Attached files
file | filename |
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EX-32 - Jingwei International LTD | v185308_ex32.htm |
EX-31.1 - Jingwei International LTD | v185308_ex31-1.htm |
EX-31.2 - Jingwei International LTD | v185308_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the quarterly period ended March 31,
2010.
|
or
¨
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the transition period
from to.
|
Commission
File Number: 000-51725
JINGWEI
INTERNATIONAL LIMITED
(Exact
name of registrant as specified in its charter)
Nevada
|
20-1970137
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
Room
701-702, Building14, Keji C. Rd.,2nd,
Software Park,
Nanshan
District,
Shenzhen, PRC
518057
(Address
of Principal Executive Offices including Zip Code)
+86
1085251198
(Registrant’s
Telephone Number, Including Area Code)
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. Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).* Yes o No o *The registrant has not
yet been phased into the interactive data requirements.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange. (Check
one):
Large
Accelerated Filer ¨
|
Accelerated
Filer ¨
|
Non-Accelerated
Filer ¨
|
Smaller
Reporting Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No
x
As
of May 13, 2010, there were 17,049,000 shares of the issuer’s common stock,
par value $0.001 per share, outstanding.
PART
I. FINANCIAL INFORMATION
|
|
|
Item
1.
|
Consolidated
Financial Statements
|
3
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
4
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
8
|
Item
4.
|
Controls
and Procedures
|
9
|
PART
II. OTHER INFORMATION
|
|
|
Item
1.
|
Legal
Proceedings
|
10
|
Item
1A.
|
Risk
Factors
|
10
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
10
|
Item
3.
|
Defaults
Upon Senior Securities
|
10
|
Item
4.
|
Removed
and reserved
|
10
|
Item
5.
|
Other
Information
|
10
|
Item
6.
|
Exhibits
|
10
|
2
PART
I.
FINANCIAL
INFORMATION
Item
1. Consolidated Financial Statements
Consolidated
Balance Sheets
|
F-1-2
|
Consolidated
Statements of Income and Comprehensive Income
|
F-3
|
Consolidated
Statements of Cash Flows
|
F-4
|
Notes
to Consolidated Financial Statements
|
F-5-13
|
3
Jingwei
International Limited and Subsidiaries
Consolidated
Balance Sheets
(Stated
in US Dollars)
March 31, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 9,908,282 | $ | 10,238,930 | ||||
Inventories
|
4,471,802 | 2,316,043 | ||||||
Accounts
receivable, less allowance for doubtful accounts of $972,500 and
$1,266,293, respectively
|
23,586,226 | 23,456,704 | ||||||
Other
receivables, prepayments and deposits, less allowance for doubtful
accounts of $175,740 and $175,712, respectively
|
1,914,575 | 3,219,008 | ||||||
Deferred
tax assets
|
224,115 | 257,837 | ||||||
Total
current assets
|
40,105,000 | 39,488,522 | ||||||
Non-current
assets
|
||||||||
Property
and equipment, net
|
1,445,278 | 1,385,438 | ||||||
Intangible
assets, net
|
15,521,949 | 16,283,425 | ||||||
Long-term
investment
|
1,737,833 | 1,737,553 | ||||||
Total
non-current assets
|
18,705,060 | 19,406,416 | ||||||
Total
assets
|
$ | 58, 810,060 | $ | 58,894,938 |
See notes
to consolidated financial statements.
F-1
Jingwei
International Limited and Subsidiaries
Consolidated
Balance Sheets (Continued)
(Stated
in US Dollars)
March 31, 2010
|
December 31, 2009
|
|||||||
(Unaudited)
|
|
|||||||
LIABILITIES
AND EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 2,961,446 | $ | 4,152,787 | ||||
Accruals
and other payables
|
1,175,089 | 1,279,474 | ||||||
Income
tax payable
|
1,770,229 | 1,718,786 | ||||||
Loan
from a stockholder
|
369,462 | 369,462 | ||||||
Total
current liabilities
|
6,276,226 | 7,520,509 | ||||||
Non-current
liabilities
|
||||||||
Other
liabilities
|
2,990,832 | 2,930,257 | ||||||
Total
liabilities
|
9,267,058 | 10,450,766 | ||||||
Equity
|
||||||||
Common
stock, $0.001 par value; 75,000,000 shares authorized, 17,049,000 shares
issued and outstanding
|
17,049 | 17,049 | ||||||
Additional
paid-in capital
|
15,708,374 | 15,643,139 | ||||||
Statutory
and other reserves
|
2,916,292 | 2,916,292 | ||||||
Retained
earnings
|
20, 753,968 | 19,734,935 | ||||||
Accumulated
other comprehensive income
|
2,667,909 | 2,654,550 | ||||||
Total
Company’s stockholders' equity
|
42, 063,592 | 40,965,965 | ||||||
Noncontrolling
interest
|
7,479,410 | 7,478,207 | ||||||
Total
equity
|
49, 543,002 | 48,444,172 | ||||||
Total
liabilities and equity
|
$ | 58, 810,060 | $ | 58,894,938 |
See notes
to consolidated financial statements.
