| | |
China Information Technology, Inc. Announces
Fourth Quarter and Year 2011 Results
SHENZHEN, China, March 7, 2012
/PRNewswire-Asia-FirstCall/ -- China
Information Technology, Inc. (Nasdaq:
CNIT), a leading provider of information
technologies and display technologies
based in China, today announced its
financial results for the fourth quarter
and year ended December 31, 2011.
Fourth Quarter 2011 Financial Highlights
-
Revenues decreased 49.0% YoY to US$31.2
million
-
Gross Profit decreased 57.1% YoY to
US$9.3 million
-
Operating loss of US$6.2 million mainly
due to write-downs in inventory and
increases in bad debt reserves
-
Net loss of US$5.7 million
-
Cash flow from operations increased
12.9% to US$9.1 million
Year 2011 Financial Highlights
-
Revenues decreased 30.1% YoY to
US$114.5 million
-
Gross Profit decreased 37.2% YoY to
US$44.3 million
-
Operating Profit decreased 77.6% YoY to
US$9.5 million
-
Net Income decreased 75.8% YoY to $8.6
million
-
Fully Diluted EPS was US$0.29.
-
Cash Flow from Operations decreased
39.4% YoY to $16.3 million
Mr. Jiang Huai Lin, chairman and chief
executive officer of the Company,
commented, "Earnings declined for
both the fourth quarter and the 2011
fiscal year as the Company continued to
navigate difficult market conditions. Our
year-end results fell below our November
guidance, with revenue decreasing 30.1%
to $114.5 million and net income
decreasing by 75.8% to $8.6 million. Our
business was affected by several factors,
the largest of which was the Chinese
government's implementation of
macroeconomic tightening policies. This
resulted in a significant slowdown in
projects in our software business, which
serves mostly government customers.
Another factor was our implementation of
more stringent customer acceptance
initiatives at the start of 2011 as we
worked to improve the quality of our
customer base and Days Sales Outstanding
('DSO') schedule.
"The decline in net income was
primarily due to write downs on our
display technology ('DT')
inventory, following restructuring
measures aimed at enhancing our
competitiveness and innovation in that
segment. Global demand for LCD products
was weak in 2011, which caused product
sales to fall for most leading
international LCD TV manufacturers. The
display industry is shifting towards
newer technologies, including 3-D TVs,
OLED screens, and interactive displays.
We believe the interactive display
market, in particular, has enormous
potential for applications ranging from
corporate use to transportation, energy,
healthcare, education, retail,
entertainment, and many others. We have
been investing a great deal of energy and
resources in developing new products
featuring advanced, multi-functional
interactive display technologies, and we
are very excited about our move into this
space. The market opportunity for
interactive display technology in China
is great, and although we are still in
the process of building critical scale,
we believe we are on-track to become the
front-runner in this new market.
Currently, only a few major players in
this market have comparably strong
hardware and software capabilities.
"We have recently introduced, or
expect to introduce in 2012, our new
generation of advanced digital technology
products including the new CNIT IT-Pad, a
display device with a built-in,
customizable computer, and a digital
high-definition touch-screen tailored for
'interactive teaching,' and the
CNIT DS-Pad, a multimedia advertising
device that is customizable for use in
various environments, with traditional or
touch-screen technology. We are also hard
at work developing new proprietary
technologies to enhance our leading
position in China. As of December 31,
2011, we had 118 registered and
copyrighted software products, 21 pending
applications, and held 17 patents.
"We were pleased to see an increase
in sales of our system integration
services, which grew 70.0% to $27.7
million. This resulted from increased
demand from the Shenzhen Summer
Universiade in August 2011, as well as
other new projects we secured during the
year. We will continue to focus on system
integration, along with our geographic
information systems ('GIS'), and
hospital information systems
('HIS') segments, both of which
are expected to have double-digit growth
in 2012 as we continue to grow these
businesses.
"Despite setbacks caused by a tough
environment, we are excited about our
future. We expect 2012 to continue to be
a transitional one, as we continue to
move away from government public security
projects and focus on our DT, GIS, and
HIS businesses. In addition, our DSOs are
likely to be lower than in previous years
because our DT business enjoys a shorter
collection period. These and other
improvements, including our more
stringent customer acceptance policies,
have already started to yield results,
especially in our operating cash flow.
