SHENZHEN, CHINA / ACCESSWIRE / April 28, 2017 / China Information Technology, Inc. (NASDAQ: CNIT), a provider of cloud-app technologies for Internet-of-Things (IoT) platforms and internet-based ad and information distribution systems in China, today reported that, for the year ended December 31, 2016, the company had revenue of $10,193,590, a 1 percent decrease on revenue of $10,284,868 in 2015. This decrease was mainly due to a year-over-year drop of about $1.5 million in revenue contributed by CNIT's government-oriented IT systems business - a segment the company continues to de-emphasize - offset in large part by increased revenue of about $1.4 million contributed by CNIT's privately-focused cloud-based technology solutions segment.
As a result, however, of a year-over-year increase in cost of revenue of approximately $1.2 million, gross profit as a percentage of revenue for 2016 fell to 25.4 percent from 38.0 percent in the prior year. Nevertheless, in 2016, CNIT cut its loss from operations to $14,577,928, a 46 percent reduction from its 2015 loss from operations of $26,963,357. This improvement resulted primarily from year-over-year decreases of roughly $2.9 million in administrative expenses, $1.3 million in selling expenses, $0.4 million in R&D expenses, and $4.5 million in impairment of intangible assets and goodwill.
Due to assorted non-recurring factors, though, the company had a net loss in 2016 of $18,170,601, or ($.45) per share, compared to a net loss of $7,504,262, or ($.22) per share, in 2015. The most prominent of these factors impacting 2016's bottom line results was the company's loss for that year on sale of deposits for land use rights of $2.8 million versus $0 in 2015. The most prominent factors mitigating CNIT's 2015 net loss was the sale in that year of the company's factory real estate property, which resulted in a gain on sale of assets of approximately $30.0 million versus $0 in 2016, as well as the company's 2015 income from discontinued operations of $1.5 million versus $0 in 2016.
CNIT reduced its short-term debt to $7.80 million at year-end 2016, from $15.27 million at the end of 2015. The company's cash on hand at the end of 2016 was $3.75 million compared to $3.79 million a year earlier.
Among the company's most important milestones in 2016, said CNIT, was its commercialization of a cloud-based new media ecosystem comprised of a cloud platform, proprietary intelligent display terminals, and a proprietary USB adaptor that easily transforms any kind of display terminal into a cloud-based IoT terminal and links it to CNIT's cloud platform. This, in turn, allows this terminal to access the company's Yunfa Net advertising content delivery system (www.cnitiot.com), which permits a customer to create reduced-cost ads on a PC or mobile app, instantly transmit them to the terminal, and receive feedback from the terminal on which ads it is displaying. These features enable customers to precisely measure the effectiveness of an ad upon a targeted audience.
As a result of this offering, said CNIT, both the number of subscribers to Yunfa Net and the digital ad terminals connected to the company's cloud network in 2016 increased significantly.
Regarding 2017, said CEO Mr. Jianghuai Lin, the company's steady migration to higher-margin cloud-based solution opportunities like Yunfa Net and its recently introduced IoT elevator safety system, Yunti Guard, should allow CNIT to achieve "break-even status or moderate profitability in the second half of the year."
Mr. Lin added that he believes the company's current cash and cash equivalents, anticipated cash flows from operations in 2017, and additional availability under its borrowing facilities will be sufficient to meet CNIT's operating and financial obligations for the remainder of the calendar year.
"We are confident that 2017 will be the year in which CNIT turns the corner and begins to bloom as one of China's better known providers of important cloud-based technologies for elevator safety and advertising communications."
For additional information on CNIT's 2016 performance, please see the company's 20-F filing at http://www.chinacnit.com/Relation/SecFill.
About China Information Technology, Inc.
