x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
(State
of incorporation)
|
|
20-11998142
(I.R.S.
Employer Identification No.)
|
Class
|
Outstanding
at May 11, 2007
|
|
Common
Stock, $.001 par value per share
|
29,756,000
shares
|
Item 1. |
Financial
Statements.
|
Page
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
2
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
3
|
Condensed
Consolidated Statement of Cash Flows (Unaudited)
|
4
|
Consolidated
Statement of Changes in Stockholders’ Equity (Unaudited)
|
5
|
Notes
to Condensed Consolidated Financial Statements
|
6-9
|
(Unaudited)
|
||||||||||
Three
months ended
March
31,
|
||||||||||
2007
|
2006
|
|||||||||
Note
|
US$’000
|
US$’000
|
||||||||
Operating
revenues
|
20,009
|
8,367
|
||||||||
Operating
expenses:
|
||||||||||
Cost
of sales
|
16,341
|
6,493
|
||||||||
Sales
and marketing
|
113
|
444
|
||||||||
General
and administrative
|
1,374
|
189
|
||||||||
Research
and development
|
53
|
81
|
||||||||
Depreciation
|
52
|
25
|
||||||||
Allowance
for obsolete inventories
|
320
|
—
|
||||||||
Total
operating expenses
|
18,253
|
7,232
|
||||||||
Operating
income
|
1,756
|
1,135
|
||||||||
Interest
expense
|
(127
|
)
|
—
|
|||||||
Other
income, net
|
2
|
2
|
||||||||
Income
before income taxes
|
1,631
|
1,137
|
||||||||
Income
taxes
|
3
|
(384
|
)
|
—
|
||||||
Net
income
|
1,247
|
1,137
|
||||||||
Other
comprehensive income
|
—
|
—
|
||||||||
1,247
|
1,137
|
|||||||||
Earnings
per share:
|
2
|
|||||||||
Basic
|
4.19
cents
|
3.82
cents
|
||||||||
Weighted
average number of common stock outstanding
|
29,756,000
|
29,756,000
|
||||||||
As
of
March
31,
2007
|
As
of
December
31,
2006
|
|||||||||
Note
|
US$’000
|
US$’000
|
||||||||
(Unaudited)
|
||||||||||
ASSETS
|
||||||||||
Current
assets
|
||||||||||
Cash
and cash equivalents
|
3,485
|
2,421
|
||||||||
Accounts
receivable, net of allowance for doubtful
accounts
of $Nil (2006:
$230,000)
|
30,950
|
31,425
|
||||||||
Inventories
|
640
|
1,230
|
||||||||
Trade
deposit paid
|
13,150
|
8,989
|
||||||||
Advance
to third party
|
—
|
288
|
||||||||
Other
current assets
|
102
|
86
|
||||||||
Pledged
deposit
|
4
|
1,254
|
1,128
|
|||||||
49,581
|
||||||||||
Total
current assets
|
45,567
|
|||||||||
Property,
plant and equipment, net
|
5
|
450
|
320
|
|||||||
Total
assets
|
50,031
|
45,887
|
||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
Current
liabilities
|
||||||||||
Short-term
bank loan
|
6
|
8,571
|
6,268
|
|||||||
Accounts
payable - Trade
|
9,532
|
10,964
|
||||||||
Accrued
expenses and other accrued liabilities
|
6,631
|
4,444
|
||||||||
Trade
deposits
received
|
1,000
|
251
|
||||||||
Due
to directors
|
7
|
330
|
330
|
|||||||
Provision
for warranty
|
53
|
53
|
||||||||
Tax
payables
|
384
|
1,294
|
||||||||
Total
current liabilities
|
26,501
|
23,604
|
||||||||
Commitments
and contingencies
|
||||||||||
Stockholders’
equity
|
||||||||||
Preferred
stock, US$0.001 par value:
Authorized:
100,000,000 shares, no shares issued
|
—
|
—
|
||||||||
Common
stock and paid-in capital, US$0.001 par value:
Authorized:
100,000,000 shares
|
||||||||||
Issued
and outstanding: 29,756,000 shares as of March 31, 2007 and as of
December
31, 2006
|
30
|
30
|
||||||||
Additional
paid-in capital
|
2,484
|
2,484
|
||||||||
Dedicated
reserves
|
1,042
|
1,042
|
||||||||
Other
comprehensive income
|
975
|
975
|
||||||||
Retained
earnings
|
18,999
|
17,752
|
||||||||
Total
stockholders’ equity
|
23,530
