R
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF
1934
|
£
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF
1934
|
NEVADA
|
62-1407521
|
|
(State
or other jurisdiction of
incorporation or organization)
|
(I.R.S.
Employer Identification
Number)
|
Large
accelerated filer
£
|
Accelerated
filer
£
|
Non-accelerated
filer
R
|
INDEX |
Page
|
|
PART I |
2
|
|
Item 1 | Business |
2
|
Item 1A | Risk Factors |
4
|
Item 1B | Unresolved SEC Comments |
8
|
Item 2 | Properties |
8
|
Item 3 | Legal Proceedings |
8
|
Item 4 | Submission of Matters to a Vote of Security Holders |
8
|
|
||
PART II |
9
|
|
Item 5 | Market for Registrant’s Common Equity and Related Stockholder Matters |
9
|
Item 6 | Selected Financial Data |
10
|
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11
|
Item 8 | Financial Statements and Supplementary Data |
17
|
Item 9 | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure |
17
|
Item 9A | Controls and Procedures |
17
|
Item 9B | Other Information |
17
|
|
||
PART III |
18
|
|
Item 10 | Directors and Executive Officers of the Company |
18
|
Item 11 | Executive Compensation |
19
|
Item 12 | Security Ownership of Certain Beneficial Owners and Management |
21
|
Item 13 | Certain Relationships and Related Transactions |
22
|
Item 14 | Principal Accountant Fees and Services |
23
|
|
||
PART IV |
24
|
|
Item 15 | Exhibits and Financial Statement Schedules |
24
|
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS |
F-1
|
· |
changes
in the advertising and marketing services markets in
China;
|
· |
our
ability to attract and retain
customers;
|
· |
the
financial condition of our
customers;
|
· |
unexpected
changes in our margins and certain cost or expense items as a percentage
of our net revenues;
|
· |
our
ability to execute key strategies;
|
· |
actions
by our competitors;
|
· |
our
ability to retain and attract key
employees;
|
· |
risks
associated with assumptions we make in connection with our critical
accounting estimates;
|
· |
potential
adverse accounting related
developments;
|
· |
developments
or change in the regulatory and legal environment for advertising
and
marketing service companies in China; and
|
· |
other
matters discussed in this Annual Report
generally.
|
· |
composition
of our board of directors, and, through it, our direction and policies,
including the appointment and removal of
officers;
|
· |
mergers
or other business combinations and opportunities involving
us;
|
· |
further
issuance of capital stock or other securities by
us;
|
· |
our
financing activities;
|
· |
payment
of dividends; and
|
· |
approval
of our business plans and general business
development.
|
· |
quarantines
or closures of some of our offices which would severely disrupt our
operations;
|
· |
the
sickness or death of our key officers and employees; and
|
· |
a
general slowdown in the Chinese economy.
|
· |
economic
structure;
|
· |
level
of government involvement in the economy;
|
· |
level
of development;
|
· |
level
of capital reinvestment;
|
· |
control
of foreign exchange;
|
· |
methods
of allocating resources; and
|
· |
balance
of payments position.
|
DATE
|
CLOSING
BID
|
CLOSING
ASK
|
||
HIGH
|
LOW
|
HIGH
|
LOW
|
|
(in
US$)
|
||||
2004
|
||||
First
Quarter
|
0.07
|
0.03
|
0.10
|
0.04
|
Second
Quarter
|
0.05
|
0.02
|
0.07
|
0.025
|
Third
Quarter
|
0.025
|
0.016
|
0.035
|
0.025
|
Fourth
Quarter
|
0.05
|
0.013
|
0.06
|
0.014
|
2005
|
||||
First
Quarter
|
0.065
|
0.03
|
0.09
|
0.045
|
Second
Quarter
|
0.035
|
0.03
|
0.045
|
0.038
|
Third
Quarter
|
0.032
|
0.032
|
0.038
|
0.038
|
Fourth
Quarter
|
0.032
|
0.02
|
0.038
|
0.025
|
2006
|
||||
First
Quarter
|
0.04
|
0.013
|
0.045
|
0.02
|
Year
ended March 31,
|
||||||||||||||||
2006
|
2005
|
2004
(1)
|
2003
(1)
|
2002
(1)
|
||||||||||||
(in
US$, except number of shares and other
data)
|
||||||||||||||||
Consolidated Statement of Operations Data : | ||||||||||||||||
Total
revenues
|
61,793,864
|
48,228,470
|
41,800,113
|
11,031,068
|
107,618
|
|||||||||||
Total
cost of sales.
