UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
November 3, 1999
Commission file number 33-55254-11
FORLINK SOFTWARE CORPORATION, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0438458
(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
P.O. Box 60, Collex/Geneva SWITZERLAND CH1239
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: 011-41-22-900-0000
1
Item No. 1. Changes in Control of the Registrant.
On November 18, 1999, the Company filed a Form 8-K regarding a Plan of
Reorganization it entered into with Beijing Forlink Software Technology Co. Ltd.
This amended Form 8-K supplements the November 18, 1999 filing. The November 18,
1999 Form 8-K filed by the Company is incorporated herein by this reference and
is supplemented with the financial information attached hereto.
Item No. 7. Exhibits
(27) Financial Data Schedule
(99) Other Exhibits:
Audited financial statements of Beijing Forlink Software
Technology Co., Ltd. ("BFST") for the period from November 11, 1998 (date of
incorporation) to September 30, 1999. Pro forma information is not provided as
it would essentially be the same information as BFST as the Company had little
activity for the periods presented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FORLINK SOFTWARE CORPORATION, INC.
Date: January 17, 2000. ________________________________
Michael J.A. Harrop, Director
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Beijing Forlink Software Technology Co., Ltd.
Report of Independent Certified Public Accountants
and Financial Statements
For the period from November 11, 1998
(date of incorporation) to September 30, 1999
Beijing Forlink Software Technology Co., Ltd.
Index To Financial Statements
Pages
Report of Independent Certified Public Accountants 1
Balance Sheet 2
Statement of Operations 3
Statement of Owners' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 10
BDO International
Certified Public Accountants
29th Floor Wing On Centre
111 Connaught Road Central
Hong Kong
Telephone: (852) 2541-5041
Fax: (852) 2815-0002
Report of Independent Certified Public Accountants
To the Board of Directors of
Beijing Forlink Software Technology Co., Ltd.
We have audited the accompanying balance sheet of Beijing Forlink Software
Technology Co., Ltd. as of September 30, 1999, and the related statements of
operations, owners' equity and cash flows for the period from November 11, 1998
(date of incorporation) to September 30, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Beijing Forlink Software
Technology Co., Ltd. as of September 30, 1999 and the results of its operations
and cash flows for the period from November 11, 1998 (date of incorporation) to
September 30, 1999, in conformity with generally accepted accounting principles
in the United States of America.
BDO International
Certified Public Accountants
Hong Kong
December 30, 1999
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Beijing Forlink Software Technology Co., Ltd.
Balance Sheet
(Expressed in US Dollars)
September 30,
1999
---------------
ASSETS
Current assets
Cash and cash equivalents $ 108,456
Accounts receivable (Note 3) 179
Other receivables, deposits and prepayments 71
Inventories (Note 4) 11,890
---------------
Total current assets 120,596
Property and equipment, net (Note 5) 53,340
---------------
Total assets $ 173,936
===============
LIABILITIES AND OWNERS' EQUITY
Current liabilities
Other payables and accrued expenses $ 60,791
Other taxes payable (Note 6) 120
---------------
Total current liabilities 60,911
Commitments and contingencies (Note 7)
Owners' equity
Contributed capital (Note 8) 120,802
Accumulated loss (7,777)
---------------
Total owners' equity 113,025
---------------
Total liabilities and owners' equity $ 173,936
===============
See accompanying notes to financial statements.
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Beijing Forlink Software Technology Co., Ltd.
Statement of Operations
(Expressed in US Dollars)
Period ended
September 30,
1999
---------------
Net sales $ 26,499
Cost of sales (8,121)
---------------
Gross profit 18,378
Selling expenses (6,116)
General and administrative expenses (20,825)
---------------
Operating loss (8,563)
Interest income 786
---------------
Loss before income tax (7,777)
Provision for income tax (Note 9) -
---------------
Net loss $ (7,777)
===============
See accompanying notes to financial statements.
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Beijing Forlink Software Technology Co., Ltd.
Statement of Owners' Equity
(Expressed in US Dollars)
Contributed Accumulated Total Owners'
Capital Loss Equity
----------- ------------ -------------
Balance, November 11, 1998 $ 120,802 $ - $ 120,802
Net loss for the period ended
September 30, 1999 - (7,777) (7,777)
----------- ------------ -------------
Balance, September 30, 1999 $ 120,802 $ (7,777) $ 113,025
=========== ============ =============
See accompanying notes to financial statements.
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Beijing Forlink Software Technology Co., Ltd.
Statement of Cash Flows
Increase/(Decrease) in Cash and Cash Equivalents
(Expressed in US Dollars)
Period ended
September 30,
1999
-------------
Cash flows from operating activities
Net loss $ (7,777)
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization of property and equipment 7,738
Changes in:
Accounts receivable (179)
Other receivables, deposits and prepayments (71)
Inventories (11,890)
Other payables and accrued expenses 60,791
Other taxes payable 120
-------------
Net cash provided by operating activities 48,732
Cash flows from investing activities
Acquisition of property and equipment (61,078)
Cash flows from financing activities
Injection of capital 120,802
-------------
Net increase in cash and cash equivalents 108,456
Cash and cash equivalents at beginning of period -
-------------
Cash and cash equivalents at end of period $ 108,456
=============
See accompanying notes to financial statements.
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Beijing Forlink Software Technology Co., Ltd.