F-2
Jingwei
International Limited and Subsidiaries
Consolidated
Statements of Income and Comprehensive Income
(Stated
in US Dollars)
Three Months Ended March
31,
|
||||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Sales
|
$ | 5,119,752 | $ | 3,943,718 | ||||
Cost
of sales
|
2,421,935 | 2,422,306 | ||||||
Gross
margin
|
2,697,817 | 1,521,412 | ||||||
Operating
expenses
|
||||||||
Selling,
general and administrative expenses
|
1,013,875 | 403,377 | ||||||
Research
and development costs
|
733,202 | 253,857 | ||||||
1,747,077 | 657,234 | |||||||
Income
from operations
|
950,740 | 864,178 | ||||||
Other
income (expense)
|
||||||||
Subsidy
income
|
309,249 | 121,216 | ||||||
Interest
income
|
23,008 | 4,024 | ||||||
Interest
expense
|
(1,728 | ) | - | |||||
Other
expense
|
(46,105 | ) | (14,066 | ) | ||||
284,424 | 111,174 | |||||||
Income
before income taxes
|
1,235,164 | 975,352 | ||||||
Income
tax expense
|
216,131 | 354,654 | ||||||
Net
income
|
1,019,033 | 620,698 | ||||||
Less:
net income attributable to noncontrolling interest
|
- | - | ||||||
Net
income attributable to the
Company’s stockholders
|
1, 019,033 | 620,698 | ||||||
Foreign
currency translation adjustment
|
13,359 | 43,520 | ||||||
Comprehensive
income
|
$ | 1, 032,392 | $ | 664,218 | ||||
Comprehensive
income attributable to noncontrolling interest
|
1,203 | 18,547 | ||||||
Comprehensive income
attributable to the Company’s stockholders
|
1,031,189 | 645,671 | ||||||
Basic
earnings per share
|
$ | 0.06 | $ | 0.04 | ||||
Diluted
earnings per share
|
$ | 0.06 | $ | 0.04 | ||||
Weighted
average number of shares outstanding
|
||||||||
Basic
|
17,049,000 | 17,049,000 | ||||||
Diluted
|
17,218,712 | 17,049,000 |
See notes
to consolidated financial statements.
F-3
Jingwei
International Limited and Subsidiaries
Consolidated
Statements of Cash Flows
(Stated
in US Dollars)
Three Months Ended March 31,
|
||||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
$ | 1,019,033 | $ | 620,698 | ||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
and amortization
|
856,078 | 527,181 | ||||||
Share-based
compensation expense
|
65,235 | 39,303 | ||||||
Change
in operating assets and liabilities:
|
||||||||
Accounts
receivable, net
|
(129,522 | ) | 281,895 | |||||
Other
receivables, prepayments and deposits, net
|
1,304,404 | 353,547 | ||||||
Inventories
|
(2,155,758 | ) | 390,073 | |||||
Deferred
tax assets
|
33,722 | - | ||||||
Accounts
payable
|
(1,191,341 | ) | (830,274 | ) | ||||
Accruals
and other payables
|
(104,385 | ) | (410,779 | ) | ||||
Income
tax payable
|
51,443 | 179,347 | ||||||
Net
cash (used in) provided by operating activities
|
(251,091 | ) | 1,150,991 | |||||
Cash
flows from investing activities
|
||||||||
Acquisition
of property and equipment
|
(152,828 | ) | (10,289 | ) | ||||
Acquisition
of intangible assets
|
- | (3,433 | ) | |||||
Long-term
investment
|
- | (49,520 | ) | |||||
Net
cash used in investing activities
|
(152,828 | ) | (63,242 | ) | ||||
Cash
flows from financing activities
|
||||||||
Repayment
of loan from a stockholder
|
- | (71,579 | ) | |||||
Net
cash used in financing activities
|
- | (71,579 | ) | |||||
Effect
of foreign currency fluctuation on cash and cash
equivalents
|
73,271 | 6,883 | ||||||
`
|
||||||||
Net
(decrease) increase in cash and cash equivalents
|
(330,648 | ) | 1,023,053 | |||||
Cash
and cash equivalents - beginning of period
|
10,238,930 | 5,472,408 | ||||||
Cash
and cash equivalents - end of period
|
$ | 9,908,282 | $ | 6,495,461 | ||||
Cash
paid during the year for:
|
||||||||
Income
tax paid
|
$ | 131,220 | $ | 175,317 | ||||
Interest
paid
|
$ | - | $ | - |
See notes
to consolidated financial statements.
F-4
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
Note
1 CORPORATE INFORMATION AND DESCRIPTION OF BUSINESS
Corporation
Information
Jingwei
International Limited (the “Company”) formerly known as Neoview Holdings Inc.
(“Neoview”), was established in Nevada, US on November 17, 2004. In May 2006,
Mr. George (Jianguo) Du, President and Chairman of the board of directors of the
Company, established Jingwei International Investments Limited (“Jingwei BVI”),
a company organized under the laws of the British Virgin Islands (“BVI”) and a
wholly owned subsidiary of the Company. Jingwei BVI has one wholly owned
subsidiary, Jingwei International Investment (HK) Ltd. (“Jingwei HK”), which was
established on October 31, 2006 in HongKong. On February 8, 2007, a wholly owned
subsidiary of Jingwei HK, Jingwei Hengtong Technology (ShenZhen) Co. Ltd
(“Jingwei Hengtong”) was established in People’s Republic of China (“PRC”). On the same
day, Jingwei Hengtong and Shenzhen Jingwei Communication Co., Ltd. (“Jingwei
Communication”), a PRC company, entered into a series of contractual agreements
(“contractual agreements”) for a ten-year term with early termination in
accordance with certain terms of the agreements. Jingwei Hengtong has agreed to
exclusively provide to Jingwei Communication technology consulting services, and
to pay all of the operating costs incurred by Jingwei Communication, in exchange
for all of its income from the business operations. Jingwei Hengtong also agrees
to guarantee Jingwei Communication’s performance of its obligations under
contracts, agreements and transactions between Jingwei Communication and third
party customers. In return, Jingwei Communication had pledged its accounts
receivables and all of its assets to Jingwei Hengtong. The stockholders of
Jingwei Communication have also entered into pledge agreements with Jingwei
Hengtong, pursuant to which they agreed to pledge all their rights and
interests, including voting rights, in favor of Jingwei Hengtong. Finally,
Jingwei Hengtong has the option to acquire the equity interests of the Jingwei
Communication for a purchase price equal to its original purchase price or such
higher price as required under PRC laws at the time of such purchase. Upon the
execution of these agreements, the Company became the primary beneficiary of
Jingwei Communication which was treated as a variable interest entity (“VIE”) of
the Company.
Jingwei
Communication has three subsidiaries, New Yulong Information Technology Co. Ltd.
(“Yulong IT”) of which Jingwei Communication owns 100%, New Yulong Software
Technology Development Co. Ltd. (“Yulong Software”) of which Jingwei
Communication owns 51.89% and Yulong IT owns the other 48.11%, and Jiangsu
Liandong Communication Ltd. ("Jiangsu Liandong") of which Jingwei Communications
owns 100% equity interest. On July 23, 2008, Yulong IT established a 100%-owned
subsidiary, Beijing New Media Advertising Co. Ltd. (“Beijing New Media”). On
April 29, 2009, Yulong IT established a wholly-owned subsidiary, Shenzhen
Xinguochuang Information Technology Company Limited
(“Xinguochuang”).
