Chun Can Capital 10QSB 2007 Q3 Quarterly report (small business)

		Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		2
Item 2. Management’s Discussion and Analysis or Plan of Operation		31
Item 3. Controls and Procedures		35

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		35
Item 3. Defaults Upon Senior Securities		35
Item 4. Submission of Matters to a Vote of Security Holders		35
Item 5. Other Information		35
Item 6. Exhibits		35
		38
SIGNATURES

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CINTEL CORP. AND SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

CONTENTS		PAGE

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		3

FINANCIAL STATEMENTS

	Consolidated Interim Balance Sheets	5

	Consolidated Interim Statements of Operations and Comprehensive Income	7

	Consolidated Interim Statements of Stockholders’ Equity	8

	Consolidated Interim Statements of Cash Flows	9

	Notes to Consolidated Interim Financial Statements	11 - 30

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Cintel Corp. and the Subsidiaries

We have reviewed the accompanying consolidated interim balance sheets of Cintel Corp. and Subsidiaries (the "Company") as of September 30, 2007 and the related consolidated interim statements of operations and comprehensive loss, stockholders' equity, and cash flows for the nine month ended September 30, 2007. These consolidated interim financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

The financial statements as of September 30, 2006, were reviewed by other accountants, whose report dated November 13, 2006, that they were not aware of any material modifications that should be made to those statements in order for them to be in conformity with generally accepted accounting principles.

Los Angeles, California

November 9, 2007

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Cintel Corp. and the Subsidiary

We have reviewed the accompanying consolidated interim balance sheets of Cintel Corp. and the Subsidiary (the "Company") as of September 30, 2006 and 2005 and the related consolidated interim statements of operations and comprehensive loss, stockholders' equity, and cash flows for the nine-month periods ended September 30, 2006 and 2005. These consolidated interim financial statements are the responsibility of the Company's management.

Toronto, Canada

November 13, 2006 except as to note 19

which is as of February 2, 2007 and June 7, 2007

CINTEL CORP. AND SUBSIDIARIES

Consolidated Interim Balance Sheets

September 30, 2007 and 2006

(Unaudited)

ASSETS
			Restated (Note 19)
	2007		2006
Current assets:
Cash and cash equivalents	$	27,482,820	$	1,333,510
Accounts receivable, net (Note 2)		17,062,274		616,894
Inventories (Note 3)		16,950,991		581,384
Advance payments to vendors		12,979,388		-
Prepaid and other current assets		11,727,729		889,813
Deferred financing costs		3,804,499		-
Loans receivable - current (Note 4)		11,040,435		-

Total current assets		101,048,136		3,421,601

Property, Plant and equipment, net (Note 6)		62,258,128		449,066

Other assets:
Loans receivable, net of current portion (Note 4)		156,323		-
Investments in non-marketable securities (Note 5)		31,792,338		1,943,429
Intangible assets (Note 8)		16,890,805		-
Land rights (Note 7)		338,829		-

Total other assets		49,178,295		1,943,429

Total assets	$	212,484,559	$	5,814,096

The accompanying notes are an integral part of these consolidated financial statements

CINTEL CORP. AND SUBSIDIARIES

Consolidated Interim Balance Sheets

September 30, 2007 and 2006

(Unaudited)

LIABILITIES AND STOCKHOLDERS’ EQUITY
				Restated (Note 19)
	2007			2006
Current liabilities:
Accounts payable	$	31,740,507		$	447,093
Accrued expenses		1,542,600			-
Deferred revenue		112,982			143,009
Customer deposits		988,835			-
Notes payable, current (Note 9)		49,435,010			53,509
Other current liabilities		2,001,594			-

Total current liabilities		85,821,528			643,611

Long-term liabilities:
Accrued severance benefits (Note 10)		1,869,413			87,503
Notes payable, net of current portion (Note 9)		3,761,570			32,067
Convertible debentures (Note 11)		91,024,295			-

Long-term liabilities		96,655,278			119,570

Total liabilities		182,476,806			763,181

Non-controlling interest		21,818,872			-

Commitments and contingencies (Note 18):

Stockholders' equity: (Note 13)
Common stocks: 300,000,000 shares authorized, par value $0.001 per share, 90,324,896 shares and 87,619,896 shares issued and outstanding, respectively		90,325			87,619
Additional paid in capital		15,240,703			14,319,408
Treasury stock		(5,630	)		(5,630	)
Accumulated other comprehensive loss (income)		3,576,785			(311,077	)
Accumulated deficit		(10,713,302	)		(9,039,405	)

Total stockholders' equity		8,188,881			5,050,915

Total liabilities and stockholders' equity	$	212,484,559		$	5,814,096

The accompanying notes are an integral part of these consolidated financial statements

CINTEL CORP. AND SUBSIDIARIES

Consolidated Statements of Operation and Comprehensive Income (Loss)

Three Months and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

	Three months Ended September 30, 2007			Restated (Note 19) Three months Ended September 30, 2006			Nine months Ended September 30, 2007			Restated (Note 19) Nine months Ended September 30, 2006
Revenues:
Finished goods	$	83,378,690		$	(2,677	)	$	130,008,861		$	85,372
Merchandise		940,381			525,834			1,152,152			4,207,788
Services		1,507,062			16,868			2,494,272			66,018
		85,826,133			540,025			133,655,285			4,359,178
Cost of revenue:
Finished goods		74,892,260			3,374			119,695,752			65,359
Merchandise		477,089			483,961			685,044			4,015,586
Services		970,480			-			1,590,790			-
		76,339,829			487,335			121,971,586			4,080,945

Gross profits		9,486,304			52,690			11,683,699			278,233

Operating expenses:
General and administrative expenses		7,636,835			504,016			9,756,833			1,447,839
Research and development		199,070			49			209,705			18,940
Depreciation and amortization		760,714			91,992			972,432			260,908
		8,596,619			596,057			10,938,970			1,727,687

Income (loss) from operations		889,685			(543,367	)		744,729			(1,449,454	)

Other income (expenses):
Interest income		955,086			9,760			1,221,259			46,714
Rental and other income		274,940			-			274,940			106,261
Net gain sale of assets		1,094,172			-			1,094,172			-
Interest expenses		(1,021,611	)		(5,149	)		(2,156,984	)		(27,636	)
Foreign currency transaction gain (loss)		109,271			2,955			109,271			(7,577	)
Share of income (loss) from equity investment		(550,982	)		43			(984,627	)		16,303
		860,876			7,609			(441,969	)		134,065
Income (loss) before income taxes and non-controlling interest		1,750,561			(535,758	)		302,760			(1,315,389	)

Income taxes (Note 12)		(1,004	)		(8,316	)		(9,317	)		(52,373	)
Non-controlling interest		(1,388,744	)		-			(1,662,998	)		-

Net income (loss)	$	360,813		$	(544,074	)	$	(1,369,555	)	$	(1,367,762	)


Other comprehensive income (loss):
Foreign currency translation adjustments		4,368,034			11,268			5,237,732			400,507
Unrealized loss on investment		-			-			-			(720,536	)

Other comprehensive income (loss) before Non-controlling interest		4,728,847			(532,806	)		3,868,177			(1,687,791	)

Foreign currency translation adjustments - Non-controlling interest		(1,273,063	)		-			(1,490,141	)		-

Total comprehensive income (loss)	$	3,455,784		$	(532,806	)	$	2,378,036		$	(1,687,791	)


Earnings (loss) per share - basic and diluted (Note 17)	$	0.01	$	(0.01	)	$	(0.02	)	$	(0.03	)

Weighted average number of common shares outstanding - basic and diluted		89,558,380		87,594,963			88,842,396			62,512,395

The accompanying notes are an integral part of these consolidated financial statements

CINTEL CORP. AND SUBSIDIARIES

Consolidated Interim Statements of Stockholders’ Equity

Nine Months Ended September 30, 2007 and 2006

(Unaudited)

	Common stock				Additional paid-in		Treasury			Cumulative other comprehensive			Retained earnings (Accumulated
	Share		Amount		capital		stock			income (loss)			deficit)			Total
Balance, January 1, 2006	42,379,354	$	42,379	$	5,351,058	$	(5,630	)	$	121,739		$	(7,269,855	)	$	(1,760,309	)
Restatement adjustments (Note 19)	-		-		-		-			(110,755	)		(267,801	)		(378,556	)
Restatement adjustments (Note 19)	-		-		-		-			(2,032	)		(134,026	)		(136,058	)
Restated Balance, January 1, 2006	42,379,354		42,379		5,351,058		(5,630	)		8,952			(7,671,683	)		(2,274,924	)
Unrealized loss on investment	-		-		-		-			(720,536	)		-			(720,536	)
Issuance of shares for consulting services (Note 13)	500,000		500		89,500		-			-			-			90,000
Conversion of convertible debentures (Note 13)	44,300,542		44,300		8,808,890		-			-			-			8,853,190
Issuance of shares for consulting services (Note 13)	440,000		440		69,960		-			-			-			70,400
Foreign currency translation adjustment	-		-		-		-			400,507			-			400,507
Net loss for the period	-		-		-		-			-			(1,369,798	)		(1,369,798	)
Restatement adjustment (Note 19)	-		-		-		-			-			2,076			2,076