|
58,402,504
|
45,282,789
|
40,173,644
|
11,100,311
|
631,350
|
|||||||||||
Total
expenses
|
2,288,879
|
2,587,055
|
1,637,120
|
744,033
|
138,997
|
|||||||||||
Income
(loss) from operations before other
income
(expense)
|
1,102,481
|
358,626
|
(10,651
|
)
|
(813,276
|
)
|
(662,729
|
)
|
||||||||
Total
other income (expense)
|
35,688
|
(16,684
|
)
|
38,213
|
8,909
|
(42,201
|
)
|
|||||||||
Inco
me
(loss) before income taxes
|
1,138,169
|
341,942
|
27,562
|
(804,367
|
)
|
(704,930
|
)
|
|||||||||
Net
income (loss)
|
1,116,177
|
340,459
|
24,952
|
(804,947
|
)
|
(704,930
|
)
|
|||||||||
Net
income (loss) per share
(2)
|
0
|
0
|
0
|
0
|
0
|
|||||||||||
Weighted average number of ordinary shares
outstanding
(2)
|
1,615,843,576
|
1,621,561,678
|
750,000,000
|
750,000,000
|
750,000,000
|
|||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||
Total
assets
|
16,179,000
|
10,805,406
|
11,920,281
|
3,098,889
|
2,126,229
|
|||||||||||
Total
liabilities
|
18,881,824
|
14,756,526
|
11,894,290
|
3,097,850
|
1,320,244
|
|||||||||||
Total
shareholders’ equity (deficit)
(3)
|
(2,702,824
|
)
|
(3,951,120
|
)
|
25,991
|
1,039
|
805,985
|
|||||||||
Other
Data:
|
||||||||||||||||
Net
cash provided by operating activities
|
2,080,229
|
569,315
|
600,203
|
(601,356
|
)
|
(89,100
|
)
|
|||||||||
Net
cash used by investing activities
|
(482,367
|
)
|
(325,704
|
)
|
(95,580
|
)
|
(47,557
|
)
|
33,971
|
|||||||
Net
cash provided (used) by financing activities
|
200,410
|
(190,685
|
)
|
460,974
|
404,756
|
254,359
|
Fiscal
Year ended March 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
US$
|
US$
|
US$
|
||||||||
Net
cash provided by operating activities
|
2,080,229
|
569,315
|
600,203
|
|||||||
Net
cash used by investing activities
|
(482,367
|
)
|
(325,704
|
)
|
(95,580
|
)
|
||||
Net
cash provided (used)
by
financing activities
|
200,410
|
(190,685
|
)
|
460,
974
|
||||||
Effect
of exchange rate change on cash
|
36,346
|
-
|
-
|
|||||||
Net
increase in cash and cash equivalents
|
1,834,618
|
52,926
|
965,597
|
|||||||
Cash
and cash equivalents (closing balance)
|
2,932,698
|
1,098,080
|
1,045,154
|
Payments
due by period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than
1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
US$
|
US$
|
US$
|
US$
|
US$
|
||||||||||||
Capital
expenditure
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Operating
leases
|
19,269
|
19,269
|
-
|
-
|
-
|
|||||||||||
Short-term
debt
|
4,149,761
|
4,149,761
|
-
|
-
|
-
|
|||||||||||
Long-term
debt
|
104,832
|
-
|
104,832
|
|||||||||||||
Total
|
4,273,862
|
4,169,030
|
104,832
|
-
|
-
|
NAME
|
AGE
|
POSITION
|
TERM
EXPIRES
