Nevada
|
20-1204606
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
ITEM
1 - FINANCIAL STATEMENTS
|
|||
Unaudited
Condensed Consolidated Statements of Operations and Other Comprehensive
Income for the three-month and six-month periods ended June 30, 2010
and 2009
|
3
|
||
Unaudited
Condensed Consolidated Balance Sheet as of June 30, 2010 and
Audited Condensed Consolidated Balance Sheet as of December 31,
2009
|
4
|
||
Unaudited
Condensed Consolidated Statements of Cash Flows for the six-month periods
ended June 30, 2010 and 2009
|
5
|
||
Notes
to the Unaudited Condensed Consolidated Financial
Statements
|
6 -
9
|
||
ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
|
10-14
|
||
ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
15
|
||
ITEM
4 - CONTROLS AND PROCEDURES
|
15
|
||
ITEM
1 - LEGAL PROCEEDINGS
|
16
|
||
ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
16
|
||
ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
|
16
|
||
ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
16
|
||
ITEM
5 - OTHER INFORMATION
|
16
|
||
ITEM
6 - EXHIBITS AND REPORTS ON FORM 8-K
|
16
|
||
SIGNATURES
|
17
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||||||
Note
|
US$
|
US$
|
US$
|
US$
|
||||||||||||||||
Continuing
operations
|
(Restated)
|
(Restated)
|
||||||||||||||||||
Operating
revenues
|
||||||||||||||||||||
Service
income
|
460,153 | 126,062 | 1,004,460 | 225,106 | ||||||||||||||||
Sale
of mobile phones
|
- | 929,785 | - | 929,785 | ||||||||||||||||
Operating
expenses
|
||||||||||||||||||||
Subcontracting
and other service costs
|
(241,040 | ) | (33,762 | ) | (556,339 | ) | (83,634 | ) | ||||||||||||
Purchase
of mobile phones
|
- | (891,180 | ) | - | (891,180 | ) | ||||||||||||||
Staff
costs
|
(108,228 | ) | (75,036 | ) | (133,517 | ) | (131,193 | ) | ||||||||||||
Depreciation
of property, plant and equipment
|
(4,343 | ) | (3,521 | ) | (8,094 | ) | (7,020 | ) | ||||||||||||
Amortization
of intangible assets
|
(51,412 | ) | (51,359 | ) | (102,825 | ) | (102,718 | ) | ||||||||||||
Other
general and administrative expenses
|
(81,793 | ) | (206,026 | ) | (146,969 | ) | (437,509 | ) | ||||||||||||
Income
(Loss) from operations
|
(26,663 | ) | (205,037 | ) | 56,716 | (498,363 | ) | |||||||||||||
Non-operating
income (expenses)
|
||||||||||||||||||||
Interest
income
|
62 | 1,134 | 3,296 | 1,875 | ||||||||||||||||
Other
income
|
6,939 | - | 6,939 | - | ||||||||||||||||
Amortization
of loans from a related party
|
- | (2,859 | ) | - | (11,333 | ) | ||||||||||||||
Share
of result of an associate
|
- | 10,803 | - | - | ||||||||||||||||
Interest
expenses
|
(12,301 | ) | (12,684 | ) | (27,512 | ) | (12,684 | ) | ||||||||||||
Compensation
payment
|
- | (18,118 | ) | - | (18,118 | ) | ||||||||||||||
Gain
on disposal of interest in a subsidiary
|
8 | 607,525 | - | 607,525 | - | |||||||||||||||
Loss
on early termination of loans from a related party
|
- | (26,461 | ) | - | (15,658 | ) | ||||||||||||||
Income
(Loss) before income tax and noncontrolling interests
|
575,562 | (253,222 | ) | 646,964 | (554,281 | ) | ||||||||||||||
Income
tax
|
4 | - | - | - | - | |||||||||||||||
Net
income (loss) from continuing operations
|
575,562 | (253,222 | ) | 646,964 | (554,281 | ) | ||||||||||||||
Discontinued
operations
|
||||||||||||||||||||
Loss
from discontinued operations
|
5 | - | (32,918 | ) | (8,472 | ) | (89,032 | ) | ||||||||||||
Net
income (loss) including noncontrolling interests
|
575,562 | (286,140 | ) | 638,492 | (643,313 | ) | ||||||||||||||
Add:
net loss from continuing operations attributable to noncontrolling
interests
|
- | 13,673 | 834 | 29,902 | ||||||||||||||||
Add:
net loss from discontinued operations attributable to noncontrolling
interests
|