While 2012 is still likely to pose many
challenges, we are highly confident in
the long-term value we are building for
shareholders."
Fourth Quarter 2011 Results
Revenues
For 4Q 2011, revenue was $31.2 million,
compared to $61.2 million in 4Q2010, a
decrease of $30.0 million, or 49.0%. The
decline in total revenue was primarily
due to the Chinese government's
implementation of macroeconomic
tightening policies, which led to a
slowdown in projects for the
Company's government customers, which
have traditionally been its core customer
base; and secondarily due to the weak
global demand and challenging industry
dynamics for flat-screen TV products.
Finally, in 2011 the Company liquidated
some of HPC's inventory that is not
aligned with the new strategic direction
as part of the restructuring process.
Product sales decreased by $12.6 million,
or 46.9%, to $14.3 million in 4Q 2011, as
compared to $26.9 million in 4Q 2010.
Product sales constituted 45.7% of total
revenue during the current period as
compared with 43.9% during the prior
year. Product sales decrease was
primarily due to the Company's
strategy of shifting from low-end to
high-end DT products and lower prices of
traditional LCD TV products in the midst
of a challenging global business
environment.
Software sales decreased by 60.2% to $9.3
million in 4Q 2011, from $23.4 million
for the three months ended December 31,
2010, mainly due to the Chinese
government's implementation of
macroeconomic tightening policies.
Software sales constituted 29.8% of total
revenue, as compared to 38.2% during the
prior year.
Sales of system integration services
decreased by 13.5% to $7.5 million in 4Q
2011, as compared to $8.7 million in 4Q
2010. As a percentage of revenue, it
increased to 24.0% during 4Q 2011 as
compared with 14.1% during 4Q 2010.
Other revenue was $173,101 in 4Q 2010, a
decrease of 92.6%, from $2.3 million in
4Q 2010. Other revenue was mainly derived
from maintenance services during the
fourth quarter of 2011.
Gross Profit and Gross Margin
Cost of revenues decreased $17.7 million,
or 44.6%, to $22.0 million in 4Q 2011,
from $39.7 million in 4Q 2010. As a
result, gross margin was 29.6% in 4Q
2011, a decrease of 559 basis points,
from 35.2% in 4Q 2010.
The decrease in the overall gross margin
resulted from a number of factors,
including revenue shifting from IT
segment to DT segment, lower software
revenues, lower system integration gross
margins, and lower prices of LCD TV
products while the cost of manufacturing
rose during 4Q 2011.
Administrative Expenses
Total administrative expenses increased
by $3.9 million, or 50.6%, to $11.7
million in 4Q 2011, from $7.8 million in
4Q 2010. As a percentage of revenue,
administrative expenses increased to
37.5% in 4Q 2011, from 12.7% for 4Q 2010.
The increase was primarily due to an
inventory impairment charge of
approximately $4.5 million, and an
increase of $3.2 million in bad debt
allowance in 4Q 2011.
Research and Development Expenses
Research and development expenses
increased to $1.5 million in 4Q 2011 from
$1.0 million in 4Q 2010, an increase of
$0.5 million, or 57.4%. As a percentage
of revenue, research and development
expenses increased to 4.8% in 4Q 2011,
from 1.5% in 4Q 2010. The increase was
primarily a result of the Company's
efforts to improve product profitability
and develop new products, especially in
its DT segment.
Selling Expenses
Selling expenses increased $0.3 million
in 4Q 2011, or 15.0%, to $2.3 million,
from $2.0 million in 4Q 2010. As a
percentage of revenue, selling expenses
increased to 7.2% for 4Q 2011, from 3.2%
in 4Q 2010. This increase was primarily
due to the Company's efforts to
introduce new products during the
quarter.
Income from Operations
Income from operations was a loss of $6.2
million in 4Q 2011, a decrease of $17.1
million, from $10.9 million in 4Q 2010.
Net Income Attributable to the Company
As a result of the foregoing factors, net
income attributable to the Company
decreased by $15.0 million to a loss of
$6.8 million in 4Q 2011, from $8.2
million in 4Q 2010.