As the
Company is the primary beneficiary of Jingwei Communication, New Yulong IT, New
Yulong Software, Xinguochuang, Jiangsu Liandong and Beijing New Media which are
qualified as VIEs, the assets and liabilities and revenues and expenses of the
VIEs have been included in the consolidated financial statements. The principal
activities of the VIEs are in the provision of data mining and software
development services. As of March 31, 2010 and for the year ended March 31,
2010, the VIEs had assets of $51.2 million, liabilities of $19.1 million,
revenues of $3.7 million, and operating expenses of $1.6 million. The assets and
liabilities include balances due from and due to the subsidiaries of the
Company. These inter-company receivables and payables are eliminated upon
consolidation of the VIEs with the Company and its subsidiaries. No assets were
pledged or given as collateral against any borrowings.
F-5
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
On May
16, 2007, Jingwei BVI entered into a share exchange agreement with Neoview, a
public shell company ("Shellco"), Synergy Business Consulting LLC, a principal
stockholder of Neoview, and the stockholder of Jingwei BVI. Pursuant to the
share exchange agreement, Shellco acquired all of Jingwei BVI’s issued and
outstanding shares from Jingwei BVI’s stockholders in exchange for the issuance
to Jingwei BVI’s stockholders of 11,554,000 shares of Shellco common stock,
constituting 86.4% of Shellco’s outstanding shares of common stock on a
fully-diluted basis. As a result of this transaction, Jingwei BVI became a
wholly-owned subsidiary of Shellco. Under accounting principles generally
accepted in the United States (“US GAAP”), the share exchange is considered to
be a capital transaction in substance, and accounted for as a change in capital
structure resulting from a reverse acquisition. Under reverse takeover
accounting, the post reverse acquisition comparative historical financial
statements of the legal acquirer, Shellco, are those of the legal acquiree,
Jingwei BVI, which is considered to be the accounting acquirer.
Immediately
following the closing of the merger, Shellco consummated a private placement of
3,395,000 units, each consisting of one (1) share of common stock and 0.3 of a
warrant to purchase one (1) share of common stock, for aggregate gross proceeds
of $16,975,000 or $5.00 per unit. In conjunction with this offering, the Company
paid a placement agent cash of $1,188,250, representing 7% of the aggregate
gross proceeds of the offering, and issued the placement agent warrants to
purchase 441,350 shares of its common stock, representing 10% of the total
number of shares sold in the offering, and the warrants to purchase 1,018,500
shares of the Company’s common stock ("Warrant Shares").
Following
the completion of the merger and the offering, the surviving Shellco changed its
name from Neoview to Jingwei International Limited, and had 17,049,000 shares of
common stock outstanding.
Description
of Business
The
Company, its subsidiaries and VIEs are collectively referred to as the
“Group”.
The Group
is one of the leading providers of data mining and interactive marketing and
software services in PRC. The Group's services include market segmentation,
customer trend and churn analysis, fraud detection and direct marketing services
such as telemarketing, direct mailing and wireless value added services. The
Group also operates a software services business, which provides a broad range
of billing systems, provisioning solutions, decision support and customer
relationship management systems for PRC’s leading mobile telecommunication
carriers.
Note
2 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a)
|
Basis
of presentation and consolidation
|
The
accompanying unaudited interim consolidated financial statements have been
prepared in accordance with the accounting policies described in the Group’s
Form 10-K filed on March 31, 2010 (“2009 Form 10-K”), and requirements of
Article 8 of Regulation S-X. Accordingly, certain information and note
disclosures normally included in the Group’s annual financial statements
prepared in accordance with US generally accepted accounting principles (“US
GAAP”) have been condensed or omitted. These consolidated financial statements
should be read in conjunction with the consolidated financial statements
included in the Group’s 2009 Form 10-K.
F-6
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
In the
opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present a fair statement of consolidated financial
position as of March 31, 2010, and consolidated results of operations, and cash
flows for the three month periods ended March 31, 2010 and 2009, as applicable,
have been made. The interim results of operations are not necessarily indicative
of the operating results for the full fiscal year or any future
periods.
The
Financial Accounting Standards Board (“FASB”) establishes the Accounting
Standards Codification (“ASC”).
ASC 810
Consolidation addresses
financial reporting for entities over which control is achieved through means
other than voting rights. According to requirements, The Company evaluated its
relationship with Jingwei Communication and concluded that Jingwei Communication
is a VIE for accounting purpose, as a result of the contractual arrangements,
which enable the Company to control and to be the primary beneficiary of Jingwei
Communication. Accordingly, the Company adopted the provisions of ASC 810 Consolidation and
consolidated Jingwei Communication. All significant inter-company accounts and
transactions have been eliminated in consolidation.
The
Company used the purchase method to consolidate Jingwei Communication, with the
current assets and liabilities recorded at fair value which approximated their
historic book value on January 31, 2007, the effective date (“effective date”)
of the contractual agreements. The fair value of the acquired net assets of
Jingwei Communication was $6,566,914 on the effective date, after eliminated all
the intercompany transaction and balances, and was recognized as noncontrolling
interest on the consolidated balance sheet. The noncontrolling interest changes
only for translation adjustments since 100% of all income and losses are
allocated to the Company in accordance with the contractual agreements and there
are no dividend distributions to noncontrolling interest. The noncontrolling
interest was amounted to $7,479,410 and $7,478,207 as of March 31, 2010 and
December 31, 2009, respectively.
b)
|
Use
of estimates
|
In
preparing financial statements in conformity with US GAAP, management makes
estimates and assumptions that affect the amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the amounts of revenues and expenses during the period
ended March 31, 2010 and 2009. Actual results could differ from those
estimates.
c)
|
Fair
value of financial instruments
|
The
carrying values of the Group’s financial instruments, including cash and cash
equivalents, accounts receivable, other receivables, prepayments and deposits,
account payable, accruals and other payables, and loan from a stockholder
approximate their fair values due to the short-term maturity of such
instruments.
d)
|
Recently
enacted accounting standards
|
In April
2010, FASB issued Accounting Standards Update (“ASU”) No. 2010-13, “Compensation-Stock Compensation
(Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment
Award in the Currency of the Market in Which the Underlying Equity Security
Trades” a consensus of the FASB Emerging Issues Task Force. The update affects entities
that issue employee share-based payment awards with an exercise price
denominated in the currency of a market in which a substantial portion of the
entity’s equity securities trades that differs from the functional currency of
the employer entity or payroll currency of the employee. The update is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2010. Earlier application is permitted. Management is
currently evaluating the impact of adopting this update on the Company’s
consolidated financial statements.
