Nevada
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20-1204606
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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Page
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PART
I - FINANCIAL INFORMATION
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ITEM
1 - FINANCIAL STATEMENTS
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Unaudited
Condensed Consolidated Statement of Operations for the three-month period
ended March 31, 2008
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3
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Condensed
Consolidated Balance Sheets as of December 31, 2007 and March 31,
2008
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4
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Unaudited
Condensed Consolidated Statement of Cash Flows for the three-month period
ended March 31, 2008
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5
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Notes
to the Unaudited Condensed Consolidated Financial
Statements
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6 -
8
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ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
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9
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ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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13
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ITEM
4 (A) - CONTROLS AND PROCEDURES
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13
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ITEM
4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
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13
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PART
II - OTHER INFORMATION
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ITEM
1 - LEGAL PROCEEDINGS
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14
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ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
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14
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ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
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14
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ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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14
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ITEM
5 - OTHER INFORMATION
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14
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ITEM
6 - EXHIBITS AND REPORTS ON FORM 8-K
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14
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SIGNATURES
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14
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Note
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US$
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|||||||
Operating
revenue
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||||||||
Service income
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118,796 | |||||||
Operating
expenses
|
||||||||
Subcontracting charges
|
(46,276 | ) | ||||||
Staff costs
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(79,269 | ) | ||||||
Depreciation of property, plant and equipment
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(2,836 | ) | ||||||
Amortization of intangible assets
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(55,299 | ) | ||||||
Other general and administrative expenses
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(118,284 | ) | ||||||
Loss
from operations
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(183,168 | ) | ||||||
Interest income
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1,040 | |||||||
Gain on disposal of partial interest in a subsidiary
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3
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259,837 | ||||||
Amortization of long-term loans from a related party
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5
(b)(v)
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(32,213 | ) | |||||
Loss on partial settlement of long-term loans from a related
party
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5
(b)(v)
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(24,717 | ) | |||||
Income
before income tax and minority interests
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20,779 | |||||||
Income
tax
|
4
|
- | ||||||
Income
before minority interests
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20,779 | |||||||
Minority
interests
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16,716 | |||||||
Net
income
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37,495 | |||||||
Other
comprehensive income
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||||||||
Foreign currency translation
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87,231 | |||||||
Total
comprehensive income
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124,726 | |||||||
Basic
earnings per share of common stock
|
0.07
cents
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|||||||
Weighted
average number of shares of common
stock outstanding
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50,527,473 |
As
of
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||||||||||||
March
31, 2008
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December
31, 2007
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ASSETS
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Note
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US$
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US$
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|||||||||
(Unaudited)
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||||||||||||
Current
assets
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||||||||||||
Trade receivables from third parties
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18,851 | 28,266 | ||||||||||
Trade receivables from related parties
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5(b)(i)
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60,279 | 36,239 | |||||||||
Prepayments and deposits
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760,416 | 170,093 | ||||||||||
Other debtors
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157,074 | 16,960 | ||||||||||
Amounts due from related parties
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5(b)(ii)
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24,575 | 10,084 | |||||||||
Loan receivable from a minority shareholder
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5(b)(iii)
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285,857 | 274,110 | |||||||||
Income tax recoverable
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3,720 | 3,567 | ||||||||||
Inventories
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33,125 | 12,604 | ||||||||||
Cash and bank balances
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517,621 | 1,373,085 | ||||||||||
Total
current assets
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1,861,518 | 1,925,008 | ||||||||||
Property, plant and equipment, net
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57,643 | 52,143 | ||||||||||
Intangible assets, net
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1,877,750 | 1,855,881 | ||||||||||
Prepayments for a long-term investment
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21,429 | 20,548 | ||||||||||
Total
assets
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3,818,340 | 3,853,580 | ||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||||||
Current
liabilities
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||||||||||||
Trade payables
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28,208 | 11,135 | ||||||||||
