Sunday, April 8, 2007

Yucheng Technologies (YTEC) - Update on Financials

Update on financials:

Number of shares immediately post transaction:

9.5mn shares
6.9mn warrants outstanding

From the company presentation:

Cash per share ($1.78 - assumes $17mn cash and 9.5mn shares)

2005 Earnings per share based on 8.8mn shares (excluding 773,000 shares
tied to performance in 2006) is $0.36

2006 Earnings per share - $0.64; management hits and exceeds the net profits target

EPS growth if management hits 40% growth is about 30% for common
shareholders (before CUAQ warrant conversion)

Highly Incentivized Management

Cash Bonus for Share Price Increase:


- US$5 million bonus if CUAQ receives an aggregate of US$34.5 million in gross proceeds in additional financing (i.e. successful warrant exercising if share price is maintained at US$8.50)
- US$1 million bonus if share price (at least 60 consecutive trading days) is above US$10.00 in 2006
- US$2.0 million if Share Price Average is above $12.00 in 2007
- US$3.0 million if Share Price Average is above $14.40 in 2008
- Total cash bonus will not exceed US$10 million

Share Bonus for Earnings Growth:

- 952,832 shares each year from 2007-2010 for meeting or exceeding 40% annual growth in net profits:

Year ending December 31 Net Profit
2007 US$8.5 million
2008 US$11.9 million
2009 US$16.7 million
2010 US$23.3 million

- All-or-nothing share bonus plan

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