3,302,196
  Investment
   (income)/loss                  --     (985,085)   3,552,902      520,762
  Loss on disposition of
   property and equipment         --           --      385,995       56,577
  Provision for doubtful
   debt                           --    2,585,988    2,340,706      343,086
  Provision for loss in
   inventory and work in
   process                        --           --    1,449,542      212,465
  Compensation expense
   for options issued to
   employees                      --    2,663,105    3,109,903      455,830
  Deferred taxes                  --     (946,704)     481,774       70,615
  Foreign exchange loss           --     (652,397)  (2,222,996)    (325,833)
  Minority interest               --      (32,520)     204,414       29,962
  Change in assets and
   liabilities:
  Accounts receivable       (664,562) (13,788,696)  (2,526,441)    (370,310)
  Refundable value added
   tax                        72,593   (1,220,094)     935,333      137,095
  Deposits                   466,458     (111,752)     156,695       22,967
  Advances to employees     (162,781)  (2,378,346)     370,994       54,378
  Advances to suppliers     (334,840)    (214,694)     991,888      145,385
  Other receivables           60,552      537,784      136,565       20,017
  Prepaid expenses           (66,189)    (291,548)     305,014       44,707
  Inventories                 25,277      265,645    1,421,159      208,305
  Trade payables             208,096    1,827,696    1,230,861      180,412
  Other payables                  --   (1,013,731)   7,269,063    1,065,454
  Accrued expenses          (101,711)   1,570,905    2,360,449      345,980
  Accrued interest                --      278,420     (278,420)     (40,809)
  Taxes payable             (482,309)   2,437,452   (1,084,826)    (159,007)
  Advances from customers  2,116,454    4,575,302    4,542,952      665,878
  Net cash provided by
   operating activities   12,648,838   17,009,508   31,048,845   $4,550,948

  Cash flows from
   investing activities:
  Purchases of property
   and equipment            (537,340)    (527,743)  (1,618,331)    (237,205)
  Payments for intangible
   assets                 (3,818,597)  (7,151,309)  (2,930,247)    (429,498)
  Long-term investments           --   (4,475,216)          --           --
  Acquisition of business         --  (53,188,175) (28,278,247)  (4,144,851)
  Loan to Guarantor          800,000           --           --           --
  Amounts due from a
   related party                  --   (3,000,000)          --           --
  Net cash used in
   investing activities   (3,555,937) (68,342,443) (32,826,825) $(4,811,554)



                                Chinese Yuan (Renminbi)         U.S. Dollars
                                       For the Years              For the
                                      Ended December 31,         Year Ended
                                                                December 31,
                              2006         2007         2008         2008
                                       (Restated)
  Cash flows from
   financing activities:
  Issuance of ordinary
   shares for cash, net
   of
  offering costs paid     47,128,495           --           --           --
  Proceeds from exercise
   of warrants                    --    1,060,992    3,657,908      536,154
  Issuance of convertible
   notes                          --   69,079,430           --           --
  Payment of make-whole
   obligation                     --  (10,015,958)  (8,054,079)  (1,180,517)
  Repayment of short-term
   loans                  (2,800,000)          --           --           --
  Net cash provided by
   (used in) financing
   activities             44,328,495   60,124,464   (4,396,171)    (644,363)
  Effect of exchange rate
   changes on cash          (791,476)  (2,537,839)    (265,463)     (38,910)
  Net increase (decrease)
   in cash                52,629,920    6,253,690   (6,439,614)    (943,879)
  Cash and cash
   equivalents at
   beginning of year       8,834,817   61,464,737   67,227,348    9,853,770

  Cash and cash
   equivalents at end of
   year                   61,464,737   67,718,427   60,787,734   $8,909,891

  Supplemental cash flow
   information
  Interest paid               66,593      510,282    1,525,200     $223,554

  Non-cash Investing and
   Financing Activities
  Acquiring assets by
   assuming payment
   obligation                     --   23,118,925   36,813,365   $5,395,876
  Conversion of
   convertible notes              --   36,473,000   27,273,200   $3,997,538
  Issuance of common
   stock for acquisition          --    8,555,961   14,310,115   $2,097,488


DATASOURCE: eFuture Information Technology Inc.



CONTACT:  Investor Contact, Troe Wen, Company Secretary of eFuture

Information Technology Inc., [phone] x8804, ; or

Investor Relations (US), Mahmoud Siddig of Taylor Rafferty, [phone],

; or Investor Relations (HK), Ruby Yim of Taylor

Rafferty, [phone], ; or Media Contact, Jason

Marshall of Taylor Rafferty, [phone], 



Web site:  http://www.e-future.com.cn/ 

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