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 Statements of Operations for the three- and
six-month periods ended June 30, 2008
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3
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Condensed
Consolidated Balance Sheets as of December 31, 2007 and June 30,
2008
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4
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Unaudited
Condensed Consolidated Statements of Cash Flows for the three- and
six-month periods ended June 30, 2008
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5
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Notes
to the Unaudited Condensed Consolidated Financial
Statements
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6 -
9
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ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
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10
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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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14
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ITEM
4 (A)T – INTERNAL CONTROL OVER FINANCIAL REPORTING
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14
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PART
II - OTHER INFORMATION
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ITEM
1 - LEGAL PROCEEDINGS
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15
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ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
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15
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ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
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15
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ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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15
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ITEM
5 - OTHER INFORMATION
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15
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ITEM
6 - EXHIBITS AND REPORTS ON FORM 8-K
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15
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SIGNATURES
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15
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Three
months ended June 30, 2008
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Six
months ended June 30, 2008
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|||||||||||
Note
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US$
|
US$
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||||||||||
Operating
revenue
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||||||||||||
Service
income
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238,571 | 357,367 | ||||||||||
Operating
expenses
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||||||||||||
Subcontracting
charges
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(105,960 | ) | (152,236 | ) | ||||||||
Staff
costs
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(76,344 | ) | (155,613 | ) | ||||||||
Depreciation
of property, plant and equipment
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(3,438 | ) | (6,274 | ) | ||||||||
Amortization
of intangible assets
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(55,299 | ) | (110,598 | ) | ||||||||
Other
general and administrative expenses
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(199,366 | ) | (317,650 | ) | ||||||||
Loss
from operations
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(201,836 | ) | (385,004 | ) | ||||||||
Interest
income
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108 | 1,148 | ||||||||||
Subsidy
income
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27,671 | 27,671 | ||||||||||
Other
income
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479 | 479 | ||||||||||
Gain
on disposal of partial interest in a subsidiary
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4
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- | 259,837 | |||||||||
Amortization
of long-term loans from a related party
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6(b)(b)
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(13,119 | ) | (45,332 | ) | |||||||
Loss
on partial settlement of long-term loans from a related
party
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6(b)(b)
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- | (24,717 | ) | ||||||||
Share
of result of an associate
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(3,192 | ) | (3,192 | ) | ||||||||
Loss
before income tax and minority interests
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(189,889 | ) | (169,110 | ) | ||||||||
Income
tax
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5
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- | - | |||||||||
Loss
before minority interests
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(189,889 | ) | (169,110 | ) | ||||||||
Minority
interests
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41,651 | 58,367 | ||||||||||
Net
loss
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(148,238 | ) | (110,743 | ) | ||||||||
Other
comprehensive income
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||||||||||||
-
Foreign currency translation
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27,662 | 114,893 | ||||||||||
Total
comprehensive (loss) income
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(120,576 | ) | 4,150 | |||||||||
Basic
loss per share of common stock
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(0.29
cents)
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(0.22
cents)
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||||||||||
Weighted
average number of shares of common
stock outstanding
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51,000,000 | 50,763,736 |
As
of
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||||||||||||
June
30,
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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||||||||||||
Note
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ASSETS
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||||||||||||
Current
assets
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||||||||||||
Trade
receivables from third parties
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24,530 | 28,266 | ||||||||||
Trade
receivables from related parties
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6(b)(i)
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30,659 | 36,239 | |||||||||
Prepayments
and deposits
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651,561 | 170,093 | ||||||||||
Other
debtors
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123,007 | 16,960 | ||||||||||
Amounts
due from related parties
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6(b)(ii)
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31,110 | 10,084 | |||||||||
Loan
receivable from a minority shareholder
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6(b)(iii)
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290,000 | 274,110 | |||||||||
Income
tax recoverable
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- | 3,567 | ||||||||||
Inventories
(smartcards)
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43,551 | 12,604 | ||||||||||
Cash
and bank balances
