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Forlink Software Corporation, Inc.(fka FLSW) RSS Feed

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Forlink Software Corporation, Inc.

Headquarters: Shenzhou Mansion 9F
Zhong Guan Cun South Street,
No. 31
100081 Haidian District
CHN
Web Address:
http://www.forlink.com

Forlink Software Corporation, Inc.

 

Company Profile

Forlink Software Corporation Inc. (OTCBB: FLSW) is a leading provider of software solutions and information technology services in China. We focus on providing Enterprise Application Integration (EAI) solutions and IT outsourcing services for telecom, logistics, financial industries, etc.

We deliver a cutting edge Application Integration platform and provide various software solutions and products, enabling our customers to build, maintain, operate, manage and continuously improve their information systems.

We provide Information Technology outsourcing services for several industries. Our services include ASP (Application Services Provider), software outsourcing services, network design/development and management, application system design/development and maintenance, customer support, system support/recovery, among others.

Since the inception of our business in 1993, our customers have spread over 20 provinces, cities and municipalities in China. We have accomplished hundreds of application integration projects in telecom, finance, logistics, governments, retailing and other industries.

 
Certifications

* CMMI (Capability Maturity Model Integration) level 3
* ISO 9001:2000
 
Awards

* 2004 Deloitte Touche Tohmatsu Asia Pacific Technology Fast 500
* 2003 Deloitte Touche Tohmatsu Asia Pacific Technology Fast 500
 
Board of Directors

Yi He Chief Executive Officer, Chairman
Hongkeung Lam Chief Financial Officer
Guoliang Tian Director
Yu Fang Director
Zhenying Sun Director
Market Data

Stock Exchange OTCBB
Ticker Symbol FLSW
Industry Software Development and Information Technology Services / China
Shares Outstanding 4,651,173 (May 12, 2009)
Forlink Software Corporation, Inc.
 
 
We are committed to designing technologies and software that set industry standards in China. Our flagship solutions, products, and services include:

ForOSS Operation Support System

ForOSS is an integrated solution for telecom carriers using Business & Operation Support Systems (BSS/OSS). It consists of software products designed to expand as well as support existing business operations, such as billing, customer service and management, accounting, decision support, and other internal functions. Several telecom carriers in China have already implemented ForOSS.


For-eMarket Electronic Trading Market

This system helps vendor and vendee spare time and money, promotes the goods providers to have more opportunities to make a deal.


For-Mail Email System

With the increasing use of Email in China, more emphasis has been given to the security, stability, speed, and integration of information facilities. Since 1998, We have been developing and continuously improving For-Mail Email System for Chinese Internet users and enterprises. Now, For-Mail is one of the most widely used Email products in China. Its state-of-the-art design, consistent performance, high scalability, rich features, and complete technical support meet the needs of various industries and enterprises, such as ISPs, ICPs, ASPs.


For-ISMG Internet Short Message Gateway

For-ISMG is a business support platform for short message value-added services and functions as a medium for different types of messages entering SMSC (Short Message Service Center). One end of For-ISMG connects to SMSC through SMPP (Short Message Peer to Peer) protocol, the other end connects to SP (Service Provider) through CMPP (China Mobile Peer to Peer) and other protocols. As an Internet Short Message Gateway, For-ISMG improves the connection between mobile users and SPs (Service Providers) that provide short message content services.


For-USSDG Unstructured Supplementary Service Data Gateway

USSD (Unstructured Supplementary Service Data) is a GSM service that allows high-speed interactive communication between subscribers and applications across a GSM network. For-USSDG acts as a redirector for the end-users to access Web Applications or SMS services. For-USSDG is an ideal way for subscribers to use their handsets to request information, make modifications to their class of service or add services to a subscription. For-USSDG offers subscribers an efficient and effective way to get information on demand.


Forlink Information Technology Outsourcing Services

We provide Information Technology outsourcing services for several industries verticals. Our services include ASP (Application Services Provider), software outsourcing services, and network design/development and management, application system design/development and maintenance, customer support, system support/recovery, among others. We have been regarded as a reliable business consultant and a trusted long-term partner because our in-depth industry knowledge and experiences with flexible business models, a broad range of products and services, and the most effective practices.


