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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10 - QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
COL China Online International Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
333-39208 52-2224845
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(Commission File Number) (IRS Employer Identification Number)
3176 South Peoria Court, Suite 100
Aurora, Colorado, 80014
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(Address of principal executive offices including zip code)
(303) 695-8530
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(Small Business Issuer telephone number, including area code)
3177 South Parker Road
Aurora, Colorado, 80014
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(Former Name or Former Address, if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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As of September 30, 2002, the Registrant had outstanding 50,155,000 shares of
its common stock, par value $.001.
Transitional Small Business Disclosure Format (Check One):
Yes No X
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COL China Online International Inc.
(A Development Stage Company)
FORM 10-QSB
September 30, 2002
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements:
Condensed Consolidated Balance Sheets as of
September 30, 2002 (unaudited) and June 30, 2002 1
Condensed Consolidated Statements of Operations
for the three months ended September
30, 2002 and 2001 (unaudited) 2
Condensed Consolidated Statements of Cash Flows
for the three months ended September
30, 2002 and 2001 (unaudited) 3
Notes to Condensed Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3 Controls and Procedures 11
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 11
Signature Page
Certifications
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COL CHINA ONLINE INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 SEPTEMBER 30, 2002 (unaudited)
------------- --------------------------------
(Rmb) (Rmb) (US$)
Assets (Illustrative Only)
------
CURRENT ASSETS:
Cash 368,839 606,661 73,381
Accounts receivable, net of an allowance for doubtful
accounts of Rmb129,122 and of nil, respectively 340,115 19,600 2,371
Inventories 19,840 -- --
Prepaid expense and other receivables 266,992 275,085 33,274
----------- ----------- -----------
Total current assets 995,786 901,346 109,026
PROPERTY, OFFICE SPACE AND EQUIPMENT, net of accumulated
depreciation of Rmb9,492,563 and Rmb 1,507,000,
respectively 3,509,596 3,478,387 420,740
----------- ----------- -----------
TOTAL ASSETS 4,505,382 4,379,733 529,766
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
- ----------------------------------------
CURRENT LIABILITIES:
Current portion of mortgage loans payable 330,528 334,959 40,516
Accounts payable and accrued expenses 2,203,103 1,654,314 200,104
Due to a minority stockholder 214,660 214,660 25,965
Taxes payable 260,894 288,760 34,928
----------- ----------- -----------
Total current liabilities 3,009,185 2,492,693 301,513
NOTES PAYABLE:
Majority Stockholder 51,784,441 54,408,030 6,581,112
Mortgage loans payable - net of current portion 860,612 775,196 93,767
----------- ----------- -----------
Total notes payable 52,645,053 55,183,226 6,674,879
STOCKHOLDERS' DEFICIENCY:
Preferred stock, US$0.001 par value, 5,000,000 shares
authorized, none outstanding -- -- --
Common stock, US$0.001 par value, 100,000,000 shares
authorized, 50,155,000 shares issued and outstanding 408,864 408,864 50,155
Additional paid-in capital 1,214,118 1,214,118 146,858
Accumulated deficit (52,738,071) (54,898,494) (6,641,138)
Accumulated other comprehensive loss (33,767) (20,674) (2,501)
----------- ----------- -----------
Total stockholders' deficiency (51,148,856) (53,296,186) (6,446,626)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY 4,505,382 4,379,733 529,766
=========== =========== ===========
See accompanying notes to these condensed consolidated financial statements
Page 1
COL CHINA ONLINE INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
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SEPTEMBER 30, 2001 SEPTEMBER 30, 2002
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(Rmb) (Rmb) (US$)
(Illustrative Only)
NET REVENUES:
Computer network installations 147,311 -- --
Transaction fee 13,021 -- --
Business services revenue 651 898 109
Sale of software 22,378 -- --
Marketing fees, minority stockholder 73,123 133,729 16,176
----------- ----------- -----------
Total revenues 256,484 134,627 16,285
COST OF SALES:
Computer network installations 109,521 -- --
Transaction costs 11,300 -- --
Business services costs 4,440 392 47
Cost of software sold 10,500 -- --
Communication costs 234,511 302,829 36,630
----------- ----------- -----------
370,272 303,221 36,677
----------- ----------- -----------
Gross Margin (113,788) (168,594) (20,392)
OPERATING EXPENSES:
General and administrative 2,217,378 2,693,022 326,444
Amortization and depreciation 1,208,846 133,610 16,161
----------- ----------- -----------
Total operating expenses 3,426,224 2,826,632 342,605