Balance, September 30, 2006	87,619,896	$	87,619	$	14,319,408	$	(5,630	)	$	(311,077	)	$	(9,039,405	)	$	5,050,915

Balance, January 1, 2007	87,619,896	$	87,619	$	14,319,408	$	(5,630	)	$	(170,806	)	$	(9,343,747	)	$	4,886,844

Restatement adjustments (Note 19)	-		-		-		-			-			(113,795	)		(113,795	)
Restated Balance, January 1, 2007	87,619,896		87,619		14,319,408		(5,630	)		(170,806	)		(9,457,542	)		4,773,049
Issuance of shares for consulting services (Note 13)	580,000		580		98,020		-			-			-			98,600
Issuance of shares for employee remuneration (Note 13)	100,000		100		19,900		-			-			-			20,000
Restatement adjustment (Note 19)	-		-		-		-			-			113,795			113,795
Issuance of shares for consulting services (Note 13)	825,000		825		318,575		-			-			-			319,400
Issuance of shares for consulting services (Note 13)	1,200,000		1,200		484,800		-			-			-			486,000

Foreign currency translation adjustment	-		-		-		-			3,747,591			-			3,747,591

Net loss for the period	-		-		-		-			-			(1,369,555	)		(1,369,555	)

Balance, September 30, 2007	90,324,896	$	90,325	$	15,240,703	$	(5,630	)	$	3,576,785		$	(10,713,302	)	$	8,188,881

The accompanying notes are an integral part of these consolidated financial statements

CINTEL CORP. AND SUBSIDIARIES

Consolidated Interim Statements of Cash Flows

Nine Months Ended September 30, 2007 and 2006

(Unaudited)

	2007			Restated (Note 19) 2006
Cash flows from operating activities:
Net loss	$	(1,369,555	)	$	(1,367,762	)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation		634,641			170,908
Amortization of financing fees		337,791			90,000
Common stocks issued for consulting services and employee remuneration		924,000			131,600
Bad debt expense		190,992			-
Share of loss from equity investment		984,627			16,303
Net gain on sale of property		(1,094,172	)		-
(Increase) decrease in assets:
Accounts receivable		(11,632,573	)		467,535
Other receivable		(12,979,388	)		-
Inventory		(11,296,401	)		(101,588	)
Prepaid expenses and other assets		(10,659,105	)		(339,408	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		23,576,150			(782,554	)
Deferred revenue		112,986			(6,952	)
Deposits from customers		988835			-
Accrued expense		1,542,600			-
Accrued severance benefits		1,772,009			13,354
Other payables		2,001,594			-

Cash used in operating activities		(15,964,969	)		(1,708,564	)

Cash flows from investing activities:
Acquisition of investments in securities		(30,812,499	)		106,156
Acquisition of property and equipment		(35,804,011	)		(2,400	)
Loan receivable		(10,766,758	)		-
Acquisition of intangible assets		(9,150,534	)		-
Changes in non-controlling interest		11,602,239			-

Cash provided by (used in) investing activities		(74,931,563	)		103,756

Cash flows from financing activities:
Proceeds from convertible debenture		75,740,000			-
Deferred financing fees		(4,142,290	)		-
Common stocks issued for repayment of convertible debentures		-			8,853,191
Repayment of convertible debenture		-			(8,853,191	)
Proceeds from short and long-term notes		37,206,822			-
Principal payments of notes payable		-			(638,883	)

Cash provided by (used in) financing activities		108,804,532			(638,883	)

Net increase (decrease) in cash		17,908,000			(2,243,691	)

Effect of foreign currency translation		5,237,732			87,752

Cash and cash equivalent - beginning of period		4,337,088			3,489,449

Cash and cash equivalent - end of period	$	27,482,820		$	1,333,510

Supplemental Disclosure of Cash Flows Information:
Cash paid during the period for:
Interest	$	2,156,984		$	27,636
Income taxes	$	9,317		$	52,373

The accompanying notes are an integral part of these consolidated financial statements

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 1 - Nature of Business

Description of Business

Cintel Corp. and Subsidiaries, formerly known as Link2 Technologies, Inc., (“Cintel” or "the Company") was incorporated in the State of Nevada on August 16, 1996. The Company changed its name from Great Energy Corporation International to Link2 Technologies, Inc April 24, 2001 and again to Cintel Corp. on September 30, 2003.

On September 30, 2003, the Company entered into a definitive Share Exchange Agreement (the “Agreement") with Cintel Co., Ltd., ("Cintel Korea") a Korean corporation and its shareholders. According to the agreement, the Company acquired 100% of the issued and outstanding capital stock of Cintel Korea and in return, the shareholders of Cintel Korea received 16,683,300 shares (equivalent to 82%) of the Company. While the Company is the legal parent, as a result of the reverse-takeover, Cintel Korea became the parent company for accounting purposes.

Upon completion of the share exchange, the business operations of Cintel Korea constituted virtually all of the business operations of the Company. Cintel Korea develops network solutions to address technical limitations to the Internet. Cintel Korea has developed server load balancing technology and advanced solutions for internet traffic management. The business operations of Cintel Korea are located in Seoul, Korea.

On October 30, 2006, the Company entered into an Equity Purchase Agreement with STS Semiconductor & Telecommunications Co., Ltd. ("STS"), a Korean corporation, to acquire 51% of the total equity of Phoenix Semiconductor Telecommunication (Suzhou) Co., Ltd. ("PSTS") for $16,500,000. The purchase was financed through the proceeds raised from the sale of Cintel's convertible bonds in an aggregate of $15,284,295.

PSTS conducts its operations in the Wujiang Economic Development Zone, Jinagsu, People's Republic of China ("PRC"). The Company was incorporated on March 2, 2004, without share capital, pursuant to the commercial law of the PRC to engage in the business of manufacturing semiconductor and other electrical components for sale to the Korean market.

On May 18, 2007, the Company entered into a Share Sale and Purchase Agreement to acquire 100% of the outstanding common stocks of Bluecomm Korea, Co. Ltd. (“Bluecomm”). Pursuant to the purchase agreement, the Company acquired 220,000 shares of Bluecomm for Korean Won 6,027,600,000 (approximately $6,483,100).

Bluecomm is a Korean based company engaged in the business of Customer Relationship Management (CRM) solution and consulting, call center operation, and database marketing. It also provides total solutions for call center outsourcing and Home Service Center (HSC) hosting. Bluecomm commenced its CRM related business in October 2005 and in June 2006 entered into an agreement with PizzaHut Korea to provide HSC and data base management operations services

On August 27, 2007, the Company entered into a Share Purchase Agreement to acquire 51% of the total equity of Phoenix Digital Tech Co. Ltd. (“PDT”) for Korean Won 32,500,000,000 (approximately $34,700,000). The purchase was financed through the proceeds raised from the sale of Cintel's convertible bonds.

PDT was incorporated in May 1992 and conducts its operations in Pyung Taek, Korea. PDT is in the business of designing, manufacturing and installing automated assembly line for Flat Panel Displays, and manufacturing and testing of PCB related equipment based on customers’ specification.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 2 - Summary of Significant Accounting Policies:

The following summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

(a)

Basis of Financial Statements Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the requirement of item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for a full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006, as filed with the Securities and Exchange Commission ("SEC").

(b)

Basis of Consolidation

The consolidated financial statements of the Company included the financial results of Cintel Corp., Cintel Korea, PSTS, Bluecomm, and PDT. The merger of the Company and Cintel Korea has been recorded as the recapitalization of the Company, with the net assets of the Company brought forward at their historical basis. The intention of the management of Cintel Korea was to acquire the Company as a shell company listed on NASDAQ. Management does not intend to pursue the business of the Company. As such, accounting for the merger as the recapitalization of the Company is deemed appropriate.

The acquisition of PSTS, Bluecomm, and PDT has been accounted for by the purchase method, with the net assets of PSTS, Bluecomm, and PDT brought forward at their fair market value basis.

(c)

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the carrying amount of property, plant and equipment, goodwill and intangible assets; valuation allowances for doubtful receivables and deferred tax assets; depreciation and amortizable lives; recoverability of inventories; and amounts recorded for contingencies. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results may differ from those estimates.

(d)

Foreign Currency Transactions and Translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations and comprehensive income.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

The functional currencies of the Company are the Korean Won (“KRW”) and Chinese RMB (“RMB”). Assets and liabilities of the Company are translated into U.S. dollars, in accordance with Statement of Financial Accounting Standards (“SFAS”) No 52, Foreign Currency Translation, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements are recorded as a separate component of accumulated other comprehensive income within stockholders’ equity.