- | 2,534 | 131 | 22,582 | ||||||||||||||||
Net
income (loss) attributable to SPYE common stockholders
|
575,562 | (269,933 | ) | 639,457 | (590,829 | ) | ||||||||||||||
Other
comprehensive income
|
||||||||||||||||||||
-
Foreign currency translation adjustment
|
- | - | - | 15,669 | ||||||||||||||||
Total
comprehensive income (loss)
|
575,562 | (269,933 | ) | 639,457 | (575,160 | ) | ||||||||||||||
Basic
and diluted earnings (loss) per share
|
||||||||||||||||||||
Earnings
(loss) per share from continuing operations
|
44.54
cents
|
(18.54)
cents
|
50.14
cents
|
(40.58)
cents
|
||||||||||||||||
Loss
per share from discontinued operations
|
- |
(2.35)
cents
|
(0.65)
cents
|
(5.14)
cents
|
||||||||||||||||
44.54
cents
|
(20.89)
cents
|
49.49
cents
|
(45.72)
cents
|
|||||||||||||||||
Weighted
average number of shares of common stock outstanding
|
1,292,166 | 1,292,166 | 1,292,166 | 1,292,166 |
As
of
|
||||||||||||
June
30,
2010
|
December
31,
2009
|
|||||||||||
Note
|
US$
|
US$
|
||||||||||
(Audited)
|
||||||||||||
ASSETS
|
||||||||||||
Current
assets
|
||||||||||||
Trade
receivables from third parties
|
389,753 | 194,865 | ||||||||||
Trade
receivable from a related party
|
6(b)(i) | 5,821 | 5,821 | |||||||||
Prepayments
and deposits
|
4,445 | 125,913 | ||||||||||
Other
debtors
|
609,824 | 52,771 | ||||||||||
Amounts
due from related parties
|
6(b)(ii)
|
13,576 | - | |||||||||
Income
tax recoverable
|
28,882 | 3,829 | ||||||||||
Inventories
|
30,950 | 40,385 | ||||||||||
Cash
and cash equivalents
|
503,892 | 378,671 | ||||||||||
Bank
deposits, collateralized
|
7 | - | 132,353 | |||||||||
Total
current assets
|
1,587,143 | 934,608 | ||||||||||
Property,
plant and equipment, net
|
52,389 | 69,759 | ||||||||||
Intangible
assets, net
|
1,190,414 | 1,322,651 | ||||||||||
Total
assets
|
2,829,946 | 2,327,018 | ||||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||
Current
liabilities
|
||||||||||||
Trade
payables
|
530,729 | 311,058 | ||||||||||
Accrued
charges and other payables
|
436,836 | 531,981 | ||||||||||
Amounts
due to related parties
|
6(b)(iii)
|
77,898 | 19,458 | |||||||||
Temporary
receipts
|
28,382 | 61,470 | ||||||||||
Loans
from a related party
|
6(b)(iv)
|
486,765 | - | |||||||||
Short-term
bank loan
|
7 | - | 125,000 | |||||||||
Interest
payable to a related party
|
6(b)(v) | 53,544 | 56,588 | |||||||||
Total
current liabilities
|
1,614,154 | 1,105,555 | ||||||||||
Long-term
loans from a related party
|
6(b)(iv)
|
- | 707,353 | |||||||||
Commitments
and contingencies
|
||||||||||||
Stockholders'
equity
|
||||||||||||
Preferred
stock, par value US$0.001 per share; authorized 5,000,000 shares; none
issued and outstanding as of June 30, 2010 and December 31,
2009
|
||||||||||||
Common
stock, par value US$0.001 per share; authorized 300,000,000 shares; issued
and outstanding 1,292,166 shares as of June 30, 2010 and December 31,
2009
|
1,292 | 1,292 | ||||||||||
Additional
paid in capital
|
2,009,454 | 2,009,454 | ||||||||||
Dedicated
reserve
|
319 | 319 | ||||||||||
Accumulated
losses
|
(869,328 | ) | (1,508,785 | ) | ||||||||
Accumulated
other comprehensive income
|
74,055 | 74,055 | ||||||||||
Total
SPYE stockholders’ equity
|
1,215,792 | 576,335 | ||||||||||
Noncontrolling
interests
|
- | (62,225 | ) | |||||||||
Total
stockholders’ equity
|
1,215,792 | 514,110 | ||||||||||
Total
liabilities and stockholders' equity
|
2,829,946 | 2,327,018 |
Six
months ended
June
30,
|
||||||||
2010
|
2009
|
|||||||
US$
|
US$
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss) including noncontrolling interests
|
638,492 | (643,313 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash from (used in) operating
activities:
|
||||||||