China Information Technology, Inc. (CNIT) is a leading Internet service company that provides integrated cloud-based solutions enabling innovation and smart living in the fields of new media, elevator safety management, education, etc. Through continuous innovation, CNIT is aiming to leverage its proprietary Cloud-Application-Terminal technology to level the competitive landscape in the new media industry and deliver value for its shareholders, employees, customers, and the community. To learn more, please visit 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 subsidiaries and other consolidated entities. All statements, other than statements of historical fact included herein, are "forward-looking statements" in nature within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, often identified by the use of forward-looking terminologies 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 and its subsidiaries and other consolidated entities or persons acting on their 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: [email protected]
http://www.chinacnit.com
or
Asia IR-PR
Jimmy Caplan
Tel: +512-329-9505
Email: [email protected]
or
Media Relations: Asia IR-PR
Rick Eisenberg
Tel: +212-496-6828
Email: [email protected]
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2016 AND 2015
December 31, |
December 31, |
|||||||
2016 |
2015 |
|||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 3,752,375 | $ | 3,786,846 | ||||
Restricted cash |
- | 868,317 | ||||||
Accounts receivable, net |
3,019,349 | 3,180,138 | ||||||
Advances to suppliers |
235,877 | 2,526,607 | ||||||
Inventories, net |
1,477,783 | 2,141,093 | ||||||
Other current assets |
7,159,803 | 8,113,861 | ||||||
Receivable from sale of discontinued operations |
- | 13,272,186 | ||||||
TOTAL CURRENT ASSETS |
15,645,187 | 33,889,048 | ||||||
Deposit for purchase of land use rights |
- | 14,020,901 | ||||||
Property, plant and equipment, net |
8,674,850 | 8,372,961 | ||||||
Intangible assets, net |
1,556,306 | 2,530,103 | ||||||
Goodwill |
- | 4,753,454 | ||||||
Long-term investments |
43,205 | - | ||||||
Deferred tax assets |
100,435 | 460,237 | ||||||
Other non-current assets |
8,267,016 | 2,065,000 | ||||||
TOTAL ASSETS |
$ | 34,286,999 | $ | 66,091,704 | ||||
LIABILITIES AND EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Short-term bank loans |
$ | 7,799,852 | $ | 15,272,986 | ||||
Accounts payable |
5,993,211 | 6,943,248 | ||||||
Bills payable |
- | 1,322,912 | ||||||
Advances from customers |
1,668,049 | 2,651,156 | ||||||
Accrued payroll and benefits |
285,284 | 396,026 | ||||||
Other payables and accrued expenses |
3,044,779 | 4,570,298 | ||||||
Amounts due to related parties |
- | 141,972 | ||||||
Income tax payable |
2,589,422 | 3,083,792 | ||||||
Derivative Liability - Warrants |
3,719 | 1,156,386 | ||||||
TOTAL CURRENT LIABILITIES |
21,384,316 | 35,538,776 | ||||||
Amounts due to related parties |
- | 12,359 | ||||||
Deferred tax liabilities |
100,435 | 86,332 | ||||||
TOTAL LIABILITIES |
21,484,751 | 35,637,467 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
Ordinary shares, par $0.01; shares issued and outstanding, 2016; 0 shares; 2015: 120,000 shares |
- | 360,000 | ||||||
EQUITY |
||||||||
Ordinary shares, par $0.01; authorized capital 100,000,000 shares; shares issued, 2016: 41,633,607 shares; 2015: 40,733,812 shares; shares outstanding, 2016: 40,231,159 shares; 2015: 39,211,364 shares |
426,744 | 416,546 | ||||||
Treasury stock: 1,402,448 shares |
(7,117,500 | ) | (7,117,500 | ) | ||||
Additional paid-in capital |
145,742,163 | 144,000,767 | ||||||
Reserve |
13,812,095 | 13,812,095 | ||||||
Accumulated deficit |
(173,149,696 | ) | (154,979,095 | ) | ||||
Accumulated other comprehensive income |
23,994,357 | 24,551,707 | ||||||
Total equity of the Company |
3,708,163 | 20,684,520 | ||||||
Non-controlling interest |
9,094,085 | 9,409,717 | ||||||
Total equity |
12,802,248 | 30,094,237 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 34,286,999 | $ | 66,091,704 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
2016 |
2015 |
2014 |
||||||||||
Revenue - Products |
$ | 6,553,090 | $ | 4,953,139 | $ | 22,628,612 | ||||||
Revenue - Software |
2,347,197 | 3,200,905 | 10,366,560 | |||||||||
Revenue - System integration |