(e)

Revenue Recognition

For finished goods, the Company recognizes revenue when there is a definitive sales agreement, and upon shipment of products, when title is passed and the amount collectible can reasonably be determined.

For merchandise sales, the Company recognizes revenue upon shipment of products, when title is passed and the amount collectible can reasonably be determined.

For service revenues, the Company recognizes such revenues when services are rendered.

For the call centers revenue, the Company recognizes revenue at the end of the month for services rendered when the relating time costs can be reasonably determined.

(f)

Cash and Cash Equivalents

Cash includes currency, checks issued by others, other currency equivalents, current deposits and passbook deposits held by financial institutions. Cash equivalents include securities and short-term money market instruments that can be easily converted into cash. The investments that mature within three months from the investment date are also included as cash equivalents.

Cash deposits that are restricted as to withdrawal or pledged as security, are disclosed separately on the face of the balance sheet or in the note, and not included in the cash total for the purpose of the statements of cash flow.

(g)

Accounts Receivable

Trade accounts receivable are presented at face value less allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable. The Company determines the allowance based on Company’s historical experience and review of specifically identified accounts and ageing data. The Company reviews its allowance for doubtful accounts periodically. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Accounts receivables are shown net of allowance of $1,699,283 and $1,117,530 as of September 30, 2007 and 2006, respectively.

(h)

Inventories

All inventories are stated at the lower of cost or market where the cost is determined by using the weighted-average method on perpetual basis. Market value for raw materials is based on replacement cost and for work-in-process and finished goods on net realizable value. Net realizable value is determined by deducting selling expenses from selling price.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

(i)

Investments

Investments with original maturities of less than 90 days are considered cash equivalents, and all other investments are classified as short-term or long-term investments. Management determines the appropriate classification of investments at the time of purchase and reevaluates such designation as of each balance sheet date.

Investments in securities are recorded in accordance with Statement of Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities." Marketable securities that are bought and held principally for the purpose of selling them in near term are classified as trading securities and are reported at fair value with net unrealized gain or loss recognized in earnings Available-for-sale investments are stated at fair value with net unrealized gain or loss reported in stockholders’ equity. Investments classified as held-to-maturity are carried at amortized cost in the absence of any other than temporary decline in value. Realized gains and losses, and declines in value determined from other than temporary are included in the statement of operations..

Investments subject to significant influence have been recorded using the equity method.

(h)

Property and Equipment

Property and equipment, including renewals and betterments, are stated at cost. The cost of renewals and betterment that extend the economic useful lives of the related assets are capitalized. Expenditures for ordinary repairs and maintenance are charged to expense as incurred.

Depreciation is provided using the straight-line method over the following estimated useful lives of the assets.

Buildings - China			20 years
Buildings - Korea			30 years
Equipment			5 - 10 years
Measuring equipment			5 years
Furniture and fixtures			5 years
Vehicles			5 years
Software			5 years
Landscaping			5 years
Structure			5 years

Upon sale or disposition of assets, gain or loss is included in the statement of operations.

Construction in progress (CIP) is stated at cost, which includes the cost of construction and other direct costs attributable to the construction. No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put into use. CIP at September 30, 2007 represents capitalized interest expense on a loan for the purchase of a land.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

(i)

Land Rights

Land right is stated at cost. Amortization, based on the estimated useful life of the asset, is provided on a straight line basis over 50 years.

(j)

Government Grants

Government grants, without obligation to repay, are recognized as income over the periods necessary to match them with the related costs or as a contra asset to the relevant property acquired and reduces the depreciable basis of the assets.

(k)

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill is not amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired.

For the periods ended September 30, 2007 and 2006, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required. There can be no assurance however, that market conditions will not change or demand for the Company’s products and services will continue, which could result in impairment of long-lived assets in the future.

(l)

Research and Development Costs

Research and development costs are expensed as incurred and consist primarily of salaries and subcontracting expenses.

Research and development expenses for the periods ended September 30, 2007 and 2006 were $209,705 and $18,940, respectively.

(m)

Fair Value of Financial Instruments

The carrying values of cash equivalents, accounts receivable, short-term and long-term investments, and short-term debt approximate fair value due to the short maturity of these instruments. The estimated fair values of other financial instruments, including debt, equity, and risk management instruments, have been determined using market information and valuation methodologies, primarily discounted cash flow analysis. These estimates require considerable judgment in interpreting market data, and changes in assumptions or estimation methods could significantly affect the fair value estimates.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

(n)

Concentration of Credit Risk

SFAS No. 105, Disclosure of Information about Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk, requires disclosure of any significant off- balance sheet risk and credit risk concentration. The Company does not have significant off-balance sheet risk or credit concentration. The Company maintains cash, cash equivalents and short-term investments with major Korean financial institutions.

The Company provides credit to its customers in the normal course of operations. It carries out, on a continuing basis, credit checks of its customers, and maintains allowance for credit loss contingent upon management’s forecasts.

For other receivables, the Company determines, on a continuing basis, the probable losses and sets up a provision for losses based on the estimated realizable value.

Concentration of credit risk arises when a group of clients having a similar characteristic such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions.

(o)

Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

(p)

Comprehensive Income

The Company has adopted SFAS No. 130, Reporting of Comprehensive Income. SFAS 130 establishes standards for reporting and presentation of comprehensive income and its components on a full set of financial statements. Other comprehensive income refers to revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive income but are excluded from net income as these amounts are recorded as a component of stockholders’ equity. The Company’s other comprehensive income represented unrealized gain or loss on available-for-sale marketable securities and foreign currency translation adjustment.

(q)

Earnings per Share

SFAS No. 128, “Earnings per Share” requires disclosure on the financial statements of basic and diluted earnings per share. Basic earning (loss) per share is computed by dividing the net earning (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earning (loss) per share is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options and warrants.

(r)

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonable estimated.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

(s)

Recent Accounting pronouncements

In June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in the Company’s financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for the fiscal years beginning after December 15, 2006. The Company does not expect that the adoption of FIN 48 will have a significant effect on its financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No 108”). SAB No. 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. Under SAB No. 108, the Company should quantify errors using both a balance sheet and income statement approach (“dual approach”) and evaluate whether either approach results in a misstatement that is material when all relevant quantitative and qualitative factors are considered. The adoption of SAB 108 did not have any impact on the Company’s financial statements.

In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), which permits entities to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The decision about whether to elect the fair value option is applied instrument by instrument, with a few exceptions; the decision is irrevocable; and it is applied only to entire instruments and not to portions of instruments. SFAS No. 159 requires disclosures that facilitate comparisons (a) between entities that choose different measurement attributes for similar assets and liabilities and (b) between assets and liabilities in the financial statements of an entity that selects different measurement attributes for similar assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year provided the entity also elects to apply the provisions of SFAS No. 157 "Fair Value Measurements.” Upon implementation, an entity shall report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. Since the provisions of SFAS No. 159 are applied prospectively, any potential impact will depend on the instruments selected for fair value measurement at the time of implementation. The Company is currently evaluating the impact, if any, adoption of SFAS No. 159 will have on its financial statements.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 3 - Inventories

Inventories consist of the following as of September 30, 2007 and 2006:

	2007		2006

Raw materials	$	3,729,663	$	159,835
Work in process		8,192,194		-
Finished goods		3,825,639		-
Merchandise		1,203,495		421,549

Total	$	16,950,991	$	581,384

Note 4 - Loans Receivable

Loans receivable from unrelated companies include the following;

	2007		2006

Loan receivable from CNY, a private company in China, is unsecured, bears interest at 7% payable quarterly, interest only, and matures in January 2009. The loan is guaranteed by the shareholders of the debtor.	$	156,324	$	-

Loans receivable from NIG, a private company in Korea, is unsecured, bears interest at 9% payable quarterly, interest only, and matures in April and August 2008. The loans are guaranteed by the shareholders of the debtor.		4,925,565		-

Loans receivable from Boyang, a private company in Korea, is unsecured, bears interest at 6.5% payable quarterly, interest only, and matures in September 2008. The loans are guaranteed by the shareholders of the debtor.		262,204

Loans receivable from Phoenix M&M, a private company in Korea, is unsecured, bears interest at 9% payable quarterly, interest only, and matures in September 2008. The loan is guaranteed by the shareholders of the debtor.		5,472,850

Other miscellaneous short-term loans receivable		379,815		-

		11,196,758		-

Less: current portion		11,040,435		-

Loan receivable, net of current	$	156,323	$	-

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 5 - Investments in Non-marketable Securities

Non-marketable investments in which the company has less than a 20% interest and in which it does not have the ability to exercise significant influence over the investee are initially recorded at cost and periodically reviewed for other than temporary impairment.

