China Information Security Technology will host a corresponding conference call and live webcast at 8:00 am Eastern Daylight Time (8:00 pm, Beijing time) on Monday, May 10, 2010.
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
- Mainland China Toll Free Number: 10-800-819-0121
- Hong Kong Toll Free Number: 80-093-0346
Conference ID: 73230958
A live and archived webcast of the conference call will be available on the Investor Relations section of China Information Security's website at http://www.chinacpby.com .
A telephone replay of the call will be available from May 10, 2010 through May 17, 2010.
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: 73230958
About China Information Security Technology, Inc.
China Information Security Technology, Inc., together with its subsidiaries, specialized in Geographic Information System ("GIS"), digital public security and hospital information systems, and aims to be the largest GIS software provider in the People's Republic of China. Headquartered in Shenzhen, China, the Company's total solutions include specialized software, hardware, systems integration, and related services organized into three business segments - Digital Public Security Technology ("DPST"), Geographic Information Systems ("GIS"), and Digital Hospital Information System ("DHIS"). To learn more about the Company, please visit its corporate website at http://www.chinacpby.com .
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of China Information Security Technology, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the significance of the Company's new contract wins during the quarter; the ability of the Company to continue to strengthen its position in the industry by winning and successfully performing under national contracts; the ability of the Company to secure future opportunities in the market by leveraging its R&D capabilities and reputation; the continued support of the Chinese government for domestic GIS products; the general ability of the Company to achieve its commercial objectives, including the Company's plan to sustain the 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 are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For further information, please contact:
China Information Security Technology, Inc.
Iris Yan
Tel: +86-755-8370-4767
Email: ir@chinacpby.com
Web: http://www.chinacpby.com
Christensen
Kathy Li
Tel: +1-480-614-3036
Email: kli@christensenir.com
Roger Hu
Tel: +86-158-1049-5326
Email: rhu@christensenir.com
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2010 AND DECEMBER 31, 2009
March 31, December 31,
2010 2009
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 11,004,980 $ 13,478,633
Restricted cash 6,316,960 5,859,910
Accounts receivable:
Billed, net of allowance for doubtful
accounts of $3,103,000 and $3,123,000,
respectively 13,667,821 23,907,035
Unbilled 67,705,717 47,851,638
Bills receivable 102,690 --
Advances to suppliers 3,602,609 6,924,035
Amount due from related parties, net of
allowance for doubtful accounts of
$0 and $73,000, respectively 138,237 129,937
Inventories, net of provision of
$208,000 and $184,000, respectively 16,596,430 10,936,004
Other receivables and prepaid expenses 16,366,468 15,405,089
Deferred tax assets 1,814,416 1,719,327
TOTAL CURRENT ASSETS 137,316,328 126,211,608
Deposit for software purchase 4,634,987 1,426,452
Long-term investments 2,862,016 2,862,016
Property, plant and equipment, net 52,777,136 53,586,514
Land use rights, net 2,126,824 1,907,611
Intangible assets, net 13,192,322 13,556,141
Goodwill 50,609,866 50,609,866
Deferred tax assets 380,933 668,730
TOTAL ASSETS $ 263,900,412 $ 250,828,938
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans $ 12,214,242 $ 15,927,780
Accounts payable 18,681,672 20,159,317
Bills payable 10,897,636 12,658,029
Advances from customers 3,908,165 3,950,744
Amount due to related parties,
current portion 583,736 583,736
Accrued payroll and benefits 1,283,047 3,142,240
Other payables and accrued expenses 12,369,519 14,252,918
Contingent consideration, current
portion 1,529,226 1,857,994
Income tax payable 2,336,989 3,290,245
TOTAL CURRENT LIABILITIES 63,804,232 75,823,003
Long-term bank loans 4,019,580 1,907,100
Amount due to related parties,
long-term portion 6,043,037 --
Contingent consideration, net of
current portion 2,169,068 2,635,397
Deferred tax liabilities 2,455,383 2,564,604
TOTAL LIABILITIES 78,491,300 82,930,104
COMMITMENTS AND CONTINGENCIES -- --
EQUITY
Common stock, par $0.01; authorized
capital 200,000,000 shares; shares
issued and outstanding 2010:
51,811,787: 2009: 49,905,141 shares $ 252,615 $ 233,548
Treasury stock, 6,000 shares, at cost (11,468) (11,468)
Additional paid-in capital 89,357,316 78,495,062
Reserve 8,345,371 8,345,371
Retained earnings 66,743,383 60,462,275
Accumulated other comprehensive
income 5,253,568 5,016,575