F-7
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
In
February 2010, FASB issued ASU No. 2010-09 (“ASC Topic 855”) which removes
the requirement for an SEC filer to disclose a date in both issued and revised
financial statements. This amendment shall be applied prospectively for interim
or annual financial periods ending after June 15, 2010. Management does not
believe the adoption will have a material effect on the Group’s consolidated
financial statements.
Since the
filing of 2009 Form 10-K, the FASB issued ASU No. 2010-12 through No. 2010-18.
These ASUs, except for No. 2010-13, entail technical corrections to existing
guidance or affect guidance related to specialized industries or entities and
therefore have minimal, if any, impact on the Group.
Note
3 ACCOUNTS RECEIVABLE
March 31,
2010
(Unaudited)
|
December 31,
2009
|
|||||||
Accounts
receivable
|
$ | 24,558,726 | $ | 24,722,997 | ||||
Less:
allowance for doubtful debts
|
972,500 | 1,266,293 | ||||||
$ | 23,586,226 | $ | 23,456,704 |
Note
4 INVENTORIES
At March
31, 2010 and December 31, 2009, inventories consist of:
March 31,
2010
(Unaudited)
|
December 31,
2009
|
|||||||
Project
costs
|
$ | 3,642,332 | $ | 2,271,943 | ||||
Others
|
829,470 | 44,100 | ||||||
$ | 4,471,802 | $ | 2,316,043 |
Note
5 INTANGIBLE ASSETS, NET
The
breakdown of the intangible asset balance as of March 31, 2010 and December 31,
2009 as well as related amortization period for each asset class is as
follows:
Cost
|
March 31, 2010
(Unaudited)
|
December 31, 2009
|
Amortization Period
|
||||||
Database
|
$ | 14,494,371 | $ | 14,492,880 |
8
years
|
||||
Strategic
alliance
|
5,785,463 | 5,784,532 |
5.5
years
|
||||||
Non-compete
agreement
|
316,409 | 316,358 |
2
years
|
||||||
Software
|
200,837 | 200,837 |
8years
|
||||||
20,797,080 | 20,794,607 | ||||||||
Less:
accumulated amortization
|
5,275,131 | 4,511,182 | |||||||
$ | 15,521,949 | $ | 16,283,425 |
F-8
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
Intangible
assets represent acquired databases, strategic alliance, non-compete agreement
and software. Amortization expense for the three months ended March 31, 2010 and
2009 was $763,949 and $448,166, respectively.
Note
6 INCOME TAX EXPENSE
United
States
Jingwei
International Limited is subject to the United States of America Tax law at tax
rate of 34%. No provision for the US federal income taxes has been made as the
Company had no US taxable income for the quarter ended March 31, 2010 and 2009,
and believes that its earnings are permanently invested in PRC.
BVI
Jingwei
BVI was incorporated in the BVI and, under the current laws of the BVI, it is
not subject to income taxes.
Hong
Kong
Jingwei
HK was incorporated in Hong Kong and is subject to Hong Kong profits tax.
The Company is subject to Hong Kong taxation on its activities conducted in Hong
Kong and income arising in or derived from Hong Kong. The applicable
statutory tax rate is 16.5%.
PRC
The
applicable income tax rate for the Group’s PRC operating companies, Yulong IT,
Yulong Software, Jingwei Hengtong, Jingwei Communication, Beijing New Media,
Xinguochuang and Jiangsu Liandong, are described as follows: Yulong IT and
Yulong Software are qualified as high-tech software enterprises and entitled to
a preferential income tax rate of 15% and 22% respectively in 2010. Jingwei
Hengtong, Jingwei Communication and Jiangsu Liandong were subject to 25% income
tax rate in 2010. Beijing New Media as a small business taxpayer and taxed on a
deemed basis, i.e. 2.5% of its reported total revenue, due to its small business
status. In April 2010, State Tax Bureau approved Xinguochuang for its
application for preferential enterprise income tax treatment, which exempted the
entity from income tax for two years beginning with its first year of profitable
operations, and entitled it to a 50% tax reduction to 12.5% for the subsequent
three years and 25% thereafter.
During
the three months ended March 31, 2010, the Group recognized an income tax
expense of $0.22 million on pretax income of $1.24 million, representing an
effective income tax rate of 17.5%, as compared to an income tax expense of
$0.35 million on a pretax income of $0.98 million, representing an effective
income tax rate of 36.4% for the same period in 2009. The much higher effective
tax rate in the first quarter of 2009 was primarily the result of an adjustment
in income tax expense to reflect the impact of a hike in enterprise income tax
rate on the Group’s deferred tax liability.
F-9
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
Note
7 SHARE-BASED COMPENSATION
On May
21, 2008, The Company adopted Jingwei International Limited 2008 Omnibus
Securities and Incentive Plan (the “Plan”). The Plan
provides for the granting of Distribution Equivalent Rights, Incentive Stock
Options, Non-Qualified Stock Options, Performance Share Awards, Restricted Stock
Awards, Stock Appreciation Rights, Tandem Stock Appreciation Rights,
Unrestricted Stock Awards or any combination of the foregoing, as may be best
suited to the circumstances of the particular employee, director or consultant
as provided herein.