 
Forlink Software Corporation, Inc.
Consolidated Balance Sheets

 
(Expressed in US Dollars)
   
March 31,
   
December 31,
 
   
2010
   
2009
 
   
(unaudited)
       
ASSETS
           
             
Current assets
           
             
Cash and cash equivalents
  $ 1,206,815     $ 2,240,863  
Accounts receivable
    3,007,101       2,434,557  
Other receivables, deposits and prepayments (Note 3)
    1,257,227       687,413  
Inventories (Note 4)
    1,048,234       935,566  
Deferred taxes assets
    23,115       0  
                 
Total current assets
    6,542,492       6,298,399  
                 
Property, plant and equipment (Note 6)
    352,284       391,671  
Long term investments (Note 7)
    4,576,573       4,707,136  
                 
Total assets
  $ 11,471,349     $ 11,397,206  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Current liabilities
               
Accounts payable
  $ 1,677,500     $ 1,193,643  
Amounts due to stockholders (Note 5)
    513,970       415,078  
Customer deposits
    1,619,210       1,329,203  
Other payables and accrued expenses (Note 9)
    373,929       535,668  
Income tax payable
    0       0  
Other tax payable
    0       727,097  
Deferred taxes debt
    65,663       38,992  
                 
Total current liabilities
  $ 4,250,272     $ 4,239,681  
                 
Commitments and contingencies
               
                 
Non-controlling interest (Note 9)
  $ 137,745     $  151,785  
                 
Stockholders’ equity
               
Common stock, par value $0.001 per share;
               
200,000,000 and 200,000,000 shares authorized;
               
4,966,173 and 4,966,173 shares issued and
4,651,173 and 4,651,173 shares outstanding, respectively
  $ 99,322     $ 99,322  
Treasury stock
    (163,800 )     (163,800 )
Additional paid-in capital
    10,195,693       10,195,693  
Accumulated losses
    (4,136,275 )     (4,214,220 )
Accumulated other comprehensive income
    1,088,392       1,088,745  
                 
Total stockholders’ equity
  $ 7,083,332     $ 7,005,740  
                 
Total liabilities and stockholders’ equity
  $ 11,471,349     $ 11,397,206  

 
See accompanying notes to unaudited consolidated condensed financial statements.

 
2

 

Forlink Software Corporation, Inc.
Consolidated Statements of Operations
(unaudited)

 
(Expressed in US Dollars)

 
   
Three Months ended
 
   
March 31,
 
   
2010
   
2009
 
             
Net sales
    683,075       856,903  
Cost of sales
    (364,832 )     (596,395 )
                 
Gross profit
    318,243       260,508  
                 
Selling expenses
    (223,160 )     (292,052 )
Research and development expenses
    (179,047 )     (113,403 )
General and administrative expenses
    (341,512 )     (217,413 )
                 
Total operating expenses
    (743,719 )     (622,868 )
                 
Operating profit/(loss)
    (425,476 )     (362,360 )
                 
Income from equity method investee
    (22,182 )     (8,358 )
Income from cost method investee
    -       7,297  
Interest income
    2,220       4,037  
                 
Other income, net
    512,899       81,672  
                 
Profit / (Loss) before tax
    67,461       (277,712 )
                 
Income tax
    3,555       0  
Minority interest
    (14,040 )     (15,407 )
                 
Net profit/(loss)
    77,946       (262,305 )
                 
Profit/(loss) per share
    0.02       (0.06 )
                 
Weighted average common shares outstanding -basic and diluted
    4,651,173       4,651,173  

 
See accompanying notes to unaudited consolidated condensed financial statements.