Notes To Financial Statements
(Expressed in US Dollars)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Beijing Forlink Software Technology Co., Ltd. ("the Company") was established in
the People's Republic of China (the "PRC") on November 11, 1998. It is a limited
liability company owned by four individual PRC citizens, namely Mr. Zhao
Xiaoxia, Mr. Che Liang, Ms. Song Wei and Mr. Zhang Ji.
The Company commenced operations in May 1999 and is engaged in the provision of
E-commerce and internet information services and the development and sales of
internet software in the PRC.
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements are prepared in accordance with generally accepted
accounting principles in the United States of America. This basis of accounting
differs from that used in the preparation of the Company's statutory financial
statements which are prepared in accordance with the accounting principles and
the relevant financial regulations applicable to enterprises in the PRC.
Foreign Currency Translation and Transactions
The functional currency of the Company is Renminbi (RMB) and the financial
records are maintained and the financial statements prepared in RMB. Foreign
currency transactions during the period are translated into RMB at the exchange
rates ruling at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated into
RMB at the market rates of exchange ruling at that date. All exchange
differences are dealt with in the statement of operations.
For the purpose of preparing these financial statements, the financial
statements in RMB have been translated into United States Dollars at US$1.00 =
RMB8.278.
Revenue Recognition
Revenue from E-commerce and internet information services is recognised when the
relevant services are provided.
Revenue from goods sold is recognized when title of goods sold has passed to the
buyers, which is usually at the time of delivery.
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Beijing Forlink Software Technology Co., Ltd.
Notes To Financial Statements
(Expressed in US Dollars)
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES (Cont'd)
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost of raw
materials is computed using the weighted average method; cost of
work-in-progress and finished goods include cost of materials, direct labor and
an appropriate proportion of production overheads that have been incurred in
bringing the inventories to their present location and condition. Net realisable
value is determined by reference to the sales proceeds of items sold in the
ordinary course of business after the balance sheet date or to management
estimates based on prevailing market conditions.
Cash and Cash Equivalents
Cash includes cash in hand and deposits repayable on demand with any bank or
other financial institution. Cash equivalents include short-term, highly liquid
investments which are readily convertible into known amounts of cash without
notice and which were within three months of maturity when acquired; less
advances from banks repayable within three months from the date of the advance.
Cash and cash equivalents include cash in hand, deposits, investments and
advances denominated in foreign currencies provided that they fulfil the above
criteria.
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method to allocate the cost of depreciable assets over the
estimated useful lives of the assets as follows:
Estimated
useful life
(in years)
Computer equipment 5
Office equipment 5
Motor vehicle 5
Maintenance, repairs and minor renewals are charged directly to the statement of
operations as incurred. Additions and betterments to property and equipment are
capitalized. When assets are disposed of, the related cost and accumulated
depreciation thereon are removed from the accounts and any resulting gain or
loss is included in the statement of operations.
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Beijing Forlink Software Technology Co., Ltd.
Notes To Financial Statements
(Expressed in US Dollars)
NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES (Cont'd)
Income Taxes
The Company accounts for income taxes using the liability method, which requires
an entity to recognize deferred tax liabilities and assets. Deferred income
taxes are recognized based on the differences between the tax bases of assets
and liabilities and their reported amounts in the financial statements which
will result in taxable or deductible amounts in future years. Further, the
effects of enacted tax laws or rate changes are included as part of deferred tax
expenses or benefits in the year that covers the enactment in the near future
date. A valuation allowance will be provided due to the uncertainty that
deferred tax benefit will be realized.
Fair Value of Financial Instruments
The carrying amounts of certain financial instruments, including cash, accounts
receivable and other payables approximate their fair values as of September 30,
1999 because of the relatively short-term maturity of these instruments.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 3 - ACCOUNTS RECEIVABLE
September 30,
1999
---------------
Accounts receivable $ 179
Less: Provision for doubtful accounts -
---------------
$ 179
===============
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Beijing Forlink Software Technology Co., Ltd.
Notes To Financial Statements
(Expressed in US Dollars)
NOTE 4 - INVENTORIES
September 30,
1999
---------------
Raw materials $ 470
Work-in-progress 11,420
---------------
$ 11,890
===============
NOTE 5 - PROPERTY AND EQUIPMENT, NET
September 30,
1999
---------------
Computer equipment $ 41,412
Office equipment 876
Motor vehicle 18,790
---------------
61,078
Less: Accumulated depreciation (7,738)
---------------
$ 53,340
===============
NOTE 6 - OTHER TAXES PAYABLE
Other taxes payable comprise mainly Valued-Added Tax, which is charged at a rate
of 17% on the selling price of the Company's products.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Operating lease commitment
As of September 30, 1999, the Company had commitment under a non-cancellable
operating lease expiring within one year amounting to $28,400.
NOTE 8 - CONTRIBUTED CAPITAL
The registered and paid up capital of the Company is RMB1,000,000.
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Beijing Forlink Software Technology Co., Ltd.
Notes To Financial Statements
(Expressed in US Dollars)
NOTE 9 - INCOME TAX
Pursuant to the Income Tax Law of the PRC, the Company is subject to income tax
at an effective rate of 33% (30% state income tax plus 3% local income tax) on
income as reported in its statutory financial statements. No provision for
income tax has been made as the Company has incurred losses during the period.
No provision for deferred taxation has been made as there is no material
temporary difference at the balance sheet date.
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