On April
16, 2008 the Company granted total of 44 key employees of the Company, options
to purchase a total of 260,400 shares of the Company’s common stock at a strike
price equal to US$4.95 and vested equally in four years with 65,100 shares in
each year. The contractual term is 10 years and it is non-transferable. Based on
the Black-Scholes option pricing model, the options were valued at $2.278 per
unit with an assumed 80.20% volatility, 6.25 years term for the options, a risk
free rate of 3.27% and a dividend yield of 0%. As of March 31, 2010,
a total of 103,300 options have been forfeited.
On June
12, 2008 the Company granted to Strategic Growth International, Inc (“SGI”)
options to purchase a total of 150,000 shares of the Company’s common stock at a
premium strike price of US$7.00 per share as part of the compensation for
investor relations service (the “service”). The contractual term is 5 years and
it is non-transferable; however, hedging is not prohibited. The options were
valued at $2.669 per unit using the Black-Scholes option-pricing model with an
assumed 70.10% volatility, a five year term for the options, a risk free rate of
3.715% and a dividend yield of 0%. These options vest in 4 quarterly
installments in equal amount of 25,000 beginning with the date of the grant and
the balance of 50,000 vesting on June 5, 2009. The consulting expense for the
service is recognized on a straight-line basis over the one year period of the
related consulting contract. On October 5, 2008 the company terminated the
service of SGI. Upon the termination of the service, pursuant to Section 4 of
the option agreement, the Company rescinded 117,000 options granted to SGI
pursuant to the terms of the Agreement. Correspondingly, pursuant to Section 5
of the option agreement and Section 6.3 of the Plan, the Option Agreement
hereinafter represents the right to purchase 33,000 Shares on the terms and
conditions contained therein.
On
September 29, 2009 the Company granted to Rick Luk, the CEO of the Company,
options to purchase a total of 200,000 shares of the Company’s common stock at a
strike price equal to the greater of fair market value of the stock at grant
date or US$1.64 to be vested quarterly over three years. The contractual term is
10 years. Based on the Black-Scholes option pricing model, the options were
valued at $0.883 per unit.
On
November 5, 2009 the Company decided to grant to ToneTat Investment Limited
(“ToneTat”) options to purchase a total of 500,000 shares of the Company’s
common stock at a premium strike price of $2.10 per share as part of the
compensation for investor relations service. Among the total 500,000 options,
100,000 option were immediately vested and exercisable as of November 5, 2009;
another 100,000 shares become vested and exercisable upon ToneTat’s satisfactory
completion of six months of services for the Company pursuant to the terms of
the Consulting Services Agreement entered into as of November 5, 2009; the
remaining 300,000 shares become vested and exercisable solely if and when the
common stock is successfully listed on NASDAQ by no later than November 5, 2010.
The contractual term is 3 years and it is non-transferable. The options were
valued at $0.76 per unit using the Black-Scholes option-pricing
model.
F-10
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
On
February 23, 2010 the Company granted to Yong Xu, the CFO of the Company,
options to purchase a total of 150,000 shares of the Company’s common stock at a
strike price equal to the greater of fair market value of the stock at grant
date or $2.05 to be vested over two years. The contractual term is 10 years.
Based on the Black-Scholes option pricing model, the options were valued at
$1.21 per unit.
The
Company has accounted for share-based compensation expense, based on the grant
date fair values of the awards. Estimates of fair value are not intended to
predict actual future events or the value that ultimately will be realized by
employees who receive equity awards, and subsequent events are not indicative of
the reasonableness of the original estimates of fair value made by the Company
for accounting purposes.
For the
three months ended March 31, 2010 and 2009, total share-based compensation
expense recognized for options under the Plan was $65,235 and $39,303
respectively.
The
following table summarizes all Company stock option and warrant transactions for
the three months ended March 31, 2010:
Number of
options and
warrants
|
Weight
average
exercise price
|
Weight average
remaining contractual
life (Years)
|
||||||||||
Outstanding,
January 1, 2010
|
2,053,250 | $ | 5.27 | 3.21 | ||||||||
Granted
|
150,000 | $ | 2.05 | 9.92 | ||||||||
Forfeited
|
(103,300 | ) | $ | 4.95 | 8.08 | |||||||
Outstanding,
March 31, 2010
|
2,099,950 | $ | 5.05 | 3.20 |
Exercisable
options and warrants as of March 31, 2010:
Range of exercise
prices
|
Number outstanding
currently exercisable as
of March 31, 2010
|
Weighted average
remaining
contractual life
(years)
|
Weighted average
exercise price of
options currently
exercisable
|
|||||||||||
$1.64-$7.00 | 1,771,440 | 2.07 | $ | 5.52 |
Note
8 BASIC AND DILUTED EARNINGS PER SHARE
Basic net
income per share is computed using the weighted average number of common shares
outstanding during the period. Diluted net income per share is computed using
the weighted average number of common shares and, if dilutive, potential common
shares outstanding during the period. Potential common shares comprise shares
issuable upon the exercise of share based awards, using the treasury stock
method. The reconciliation of the numerators and denominators of the basic and
diluted EPS computations for income from continuing operations is shown as
follows:
F-11
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
Three
Months Ended March 31,
|
||||||||
2010
(Unaudited)
|
2009
(Unaudited)
|
|||||||
Numerator
for basic and diluted earnings per share:
|
||||||||
Net
income
|
$ | 1,019,033 | $ | 620,698 | ||||
Denominator
for basic earnings per share—weighted average shares
outstanding
|
17,049,000 | 17,049,000 | ||||||
Dilutive
effect of stock-based compensation plan
|
169,712 | - | ||||||
Denominator
for diluted earnings per share
|
17,218,712 | 17,049,000 | ||||||
Basic
earnings per share
|
$ | 0.06 | $ | 0.04 | ||||
Diluted
earnings per share
|
$ | 0.06 | $ | 0.04 |
Options
and warrants to purchase 2,099,950 shares of common stock at an average price
$5.05 per share were outstanding during the three months ended March 31, 2010,
but options and warrants to acquire 1,649,950 shares of common stock were not
included in the computation of diluted EPS because the options’ exercise price
was greater than the average market price of the common shares. These options
and warrants were still outstanding as of March 31, 2010.