----------- ----------- -----------
OPERATING LOSS (3,540,012) (2,995,226) (362,997)
Other income 1,817 834,803 100,976
----------- ----------- -----------
LOSS BEFORE MINORITY INTEREST (3,538,195) (2,160,423) (262,021)
Minority interest -- -- --
----------- ----------- -----------
NET LOSS (3,538,195) (2,160,423) (262,021)
OTHER COMPREHENSIVE LOSS -- (13,092) (1,588)
----------- ----------- -----------
COMPREHENSIVE LOSSES (3,538,195) (2,173,515) (263,609)
=========== =========== ===========
BASIC AND FULLY DILUTED NET LOSS PER SHARE (0.08) (0.04) (0.005)
=========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES 42,195,814 50,155,000 50,155,000
=========== =========== ===========
See accompanying notes to these condensed consolidated financial statements
Page 2
COL CHINA ONLINE INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
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SEPTEMBER 30, 2001 SEPTEMBER 30, 2002
------------------ ------------------------------
(Rmb) (Rmb) (US$)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (3,538,195) (2,160,423) (262,021)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization and depreciation 1,208,846 133,610 16,161
Gain on disposal of computer equipment and
Education Net -- (395,991) (47,898)
Provision for staff welfare written back -- (436,479) (52,796)
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivables 130,091 (33,494) (4,051)
Other assets (357,428) 41,908 5,069
Inventories 10,500 19,840 2,400
Increase (decrease) in:
Accounts payable and accrued expenses 267,086 (112,311) (12,885)
Taxes payable 11,075 27,866 3,371
Billings in excess of costs and estimated
earnings on uncompleted contracts (86,265) -- --
---------- ---------- ----------
Net cash used in operating activities (2,354,290) (2,915,474) (352,650)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (411,556) (152,401) (18,434)
Sales of Education Net -- 750,000 90,719
Net cash acquired in acquisition of COL
International under reverse acquisition 63,308 -- --
---------- ---------- ----------
Net cash (used) received in investing activities (348,248) 597,599 72,285
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage loans (repayments) (76,740) (80,985) (9,796)
Advances from Majority Stockholder 1,520,979 2,623,589 317,345
Minority stockholders interest and advance (82,094) -- --
---------- ---------- ----------
Net cash provided by financing activities 1,362,145 2,542,604 307,549
---------- ---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (3,077) 13,093 1,584
---------- ---------- ----------
NET (DECREASE) INCREASE IN CASH (1,343,470) 237,822 28,768
---------- ---------- ----------
CASH, beginning of period 1,858,434 368,839 44,613
---------- ---------- ----------
CASH, end of period 514,964 606,661 73,381
========== ========== ==========
CASH PAID FOR INTEREST 20,196 16,638 2,013
========== ========== ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for acquisition
of subsidiaries 67,662 -- --
========== ========== ==========
Page 3
COL CHINA ONLINE INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Business
-------------------
Nature of Operations - COL China Online International Inc. ("COL
International" or the "Company") was incorporated as a Delaware
corporation on February 22, 2000, for the purpose of acquiring
Migration Developments Limited ("Migration") and raising equity
capital. Prior to the acquisition of Migration, COL International was
considered to be in the development stage, due to its limited
operations and lack of revenues.
In July 2001, the Company completed its initial public offering of
common stock. The Company issued 1,655,000 shares of common stock in
this offering at US$0.05 per share (approximately US$83,000). All net
proceeds from this offering were used to pay costs associated with the
offering.
COL International was formed for the purpose of acquiring and
conducting the engineering services and the internet related business
of Migration. On September 24, 2001, the acquisition of Migration by
the Company through the exchange of the Company's shares was
completed. In this transaction, the Company acquired all the
outstanding shares of common stock of Migration in exchange for 40.2
million shares of the Company's common stock. As a result of the
acquisition, Migration became a wholly owned subsidiary of COL
International.
For financial reporting purposes, the acquisition of Migration by the
Company on September 24, 2001 has been treated as a reverse
acquisition. Migration is the continuing entity for financial
reporting and the acquisition of COL International is considered a
recapitalization and restructuring of Migration. On this basis, the
historical financial statements prior to September 24, 2001 represent
the financial statements of Migration. The historical shareholders'
equity accounts of the Company have been retroactively restated to
reflect the issuance of 40,200,000 shares of common stock since
inception of Migration and the issuance of 9,955,000 shares of stock
upon the merger with COL International.