|
Qiang Jiang
(1)
|
44
|
Chief Executive Officer and Director
|
June 2006/May 2007
|
Bulin Miao
(2)
|
29
|
Finance Manager
|
June 2006
|
Li Li
|
43
|
Chairman and Director
|
May 2007
|
Yan Gong
(3)
|
42
|
Chief Operating Officer and Director
|
June 2006/ May 2007
|
Hongmei Zhang
(4)
|
41
|
Vice Finance Manager
|
June 2006
|
Min Wei
|
52
|
Director
|
May 2007
|
NAME
AND PRINCIPAL POSITION
|
YEAR
|
SALARY
(US$)
|
BONUS
(US$)
|
OTHER
ANNUAL
COMPENSATION
|
|||||||||
Qiang
Jiang
(1)
|
2004
|
$
|
7,315
|
-0-
|
-0-
|
||||||||
Chief
Executive Officer and Director
|
2005
|
$
|
14,857
|
-0-
|
-0-
|
||||||||
2006
|
$
|
15,214
|
-0-
|
-0-
|
|||||||||
|
|
|
|||||||||||
Bulin
Miao
(2)
|
2004
|
$
|
3,494
|
-0-
|
-0-
|
||||||||
Finance
Manager
|
2005
|
$
|
8,618
|
-0-
|
-0-
|
||||||||
2006
|
$
|
8,786
|
-0-
|
-0-
|
|||||||||
|
|
||||||||||||
Li
Li
|
2004
|
$
|
11,000
|
-0-
|
-0-
|
||||||||
Chairman
and Director
|
2005
|
$
|
28,586
|
-0-
|
-0-
|
||||||||
2006
|
$
|
29,194
|
-0-
|
-0-
|
|||||||||
|
|
|
|||||||||||
Yan
Gong
(3)
|
2004
|
$
|
12,009
|
-0-
|
-0-
|
||||||||
Chief Operating
Officer and Director
|
2005
|
$
|
23,982
|
-0-
|
-0-
|
||||||||
2006
|
$
|
24,031
|
-0-
|
-0-
|
|||||||||
|
|
|
|||||||||||
Min
Wei
|
2004
|
-0-
|
-0-
|
-0-
|
|||||||||
Director
|
2005
|
-0-
|
-0-
|
-0-
|
|||||||||
2006
|
-0-
|
-0-
|
-0-
|
||||||||||
|
|
|
TITLE
OF CLASS
|
NAME
AND ADDRESS OF
BENEFICIAL
OWNER
|
AMOUNT
AND NATURE OF BENEFICIAL OWNERSHIP
|
PERCENT
OF CLASS
|
Common
|
Qiang
Jiang
(1)
Room
602, 2 North Tuanjiehu Street
Chaoyang
District, Beijing 100026
People’s
Republic of China
|
750,000,000
|
46.49%
|
Common
|
Li
Li
(1)
Room
602, 2 North Tuanjiehu Street
Chaoyang
District, Beijing 100026
People’s
Republic of China
|
-0-
|
-0-
|
Common
|
Yan
Gong
(1)
Room
602, 2 North Tuanjiehu Street
Chaoyang
District, Beijing 100026
People’s
Republic of China
|
-0-
|
-0-
|
Common
|
Min
Wei
(1)
Room
602, 2 North
Tuanjiehu
Street
Chaoyang
District, Beijing 100026
People’s
Republic of China
|
-0-
|
-0-
|
Common
|
Faithhill
Investments Limited
(2)
P.O.
Box 957
Offshore
Incorporations Centre
Road
Town
Tortola,
BVI
|
204,234,700
|
12.66%
|
Common
|
Vesto
Pacific Holdings, Ltd.
10th
Floor, Hutchison House
10
Harcourt Road
Hong
Kong
|
200,000,000
|
12.39%
|
Common
|
Beijing
Shengshi Chuanren Advertising Co., Ltd.
5
Bei Feng Xiang Technology Development Zone, Yangsong Town, Huairou,
Beijing
People’s
Republic of China
|
96,765,300
|
5.99%
|
Common
|
Capital
Holdings, LLC
5882
South 900 East, Ste 202
Salt
Lake City, UT 84121
|
83,615,603
|
5.18%
|
Common
|
Officer
and Directors as a Group: 4 persons
|
750,000,000
|
46.49%
|
Exhibit
No.