Cash and Cash Equivalents
As of December 31, 2011, the Company had
$14.0 million in cash and cash
equivalents, and $12.5 million in
restricted cash, as compared to $18.2
million in cash and cash equivalents, and
$8.3 million in restricted cash as of
December 31, 2010. During 4Q 2011, cash
provided by operating activities amounted
to $9.1 million, an increase of 12.9%
from $8.08 million in 4Q 2010.
Year 2011 Results
Revenues
For FY 2011, revenue was $114.5 million,
compared to $163.8 million for FY 2010, a
decrease of $49.3 million, or 30.1%. The
decrease was primarily due to the Chinese
government's implementation of
macroeconomic tightening policies, which
led to a slowdown in projects for the
Company's government customers that
have traditionally been its core customer
base; and, secondarily due to the weak
global demand and challenging industry
dynamics for flat-screen TV products.
Software sales decreased by $51.1
million, or 56.5%, to $39.3 million for
FY 2011, from $90.4 million for FY 2010.
Software sales constituted 34.3% of total
revenue in 2011, compared with 55.2% in
2010. The decrease was mainly due to the
Chinese government's implementation
of macroeconomic tightening policies and
the curtailment of its large economic
stimulus package. These led to a slowdown
in software projects for the
Company's government customers. In
addition, during 2011 the Company
instituted more stringent customer
acceptance policies, which limited new
projects to those with solid credit
credentials and long-term business
prospects in light of the unfavorable
government fiscal environment.
Product sales decreased by $6.9 million,
or 12.9%, to $46.4 million for FY 2011,
as compared to $53.3 million in FY 2010.
Product sales constituted 40.5% of total
revenue during 2011 as compared with
32.5% during 2010. The decrease in
product sales primarily reflected 1) the
Company's efforts to transition its
DT segment from the increasingly
competitive and low-margin flat-screen TV
market into the multi-functional and
interactive display technology markets,
which caused total product unit sales to
fall, and 2) lower pricing of the
Company's traditional flat-screen TVs
in the midst of increasing industry
competition and weak global consumer
demand for flat-screen TVs.
Sales of system integration services
increased by $11.4 million, or 70.0%, to
$27.7 million for FY 2011, as compared to
$16.3 million for FY 2010. As a
percentage of revenue, it increased from
9.9% during 2010 to 24.2% during 2011.
Such growth primarily resulted from an
increase in demand for system integration
solutions in connection with the Shenzhen
Summer Universiade, which was held in
August 2011, and other new projects
during 2011.
Other revenue decreased from $3.8 million
in FY 2010 to $1.1 million in FY 2011, a
decrease of $2.7 million, or 70.7%. Other
revenue was mainly derived from
maintenance services in 2011, while in
2010, in addition to maintenance
services, the Company also generated
royalty income by licensing other
manufacturers to use the HPC trademark.
IT segment accounted for 59.6% of total
revenue for FY 2011, as compared with
69.4% for FY 2010. DT segment represented
40.4% of total revenue for FY 2011,
compared with. 30.6% for FY 2010.
Cost of Revenue, Gross Profit, and Gross
Margin
Cost of revenue decreased $23.1 million,
or 24.7%, to $70.2 million, for FY 2011,
from $93.3 million for FY 2010. As a
percentage of revenue, cost of revenue
increased to 61.3% during FY 2011, from
56.9% during FY 2010.
Gross profit decreased $26.2 million, or
37.2%, to $44.3 million for FY 2011, from
$70.6 million for 2010. Gross margin
decreased by 437 basis points to 38.7% in
2011 from 43.1% in 2010.
The decrease in gross profit margin
resulted from several factors. First, in
2011 the Company continued its effort to
increase DT solutions as a percentage of
total revenues. The percentage of DT
revenue increased from 30.6% during 2010
to 40.4% during 2011. The increase in
contribution from DT revenues resulted in
a decrease in gross profit margin for
2011, as DT solutions business has lower
average gross margins than other segments
of the Company's business. Second,
due to the Chinese government's
implementation of macroeconomic
tightening policies, the Company's
government customers reduced software
project orders. As a result, the
percentage of software revenue decreased
from 55.2% during 2010 to 34.3% in 2011.
