UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - K
(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the Fiscal Year Ended June 30, 2008.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______TO _______.
COL China Online International Inc.
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(Exact name of registrant 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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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
(None)
Securities registered pursuant to Section 12(g) of the Exchange Act:
$.001 par value common stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ] Yes [X] No
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
As of December 31, 2007, the aggregate market value of the voting stock held by
non-affiliates of the issuer was approximately $197,750. Because there is no
public trading market for the issuer's common stock, this calculation is based
upon the sale price of $.05 per share of common stock sold in the Registrant's
initial public offering pursuant to a Registration Statement on Form SB-2/A
declared effective by the U.S. Securities and Exchange Commission on February 8,
2001 (Registration No. 333-32908). Without asserting that any director or
executive officer of the issuer, or the beneficial owner of more than five
percent of the issuer's common stock, is an affiliate, the shares of which they
are the beneficial owners have been deemed to be owned by affiliates solely for
this calculation.
The number of shares of the registrant's common stock, par value $.001 per
share, outstanding as of September 21, 2008 was 50,155,000.
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China Online International Inc.
10-K for the Year Ended June 30, 2008
Table of Contents
PART I.........................................................................2
Item 1. Business..........................................................2
Item 1A. Risk Factors......................................................4
Item 2. Properties........................................................7
Item 3. Legal Proceedings.................................................7
Item 4. Submission of Matters to a Vote of Security Holders...............7
PART II........................................................................7
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.................7
Item 6. Selected Financial Data...........................................8
Item 7. Management's Discussion and Analysis of Financial Condition
or Plan of Operations.............................................8
Item 8. Financial Statements.............................................11
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................11
Item 9A(T). Controls and Procedures..........................................11
Item 9B. Other Information................................................12
PART III......................................................................12
Item 10. Directors, Executive Officers and Corporate Governance...........12
Item 11. Executive Compensation...........................................14
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters..................................15
Item 13. Certain Relationships and Related Transactions...................17
Item 14. Principal Accountant Fees and Services...........................18
PART IV.......................................................................19
Item 15. Exhibits and Financial Statement Schedules.......................19
- i -
PART I
Item 1. Business
Overview of COL International
COL China Online International Inc., which is referred to herein as "COL
International", the "Company", "our Company", "we", "us" or "our", was formed on
February 18, 2000 for the purpose of acquiring and conducting the engineering
services and the internet related business of Migration Development Limited, a
British Virgin Islands company (Migration), and raising equity capital to be
utilized in the business of Migration. Beginning in approximately January 2004,
the Company focused its business on internet and telecommunication convergence
solutions and customer-specific solutions for the retail industry.
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
"shell company", as discussed below, and as a going concern is dependent upon
continued support from Honview International Limited (Honview), a former
shareholder of Migration, which is now a major stockholder of COL International.
Acquisition - In September 2001, 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 was treated as a reverse acquisition, whereby Migration was
considered an acquirer.
Migration was formed on May 18, 1998 and has two subsidiaries, Shenzhen
Knowledge & Communications Co., Ltd. (formerly Shenzhen Rayes Electronic Systems
Co., Ltd.), referred to as the Joint Venture, and Shanghai Shangyi Science and
Trade Information Consulting Co., Ltd., referred to as 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, or the
PRC. Most of the operations of Migration are through the Joint Venture, which
did not commence substantive operations until the spring of 1999.
Migration initially provided marketing and technical services for Internet
Service Providers (ISP) and value-added services generally related to the
installation of computer network systems (i.e., Local Area Networks or LANs) in
the PRC.
Termination of Operations - Because the Company's past business model was not
successful, the Company developed a new business model in late 2003. From late
2003 through mid-2007, the Company focused on the business of providing internet
and telecommunication convergence solutions to its customers. However, the
majority of the Company's business activities were suspended effective July
2007, and all of the Joint Venture's and the Company's operations were
discontinued upon expiration of the Joint Venture's business license on December
10, 2007. The Company has used the amounts collected from its accounts
receivable and deposits paid to pay any outstanding liabilities or accounts
payable, and does not expect that there will be any assets left to distribute to
the parties of the Joint Venture of shareholders of the Company. For further
information regarding the Company's Plan of Operations following the termination
of its business, see Part II, Item 7 "Management's Discussion and Analysis or
Plan of Operation" below.
Page 2
Shell Company Plan of Operations. In connection with the termination of
substantially all of the Company's operations, the Company effectively became a
"shell company". Under Rule 12b-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a "shell company" is defined as a company that has
(1) no or nominal operations; and (2) either: (a) no or nominal assets; (b)
assets consisting solely of cash and cash equivalents; or (c) assets consisting
of any amount of cash and cash equivalents and nominal other assets. Because the
Company is now effectively a shell company, it is currently seeking to enter
into a business combination with one or more yet to be identified privately held
businesses. The Board of Directors believes that the Company will be attractive
to privately held companies interested in becoming publicly traded by means of a
business combination with the Company, without offering their own securities to
the public. The Board of Directors does not expect to restrict its search for
business combination candidates to any particular geographical area, industry or
industry segment, and may enter into a combination with a private business
engaged in any line of business. The Company's discretion is, as a practical
matter, unlimited in the selection of a combination candidate.
Following the suspension of business effective July 2007, the board of directors
resolved on November 23, 2007 to cease the operations of the only business of
the Company upon the expiration of the Joint Venture's business license on
December 10, 2007. Accordingly, the Company reentered development stage. It is
expected that the Company will remain in such status until a business
combination is taken place.
Exchange Rate
In this report, references to "U.S. dollars," "US$" or "$" are to U.S. currency
and references to "Renminbi," "RMB" or "Rmb" are to China's currency. Solely for
the convenience of the reader, this report contains translations of certain
Renminbi amounts into U.S. dollars at specified rates. These translations should
not be construed as representations that the Renminbi amounts actually represent
such U.S. dollar amounts or could be converted into U.S. dollars at the rate
indicated. The Rmb is not a freely convertible security. Unless otherwise
stated, conversion of amounts from Renminbi into United States dollars for the
convenience of the reader has been made at the exchange rate of US$1.00 =
Rmb6.8718, which was close to the exchange rate on June 30, 2008 and is not
expected to have a material effect on the Company's financial statements.
The following table sets forth certain information concerning exchange rates
between Renminbi and U.S. dollars for the periods indicated:
Noon Buying Rate (1)
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Calendar Year Period End Average (2) High Low
- ------------------- ------------- ------------- ------------- -------------
(Rmb per US$)
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2002 8.2771 8.2769 8.2774 8.2765
2003 8.2776 8.2774 8.2800 8.2767
2004 8.2866 8.2871 8.2870 8.2468
2005 8.2865 8.2869 8.2868 8.2365
2006 8.0353 8.0807 8.2666 7.9665
2007 7.6248 7.8285 7.9950 7.6035
2008 (through June) 6.8718 7.2793 7.6035 6.8421
......................
(1) The noon buying rate in New York for cable transfers payable in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York.
(2) Determined by averaging the rates on the last business day of each month
during the relevant period.
Page 3
Research and Development
In the years ended June 30, 2008 and June 30, 2007, the Company did not incur
any research and development costs.
Employees
As of June 30, 2008, neither the Company nor the Joint Venture had any
employees, as all positions were terminated in connection with the winding up of
the business of the Company and Joint Venture.
Liquidation
Under the Chinese joint venture laws, the Joint Venture may be liquidated in
certain limited circumstances, including expiration of the ten-year term or any
term of extension, the inability to continue operations due to severe losses,
force majeure, or the failure of a party to honor its obligations under the
joint venture agreement or the Articles of Association in such a manner as to
impair the operations of the joint venture. The Chinese joint venture laws
provide that, upon liquidation, the net asset value (based on the prevailing
market value of the assets) of a joint venture shall be distributed to the
parties in proportion to their respective registered capital in the joint
venture. Currently, the Company does not expect that there will be any
distribution to the parties of the Joint Venture in connection with the
termination of the Joint Venture's license and business.
Disclosure Regarding Forward-Looking Statements and Cautionary Statements
This Annual Report on Form 10-K includes "forward-looking statements." All
statements other than statements of historical fact included in this Annual
Report, including without limitation under Item 1: "Business" and Item 7:
"Management's Discussion and Analysis of Financial Condition or Plan of
Operations," regarding our financial position, business strategy, plans and
objectives of our management for future operations and capital expenditures, and
other matters, other than historical facts, are forward-looking statements.
Although we believe that the expectations reflected in such forward-looking
statements and the assumptions upon which the forward-looking statements are
based are reasonable, we can give no assurance that such expectations will prove
to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from our expectations are disclosed in the
following "Cautionary Statements" section and elsewhere in this Annual Report.
All written and oral forward-looking statements attributable to us or persons
acting on our behalf subsequent to the date of this Annual Report are expressly
qualified in their entirety by the following risk factors.
Item 1A. Risk Factors
Risk Factors that May Affect Future Operating Results
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our Company. Additional risks and uncertainties not presently
known to us or what we currently deem immaterial may also impair our current
strategic plans and any future business operations. If any of the following
risks actually occur, our business, financial condition, or results of
operations could be materially adversely affected. You should also refer to the
other information about us contained in this Form 10-K, including our financial
statements and related notes.
We have no operating history nor any revenues or earnings from operations.
Page 4
We have no operating history nor any revenues or earnings from operations. We
have no assets or other financial resources. We have operated at a loss to date
and will, in all likelihood, continue to sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination.
Our management does not devote its full time to our business and
operations.
In connection with the Board of Directors' decision to discontinue our business
operations as of December 2007, our management will only devote minimal time to
the new business plan. Management does not have any written employment agreement
with us, and is not expected to enter into one. Our management will serve only
on a part-time basis. We lack the funds or other incentives to hire full-time
experienced management. Management has other employment or business interests to
which we expect they will devote their primary attention to after we discontinue
operations, devoting time to the Company only on an as-needed basis.
Our proposed operations are purely speculative.
The success of our proposed plan of operations will depend to a great extent on
the operations, financial condition and management of the identified target
company. While business combinations with entities having established operating
histories are preferred, there can be no assurance that we will be successful in
locating candidates meeting these criteria. If we complete a business
combination, the success of our operations will be dependent upon management of
the target company and numerous other factors beyond our control. No combination
candidate has been identified for acquisition by the Board of Directors or
management, nor has any determination been made as to any business for the
Company to enter, and stockholders will have no meaningful voice in any such
determinations. There is no assurance that we will be successful in completing a
combination or originating a business, nor that we will be successful or that
our shares will have any value even if a combination is completed or a business
originated.
Our continued existence is highly dependent on our majority stockholder.
Our continued existence is largely dependent upon the support of Honview
International Limited, our majority stockholder. As of June 30, 2008, Honview
owns approximately 45.6 percent of our outstanding shares of common stock. In
addition, Honview has continued to financially support the Company's business.