Depreciation of property, plant and equipment | 8,362 | 7,555 | ||||||
Amortization of intangible assets | 102,825 | 110,723 | ||||||
Interest income | (3,296 | ) | (1,901 | ) | ||||
Interest expense | 34,130 | 34,858 | ||||||
Amortization of loans from a related party | - | 16,469 | ||||||
Gain on disposal of interest in a subsidiary | (607,525 | ) | - | |||||
Loss on early termination of loans from a related party | - | 25,974 | ||||||
Share of result of
an associate
|
- | 13,465 | ||||||
Changes in working
capital:
|
||||||||
Trade
receivables
|
(194,888 | ) | (21,354 | ) | ||||
Prepayments and
deposits
|
1,591 | 18,562 | ||||||
Other debtors
|
(1,916 | ) | 178,257 | |||||
Inventories
|
(13,780 | ) | (14,423 | ) | ||||
Trade payables
|
219,671 | (24,081 | ) | |||||
Accrued charges and other
payables
|
72,657 | 235,836 | ||||||
Temporary
receipts
|
(33,088 | ) | (82,697 | ) | ||||
Income tax
recoverable/payable
|
(25,053 | ) | 3,829 | |||||
Net
cash generated from (used in) operating activities
|
198,182 | (142,241 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Interest
income
|
3,296 | 1,901 | ||||||
Payments for purchase of
property, plant and equipment
|
(17,676 | ) | (5,830 | ) | ||||
Payments for purchase of
intangible assets
|
- | (29,411 | ) | |||||
Decrease in bank deposit,
collateralized
|
132,353 | - | ||||||
Net
cash generated from (used in) investing activities
|
117,973 | (33,340 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Repayments to related
parties
|
(53,025 | ) | (13,030 | ) | ||||
Interest paid
|
(12,909 | ) | (20,711 | ) | ||||
Repayment of short-term bank
loan
|
(125,000 | ) | (125,000 | ) | ||||
New short-term bank loan
raised
|
- | 125,000 | ||||||
Net
cash used in financing activities
|
(190,934 | ) | (33,741 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
125,221 | (209,322 | ) | |||||
Cash
and cash equivalents at beginning of period
|
378,671 | 245,685 | ||||||
Effect
on exchange rate changes
|
- | 3,576 | ||||||
Cash
and cash equivalents at end of period,
represented by cash and bank
balances
|
503,892 | 39,939 | ||||||
Supplemental
cash flow information
|
||||||||
Interest
paid
|
12,909 | 20,711 | ||||||
Non-cash
transactions (see note 8):
- consideration for acquisition
of additional interest in a subsidiary paid by a related
party
|
294,118 | - | ||||||
- consideration
for disposal of interest in a subsidiary:
settled
by offsetting against amount due to a related party
|
251,471 | - | ||||||
unpaid and included in other debtors
|
566,176 |
1.
|
ORGANIZATION
|
2.
|
GOING
CONCERN CONSIDERATION
|
4.
|
TAXATION
|
5.
|
DISCONTINUED
OPERATIONS
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Service
income
|
- | 464 | - | 1,708 | ||||||||||||
Subcontracting
and other service costs
|
- | (20 | ) | - | (149 | ) | ||||||||||
Staff
costs
|
- | (12,487 | ) | (1,576 | ) | (42,437 | ) | |||||||||
Depreciation
of property, plant and equipment
|
- | - | (268 | ) | (535 | ) | ||||||||||
Amortization
of intangible assets
|
- | (268 | ) | - | (8,006 | ) | ||||||||||
Other
general and administrative expenses
|
- | (1,951 | ) | (13 | ) | (6,665 | ) | |||||||||
Interest
income
|
- | - | 3 | 25 | ||||||||||||
Amortization
of loans from a related party
|
- | (1,296 | ) | - | (5,136 | ) | ||||||||||
Share
of results of an associate
|
- | (13,465 | ) | - | (13,465 | ) | ||||||||||
Interest
expenses
|
- | (3,895 | ) | (6,618 | ) | (4,056 | ) | |||||||||
Loss on early termination of loans from a related party
|
- | - | - | (10,316 | ) | |||||||||||
Loss before taxation
|
- | (32,918 | ) | (8,472 | ) | (89,032 | ) | |||||||||
Taxation
|
- | - | - | - | ||||||||||||
Loss from discontinued operations, net of tax
|
- | (32,918 | ) | (8,472 | ) | (89,032 | ) |
6.