The decrease in contribution from
software revenues resulted in a decrease
in gross profit margin for 2011 as, on
average, software projects have higher
average gross margins than other segments
of the Company's business. Third, the
gross profit margin for system
integration business decreased from 49.3%
during 2010 to 29.1% in 2011, primarily
due to the high profit margin of certain
projects in the 2010 period. Finally, the
Company lowered its LCD TV prices in the
face of increased competition and weak
global consumer demand, while costs of
manufacturing continued to rise in 2011.
However, as the Company became more
selective with its acceptance of orders
in an effort to improve the quality of
earnings, the gross margin for product
and software sales were higher in FY 2011
compared to FY 2010.
Administrative Expenses
Administrative expenses increased by $4.2
million, or 22.3%, to $22.8 million for
FY 2011, from $18.6 million for FY 2010.
As a percentage of revenue,
administrative expenses increased to
19.9% for 2011, from 11.4% for 2010.
Research and Development Expenses
For FY 2011, research and development
expenses increased by $1.5 million, or
48.6%, to $4.5 million, from $3.0 million
for FY 2010. As a percentage of revenue,
research and development expenses
increased to 3.9% for 2011, from 1.8% in
2010. Such an increase was primarily a
result of the Company's efforts to
improve product profitability and develop
new products.
Selling Expenses
Selling expenses increased $1.2 million,
or 18.3%, to $7.5 million for FY 2011,
from $6.4 million for FY 2010. As a
percentage of revenue, selling expenses
increased to 6.6% for 2011, from 3.9% for
2010. The increase in selling expenses
reflects the Company's heightened
efforts in national market expansion.
Income from Operations
Income from operations decreased by $33.1
million, or 77.6%, to $9.53 million for
FY 2011, from $42.6 million for 2010. Net
income margin decreased to 7.5% in 2011
from 21.7% in 2010.
Net Income Attributable to the Company
Net income attributable to the company
was $7.9 million for FY 2011, as compared
to $34.4 million for 2010, a 77.0%
decrease. As a result, net margin
decreased to 6.9% in 2011 from 21.0% in
2010.
Cash and Cash Equivalents
As of December 31, 2011, the Company had
cash and cash equivalents of $14.0
million, compared to $18.2 million as of
December 31, 2010. Restricted cash was
$12.5 million as of December 31, 2011,
compared to $8.3 million as of December
31, 2010. Cash provided by operating
activities amounted to $16.3 million, a
decrease of 39.4% from $26.9 million in
the prior year.
Financial Outlook
For fiscal year 2012, the Company updates
its guidance with projected revenue in
the range of $110 million to $120 million
and net income in the range of $3 million
to $5 million. As 2012 continues to be a
transitional year for the Company, it
expects to regain growth momentum in 2013
and improve on overall operating metrics.
Conference Call
China Information Technology will host a
conference call and live webcast at to
discuss these results on Wednesday, March
7, 2012, at 7:00am Eastern Standard Time
(EST) (8:00pm in Beijing and Hong Kong).
The dial-in details for the live
conference call are as follows:
- U.S. Toll Free
Number: |
+1 866 519 4004 |
- International Dial-in
Number: |
+65 6723 9381 |
- China Toll Free
Number: |
800 819 0121 |
- China Toll Free Mobile
Number: |
400 620 8038 |
- Hong Kong Toll Free
Number: |
800 930 346 |
Conference ID: 56650145
A live and archived webcast of the call
will be available on the Investor
Relations section of China Information
Technology's website at
http://www.chinacnit.com/.
A telephone replay of the call will be
available beginning two hours after the
conclusion of the conference call through
11:59 pm Eastern Daylight Time, March 14,
2012.