Pursuant to a Loan Agreement, Honview agreed to lend Migration its cash needs,
from time to time, at any time until January 1, 2004 up to an aggregate
principal amount of US$8 million. As a result of Migration becoming a
wholly-owned subsidiary of COL International, any amounts loaned from Honview
prior to February 8, 2001, the effective date of the registration statement
related to COL International's initial public offering, may be paid by us, at
the option of Honview, by converting, at any time after October 10, 2001, part
or all the unpaid principal amount of the loan into shares of COL
International's common stock, at a price equal to the greater of $1.20 per share
or 90 percent of the average weighted trading price of the common stock for the
20 trading days preceding the date of notice of exercise of conversion. Any
amounts loaned from Honview after the effective date of that registration
statement may be paid, at the option of Honview, by converting, at any time
after October 10, 2001, part or all the unpaid principal amount of the loan into
shares of COL International's common stock, at a price equal to the greater of
$1.20 per share or 110 percent of weighted average trading price of common stock
for the 20 trading days preceding the date of the loan. Since 2001, there were
additional advances from Honview to COL. As of June 30, 2008, advances from
Honview without any conversion rights totaled Rmb79,590,829 (US$11,582,239).
With the Board of Directors' decision to cease operations of the Joint Venture
upon expiration of the business license on December 10, 2007, there is
substantial risk that stockholders other than Honview may be significantly
diluted or will be harmed due to the significant liabilities currently owed to
Honview. These liabilities may also deter prospective target companies from
seeking a business combination with us.
Page 5
Management has controlling ownership of the Company that creates conflicts
of interest.
Kam Che Chan, our Chairman of the Board, and Paul Wong and Qi Yu Zhang, two of
our directors, are considered beneficial owners of 45.6 percent, 45.6 percent
and 34.7 percent, respectively, of our outstanding shares of common stock.
Controlling ownership of our business by our directors could create conflicts of
interest. Although management's duties are directed to the best interests of the
Company, we cannot guarantee that conflicts of interests will not arise.
We may have significant difficulty in locating a viable business
combination candidate.
We are and will continue to be an insignificant participant in the business of
seeking mergers with and acquisitions of business entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies that may be merger or
acquisition target candidates for us. Nearly all of these competitors have
significantly greater financial resources, technical expertise and managerial
capabilities than we do and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, we will also compete with numerous
other small public companies in seeking merger or acquisition candidates.
It is possible that the per share value of your stock will decrease upon
the consummation of a business combination.
A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets acquired in
a business combination, the current stockholders of the Company may experience
severe dilution of their ownership due to the issuance of shares in the
combination. Any combination effected by the Company almost certainly will
require its existing management and board members to resign, thus stockholders
have no way of knowing what persons ultimately will direct the Company and may
not have an effective voice in their selection.
Any business combination that we engage in may have tax effects on us.
Federal and state tax consequences, and possible international tax consequences,
will, in all likelihood, be major considerations in any business combination
that we may undertake. Currently, a business combination may be structured so as
to result in tax-free treatment to both companies pursuant to various federal
and state tax provisions. We intend to structure any business combination so as
to minimize the federal and state tax consequences to both us and the target
company; however, there can be no assurance that a business combination will
meet the statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or assets.
A non-qualifying reorganization could result in the imposition of both federal
and state taxes that may have an adverse effect on both parties to the
transaction.
We have discretionary use of proceeds.
Because we are not currently engaged in any substantive business activities, as
well as management's broad discretion with respect to selecting a business or
industry for commencement of operations or completing an acquisition of assets,
property or business, we are deemed to be a blank check or shell company.
Although management intends to apply any proceeds we may receive through the
issuance of stock or debt to a suitable business enterprise, such proceeds will
not otherwise be designated for any more specific purpose. We can provide no
assurance that any use or allocation of such proceeds will allow us to achieve
our business objectives.
Page 6
We are subject to the penny stock rules.
Our securities may be classified as penny stock. The Securities and Exchange
Commission (the "SEC") has adopted Rule 15g-9, which establishes the definition
of a "penny stock," for purposes relevant to us, as any equity security that has
a market price of less than $5.00 per share or with an exercise price of less
than $5.00 per share whose securities are admitted to quotation but do not trade
on a national securities exchange. For any transaction involving a penny stock,
unless exempt, the rules require delivery of a document to investors stating the
risks, special suitability inquiry, regular reporting and other requirements.
Prices for penny stocks are often not available and investors are often unable
to sell this stock. Thus, an investor may lose his investment in a penny stock
and consequently should be cautious of any purchase of penny stocks.
Our shares are subject to 144 resale restrictions applicable to shell
companies.
Any securities issued by us while we are a shell company will be subject to
resale limitations imposed on shell companies that limit the resale of
securities issued by shell company until 12 months after the cessation of a
shell company status and the filing of the Form 10 information about the
acquired company as required by Item 5.01(a)(8) of Form 8-K of the SEC.
Our shares may have limited liquidity.
The current and possible future lack of a public market may prevent investors
from selling their shares when they wish to do so, and investors may not be able
to use our shares as collateral for a loan or other matter. Further, any public
trading that may develop in the future may have very limited liquidity. Even if
a trading market for our shares develops, stock prices may be volatile.
Item 2. Properties.
The Company maintains an office in the United States at 3176 South Peoria Court,
Suite 100, Aurora, Colorado 80014 through the Company's North American
representative. The cost is included in the $1,000 per month paid to the
representative and this arrangement may be cancelled at any time.
The Joint Venture also had a two-and-a-half-year lease that expired on April 24,
2008 on an approximately 7,000 square foot office in Shanghai. During the year,
the Company shared the office with other parties and only paid for its share of
the office. The total rent paid by the Company for the current year was
Rmb55,300 (US$8,047). Management did not renew the lease upon its expiration in
April 2008.
Item 3. Legal Proceedings.
We know of no litigation pending, threatened, or contemplated, or unsatisfied
judgments against the Company, or any proceedings of which the Joint Venture is
a party. We know of no legal actions pending or threatened, or judgments entered
against any of our officers or directors in their capacities as such.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
There is no established public trading market for any of the Company's
securities, and management does not expect that, and there is no assurance that,
a trading market will develop. As of June 30, 2008, the Company had
approximately 331 shareholders of record.
page 7
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 6. Selected Financial Data.
Not Applicable.
Item 7. Management's Discussion and Analysis of Financial Condition or
Plan of Operations.
The following is the Company's plan of operations and a discussion and
comparison of the financial condition and results of operations of the Company
as of June 30, 2008 and the periods then ended. These discussions should be read
in conjunction with our financial statements, the notes to the financial
statements, and the other financial data included elsewhere in this report.
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 above
in this Annual Report on Form 10-K for the year ended June 30, 2008.
Overview
- --------
COL China Online International, Inc. (the "Company" or "COL International") was
formed for the purpose of acquiring and conducting the engineering services and
the internet related business of Migration Development Limited, a British Virgin
Islands company ("Migration"), and raising equity capital to be utilized in the
business of Migration. Migration held a 90% equity interest in Shenzhen
Knowledge & Communication Co. Ltd. which was a Sino-foreign equity joint venture
(the "Joint Venture") in the People's Republic of China ("PRC").
Going Concern - The ability of the Company to continue operations as a "shell
company" and as a going concern is dependent upon the continuing support from
Honview International Limited ("Honview"), a former shareholder of Migration,
which is now a majority stockholder of the Company, until such time as, when or
if, the combined entity of the Company and Migration achieve profitable
operations and/or additional funds are raised in future private and public
offerings or the Company is party to a business combination due to the
termination of its operations, as described below.
Termination of Operations - The Company has focused on the business of providing
internet and telecommunication convergence solutions to its customers up to the
end of its 2007 fiscal year. Substantially all of the Company's business
activities were suspended effectively during the second half of calendar year
2007. On November 23, 2007, the Board of Directors resolved to cease the
Company's primary operations due to the expiration of the Joint Venture's
business license on December 10, 2007. The Company has used the amounts
collected from its accounts receivables and deposits paid and cash on hand to
pay any outstanding liabilities or accounts payable, and expects that the
remaining liabilities will be undertaken by Honview. The Company does not expect
any assets to remain outstanding or to be available for distribution to the
parties of the Joint Venture or shareholders of the Company.
Page 8
In connection with the termination of substantially all of the Company's
operations on November 23, 2007, the Company effectively became a "shell
company" under the Exchange Act. As a result, the Company is currently seeking
to enter into a business combination with one or more yet to be identified
privately held businesses. The Board of Directors believes that the Company will
be attractive to privately held companies interested in becoming publicly traded
by means of a business combination with the Company, without offering their own
securities to the public. The Board of Directors does not expect to restrict its
search for business combination candidates to any particular geographical area,
industry or industry segment, and may enter into a combination with a private
business engaged in any line of business. The Company's discretion is, as a
practical matter, unlimited in the selection of a combination candidate.
The Company has not entered into any agreement, arrangement or understanding of
any kind with any person regarding a business combination. Depending upon the
nature of the transaction, the current officers and directors of the Company
probably will resign their directorship and officer positions with the Company
in connection with any consummation of a business combination. The current
management is not expected to have any control over the conduct of the Company's
business following the completion of a business combination. The Company has no
plans, understandings, agreements, or commitments with any individual or entity
to act as a finder of or as a business consultant in regard to any business
opportunities for the Company. In addition, there are no plans to use
advertisements, notices or any general solicitation in the search for
combination candidates.
Accounting Treatment After Termination of Operations - In connection with the
expiration of the Joint Venture license on December 10, 2007 and in accordance
with the applicable accounting guidance, all assets and liabilities associated
with the Joint Venture are separately disclosed in note 9 to the consolidated
financial statements. Discontinued operations are reported as a separate
component within the Consolidated Statement of Operations outside of loss from
continuing operations. As a result, net revenues or cost of sales, all of which
related to the Joint Venture, are no longer report separately in the
Consolidated Statements of Operations.
In addition, the Company reentered the development stage upon the expiration of
the Joint Venture' business license. The results of operations that have
accumulated since the Company reentered the development stage are presented in
the Consolidated Statement of Operations. The accumulated deficit before
reentering development stage and the accumulated deficit since reentering the
development stage (inception) have been separately presented in the Balance
Sheet, Consolidated Statement of Changes in Stockholders' Deficit and the
Consolidated Statement of Cash Flows for the period from December 10, 2007
(inception) to June 30, 2008.
Results of Operations
General and administrative expenses for continuing operations included salaries,
professional fees and other expenses. For the year ended June 30, 2008 and 2007,
general and administrative expenses decreased to Rmb936,071(US$136,219) from
Rmb1,409,349 (US$184,838), respectively, due to the downsizing of operations
since the second quarter of 2007.
Revenues for the year ended June 30, 2008 included services commission revenues
from telecommunication of Rmb9,646 (US$1,404) compared to services commission
revenues from telecommunication of Rmb1,135,609 (US$148,936) for the year ended
June 30, 2007. At the same time, marketing fee revenues were Rmb Nil and
Rmb766,072 (US$100,471) for the year ended June 30, 2008 and 2007, respectively.