Accrued charges and other payables
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203,503 | 575,125 | ||||||||||
Amounts due to related parties
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5(b)(iv)
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1,383,853 | 1,423,636 | |||||||||
Temporary receipts
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156,290 | 508,318 | ||||||||||
Income tax payable
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714 | 4,536 | ||||||||||
Total
current liabilities
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1,772,568 | 2,522,750 | ||||||||||
Long-term
loans from a related party
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5(b)(v)
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739,370 | 883,562 | |||||||||
Commitments
and contingencies
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||||||||||||
Minority
interests
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606,413 | 472,005 | ||||||||||
Stockholders' equity
(deficit)
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||||||||||||
Common stock, par value US$0.001 per share; authorized 300,000,000
shares;
issued and outstanding 51,000,000 shares as of March 31, 2008
and 50,000,000 shares as of December 31, 2007
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6
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51,000 | 50,000 | |||||||||
Additional paid in capital
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6
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599,000 | - | |||||||||
Dedicated reserve
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319 | 319 | ||||||||||
Accumulated losses
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(37,561 | ) | (75,056 | ) | ||||||||
Accumulated other comprehensive income
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87,231 | - | ||||||||||
Total
stockholders’ equity (deficit)
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699,989 | (24,737 | ) | |||||||||
Total
liabilities and stockholders' equity (deficit)
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3,818,340 | 3,853,580 |
US$
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||||
Cash
flows from operating activities:
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||||
Net
income
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37,495 | |||
Adjustments
to reconcile net income to net cash used in operating
activities:
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Depreciation of property, plant
and equipment
|
2,836 | |||
Amortization
of intangible assets
|
55,299 | |||
Interest
income
|
(1,040 | ) | ||
Gain
on disposal of partial interest in a subsidiary
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(259,837 | ) | ||
Amortization
of long-term loans from a related party
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32,213 | |||
Loss
on partial settlement of long-term loans from a related
party
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24,717 | |||
Minority
interests
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(16,716 | ) | ||
Exchange
difference
|
10,983 | |||
Changes in working
capital:
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Trade
receivables
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(11,860 | ) | ||
Inventories
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(19,981 | ) | ||
Prepayments and
deposits
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16,967 | |||
Other debtors
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(139,387 | ) | ||
Trade payables
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16,596 | |||
Accrued charges and other
payables
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(396,270 | ) | ||
Temporary
receipts
|
37,148 | |||
Income tax
recoverable/payable
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(4,016 | ) | ||
Net
cash used in operating activities
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(614,853 | ) | ||
Cash
flows from investing activities:
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Interest
income
|
1,040 | |||
Payments for purchase of
property, plant and equipment
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(6,222 | ) | ||
Net advances to related
parties
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(14,059 | ) | ||
Net
cash used in investing activities
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(19,241 | ) | ||
Cash
flows from financing activities:
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Repayments to related
parties
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(40,577 | ) | ||
Settlement
of long-term loans from a related party
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(238,989 | ) | ||
Net
cash used in financing activities
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(279,566 | ) | ||
Net
decrease in cash and cash equivalents
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(913,660 | ) | ||
Cash
and cash equivalents at beginning of period
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1,373,085 | |||
Effect
on exchange rate changes
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58,196 | |||
Cash
and cash equivalents at end of period, represented by cash and bank
balances
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517,621 | |||
Supplementary
cash flow information:
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Income tax paid
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4,016 | |||
Major
non-cash transaction:
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Shares issued for consulting and
professional services (see note 6)
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600,000 |
(a)
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Name
and relationship of related parties
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Name
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Existing relationships with the
Company
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Benny
Lee
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The
sole director and a major shareholder of SPYX
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Li
Xing Hao
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A
director of Wanzhi
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Guangdong
Chigo Air Conditioning Company Limited (“Chigo”)
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A
company in which Li Xing Hao has control and beneficial
interest
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Tang
Jin Cheng
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A
director of JinCheng
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Foshan
JinCheng Technology Company Limited
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Minority
shareholder of JinCheng
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Foshan
Shancheng JiaXun Technology Services Centre
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Minority
shareholder of JiaXun
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(b)
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Balances
with related parties
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As
of
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March
31,
2008
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December
31, 2007
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US$
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US$
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|||||||
(Unaudited)
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||||||||
Chigo
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42,250 | 24,496 | ||||||
Foshan
JinCheng Technology Company Limited
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18,029 | 11,743 | ||||||
60,279 | 36,239 |
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The
amounts due are unsecured, interest-free and have no fixed repayment
term.