 
3

 

Forlink Software Corporation, Inc.
Consolidated Statements of Cash Flows
Increase in Cash and Cash Equivalents
(unaudited)
(Expressed in US Dollars)
 
Three Months Ended
 March 31,
 
   
2010
   
2009
 
Cash flows from operating activities
           
Net profit/(loss)
  $ 77,945     $ (262,305 )
Adjustments to reconcile net profit/(loss) to
               
net cash provided by/(used in) operating activities
               
Minority interest
    (14,040 )     (15,407 )
(Gain)/loss from write-off of property, plant and equipment
               
Depreciation of property, plant and equipment
    45,411       65,162  
Income from equity method investee
               
Loss from equity method investee
    22,182       8,358  
Dividend received from investee
    -       (7,297 )
Effect of deferred taxes
    3,560       23,271  
                 
Change in:
               
Accounts receivables
    (572,793 )     (28,718 )
Other receivables, deposits and prepayments
    (585,513 )     (462,748 )
Inventories
    (112,764 )     (314,560 )
Accounts payable
    483,979       395,451  
Amounts due to stockholders
    98,934       17,464  
Customer deposits
    297,453       132,959  
Other payables and accrued expenses
    (168,994 )     (73,644 )
Income tax payable
    -       (16 )
Other taxes payable
    (727,023 )     (104,848 )
                 
Net cash provided by/(used in) operating activities
    (1,151,662 )     (626,878 )
                 
Cash flows from investing activities
               
Purchase of long term investment
               
Acquisition of property, plant and equipment
    -       5,934  
Proceeds from disposal of long term investment
    -       -  
Dividend from investee
    107,980       111,104  
                 
Net cash used in investing activities
    107,980       117,038  
                 
Cash flows from financing activities
               
Repayment to short term borrowings
    -       -  
(Repayments to)/advances from stockholders
    -       -  
Proceeds from issuances of common stock under Plan 2002
    -       -  
                 
Net cash provided by financing activities
    -       -  
                 
Effect of exchange rate changes
    9,634       (51,270 )
                 
Net increase/(decrease) in cash and cash equivalents
    (1,034,048 )     (561,110 )
                 
Cash and cash equivalents at beginning of period
    2,240,863       2,543,430  
                 
Cash and cash equivalents at end of period
  $ 1,206,815     $ 1,982,320  
Supplemental disclosure of cash flow information
               
Income tax paid
  $ -       -  
Interest paid
  $ -     $  -  

 
Consolidated Balance Sheets

 
(Expressed in US Dollars)
   
December   31,
   
December   31,
 
   
2009
   
2008
 
Current assets
           
Cash and cash equivalents
  $ 2,240,863     $ 2,543,430  
Accounts receivable
    2,434,557       898,005  
Other receivables, deposit and prepayments
    687,413       1,627,555  
Inventories
    935,566       1,019,713  
Deferred Taxes Assets
    0       3,160  
Total current assets
    6,298,399       6,091,863  
                 
Property, plant and equipment
    391,671       593,805  
Long term investments
    4,707,136       4,994,953  
                 
Total assets
  $ 11,397,206     $ 11,680,621  
                 
Liabilities and stockholders' equity
               
Current liabilities
               
Accounts payable
  $ 1,193,643     $ 2,050,321  
Amounts due to shareholders
    415,078       378,672  
Customer deposits
    1,329,203       1,123,060  
Other payables and accrued expenses
    535,668       605,319  
Income tax payable
    0       16  
Other tax payable
    727,097       973,588  
Deferred Taxes Debt
    38,992       0  
Total current liabilities
  $ 4,239,681     $ 5,130,976  
                 
Commitments and contingencies
               
Non-controlling interest in subsidiaries
  $ 151,785     $ 193,295  
Stockholders' equity
               
                 
Common stock, par value $0.001 per share; 200,000,000 and 200,000,000 shares authorized; 4,966,173 and 4,966,173 shares issued and 4,651,173and 4,651,173 shares outstanding, respectively
  $ 99,322     $ 99,322  
Treasury stock
    (163,800 )     (163,800 )
Additional paid-in capital
    10,195,693       10,195,693  
Accumulated losses
    (4,214,220 )     (4,839,261 )
Accumulated other comprehensive income
    1,088,745       1,064,396  
 
               
Total stockholders' equity
  $ 7,005,740     $ 6,356,350  
                 
Total liabilities and stockholders' equity
  $ 11,397,206     $ 11,680,621  

 


 
See accompanying notes to consolidated financial statements.


 

 
F-2

 


Forlink Software Corporation, Inc.