The Company’s investments in debt and equity securities at September 30, 2007 and 2006 are as follows:

	2007		2006

Investment in Cintel Systems Corp.	$	513,353	$	-
Convertible debenture A - STS, 24.5% owners of PSTS		10,480,610		-
Phoenix Asset Investment		10,838,089		1,926,404
Investment in PluM Tech		218,914		-
Info Space (H.K.)		1,678,277		-
We-Tech		1,450,989		-
East Gate		1,191,679		-
Phoenix Springs		3,283,710		-
Phoenix M & M		1,597,525		-
Debt securities - Government bonds		333,975		-
Other miscellaneous		205,217		17,025

Total	$	31,792,338	$	1,943,429

The Convertible Debenture A, maturing on April 20, 2012, is non-interest bearing until the date of conversion. However, if conversion right is not exercised during the conversion period (i.e., the period from one year after the Issue Date until one month prior to the Maturity Date), then regardless of the coupon rate, the Company shall guarantee a compounded interest rate of 8.0% per annum in total on the bond. At any time between one year after the Issue Date and one month prior to the Maturity Date, the bond may, at the option of the holder, be converted into common shares in the Company at a conversion price of $8.60 (8,010 won). The conversion price will be adjusted based on the fair market value of the debtor's share. The adjustment shall be limited to a maximum of 30% of the conversion price. The debenture has been pledged as security for Convertible Debenture-B as per Note 11.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 6 - Property, Plant and Equipment

Property, plant and equipment consist of the following at September 30:

	2007		2006

Land	$	18,796,924	$	-
Buildings and improvements		25,169,011		-
Machinery and equipment		26,926,078		910,110
Furniture and fixtures		1,611,721		71,619
Vehicles		429,444		17,750
Software		788,383		733,304
Small tools		282,928		-
		74,004,489		1,732,783

Less: Accumulated depreciation		15,091,980		1,283,717
		58,912,509		449,066

Construction in progress		3,345,619		-

Property and equipment, net	$	62,258,128		449,066

Depreciation expenses for the periods ended September 30, 2007 and 2006 were $634,641 and $170,908, respectively.

Note 7 - Land Rights

The Company has an agreement with the government of the PRC for the use of land until February 14, 2054. According to the agreement, the Company is obligated to pay an annual management fee of approximately $2,400, and the land has to be used for manufacturing. The Company has the right to apply for renewal by notifying the government no later than six months prior to the expiry of the agreement. The government has no obligation to approve the renewal application.

The cost of the land right is capitalized and amortized over the life of the land right (50 years) on the straight-line method. The carrying value of land rights at September 30, 2007 and 2006 are summarized as follows:

	2007		2006

Land rights at cost	$	369,224	$	-
Less: Accumulated depreciation		30,395		-

Net carrying amount	$	338,829	$	-

Note 8 - Intangible Assets

The goodwill represents the intangible benefits that the acquired business is expected to bring to the Company in the future by providing the Company the access to potential strategic customers and broadening the Company’s product/service offerings to its customers.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 9 - Notes Payable

Notes payable consist of the following at September 30:

	2007		2006
Note payable to Industrial and Commercial Bank of China, payable monthly interest only with interest at LIBOR plus 0.85%. The note is unsecured and matures in December 2007.	$	2,001,616	$	-
Note payable to Industrial and Commercial Bank of China, payable monthly interest only with interest at LIBOR plus 0.85%. The note is unsecured and matures in April 2008.		3,001,767		-
Note payable to Industrial and Commercial Bank of China, payable monthly interest only with interest at LIBOR plus 0.75%. The note is unsecured and matures in September 2008.		5,003,383		-
Note payable to China Misheng Banking Corp, payable monthly interest only with interest at 6.36%. The note is unsecured and matures in December 2007.		1,501,016		-
Notes payable to shareholders, payable in semi-annually, with interest at 8%. The note is unsecured and matures in May 2008.		4,898,862		-
Notes payable to Hana Bank of Korea, payable monthly interest-only, with interest at 6.93% to 7.81%. The note is secured by real property in Korea and matures on March 2008.		2,483,900		-
Notes payable to Shin-Han Bank of Korea, payable monthly interest-only, with interest at 4.35% to 5.61% The notes are secured by real property and mature in October and November 2007.		547,285		-
Notes payable to Citi Bank Korea, payable monthly interest-only with interest at 5.51% to 5.59%. The notes are unsecured and mature in June 2008.		3,283,710		-
Note payable to Korea Exchange Bank, payable monthly interest-only, with interest at 4.68%. The note is unsecured and matures in November 2007.		1,094,570		-
Note payable to Kook Min Bank of Korea, payable monthly interest-only, with interest at 4.97%. The note is secured by a deed of trust covering the Company’s real property and matures in July 2008.		8,756,560		-
Note payable to Citi Bank Korea, payable monthly interest-only, with interest at 4.98%. The note is secured by a deed of trust covering the Company’s real property and matures in July 2008.		7,775,825		-
Note payable to Sam Sung Electronics, bearing no interest. The note loan is secured by a deed of trust covering the Company’s real property and matures in December 2011.		698,336		-
Notes payable to bank, payable monthly interest-only, with interest at 8%. The note is unsecured and matures in 2008.		7,028,404		-
Convertible note payable to Woori PEF, payable at maturity with principle, with interest at 8% matures in August 2012.		5,071,677		-
Auto loan payable with monthly payment of $340, bearing no interest. The loan is secured by the vehicle and matures in December 2008.		-		13,727
Note payable to an unrelated party, bearing no interest. The note is unsecured and due on demand.		39,000		39,000
Loan payable to local government with annual principal payment of $10,669, bearing no interest. The loan is unsecured and matures in October 2009		10,669		29,400
		53,196,580		85,576
Less: current portion		49,435,010		53,509
Long-term debt	$	3,761,570	$	32,067

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Following is a summary of principal maturities of notes payable over the next five years:

Years ending December 31,	Amount

2008	$	49,435,010
2009		3,046,273
2010		715,297
2011 and thereafter		-

Total	$	53,196,580

Note 10 - Employee Severance Benefits

Employees and directors with one year or more of service are entitled to receive a lump-sum payment upon termination of their employment based on their length of service and rate of pay at the time of termination. Accrued severance benefits represent the amount which would be payable assuming all eligible employees and directors are to terminate their employment as of the balance sheet date. The accrued severance benefits at September 30, 2007 and 2006, were $1,869,413 and $87,503, respectively.

Note 11 - Convertible Debentures

Pursuant to SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," the Company accounts for the convertible debentures as a liability at face value and no formal accounting recognition is assigned to the value inherent in the conversion feature.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

	2007		2006

Face value	$	-	$	-

Convertible Debenture - A		15,284,295		-
Convertible Debenture - B		64,920,000		-
Convertible Debenture - C		10,820,000		-

	$	91,024,295	$	-

Convertible Debenture -A

The convertible debentures are non-interest bearing, unsecured, and mature on October 30, 2011. The bonds are convertible to common stock of the Company at $0.50 per share. The holders have a right to adjust the conversion price at any time between April 1, 2008 and September 30, 2011. The adjustment discount will be 100% X ($0.50 - Previous 3 months average share price)/$0.50, to a maximum of 30%. The holders can exercise their conversion rights any time from October 25, 2006 to September 30, 2011. As of September 30, 2007, no bonds have been converted.

For any unconverted amount on October 30, 2011, the Company shall pay interest at the rate of 8% per annum provided that PSTS generates total revenues of $65,800,000 and an operating profit of $6,800,000 in 2007, and total revenue of $95,400,000, and an operating profit of $10,600,000 in 2008. If the conditions are not achieved, interest shall be calculated at 10% per annum. Interest shall be due and payable in cash on the maturity date of October 30, 2011.

Convertible Debenture - B

The convertible debenture will mature on April 12, 2012 and is convertible into shares of common stock of the Company, at the option of the holder, at a rate of $0.70 per share. The coupon rate of the bond shall be at the compounded interest rate of 2.3% per annum; provided however, if the bond is not converted during the period commencing on the issuance date through one month prior to the maturity date, the Company shall guarantee a compounded interest rate of 8% per annum.

Per the Debenture agreement, the Company will undertake to apply for listing of its common stock on any of the NASDAQ, London Stock Exchange, Hong Kong Stock Exchange and Singapore Exchange Securities Trading Limited and use its best efforts to obtain such listing by October 31, 2009. In the event that the Company does not secure such listing by October 31, 2009 for any reason not solely attributable to Woori, Woori shall be entitled to exercise its put option to redeem the Debenture at the face value and shall also be entitled to receive from the Company the payment of interest on the outstanding principal balance of the Debenture calculated at the compounded rate of ten per cent per annum. In the case of the Company completing the listing process prior to the end of October of 2009, Woori shall be entitled, on or after the fourth anniversary of the issuance of the Debenture, to exercise its put option to redeem the Debenture at the face value thereof and shall also be entitled to receive from the Company the payment of interest on the outstanding principal amount of the Debenture calculated at the compounded rate of 8% per annum. In case of the occurrence of any event of default by the Company, Woori shall be entitled to exercise its put option to redeem the Debenture at the face value thereof if such event of default is not cured within sixty days of notice, in which case Woori shall also be entitled to receive from the Company the payment of default interest on the outstanding principal balance of the Debenture calculated at the compounded rate of nineteen percent per annum.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

The Company has agreed to pledge as security all convertible bonds to be issued by any entity and subscribed by the Company using the proceeds from the Debenture in favor of the Company and all the shares of any such entity to be acquired by the Company. As of September 30, 2007, proceeds from the bond have been invested in $40,034,000 convertible debentures issued by STS as per Note 5.