Migration is a British Virgin Islands (BVI) corporation incorporated
on May 18, 1998. It has two subsidiaries, Shenzhen Knowledge &
Communications Co., Ltd. ("Joint Venture") and Shanghai Shangyi
Science and Trade Information Consulting Co., Ltd. ("Shangyi"), in
which it has 90% and 70% equity interests, respectively. The Joint
Venture and Shangyi are Sino-foreign equity joint ventures in the
People's Republic of China (PRC). Most of the operations of Migration
are through the Joint Venture, which did not commence substantive
operations until the Spring of 1999. The acquisitions of Joint Venture
and Shangyi had been accounted for as purchases by Migration.
Migration has been providing marketing and technical services for the
Internet Service Provider (ISP) and value added services generally
related to the installation of computer network systems (i.e., Local
Area Networks or LANs) in the PRC.
Migration is also developing proprietary websites in which it markets
services and products of other companies and receives subscriber
and/or transactional fees for its services. Migration designs websites
and provides hosting services to other companies.
Page 4
COL CHINA ONLINE INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. Basis of Presentation
---------------------
The unaudited condensed consolidated financial statements have been
prepared by the Company, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such SEC rules and regulations;
nevertheless, the Company believes that the disclosures are adequate
to make the information presented not misleading. These financial
statements have been prepared on the same basis as the annual
financial statements except for certain accounting policies used by
Migration as detailed in the Form 10-QSB for the quarter ended
September 30, 2001. These financial statements and the notes hereto
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the
year ended June 30, 2002, which was filed October 11, 2002. In the
opinion of the Company, all adjustments, including normal recurring
adjustments necessary to present fairly the financial position of the
Company as of September 30, 2002 and the results of its operations and
cash flows for the quarter then ended, have been included. The results
of operations for the interim period are not necessarily indicative of
the results for the full year.
The amounts included in the financial statements are presented in
Renminbi ("Rmb") which is COL International's functional currency,
unless otherwise indicated as US dollars, because COL International's
operations are primarily located in the PRC. For illustrative
purposes, the condensed consolidated balance sheet as of September 30,
2002 and condensed consolidated statement of operations for the three
months ended September 30, 2002 and condensed consolidated statement
of cash flows for the three months ended September 30, 2002 have been
translated into US dollars at approximately 8.2673 Rmb to the dollar,
which was the exchange rate at September 30, 2002.
3. Recent Accounting Pronouncements
--------------------------------
In October 2002, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 147 "Acquisitions of Certain Financial Institutions",
which is an amendment to SFAS No. 72 "Accounting for Certain
Acquisitions of Banking or Thrift Institutions" and Interpretation No.
9. This statement removes acquisitions of financial institutions from
the scope of both SFAS No. 72 and Interpretation No. 9 except for
transactions between two or more mutual enterprises. This statements
requires that the application of the purchase method of accounting
will be applied to the acquisition of financial institutions, except
for transaction between two or more mutual enterprises, in line with
those required in both SFAS No. 141 "Business Combinations" and No.142
"Goodwill and Other Tangible Assets". This statement becomes effective
on October 1, 2002 and earlier adoption is permitted. However, the
Company did not elect earlier adoption of this statement for preparing
its financial statements. This statement is not expected to have a
material impact on the Company.
4. Comprehensive Income (Loss)
--------------------------
The Company accounts for comprehensive income (loss) in accordance
with SFAS No. 130, "Reporting Comprehensive Income". SFAS No. 130
establishes standards for reporting comprehensive income and its
components in financial statements. Comprehensive income, as defined
therein, refers to revenues, expenses, gains and losses that are not
included in net income but rather are recorded directly in
stockholders' equity. Accumulated other comprehensive income (loss)
for the three months ended September 30, 2002 represented foreign
currency translation adjustments.
Page 5
COL CHINA ONLINE INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Net Loss Per Share
------------------
Basic and diluted net loss per share is computed by dividing net loss
by the weighted average number of common shares outstanding.
Pursuant to the Company's 2000 Stock Option Plan, options may be
granted to purchase an aggregate of 4,000,000 shares of common stock
to key employees and other persons who have or are contributing to the
Company's success. As of September 30, 2002, no options had been
granted under the 2000 plan.
Page 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This document contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. When used in this document, the words "expects",
"anticipates", "intends" and "plans" and similar expressions are intended to
identify certain of these forward-looking statements. The cautionary statements
made in this document should be read as being applicable to all related
forward-looking statements wherever they appear in this document. Our actual
results could differ materially from those discussed in this document. Factors
that could cause or contribute to such difference include those discussed below
and in the Company's Annual Report on Form 10-KSB for the year ended June 30,
2002.