Total equity of the Company 169,940,785 152,541,363
Non-controlling interest 15,468,327 15,357,471
Total equity 185,409,112 167,898,834
TOTAL LIABILITIES AND EQUITY 263,900,412 250,828,938
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2010 2009
Revenue - Products $ 6,347,970 $ 2,821,128
Revenue - Software 15,178,632 9,011,466
Revenue - System integration 2,783,883 2,955,457
Revenue - Others 994,622 192,133
TOTAL REVENUE 25,305,107 14,980,184
Cost - Products sold 5,240,422 2,612,791
Cost - Software sold 6,401,411 2,700,941
Cost - System integration 2,475,810 2,145,752
Cost - Others 70,011 37,436
TOTAL COST 14,187,654 7,496,920
GROSS PROFIT 11,117,453 7,483,264
Administrative expenses (2,770,031) (2,216,347)
Research and development expenses (569,431) (503,852)
Selling expenses (1,214,562) (593,716)
INCOME FROM OPERATIONS 6,563,429 4,169,349
Subsidy income 162,782 197,789
Other income, net 966,799 181,367
Interest income 18,891 76,917
Interest expense (148,891) (60,210)
INCOME BEFORE INCOME TAXES 7,563,010 4,565,212
Income tax expense (1,171,083) (588,396)
NET INCOME 6,391,927 3,976,816
Less: Net income attributable to the
non-controlling interest (110,819) (219,823)
NET INCOME ATTRIBUTABLE TO THE
COMPANY $ 6,281,108 $ 3,756,993
Weighted average number of shares
Basic 51,213,463 47,520,030
Diluted 51,213,463 47,520,030
Earnings per share - Basic and
Diluted
Basic - Net income attributable to
the Company's common stockholders $ 0.12 $ 0.08
Diluted - Net income attributable to
the Company's common stockholders $ 0.12 $ 0.08
Three Months Three Months
Ended Ended
March 31, March 31,
2010 2009
Net income $ 6,391,927 $ 3,976,816
Other comprehensive income:
Foreign currency translation gain 237,030 451,742
Total other comprehensive income
Comprehensive income 6,628,957 4,428,558
Comprehensive income attributable to
the non-controlling interest (110,856) (219,823)
Comprehensive income attributable to
the Company $ 6,518,101 $ 4,208,735
CHINA INFORMATION SECURITY TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2010 2009
OPERATING ACTIVITIES
Net income $6,391,927 $3,976,816
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 1,524,276 915,105
Amortization of intangible assets 499,657 428,006
Stock-based compensation -- 183,600
(Gain)/ loss on disposal of property and equipment (5,037) 8,329
Change in allowance for accounts receivable 438,272 335,129
Provision for obsolete inventories 23,835 --
Change in deferred income tax 83,458 (18,597)
Change in fair value of contingent consideration (795,097) --
Changes in operating assets and liabilities, net
of effects of business acquisitions:
Increase in restricted cash (456,894) --
Increase in accounts receivable (10,152,521) (3,278,151)
Decrease in advances to suppliers 3,484,877 --
Increase in other receivables and
prepaid expenses (1,452,006) (1,883,282)
Increase in inventories (5,890,035) (5,489,875)
(Decrease) / increase in accounts payable (3,236,934) 625,672
(Decrease) / increase in advances from customers (41,873) 3,783,613
Increase in amount due to related parties 844,549 7,472
Decrease in amount due from related parties -- 62,663
Decrease in other payables and accrued expenses (1,648,862) (1,119,926)
Decrease in income tax payable (952,931) (26,316)
Net cash used in operating activities (11,341,339) (1,489,742)
INVESTING ACTIVITIES
Proceeds from sales of property and equipment 30,797 21,068
Purchase of land-use-rights (384,187) --
Purchases of property and equipment (532,107) (231,528)
Capitalized and purchased software development
costs (135,962) (147,588)
Deposit for software purchase (3,207,441) (717,752)
Net cash used in investing activities (4,228,900) (1,075,800)
FINANCING ACTIVITIES
Borrowing of short-term loans 8,250,529 --
Borrowing of short-term shareholders' loans 6,026,550 --
Borrowing of long-term loans 4,018,210 --
Repayment of short-term loans (10,872,150) --
Repayment of long-term loans (4,018,210) --
Issued common stock 9,611,811 --
Repurchase of common stock -- (11,468)
Net cash provided by / (used in) financing
activities 13,016,740 (11,468)
Effect of exchange rate changes on cash and cash
equivalents 79,846 46,153
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,473,653) (2,530,857)
CASH AND CASH EQUIVALENTS, BEGINNING 13,478,633 9,565,252
CASH AND CASH EQUIVALENTS, ENDING $11,004,980 $7,034,395
Selected information by segment is presented in the following tables for
the three months ended March 31, 2010 and 2009.
Three Months Three Months
Ended March Ended March
31, 2010 31, 2009
(Unaudited) (Unaudited)
Revenues(1)
DIST Segment $ 12,097,423 $ 7,520,456
GIS Segment 10,637,080 5,859,666
DHIS Segment 2,570,604 1,600,062
(1) Revenues by operating segments
exclude inter-company transactions $ 25,305,107 $ 14,980,184
Percentage to Revenue
DIST Segment 47.8% 50.2%
GIS Segment 42.0% 39.1%
DHIS Segment 10.2% 10.7%