Convertible debenture - C

The debenture will mature on April 12, 2012 and are convertible into shares of common stock of the Company, at the option of the holder at a rate of $0.70 per share. The coupon rate of the bond shall be at the compounded interest rate of 2.3% per annum. If the bond is not converted during the period commencing on the issuance date through one month prior to the maturity date, the Company shall guarantee a compounded interest rate of 8% per annum.

At any time during the period from November 1, 2009 to March 12, 2012, the holders are entitled to exercise their put option to redeem the Debentures at the face value thereof, in which case the holder shall also be entitled to receive from the Company the payment of interest on the outstanding principal balance of the Debentures calculated at the compounded rate of 8 % per annum. Upon the occurrence of any event of default by the Company, the holders will be entitled to exercise their put option to redeem the Debentures at the face value thereof if the event of default is not cured within sixty days of notice thereof, in which case the holders shall also be entitled to receive from the Company default interest on the outstanding principal balance of the Debentures calculated at the compounded rate of 19 % per annum.

The convertible debentures have not been included in the calculation of the diluted (loss) per share as their inclusion would be anti-dilutive.

Note 12 - Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for Income Taxes.” This Standard prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated. Corporate income tax rates applicable to the Korean subsidiaries in 2007 and 2006 are 16.5 percent of the first 100 million Korean Won ($105,700) of taxable income and 29.7 percent on the excess. For the United States operation, the corporate tax rate is approximately 34%. The company provided a valuation allowance equal to the deferred tax amounts resulting from the tax losses in the United States, as it is not likely that they will be realized. Tax losses from the Korean subsidiaries can be carried forward for five years to offset future taxable income. The U.S. tax losses can be carried forward for fifteen years to offset future taxable income. The company has accumulated approximately $7,780,000 and $2,260,000 of taxable losses in its Korea and US operations, respectively, which can be used to offset future taxable income. The utilization of the Korean losses expires in years 2008 to 2011 and the US losses in years 2019 to 2021.

Under SFAS No. 109 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes. The Company has deferred income tax assets arising from research and development expenses. For accounting purposes, these amounts are expenses when incurred. Under Korean tax laws, these amounts are deferred and amortized on a straight-line basis over 5 years.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

For the first two profitable taxation years, taxable income of the Company's Chinese subsidiary, PSTS, is exempt from income taxes. Taxable income in the third to fifth profitable taxation years will be taxed at 5% and subsequently the applicable tax rate will be 10%.

The taxable income is determined by off-setting the income for tax purposes of the period with tax losses carried forward from prior years. Tax losses can be carried forward for five years. The Company provided a valuation allowance equal to the deferred tax amounts resulting from the tax losses as it is not more likely than not that they will be realized. The Company has accumulated approximately $1,828,000 of taxable losses, which can be used to offset future taxable income. The utilization of the losses expires in 2008 ($509,187), 2009 ($939,866), 2010 ($2,839,746), 2011 ($912,909) and 2012 ($1,156,100).

The Company has deferred tax assets (liabilities) at September 30, 2007 and 2006 as follows:

	2007			2006
Research and development expenses amortized over 5 years for tax purposes	$	171,949		$	265,671
Other timing differences		257,620			(55,272	)
Net operating loss carryforwards		2,829,750			2,194,563
		3,259,319			2,404,962
Valuation allowance (Note 19)		(3,259,319	)		(2,404,962	)

	$	-		$	-

Note 13 - Capital

In January 2005, the Company issued 240,000 common shares for consulting service at the value of $20,500.

In January 2005, the Company issued 2,262,424 common shares from escrow upon the repayment of $40,000 of the convertible debenture.

In February 2005, the Company issued 622,200 common shares from escrow upon the repayment of $50,000 of the convertible debentures.

In February 2005, 400,000 common shares were issued for consulting services at the value of $44,000.

In March 2005, the Company issued 1,485,120 common shares from escrow upon the repayment of $80,000 of the convertible debenture.

In March 2005, the Company repurchased 93,830 common shares for $105,259. The excess of repurchase price over fair market value was recorded as an employee benefit.

In March 2005, 1,905,136 common shares were issued upon the conversion of $140,000 of convertible debenture.

In April 2005, the Company issued 1,311,769 common shares from escrow upon the repayment of $40,000 of the convertible debenture.

In April 2005, 1,200,000 common shares were issued for consulting services at the value of $48,000.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

In April 2005, 712,500 common shares were issued upon the conversion of $20,000 of convertible debenture.

In May 2005, 1,329,346 common shares were issued upon the conversion of $50,000 of convertible debenture.

In May 2005, the Company issued 2,333,551 common shares from escrow upon the repayment of $70,000 of the convertible debenture.

In June 2005, 150,000 common shares were issued for consulting services at the value of $4,500.

In June 2005, the Company issued 3,268,031 common shares from escrow upon the repayment of $80,000 of the convertible debenture.

In July 2005, the Company issued 704,225 common shares from escrow upon the repayment of $20,000 of the convertible debenture.

In September 2005, 500,000 common shares were issued for consulting services at the value of $15,000.

In October 2005, 400,000 common shares were issued for consulting services at the value of $36,000.

In December 2005, the Company issued 145,252 common shares for the repayment of $38,492 of the convertible debenture including interest.

In April 2006, 500,000 common shares were issued for consulting services at the value of $90,000.

In May 2006, the Company issued 44,300,542 common shares for the repayment of $8,853,191 of the convertible debenture including interest.

In July 2006, 440,000 common shares were issued for consulting services at the value of $70,400.

In February 2007, 580,000 common shares were issued for consulting services at the value of $98,600.

In March 2007, 100,000 common shares were issued as employee remuneration at the value of $20,000.

In June 2007, 825,000 common shares were issued for consulting services at the value of $319,400.

In July 2007, 1,200,000 common shares were issued for consulting services at the value of $486,000.

Stock Warrants and Options

The Company has accounted for its stock options and warrants in accordance with SFAS 123 "Accounting for Stock - Based Compensation" and SFAS 148 "Accounting for Stock - Based compensation - Transition and Disclosure." Value of options granted has been estimated by the Black Scholes option pricing model. The assumptions are evaluated annually and revised as necessary to reflect market conditions and additional experience. The following assumptions were used:

	2007			2006
Interest rate		6.5	%		6.5	%
Expected volatility		70.0	%		70.0	%
Expected life in years		6			6
Expected dividends		-			-

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

In 1999, the Board of Directors of Cintel Korea adopted an option plan to allow employees to purchase ordinary shares of the Cintel Korea.

In August 1999, the share option plan granted 96,000 stock options for the common stock of Cintel Korea having a $0.425 nominal par value each and an exercise price of $0.425. In 2002, 53,000 stock options were cancelled. In 2003, an additional 30,000 stock options were cancelled.

In March 2000, 225,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.68. In 2002, 135,000 and in 2003, an additional 47,000 of these stock options were cancelled.

In February 2001, 30,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.72. In 2003, all of these stock options were cancelled.

In March 2003, 65,000 stock options were granted having a $0.425 nominal par value each and an exercise price of $0.71. In the same year, 15,000 of these stock options were cancelled.

The options vest gradually over a period of 3 years from the date of grant. The term of each option shall not be more than 8 years from the date of grant. No options have vested during the nine months ended September 30, 2007 and 2006.

The stock options have not been included in the calculation of the diluted earnings per share as their inclusion would be anti-dilutive.

The following table summarizes the stock option activity during the nine months in 2007 and 2006:

	2007		2006

Outstanding, beginning of period	$	106,000	$	106,000
Exercised		-		-
Cancelled		-		-
Expired		106,000		-
Outstanding, end of period	$	-	$	106,000

Weighted average fair value of options granted during the period	$	-	$	-
Weighted average exercise price of options, beginning of period	$	0.62	$	0.62
Weighted average exercise price of options granted during the period	$	-	$	-
Weighted average exercise price of options, end of period	$	0.67	$	0.67
Weighted average remaining contractual life of common stock options		n/a		1 year

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Significant transactions with companies affiliated by common control for the nine month ended and as of September 30, 2007 are summarized as follows:

	2007

Accounts receivable - STS	$	2,227,935
Accounts receivable - BKLCD	$	203,050
Accounts payable - STS	$	5,56,054
Accounts payable - BKLCD	$	636,142
Sales - STS	$	27,629,520
Sales - BKLCD	$	3,603,825
Purchase - STS	$	21,924,760
Purchase - BKLCD	$	3,675,901

These transactions were in the normal course of business and recorded at an exchange value established and agreed upon by the above mentioned parties.