|
RELATED
PARTY TRANSACTIONS
|
(a)
|
Name
and relationship of related parties
|
||
Name
|
Existing relationships with the
Company
|
||
Li
Xing Hao
|
A
director of Wanzhi and a major stockholder of SPYE
|
||
Guangdong
Chigo Air Conditioning Company Limited
(“Chigo”) *
|
A
company in which Li Xing Hao has control and beneficial
interest
|
||
Foshan
Information Technology Company Limited (“Foshan Company”)
*
|
A
company in which Li Xing Hao has significant influence and beneficial
interest
|
||
Foshan
JinCheng Information Technology Company Limited (“JinCheng”)
*
|
A
company in which Li Xing Hao has significant influence and beneficial
interest
|
||
Foshan
KaiEr Information Technology Company Limited (“KaiEr”) *
|
An
associate of JinCheng
|
||
Tang
Jin Cheng
|
A
director of JinCheng
|
(b)
|
Balances
with related parties
|
As
of
|
|||
June
30, 2010
|
December
31, 2009
|
||
US$
|
US$
|
||
(Audited)
|
|||
Chigo
|
5,8211
|
5,8211
|
|
The
amount due is unsecured, interest-free and has no fixed repayment
term.
|
As
of
|
||||||||
June
30, 2010
|
December
31, 2009
|
|||||||
US$
|
US$
|
|||||||
(Audited)
|
||||||||
Tang
Jin Cheng
|
- | 14,706 | ||||||
JinCheng
|
13,576 | - | ||||||
KaiEr
|
28,049 | 108,931 | ||||||
41,625 | 123,637 | |||||||
Allowance
for doubtful accounts
|
(28,049 | ) | (123,637 | ) | ||||
13,576 | - |
(iii)
|
Amounts
due to related parties
|
As
of
|
||||||||
June
30, 2010
|
December
31, 2009
|
|||||||
US$
|
US$
|
|||||||
(Audited)
|
||||||||
Chigo
|
3,706 | 3,706 | ||||||
Foshan
Company
|
59,418 | - | ||||||
Li
Xing Hao
|
14,774 | 15,752 | ||||||
77,898 | 19,458 |
|
The
amounts due are unsecured, interest-free and have no fixed repayment
term.
|
(b)
|
Balances
with related parties (Continued)
|
As
of
|
|||
June
30, 2010
|
December
31, 2009
|
||
US$
|
US$
|
||
(Audited)
|
|||
Li
Xing Hao
|
53,544
|
56,588
|
(c)
|
Summary
of related party transactions
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Service income from Chigo | - | 27,703 | - | 53,762 | ||||||||||||
Sales
of goods to Chigo
|
82,239 | - | 82,239 | - | ||||||||||||
Interest
expenses to Li Xing Hao
|
12,301 | 16,740 | 33,523 | 16,740 | ||||||||||||
Compensation
payment to Li Xing Hao
|
- | 18,118 | - | 18,118 |
7.
|
SHORT-TERM
BANK LOAN
|
8.
|
ACQUISITION
OF ADDITIONAL INTEREST IN A SUBSIDIARY AND DISPOSAL OF ENTIRE INTEREST IN
A SUBSIDIARY
|
9.