Overview
COL International was incorporated for the purpose of acquiring Migration and
raising equity capital. Prior to the acquisition of Migration on September 24,
2001, COL International was considered to be in the development state, due to
its limited operations and lack of revenues.
Initial Public Offering - In July 2001, the Company completed its initial public
offering of common stock. The Company issued 1,655,000 shares of common stock in
this offering at US$0.05 per share (approximately US$83,000). All net proceeds
from this offering were used to pay costs associated with the offering.
Going concern - The ability of COL International to continue operations as a
going concern is depend upon the continued support from Honview International
Limited ("Honview"), a former shareholder of Migration, which is now a major
stockholder of COL International, until such time as, when or if, the combined
entity of COL International and Migration achieve profitable operations and/or
additional funds are raised in future private and public offerings.
Acquisition - COL International was formed for the purpose of acquiring and
conducting the engineering services and the internet related business of
Migration. In September 2001, the acquisition of Migration by the Company
through the exchange of the Company's shares was completed. In this transaction,
the Company acquired all the outstanding shares of common stock of Migration in
exchange for 40.2 million shares of the Company's common stock. As a result of
the acquisition, Migration became a wholly owned subsidiary of COL
International. However, for accounting purposes, this transaction is treated a
reverse acquisition, whereby Migration is considered as an acquirer. No goodwill
is recorded in the merger. The condensed consolidated financial statements of
the Company reflected the operations of Migration prior to the merger and the
combined entity after the merger.
Migration is a British Virgin Islands (BVI) corporation incorporated on May 18,
1998. Migration has been providing marketing and technical services for an
Internet Service Provider (ISP) and value added services generally related to
the installation of computer network system (i.e. Local Area Networks LANs) in
the PRC. Migration is also developing proprietary websites in which it markets
services and products of other companies and receive subscriber and/or
transactional fees for its services. Migration designs websites and provides
hosting services to other companies.
Disposal - COL International terminated the Education Net business in Wuhan by
disposal of its entire interest in and assets of Education Net for a total
consideration of Rmb750,000 (US$90,719) in July 2002. During the three months
ended September 30, 2002, the Wuhan business recorded an operating loss of
Rmb304,822 (US$36,870) from ordinary activities, while the operating loss of the
last corresponding period was Rmb820,504 (US$99,247), representing a 63%
decrease in operating loss as compared with the three months ended September 30,
2001. The non-recurring transaction resulted in gain on disposal of equipment
and Education Net of Rmb395,991 (US$47,898) as well as provision for staff
welfare fund written back of Rmb436,479 (US$52,796), totaling Rmb832,470
(US$100,694), which was included in other income, for the three months ended
September 30, 2002.
Page 7
Plan of Operations
To re-focus the Company's operation in Shanghai, the Company divested its
operations in Wuhan in July 2002. COL International intends to pursue the
following in Shanghai:
o Attempting to increase the competitiveness of the Company's products
by actively seeking alternative suppliers for various services the
Company is offering.
o Commencing an operation to provide internet services to Sino Foreign
Joint Ventures and Foreign Owned Companies in the area of Shanghai.
o Pursuing a calling card service in Shanghai.
o Seeking a strategic alliance with traditional media to promote the
Company name and products.
The Company has a negative cash flows from operating activities and is
seeking additional financing in order to satisfy its cash requirements. The
Company anticipates that it will require Rmb7,200,000 (or approximately
US$870,000) in financing during the next 12 months to satisfy its cash
requirements. COL International, through its Migration subsidiary, currently
employs approximately 70 employees in China. As COL International pursues its
plan of operations, it anticipates hiring up to 30 additional employees in the
next 12 months.
We anticipate making no purchases or sales of plant and significant
equipment in the coming year, apart from the possible addition of more servers
to keep pace with future growth. We do not expect the costs of additional
servers to be material.
Results of Operations
Revenues for the three months ended September 30, 2002 mainly comprised of
marketing fees received from Shenzhen Rayes Group Co., Ltd. ("Rays Group") of
Rmb133,729 (US$16,176), representing an increase in 82%, as compared to
marketing fees of Rmb73,123 for the three months ended September 30, 2001. No
revenue was derived from computer network installation for the three months
ended September 30, 2002 mainly due to major installation contracts having
previously been completed in last year. In contrast, such revenue of Rmb147,311
with a gross profit margin of approximately 26 percent was recorded for the
three months ended September 30, 2001.