|
22,283
|
||||||||
Total
liabilities and stockholders’ equity
|
50,031
|
45,887
|
(Unaudited)
|
|||||||
Three
months ended
March
31,
|
|||||||
2007
|
2006
|
||||||
US$’000
|
US$’000
|
||||||
Cash
flows used in operating activities
|
|||||||
Net
income
|
1,247
|
1,137
|
|||||
Adjustments
to reconcile net income to net cash used in operating
activities:
|
|||||||
Depreciation
|
52
|
25
|
|||||
Allowance
for obsolete inventories
|
320
|
—
|
|||||
Allowance
for doubtful account
|
1,341
|
—
|
|||||
Interest
expenses
|
127
|
—
|
|||||
Changes
in assets and liabilities:
|
|||||||
Accounts
receivable -trade
|
475
|
(2,332
|
)
|
||||
Inventories,
net
|
270
|
8
|
|||||
Trade
deposit paid
|
(5,502
|
)
|
(3,797
|
)
|
|||
Other
current assets
|
(16
|
)
|
(80
|
)
|
|||
Pledged
deposit
|
(126
|
)
|
—
|
||||
Trade
deposit received
|
749
|
3,087
|
|||||
Accounts
payable - trade
|
(1,432
|
)
|
(612
|
)
|
|||
Provision
for warranty
|
—
|
(78
|
)
|
||||
Accrued
expenses and other accrued liabilities
|
2,187
|
361
|
|||||
Provision
for taxation
|
(910
|
)
|
|||||
Net
cash used in operating activities
|
(1,218
|
)
|
(2,281
|
)
|
|||
Cash
flows generated from (used in) investing
activities
|
|||||||
Purchase
of property, plant and equipment
|
(182
|
)
|
(89
|
)
|
|||
Loan
to third party
|
288
|
(707
|
)
|
||||
Net
cash generated from (used in) investing
activities
|
106
|
(796
|
)
|
||||
Cash
flows from financing activities
|
|||||||
Interest
expenses
|
(127
|
)
|
—
|
||||
Borrowing
from banks
|
2,303
|
991
|
|||||
Net
cash from financing activities
|
2,176
|
991
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
1,064
|
(2,086
|
)
|
||||
Cash
and cash equivalents, beginning of the period
|
2,421
|
2,974
|
|||||
Cash
and cash equivalents, end of the period
|
3,485
|
888
|
Common
stock issued
|
||||||||||||||||||||||
No.
of
shares
|
Amount
|
Additional
paid-in
capital
|
Dedicated
reserves
|
Other
comprehensive
income
|
Retained
earnings
|
Total
|
||||||||||||||||
US$’000
|
US$’000
|
US$’000
|
US$’000
|
US$’000
|
US$’000
|
|||||||||||||||||
Balance
as of January 1, 2006
|
29,756,000
|
30
|
2,484
|
1,042
|
349
|
11,034
|
14,939
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
6,718
|
6,718
|
|||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
—
|
626
|
—
|
626
|
|||||||||||||||
Balance
as of December 31, 2006
|
29,756,000
|
30
|
2,484
|
1,042
|
975
|
17,752
|
22,283
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
1,247
|
1,247
|
|||||||||||||||
Balance
as of March 31, 2007
|
29,756,000
|
30
|
2,484
|
1,042
|
975
|
18,999
|
23,530
|
2. |
EARNINGS
PER SHARE
|
3. |
INCOME
TAXES
|
3. |
INCOME
TAXES (CONTINUED)
|
3. |
INCOME
TAXES
(CONTINUED)
|
4. |
PLEDGED
DEPOSIT
|
5. |
PROPERTY,
PLANT AND EQUIPMENT, NET
|
(Unaudited)
|
|||||||
As
of
March
31,
2007
|
As
of
December
31,
2006
|
||||||
US$’000
|
US$’000
|
||||||
Moulds
|
112
|
107
|
|||||
Leasehold
improvements
|
115
|
115
|
|||||
Plant
and machinery
|
18
|
18
|
|||||
Office
equipment
|
266
|
266
|
|||||
Motor
vehicles
|
266
|
89
|
|||||
777
|
595
|
||||||
Accumulated
depreciation
|
(327
|
)
|
(275
|
)
|
|||
450
|
320
|
6. |
SHORT-TERM
BANK LOAN
|
The
bank loan is secured by the director, Mr. Liu Yu, and is repayable
on
February 19, 2008 at interest rate 7.67% per
annum.
|
7. |
RELATED
PARTY
TRANSACTION
|
a. |
Name
and relationship of related
parties
|
Related
party
|
Relationship
with the Company during the period ended March 31,
2007
|
|
Mr.