|
CHANGE
TO A PLAN OF DISCONTINUED OPERATIONS AND ASSETS HELD FOR
SALE
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||||
US$
|
US$
|
US$
|
US$
|
|||||||||||||||
Continuing
operations
|
(Restated)
|
(Restated)
|
||||||||||||||||
Operating
revenues
|
||||||||||||||||||
Service
income
|
460,153 | 126,062 | 1,004,460 | 225,106 | ||||||||||||||
Sale
of mobile phones
|
- | 929,785 | - | 929,785 | ||||||||||||||
Operating
expenses
|
||||||||||||||||||
Subcontracting
and other service costs
|
(241,040 | ) | (33,762 | ) | (556,339 | ) | (83,634 | ) | ||||||||||
Purchase
of mobile phones
|
- | (891,180 | ) | - | (891,180 | ) | ||||||||||||
Staff
costs
|
(108,228 | ) | (75,036 | ) | (133,517 | ) | (131,193 | ) | ||||||||||
Depreciation
of property, plant and equipment
|
(4,343 | ) | (3,521 | ) | (8,094 | ) | (7,020 | ) | ||||||||||
Amortization
of intangible assets
|
(51,412 | ) | (51,359 | ) | (102,825 | ) | (102,718 | ) | ||||||||||
Other
general and administrative expenses
|
(81,793 | ) | (206,026 | ) | (146,969 | ) | (437,509 | ) | ||||||||||
Income
(Loss) from operations
|
(26,663 | ) | (205,037 | ) | 56,716 | (498,363 | ) | |||||||||||
Non-operating
income (expenses)
|
||||||||||||||||||
Interest
income
|
62 | 1,134 | 3,296 | 1,875 | ||||||||||||||
Other
income
|
6,939 | - | 6,939 | - | ||||||||||||||
Amortization
of loans from a related party
|
- | (2,859 | ) | - | (11,333 | ) | ||||||||||||
Share
of result of an associate
|
- | 10,803 | - | - | ||||||||||||||
Interest
expenses
|
(12,301 | ) | (12,684 | ) | (27,512 | ) | (12,684 | ) | ||||||||||
Compensation
payment
|
- | (18,118 | ) | - | (18,118 | ) | ||||||||||||
Gain
on disposal of interest in a subsidiary
|
607,525 | - | 607,525 | - | ||||||||||||||
Loss
on early termination of loans from a related party
|
- | (26,461 | ) | - | (15,658 | ) | ||||||||||||
Income
(Loss) before income tax and noncontrolling interests
|
575,562 | (253,222 | ) | 646,964 | (554,281 | ) | ||||||||||||
Income
tax
|
- | - | - | - | ||||||||||||||
Net
income (loss) from continuing operations
|
575,562 | (253,222 | ) | 646,964 | (554,281 | ) | ||||||||||||
Discontinued
operations
|
||||||||||||||||||
Loss
from discontinued operations
|
- | (32,918 | ) | (8,472 | ) | (89,032 | ) | |||||||||||
Net
income (loss) including noncontrolling interests
|
575,562 | (286,140 | ) | 638,492 | (643,313 | ) | ||||||||||||
Add:
net loss from continuing operations attributable
to noncontrolling interests
|
- | 13,673 | 834 | 29,902 | ||||||||||||||
Add:
net loss from discontinued operations attributable to noncontrolling
interests
|
- | 2,534 | 131 | 22,582 | ||||||||||||||
Net
income (loss) attributable to SPYE common stockholders
|
575,562 | (269,933 | ) | 639,457 | (590,829 | ) | ||||||||||||
Other
comprehensive income
|
||||||||||||||||||
-
Foreign currency translation adjustment
|
- | - | - | 15,669 | ||||||||||||||
Total
comprehensive income (loss)
|
575,562 | (269,933 | ) | 639,457 | (575,160 | ) | ||||||||||||
Basic
and diluted earnings (loss) per share
|
||||||||||||||||||
Earnings
(loss) per share from continuing operations
|
44.54
cents
|
(18.54)
cents
|
50.14
cents
|
(40.58)
cents
|
||||||||||||||
Loss
per share from discontinued operations
|
- |
(2.35)
cents
|
(0.65)
cents
|
(5.14)
cents
|
||||||||||||||
44.54
cents
|
(20.89)
cents
|
49.49
cents
|
(45.72)
cents
|
|||||||||||||||
Weighted
average number of shares of common stock outstanding
|
1,292,166 | 1,292,166 | 1,292,166 | 1,292,166 |
31.1
|
Certification
of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934
|
31.2
|
Certification
of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934
|
32.1
|
Certification
of the Company's Chief Executive Officer Pursuant to 18 U.S.C. SS. 1350
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
of the Company's Chief Financial Officer Pursuant to 18 U.S.C. SS. 1350
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
August
23, 2010
|
Smartpay
Express, Inc.
|
|
By:
|
/s/
Ping Tang
|
|
Ping
Tang
|
||
Chairman
and Chief Executive Officer
|
August
23, 2010
|
Smartpay
Express, Inc.
|
|
By:
|
/s/
Jin Liu
|
|
Jin
Liu
|
||
Chief
Financial Officer
|