Note 15 - Significant Concentration of Sales

For the nine months ended September 30, 2007, the Company’s Chinese subsidiary, PSTS, had three major customers which accounted for about 82% of the PSTS’s total revenue. For the same period, the Company’s Korean subsidiary, PDT, had one major customer which accounted for about 71% of the PDT’s total revenue.

Note 16 - Appropriated Retained Earnings

The Company’s Korean subsidiary, PDT, is required under the regulation of Restriction of Tax Reduction and Exemption Act in Korea, to appropriate a part of their net profits for statutory surplus reserve and reserve for technological development and business investment. For the statutory surplus reserve, an amount equivalent to 10% or more of the declared dividends is transferred to the reserve until the reserve reaches 50% of the registered capital of PDT. The reserve is not distributable as cash dividends but can be converted into capital upon approval of the Company.

Note 17 - Earnings per Share

The following reconciles the numerators and denominators of the basic and diluted per share computation for the nine months ended September 30, 2007 and 2006:

	2007			2006
Numerator for basic and diluted earnings per share:
Net income (loss)	$	(1,369,555	)	$	(1,367,762	)

Denominator:
Basic and diluted weighted average shares outstanding		88,842,396			62,512,395

Basic and diluted earnings (loss) per share	$	(0.02	)	$	(0.03	)

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

Note 18- Commitments and Contingencies

(a)

The Company entered into a contract with iMimic Networking, Inc. for the use of the iMimic solution within Korea starting November 17, 2000. For the use of this solution, the Company paid $70,000 as an upfront payment and pays a $640 royalty for each product sold that uses the iMimic solution. The Company is also required to pay an annual royalty fee of $10,000. The contract has no fixed termination date.

(b)

The Company leases its premises under a non-cancellable lease agreement which will expire in December 2007 and February 2008. Future minimum annual payments (exclusive of taxes and insurance) under the leases are $17,800 in 2007 and $1,950 in 2008.

(c)

The Company is committed to pay interest of 8% or 10% on its convertible bonds payable, should PSTS fail to achieve the predetermined earnings threshold as disclosed in Note 11.

(d)

The Company's Chinese subsidiary, PSTS, is committed to pay a management fee to the government of Republic of China of approximately $2,400 per annum for the use of land as disclosed in Note 7.

(e)

The Company's Chinese subsidiary, PSTS, in accordance with its Articles of Incorporation, the Company has to maintain a minimum capital of $20,000,000.

(f)

The Company's Korean subsidiary Bluecomm is committed to vehicle lease obligations which expires in June, 2010. Future minimum annual payments (exclusive of tax and insurance) under the lease are as follows:

2007			32,453
2008			64,907
2009			64,907
2010			32,453
			194,720

(g)

The Company’s Korean subsidiary, PDT, has an outstanding commitment under standby letters of credit totaling approximately $2,000,000. This standby letter of credit was issued on behalf of affiliated company. In addition, PDT has an outstanding debt-guarantee it provided on behalf of an affiliated company for a debt up to KRW500,000,000.

Note 19 - Restatement of the 2006 Comparative Consolidated Financial Statements

Restatement dated February 2, 2007

On further consideration, the Company determined that at September 30, 2006 it was not more likely than not that deferred tax benefits would be realized, therefore, the Company provided a 100% valuation allowance against the deferred tax assets.

CINTEL CORP. AND SUBSIDIARIES

Notes to Consolidated Interim Financial Statements

September 30, 2007 and 2006

(Unaudited)

The effects of this restatement for September 30, 2006 are to increase the valuation allowance from the consolidated financial statements dated November 13, 2006 to $1,149,389 from nil (Note 12); to decrease the deferred tax assets on the 2006 comparative consolidated balance sheets to nil from $1,149,389 (comprised of $202,024 current and $947,365 long term); and to decrease the deferred income taxes recoverable from $235,181 to an expense of nil on the 2006 comparative consolidated statements of operations and comprehensive loss.

Restatement dated June 7, 2007

On further consideration, the Company decided to defer recognition of revenue for all sale arrangements that include the credit terms "condition of clearing from original buyer", when distributors who used the Company's products in network installation projects were allowed to pay when their final end-users paid them, until such time as the underlying payment condition has been met.

The affects of this restatement for September 30, 2006 are to increase the deferred revenue from the consolidated financial statements dated February 2, 2007 to $143,009 from $nil on the consolidated balance sheet; and to increase revenue from merchandise from $3,980,325 to $4,207,788, increase revenue from finished goods from $76,680 to $85,372, increase cost of sales for merchandise from $3,795,287 to $4,015,586 and to increase cost of sales for finished goods from $51,538 to $65,359 on the consolidated statements of operations and comprehensive loss.

Note 20- Subsequent Events

On October 30, 2007, the Company entered into a Share Subscription Agreement pursuant to which the Company received subscriptions for the sale of 7,000,000 shares of common stock to eight investors. The offering closed on October 30, 2007. The shares of common stock were sold at a price of $0.70 per share.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

FORWARD-LOOKING STATEMENTS

The information in this quarterly report on Form 10-QSB contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management's current expectations and are inherently uncertain. Our actual results may differ significantly from management's expectations.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes of Cintel Corp. (referred to herein as the "Company," "we," "us," and "our") included herewith and with our annual report on Form 10-KSB for the fiscal year ended December 31, 2006. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

OVERVIEW

Founded in 1997, the Company evolved from being an internet traffic management (“ITM”) solution provider to a semiconductor-focused company. The Company has created a conglomeration of technology products to include NAND flash memory packaging, TFT LCD assembly, semiconductor packaging and testing specialists, as well as a total solution provider for memory applications for home appliances, semiconductor and TFT-LCD application products.

The Company first entered the semiconductor industry in 2006 with the acquisition of Phoenix Semiconductor Telecommunication (Suzhou), Ltd. ("PSTS"), a semiconductor manufacturer with established relationships with Samsung Electronics. PSTS was a spin-off company of Samsung Electronics and now is a dedicated provider of contracted products for Samsung Electronics and other vendors.

The Company also went into new markets in May 2007 with the acquisition of Bluecomm Co., Ltd. (“Bluecomm”). With customers like Pizza Hut Korea, The Company stepped into the Customer Relationship Management sector. Bluecomm is a Korean company engaged in the business of CRM solution and consulting, call center operation, and database marketing. It also provides total solutions for call center outsourcing and Home Service Center hosting. Bluecomm commenced its CRM related business in October 2005 and in June 2006 entered into an agreement with PizzaHut Korea to provide HSC and DBM operation services.

On August 2007, the Company acquired a semiconductor / display manufacturing equipment producer in Korea according to its strategic acquisition plan. Phoenix Digital Tech Co., Ltd, (“PDT”), ever since its foundation in 1992, has been developing Hi-tech related manufacturing facilities and has special expertise in four areas: Flat Panel Display (FPD) division, Semiconductor division, Surface Mount Technology (SMT) & Automated Optical Inspection (AOI) division, and Factory Automation (FA) division. It has been maintaining its business relationship with worldwide corporations like Samsung Electronics, especially in connection with Samsung Electronics’ LCD production and Samsung SDI’s PDP production.

The Company has selected the semiconductor as primary target markets and plans to expand its interest in the semiconductor and its related business over the years to help boost sales and secure growth within the Company. The Company’s acquisition of several semiconductor manufacturing and packaging plants continues to bring the Company into the mainstream of the industry and will fuel the increased sales in the coming years. The Company will continue to strive towards a marked place in the semiconductor and flash memory packaging fields with multiple acquisitions of firms related to that business sector. These purchases have been coordinated with our key investors and market partners to help expand the Company’s marketable service offerings and product lines.

BUSINESS TRENDS

Semiconductor - According to Gartner, world’s leading information technology researcher, the semiconductor market is poised to record another year of modest growth. In the short term, although inventory levels are improving, the outlook for growth in end-market semiconductor demand is weakening, especially in the key PC and cellular phone markets. Semiconductor supply-side market conditions remain controlled, with vendors lacking the business confidence to invest aggressively, confirmed by the slowdown in capital spending expected in 2007. The exception is in the commodity memory space, where volatility remains a feature of the dynamic random-access memory (DRAM) and NAND flash memory markets. According to iSuppli, an expert research company in the electronics industry, with improved demand expected for the second-half of the year coupled to a tight supply situation, NAND flash revenue growth is forecasted to the 10 to 15 percent range, up from the previous prediction of flat growth. One of CinTel’s subsidiaries, PSTS, has strong contracts with industry leaders that will ensure to meet the expected market demand. One of the PSTS’s current focal products is NAND flash memory.