|
Title
|
|
3.1
|
Certificate
of Incorporation
(1)
|
|
3.2
|
Articles
of Amendment to Charter
(1)
|
|
3.3
|
Certificate
of Amendment to Certificate of Incorporation
(2)
|
|
3.4
|
Bylaws
|
|
10.1
|
Convertible
Promissory Note
(3)
|
|
10.2
|
Convertible
Promissory Note
(3)
|
|
10.3
|
Registration
Rights Agreement
(3)
|
|
14.1
|
Code
of Ethics
(4)
|
|
21.1
|
List
of Subsidiaries
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
Certification
of Finance Manager pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
32.2
|
Certification
of Finance Manager pursuant to Section 906 of the Sarbanes-Oxley
Act of
2002
|
Reports of Independent Registered Public Accounting Firms |
F-2
|
|
|
Consolidated Balance Sheets |
F-4
|
|
|
Consolidated Statements of Operations |
F-5
|
|
|
Consolidated Statements of Stockholders’ Equity (Deficit) |
F-6
|
|
|
Consolidated Statements of Cash Flows |
F-7
|
|
|
Notes to the Consolidated Financial Statements |
F-9
|
For
the Years Ended
March
31,
|
||||||||||||||||
2006
|
2005
|
2004
|
||||||||||||||
REVENUE
|
$
|
61,793,864
|
$
|
48,228,470
|
$
|
41,800,113
|
||||||||||
COST
OF SALES
|
58,402,504
|
45,282,789
|
40,173,644
|
|||||||||||||
GROSS
PROFIT
|
3,391,360
|
2,945,681
|
1,626,469
|
|||||||||||||
EXPENSE:
|
||||||||||||||||
General
and administrative
|
2,203,081
|
1,776,163
|
1,136,467
|
|||||||||||||
Bad
debt expenses (recovery) (Note 7)
|
(26,975
|
)
|
736,264
|
483,521
|
||||||||||||
Depreciation
|
112,773
|
74,628
|
17,132
|
|||||||||||||
Total
Expenses
|
2,288,879
|
2,587,055
|
1,637,120
|
|||||||||||||
INCOME
(LOSS) BEFORE OTHER
INCOME
(EXPENSE)
|
1,102,481
|
358,626
|
(10,651
|
)
|
||||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Gain
on disposal of assets
|
689
|
-
|
42,127
|
|||||||||||||
Interest
expense
|
(6,206
|
)
|
(36,254
|
)
|
-
|
|||||||||||
Interest
income
|
47,622
|
17,019
|
114,730
|
|||||||||||||
Other
income (expense)
|
(6,417
|
)
|
2,551
|
(118,644
|
)
|
|||||||||||
Total
Other Income (Expense)
|
35,688
|
(16,684
|
)
|
38,213
|
||||||||||||
INCOME
BEFORE INCOME TAXES
|
1,138,169
|
341,942
|
27,562
|
|||||||||||||
CURRENT
INCOME TAX EXPENSE (Note 8)
|
21,992
|
1,483
|
2,610
|
|||||||||||||
NET
INCOME
|
$
|
1,116,177
|
$
|
340,459
|
$
|
24,952
|
||||||||||
BASIC
INCOME PER SHARE (Note 13)
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
||||||||||
DILUTED
EARNINGS PER
COMMON
SHARE (Note 13)
|
$
|
0.00
|
$
|
0.00
|
$
|
N/A
|
Common
Stock
|
|||||||||||||||||||
|
|
|
Shares
|
Dollars
|
Capital
par value
(Deficit)
|
Accumulated
other comprehensive income
|
Retained
Earnings (Deficit)
|
Total
Stockholders' equity (Deficit)
|
|||||||||||
Balance,
March 31, 2003
|
750,000,000
|
$
|
750,000
|
$
|
1,006,763
|
$
|
-
|
$
|
(1,755,724
|
)
|
$
|
1,039
|
|||||||
Net
income for the year ended
March31,
2004
|
-
|
-
|
-
|
24,952
|
24,952
|
||||||||||||||
Balance,
March 31, 2004
|
750,000,000
|
750,000
|
1,006,763
|
-
|
(1,730,772
|
)
|
25,991
|
||||||||||||
Recapitalization
of
Subsidiaries
(Note1)
|
871,561,678
|
871,562
|
(5,189,132
|
)
|
-
|
-
|
(4,317,570
|
)
|
|||||||||||
Net
income for the year ended
March
31, 2005
|
-
|
-
|
-
|
-
|
340,459
|
340,459
|
|||||||||||||
Balance,
March31, 2005
|
1,621,561,678
|
1,621,562
|
(4,182,369
|
)
|
-
|
(1,390,313
|
)
|
(3,951,120
|
)
|
||||||||||
Shares
issued for debt
|
1,629,331
|