 
Consolidated Statements of Operations

 
(Expressed in US Dollars)
   
Year ended
December
31,2009
   
Year ended
December
31,2008
 
             
Net sales
  $ 6,288,964     $ 5,568,877  
Cost of sales
    (2,592,005 )     (1,836,509 )
                 
Gross profit
    3,696,959       3,732,368  
                 
Selling expenses
    (1,199,800 )     (1,377,501 )
Research and development expenses
    (1,039,742 )     (639,927 )
General and administrative expenses
    (1,199,494 )     (1,752,975 )
              -  
Operating profit / (loss)
    257,923       (38,035 )
                 
Investment income
    (181,497 )     9,408  
Loss on disposal of subsidiaries
    0       0  
Interest income
    9,636       16,234  
Interest expenses
    0       0  
Impairment loss on goodwill
    0       (1,684,023 )
Income from cost method investee
    257,522       248,710  
Other income, net
    298,254       72,533  
                 
Profit before income taxes
    641,838       (1,375,173 )
                 
Income tax
    (58,308 )     9,615  
                 
Consolidated profit
    583,530       (1,365,558 )
                 
Net loss attributable to minority interest
    (41,510 )     (76,477 )
                 
Net consolidated profit (loss)
  $ 625,040     $ (1,289,081 )
                 
Gain/Loss per share
  $ 0.13     $ (0.28 )
Weighted average common shares outstanding - basic and diluted
    4,651,173       4,651,173  

 


 
See accompanying notes to consolidated financial statements.


 

 
F-3

 


Forlink Software Corporation, Inc.

 
Consolidated Statement of Stockholders’ Equity

 
(Expressed in US Dollars)

 
   
Common  Stock
               
Accumulated
   
Retained
             
   
Number
of  Share
Issued
   
Number  of
Share
Outstanding
   
Number  of 
Treasury
Stock
   
Amount
   
Treasury
Stock
   
Additional
Paid-in
Capital
   
other
comprehen sive
income
   
Profit s /
(Accumulated
L osses)
   
Total
Stockholders
Equity
   
Comprehensive
Income/
(Losses)
 
                                                             
Balance, December 31, 2007
    99,121,707       92,821,707       6,300,000     $ 99,122     $ (163,800 )   $ 10,177,812     $ 596,963     $ (3,517,749 )   $ 7,192,348     $    
                                                                                 
Shares issued
                            200               17,881                       18,081          
                                                                                 
Net profit for the year
                                                            (1,241,843 )     (1,241,843 )     (1,241,843 )
                                                                                 
Translation reserve
                                                    467,433               467,433       467,433  
                                                                                 
Comprehensive income
                                                                          $ (774,410 )
                                                                                 
Balance, December 31, 2008
    4,966,173       4,651,173       315,000     $ 99,322     $ (163,000 )   $ 10,195,693     $ 1,064,396     $ (4,759,592 )   $ 6,436,019          
                                                                                 
Shares issued
                                                                               
                                                                                 
Net profit for the year
                                                            545,372               545,372  
                                                                                 
Translation reserve
                                                    24,349                       24, 349  
                                                                                 
Comprehensive income
                                                                          $ 569,721  
                                                                                 
Balance, December 31, 2009
    4,966,173       4,651,17 3       315,000     $ 99,322     $ (163,000 )   $ 10,195,693     $ 1,08 8,745     $ ( 4,214,220 )   $ 7, 005,740          

 


 
See accompanying notes to consolidated financial statements.


 

 
F-4

 


Forlink Software Corporation, Inc.