The decrease was due to the Company's cessation of business upon expiration of
the Joint Venture's business license in December 2007.
Page 9
Rental income from discontinued operations relates to sublease income charged to
related parties for the use of a portion of the Company's office premise. No
rental income was charged after the suspension of the Company's business in July
2007 as the related party no longer paid rent to the Company, but rather paid
its rent directly to the property owner. As a result, for the year ended June
30, 2008, there was no rental income while it was Rmb797,477 (US$104,590) for
the year ended June 30, 2007.
Waiver of loans from discontinued operations for the year ended June 30, 2008
and 2007 were Rmb Nil and Rmb51,236 (US$6,720), respectively. The amounts were
due to Shanghai Paisi Computer Technology Ltd and Shanghai Shangyi Science and
Trade Information Consulting Co. Ltd. (Shangyi), the fellow subsidiary of the
Company.
Other income from discontinued operations included mostly the write back of
provision for staff welfare and business tax and interest income. For the year
ended June 30, 2008 and 2007, other income was Rmb258,945(US$ 37,682) and
Rmb42,307 (US$5,549), respectively.
Operating expenses for discontinued operations included rent, amortization and
depreciation, provision for impairment loss on property, office space and
equipment, salaries and other expenses. For the year ended June 30, 2008,
general and administrative expenses decreased to Rmb258,025(US$37,548) from
Rmb3,322,813 (US$435,790) for the year ended June 30, 2007. This decrease is due
to the Company's termination of operations in the Joint Venture and
corresponding reduction in manpower, audit fees and building management fees
during fiscal 2008. There was no amortization and depreciation expenses for the
year ended June 30, 2008 compared to amortization and depreciation expenses for
the year ended June 30, 2007 amounting to Rmb83,855 (US$10,998) as all the
property, office space and equipment had been fully depreciated and impaired as
of June 30, 2007. Provision for impairment loss on property, office space and
equipment for the year ended June 30, 2007 was fully made and amounted to
Rmb150,194 (US$19,698). The impairment loss is related to the deterioration of
the Company's equipment.
The foregoing revenues and expenses have resulted in net losses of Rmb955,505
(US$139,047) and Rmb2,151,466 (US$282,167) for the year ended June 30, 2008 and
2007, respectively. The Company expects to continue to incur non-operating
expenses as a shell company.
The Company has recorded other comprehensive income of Rmb1,641,379 (US$238,857)
and Rmb771,186 (US$101,142) for the year ended June 30, 2008 and 2007,
respectively, directly into the Stockholders' Deficit. This comprehensive income
is the result of an unrealized gain on translation of United States dollar
advances from the majority stockholder, Honview International Limited, from US$
to Rmb on consolidation. The significant increase in comprehensive income is due
to the appreciation of Rmb over the US$ during the year.
Liquidity and Capital Resources
As of June 30, 2008 and June 30, 2007, the Company had a negative working
capital of Rmb154,276 (US$22,451) and Rmb301,627 (US$39,559), respectively. As
of June 30, 2008, advances from the majority stockholder totaled Rmb79,590,829
(US$11,582,239) compared to advances from the majority stockholder of
Rmb80,129,352 (US$10,509,043) as of June 30, 2007. The majority stockholder has
confirmed that it intends to provide continued financial support to the Company.
Cash used in operating activities for the year ended June 30, 2008 was
Rmb1,176,887 (US$171,264) as compared with Rmb2,083,044 (US$273,193) for the
year ended June 30, 2007. The cash used in operations was to fund operating
losses of Rmb955,505 (US$139,047) and Rmb2,151,466 (US$282,167) for the year
ended June 30, 2008 and 2007, respectively, generally offset by receipt of
accounts receivable, refund of deposits and settlement of accrued expenses, but
further compensated by the write back of provision for staff welfare and
taxation.
Page 10
Cash flows from financing activities have generally come from advances by the
majority stockholder of the Company. During the year ended June 30, 2008 and
2007, the majority stockholder has advanced Rmb1,054,528 (US$153,457) and
Rmb2,178,772 (US$285,748), respectively. The significant decrease in the
advances was due to the Company incurring fewer expenses, which primarily were
paid through advances by the majority stockholder, after suspension of the
Company's business in July 2007.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the U.S., or GAAP, requires the Company to make estimates
and assumptions that affect the 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 year. Actual results could differ from those estimates.
The critical accounting policies and use of estimates are discussed in the
annual consolidated financial statements and notes included in the latest Annual
Report on Form 10-K, as filed with the SEC, which includes audited consolidated
financial statements for the two fiscal years ended June 30, 2008. These
financial statements and the notes thereto should be read in conjunction with
the latest Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
Item 8. Financial Statements
The financial statements and schedules that constitute Item 8 of this Annual
Report on Form 10-K are included in Item 15 below.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
See Part IV below, incorporated herein by reference.
Item 9A(T). Controls and Procedures
Within the 90-day period prior to the filing of this report, an evaluation was
carried out under the supervision and with participation of the Company's
management, including Mr. Wong, our Chief Executive Officer and Principal
Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-14 (c) under the Securities Exchange Act of
1934). Based on his evaluation, as of June 30, 2008, our Chief Executive Officer
and Principal Financial Officer has concluded that disclosure controls and
procedures are, to the best of his knowledge, effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. Subsequent to the date of his evaluation, there were not significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Page 11
Management's Annual Report on Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act). The Company's internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes of accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving
their control objectives.
The Company's management, with the participation of the Chief Executive Officer
and Principal Financial Officer, evaluated the effectiveness of the Company's
internal control over financial reporting as of June 30, 2008. Based on this
evaluation, our management, with the participation of the Chief Executive
Officer and Principal Financial Officer, concluded that, as of June 30, 2008,
our internal control over financial reporting was effective.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this Annual Report.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Directors and Officers
Our directors and executive officers are listed below, including their
respective names, ages and positions with COL International. Each director,
unless such director resigns or is removed, shall serve on the Company's Board
of Directors until the next annual meeting or until his successor is duly
elected and qualified. Each officer, unless officer resigns or is terminated,
shall serve in his respective position until his successor is duly appointed and
qualified.
NAME Age Position with COL International
- ------------------ --- ---------------------------------------
Kam Che Chan 59 Chairman of the Board
Chi Keung Wong 70 Chief Executive Officer, Chief Financial
Officer and Chief Operating Officer
Anthony Ng 59 Director and Secretary
Paul Wong 58 Director
Qi Yu Zhang 50 Director
Kam Che Chan has served as a director and Chairman of the Company's Board of
Directors since our formation in 2000. He has been the General Manager and a
director of Hogan Industries Limited since 1989, which has operations in China,
Vietnam, the U.S. and Mexico and nearly 5,000 staff members. In these
capacities, Mr. Chan has been working in project management and marketing for
Page 12
Hogan Industries. After majoring in accounting at what is now Hong Kong Baptist
University in Hong Kong, he spent 18 years working in several major certified
public accounting firms in Hong Kong before moving into marketing and
management.
Chi Keung Wong has been a director of the Joint Venture since 1999 and the Chief
Financial Officer of the Joint Venture since 1999. Mr. Wong also has been a
director and Chief Financial Officer of Migration since July 1998. Mr. Wong was
appointed as Chief Executive Officer, Chief Financial Officer, and Chief
Operating Officer of the Company effective September 1, 2004. Mr. Wong has 40
years of experience as a financial controller and an auditor both in Australia
and Hong Kong. He started his career in the audit department of Lowe Bingham &
Mathews (now PricewaterhouseCoopers LLP) in 1960 after having graduated in Hong
Kong in accounting. He was the Financial Controller for the YMCA of Darwin,
Australia from 1984 through July 1998. Chi Keung Wong is the brother of Paul
Wong, one of the directors of the Company.
Anthony Ng became the Secretary, and also was elected as a director, of the
Company effective March 31, 2002. From March 31, 2002 to September 1, 2004, he
served as the Chief Executive Officer of COL International. From 1996 to 1999,
Mr. Ng was the Chief Executive Officer of Pan Pacific Strategy Corporation, a
listed company in Canada, which is an investment company with investments mainly
in the Asian region and the People's Republic of China. From 1999 to 2001, Mr.
Ng was the Chief Executive Officer of Zuespac Capital Partners Limited, which is
a financial consulting company.
Paul Wong has been a director of the Company since our formation in 2000. He is
the founder and has served as the Chairman of the board of directors of Hogan
Industries Limited since 1982. Mr. Wong's factories are suppliers of molded baby
bottles to leading U.S. and European brand names, as well as precision scale
models to major airlines worldwide. His responsibilities include new product
concepts regarding investments in high tech companies in Asia. Paul Wong is the
brother of Chi Keung Wong, the Company's Chief Executive Officer, Chief
Financial Officer, and Chief Operating Officer.
Qi Yu Zhang has been a director of the Company since our formation in 2000. He
became Chief Executive Officer of the Rayes Group in April 1997. Mr. Zhang was
one of the founders and has served as a director of the Rayes Group since 1995.
In these capacities, he has been responsible for the ISP and ICP development and
operations of the Rayes Group in more than ten Chinese cities. Mr. Zhang also
became the Chief Executive Officer and a director of Migration in July 1998. Mr.
Zhang is a member of the Computer Engineering Application Association in China
and has obtained advanced degrees after studying Computer Telecommunications at
Xian Electronic Technology University.
Involvement in Certain Legal Proceedings
None of the Company's directors, director nominees or executive officers has
been involved in any transactions with the Company or any of the Company's
directors, executive officers, affiliates or associates that are required to be
disclosed pursuant to the rules and regulations of the SEC other than as set
forth in "Item 13. Certain Relationships and Related Transactions" below. None
of the directors, director designees or executive officers to our knowledge has
been convicted in a criminal proceeding, excluding traffic violations or similar
misdemeanors, or has been a party to any judicial or administrative proceeding
during the past five years that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws, except for matters that were dismissed without
sanction or settlement.
Page 13
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act, requires the Company's directors, executive
officers and holders of more than 10% of the Company's common stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of common stock and other equity securities of the
Company. The Company believes that during the year ended June 30, 2008, its
officers, directors and holders of more than 10% of the Company's common stock
complied with all Section 16(a) filing requirements. In making these statements,
the Company has relied solely upon its review of copies of the Section 16(a)
reports filed for the fiscal year ended June 30, 2008 on behalf of the Company's
directors, officers and holders of more than 10% of the Company's common stock.
Audit Committee
The Company has not established an audit committee and does not currently have
an audit committee financial expert on either an audit committee or the Board of
Directors. Although the Company believes it would be desirable to have an audit
committee financial expert, the Company currently believes that the costs
associated with retaining such an expert would be prohibitive.
Code of Ethics
The Company has not adopted a code of ethics for its executive officers because
of the small number of persons involved in the management of the Company and the
suspension of its business in July 2007.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth in summary form the compensation received by Chi
Keung Wong, our Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer. None of our employees and no employees of the Joint Venture
received total salary and bonus in excess of $100,000 during the last two
completed fiscal years.