Note
9 SEGMENT INFORMATION
The
Company has two reportable segments based on the type of services provided, data
mining services, and software and system services. Information for the segments
for the three months ended March 31, 2010 and 2009 in accordance with ASC 280
Segment Reporting is
shown as follows.
Three
Months Ended March 31,
|
||||||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||||||
Data
mining
Services |
Software
Services |
Total
(Unaudited)
|
Data
mining
Services |
Software
Services |
Total
(Unaudited)
|
|||||||||||||||||||
Net
revenue
|
$ | 3,070,132 | $ | 2,049,620 | $ | 5,119,752 | $ | 2,189,696 | $ | 1,754,022 | $ | 3,943,718 | ||||||||||||
Gross
margin
|
1,328,624 | 1,369,193 | 2,697,817 | 988,257 | 533,155 | 1,521,412 | ||||||||||||||||||
Net
income
|
519,088 | 499,945 | 1,019,033 | 403,184 | 217,514 | 620,698 | ||||||||||||||||||
Segment
assets
|
41,341,516 | 17,468,544 | 58,810,060 | 34,599,731 | 11,815,819 | 46,415,550 | ||||||||||||||||||
Depreciation
and amortization
|
820,603 | 35,475 | 856,078 | 491,757 | 35,424 | 527,181 | ||||||||||||||||||
Expenditure
for segment assets
|
$ | 152,828 | $ | - | $ | 152,828 | $ | 13,720 | $ | - | $ | 13,720 |
There is
no inter-segment revenue. Segment assets include property and equipment and
intangible assets.
F-12
Jingwei
International Limited and Subsidiaries
Notes
to Consolidated Financial Statements
(Stated
in US Dollars)
(Unaudited)
Note
10 COMMITMENT AND CONTINGENCY
Lease
Commitment
Future
minimum lease payments under non-cancellable operating leases as of March 31,
2010 are as follows:
Within
1 year
|
$ | 162,478 | ||
Within
1-2 years
|
144,714 | |||
Within
2-3 years
|
131,759 | |||
Thereafter
|
10,980 | |||
$ | 449,931 |
Other
contractual obligations
On
February 29, 2008, New Yulong IT engaged the Research Institute of Tsinghua
University (“Research Institute”) to conduct a multi-year research and
development joint project for a total consideration of RMB7.0 million
($1,023,811). However, due to key personnel changes at the Research Institute,
there had been little to no progress in 2009 and the project had been on hold
and the agreement was effectively cancelled in accordance with the default
clause in the agreement. As of March 31, 2010, RMB500,000 ($73,129) has been
paid, and there is no further payment obligation to the Research Institute in
accordance with the default clause for project termination in the original
agreement.
Legal
matter
On
September 5, 2008, Beijing New Media provided a short-term loan of RMB2.0
million ($292,255) at zero interest rate to Shanghai Jujun Infotech Limited
(“Jujun”), with its majority shareholder and Chairman Jerry Yu providing
personal guarantee, for its general business development. In 2009, Jujun paid
back only RMB300,000 ($43,988) but defaulted on the rest. On November 10, 2009,
the Company submitted the dispute over RMB1.7 million ($249,267) to Shenzhen
Arbitration Commission for arbitration against Jujun and Jerry Yu. For the above
legal matter, no contingent reserve has been recorded in the balance sheets as
such potential losses are not deemed estimable.
NOTE
11 SUBSEQUENT EVENTS
As of May
17, 2010, the Company did not have significant subsequent event.
F-13
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
The
following Management’s Discussion and Analysis (“MD&A”) is intended to help
the reader understand the results of operations and financial conditions of
Jingwei International Limited (the “Company”). Throughout this document,
references to “we,” “our,” “the Group” or “Jingwei” refer to Jingwei
International Limited and its subsidiaries and VIEs. MD&A should be read in
conjunction with our interim consolidated financial statements and the
accompanying notes, and the other financial information included in this
report.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
filing contains forward-looking statements. The words “anticipated,” “believe,”
“expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may” and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this report or other reports or documents we file with the
Securities and Exchange Commission (“SEC”) from time to time, which could cause
actual results or outcomes to differ materially from those projected. Undue
reliance should not be placed on these forward-looking statements, which speak
only as of the date hereof. We undertake no obligation to update these
forward-looking statements.
Business
Overview
Jingwei
has evolved from the conventional data mining and customer relationship
marketing services business to become a leading provider of data mining and
interactive marketing and software services in the People’s Republic of China
(the “PRC” or “China”). With a customer database of about 400 million Chinese
consumers, we enable leading multinational and Chinese companies to reach their
target audience. Currently, we operate two business segments in China: data
mining and software services.
In the
data mining segment, we offer a rich portfolio of business intelligence and
interactive marketing services powered by our proprietary consumer database and
the software tools we developed over the years. Our services include market
segmentation, customer trend and churn analysis, fraud detection and a range of
interactive marketing and advertising services such as telemarketing, direct
mailing, mobile advertising, mobile value-added services (“MVAS”) and mobile
application solutions. In the Software Services segment, we provide a broad
range of billing systems, provisioning solutions, decision support and customer
relationship management systems for China’s leading telecommunication carriers.
The software services business complements and strengthens sales opportunities
for our high margin data mining and interactive marketing services platform,
which not only allows us to enhance our customer database, it also provides
useful tools to allow us to leverage the telecom resources to provide
comprehensive multi-media marketing and advertising delivery channels to reach
the target consumers for our corporate customers.
We have
been investing heavily in research and development in data mining tools to
enable the Group to cross reference different sources for its vast data. We
continue to expand our product offerings as well as create innovative data
mining software tools to enhance our service offerings to support database
marketing and interactive marketing for our clients. In addition, to capitalize
on the burgeoning growth of mobile applications and consumers spending, we are
developing smart interactive mobile value-added services as well as enhancing
our interactive marketing platform to support mobile internet marketing and
application solutions for our clients to provide high value services to business
enterprises and the consumers.
4
The
primary geographic focus of our operations is in China including Hong Kong
Special Administrative Region (“Hong Kong” or “HK”), where we derive all of our
sales. We conduct our business operations through Jingwei Hengtong Technology
(ShenZhen) Co. Ltd (“Jingwei Hengtong”), a wholly-owned subsidiary company that
became the primary beneficiary of Shenzhen Jingwei Communication Co., Ltd.