628,880 | 1,012,088 | 4,822,003 | |||||||||
Revenue - Others |
664,423 | 1,118,736 | 817,572 | |||||||||
TOTAL REVENUE |
10,193,590 | 10,284,868 | 38,634,747 | |||||||||
Cost - Products |
5,512,305 | 2,910,334 | 18,769,338 | |||||||||
Cost - Software |
921,432 | 1,267,834 | 4,086,717 | |||||||||
Cost - System integration |
1,078,103 | 1,745,647 | 4,480,388 | |||||||||
Cost - Others |
95,350 | 457,390 | 809,947 | |||||||||
TOTAL COST |
7,607,190 | 6,381,205 | 28,146,390 | |||||||||
GROSS PROFIT |
2,586,400 | 3,903,663 | 10,488,357 | |||||||||
Administrative expenses |
8,342,842 | 11,223,502 | 20,837,181 | |||||||||
Research and development expenses |
3,044,972 | 3,446,867 | 1,477,246 | |||||||||
Selling expenses |
1,334,147 | 2,661,545 | 4,240,097 | |||||||||
Impairment of property, plant and equipment |
- | 4,616,679 | 827,319 | |||||||||
Impairment of intangible assets and goodwill |
4,442,367 | 8,918,427 | 7,015,727 | |||||||||
LOSS FROM OPERATIONS |
(14,577,928 | ) | (26,963,357 | ) | (23,909,213 | ) | ||||||
Subsidy income |
223,166 | 501,404 | 676,159 | |||||||||
Gain on sale of assets |
- | 29,994,037 | - | |||||||||
Loss on disposal of consolidated entities |
(575,956 | ) | - | - | ||||||||
Loss on sale of deposits for land use rights |
(2,762,033 | ) | - | - | ||||||||
Other (loss) income, net |
(326,546 | ) | 776,233 | (407,616 | ) | |||||||
Interest income |
17,420 | 76,716 | 408,121 | |||||||||
Interest expense |
(498,931 | ) | (3,116,777 | ) | (5,858,770 | ) | ||||||
Change in fair value of warrant liability |
34,175 | (5,657,988 | ) | - | ||||||||
Loss from continuing operations before income taxes |
(18,466,633 | ) | (4,389,732 | ) | (29,091,319 | ) | ||||||
Income tax (expense ) benefit |
(57,844 | ) | (4,305,028 | ) | 4,599,559 | |||||||
Net loss from continuing operations |
(18,524,477 | ) | (8,694,760 | ) | (24,491,760 | ) | ||||||
Net income (loss) from discontinued operations |
- | 1,498,971 | (5,260,538 | ) | ||||||||
NET LOSS |
(18,524,477 | ) | (7,195,789 | ) | (29,752,298 | ) | ||||||
Less: Net loss (income) attributable to the non-controlling interest |
353,876 | (308,473 | ) | 520,951 | ||||||||
NET LOSS ATTRIBUTABLE TO THE COMPANY |
$ | (18,170,601 | ) | $ | (7,504,262 | ) | $ | (29,231,347 | ) | |||
(Loss) earnings per share - Basic and Diluted |
||||||||||||
CONTINUING OPERATIONS |
||||||||||||
Basic |
$ | (0.45 | ) | $ | (0.26 | ) | $ | (0.79 | ) | |||
Diluted |
$ | (0.45 | ) | $ | (0.26 | ) | $ | (0.79 | ) | |||
DISCONTINUED OPERATIONS |
||||||||||||
Basic |
$ | - | $ | 0.04 | $ | (0.17 | ) | |||||
Diluted |
$ | - | $ | 0.04 | $ | (0.17 | ) | |||||
NET LOSS PER SHARE ATTRIBUTABLE TO THE COMPANY |
||||||||||||
Basic |
$ | (0.45 | ) | $ | (0.22 | ) | $ | (0.96 | ) | |||
Diluted |
$ | (0.45 | ) | $ | (0.22 | ) | $ | (0.96 | ) | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
2016 |
2015 |
2014 |
||||||||||
OPERATING ACTIVITIES |
||||||||||||
Net loss |
$ | (18,524,477 | ) | $ | (7,195,789 | ) | $ | (29,752,298 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities from continuing operations: |
||||||||||||
(Income) loss from discontinued operations, |
||||||||||||
net of income taxes |
- | (1,498,971 | ) | 5,260,538 | ||||||||
Provision for losses on accounts receivable and other current assets |
1,995,046 | 2,659,499 | 6,398,463 | |||||||||
Impairment of intangible assets and goodwill |
4,442,367 | 8,918,427 | 7,015,727 | |||||||||
Provision for obsolete inventories |
324,581 | 274,663 | 3,808,307 | |||||||||
Depreciation |
1,736,607 | 1,665,257 | 2,135,644 | |||||||||
Amortization of intangible assets and land use rights |
845,149 | 876,237 | 917,780 | |||||||||
(Gain) loss on sale of property and equipment and land use rights |
(8,544 | ) | (30,005,007 | ) | (6,550 | ) | ||||||
Loss on disposal of inventories |
345,963 | - | 476,597 | |||||||||
Loss from disposals of consolidated entities |
575,956 | - | - | |||||||||
Loss on disposal of deposit for land use rights |
2,762,033 | - | - | |||||||||
Stock-based payment compensation for consulting services |
- | 98,483 | 120,167 | |||||||||
Stock-based compensation |
273,102 | 102,282 | 81,615 | |||||||||
Impairment of property, plant and equipment |
- | 4,616,679 | 827,319 | |||||||||
Income tax expense (benefit) |
