For more information, please contact:
Company Contact
Ms. Iris Yan
Investor Relations Manager
China Information Security Technology, Inc.
Tel: +86-755-8370-4767
Email: iri@chinacpby.com
Web: http://www.chinacpby.com
Investor Relations Contact:
ICR:
Michael Tieu
Tel: +86-10-6599-7960
Email: michael.tieu@icrinc.com
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)
Three Months Three Months
Ended Ended
March, 31 March, 31
2009 2008
Revenue - Products $ 2,821,128 $ 4,543,473
Revenue - Software 9,011,466 4,989,734
2,955,457 4,553,657
Revenue - System integration
Revenue - Others 192,133 317,562
TOTAL REVENUE 14,980,184 14,404,426
Cost - Products sold 2,612,791 3,929,535
Cost - Software sold 2,700,941 1,218,463
Cost - System integration 2,145,752 3,153,620
Cost - Others 37,436 50,646
TOTAL COST 7,496,920 8,352,264
GROSS PROFIT 7,483,264 6,052,162
Administrative expenses (2,216,347) (1,752,735)
(147,003)
Research and development expenses (503,852)
Selling expenses (593,716) (417,703)
INCOME FROM OPERATIONS 4,169,349 3,734,721
Subsidy income 197,789 69,680
Other income (expenses), net 181,367 (279)
Interest income 76,917 26,603
Interest expense (60,210) --
INCOME BEFORE INCOME TAXES 4,565,212 3,830,725
Income tax expense (588,396) (206,745)
NET INCOME 3,976,816 3,623,980
Less: Net income attributable to the
non-controlling interest (219,823) (45,000)
NET INCOME ATTRIBUTABLE TO THE COMPANY 3,756,993 3,578,980
Weighted average number of shares
Basic 47,520,030 45,985,550
Diluted 47,520,030 46,720,415
Earnings per share - Basic and Diluted
Basic -- Net income attributable to the
Company's stockholders $ 0.08 $ 0.08
Diluted -- Net income attributable to
the Company's stockholders $ 0.08 $ 0.08
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2009 AND DECEMBER 31, 2008
March 31 December 31
2009 2008
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 7,034,395 $ 9,565,252
Short-term investments 5,860,000 5,835,838
Accounts receivable:
Billed, net of allowance for doubtful
accounts of $736,564 and $399,800,
respectively 21,516,289 17,135,099
Unbilled 24,461,082 25,722,009
Bills receivable -- 4,481,340
Advances to suppliers 10,459,121 8,469,976
Amount due from related parties, net of
allowance for doubtful accounts of
$73,000 69,480 131,594
Inventories 12,626,465 7,107,537
Other receivables and prepaid expenses 6,229,554 6,251,484
Deferred tax assets 259,490 --
TOTAL CURRENT ASSETS 88,515,876 84,700,129
Deposit for software purchase 717,704 --
Long-term investments 3,091,150 3,078,405
Property and equipment, net 22,946,191 23,555,603
Intangible assets, net 12,882,695 13,115,151
Goodwill 23,778,000 24,018,894
TOTAL ASSETS $ 151,931,616 $ 148,468,182
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans $ 6,332,000 $ 6,327,992
Accounts payable 11,377,692 10,707,728
Advances from customers 1,781,770 2,476,335
Amount due to related parties 495,621 486,136
Accrued payroll and benefits 744,829 1,319,386
Other payables and accrued expenses 2,021,148 2,553,019
Income tax payable 1,572,739 1,592,459
TOTAL CURRENT LIABILITIES 24,325,799 25,463,055
EQUITY
China Information Security Technology,
Inc. equity
Common stocks, par $0.01; authorized
capital,200,000,000 shares; Shares
issued and outstanding 2009: 48,803,211
and 2008: 47,462,404 shares respectively) 222,529 209,121
Treasury stock, 6000 shares, at cost (11,468) --
Additional paid-in capital 64,297,531 64,127,339
Reserve 4,964,597 4,964,597
Retained earnings 37,505,473 33,748,480
Accumulated other comprehensive income 6,499,985 6,048,243
Total stockholders' equity of the
Company 113,478,647 109,097,780
Non-controlling interest 14,127,170 13,907,347
Total equity 127,605,817 123,005,127
TOTAL LIABILITIES AND EQUITY $ 151,931,616 $ 148,468,182
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Unaudited)
Three Three
Months Months
Ended Ended
March 31, March 31,
2009 2008
OPERATING ACTIVITIES
Net income $ 3,976,816 $ 3,623,980
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation 915,105 657,678
Amortization of intangible assets 428,006 217,854
Stock-based compensation (Note 14) 183,600 383,965
Loss on disposal of property and equipment 8,329 --
Provisions for losses on accounts receivable 335,129 --
Deferred Taxes (18,597)
Changes in operating assets and liabilities,
net of effects of business acquisitions:
Increase in inventories (5,489,875) (590,698)
Increase in accounts receivable (3,278,151) (5,648,740)
Decrease in bills receivable 4,488,480 --
Increase in other receivables, advances to
suppliers and prepaid expenses (1,883,282) (2,738,826)
Decrease in amount due from related parties 62,663 --
Increase in amount due to related parties 7,472 --
Increase (decrease) in accounts payable 625,672 (303,819)
Decrease in advances from customers (704,867) (1,024,711)
(Decrease) increase in other payables and
accrued expenses (1,119,926) 439,039
(Decrease) increase in income tax payable (26,316) 70,142
Net cash used in operating activities $ (1,489,742) $ (4,914,136)
INVESTING ACTIVITIES
Cash acquired in Bocom acquisition -- 713,793
Proceeds from sales of marketable securities -- 14,966,752
Proceeds from sales of property and equipment 21,068 --
Purchases of property and equipment (231,528) (337,212)
Capitalized and purchased software
development costs (147,588) (67,292)
Deposit for acquisition of Geo -- (6,909,279)
Deposit for software purchase (717,752) --
Decrease in Goodwill 240,910 --
Allowance for deferred tax assets related
to Geo's acquisition (240,910)
Net cash used in investing activities (1,075,800) 8,366,762
FINANCING ACTIVITIES
Repurchase of common stock (11,468) --
Net cash used in financing activities (11,468) --
Effect of exchange rate changes on cash and
cash equivalent 46,153 416,964
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (2,530,857) 3,869,590
CASH AND CASH EQUIVALENTS, BEGINNING 9,565,252 19,755,182
CASH AND CASH EQUIVALENTS, ENDING
$ 7,034,395 $ 23,624,772
Web site: http://www.chinacpby.com/