(“Jingwei Communication”) via various contractual agreements. Jingwei
Communication has three subsidiaries: New Yulong Information Technology Co. Ltd
(“Yulong IT”), New Yulong Software Technology Development Co. Ltd (“Yulong
Software”) and Jiangsu Liandong Communication Ltd. ("Jiangsu Liandong"). In
addition, Yulong IT wholly owns two subsidiaries: Beijing New Media Advertising
Co. Ltd. (“Beijing New Media”) and Shenzhen Xinguochuang Information Technology
Company Limited (“Xinguochuang”).
We
believe our future growth is in the broad adoption of our data mining and
interactive marketing service as well as mobile Internet solutions across
various business segments by leveraging our resourceful consumer database to
provide target marketing for domestic and multinational companies who want to
carve out a burgeoning consumer market in China. In order to cement our
leadership position in data mining and interactive marketing, we will need to
continuously refresh, update and increase the number of profiles of our consumer
database, enhance our data mining and interactive marketing infrastructure
including the addition of new hardware and software capabilities as well as
expanding our web-enabled call center operations to multiple
cities.
Business
Outlook and Other Recent Developments
Riding on
the momentum established in the last two quarters, the Company delivered strong
performance in the first quarter of 2010 in both sales and earnings compared to
the same period last year. In data mining, the strategic business
partnering agreement with Shenzhen Newway Digital S&T Co., Ltd. in 2009 has
helped the Group expand its product offering into 3G related value-added
services (“VAS”) and there was strong demand in the last quarter for its bundled
mobile VAS solutions.
In
software services, we have seen increasing demand for our software services in
the telecom sector as operators are expanding their deployment of internet
protocol TV (“IPTV”) and digital TV (“DTV”) network nationwide. In addition,
there is also demand for new management support systems to support the
infrastructure and network buildup. We expect this trend to continue to
contribute to the sales and earnings growth of the software service through
2010.
In the
quarter, the Group has finalized an agreement with our strategic partner to
design and develop an “APP Store” application for a major telecom operator for
pilot trial in March in Sichuan province. This pilot system was deployed in
March and is now in acceptance and trial stage. In April 2010, the Group also
successfully worked with a second major telecom carrier on an APP store
application. We are now in the final stage of our negotiation for a pending
contract and we expect we will be able to launch a second system for pilot trial
in Shanghai in the second half of 2010.
In the
data mining segment, the Group successfully opened a call center in Jiangsu
Province in the first quarter of 2010. This is deployed as an
outsourced “e-Contact” center with integrated telemarketing and customer support
capabilities to support the business promotion and customer care programs for
the telecom operators nationwide. We expect to see more significant sales
contributions from this business area in the second half of 2010. To support the
growth of our business in interactive marketing, we plan to make major capital
investment in capbability enhancement and building up more call centers across
the country in 2010.
5
RESULTS
OF OPERATIONS
Sales
Three Months Ended March 31
|
||||||||||||||||||||
2010
|
2009
|
% Change
|
||||||||||||||||||
(In
thousands, except percentages)
|
||||||||||||||||||||
(Unaudited)
|
% of sales
|
(Unaudited)
|
% of sales
|
|||||||||||||||||
Sales:
|
||||||||||||||||||||
Data
mining
|
$ | 3,070 | 60 | % | $ | 2,190 | 56 | % | 40 | % | ||||||||||
Software
Services
|
2,050 | 40 | % | 1,754 | 44 | % | 17 | % | ||||||||||||
Total
Sales
|
$ | 5,120 | 100 | % | $ | 3,944 | 100 | % | 30 | % |
Total
sales were $5.1 million for the three months ended March 31, 2010, compared to
$3.9 million for the three months ended March 31, 2009. The year-on-year
increase in total sales for the first quarter of 2010 was $1.2 million. The
increase was mainly attributable to data mining sales.
Data mining.
Data mining sales increased 40% for the three months ended March 31,
2010, as the demand for the Group’s data mining service including bundled mobile
VAS solutions continued to grow.
Software
Services. Software services sales increased 17% for the three
months ended March 31, 2010. The increase was mainly due to an increase in
demand for the Company’s software services to support the expanding deployment
of IPTV and DTV by major telecommunication operators in China.
Cost
of Sales
Three Months Ended March 31
|
||||||||||||
2010
(Unaudited)
|
2009
(Unaudited)
|
% Change
|
||||||||||
(In
thousands, except percentages)
|
||||||||||||
Cost
of sales:
|
||||||||||||
Data
mining
|
$
|
1,742 | $ | 1,201 | 45 | % | ||||||
Software
Services
|
680 | 1,221 | -44 | % | ||||||||
Total
Cost of Sales
|
$
|
2,422 | $ | 2,422 | 0 | % |
Total
cost of sales was $2.4 million for the three months ended March 31, 2010,
staying the same as $2.4 million for the same period in 2009..
Data mining.
Cost of data mining increased 45% for the three months ended March 31,
2010 and is in line with the increase in sales.
Software
Services. Cost of software services decreased 44% for the
three months ended March 31, 2010. The decrease was attributed to an improvement
in product mix, as the software products delivered this quarter required fewer
developers to complete the project.
6
Gross
Profit Margin
Three
Months Ended March 31
|
||||||||||||
2010
|
2009
|
%
Change
|
||||||||||
Gross
Profit Margin:
|
||||||||||||
Data
mining
|
43 | % | 45 | % | -2 | % | ||||||
Software
Services
|
67 | % | 30 | % | 37 | % | ||||||
Total
Sales
|
53 | % | 39 | % | 14 | % |
Overall
gross margin increased by 14% year over year for the three months ended March
31, 2010, which was primarily due to a change in mix resulting from a 37%
increase in software services offset by a 2% decrease in data
mining.
Data mining.
The gross margin of data mining decreased by 2% year over year for the
three months ended March 31, 2010, due to unfavorable product mix and pricing
pressure from competition.