CRM / DBM - The changes in markets and consumer lifestyle are having a powerful impact on customer behavior. The overarching result is that consumer are putting greater demands on firms in terms of high value products and services provided at the right place at the right time. As the changes drive the marketplace to become relationship-based, the only way to maintain market share is to realign the companies’ business strategy and become customer centric. Thus, customer relationship management has become strategically important in positioning a company in today’s market. CRM solution, Data Base Management, and telemarketing are all fast-growing businesses in the Korea market. Bluecomm has special expertise in DBM, HSC hosting, and telemarketing business.

Display - According to the Quarterly TFT LCD Supply/Demand and Capital Spending Report, TFT LCD equipment spending will drop 38% to $7.6 billion in 2007, but the market is forecast to recover in 2008 to $8.8 billion and continue to grow another 12.1% in 2009. With panel inventories at record low levels in notebook PCs and LCD monitors, supply has tightened, so prices have stabilized and even increased in a number of cases. With supply expected to remain tight through 2008, panel suppliers are expected to place purchase orders for new equipment in the second half of 2007 creating an improved outlook for equipment suppliers. PDT is mainly producing PDP, LCD, and semiconductor manufacturing equipments that can meet high-technology need for fine movement control.

RESULTS OF OPERATIONS

Nine months period ended Sep 30, 2007 compared to the nine months ended Sep 30, 2006.

		(Unit: USD)

	9/30/2007	9/30/2006

Revenue	133,655,285	4,359,178

Cost of sales	121,971,586	4,080,945

Gross Profit	11,683,699	278,233

Expenses	10,938,970	1,727,687

Operating Profit (Loss)	744,729	(1,449,454	)

Profit (Loss) Before Income Taxes	302,760	(1,315,389	)

The first nine months of 2007 and 2006 revenues totaled approximately $133.66 million and approximately $4.36 million, respectively, which reflects an increase of approximately of $129.29 million. The main reason for the increase in revenue for the first nine months of 2007, as compared to the nine months of 2006, was primarily attributed to the consolidating of the revenue of Phoenix Semiconductor Telecommunication (Suzhou) Co., Ltd (“PSTS”), our subsidiary. In October 2006 and the consolidating of the revenue of Blucomm Co., Ltd. (“Bluecomm”), our subsidiary. In May 2007 and the consolidating of the revenue of Phoenix Digital Tech Do., Ltd.(“PDT”), our subsidiary. In August 2007.

The revenue of PSTS for the nine months of 2007 is $83.92million. PSTS’s main customer is Samsung Electronics Corporation, the largest semiconductor manufacturer in the world. PSTS's main products are semiconductor packaging, NAND flash memory and LCD assembly.

The revenue of Bluecomm for the nine months of 2007 is $4.70 million. Bluecomm is a Korean company engaged in the business of CRM solution and consulting, call center operation and database marketing. The revenue of Cintel Korea for the nine months of 2007 is $1.0 million.

The revenue of PDT for the nine months of 2007 is $44.0million. PDT’s main customer is Samsung Electronics Corporation, the largest semiconductor manufacturer in the world. PDT's main products are semiconductor / display manufacturing equipments.

The increase in cost of sales and gross margins for the first nine months of 2007 compared to the same period in 2006 was primarily attributable to the increase in revenues, but gross profit ratio improved from 6.3% in 2006 to 8.7% in 2007 due.

Total expenses for the first nine months of 2007 and 2006 totaled approximately $10.93 million and approximately $1.73 million. The main reason for the increase in the total expenses was primarily attributed to the reflecting of the expenses of PSTS, Bluecomm and PDT in the consolidated financial statement. In addition, there was an increase in consulting fee for the issuance of convertible bonds and the selection of a target company for M&A.

The operating profit for the first nine months of 2007 and 2006 totaled $0.74 million and $(1.45) million respectively. The main reason for the turnaround in the operating profit was primarily attributed to the improvement of gross profit ratio and of profit of PSTS in the third quarter, and the profit of PDT reflected in the consolidated financial statement due to its acquisition.

Total profit before income taxes the first nine months of 2007 and 2006 totaled $0.30 million and $(1.32) million respectively.

Three months period ended Sep 30, 2007 compared to the three months ended Sep 30, 2006

		(Unit: USD)

	9/30/2007	9/30/2006

Revenue	85,826,133	540,025

Cost of sales	76,339,829	487,335

Gross Profit	9,486,304	52,690

Expenses	8,596,619	596,057

Operating Profit (Loss)	889,685	(543,367	)

Profit Loss Before Income Taxes	1,750,561	(535,758	)

For the three months period ended September 30, 2007 and 2006 revenues totaled approximately $85.82 million and approximately $0.54 million, respectively, which reflects an increase of approximately of $85.28 million. The main reason for the increase in revenue was primarily attributed to the acquisition of PSTS, Bluecomm and PDT.

The increase in cost of sales for the three months period ended September 30 of 2007 compared to the same period in 2006 was primarily attributable to the acquisition of PSTS, Bluecomm and PDT.

Through the strategic acquisition of companies in semiconductor and its related industry, CinTel expects a consistent growth based on the increase in revenues and gross profit in 2007 compared to in 2006.

Total expenses for the three months period ended September 30, 2007 and 2006 totaled approximately $8.59 million and approximately $0.59 million. The main reason for the increase in the total expenses was primarily attributed to the reflecting of the expenses of PSTS, Bluecomm and PDT in the consolidated financial statement.

The operating profit for the three months period ended September 30, 2007 and 2006 totaled $0.89 million and $(0.54) million, respectively. Total profit before income taxes for the three months period ended September 30, 2007 and 2006 totaled $1.75 million and $(0.53) million respectively. The main reason for the turnaround in the total profit before income taxes was primarily attributable to the increase in the profit of PSTS in the third quarter and the reflection of the third quarter profit of PDT in the consolidated financial statement.

LIQUIDITY AND CAPITAL RESOURCES

As of Sep 30, 2007 our cash balance was $27,482,820 compared to $1,333,510 at Sep 30, 2006. Total current assets at Sep 30, 2007 were $101,048,136 compared to $3,421,601 at Sep 30, 2006. We currently plan to use the cash balance and cash generated from operations for our growth through the acquisitions of semiconductor manufacturing company.

For the nine months ended Sep 30, 2007, net cash used in operating activities was $(15,964,969) as compared to $(1,708,564) for the nine months ended Sep 30, 2006. The decrease in cash used in operating activities can be attributed to the increase in the accounts receivable, and inventories and other receivable.

For the nine months ended Sep 30, 2007, net cash used in investing activities was $(74,931,563), compared to net cash used in investing activities of $103,756 for the nine months ended Sep 30, 2006. The main reason for the decrease in cash used in investing activities was primarily attributed to the purchasing of the convertible bond of Kosdaq listed semiconductor manufacturer in Korea, STS Semiconductor & Telecommunications Co., Ltd., the acquisition of Bluecomm specializing in CRM the acquisition of PDT, a semiconductor / display manufacturing equipment producer in Korea, the acquisition of property and equipment.

For the nine months ended Sep 30, 2007, net cash provided by Financing Activities was $108,804,532 compared to $(638,883) for the nine months ended Sep 30, 2006. The main reason for the increase in cash used in operating activities was primarily attributed to the issuing of convertible bond to Woori PEF in the amount of $65 million and BoKwang Group in the amount of $11 million for financing. Another reason for the increase was attributed to the increase in the bank loan for the expansion of facilities. We are planning to grow as a semiconductor group by investing the funds into the acquisition of semiconductor manufacturing companies.

ALLOWANCE FOR CREDIT LOSS

The allowance for credit losses is management’s estimate of incurred losses in our customer and commercial accounts receivables. Management performs detailed review of individual portfolios to determine if an impairment has occurred and to assess the adequacy of the allowance for credit losses, based on historical and current trends and other factors affecting credit losses. When receivables are past due for a period exceeding 2 years, a 100% allowance for credit losses is established without an individual analysis of the customer. A 100% allowance for credit losses is established, in an amount determined to be uncollectible, for the customer whom is not discontinuing operations or is facing financial issues that could result in discontinuance of business based on the assumptions management believes are reasonably likely to occur in future.

On Sep 30, 2007, the allowance for credit losses was $1,699,283 of $17,761,557 in accounts receivables and on Sep 30, 2006, the allowance for credit losses was $1,117,530 of $1,734,424 of accounts receivables.

The accounts receivables older than 2 years were incurred because of national economic issues in the Korean market with changing many management situations, with bankrupt companies and bad cash flow of many companies in Korea beginning in 2000. Our credit losses ratio is moderately high but we expect a decrease of credit losses ratio in future as most Korean companies have restructured to establish more stable organizations.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

SIGNIFICANT ACCOUNTING POLICIES

Currency Translation - The Company's functional currency is Korean won. Adjustments to translate those statements into U.S. dollars at the balance sheet date are recorded in other comprehensive income. Foreign currency transactions of the Korean operation have been translated to Korean Won at the rate prevailing at the time of the transaction. Realized foreign exchange gains and losses have been charged to income in the year.