Summary Compensation Table
- --------------------------
Nonqualified
Non-Equity Deferred
Bonus Stock Option Incentive Plan Compensation All Other
Name and Principal Position Salary($) ($) Award Awards Compensation Earnings Compensation Total
Year (1) (2) ($) ($) ($) (3) ($)(3) ($) (4) ($)
- --------------------------- ---- --------- ----- ----- ---- -------------- ------------ ------------ -------
Chi Keung Wong, 2008 $61,538 $61,538
Chief Executive Officer, 2007 $57,051 $57,051
Chief Financial Officer
and Chief Operating
Officer
Compensation of Directors
The Company has no standard arrangements in place or currently contemplated to
compensate the Company's directors for their service as directors or as members
of any committee of directors.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
The Company does not have and currently is not planning to have any written
employment contracts with respect to any of its directors, officers or other
employees. The Company has no compensatory plan or arrangement that results or
will result from the resignation, retirement, or any other termination of an
executive officer's employment or from a change-in-control of COL International
or a change in an executive officer's responsibilities following a
change-in-control.
Page14
Employee Retirement Plans, Long-Term Incentive Plans and Pension Plans
Other than our stock option plan that is described below under "2000 Stock
Option Plan", the Company has no employee retirement plan, pension plan, or
long-term incentive plan to serve as incentive for performance to occur over a
period longer than one fiscal year.
2000 Stock Option Plan
Pursuant to the Company's 2000 Stock Option Plan, the Company may grant options
to purchase an aggregate of 4,000,000 shares of common stock to key employees
and other persons who have contributed, or are contributing, to the Company's
success. The options granted pursuant to the 2000 Plan may be either incentive
options qualifying for beneficial tax treatment for the recipient, or
non-qualified options. The terms of the 2000 Plan concerning incentive options
and non-qualified options are substantially the same except that only employees
or employees of subsidiaries are eligible for incentive options and employees
and other individuals who have contributed or are contributing to the Company's
success are eligible for non-qualified options. With respect to options granted
to persons other than outside directors, the 2000 Plan also is administered by
an option committee that determines the terms of the options subject to the
requirements of the 2000 Plan.
All options granted under the 2000 Plan will become fully exercisable on the
date that the options are granted or other dates that the Option Committee
determines and will continue for a period up to a maximum of ten years. Options
granted pursuant to the 2000 Plan are not transferable during the optionee's
lifetime. Subject to the other terms of the 2000 Plan, the option committee has
discretion to provide vesting requirements and specific expiration provisions
with respect to the incentive options and non-qualified options granted. As of
September 22, 2008, no options had been granted under the 2000 Plan.
Outstanding Equity Awards
None.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Equity Compensation Plan Information
Securities authorized for issuance under our equity compensation plans as of
June 30, 2008 are as follows:
Equity Compensation Plan Table
- ------------------------------------ --------------------------- ------------------------ ------------------------
Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available
of outstanding option, outstanding options, for future issuance
warrants and rights warrants and rights under equity
compensation plans
- ------------------------------------ --------------------------- ------------------------ ------------------------
Equity compensation plans approved 0 0 4,000,000
by security holders
- ------------------------------------ --------------------------- ------------------------ ------------------------
Equity compensation plans not n/a n/a n/a
approved by security holders
- ------------------------------------ --------------------------- ------------------------ ------------------------
Total: 0 0 4,000,000
- ------------------------------------ --------------------------- ------------------------ ------------------------
Page 15
Beneficial Ownership
As of September 22, 2008, there were 50,155,000 shares of common stock
outstanding. The following table sets forth certain information as of September
22, 2008, by all executive officers and directors as a group, and by each other
person known by us to be the beneficial owner of more than five percent of the
common stock:
Percentage of
Name and Address No. of Shares Shares
of Beneficial Owner Beneficially Owned (1) Outstanding
- ------------------- ---------------------- -----------
Kam Che Chan (2)
Flat D3, 5/F
36 Broadcast Drive
Kowloon, Hong Kong 22,849,680 45.6%
Paul Wong (3)
32-2A Clovelly Court
12 May Road
Hong Kong 22,849,680 45.6%
Qi Yu Zhang (4)
2811 City E. Station
Lai Zhen Mansion
40 Fu Min Road, Fu Tian Area 17,350,320 34.6%
Shenzhen, PRC 518033
First Strike Securities Limited (5)
18/F, Kam Sang Building
255-257 Des Voeux Road Central 17,350,320 34.7%
Hong Kong
Honview International Limited (6)
Room 1408, Lippo Sun Plaza
28 Canton Road 22,849,680 45.6%
Kowloon, Hong Kong
Anthony Ng
Apt. 305, 9015 Leslie Street
Richmond Hill, Ontario
Canada L4B 4J8 6,000,000 12.0%
All Executive Officers and Directors
as a group (five persons) (2)(3)(4) 46,200,000 92.1%
- ---------------------
(1) "Beneficial ownership" is defined in the regulations promulgated by the SEC
as having or sharing, directly or indirectly (A) voting power, which
includes the power to vote or to direct the voting, or (B) investment
power, which includes the power to dispose or to direct the disposition, of
shares of the common stock of an issuer. Unless otherwise indicated, the
beneficial owner has sole voting and investment power.
(2) Kam Che Chan may be considered a beneficial owner of the 22,849,680 shares
of which Honview International Limited is the record owner. Mr. Chan is a
director of Honview International Limited and he also is the beneficial
owner of 15.20 percent of the outstanding equity interests of Honview. The
shares to be issued to Honview are included three times in the table. They
are listed as being held beneficially by each of Kam Che Chan, Honview
International Limited and Paul Wong. Mr. Chan is the Chairman of our Board
of Directors. See also footnotes 3 and 6, below.
Page 16
(3) Paul Wong may be considered a beneficial owner of the 22,849,680 shares of
which Honview International Limited is the record owner. Mr. Wong is a
beneficial owner of 39.21 percent of the outstanding equity interests in
Honview. The shares to be issued to Honview are included three times in the
table. They are listed as being held beneficially by each of Paul Wong, Kam
Che Chan and Honview International Limited. Mr. Wong is a director of COL
International. See also footnotes 2 and 6.
(4) Qi Yu Zhang may be considered a beneficial owner of the 17,350,320 shares
of which First Strike Securities Limited is the record owner. Mr. Zhang is
the beneficial owner of 20 percent of the outstanding equity interests of
First Strike. The shares to be issued to First Strike are included twice in
the table. They are listed as being held beneficially by both Qi Yu Zhang
and First Strike. Mr. Zhang is a director of COL International. See also
footnote 5, below.
(5) First Strike Securities Limited owns 17,350,320 shares of our common stock.
These shares are included twice in the table. They are listed as being held
beneficially by both First Strike Securities Limited and Qi Yu Zhang. See
also footnote 4, above.
(6) Honview International Limited owns 22,849,680 shares of our common stock.
These shares are included three times in the table. They are listed as
being held beneficially by each of Honview International Limited, Paul Wong
and Kam Che Chan. See also footnotes 2 and 3, above.
Item 13. Certain Relationships and Related Transactions
Honview International Limited owns 22,849,680 shares of our common stock, or
45.6 percent of our outstanding common stock, and First Strike Securities
Limited owns 17,350,320 shares of our common stock, or 34.6 percent of our
outstanding common stock. Paul Wong is a director of Honview and he also is a
beneficial owner of 39.2 percent of the outstanding equity interests in Honview.
Mr. Wong also is a director of COL International.
Kam Che Chan is a director of Honview and he also is the beneficial owner of
15.2 percent of the outstanding equity interests of Honview. Mr. Chan also is
the Chairman of our Board of Directors.
Qi Yu Zhang is a director of First Strike and he also is the beneficial owner of
20.0 percent of the outstanding equity interests of First Strike. Mr. Zhang also
is a director of COL International.
Pursuant to a Loan Agreement, Honview agreed to lend Migration its cash needs,
from time to time, at any time until January 1, 2004 up to an aggregate
principal amount of US$8 million. As of June 30, 2004, advances from Honview
totaled Rmb71,059,244 (US$8,574,371). As a result of Migration becoming a
wholly-owned subsidiary of COL International, any amounts loaned from Honview
prior to February 8, 2001, the effective date of the registration statement
related to COL International's initial public offering, may be paid at the
option of Honview, by converting, at any time after October 10, 2001, part or
all the unpaid principal amount of the loan into shares of COL International's
common stock, at a price equal to the greater of $1.20 per share or 90 percent
of the average weighted trading price of the common stock for the 20 trading
days preceding the date of notice of exercise of conversion. Any amounts loaned
from Honview after the effective date of that registration statement may be
paid, at the option of Honview, by converting, at any time after October 10,
2001, part or all the unpaid principal amount of the loan into shares of COL
International's common stock, at a price equal to the greater of $1.20 per share
or 110 percent of weighted average trading price of common stock for the 20
trading days preceding the date of the loan. Since 2001, there were additional
advances from Honview to COL. As of June 30, 2008, additional advances from
Honview totaled Rmb79,590,829 (US$11,582,239) and there were no conversion
rights for these advances.
During the year, the Company received rental income from a company subject to
common significant influence for an amount of Rmb Nil for the year ended June
30, 2008, and Rmb797,477 (US$104,591) for the year ended June 30, 2007.
Page 17
Except as discussed above, during the past two years there were no transactions
between COL International and its directors, executive officers or known holders
of more than five percent of the common stock, or transactions by COL
International in which any of the foregoing persons had a direct or indirect
material interest, in which the amount involved exceeded $120,000.
Item 14. Principal Accountant Fees and Services
Resignation of Independent Registered Public Accounting Firm.
Effective August 1, 2007, Moores Rowland Mazars (the "Former Auditor") resigned
as the independent auditor of the Company in connection with the reorganization
of the Former Auditor on June 1, 2007, in which certain of its partners resigned
and joined Mazars CPA Limited and the Former Auditor changed its name to Moores
Rowland. The Former Auditor had been the Company's auditor since November 14,
2001. The Company's Board of Directors approved the resignation of the Former
Auditor on August 1, 2007.
The Former Auditor's audit report on the Company's consolidated financial
statements for each of the past two fiscal years, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope or accounting principles, except that the Former
Auditor's report on the Company's financial statements for each of the fiscal
years ended June 30, 2006 and 2005 included an explanatory paragraph describing
the uncertainty as to the Company's ability to continue as a going concern.
During the Company's two most recent fiscal years, (a) there were no
disagreements between the Company and the Former Auditor on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
the Former Auditor, would have caused the Former Auditor to make reference to
the subject matter of the disagreement in connection with its report; and (b) no
reportable events as set forth in Item 304(a)(1)(V)(A) through (D) of Regulation
S-K have occurred.
Engagement of New Independent Registered Public Accounting Firm
As key members of the Former Auditor servicing the Company are now with Mazars
CPA Limited, the Board of Directors appointed Mazars CPA Limited as the
Company's new independent auditor (the "New Auditor"), effective from August 1,
2007.