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593,872 | 1,373,085 | ||||||||||
Total
current assets
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1,788,290 | 1,925,008 | ||||||||||
Property,
plant and equipment, net
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57,081 | 52,143 | ||||||||||
Intangible
assets, net
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1,846,459 | 1,855,881 | ||||||||||
Interest
in an associate
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7
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18,362 | - | |||||||||
Prepayment
for a long-term investment
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7
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50,725 | 20,548 | |||||||||
Total
assets
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3,760,917 | 3,853,580 | ||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current
liabilities
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||||||||||||
Trade
payables
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17,882 | 11,135 | ||||||||||
Accrued
charges and other payables
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447,398 | 575,125 | ||||||||||
Amounts
due to related parties
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6(b)(iv)
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1,383,472 | 1,423,636 | |||||||||
Temporary
receipts
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3,301 | 508,318 | ||||||||||
Income
tax payable
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725 | 4,536 | ||||||||||
Total
current liabilities
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1,852,778 | 2,522,750 | ||||||||||
Long-term
loans from a related party
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6(b)(v)
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763,964 | 883,562 | |||||||||
Commitments
and contingencies
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||||||||||||
Minority
interests
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564,762 | 472,005 | ||||||||||
Stockholders'
equity (deficit)
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Common
stock, par value US$0.001 per share; authorized 300,000,000 shares; issued
and outstanding 51,000,000 shares as of June 30, 2008 and 50,000,000 as of
December 31, 2007
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8
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51,000 | 50,000 | |||||||||
Additional
paid in capital
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8
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599,000 | - | |||||||||
Dedicated
reserve
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319 | 319 | ||||||||||
Accumulated
losses
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(185,799 | ) | (75,056 | ) | ||||||||
Accumulated
other comprehensive income
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114,893 | - | ||||||||||
Total
stockholders’ equity (deficit)
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579,413 | (24,737 | ) | |||||||||
Total
liabilities and stockholders' equity (deficit)
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3,760,917 | 3,853,580 |
Six
months ended June 30,
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2008
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2007
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US$
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US$
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|||||||
Cash
flows from operating activities:
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Net
loss
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(110,743 | ) | - | |||||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation of property, plant
and equipment
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6,274 | - | ||||||
Amortization of intangible
assets
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110,598 | - | ||||||
Interest income
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(1,148 | ) | - | |||||
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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45,332 | - | ||||||
Loss on partial settlement of
long-term loans from a related party
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24,717 | - | ||||||
Minority
interests
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(58,367 | ) | - | |||||
Share of result of an
associate
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3,192 | - | ||||||
Exchange
difference
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15,223 | - | ||||||
Changes in working
capital:
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||||||||
Trade
receivables
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13,056 | - | ||||||
Inventories
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(30,217 | ) | - | |||||
Prepayments and
deposits
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128,332 | - | ||||||
Other debtors
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(105,063 | ) | - | |||||
Trade payables
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6,101 | - | ||||||
Accrued charges and other
payables
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(161,068 | ) | - | |||||
Temporary
receipts
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(123,523 | ) | - | |||||
Income tax
recoverable/payable
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(300 | ) | - | |||||
Net
cash used in operating activities
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(497,441 | ) | - | |||||
Cash
flows from investing activities:
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Interest income
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1,148 | - | ||||||
Prepayment for a long-term
investment
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(50,725 | ) | - | |||||
Payments for purchase of
property, plant and equipment
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(8,553 | ) | - | |||||
Net advances to related
parties
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(20,256 | ) | - | |||||
Net
cash used in investing activities
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(78,386 | ) | - | |||||
Cash
flows from financing activities:
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||||||||
Issue of share
capital
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- | * - | ||||||
Repayments to related
parties
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(41,238 | ) | - | |||||
Settlement of long-term loans
from a related party
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(240,868 | ) | - | |||||
Net
cash used in financing activities
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(282,106 | ) | - | |||||
Net
decrease in cash and cash equivalents
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(857,933 | ) | * - | |||||
Cash
and cash equivalents at beginning of period
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1,373,085 | - | ||||||
Effect
on exchange rate changes
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78,720 | - | ||||||
Cash
and cash equivalents at end of period, represented by cash and bank
balances
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593,872 | * - |
*
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The
amount should be HK$1, which is the cash received from issuance of share
capital of Eastern Concept Development Limited on incorporation. The
amount is presented as US$nil due to
rounding.