 
Consolidated Statements of Cash Flows
(Decrease)/Increase in Cash and Cash Equivalents

 
(Expressed in US Dollars)
   
Year Ended December 31,
 
   
2009
   
2008
 
Cash flows from operating activities
           
               
Net income
    625,041    
(1,289,081
Adjustment to reconcile net income to net cash provided by (used in) operating activities:
             
Minority interest
    (41,510 )     (76,477 )
Proceeds from transferred of treasury stock
    -       -  
Depreciation of property, plant and equipment
    204,262       273,172  
Amortization of intangible assets
    -       -  
Loss on disposal of property, plant and equipment
    -       -  
Loss from equity method investee
    181,498       (9,408 )
Loss on disposal from subsidiaries
    -       -  
Dividend from cost method investee
    (257,522 )     (248,710 )
Loss from goodwill impairment
    -       1,684,023  
Effect of deferred taxes
    (16,659 )     (22,342 )
                 
Charge in:
               
Account Receivables
    (1,536,902 )     762,132  
Other receivables, deposits & prepayments
    959,005       (1,063,502 )
Inventories
    83,715       (486,080 )
Account Payable
    (855,809 )     338,662  
Amounts due to stockholders
    36,567       30,398  
Customers deposits
    199,308       (735,804 )
Other payables & accrued expenses
    (20,884 )     239,262  
Income tax payable
    (16 )     (1,633 )
Other taxes payable / recoverable
    (246,078 )     52,179  
                 
Net cash used in operating activities
    (685,985 )     (553,209 )
                 
Cash flows from investing activities
               
Acquisition of property, plant & equipments
    (19,171 )     (95,586 )
Disposal of subsidiary
    -       -  
Cash payment associated with long term investments
    -       -  
Cash dividend from cost method investee
    360,033       452,607  
Cash Received from disposal property, plant& equipments
    -       -  
                 
Net cash used in investing activities
    340,862       357,021  
                 
Cash flow from financing activities
               
Proceeds from issuance of common stock under Plan 2002
    -       200  
Increase in treasury stock
    -       -  
Increase/decrease in additional paid in capital
    -       9,800  
Capital contribution from minority interest
    -       -  
                 
Net cash generated from financing activities
    -       10,000  
                 
Effect of exchange rate changes on cash and cash equivalents
    42,556       328,717  
                 
Net increase (decrease) in cash and cash equivalents
    (302,567 )     142,529  
                 
Cash and cash equivalents at the beginning of year
    2,543,430       2,400,901  
                 
Cash and cash equivalents at the end of year
    2,240,863       2,543,430  
                 
Supplemental disclosure of cash flow information
               
Income tax paid
  $ 28,755     $ 1,665  
Interest paid
  $ -     $ -  

 

 
See accompanying notes to consolidated financial statements.


 

 
F-5

 


 


 
Forlink Software Corporation, Inc. (the "Company" or the "Registrant" or "Forlink"), is a Nevada corporation which was originally incorporated on January 7, 1986 as "Why Not?, Inc. " under the laws of the State of Utah and subsequently reorganized under the laws of Nevada on December 30, 1993.  From 1996 until 1999, the Company continued as an unfunded venture in search of a suitable business acquisition or business combination.

 
On November 3, 1999, the Company entered into a Plan of Reorganization with Beijing Forlink Software Technology Co., Ltd., (hereinafter "BFSTC"), a limited liability company organized under the laws of the People’s Republic of China (“PRC” or “China”), under the terms of which BFSTC gained control of the Company.  Pursuant to the Plan of Reorganization, the Company acquired 100% of the registered and fully paid-up capital of BFSTC in exchange for 20,000,000 shares of the Company's authorized, but unissued, common stock.  BFSTC is engaged in the provision of computer software consultancy and engineering services and the development and sale of computer software in the People’s Republic of China (“PRC”).  As a part of its computer consultancy and engineering services, BFSTC is also engaged in the sale of computer hardware.  In June 2001, BFSTC changed its name to Forlink Technologies Co. Ltd. (“FTCL”). FTCL is the Company’s major operating subsidiary in China.

 
In August 2001, the Company acquired Beijing Slait Science & Technology Development Limited Co. (“SLAIT”) pursuant to a Plan of Reorganization dated January 11, 2001.  The Company issued 59,430,000 shares of its common stock to SLAIT’s original beneficial owners in exchange for 100% of the outstanding equity of SLAIT.  As a result of the share exchange, the former beneficial owners of SLAIT own approximately 70% of the issued and outstanding shares of the Company, and SLAIT became a wholly-owned subsidiary of the Company.  The Company also agreed to transfer 1,085,000 Renminbi (“RMB”) (approximately US$131,039) to the former owners of SLAIT.   A change in control occurred in which all but one of the officers and directors of the Company resigned and two former directors (also former owners) of SLAIT became officers and directors of the Company.  Prior to its dissolution 2004, SLAIT provided application system integration technology and specializes in large volume transaction processing software for networks such as mobile phone billing and band operation.  Subsequent to the acquisition, the principal activities of SLAIT were gradually shifted to those of FTCL.   On February 13, 2004, SLAIT was officially dissolved in accordance with relevant PRC regulations.