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As
of
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||||||||
March
31,
2008
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December
31, 2007
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US$
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US$
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|||||||
(Unaudited)
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||||||||
Foshan
Shancheng JiaXun Technology Services Centre
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6,004 | 5,975 | ||||||
Tang
Jin Cheng
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18,571 | 4,109 | ||||||
24,575 | 10,084 |
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The
amounts due are unsecured, interest-free and have no fixed repayment
term.
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The
loan to Foshan Shancheng JiaXun Technology Services Centre is unsecured,
interest-free and repayable within six months from the date of
advance.
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As
of
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||||||||
March
31,
2008
|
December
31, 2007
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|||||||
US$
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US$
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|||||||
(Unaudited)
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||||||||
Chigo
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- | 3,453 | ||||||
Benny
Lee
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1,362,837 | 1,360,746 | ||||||
Li
Xing Hao
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21,016 | 59,437 | ||||||
1,383,853 | 1,423,636 |
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The
amounts due are unsecured, interest-free and have no fixed repayment
term.
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As
of
|
||||||||
March
31,
2008
|
December
31, 2007
|
|||||||
US$
|
US$
|
|||||||
(Unaudited)
|
||||||||
At
beginning of period
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883,562 | - | ||||||
Exchange
realignment
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37,867 | - | ||||||
Additions
through acquisition of subsidiaries
|
- | 883,562 | ||||||
Amortization
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32,213 | - | ||||||
Repayments
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(214,272 | ) | - | |||||
At
balance sheet date
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739,370 | 883,562 |
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The
loans from Li Xing Hao, a director of Wanzhi, are unsecured, interest-free
and repayable within two years from the date of advances. The
loans were stated at fair value at inception, calculated by using the
discount rate of 7.56% per annum, and are subsequently stated at amortized
cost.
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During
the three-month period ended March 31, 2008, the Company paid US$238,989
for partial settlement of a portion of the loans with carrying amount of
US$214,272, resulted in a loss of US$24,717 as recorded in the condensed
consolidated statement of
operations.
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(c)
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Summary
of related party transactions
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Period
from January 1, 2008 to March 31, 2008
|
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US$
|
||||
Service income from Chigo | 16,019 | |||
Service
income from Foshan JinCheng Technology Company Limited
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5,545 |
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(In US$ thousands except per
share data)
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Three-month
Period Ended
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%
of
|
||||||
Mar.
31
|
Revenue
|
|||||||
2008
|
||||||||
Operating
revenues
|
||||||||
Service Income
|
119
|
100.0
|
||||||
Operating
expenses
|
||||||||
Subcontracting charges
|
(46
|
)
|
(38.7
|
)
|
||||
Staff costs
|
(79
|
)
|
(66.4
|
)
|
||||
Depreciation expenses
|
(3
|
)
|
(2.5
|
)
|
||||
Amortization of intangible assets
|
(56
|
)
|
(47.0
|
)
|
||||
Other general and administrative expenses
|
(118
|
)
|
(99.2
|
)
|
||||
Total
Operating expenses
|
(302
|
)
|
(253.8
|
)
|
||||
Loss
from operations
|
(183
|
)
|
(153.8
|
)
|
||||
Non-operating
income
|
||||||||
Interest income
|
1
|
0.8
|
||||||
Other income
|
203
|
170.6
|
||||||
Income
before income tax and minority interests
|
21
|
17.6
|
||||||
Income tax expense
|
--
|
--
|
||||||
Income
before minority interests
|
21
|
17.6
|
||||||
Minority interests
|
16
|
13.4
|
||||||
Net
Income
|
37
|
31.0
|
||||||
Other comprehensive income
|
||||||||
Foreign cuurency translation
|
87
|
|||||||
Total
comprehensive income
|
124
|
|||||||
Basic
earnings per share of
|
||||||||
Common stock
|
0.07
|
cents
|
31
|
Certification
of the Chief Executive Officer and Chief Financial Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934
|
32
|
Certification
of the Company's Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
May
15, 2008
|
/s/
Benny Lee
|
Benny
Lee
|
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Chairman,
Chief Executive Officer and Chief Financial Officer
|
|
(Principal
Executive Officer and Principal
Accounting Officer)
|