365,401 | 3,761,084 | (4,603,763 | ) | ||||||||
Change in fair value of warrants liability |
(34,175 | ) | 5,657,988 | - | ||||||||
Changes in operating assets and liabilities, net of effects of business acquisitions and dispositions: |
||||||||||||
Accounts receivable |
(913,486 | ) | 2,914,918 | (1,497,285 | ) | |||||||
Inventories |
(590,274 | ) | 1,546,570 | 6,019,174 | ||||||||
Other receivables and prepaid expenses |
6,222,650 | (1,089,481 | ) | (3,435,388 | ) | |||||||
Advances to suppliers |
1,981,816 | (1,708,552 | ) | 5,781,743 | ||||||||
Restricted cash |
848,573 | 9,566,303 | (1,515,573 | ) | ||||||||
Amounts due to/from related parties |
(154,331 | ) | (1,088,001 | ) | 1,126,768 | |||||||
Other payables and accrued expenses |
(2,344,677 | ) | (2,736,926 | ) | (3,808,563 | ) | ||||||
Advances from customers |
(846,599 | ) | 1,598,944 | (2,017,504 | ) | |||||||
Accounts payable and bills payable |
(1,811,119 | ) | (24,134,831 | ) | (6,018,929 | ) | ||||||
Income tax payable |
(312,615 | ) | (118,973 | ) | 171,552 | |||||||
Net cash used in continuing operations |
(2,821,053 | ) | (25,319,197 | ) | (12,514,459 | ) | ||||||
Net cash used in operating activities from discontinued operations |
- | (595,404 | ) | (115,066 | ) | |||||||
Net cash used in operating activities |
(2,821,053 | ) | (25,914,601 | ) | (12,629,525 | ) | ||||||
INVESTING ACTIVITIES |
||||||||||||
Deposit (paid) received for assets held-for sale |
- | (20,717 | ) | 13,024,000 | ||||||||
Deposit refunded for land use rights |
- | - | 3,355,088 | |||||||||
Cash acquired in Biznest acquisition |
- | - | 67,506 | |||||||||
Proceeds from sale of property and equipment |
299,298 | 55,101 | 6,561 | |||||||||
Consideration paid for acquisition of Biznest |
- | (1,488,969 | ) | (5,951,968 | ) | |||||||
Investment in Geo |
- | - | (128,901 | ) | ||||||||
Investment in Biznest's joint company |
(45,179 | ) | - | - | ||||||||
Capitalized and purchased software development costs |
- | (66,870 | ) | (1,353,028 | ) | |||||||
Purchases of property and equipment |
(3,463,915 | ) | (3,004,209 | ) | (529,053 | ) | ||||||
Investment in Zhongtian |
- | - | (638,723 | ) | ||||||||
Cash received from sale of Zhongtian and Geo |
12,312,378 | - | - | |||||||||
Cash received for sale of assets held for sale |
- | 45,052,000 | - | |||||||||
Net cash provided by investing activities from continuing operations |
9,102,582 | 40,526,336 | 7,851,482 | |||||||||
Net cash provided by (used in) investing activities from discontinued operations |
- | 1,558,581 | (1,530,773 | ) | ||||||||
Net cash provided by investing activities |
9,102,582 | 42,084,917 | 6,320,709 | |||||||||
FINANCING ACTIVITIES |
||||||||||||
Borrowings under short-term loans |
10,541,720 | 44,584,103 | 58,862,064 | |||||||||
Common stock issued for cash |
- | 12,786,353 | 3,683,028 | |||||||||
Decrease (increase) in restricted cash in relation to bank borrowings |
- | 543,300 | 256,427 | |||||||||
Repayment of short-term loans |
(17,101,230 | ) | (79,952,564 | ) | (56,153,075 | ) | ||||||
Repurchase of ordinary shares |
(379,710 | ) | (1,310,184 | ) | (1,290,000 | ) | ||||||
Repayment of long-term loans |
(214,527 | ) | (97,751 | ) | (94,279 | ) | ||||||
Cash paid to warrant holders |
- | (542,806 | ) | - | ||||||||
Net cash (used in) provided by financing activities from continuing operations |
(7,153,747 | ) | (23,989,549 | ) | 5,264,165 | |||||||
Net cash (used in) provided by financing activities from discontinued operations |
- | (147,237 | ) | 1,131,223 | ||||||||
Net cash (used in) provided by financing activities |
(7,153,747 | ) | (24,136,786 | ) | 6,395,388 | |||||||
Effect of exchange rate changes on cash and cash equivalents |
837,747 | 564,125 | 19,027 | |||||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(34,471 | ) | (7,402,345 | ) | 105,599 | |||||||
CASH AND CASH EQUIVALENTS, BEGINNING |
3,786,846 | 11,189,191 | 11,083,592 | |||||||||
CASH AND CASH EQUIVALENTS, ENDING |
$ | 3,752,375 | $ | 3,786,846 | $ | 11,189,191 | ||||||
Less cash and cash equivalents from discontinued operations |
$ | - | $ | - | $ | 4,499,343 | ||||||
CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS, end of period |
$ | 3,752,375 | $ | 3,786,846 | $ | 6,689,848 | ||||||
SOURCE: China Information Technology, Inc.