Wang Xin
|
Director
and stockholder of the Company
|
|
Mr.
Liu Yu
|
Director
and stockholder of the Company
|
|
Mr.
Wang Zhibin
|
Director
and stockholder of the Company #
|
b. |
Summary
of related party balances
|
(Unaudited)
|
||||||||||
As
of
March
31,
2007
|
As
of
December
31,
2006
|
|||||||||
Note
|
US$’000
|
US$’000
|
||||||||
Due
to directors
|
||||||||||
Mr.
Wang Xin, Mr. Liu Yu and Mr. Wang Zhibin
|
(i
|
)
|
330
|
330
|
(Unaudited)
|
|||||||
As
of
March
31,
2007
|
As
of
December
31,
2006
|
||||||
US$’000
|
US$’000
|
||||||
Bank
loans guaranteed by a director
|
|||||||
Mr.
Liu Yu
|
8,571
|
6,268
|
Note: |
(i) |
The
amounts are unsecured, interest-free and repayable on
demand.
|
# |
Ceased
to be a director since February 7,
2007
|
Item 2. |
Managements’
Discussion and Analysis of Financial Conditions and Results of
Operations
|
Three
months ended
March
31, 2007
|
Three
months ended
March
31, 2006
|
Comparison
|
|||||||||||||||||
$’
000
|
%
of revenue
|
$’
000
|
%
of revenue
|
$’000
|
%
|
||||||||||||||
Revenues
|
20,009
|
—
|
8,367
|
—
|
11,642
|
139.14
|
%
|
||||||||||||
Cost
of sales
|
16,341
|
81.67
|
%
|
6,493
|
77.60
|
%
|
9,848
|
151.67
|
%
|
||||||||||
Sales
& Marketing expenses
|
113
|
0.56
|
%
|
444
|
5.31
|
%
|
-331
|
-74.55
|
%
|
||||||||||
General
& Admin expenses*
|
1,374
|
6.87
|
%
|
189
|
2.26
|
%
|
1,185
|
626.98
|
%
|
||||||||||
R&D
expenses
|
53
|
0.27
|
%
|
81
|
0.97
|
%
|
-28
|
-34.57
|
%
|
||||||||||
Depreciation
& Amortization
|
52
|
0.26
|
%
|
25
|
0.30
|
%
|
27
|
108.00
|
%
|
||||||||||
Allowance
for Obsolete Inventory
|
320
|
1.60
|
%
|
—
|
—
|
320
|
—
|
||||||||||||
Interest
expenses
|
127
|
0.63
|
%
|
—
|
—
|
127
|
—
|
||||||||||||
Other
income, net
|
2
|
0.01
|
%
|
2
|
0.02
|
%
|
—
|
—
|
|||||||||||
Income
before tax
|
1,631
|
8.15
|
%
|
1,137
|
13.59
|
%
|
494
|
46.45
|
%
|
||||||||||
Income
taxes
|
384
|
1.92
|
%
|
—
|
—
|
384
|
—
|
||||||||||||
Net
income
|
1,247
|
6.23
|
%
|
1,137
|
13.59
|
%
|
110
|
9.67
|
%
|
* |
General & Administrative expenses
includes an allowance for trading deposit receivables of
$1,215,000.
|
Three
months ended
March
31, 2007
|
|||||||
$’000
|
%
of revenue
|
||||||
D8110
|
6,735
|
33.66
|
%
|
||||
C8000
|
6,287
|
31.42
|
%
|
||||
M5
|
3,991
|
19.95
|
%
|
||||
M6
|
2,908
|
14.53
|
%
|
||||
Others
|
88
|
0.44
|
%
|
||||
Total
|
20,009
|
100
|
%
|
Three
months ended
March
31, 2007
|
|||||||
$’000
|
%
of revenue
|
||||||
Beijing
Xingwang Shidai Tech & Trading Co., Ltd.