1,629
|
55,397
|
-
|
-
|
57,026
|
|||||||||||||
Treasury
Stock
|
(10,000,000
|
)
|
(10,000
|
)
|
10,000
|
-
|
-
|
-
|
|||||||||||
Debt
forgiveness
|
-
|
-
|
51,675
|
-
|
-
|
51,675
|
|||||||||||||
Foreign
Currency
translation
Adjustment
|
-
|
-
|
-
|
23,418
|
-
|
23,418
|
|||||||||||||
Net
income for the year ended
March
31, 2006
|
-
|
-
|
-
|
-
|
1,116,177
|
1,116,177
|
|||||||||||||
Balance,
March 31,2006
|
1,613,191,009
|
$
|
1,613,191
|
$
|
(4,065,297
|
)
|
$
|
23,418
|
$
|
(274,136
|
)
|
$
|
(2,702,824
|
)
|
For
The Years Ended March 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||
Net
income
|
$
|
1,116,177
|
$
|
340,459
|
$
|
24,952
|
||||
Adjustments
to reconcile net income to net cash
provided
by operating activities:
|
||||||||||
Depreciation
expense
|
112,773
|
74,628
|
17,132
|
|||||||
Bad
debt expense
|
(26,975
|
)
|
736,264
|
483,521
|
||||||
Gain
on disposal of assets
|
(689
|
)
|
-
|
(42,127
|
)
|
|||||
Changes
in assets and liabilities:
|
||||||||||
(Increase)
in accounts receivable &
other
receivable
|
(3,947,491
|
)
|
(1,411,819
|
)
|
(2,709,832
|
)
|
||||
Decrease
(Increase) in prepaid expense
|
511,338
|
2,176,608
|
(5,985,994
|
)
|
||||||
Decrease
(Increase) in other current assets
|
16,561
|
(26,254
|
)
|
-
|
||||||
Decrease
(Increase) in other non-current assets
|
5,439
|
(11,357
|
)
|
-
|
||||||
Increase
(Decrease) in accounts payable &
other
payable
|
4,118,362
|
(503,954
|
)
|
7,560,318
|
||||||
Increase
in accounts payable-related party
|
-
|
-
|
12,084
|
|||||||
Increase
in accrued expenses
|
135,679
|
92,196
|
80,105
|
|||||||
Increase
(Decrease) in customer deposits
|
590
|
(897,456
|
)
|
1,145,060
|
||||||
Increase
in other liabilities
|
-
|
-
|
14,984
|
|||||||
Exchange
gain
|
38,465
|
-
|
-
|
|||||||
Net
Cash Provided by Operating Activities
|
2,080,229
|
569,315
|
600,203
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||
Payments
for property and equipment
|
(569,376
|
)
|
(400,629
|
)
|
(83,495
|
)
|
||||
Proceeds
from disposal of property and equipment
|
4,834
|
-
|
-
|
|||||||
Proceeds
from (payments for) note receivable
|
82,175
|
74,925
|
(12,085
|
)
|
||||||
Net
Cash Used by Investing Activities
|
(482,367
|
)
|
(325,704
|
)
|
(95,580
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||
Proceeds
from note payable
|
254,593
|
78,550
|
181,269
|
|||||||
Payments
for note payable
|
(259,819
|
)
|
-
|
-
|
||||||
Decrease
(Increase) in advances receivable-related party
|
221,042
|
(44,565
|
)
|
477,085
|
||||||
(Decrease)
in advances payable-related party
|
(15,406
|
)
|
(224,670
|
)
|
(197,380
|
)
|
||||
Net
Cash Provided (Used) by Financing Activities
|
200,410
|
(190,685
|
)
|
460,974
|
||||||
Effect
of Exchange Rate Change on Cash
|
36,346
|
-
|
-
|
|||||||
NET
INCREASE IN CASH
|
1,834,618
|
52,926
|
965,597
|
|||||||
CASH
AT BEGINNING OF PERIOD
|
1,098,080
|
1,045,154
|
79,557
|
|||||||
CASH
AT END OF PERIOD
|
$
|
2,932,698
|
$
|
1,098,080
|
$
|
1,045,154
|
For
The Years Ended March 31,
|
||||||||||
2006
|
2005
|
2004 | ||||||||
SUPPLEMENTAL
DISCLOSURES OF CASH
FLOW
INFORMATION
|
||||||||||
Cash
paid during the period for:
|
||||||||||
Interest
|
$
|
6,206
|
-
|
-
|
||||||
income
taxes
|
$
|
12,932
|
$
|
1,483
|
$
|
2,610
|
||||
SUPPLEMENTAL
SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
|
March
31,
2006
|
March