Concentration of Credit Risk - SFAS No. 105, "Disclosure of Information About Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk", requires disclosure of any significant off-balance sheet risk and credit risk concentration. The Company does not have significant off-balance sheet risk or credit concentration. The Company maintains cash and cash equivalents with major Korean financial institutions. The Company's provides credit to its clients in the normal course of its operations. It carries out, on a continuing basis, credit checks on its clients and maintains provisions for contingent credit losses which, once they materialize, are consistent with management's forecasts. For other debts, the Company determines, on a continuing basis, the probable losses and sets up a provision for losses based on the estimated realizable value. Concentration of credit risk arises when a group of clients having a similar characteristic such that their ability to meet their obligations is expected to be affected similarly by changes in economic conditions. The Company does not have any significant risk with respect to a single client.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based Payment" (Statement 123). This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met; those conditions are much the same as the related conditions in Statement 123. This Statement is effective for public entities that do not file as a small business issuers as of the beginning of the first interim or annual reporting period that begins after June 15, 2005. This Statement applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. The cumulative effect of initially applying this Statement, if any, is recognized as of the required effective date and is not expected to have a material impact on the Company's consolidated financial statements.

Allowance for Credit Loss - The allowance for credit losses is management's estimate of incurred losses in our customer and commercial accounts receivables. Management performs detailed review of individual portfolios to determine if an impairment has occurred and to assess the adequacy of the allowance for credit losses, based on historical and current trends and other factors affecting credit losses. When receivables are past due for a period exceeding 2 years, a 100% allowance for credit losses is established without an individual analysis of the customer. A 100% allowance for credit losses is established, in an amount determined to be uncollectible, for the customer whom is not discontinuing operations or is facing financial issues that could result in discontinuance of business based on the assumptions management believes are reasonably likely to occur in future.

On December 31, 2005, the allowance for credit losses was $1,048,068 of $2,071,528 in accounts receivables and on December 31, 2004, the allowance for credit losses was $970,421 of $1,565,712 of accounts receivables. The allowance for credit losses in 2005 saw an increase of $77,647 (8%) compared to 2004. The $970.421 allowance was established for credit losses as of December 31, 2004, for 100% credit losses of more than 2 years. The increasing of allowances for credit losses as of December 31, 2005 was primarily due to receivables which occurred in 2003. We established a 100% allowance for credit losses for the receivables of more than 2 years and for customers who have an impairment of capital assets, are discontinuing business operations or are suffering from bad cash flow and liquidity issues. The accounts receivables older than 2 years were incurred because of national economic issues in the Korean market with changing many management situations, with bankrupt companies and bad cash flow of many companies in Korea beginning in 2000. Our credit losses ratio is moderately high but we expect a decrease of credit losses ratio in future as most Korean companies have restructured to establish more stable organizations.

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3 (Statement No. 154). Statement No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle. Statement No. 154 requires retrospective application of any change in accounting principle to prior periods' financial statements. Statement No. 154 is effective for the first fiscal period beginning after December 15, 2005. We do not expect the implementation of Statement No. 154 to have a significant impact on our consolidated financial statements.

ITEM 3. CONTROLS AND PROCEDURES.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (1) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure; and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change to our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

On October 26, 2007, the shareholders owning a majority of the Company’s common stock voted to adopt amended and restated Articles of Incorporation.

Item 5. Other Information.

On October 30, 2007, the Company’s Board of Directors approved the adoption of amended and restated Bylaws.

Item 6. Exhibits.

Exhibit Number		Description

3.1		Amended and Restated Articles of Incorporation filed with the Secretary of State of Nevada on November 7, 2007 (filed herewith)
3.2		Amended and Restated Bylaws (filed herewith)
4.1		Standby Equity Distribution Agreement, dated August 4, 2004, between Cornell Capital Partners, L.P. and the Company (Incorporated by reference to the Company’s registration statement on Form SB-2 (File No. 333-119002), filed with the Securities and Exchange Commission on September 15, 2004)
4.2		$240,000 principal amount Compensation Debenture, due August 4, 2007, issued to Cornell Capital Partners, L.P., in connection with the Standby Equity Distribution Agreement (Incorporated by reference to the Company’s registration statement on Form SB-2 (File No. 333-119002), filed with the Securities and Exchange Commission on September 15, 2004)
4.3		Convertible Note in the principal amount of $40,000 issued to Sang Yong Oh (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 21, 2005)
4.4		Convertible Note in the principal amount of $400,000 issued to Tai Bok Kim (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 21, 2005)
4.5		Convertible Note in the principal amount of $9,640 issued to Meung Jun Lee (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.6		Convertible Note in the principal amount of $28,930 issued to Jin Yong Kim (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)

Exhibit Number		Description

4.7		Convertible Note in the principal amount of $48,300 issued to Su Jung Jun (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.8		Convertible Note in the principal amount of $48,300 issued to Se Jung Oh (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.9		Convertible Note in the principal amount of $48,300 issued to Sun Kug Hwang (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.10		Convertible Note in the principal amount of $192,864 issued to Woo Young Moon (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.11		Convertible Note in the principal amount of $336,000 issued to Joo Chan Lee (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.12		Convertible Note in the principal amount of $483,000 issued to Sang Ho Han (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.13		Convertible Note in the principal amount of $483,000 issued to Jun Ro Kim (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.14		Convertible Note in the principal amount of $483,000 issued to Tai Bok Kim (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 21, 2005)
4.15		Convertible Note in the principal amount of $2,082,500 issued to Tai Bok Kim (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.16		Convertible Note in the principal amount of $280,000 issued to Joo Chan Lee (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.17		Convertible Note in the principal amount of $281,065 issued to Sang Yong Oh (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.18		Convertible Note in the principal amount of $246,400 issued to JungMi Lee (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.19		Convertible Note in the principal amount of $59,172 issued to Sung Min Chang (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.20		Convertible Note in the principal amount of $246,400 issued to Eun Suk Shin (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.21		Convertible Note in the principal amount of $492,800 issued to Overnet Co., Ltd. (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.22		Convertible Note in the principal amount of $98,620 issued to Yeun Jae Jo (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.23		Convertible Note in the principal amount of $985,950 issued to Equinox Partners Inc. (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.24		Convertible Note in the principal amount of $788,950 issued to Kei Wook Lee (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 20, 2005)
4.25		Convertible Note in the principal amount of $492,800 issued to Seok Kyu Hong (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)
4.26		Convertible Note in the principal amount of $197,200 issued to Moon Soo Park (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)
10.1		Distribution Agreement dated March 15, 2006 among Cintel Corp. and InterSpace Computers, Inc. (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 3, 2006)
10.2		Convertible Bonds Subscription Agreement between the Company and Axlon Corporation dated October 24, 2006 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on October 31, 2006)
10.3		Convertible Bonds Subscription Agreement between the Company and Emerging Memory & Logic Solutions, Inc. dated October 24, 2006 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on October 31, 2006)
10.4		Convertible Bonds Subscription Agreement between the Company and KTB China Optimum Fund dated October 24, 2006 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on October 31, 2006)
10.5		Convertible Bonds Subscription Agreement between the Company and Emerging Memory & Logic Solutions, Inc. dated October 24, 2006 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on October 31, 2006)
10.6		Stock Purchase Agreement by and between Cintel Corp. and STS Semiconductor & Telecommunications Co., Ltd. Dated October 30,2006 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 3, 2006)
10.6		Convertible Bonds Subscription Agreement between the Company and Woori Private equity. dated March 15, 2007 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on March 21, 2007)

Exhibit Number		Description

10.7		Convertible Bonds Subscription Agreement between the Company and Korea Culture Promotion Inc. and Phoenix M&M Corporation. dated April 12, 2007 (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on April 13, 2007)
10.8		Convertible Bonds Purchase Agreement by and between Cintel Corp. and STS Semiconductor & Telecommunications Co., Ltd. Dated April 19, 2007 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 26, 2006)
10.9		Stock Purchase Agreement by and among Cintel Corp. and Ispromotion Co., Ltd., Soo Hyun You, Seol Hee Park, Nam Won Cho, De Jong An, Hyun Ik Shin, Sung Hyun Yoon, Soon Young Moon, Joon Sang Yoo, Gangnam TM Center Co., Ltd. Dated May 18,2007 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2007)
10.10		Share Subscription Agreement by and among Cintel Corp. and Phoenix Digital Tech Co., Ltd., Dated August 27,2007 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 30, 2007)
31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 14, 2007
	CINTEL CORP.


	By:	/s/ Sang Don Kim
		Name: Sang Don Kim
		Title: Chief Executive Officer


	By:	/s/ Kyo Jin Kang
		Name: Kyo Jin Kang
		Title: Principal Financial Officer Principal Accounting Officer

Chun Can Capital (CNCN) 10QSB2007 Q3 Quarterly report (small business)