The dial-in details for the replay are as
follows:
- U.S. Toll Free
Number |
+1 866 214 5335 |
- International Dial-in
Number |
+61 2 8235 5000 |
Conference ID: 56650145
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" including statements
regarding: the financial outlook of the
Company; the ability of the Company to
secure future opportunities in the market
by leveraging its R&D capabilities and
reputation; the ability of the Company to
develop new products and new markets
successfully; the general ability of the
Company to achieve its commercial
objectives, including the Company's
plan to sustain growth while creating
shareholder value; the business strategy,
plans and objectives of the Company and
its subsidiaries; and any other
statements of non-historical information.
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.
CHINA INFORMATION
TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
Expressed in U.S. dollars
(Except for share amounts) | | | | | | | | |
2011 | | |
2010 |
ASSETS | | | | | | | | | | | |
CURRENT ASSETS | | | | | |
Cash and cash
equivalents |
$ |
14,019,634 | |
$ |
18,166,857 |
Restricted cash | |
12,538,049 | | |
8,344,147 |
Accounts receivable: | | | | | |
Billed, net of allowance
for doubtful accounts of
$9,373,000 and $6,073,000,
respectively | |
31,117,415 | | |
31,172,599 |
Unbilled | |
72,225,044 | | |
67,622,656 |
Bills receivable | |
247,338 | | |
201,003 |
Advances to
suppliers | |
5,020,747 | | |
9,246,437 |
Amounts due from related
parties | |
22,823 | | |
330,876 |
Inventories, net of
provision of $5,224,000 and
$578,000, respectively | |
22,317,260 | | |
19,931,866 |
Other receivables and
prepaid expenses | |
9,603,954 | | |
2,463,562 |
Deferred tax assets | |
2,548,834 | | |
1,565,006 |
TOTAL CURRENT ASSETS | |
169,661,098 | | |
159,045,009 | | | | | | |
Deposit for software
purchase | |
- | | |
3,034,000 |
Deposit for purchase of
land use rights | |
27,564,586 | | |
26,566,377 |
Long-term
investments | |
2,401,561 | | |
3,296,252 |
Property, plant and
equipment, net | |
91,161,093 | | |
79,348,883 |
Land use rights, net | |
1,956,616 | | |
1,929,194 |
Intangible assets,
net | |
14,380,459 | | |
13,725,274 |
Goodwill | |
53,983,687 | | |
51,918,275 |
Deferred tax assets | |
683,042 | | |
538,460 |
TOTAL ASSETS |
$ |
361,792,142 | |
$ |
339,401,724 | | | | | | |
LIABILITIES AND
EQUITY | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | |
Short-term bank
loans |
$ |
40,983,457 | |
$ |
35,326,566 |
Accounts payable | |
19,013,509 | | |
17,249,334 |
Bills payable | |
27,399,393 | | |
20,536,475 |
Advances from
customers | |
6,403,966 | | |
7,480,686 |
Amounts due to related
parties | |
593,617 | | |
1,293,866 |
Accrued payroll and
benefits | |
3,060,384 | | |
4,304,988 |
Other payables and accrued
expenses | |
6,784,353 | | |
6,953,561 |
Contingent consideration,
current portion | |
- | | |
3,267,087 |
Income tax payable | |
3,525,949 | | |
3,809,708 |
TOTAL CURRENT
LIABILITIES | |
107,764,628 | | |
100,222,271 | | | | | | |
Long-term bank loans | |
109,524 | | |
5,863,205 |
Amounts due to related
parties, long-term portion | |
12,624 | | |
5,014,949 |
Contingent consideration,
net of current portion | |
- | | |
901,171 |
Deferred tax
liabilities | |
1,365,680 | | |
1,824,434 |
TOTAL LIABILITIES | |
109,252,456 | | |
113,826,030 | | | | | | |
COMMITMENTS AND
CONTINGENCIES | |
- | | |
- | | | | | | |
EQUITY | | | | | |
Common stock, par $0.01;
authorized capital 100,000,000
shares; | | | | | |
shares issued and
outstanding 2011: 27,591,462,
2010: 26,030,894 shares | |
286,326 | | |
255,115 |
Treasury stock, 360,627
shares, at cost | |
(695,514) | | |
(11,468) |
Additional paid-in
capital | |
101,261,307 | | |
92,294,350 |
Reserve | |
14,488,533 | | |
12,968,985 |