 
On June 18, 2003, Forlink Technologies (Hong Kong) Limited (“FTHK”) was incorporated in Hong Kong Special Administrative Region as a limited liability company.  In December 2003, FTHK became a wholly owned subsidiary of Forlink.  FTHK is an investment holding company set up to take advantage of the favorable business environment in Hong Kong and to facilitate the Company’s investment transactions.  Through FTHK, on December 18, 2003, the Company invested $760,870 in All China Logistics Online Co., Ltd. ("All China Logistics"), a privately held PRC company providing logistic services in China, in exchange for a 17.8% equity interest.

 
On June 14, 2004, Forlink Technologies (Chengdu) Limited ("FTCD") was established as a limited liability company in Chengdu, PRC and subsequently became a wholly owned subsidiary of FTHK in September 2004. FTCD is in the business of providing software outsourcing services and software development.  The registered capital of FTCD is $5,000,000 and the fully paid up capital was $750,000 as of December 31, 2005. In April 2006, FTHK further invested $130,000 in FTCD. FTCD commenced operations in late 2005. The registered capital of FTCD was reduced to $200,000 in December 2007, which amount was fully paid as of December 2007.

 
In compliance with China’s foreign investment restrictions on telecom value-added services and other laws and regulations, the Company conducts telecom value-added services and application integration services for government organizations in China via Beijing Forlink Hua Xin Technology Co. Ltd. ("BFHX"). BFHX was established in the PRC on September 19, 2003 as a limited liability company.  The registered capital of BFHX is $120,733 (RMB 1,000,000) and was fully paid up as of March 31, 2005.  Mr. Yi He and Mr. Wei Li have been entrusted as nominee owners of BFHX to hold 70% and 30%, respectively, of the fully paid up capital of BFHX on behalf of the Company as the primary beneficiary.  BFHX is considered a Variable Interest Entity ("VIE"), and because the Company is the primary beneficiary, the Company’s consolidated financial statements include BFHX.  Upon the request of the Company, Mr. Yi He and Mr. Wei Li are required to transfer their ownership interests in BFHX to the Company or its designees at any time for the amount of the fully paid registered capital of BFHX.  Mr. Yi He is the Chief Executive Officer, a director and a major stockholder of the Company.  Mr. Wei Li is the administration manager of FTCL.

 
On October 24, 2005, the Company entered into a definitive agreement to acquire a 17.5% equity interest of China Liquid Chemical Exchange Company Limited (“CLCE”), a PRC limited liability company, in exchange for deployment of the Company’s For-online Electronic Trading System.  In early 2007, CLCE increased its share capital to $1,708,526 (RMB 13,000,000). As the Company did not subscribed the new shares, the Company’s shareholding of CLCE was diluted and as of December 31 2007 was 13.46%. CLCE commenced operations fully in early 2007.


 

 
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On October 3, 2006, the Company entered into a Transfer of Right to Invest and Project Cooperation Agreement (“Statelink Agreement”) with Statelink International Group, Ltd., a British Virgin Islands company (“Statelink”), pursuant to which the Company acquired 22.73% registered capital in Guangxi Caexpo International Trade and Logistics Co., Ltd. (“Guangxi Caexpo”), a PRC limited liability company in the businesses of real estate development, advertising and computer distribution for cash consideration of $2,557,545 (RMB 20,000,000) from BFHX and stock consideration of 13,000,000 shares of the Company’s restricted common stock. On October 26, 2006, BFHX established Forlink Technologies (Guangxi) Limited (“FTGX”), a PRC limited liability company, to carry out a contract from Guangxi Caexpo to build an “Electronic Trade and Logistics Information Platform and Call Center” (the “Project”). At the time of incorporation, BFHX injected RMB 20,000,000 (approximately US$2,557,545) as registered capital to FTGX.

