MIRA INFORM REPORT

Report Date :

18.11.2011

IDENTIFICATION DETAILS

Name :	YULONG COMPUTER TELECOMMUNICATION SCIENTIFIC (SHENZHEN) CO., LTD.
Registered Office :	Coolpad Cyber Park, 2nd Mengxi Road, Hi-Tech Industry Park Nanshan District, Shenzhen, Guangdong Province 518057 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	29.04.1993
Com. Reg. No.:	440301503269022
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	Manufacturing and selling wireless equipment.

RATING & COMMENTS

MIRA’s Rating :

A

RATING		STATUS	PROPOSED CREDIT LINE
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large

Maximum Credit Limit :	USD 2,500,000
Status :	Good
Payment Behaviour :	No Complaint
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – September 30, 2011

Country Name	Previous Rating (30.06.2011)	Current Rating (30.09.2011)
China	A2	A2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name and address

YULONG COMPUTER TELECOMMUNICATION SCIENTIFIC

(SHENZHEN) CO., LTD.

COOLPAD CYBER PARK, 2ND MENGXI ROAD, HI-TECH INDUSTRY PARK

NANSHAN DISTRICT, SHENZHEN, GUANGDONG PROVINCE 518057 PR CHINA

TEL: 86 (0) 755-83301199/83301916/81132508

FAX: 86 (0) 755-83439008

EXECUTIVE SUMMARY

Date of Registration : APRIL 29, 1993

REGISTRATION NO. : 440301503269022

LEGAL FORM : WHOLLY FOREIGN-OWNED enterprise

CHIEF EXECUTIVE : GUO DEYING (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : CNY 403,000,000

staff : 3,000

BUSINESS CATEGORY : manufacturing

Revenue : CNY 5,274,610,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 407,633,000 (AS OF DEC. 31, 2010)

WEBSITE : www.yulong.com.cn

E-MAIL : overseas@yulong.com

PAYMENT : AVERAGE

Recommended Credit Limit: UP TO USD 2,500,000

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : FAIRly stable

OPERATIONAL TREND : fairly STEADY

GENERAL REPUTATION : fairly good

EXCHANGE RATE : CNY 6.34 = USD 1

Adopted abbreviations (as follows)

SC - Subject Company (the company inquired by you)

N/A – Not available

CNY – China Yuan Ren Min Bi

OPERATIONAL TREND & GENERAL REPUTATION

This section aims at indicating the relative positions of SC in respect of its operational trend & general reputation

Operational Trend:- General Reputation:-

Upward Excellent

Steady Good

Fairly Steady Fairly Good

Ordinary Average

Fair Fair

Stagnant Detrimental

Downward Not known

Not known Not yet be determined

Not yet be determined

LEGAL STATUS & HISTORY

SC was established as a wholly foreign-owned enterprise of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 440301503269022 on April 29, 1993.

SC’s Organization Code Certificate No.: 61884555-8

SC’s registered capital: CNY 403,000,000

SC’s paid-in capital: CNY 403,000,000

Registration Change Record:

Date	Change of Contents	Before the change	After the change
2002-5-24	Registration No.	104011	309115
2002-9-29	Registered Capital	CNY 3,100,000	CNY 10,000,000
2003-11-10	Registered Capital	CNY 10,000,000	CNY 30,000,000
2005-1-24	Registered Capital	CNY 30,000,000	CNY 70,000,000
2005-8-4	Registered Capital	CNY 70,000,000	CNY 200,000,000
2006-12-8	Registered Capital	CNY 200,000,000	CNY 403,000,000
2007-12-5	Registration No.	309115	440301503269022

Current Co search indicates SC’s shareholders & chief executives are as follows:-

Name of Shareholder (s)	% of Shareholding
Digital Tech Inc. (B.V.I.)	52
Yulong Infotech Inc. (B.V.I.)	48

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman, and General Manager	Guo Deying
Vice Chairman	Yang Xiao
Director	Jiang Chao

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Digital Tech Inc. (B.V.I.) 52

Yulong Infotech Inc. (B.V.I.) 48

MANAGEMENT

Guo Deying , Legal Representative, Chairman and General Manager

----------------------------------------------------------------------------------------------------

Ø Gender: M

Ø Age: 50’s

Ø Qualification: University

Ø Working experience (s):

From 1993 to present, working in SC as legal representative, chairman and general manager

Also working in China Wireless Technologies Limited as chairman and CEO

Yang Xiao , Vice Chairman

-------------------------------------------

Ø Gender: M

Ø Age: 40’s

Ø Qualification: University

Ø Working experience (s):

At present, working in SC as vice chairman

Director

=======

Jiang Chao

BUSINESS OPERATION

SC’s registered business scope includes manufacturing and selling desktop communication terminal; researching, developing wireless devices, handheld communication terminal, call center systems, mobile data systems, embedded operating systems, communications application, wireless transmission, indoor & outdoor signal coverage technology, value-added telecom technology; computer integrated systems; selling its technology; related technology consulting services, adding: researching, developing mobile parts; international trade, researching and manufacturing GSM, CDMA handled terminal.