During the Company's two fiscal years and subsequent interim period prior to
engaging the New Auditor on August 1, 2007, the Company did not consult with the
New Auditor regarding the application of accounting principles to a specified
transaction, either completed or proposed, or any of the matters or events set
forth in Item 304(a)(2) of Regulation S-K.
Audit Fees
The New Auditor billed the Company $19,231 for the year ended June 30, 2008, and
$28,846 for the year ended June 30, 2007. The Former Auditor billed the Company
$29,487 and $65,385 for the year ended June 30, 2007 and June 30, 2006,
respectively, for professional services rendered for the audit of the Company's
annual financial statements and review of financial statements included in the
Company's Forms 10-Q and services normally provided by independent accountants
in connection with statutory and regulatory filings or engagements for those
fiscal years.
Audit-Related Fees
For the years ended June 30, 2008 and June 30, 2007, neither the New Auditor or
the Former Auditor provided the Company with any services for assurance and
related services that are reasonably related to the performance of the audit or
review of the Company's financial statements and are not reported above under
"--Audit Fees."
Page 18
Tax Fees
For the years ended June 30, 2008 and June 30, 2007, neither the New Auditor nor
the Former Auditor provided the Company with professional services for tax
compliance, tax advice, and tax planning.
All Other Fees
For the years ended June 30, 2008 and June 30, 2007, neither the New Auditor nor
the Former Auditor billed the Company for products and services other than those
described above.
Audit Committee Pre-Approval Policies
The Board of Directors, which is performing the equivalent functions of an audit
committee, currently does not have any pre-approval policies or procedures
concerning services performed by the New Auditor or the Former Auditor. All the
services performed by the New Auditor or the Former Auditor that are described
above were pre-approved by the Board of Directors. Less than 50% of the hours
expended on either the New Auditor's or the Former Auditor's engagement to audit
the Company's financial statements for the fiscal years ended June 30, 2008,
June 30, 2007 and June 30, 2006 were attributed to work performed by persons
other than the New Auditor's or the Former Auditor's full-time, permanent
employees, respectively.
PART IV
Item 15. Exhibits and Financial Statement Schedules
See the audited financial statements for the year ended June 30, 2008 following
the signature page which are incorporated herein.
The following is a complete list of Exhibits filed as part of this registration
statement, which Exhibits are incorporated herein.
Number Description
- ------ -----------
2.1 Stock Exchange Agreement between and among Migration
Developments Limited, the Company and the shareholders of
Migration Developments Limited dated June 8, 2000 (1)
3.1 Certificate of Incorporation filed with the Delaware
Secretary of State effective as of February 22, 2000 (1)
3.2 Certificate of Amendment to the Certificate of Incorporation
filed with the Delaware Secretary of State effective as of
April 3, 2000 (1)
3.3 Amended and Restated Bylaws (4)
3.4 Sino-Foreign Joint Venture Contract (2) (1)
3.5 Articles of Association of the Sino-Foreign Joint Venture
(1)
4.1 Specimen Common Stock Certificate (1)
10.1 Joint Venture Business License (2) (1)
10.2 Cooperation Agreement Regarding China Online's Internet
Connection Service Commercial Business dated July 15, 1998
between Neihi Electronic Systems Co., Ltd. (now known as the
JV) and Rayes Group (2) (1)
Page 19
10.3 Cooperation Agreement Regarding China Online's Internet
Content Service Commercial Business dated July 15, 1998
between Neihi Electronic Systems Co., Ltd. (now known as the
JV) and Rayes Group (2) (1)
10.4 Cooperation Agreement for Dissemination of Educational
Resources between the JV and Wuhan City No.2 Secondary
School to establish Education Net dated January 7, 2000 (2)
(1)
10.5 Cooperation Agreement for Transmission of Education
Materials between the JV and Wuhan Cable TV to provide
Education Net infrastructure dated March 10, 2000 (2) (1)
10.6 Purchase Agreement between the JV, Shanghai Togji
Construction Materials Technology Sales Service Co., Ltd.
and other parties specified thereby dated October 22, 1999
(2) (1)
10.7 2000 Stock Option Plan* (1)
10.8 Form of Subscription Agreement (1)
10.9 Form of Escrow Agreement between the Company and American
Securities Transfer and Trust, Inc. (1)
10.10 Form of Migration's Convertible Promissory Note (3)
10.11 Migration's Loan Agreement dated October 10, 2000 (3)
10.12 Sino-Foreign Joint Venture Agreement dated July 7, 2000
between Migration and Shanghai Dongyi Scientific Technology
Engineering Co. (3)
10.13 Share Purchase Agreement dated July 17, 2000 between
Shanghai Shangyi Science and Trade Information Consulting
Co., Ltd. and Shanghai Tongji Construction Materials Sales
and Services Co., Ltd. (3)
10.14 Lease Agreement for Rental of Office Premises dated April
25, 2000 (3)
10.15 COL International's Loan Agreement dated December 21, 2000
(4)
21 Subsidiaries of the Registrant (5)
31 Rule 13a-14(a)/15a-14(a) Certification of Chief Executive
Officer and Chief Financial Officer
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- ----------
* Designates a management contract or compensatory plan
required to be filed as an Exhibit to this Report on Form
10-K
(1) Incorporated by reference from the Company's Form SB-2
Registration Statement dated June 13, 2000 (File No.
333-39208)
(2) Translated into English from Chinese
(3) Incorporated by reference from the Company's Amendment No. 2
to Form SB-2 Registration Statement dated October 19, 2000
(File No. 333-39208)
(4) Incorporated by reference from the Company's Amendment No. 3
to Form SB-2 Registration Statement dated January 17, 2001
(File No. 333-39208)
(5) Incorporated by reference from the Company's Form 10-KSB
dated November 15, 2001 for the year ended June 30, 2001
(File No. 333-39208)
Page 20
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COL CHINA ONLINE INTERNATIONAL INC.
Date: October 14, 2008 By: /s/ Chi Keung Wong
--------------------------------
Chi Keung Wong,
Chief Executive Officer
and Chief Financial
Officer (Principal
Accounting Officer)
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant in the capacities and on the dates
indicated.
Date Signatures
- ---- ----------
October 14, 2008 /s/ Kam Che Chan
-----------------------------------
Kam Che Chan, Director
October 14, 2008 /s/ Anthony Ng
-----------------------------------
Anthony Ng, Director
October 14, 2008 /s/ Paul Wong
-----------------------------------
Paul Wong, Director
October 14, 2008 /s/ Qi Yu Zhang
-----------------------------------
Qi Yu Zhang, Director
Page 21
CHINA ONLINE INTERNATIONAL INC. AND ITS SUBSIDIARIES
- ----------------------------------------------------
Index to Consolidated Financial Statements
- ------------------------------------------
- --INDEX--
Page(s)
Report of Independent Registered Public Accounting Firm F-2
Consolidated Financial Statements:
Consolidated Balance Sheets
June 30, 2008 and 2007 F-3
Consolidated Statements of Operations
For the Years ended June 30, 2008 and 2007 F-4 - F-5
Consolidated Statements of Changes in Stockholders' Deficit
For the Years ended June 30, 2008 and 2007 F-6
Consolidated Statements of Cash Flows
For the Years ended June 30, 2008 and 2007 F-7
Notes to Consolidated Financial Statements F-8 - F-18
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and the Stockholders
COL China Online International Inc.
(A Development Stage Company incorporated in Delaware)
We have audited the accompanying consolidated balance sheets of COL China Online
International Inc. and its subsidiaries (the "Company") (a Development Stage
Company) as of June 30, 2008 and 2007, and the related consolidated statements
of operations, changes in stockholders' deficit and cash flows for each of the
years then ended, and for the period from December 10, 2007 (inception of
reentering the development stage) to June 30, 2008. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing auditing procedures
that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. Our audits also included
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
June 30, 2008 and 2007, and the results of its operations and its cash flows for
each of the years then ended, and for the period from December 10, 2007
(inception of reentering the development stage) to June 30, 2008, in conformity
with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 3 to the
consolidated financial statements, the Company's Board of Directors resolved to
cease the major operations of the Joint Venture in November 2007 due to the
expirations of the Joint Venture's business license in December 2007. The
Company's ability to continue as a going concern is dependent upon several
factors, including, but not limited to, continued financial support by the major
stockholder, raising additional capital or financing, potentially completing a
merger or acquisition of a business and ultimately achieving profitable
operations with positive cash flow. There are significant uncertainties as to
the Company's ability to accomplish these objectives, which raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
Mazars CPA Limited
Certified Public Accountants
Hong Kong
October 14, 2008
F-2
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
Note: JUNE 30, 2008 JUNE 30, 2007
-------------------------- -----------
(US$) (Rmb) (Rmb)
(Illustrative
ASSETS only)
CURRENT ASSETS:
Cash 9,087 62,445 190,579
Accounts receivable, net of allowance of Rmb Nil 4 -- -- 19,757
Deposits and other receivables 5 3,056 21,000 432,046
----------- ----------- -----------
Total current assets 12,143 83,445 642,382
PROPERTY, OFFICE SPACE AND EQUIPMENT, net 6 -- -- --
----------- ----------- -----------
TOTAL ASSETS 12,143 83,445 642,382
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses 34,594 237,721 718,341
Business tax payable -- -- 225,668
----------- ----------- -----------
Total current liabilities 34,594 237,721 944,009
----------- ----------- -----------
NON-CURRENT LIABILITIES:
Payable to majority stockholder 7a 11,582,239 79,590,829 80,129,352
----------- ----------- -----------
Total non-current liabilities 11,582,239 79,590,829 80,129,352
----------- ----------- -----------
Commitments and contingencies 8 -- -- --
----------- ----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, US$0.001 par value, 100,000,000
shares authorized and 50,155,000 shares issued,
outstanding 59,499 408,864 408,864
Additional paid-in capital 176,680 1,214,118 1,214,118
Accumulated deficit before reentering development stage (12,181,445) (83,708,451) (83,282,716)
Accumulated deficit from inception of reentering
development stage (77,093) (529,770) --
Other comprehensive income 417,669 2,870,134 1,228,755
----------- ----------- -----------
Total stockholders' deficit (11,604,690) (79,745,105) (80,430,979)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 12,143 83,445 642,382
=========== =========== ===========
F-3
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED CUMULATIVE
-------------------------------------- SINCE
REENTERING
DEVELOP-
MENT STAGE
DECEMBER 10,
2007, TO
------------------------ JUNE 30, JUNE 30,
JUNE 30, 2008 2007 2008
------------------------ ---------- ----------
(US$) (Rmb) (Rmb) (Rmb)
(Illustrative
Note only)
CONTINUING OPERATIONS
General and administrative expenses (136,219) (936,071) (1,409,349) (440,232)
Other income -- -- 24,399 --
---------- ---------- ---------- ----------
LOSS FROM CONTINUING OPERATIONS (136,219) (936,071) (1,384,950) (440,232)
---------- ---------- ---------- ----------
DISCONTINUED OPERATIONS 2
Net revenues:
Telecommunication 1,404 9,646 1,135,609 --
Marketing fee - PIERS -- -- 766,072 --
---------- ---------- ---------- ----------
Total revenues 1,404 9,646 1,901,681 --
---------- ---------- ---------- ----------
Cost of Sales:
Telecommunication (4,366) (30,000) (89,499) (30,000)
Marketing fee - PIERS -- -- (146,905) --