 
On October 12, 2006, the Company invested $31,969 (RMB 250,000) in Wuxi Stainless Steel Exchange Co., Ltd. (“Wuxi Exchange”), a PRC limited liability company, for a 12.5% equity interest. On January 14, 2007, the Company entered into an agreement with a major shareholder of Wuxi Exchange to transfer 2.5% of the Company’s interest in Wuxi Exchange to the major shareholder for a cash payment of RMB 500,000.

 
On January 25, 2007, the board of directors and the majority holders of the Company’s common stock jointly approved an amendment to the Company’s Articles of Incorporation by written consent, to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000.  The Certificate of Amendment to the Articles of Incorporation to effect the increase of the number of the Company’s authorized common shares was filed with Nevada’s Secretary of State on April 4, 2007.

 
On April 29, 2007, the Company invested, through BFHX, $138,158 (RMB 1,050,000) in Beijing GuoXin Forlink Internet Technologies Limited (“BGXF”), a privately held PRC company that operates a finance study website, for a 35% equity interest.  The investment in BGXF is accounted for under the equity method of accounting due to the Company’s significant influence over the operational and financial policies of BGXF.  BGXF commenced operations on March 9 2008. On October 14, 2008, the registered capital of BGXF was increased to RMB 4,285,700, and since the Company did not invest additional funds into BGFX, the ratio of its holding was diluted to a 24.5% equity interest.

 
On July 12, 2007, the Company invested through FTGX, $1,063,830 (RMB 8,000,000) in Nanning Bulk Commodities Exchange Corporation Limited (“NNBCE”), a privately held PRC company, for an 80% equity interest.  NNBCE became a subsidiary of FTGX.  NNBCE, set up on April 29, 2007, commenced operations on March 28, 2008, and provides logistical e-commerce service.
 
On September 5, 2007, the Company invested $465,425 (RMB 3,500,000), through NNBCE, in Guangxi Bulk Sugar & Ethanol Exchange Corporation Limited (“GBSEE”), a PRC limited liability company established on September 12, 2007, for a 35% equity interest. Concurrently, All China Logistics was entrusted as nominee owner of GBSEE to hold 20% of the fully paid up capital of GBSEE on behalf of NNBCE as the primary beneficiary. Upon the request of NNBCE, All China Logistics is required to transfer its ownership interests in GBSEE to NNBCE or its designees at any time for the amount of the 20% fully paid up capital. In accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46R “Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51” (“FIN 46R”), NNBCE is deemed to hold the primary beneficial interest of 55% equity interest in GBSEE. GBSEE was established to provide logistical e-commerce service, but it was dissolved on December 16, 2007 before it commenced any operations and NNBCE received payments back of its investment in GBSEE of $410,397 (RMB 3,000,000) in December 2007; $66,211 (RMB 484,000) in February 2008, and $2,189 (RMB 16,000) in September 2008.

 
On December 24, 2007, the board of directors and the majority holders of the Company’s common stock jointly approved an amendment to the Company’s Articles of Incorporation by written consent, to effect a 1-for-20 reverse stock split. The Certificate of Amendment to the Articles of Incorporation to effect the reverse split was filed with Nevada’s Secretary of State on February 21, 2008.

 
On March 20, 2008, the Company invested $71,124 (RMB 500,000), through BFHX, in Shandong LongDong Internet Technologies Limited (“SDLD”), a PRC limited liability company established on October 24, 2007, for a 5% equity interest.  SDLD, which commenced operations in December 2007, is in the business of providing of providing primary products e-commerce services.  The purpose of this investment is to gain cash dividends from SDLD.

 
On February 8, 2010, the Company transferred all its ownership interests in FTCL to BFHX for the amount of FTCL’s 100% fully paid up capital.

 
The principal activities of the Company are the development and sale of network software systems and the provision of enterprise application system integration services in the PRC.  The Company is also engaged in the sale of computer hardware.
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