|
20,009
|
100
|
%
|
Three
months ended
March
31, 2007
|
Three
months ended
March
31, 2006
|
Comparison
|
|||||||||||||||||
$’000
|
%
of revenue
|
$’000
|
%
of revenue
|
$’000
|
%
|
||||||||||||||
Cost
of sales
|
16,341
|
81.67
|
%
|
6,493
|
77.60
|
%
|
9,848
|
151.67
|
%
|
||||||||||
Sales
& marketing exp.
|
113
|
0.56
|
%
|
444
|
5.31
|
%
|
-331
|
-74.55
|
%
|
||||||||||
General
& admin. exp.
|
159
|
0.79
|
%
|
189
|
2.26
|
%
|
-30
|
-15.87
|
%
|
||||||||||
R&D
|
53
|
0.26
|
%
|
81
|
0.97
|
%
|
-28
|
-34.57
|
%
|
||||||||||
Depreciation
|
52
|
0.26
|
%
|
25
|
0.30
|
%
|
27
|
108.00
|
%
|
||||||||||
Allowance
for trading deposit receivable
|
1,215
|
6.07
|
%
|
—
|
—
|
1,215
|
—
|
||||||||||||
Allowance
for Obsolete Inventory
|
320
|
1.60
|
%
|
—
|
—
|
320
|
—
|
||||||||||||
Total
|
18,253
|
91.22
|
%
|
7,232
|
86.44
|
%
|
11,021
|
152.32
|
%
|
1. |
The
keen competition from the domestic cellular manufactures and the
overseas
cellular providers by the strategy of
price-cutting.
|
2. |
Increase
in the sales of low-ended products, the demand of the low ended products
was stimulated by the reduction of monthly charges by the
telecommunication operators.
|
3. |
Compared
with the average gross profit margin of 18.9% in 2006, the gross
profit
margin in the first quarter in 2007 kept steady, which is mainly
because
we increased our payment of deposit to the manufactures in order
to get a
favorable price.
|
Payments due by period
|
||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
|||||||||||
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
||||||||||||
Long-term
Debt Obligations
|
8,571
|
8,571
|
—
|
—
|
—
|
|||||||||||
Capital
Lease Obligations
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Operating
Lease Obligations
|
73
|
73
|
—
|
—
|
—
|
|||||||||||
Purchase
Obligations
|
3,888
|
3,888
|
—
|
—
|
—
|
|||||||||||
Other
long-term liabilities reflected on the registrant’s balance sheet under
GAAP
|
—
|
—
|
—
|
—
|
—
|
|||||||||||
Total
|
12,532
|
12,532
|
—
|
—
|
—
|
Item 3. |
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Item 4T. |
Controls
and Procedures.
|
Item 1. |
Legal
Proceedings.
|
Item 1A. |
Risk
Factors.
|
Item 2. |
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
(a) |
None.
|
(b) |
None.
|
(c) |
None.
|
Item 3. |
Defaults
Upon Senior Securities.
|
Item 4. |
Submission
of Matters to a Vote of Security
Holders.
|
Item 5. |
Other
Information.
|
Item 6. |
Exhibits.
|
Exhibit
Number
|
|
Exhibit
Description
|
Certification
of Principal Executive Officer under Section 302 of the Sarbanes-Oxley
Act
of 2002
|
||
Certification
of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley
Act of 2002
|
||
Certification
of Principal Executive Officer under Section 906 of the Sarbanes-Oxley
Act
of 2002
|
||
Certification
of Principal Accounting Officer under Section 906 of the Sarbanes-Oxley
Act of 2002
|
Exhibit
Number
|
|
Exhibit
Description
|
31.1
|
Certification
of Principal Executive Officer under Section 302 of the Sarbanes-Oxley
Act
of 2002
|
|
31.2
|
Certification
of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32.1
|
Certification
of Principal Executive Officer under Section 906 of the Sarbanes-Oxley
Act
of 2002
|
|
32.2
|
Certification
of Principal Accounting Officer under Section 906 of the Sarbanes-Oxley
Act of 2002
|