---------- ---------- ---------- ----------
Total cost of sales (4,366) (30,000) (236,404) (30,000)
---------- ---------- ---------- ----------
Gross (loss) margin (2,962) (20,354) 1,665,277 (30,000)
---------- ---------- ---------- ----------
Operating expenses:
General and administrative expenses (37,548) (258,025) (3,088,764) (81,588)
Amortization and depreciation -- -- (83,855) --
Provision for impairment loss on property,
office space and equipment -- -- (150,194) --
---------- ---------- ---------- ----------
Total operating expenses (37,548) (258,025) (3,322,813) (81,588)
---------- ---------- ---------- ----------
Operating loss (40,510) (278,379) (1,657,536) (111,588)
Rental income 12 -- -- 797,477 --
Waive of loan -- -- 51,236 --
Other income 37,682 258,945 42,307 22,050
---------- ---------- ---------- ----------
LOSS FROM DISCONTINUED OPERATIONS (2,828) (19,434) (766,516) (89,538)
---------- ---------- ---------- ----------
LOSS BEFORE MINORITY INTEREST (139,047) (955,505) (2,151,466) (529,770)
Minority interest -- -- -- --
---------- ---------- ---------- ----------
F-4
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED CUMULATIVE
-------------------------------------- SINCE
REENTERING
DEVELOP-
MENT STAGE
DECEMBER 10,
2007, TO
------------------------ JUNE 30, JUNE 30,
JUNE 30, 2008 2007 2008
------------------------ ---------- ----------
(US$) (Rmb) (Rmb) (Rmb)
(Illustrative
Note only)
NET LOSS (139,047) (955,505) (2,151,466) (529,770)
Other comprehensive income 238,857 1,641,379 771,186 974,390
COMPREHENSIVE INCOME (LOSS) 99,810 685,874 (1,380,280) (444,620)
Basic And Fully Diluted Loss Per Share 2
Loss from continuing operations (0.0027) (0.0187) (0.0276) (0.0088)
========== ========== ========== ==========
Loss from discontinued operations (0.0001) (0.0004) (0.0153) (0.0018)
========== ========== ========== ==========
Weighted Average Common Share Outstanding 50,155,000 50,155,000 50,155,000 50,155,000
========== ========== ========== ==========
F-5
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2008 AND 2007
ACCUMULATED
DEFICIT ACCUMULATED
BEFORE DEFICIT FROM ACCUMULATED
ADDITIONAL REENTERING INCEPTION OF OTHER
PAID-IN DEVELOPMENT DEVELOPMENT COMPREHENSIVE
COMMON STOCK CAPITAL STAGE STAGE INCOME TOTAL
----------- ----------- ----------- ----------- ----------- ----------- -----------
Number (Rmb) (Rmb) (Rmb) (Rmb) (Rmb) (Rmb)
Balances, June 30, 2006 50,155,000 408,864 1,214,118 (81,131,250) -- 457,569 (79,050,699)
Net loss -- -- -- (2,151,466) -- -- (2,151,466)
Other comprehensive income -- -- -- -- -- 771,186 771,186
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, June 30, 2007 50,155,000 408,864 1,214,118 (83,282,716) -- 1,228,755 (80,430,979)
Net loss -- -- -- (425,735) (529,770) -- (955,505)
Other comprehensive income -- -- -- -- -- 1,641,379 1,641,379
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, June 30, 2008 50,155,000 408,864 1,214,118 (83,708,451) (529,770) 2,870,134 (79,745,105)
=========== =========== =========== =========== =========== =========== ===========
F-6
COL CHINA ONLING INTERNATIONAL INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
CUMULATIVE
SINCE
REENTERING
DEVELOP-
FOR THE YEAR ENDED MENT STAGE
------------------------------------- DECEMBER 10,
JUNE 30, 2007, TO JUNE
JUNE 30, 2008 2007 30, 2008
------------------------ ---------- ----------
(US$) (Rmb) (Rmb) (Rmb)
(Illustrative
only)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (139,047) (955,505) (2,151,466) (425,734)
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization and depreciation -- -- 83,855 --
Exchange difference 7,873 54,103 46,915 (5,727)
Provision for impairment loss on Property, Office
Space and Equipment -- -- 150,194 --
Waiver of loans -- -- (51,236) --
Write back of provision for staff welfare (1,746) (12,000) -- (12,000)
Write back of provision for taxation (32,076) (220,418) -- (220,418)
Write back of deposits received (3,181) (21,859) -- --
Change in operating assets and liabilities:
Decrease (Increase) in:
Accounts receivable 2,875 19,757 72,255 19,757
Deposits and other receivables 59,816 411,046 -- 387,438
(Decrease) Increase in:
Accounts payable and accrued expenses (65,014) (446,761) (224,843) (525,445)
Business tax payable (764) (5,250) (8,718) (5,250)
---------- ---------- ---------- ----------
Net cash used in operating activities (171,264) (1,176,887) (2,083,044) (787,379)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property, Office Space and Equipment -- -- (3,333) --
---------- ---------- ---------- ----------
Net cash used in investing activities -- -- (3,333) --
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of other loan -- -- (98,764) --
Advances from Majority Stockholder 153,457 1,054,528 2,178,772 729,605
---------- ---------- ---------- ----------
Net cash provided by financing activities 153,457 1,054,528 2,080,008 729,605
---------- ---------- ---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (840) (5,775) (3,290) (1,133)
---------- ---------- ---------- ----------
NET DECREASE IN CASH (18,647) (128,134) (9,659) (58,907)
CASH, beginning of year 27,734 190,579 200,238 190,579
---------- ---------- ---------- ----------
CASH, end of year 9,087 62,445 190,579 131,672
========== ========== ========== ==========
F-7
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Company Organization and Operations
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 and conducting the engineering services and
the internet related business of Migration Developments Limited, a British
Virgin Islands company ("Migration") and raising equity capital to be utilized
in the business of Migration. Migration held a 90% equity interest in Shenzhen
Knowledge & Communication Co. Ltd. which was a Sino-foreign equity joint venture
("Joint Venture") in the People's Republic of China ("PRC").
Beginning in approximately January 2004, the Company focused its business on
internet and telecommunication convergence solutions and customer-specific
solutions for the retail industry until November 23, 2007 when its board of
directors resolved to cease the operations of such business due to the
expiration of the Joint Venture's business license on December 10, 2007. Such
business was the only business that the Company operated in the last two fiscal
years. The Company has been in an inactive or non-operating status since
November 23, 2007, and currently remains as a "shell company", as such term is
defined under the Securities Exchange Act of 1934, as amended, with its only
activities being those related to maintaining its shell company status and
seeking a merger candidate.
After becoming a shell company, the Company has reentered the development stage
since December 10, 2007. For the Company's plan of operations following the
termination of its business, see note 3 to the consolidated financial
statements.
2. Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Basis of Accounting - The amounts included in the financial statements are
presented in Renminbi ("Rmb"), which is COL International's functional currency,
because the Company's major operations are primarily located in the PRC. For
illustrative purposes, the consolidated balance sheet as of June 30, 2008,
consolidated statement of operations, consolidated statement of changes in
stockholders' deficit and consolidated statement of cash flows for the year then
ended have been translated into US dollars at approximately Rmb6.8718 to the US
dollar, which was the prevailing exchange rate at June 30, 2008.
Concentration of Credit Risk - Credit risk represents the accounting loss that
would be recognized at the reporting date if counterparties failed completely to
perform as contracted. Concentrations of credit risk (whether on or off balance
sheet) that arise from financial instruments exist for groups of customers or
counterparties when they have similar economic characteristics that would cause
their ability to meet contractual obligations to be similarly affected by
changes in economic or other conditions. COL International's accounts receivable
include a limited number of customers. Financial instruments that subject the
Company to credit risk consist principally of accounts receivable. When it was
operating, the Company generally did not require collateral from its customers.
Accounts receivable totaled Rmb19,757 (US$2,591) and Rmb Nil as at June 30, 2007
and 2008, respectively. The Company has made no allowance for doubtful accounts
for the year ended June 30, 2007 as all of the receivables had been received in
2008. Thereafter, no accounts receivable arose up to June 30, 2008.
Country Risks - As COL International's primary operations were in the PRC, and
will continue to remain in the PRC unless moved out to other geographic areas in
connection with an acquisition or merger, the Company is exposed to certain
F-8
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
foreign company risks not normally associated with entities operating solely in
the United States. These risks include, among others, the political, economic
and legal environments, and foreign currency exchange. The Company's results may
be adversely affected by changes in the political and social conditions in the
PRC, and by changes in governmental policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things. COL
International's management does not believe these risks to be significant. There
can be no assurance, however, that changes in political, social, and other
conditions will not result in any adverse impact.
Cash Equivalents - COL International considers all highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.
Property, Office Space and Equipment - Property, office space and equipment are
recorded at cost less accumulated depreciation and amortization less any
impairment loss. Depreciation is computed using the straight-line method over
the estimated useful life of the assets, generally twenty years for property,
three years for computer equipment and five years for office space and other
equipment. Repairs and maintenance are charged to expense as incurred. Material
expenditures, which increase the life of an asset, are capitalized and
depreciated over the estimated remaining useful life of the asset. The cost of
equipment sold, or otherwise disposed of, and the related accumulated
depreciation or amortization is removed from the accounts, and any gains or
losses are reflected in current operations. Amortization and depreciation
expense charged to operations were Rmb83,855 (US$10,998) and Rmb Nil and
provision for impairment loss on property, office space and equipment was Rmb
150,194 (US$19,698) and Rmb Nil for the year ended June 30, 2007 and 2008,
respectively.
Income Taxes - COL International accounts for income taxes under the liability
method of Statement of Financial Accounting Standard (SFAS) No. 109, "Accounting
for Income Taxes", whereby current and deferred tax assets and liabilities are
determined based on tax rates and laws enacted as of the balance sheet date.
Deferred tax expense or benefit represents the change in the deferred tax
asset/liability balance.
Revenue Recognition - COL International recognizes revenue at the time the
service is rendered or product is delivered and collection is reasonably
assured, which generally approximates the time it is accepted by the customer.
Telecommunication income represents the services commission revenues from ISP
service and selling IP phones. The Company contracted with telecommunication
services companies selling IDD (IP phones) to end-users and received
telecommunication services commission income from the agents, which is a
percentage of the fees paid by the end users for monthly usage of the phones.
Services commission revenue is recognized in the period in which the service is
rendered.
Marketing fee is derived from sales of trade data products from Commonwealth
Business Media, Inc. ("CBM"). The Company contracted with CBM on revenue sharing
basis to promote and market their trade data products to end users in the region
of Eastern China. Marketing fee is recognized upon referring customer sales
orders to CBM and is recognized on a net basis.