Software
Services. The gross margin of software services sales
increased 37% for the three months ended March 31, 2010. The increase was mainly
due to an improvement in product mix, as the software products delivered this
quarter required fewer developers to complete the project.
Operating
Expenses
Three Months Ended March 31
|
||||||||||||||||||||
2010
|
2009
|
|||||||||||||||||||
(In thousands, except percentages)
|
||||||||||||||||||||
(Unaudited)
|
% of
total
sales
|
(Unaudited)
|
% of
total
sales
|
% of Changes
|
||||||||||||||||
Selling,
General and Administrative Expenses
|
$
|
1,014 | 20 | % | $ | 403 | 10 | % | 151 | % | ||||||||||
Research
and Development Costs
|
733 | 14 | % | 254 | 6 | % | 189 | % | ||||||||||||
Total
Expenses
|
$
|
1,747 | 34 | % | $ | 657 | 16 | % | 166 | % |
Selling, General
and Administrative Expenses. Selling, general and
administrative expenses consist primarily of compensation and incentive
expenses, entertaining and marketing expenses, fees for professional services,
traveling and transportation expenses, and office expenses. The increase can be
attributed to an annual bonus distributed in the current period and increased
shared-based compensation and office expenses, while the board did not approve a
2008 annual bonus plan in the same period of 2009.
Research and
Development Costs. Research and development costs consist
primarily of personnel-related expenses and amortization of acquired intangibles
for the development of software and maintenance of our database. The increase of
research and development costs in the current period was mainly attributed to
the increased research and development efforts on APP Store projects, and the
amortization of acquired intangibles used in research and development
activities.
7
LIQUIDITY
AND CAPITAL RESOURCES
March 31, 2010
(Unaudited)
|
December 31, 2009
|
|||||||
(In thousands)
|
||||||||
Cash
and cash equivalents
|
$ | 9,908 | $ | 10,239 | ||||
Working
capital
|
33,829 | 31,968 | ||||||
Stockholder’s
equity
|
$ | 49,543 | $ | 48,444 |
As of
March 31, 2010, we had $9.9 million in cash and cash equivalents. We believe
that our ability to generate strong cash flow from our operating activities,
along with our available cash will be sufficient to fund our operating
activities, capital expenditures and other obligations through
2010.
The
following tables set forth the movements of our cash and cash equivalents for
the periods presented:
Three Months Ended March 31
|
||||||||
2010
(Unaudited)
|
2009
(Unaudited)
|
|||||||
(In
thousands)
|
||||||||
Net
cash (used in) provided by operating activities
|
$ | (251 | ) | $ | 1,151 | |||
Net
cash used in investing activities
|
(153 | ) | (63 | ) | ||||
Net
cash used in financing activities
|
- | (72 | ) | |||||
Effect
of foreign currency translation on cash and cash
equivalents
|
73 | 7 | ||||||
Net
(decrease) increase in cash and cash equivalents
|
(331 | ) | 1,023 | |||||
Cash
and cash equivalents - beginning of period
|
10,239 | 5,472 | ||||||
Cash
and cash equivalents - end of period
|
$ | 9,908 | $ | 6,495 |
Operating
activities
Net cash used in operating activities
for the three months ended March 31, 2010 was $0.25 million. This was primarily
attributable to the net income of $1.02 million, adjusted by non-cash
items of share-based compensation expense of $65,235, and depreciation and
amortization of $0.86 million, offset by a net decrease in cash from working
capital items of $2.2 million.
Investing
activities
Net cash
used in investing activities for the three months ended March 31, 2010 was
$152,828, which was attributable to acquisition of properties and
equipment.
Financing
activities
No cash
has been used in or provided by financing activities for the three months ended
March 31, 2010.
OFF-BALANCE
SHEET ARRANGEMENTS
None.
Item
3. Quantitative and Qualitative Disclosures About
Market Risk
Not
applicable.
8
Item
4. Controls and Procedures
Disclosure Controls and
Procedures
Under the
supervision and with the participation of our management, including our chief
executive officer and the chief financial officer, we conducted an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Securities
Act”)
as of March 31, 2010, the end of the period covered by this report (the
“Evaluation Date”). Based on this evaluation, our chief executive officer and
chief financial officer concluded as of the Evaluation Date that our disclosure
controls and procedures were effective such that the material information
required to be included in our SEC reports is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms relating
to us and our consolidated subsidiaries, and communicated to our management
(including our principal executive officer and principal financial officer), as
appropriate to allow timely decisions regarding required
disclosure.
Changes
in internal controls over financial reporting
There
were no changes in our internal controls over financial reporting (as defined in
Rules 13a-15 and 15d-15 under the Securities Act) during the three months ended
March 31, 2010 that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
9
PART
II.
OTHER
INFORMATION
|
Item
1.
|
Legal
Proceedings
|
There
have been no material developments in the legal proceedings reported in our
Annual Report on Form 10-K for the year ended December 31, 2009 filed with the
SEC on March 31, 2010.
Item
1A. Risk Factors
We are
not required to respond to this item because we are a smaller reporting
company.
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
Not
applicable.
|
Item
3.
|
Defaults
Upon Senior Securities
|
Not
applicable.
|
Item
4.
|
Removed
and reserved
|
|
Item
5.
|
Other
Information
|
None.
|
Item
6.
|
Exhibits
|
The
following exhibits are furnished as part of the Quarterly Report on Form
10-Q:
Exhibit
|
Description
|
31.1
|
Certification
of the Chief Executive Officer (Principal Executive Officer) pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002.
|
31.2
|
Certification
of the Chief Financial Officer (Principal Financial and Accounting
Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
32
|
Certifications
of the Chief Executive Officer (Principal Executive Officer) and the Chief
Financial Officer (Principal Financial and Accounting Officer) pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
|
10
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated:
May 17, 2010
JINGWEI INTERNATIONAL LIMITED | ||
By:
|
/s/ Rick Luk
|
|
Name:
Rick Luk
|
||
Title:
Chief Executive Officer
|
||
(Principal
Executive Officer)
|
||
By:
|
/s/ Yong Xu
|
|
Name:
Yong Xu
|
||
Title:
Chief Financial Officer
|
||
(Principal
Accounting and Financial
Officer)
|
11