31,
2005
|
|||||||
Accounts receivable - trade | $ |
9,289,096
|
$
|
4,757,902
|
||||
Allowance for doubtful accounts |
(703,667
|
) | (578,751 |
)
|
||||
Accounts receivable, net |
$
|
8,585,429
|
$ |
4,179,151
|
March
31,
2006
|
March
31,
2005
|
|||||||
Office
equipment
|
$
|
623,719
|
$
|
71,540
|
||||
Vehicles
|
497,629
|
486,694
|
||||||
Leasehold
improvement
|
45,115
|
43,687
|
||||||
Less
accumulated depreciation
|
(231,653
|
)
|
(114,015
|
)
|
||||
$
|
934,810
|
$
|
487,906
|
Minimum
Annual Payments
|
March
31,
2006
|
March
31,
2005
|
||||||
Within
one year
|
$
|
4,149,761
|
$
|
4,259,819
|
||||
After
one year but within two years
|
104,832
|
-
|
||||||
$
|
4,254,593
|
$
|
4,259,819
|
March
31,
2006
|
March
31,
2005
|
March
31,
2004
|
|||||||||
Accounts
receivable (Note 2)
|
$
|
104,272
|
$
|
81,568
|
$
|
459,721
|
|||||
Receivable
from related party (Note 10)
|
(44,834
|
)
|
(68,978
|
)
|
23,800
|
||||||
Other
receivables
|
(86,413
|
)
|
723,674
|
-
|
|||||||
$
|
(26,975
|
)
|
$
|
736,264
|
$
|
483,521
|
March
31,
2006
|
March
31,
2005
|
|||||||
Net
operating loss carryover
-
federal
|
$
|
61,120
|
$
|
41,658
|
||||
Valuation
allowance
|
(61,120
|
)
|
(41,658
|
)
|
||||
Deferred
Tax Asset (Liability)
|
$
|
-
|
$
|
-
|
March
31,
2006
|
March
31,
2005
|
March
31,
2
004
|
|||||||||
Computed
tax at the expected
|
|||||||||||
federal
statutory
|
15%
|
15%
|
15%
|
||||||||
Valuation
allowance
|
(15)%
|
(15)%
|
(15)%
|
||||||||
Effective
income tax rates
|
-
|
-
|
-
|
March
31,
2006
|
March
31, 2005
|
March
31, 2004
|
|||||||||
Current
income tax expense:
|
|||||||||||
Book
income
|
$
|
418,411
|
$
|
215,922
|
$
|
9,095
|
|||||
Bad
debt expense (recovery)
|
(8,902
|
)
|
(53,177
|
)
|
159,562
|
||||||
Entertainment
|
11,698
|
4,274
|
1,492
|
||||||||
Payroll
related expenses
|
116,184
|
141,761
|
33,462
|
||||||||
Interest
expense
|
(2,232
|
)
|
6,710
|
-
|
|||||||
Accrued
bonuses
|
54,241
|
-
|
-
|
||||||||
Other
|
1,995
|
25,391
|
-
|
||||||||
Net
operating loss from loss entities
|
15,568
|
-
|
-
|
||||||||
Tax
exempt income
|
(584,971
|
)
|
(339,398
|
)
|
(201,001
|
)
|
|||||
Tax
expense
|
$
|
21,992
|
$
|
1,483
|
$
|
2,610
|
|||||
Deferred
tax expense (benefit) resulted from:
|
|||||||||||
Excess
of tax over financial accounting net operating loss
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Valuation
allowance
|
(6,800
|
)
|
(12,800
|
)
|
38,000
|
||||||
Allowance
for bad debts
|
6,800
|
12,800
|
(38,000
|
)
|
|||||||
Net
deferred tax expense
|
$
|
-
|
$
|
-
|
$
|
-
|
March
31,
2006
|
March
31,
2005
|
|||||||
Net
operating loss carryover
|
$
|
15,600
|
$
|
15,100
|
||||
Allowance
for bad debt
|
473,000
|
466,700
|
||||||
Others
|
-
|
-
|
||||||
Valuation
allowance
|
(488,600
|
)
|
(481,800
|
)
|
||||
Deferred
Tax Asset (Liability)
|
$
|
-
|
$
|
-
|
Minimum Annual Payments |
March
31,
2006
|
March
31,
2005
|
||||||
Within
one year
|
$
|
19,269
|
$
|
42,681
|
March
31,
2006
|
March
31,
2005
|
|||||||
Receivables
from related party
|
$
|
105,383
|
$
|
326,426
|
||||
Allowance
for doubtful accounts
|
(70,016
|
)
|
(111,922
|
)
|
||||
Receivables
from related party, net
|
$
|
35,367
|
$
|
214,504
|
For
The Years Ended
March
31,
|
|||||||||||
2006
|
2005
|
2004
|
|||||||||
Income
available to common shareholders (Numerator)
|
$
|
1,116,177
|
$
|
340,459
|
$
|
24,952