Impairment of Long-Lived Assets - COL International has adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of". In the event that facts and circumstances indicate that the
carrying value of long-lived assets may be impaired, an evaluation of
recoverability would be performed. If an evaluation is required, the estimated
future undiscounted cash flows associated with the asset would be compared to
the asset's carrying amount to determine if a write-down to market value or
discounted cash flow value is required.
F-9
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Transaction - Foreign currency transactions during the period
are translated into Renminbi at approximately the market exchange rates ruling
at the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated into Renminbi at approximately the market exchange
rates ruling at the balance sheet date. Differences arising from foreign
currency translation are included in the net profit or loss for the period.
The consolidated financial statements consolidate the financial statements of
the Company and its subsidiaries. Some of these companies use their local
currencies other than Renminbi as the functional currency. For Group
consolidation purposes, assets and liabilities whose functional currency is not
Renminbi are translated into Renminbi at the rate in effect at the balance sheet
date. Revenue and expenses are translated at the average exchange rate during
the year. The effects of translation adjustments are recorded in accumulated
other comprehensive income.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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 reporting period. Such estimates include provisions for
doubtful accounts, sales returns and allowances, long-lived assets, deferred
income taxes and warranty provisions. Actual results could differ from those
estimates.
Fair Value of Financial Instruments - The estimated fair values for financial
instruments under SFAS No.107, "Disclosures about Fair Value of Financial
Instruments", are determined at discrete points in time based on relevant market
information. These estimates involve uncertainties and cannot be determined with
precision. The estimated fair values of COL International's financial
instruments, which includes cash, accounts receivable and accounts payable,
approximates their carrying value in the financial statements. The fair value of
advances from COL International's majority stockholder, which are without
interest, cannot be estimated due to the relationship between the entities.
Comprehensive Income - The Company accounts for comprehensive income 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. Other comprehensive income
for the years ended June 30, 2007 and 2008 represented gain from foreign
currency translation adjustments mainly on the payable to majority stockholder.
Net Loss Per Share - Basic and diluted net loss per share is computed by
dividing net loss for continuing and discontinued operations, respectively by
the weighted average number of common stock 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 June
30, 2007 and 2008, no options had been granted under the 2000 plan.
Accumulated Deficit - The acquisition of Migration by COL International on
September 24, 2001 had been treated as a reverse acquisition. As a result,
accumulated deficit prior to the acquisition should reflect that of Migration
only. However, no goodwill was recorded on this acquisition as COL International
had limited operations and was formed for the sole purpose of merging with
Migration and raising limited funding prior to the acquisition. Therefore,
accumulated deficit of COL International of Rmb3,630,010 (US$438,016) at the
date of acquisition has also been recorded in the accumulated deficit of the
Company.
F-10
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating Leases - Leases where substantially all the rewards and risks of
ownership of assets remain with the leasing company are accounted for as
operating leases. Rental receivables and payables under operating leases are
recognized as income and expenses, respectively, on the straight-line basis over
the lease term.
Discontinued Operations - On November 23, 2007, the board of directors has
resolved to cease the operations of the only business of the Company upon the
expiration of the Joint Venture's business license on December 10, 2007.
The Company reported such cessation as discontinued operations during the year
and the audited financial results of the discontinued operations for the
corresponding year ended June 30, 2007 in the accompanying consolidated
financial statements have been restated, on the same basis accordingly, in
accordance with SFAS 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets".
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS 157 is effective for fiscal years beginning after November
15, 2007. The adoption of this Statement is not expected to have a material
effect on the Company's Consolidated Financial Statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities ("SFAS 159"), which gives entities
the option to measure eligible financial assets, and financial liabilities at
fair value under other instrument basis, that are otherwise not permitted to be
accounted for at fair value under other accounting standards. The election to
use the fair value option is available when an entity first recognizes a
financial asset or financial liability. Subsequent changes in fair value must be
recorded in earnings. This statement is effective as of the beginning of a
company's first fiscal year after November 15, 2007. The Company is currently
evaluating the impact of adopting this Statement.
In December 2007, the FASB issued SFAS No. 141R, Business Combinations ("SFAS
141R"), which broadens the guidance of SFAS No. 141, extending its applicability
to all transactions and other events in which one entity obtains control over
one or more other businesses. It broadens the fair value measurement and
recognition of assets acquired, liabilities assumed, and interests transferred
as a result of business combinations; and stipulated that acquisition related
costs be expensed rather than included as part of the basis of the acquisition.
SFAS 141R expands required disclosures to improve the ability to evaluate the
nature and financial effects of business combinations. SFAS 141R is effective
for all transactions entered into, on or after January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements - An Amendment of ARB No. 51 ("SFAS 160").
SFAS 160 requires a noncontrolling interest in a subsidiary to be reported as
equity and the amount of consolidated net income specifically attributable to
the noncontrolling interest to be identified in the consolidated financial
statements. SFAS 160 also calls for consistency in the manner of reporting
changes in the parent's ownership interest and required fair value measurement
of any noncontrolling equity investment retained in a deconsolidation. SFAS 160
is effective on January 1, 2009. The adoption of this Statement is not expected
to have a material effect on the Company's Consolidated Financial Statements.
F-11
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities - An Amendment of SFAS No. 133 ("SFAS 161").
SFAS 161 expands the disclosure requirements in SFAS 133, regarding an entity's
derivative instruments and hedging activities. SFAS 161 is effective on January
1, 2009. The adoption of this Statement is not expected to have a material
effect on the Company's Consolidated Financial Statements.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles ("SFAS 162"). The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles for non-governmental entities. SFAS 162 is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles. The Company is currently evaluating
the impact of the adoption of SFAS 162 on its consolidated financial statements.
In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60 ("SFAS 163") to
require that an insurance enterprise recognize a claim liability prior to an
event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation and clarifies how
Statement 60 applies to financial guarantee insurance contracts. The adoption of
this Statement is not expected to have a material impact on the Company's
financial position or results of operations.
3. Termination of Operations
The accompanying consolidated financial statements have been prepared assuming
COL International will continue operating as a going concern. On November 23,
2007, the Board of Directors resolved to cease the Company's primary operations
due to the expiration of the Joint Venture's business license on December 10,
2007. The Company has used the amounts collected from its accounts receivable
and deposits paid and cash on hand to pay any outstanding liabilities or
accounts payable, and expects that the remaining liabilities will be undertaken
by Honview. The Company does not expect any assets to remain outstanding or to
be available for distribution to the parties of the Joint Venture or
stockholders of the Company.
In connection with the termination of substantially all of the Company's
operations on November 23, 2007, the Company effectively became a "shell
company". Under Rule 12b-2 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), a "shell company" is defined as a company that has (1) no
or nominal operations; and (2) either: (a) no or nominal assets; (b) assets
consisting solely of cash and cash equivalents; or (c) assets consisting of any
amount of cash and cash equivalents and nominal other assets. Because the
Company is now effectively a shell company, under the Exchange Act, it is
currently seeking to enter into a business combination with one or more yet to
be identified privately held businesses. The Board of Directors believes that
the Company will be attractive to privately held companies interested in
becoming publicly traded by means of a business combination with the Company,
without offering their own securities to the public. The Board of Directors does
not expect to restrict its search for business combination candidates to any
particular geographical area, industry or industry segment, and may enter into a
combination with a private business engaged in any line of business. The
Company's discretion is, as a practical matter, unlimited in the selection of a
combination candidate.
The majority of the Company's business activities were suspended effective July
2007, and on November 23, 2007, the board of directors has resolved to cease the
operations of the only business of the Company upon expiration of the Joint
F-12
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Venture's business license on December 10, 2007. Since December 10, 2007, the
Company reentered the development stage. It is expected that the Company will
remain in such status until a business combination is taken place.
In accordance with the applicable accounting guidance, the assets and
liabilities associated related to the operations with the Joint Venture have
been separately disclosed in note 9 to the consolidated financial statements.
Discontinued operations are reported as a separate component within the
Consolidated Statement of Operations outside of loss from continuing operations.
As a result, net revenues or cost of sales all of which related to the Joint
Venture are no longer reported separately in the Consolidated Statements of
Operations.
As a result of the expiration of the Joint Venture's business license on
December 10, 2007, the Company reentered the development stage. The results of
operations that have accumulated since the Company reentered the development
stage are presented in the Consolidate Statement of Operations. The accumulated
deficit before reentering development stage and the accumulated deficit since
reentering the development stage (inception) have been separately presented in
the Balance Sheet, Consolidated Statement of Changes in Stockholders' Deficit
and the Consolidated Statement of Cash Flows for the period from December 10,
2007 (inception) to June 30, 2008.
The Company has not entered into any agreement, arrangement or understanding of
any kind with any person regarding a business combination. Depending upon the
nature of the transaction, the current officers and directors of the Company
probably will resign their directorship and officer positions with the Company
in connection with any consummation of a business combination. The current
management is not expected to have any control over the conduct of the Company's
business following the completion of a business combination. The Company has no
plans, understandings, agreements, or commitments with any individual or entity
to act as a finder of or as a business consultant in regard to any business
opportunities for the Company. In addition, there are no plans to use
advertisements, notices or any general solicitation in the search for
combination candidates.
In view of the above-mentioned plan, the Company's ability to continue as a
going concern is dependent upon several factors, including, but not limited to,
continuing financial support from Honview International Limited ("Honview"),
which is now a majority stockholder of the Company, the successfulness of a
possible business combination and whether the post-combination business would be
able to achieve and maintain profitable operations and to raise additional
capital. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
The Company believes that Honview will continue to provide funding during the
forthcoming year.
4. Accounts Receivable
The following information summarizes accounts receivable at:
June 30, 2008 June 30, 2007
---------------------------------- ---------------
(US$) (Rmb) (Rmb)
(Illustrative
Only)
Trade receivables - - 19,757
=============== ============= ===============
F-13
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Deposits and Other Receivables
The following information summarizes deposits and other receivables at:
June 30, 2008 June 30,
2007
--------------------------------- -------------
(US$) (Rmb) (Rmb)
(Illustrative
Only)
Rental deposits 3,056 21,000 208,932
Trade deposit paid - - 199,600
Other receivables - - 23,514
-------------- ------------ -------------
3,056 21,000 432,046
============== ============ =============
6. Property, Office Space and Equipment
Property, office space and equipment consist of the following:
June 30,
June 30, 2008 2007
--------------------------------- -------------
(US$) (Rmb) (Rmb)
(Illustrative
Only)
Vehicles 41,565 285,622 285,622
Computer equipment 684,204 4,701,715 4,701,715
Computer software 571,532 3,927,454 3,927,454
Office furniture 27,820 191,174 191,174
Other equipment 228,148 1,567,787 1,567,787
-------------- ------------ -------------
1,553,269 10,673,752 10,673,752
Less : Accumulated depreciation and
amortization (1,553,269) (10,673,752) (10,673,752)
-------------- ------------ -------------
- - -
============== ============ =============
F-14
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Payable To Related Party
June 30, 2008 June 30,
2007
--------------------------- ----------
(US$) (Rmb) (Rmb)
(Illustrative
Only)
Majority stockholder of COL International
(Note a) 11,582,239 79,590,829 80,129,352
========== ========== ==========
All payables with related party are without interest or collateral.