SC is mainly engaged in manufacturing and selling wireless equipment.

Brand: Coolpad

SC’s products mainly include: CDMA+GSM Phone, Dual GSM Phone, and CDMA Phone.

SC sources its materials 90% from domestic market, and 10% from overseas market, mainly USA and Europe. SC sells 85% of its products in domestic market, and 15% to overseas market, mainly Hong Kong and Germany.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include Check, T/T, L/C and Credit of 30-60 days.

*Major Supplier:

=============

TechFaith Wireless Communication Technology (Shanghai) Co., Ltd.

Staff & Office:

--------------------------

SC is known to have approx. 3,000 staff at present.

SC owns an area as its operating office & factory of approx. 65,000 sq. meters at the heading address.

RELATED COMPANY

SC is known to have 2 branches at present:

Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd. Beijing Branch

Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd. Sales Branch

PAYMENT

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet be determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC’s suppliers declined to make any comments.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

BANKING

Basic Bank:

Shenzhen Ping’an Bank Chegongmiao Sub-branch

AC#: 043210007784

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2010
Cash	303,937	1,072,922
Notes receivable	40,190	54,174
Accounts receivable	626,322	462,931
Advances to suppliers	252,018	246,501
Interest receivable	0	1,704
Other receivable	-237,410	-56,682
Inventory	599,915	640,421
Non-current assets within one year	0	0
Other current assets	2,158	832
	------------------	------------------
Current assets	1,587,130	2,422,803
Long-term investment	103,498	101,260
Investment property	214,151	204,421
Fixed assets	78,951	79,561
Construction in progress	32,991	-1,230
Intangible assets	15,641	15,697
Long-term prepaid expenses	2,575	2,421
Deferred income tax assets	0	0
Other non-current assets	0	0
	------------------	------------------
Total assets	2,034,937	2,824,933
	=============	=============
Short-term loans	0	1,520
Notes payable	141,802	455,308
Accounts payable	887,879	1,280,213
Wages payable	17,735	24,912
Tax payable	1,538	-21,433
Advances from clients	261,560	252,438
Non-current liabilities within one year	24,000	0
Other payable	8,866	944
Other current liabilities	211,035	423,398
	------------------	------------------
Current liabilities	1,554,415	2,417,300
Non-current liabilities	22,000	0
	------------------	------------------
Total liabilities	1,576,415	2,417,300
Equities	458,522	407,633
	------------------	------------------
Total liabilities & equities	2,034,937	2,824,933
	=============	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2009	As of Dec. 31, 2010
Revenue	2,490,522	5,274,610
Cost of sales	2,054,510	4,759,285
Taxes and surcharges	1,938	3,820
Sales expense	212,282	261,297
Management expense	161,235	160,409
Finance expense	12,266	3,410
Investment income	0	-12
Non-business income	9,077	36,016
Non-business expense	858	4,510
Profit before tax	-56,757	-12,072
Less: profit tax	0	6,409
Profits	-56,757	-18,481

Important Ratios

=============

	As of Dec. 31, 2009	As of Dec. 31, 2010
*Current ratio	1.02	1.00
*Quick ratio	0.64	0.74
*Liabilities to assets	0.77	0.86
*Net profit margin (%)	-2.28	-0.35
*Return on total assets (%)	-2.79	-0.65
*Inventory / Revenue ×365	88 days	45 days
*Accounts receivable/ Revenue ×365	92 days	33 days
* Revenue/Total assets	1.22	1.87
* Cost of sales / Revenue	0.82	0.90

FINANCIAL COMMENTS

PROFITABILITY: AVERAGE

l The revenue of SC appears good, and it was rising in 2010.

l SC’s net profit margin is fair in both years.

l SC’s return on total assets is fair in both years.

l SC’s cost of goods sold is fairly high, comparing with its revenue.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a fair level.

l SC’s quick ratio is maintained in a fair level.

l The inventory of SC is maintained in an average level.

l The accounts receivable of SC is maintained in an average level.

l SC’s short-term loan is in an average level in 2010.

l SC’s revenue is in an average level, comparing with the size of its total assets.

LEVERAGE: AVERAGE

l The debt ratio of SC is fairly high.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly stable.

CONCLUSIONS

SC is considered large-sized in its line with fairly stable financial conditions. A credit line up to USD 2,500,000 would appear to be within SC’s capacities.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.50.72
UK Pound	1	Rs.79.88
Euro	1	Rs.68.46

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.