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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 (“Shancheng
JiaXun”)
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Minority
shareholder of JiaXun
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Foshan
KaiEr Information Technology Company Limited (“KaiEr”)
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An
associate
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(b)
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Balances
with related parties
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As
of
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June
30, 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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29,559 | 24,496 | ||||||
Foshan
JinCheng Technology Company Limited
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1,100 | 11,743 | ||||||
30,659 | 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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||||||||
June
30,
2008
|
December
31, 2007
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|||||||
US$
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US$
|
|||||||
(Unaudited)
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||||||||
Shancheng
JiaXun (a)
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2,124 | 5,975 | ||||||
Tang
Jin Cheng (a)
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14,493 | 4,109 | ||||||
KaiEr
(b)
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14,493 | - | ||||||
31,110 | 10,084 |
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(a) The
amounts due are unsecured, interest-free and have no fixed repayment
term.
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(b) The
amount due is unsecured, interest-free and repayable within three months
from the date of advance.
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The
loan to Shancheng JiaXun is unsecured, interest-free and repayable on 31
December 2008. Mr. Li Xing Hao has undertaken to indemnify the
Company against any loss that may arise from the non-recovery of the
loan.
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As
of
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||||||||
June
30,
2008
|
December
31, 2007
|
|||||||
US$
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US$
|
|||||||
(Unaudited)
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||||||||
Chigo
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- | 3,453 | ||||||
Benny
Lee
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1,362,151 | 1,360,746 | ||||||
Li
Xing Hao
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21,321 | 59,437 | ||||||
1,383,472 | 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
|
||||||||
June
30,
2008
|
December
31, 2007
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|||||||
US$
|
US$
|
|||||||
(Unaudited)
|
||||||||
At
beginning of period
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883,562 | - | ||||||
Exchange
realignment
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51,221 | - | ||||||
Additions
through acquisition of subsidiaries
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- | 883,562 | ||||||
Amortization
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45,332 | - | ||||||
Repayments
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(216,151 | ) | - | |||||
At
balance sheet date
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763,964 | 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 period ended June 30, 2008, the Company paid US$240,868 for partial
settlement of a portion of the loans with carrying amount of US$216,151,
resulted in a loss of US$24,717 as recorded in the condensed consolidated
statements of operations.
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(c)
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Summary
of related party transactions
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Three
months ended
June
30, 2008
|
Six
months
ended
June
30, 2008
|
|||||||
US$
|
US$
|
|||||||
Service
income from Chigo
|
30,480 | 46,499 | ||||||
Service
income from Foshan JinCheng Technology Company Limited
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3,102 | 8,647 |
(In US$ thousands except per
share data)
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Three-month
Period
Ended
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Six-month
Period
Ended
|
||||||
Jun.
30
|
Jun.
30
|
|||||||
2008
|
2008
|
|||||||
Operating
revenues
|
||||||||
Service Income
|
239 | 357 | ||||||
Operating
expenses
|
||||||||
Subcontracting charges
|
(106 | ) | (152 | ) | ||||
Staff costs
|
(76 | ) | (156 | ) | ||||
Depreciation expenses
|
(3 | ) | (6 | ) | ||||
Amortization of intangible assets
|
(56 | ) | (110 | ) | ||||
Other general and administrative expenses
|
(199 | ) | (318 | ) | ||||
Total
Operating expenses
|
(440 | ) | (742 | ) | ||||
Loss
from operations
|
(202 | ) | (385 | ) | ||||
Non-operating
income
|
||||||||
Interest income
|
-- | 1 | ||||||
Other income
|
12 | 215 | ||||||
Loss
before income tax and minority interests
|
(190 | ) | (169 | ) | ||||
Income tax expense
|
-- | -- | ||||||
Loss
before minority interests
|
(190 | ) | (169 | ) | ||||
Minority interests
|
42 | 58 | ||||||
Net
Loss
|
(148 | ) | (111 | ) | ||||
Other comprehensive income
|
||||||||
--Foreign currency translation
|
28 | 115 | ||||||
Total
comprehensive income/(loss)
|
(120 | ) | 4 | |||||
Basic
loss per share of
|
||||||||
Common stock (cents)
|
(0.29 | ) | (0.22 | ) |
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
|
August
14, 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)
|