Note:
a. Pursuant to the Loan Agreement, Honview International Limited, the ultimate
holding company of the Company, agreed to lend Migration its cash needs, from
time to time, at any time until January 1, 2004 up to an aggregate principal
amount of US$8 million. As a result of Migration becoming a wholly owned
subsidiary of the Company, any amounts loaned from Honview prior to February 8,
2001, the effective date of the registration statement related to the Company's
initial public offering, may be paid at the option of Honview, by converting, at
any time after October 10, 2001, part or all the unpaid principal amount of the
loan into shares of the Company's common stock, at a price equal to the greater
of $1.20 per share or 90 percent of the average weighted trading price of the
common stock for the 20 trading days preceding the date of notice of exercise of
conversion. Any amounts loaned from Honview after the effective date of this
registration statement may be paid, at the option of Honview, by converting, at
any time after October 10, 2001, part or all the unpaid principal amount of the
loan into shares of the Company's common stock, at a price equal to the greater
of $1.20 per share or 110 percent of weighted average trading price of common
stock for the 20 trading days preceding the date of the loan.
There has been no change to the above loan condition during the year to June 30,
2008. In addition, during the year, Honview has undertaken to make available
adequate funds to the Company as and when required to maintain the Company as a
going concern.
The Company has recorded other comprehensive income of Rmb 771,186 (US$101,142)
and Rmb1,641,379 (US$238,857) for the year ended June 30, 2007 and 2008,
respectively, directly into the Stockholders' deficit. This comprehensive income
is the result of an unrealized gain on translation of United States dollar
payable to Honview from US$ to Rmb on consolidation.
8. Commitments and Contingencies
i) Operating Leases Payable - As of June 30, 2008 and 2007, the Company has no
non-cancellable lease commitments and Rmb986,508 (US$129,381) to be paid in
2008, respectively.
Rental expense charged to operations was Rmb1,053,493 (US$138,167) and
Rmb55,300 (US$8,047) for the year ended June 30, 2007 and 2008,
respectively.
F-15
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ii) Operating Leases Receivable - As of June 30, 2008 and 2007, the Company has
no non-cancellable lease commitments and Rmb727,737 (US$95,443) to be
received in 2008, respectively, which will be recorded as rental income.
iii) Stock Option Plan - The Company has set up a stock option plan (the "Stock
Option Plan"), which the Company may grant options to key employees and
other persons to purchase an aggregate of 4,000,000 shares of common stock.
The options granted pursuant to the Stock Option Plan may be either
incentive options qualifying for beneficial tax treatment for the
recipient, or non-qualified options. The terms of the Stock Option Plan
concerning incentive options and non-qualified options are substantially
the same except that only the Company's or its subsidiaries' employees are
eligible for incentive options, and other individuals are eligible for
non-qualified options. With respect to options granted to persons other
than outside directors, the Stock Option Plan is administered by an Option
Committee that determines the terms of the options subject to the
requirements of the Stock Option Plan.
All options granted under the Stock Option Plan will become fully
exercisable on the date that the options are granted or other dates that
the Option Committee determines and will continue for a period up to a
maximum of ten years. Options granted pursuant to the Stock Option Plan are
not transferable during the optionee's lifetime. Subject to the other terms
of the Stock Option Plan, the Option Committee has discretion to provide
vesting requirements and specific expiration provisions with respect to the
incentive options and non-qualified options granted. No options had been
granted under the Stock Option Plan since its establishment.
9. Discontinued Operations
On November 23, 2007, the board of directors resolved to cease the operations of
the only business of the Company upon the expiration of the Joint Venture's
business license on December 10, 2007. The discontinued operations had been
reported as a separate component within Consolidated Statement of Operations
outside of loss from continuing operations. Assets and liabilities of the
discontinued operations, which have been included in the Consolidated Balance
Sheets, were as follows:
June 30,
June 30, 2008 2007
(US$) (Rmb) (Rmb)
(Illustrative
Only)
Deposits and other receivables 3,056 21,000 451,803
Accounts payable and accrued expenses - - 328,627
----------------- ---------------- ----------------
Net assets 3,056 21,000 123,176
================= ================ ================
10. Taxes
COL International and its subsidiaries are subject to income taxes on an entity
basis on income arising in or derived from the tax jurisdiction in which they
operate.
The Joint Venture, which was established in the PRC, is subject to the PRC
income taxes at a rate of 33%. However, the Shenzhen head office of the Joint
Venture is entitled to full exemption from income tax for one year starting from
the first profit making year and 50% tax reduction in the subsequent two years.
F-16
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
No provision for PRC income tax has been provided for in the financial
statements as the Joint Venture in the PRC was operating at a loss for the
periods presented.
In addition, the Joint Venture is subject to business taxes in the PRC and are
required to pay 5% of revenues generated from marketing and value added
services, computer software, and network development.
Migration operates in Hong Kong where the statutory tax rate is 16.5% (2007:
17.5%) on assessable income arising in Hong Kong. Migration is exempt from any
BVI income taxes under BVI International Business Act for its operations being
located only in Hong Kong.
The Company has a net operating loss (NOL) carryforward for tax reporting
purposes in the PRC of approximately Rmb15,000,000 and Rmb Nil for the year
ended June 30, 2007 and 2008, respectively.
Under PRC taxation laws, NOL of each year can only be carried forward for a
maximum of 5 years. Considering the fact that the Joint Venture's operation was
ceased in December 2007 and tax clearance was properly approved, any accumulated
NOL should have expired accordingly and not be carried forward. As a result,
business tax payables were reversed during the year ended June 30, 2008.
The Company has adopted FASB Interpretation 48 "Accounting or Uncertainty in
Income Taxes" ("FIN48") for the year ended June 30, 2008. FIN 48 stated that a
tax position should be recognized as a benefit only if it is "more likely than
not" that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. After such examination, the Company had no
such tax benefits to be recognized.
No deferred income taxes are provided as there are no temporary differences
between the tax and book basis of assets and liabilities due to the current
status of the Company as a shell company.
11. Major Customers
The following customers totaled more than 10% of sales:
Year ended June 30
-------------------------------
2008 2007
A 100% 9%
B 0% 23%
C 0% 13%
12. Rental Income
The Company received rental income from three related companies subject to
common significant influence for an amount of Rmb797,477 (US$104,590) and Rmb
Nil for the years ended June 30, 2007 and 2008, respectively.
F-17
COL CHINA ONLINE INTERNATIONAL INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Pension Costs
As stipulated by PRC regulations, the Company maintains a defined contribution
retirement plan for all of its employees who are residents of PRC. All retired
employees of the Company are entitled to an annual pension equal to their basic
annual salary upon retirement. The Company contributed to state sponsored
retirement plan approximately 32.5% - 48% of the basic salary of its employees
and has no further obligations for the actual pension payments or
post-retirement benefits beyond the annual contributions. The state sponsored
retirement plan is responsible for the entire pension obligation payable to all
employees. The pension expenses were Rmb275,769 (US$36,167) and Rmb16,769
(US$2,440) for the years ended June 30, 2007 and 2008, respectively.
F-18
Exhibits List
The following is a complete list of Exhibits filed as part of this registration
statement, which Exhibits are incorporated herein.
Number Description
- ------ -----------
2.1 Stock Exchange Agreement between and among Migration
Developments Limited, the Company and the shareholders of
Migration Developments Limited dated June 8, 2000 (1)
3.1 Certificate of Incorporation filed with the Delaware
Secretary of State effective as of February 22, 2000 (1)
3.2 Certificate of Amendment to the Certificate of Incorporation
filed with the Delaware Secretary of State effective as of
April 3, 2000 (1)
3.3 Amended and Restated Bylaws (4)
3.4 Sino-Foreign Joint Venture Contract (2) (1)
3.5 Articles of Association of the Sino-Foreign Joint Venture
(1)
4.1 Specimen Common Stock Certificate (1)
10.1 Joint Venture Business License (2) (1)
10.2 Cooperation Agreement Regarding China Online's Internet
Connection Service Commercial Business dated July 15, 1998
between Neihi Electronic Systems Co., Ltd. (now known as the
JV) and Rayes Group (2) (1)
10.3 Cooperation Agreement Regarding China Online's Internet
Content Service Commercial Business dated July 15, 1998
between Neihi Electronic Systems Co., Ltd. (now known as the
JV) and Rayes Group (2) (1)
10.4 Cooperation Agreement for Dissemination of Educational
Resources between the JV and Wuhan City No.2 Secondary
School to establish Education Net dated January 7, 2000 (2)
(1)
10.5 Cooperation Agreement for Transmission of Education
Materials between the JV and Wuhan Cable TV to provide
Education Net infrastructure dated March 10, 2000 (2) (1)
10.6 Purchase Agreement between the JV, Shanghai Togji
Construction Materials Technology Sales Service Co., Ltd.
and other parties specified thereby dated October 22, 1999
(2) (1)
10.7 2000 Stock Option Plan* (1)
10.8 Form of Subscription Agreement (1)
10.9 Form of Escrow Agreement between the Company and American
Securities Transfer and Trust, Inc. (1)
10.10 Form of Migration's Convertible Promissory Note (3)
10.11 Migration's Loan Agreement dated October 10, 2000 (3)
10.12 Sino-Foreign Joint Venture Agreement dated July 7, 2000
between Migration and Shanghai Dongyi Scientific Technology
Engineering Co. (3)
10.13 Share Purchase Agreement dated July 17, 2000 between
Shanghai Shangyi Science and Trade Information Consulting
Co., Ltd. and Shanghai Tongji Construction Materials Sales
and Services Co., Ltd. (3)
10.14 Lease Agreement for Rental of Office Premises dated April
25, 2000 (3)
10.15 COL International's Loan Agreement dated December 21, 2000
(4)
21 Subsidiaries of the Registrant (5)
31 Rule 13a-14(a)/15a-14(a) Certification of Chief Executive
Officer and Chief Financial Officer
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- ----------
* Designates a management contract or compensatory plan
required to be filed as an Exhibit to this Report on Form
10-K
(1) Incorporated by reference from the Company's Form SB-2
Registration Statement dated June 13, 2000 (File No.
333-39208)
(2) Translated into English from Chinese
(3) Incorporated by reference from the Company's Amendment No. 2
to Form SB-2 Registration Statement dated October 19, 2000
(File No. 333-39208)
(4) Incorporated by reference from the Company's Amendment No. 3
to Form SB-2 Registration Statement dated January 17, 2001
(File No. 333-39208)
(5) Incorporated by reference from the Company's Form 10-KSB
dated November 15, 2001 for the year ended June 30, 2001
(File No. 333-39208)