Marketing fees are related to the Joint Venture's share of 50 percent of
the revenues generated from ISP services owned by a minority shareholder, Rayes
Group, and computer hosting of web sites for customers. The Company has not yet
generated significant revenues from these lines of business, but is devoting
substantial resources to developing this business. To date, most ISP services
are paid by a limited number of individual dial-up customers and internet games
centers in Shanghai, as well as a limited number of companies whose web sites
are hosted by the Company. The Company also designs web sites for companies,
however, insignificant revenue has been generated from this activity to date. To
the extent that the Company designs and hosts a customer's web sites, the
related revenue from the design will generally be deferred and recognized over
the hosting term of the contract or expected life of the customer, if longer.
Page 8
In connection with these services, the Company has an agreement with Rayes
Group to reimburse Rayes Group for their actual transmission (i.e., telephone
line) costs, provided that Rayes Group will pay all incremental costs related to
expansion of the telecommunications facilities related to the ISP operations.
These amounts totaled Rmb234,511 and Rmb302,829 (US$36,630) during the three
months ended September 30, 2001 and September 30, 2002, respectively. The Joint
Venture has no long-term commitments in connection with its telecommunication
costs other than management fees payable to the Rayes Group for providing
services.
General and administrative costs include salaries, rent, travel and other
overhead costs. For the three months ended September 30, 2001 and 2002, general
and administrative costs totaled Rmb2,217,378 and Rmb2,693,022 (US$326,444),
respectively. These costs are increasing as the Company continues to expand its
business services.
Amortization and depreciation expense for the three months ended September
30, 2001 and September 30, 2002 was Rmb1,208,846 and Rmb133,610 (US$16,161),
respectively. The decrease represents the impairment loss had been provided for
intangible assets in the fiscal year ended June 30, 2002.
The Company has not recognized any future tax benefits resulting from its
operating losses due to the uncertainty of future realization.
No share of loss has been absorbed by minority interest holder for the
three months ended September 30, 2002 as its initial capital contribution was
fully absorbed.
The above has resulted in net losses of Rmb3,538,195 and Rmb2,160,423
(US$262,021) for the three months ended September 30, 2001 and September 30,
2002 respectively. The Company expects to continue to incur losses until its
services are more fully developed and accepted in China.
Page 9
Liquidity and Capital Resources
As of June 30, 2002 and September 30, 2002, the Company had a negative
working capital of Rmb2,013,399 and Rmb1,591,347 (US$192,487), respectively. As
of September 30, 2002, advances from the majority stockholder totaled
Rmb54,408,030 (US$6,581,112). The Company's management believes the majority
stockholder will continue to provide financial support to the Company and the
majority stockholder has signed a note agreement to provide up to US$8,000,000.
Migration's ability to continue operations is currently dependent upon continued
financial support from its majority stockholder. Also included in liabilities at
June 30, 2002 and September 30, 2002 is Rmb1,191,140 and Rmb1,110,155
(US$134,283), respectively, incurred in connection with the purchase of office
space and staff quarter in Wuhan, China.
Cash was used in operating activities for the three months period ended
September 30, 2002 was Rmb2,915,474 (US$352,650) as compared with Rmb2,354,290
for the three months ended September 30, 2001. The cash used in operations was
to fund operating losses of Rmb3,538,195 and Rmb2,160,423 (US$262,021),
generally offset by non-cash expenses related to amortization and depreciation
of Rmb1,208,846 and Rmb133,610 (US$16,161), gain on disposal of equipments and
Education Net of nil and Rmb395,991 (US$47,898) as well as provision for staff
welfare fund written back of nil and of Rmb436,479 (US$52,796) for the three
months ended September 30, 2001 and September 30, 2002, respectively.
Cash outflow from investing activities for the three months ended September
30, 2001 was Rmb348,248 while an inflow of cash for the three months ended
September 30, 2002 was Rmb597,599 (US$72,285) that was due to cash receipt from
disposal of Education Net amounted to Rmb750,000 (US$90,719) from the acquirer
for the period.
Cash flows from financing activities have generally come from advances by
the majority stockholder of the Company. During the three months ended September
30, 2001 and September 30, 2002, the majority stockholder has advanced
Rmb1,520,979 and Rmb2,623,589 (US$317,345), respectively.
Critical Accounting Policies
The Company's significant accounting policies are described in note 2 to
the financial statements for the years ended June 30, 2001 and 2002 included in
the accompanying financial statements and notes to consolidated financial
statements. The Company believes its most critical accounting policies include
accounting for provision for doubtful debts and impairment loss provision=