|
|||||
Weighted
average number of common shares outstanding used in earnings per
share
during the period (Denominator)
|
1,615,843,576
|
1,621,561,678
|
750,000,000
|
||||||||
Weighted
average number of common shares outstanding used in diluted earnings
per
share during the period (Denominator)
|
1,715,843,576
|
1,701,561,678
|
N/A
|
Date: June 28, 2006 | By: /s/ Qiang Jiang | |
Qiang Jiang | ||
Chief Executive Officer | ||
Date: June 28, 2006 | By: /s/ Bulin Miao | |
Bulin Miao | ||
Finance Manager |
Date: June 28, 2006 | By: /s/ Li Li | |
Li Li | ||
Chairman and Director | ||
Date: June 28, 2006 | By: /s/ Qiang Jiang | |
Qiang Jiang | ||
Director | ||
Date: June 28, 2006 | By: /s/ Yan Gong | |
Yan Gong | ||
Director | ||
Date: June 28, 2006 | By: /s/ Min Wei | |
Min Wei | ||
Director |
Name
|
Place
of Incorporation
|
Beijing
Asia Hongzhi Advertising Co., Ltd.
|
People’s
Republic of China
|
Beijing
Hongzhi Century Advertising Co., Ltd
|
People’s
Republic of China
|
Shandong
Hongzhi Communications and Career Advertising Co., Ltd.
|
People’s
Republic of China
|
Tibet
Asia Culture Media Co., Ltd.
|
People’s
Republic of China
|
Beijing
Asia Qiangshi Media Advertising Co., Ltd.
|
People’s
Republic of China
|
Tibet
Hongzhi Advertising Co., Ltd.
|
People’s
Republic of China
|
1.
|
I
have reviewed this annual report on Form 10-K of the
Company;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
As
the registrant’s certifying officer, I am responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e) and 15d-15(e)) for the registrant and I
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under my supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the period covered by this
report
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial
reporting.
|
5.
|
As
the registrant’s certifying officer, I have disclosed, based on my most
recent evaluation of internal control over financial reporting, to
the
registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
function):
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
June
28, 2006
|
By: /s/ Qiang Jiang | |
Qiang Jiang | ||
Chief Executive Officer | ||
1.
|
I
have reviewed this annual report on Form 10-K of the
Company;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
As
the registrant’s certifying officer, I am responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e) and 15d-15(e)) for the registrant and I
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under my supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the period covered by this
report
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial
reporting.
|
5.
|
As
the registrant’s certifying officer, I have disclosed, based on my most
recent evaluation of internal control over financial reporting, to
the
registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
function):
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: June 28, 2006 | By: /s/ Bulin Miao | |
Bulin Miao | ||
Finance Manager |
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date: June 28, 2006 | By: /s/ Qiang Jiang | |
Qiang Jiang | ||
Chief Executive Officer |
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d)
of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the
Company.
|
Date: June 28, 2006 | By: /s/ Bulin Miao | |
Bulin Miao | ||
Finance Manager |