Retained earnings | |
95,600,619 | | |
90,240,665 |
Accumulated other
comprehensive income | |
19,925,259 | | |
11,325,040 |
Total equity of the
Company | |
230,866,530 | | |
207,072,687 |
Non-controlling
interest | |
21,673,156 | | |
18,503,007 |
TOTAL EQUITY | |
252,539,686 | | |
225,575,694 | | | | | | | | | | | | |
TOTAL LIABILITIES AND
EQUITY |
$ |
361,792,142 | |
$ |
339,401,724 | | | | | | | | | | | |
CHINA INFORMATION
TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
YEARS ENDED DECEMBER 31, 2011,
2010 AND 2009
Expressed in U.S. dollars
(Except for share amounts) | | | | | | | | | | | | |
2011 | | |
2010 | | |
2009 | | | | | | | | | | | |
Revenue - Products |
$ |
46,435,133 | |
$ |
53,328,214 | |
$ |
16,784,910 | |
Revenue - Software | |
39,301,812 | | |
90,419,181 | | |
63,827,233 | |
Revenue - System
integration | |
27,678,685 | | |
16,278,860 | | |
19,017,962 | |
Revenue - Others | |
1,119,923 | | |
3,819,342 | | |
1,365,989 | |
TOTAL REVENUE | |
114,535,553 | | |
163,845,597 | | |
100,996,094 | | | | | | | | | | | |
Cost - Products sold | |
36,815,966 | | |
46,052,309 | | |
13,560,279 | |
Cost - Software sold | |
13,302,464 | | |
38,574,738 | | |
22,229,542 | |
Cost - System
integration | |
19,625,349 | | |
8,259,899 | | |
14,251,391 | |
Cost - Others | |
472,270 | | |
395,496 | | |
303,215 | |
TOTAL COST | |
70,216,049 | | |
93,282,442 | | |
50,344,427 | | | | | | | | | | | |
GROSS PROFIT | |
44,319,504 | | |
70,563,155 | | |
50,651,667 | | | | | | | | | | | |
Administrative
expenses | |
22,785,631 | | |
18,623,523 | | |
12,653,175 | |
Research and development
expenses | |
CHINA INFORMATION
TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
YEARS ENDED DECEMBER 31, 2011,
2010 AND 2009
Expressed in U.S. dollars |
OPERATING ACTIVITIES | |
2011 | | |
2010 | | |
2009 | |
Net income |
$ |
8,570,179 | |
$ |
35,473,630 | |
$ |
30,137,645 | |
Adjustments to reconcile
net income to net cash provided
by operating activities: | | | | | | | | | | | | |
Supplemental disclosure of significant
non-cash transactions:
On November 11, 2009, 550,965 shares of
common stock were issued for the equity
portion of the purchase price of
approximately $8.46 million of Huipu.
In 2009, upon achievement of earn out
targets by ISS, Bocom and Zhongtian,
approximately 452,582 previously issued
shares became no longer returnable and
resulted in additional equity purchase
consideration and goodwill of
approximately $5,58 million
In 2010, upon achievement of earn out
target by Zhongtian, 177,582 previously
issued shares became no longer returnable
and resulted in additional equity
purchase consideration and goodwill of
$1.85 million. Huipu achieved earn out
target in 2010 and 165,289 shares will be
issued for equity portion of purchase
price of Huipu.
On February 8, 2011, the Company granted
eligible employees a total of 125,000
shares of the Company's common stock
under the China Information Technology,
Inc. as compensation. The fair value of
these shares of approximately $1.1
million, based on the quoted market
price, was accrued as of December 31,
2010 as the compensation was for services
provided in 2010.
On May 3, 2011, upon achievement of earn
out targets by Huipu, the Company issued
165,289 shares of the Company's
common stock in connection with the
acquisition of Huipu.
On August 16, 2011, the Company issued a
total of 925,926 shares of the
Company's common stock at a
conversion price of $5.4 per share as
full repayment of shareholder's loan
of $5.0 million.
On August 30, 2011, the Company settled
the remaining potential earn out for 2011
and 2012 with Huipu's former
shareholder and issued 344,354 shares of
the Company's common stock in
connection with the acquisition of Huipu
.
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