MIRA INFORM REPORT

Report Date :

31.10.2013

IDENTIFICATION DETAILS

Name :	SHENZHEN LOCKTEL NETWORK COMMUNICATION TECHNOLOGY CO., LTD.

Registered Office :	Unit 428, Block 1, 2 Kefa Road, Area 30 Shenzhen Hi-Tech Industrial Park, Nanshan District Shenzhen, Guangdong Province 518057 Pr

Country :	China

Financials (as on) :	31.12.2012

Date of Incorporation :	09.03.2010

Com. Reg. No.:	440301104536145

Legal Form :	Limited Liabilities Company

Line of Business :	Subject tis engaged in technology development & sales & technology consultation and technology maintenance of computer network products

No. of Employees :	14

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
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

Status :	Moderate

Payment Behaviour :	Slow

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 – March, 31^st,2013

Country Name

Previous Rating

(31.12.2012)

Current Rating

(31.03.2013)

China

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

china - ECONOMIC OVERVIEW

Since the late 1970s China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2012 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. Still, per capita income is below the world average. The Chinese government faces numerous economic challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of population control policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2010-11, China faced high inflation resulting largely from its credit-fueled stimulus program. Some tightening measures appear to have controlled inflation, but GDP growth consequently slowed to under 8% for 2012. An economic slowdown in Europe contributed to China's, and is expected to further drag Chinese growth in 2013. Debt overhang from the stimulus program, particularly among local governments, and a property price bubble challenge policy makers currently. The government's 12th Five-Year Plan, adopted in March 2011, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent on exports in the future. However, China has made only marginal progress toward these rebalancing goals.

Source : CIA

company name and address

SHENZHEN LOCKTEL NETWORK COMMUNICATION TECHNOLOGY CO., LTD.

UNIT 428, BLOCK 1, 2 KEFA ROAD, AREA 30 SHENZHEN HI-TECH INDUSTRIAL PARK, NANSHAN DISTRICT SHENZHEN, GUANGDONG PROVINCE 518057 PR CHINA

TEL: 86 (0) 755-25565075

FAX: 86 (0) 755-25565074

EXECUTIVE SUMMARY

Date of Registration : march 9, 2010

REGISTRATION NO. : 440301104536145

LEGAL FORM : Limited liabilities company

CHIEF EXECUTIVE : xu aihua (LEGAL REPRESENTATIVE)

REGISTERED CAPITAL : cny 5,000,000

staff : 14

BUSINESS CATEGORY : developing & trading & service

Revenue : CNY 1,034,000 (AS OF DEC. 31, 2012)

EQUITIES : CNY -700,000 (AS OF DEC. 31, 2012)

WEBSITE : www.locktel.com.cn

E-MAIL : locktec@chinalookit.com

PAYMENT : AVERAGE

MARKET CONDITION : fair

FINANCIAL CONDITION : poor

OPERATIONAL TREND : DOWNWARD

GENERAL REPUTATION : fair

EXCHANGE RATE : CNY 6.08 = 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 limited liabilities company of PRC with State Administration of Industry & Commerce (SAIC) under registration No.: 440301104536145 on March 9, 2010.

SC’s Organization Code Certificate No.: 55211011-X

SC’s Tax No.: 44030055211011X

SC’s registered capital: cny 5,000,000

SC’s paid-in capital: cny 4,500,000

Registration Change Record:-

Date	Change of Contents	Before the change	After the change
2012-06-18	Registered Capital	CNY 500,000	CNY 1,000,000
2013-09-06	Registered Capital	CNY 1,000,000	cny 5,000,000

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

Name of Shareholder (s)	% of Shareholding
Xu Aihua	70
Zha Xingyu	30

SC’s Chief Executives:-

Position	Name
Legal Representative, Chairman and General Manager	Xu Aihua
Supervisor	Zha Xingyu

RECENT DEVELOPMENT

No recent development was found during our checks at present.

SHAREHOLDER CHART & BACKGROUND

Name % of Shareholding

Xu Aihua 70

Zha Xingyu 30

MANAGEMENT

Xu Aihua, Legal Representative, Chairman and General Manager

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

Gender: M

Working experience (s):

At present, working in SC as legal representative, chairman and general manager

Zha Xingyu, Supervisor

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

Gender: M

BUSINESS OPERATION

SC’s registered business scope includes technology development & sales & technology consultation and technology maintenance of computer network products; technology developing, designing, and selling network equipment, communications equipment, computer peripheral equipment, and electronic products, and its domestic trade; and international trade.

SC is mainly engaged in technology development & sales & technology consultation and technology maintenance of computer network products.

SC’s products mainly include:

Wireless Multimedia Dispatching & Command System

WIFI SIP PHONE (WP04)

Industrial Design SIP WIFI VoIP Mobile Phone

SC sources its materials 100% from domestic market. SC sells 70% of its products in domestic market, and 30% to overseas market, mainly Southeast Asia, etc.

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

Staff & Office:

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

SC is known to have approx. 14 staff at present.

SC rents an area as its operating office and factory, but the detailed information is unknown.

RELATED COMPANY

SC is not known to have any subsidiary at present.

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 did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

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

The bank information of SC is not filed in local SAIC.

FINANCIALS

Balance Sheet

Unit: CNY’000	As of Dec. 31, 2012
Cash	358
Notes receivable	0
Accounts receivable	369
Advances to suppliers	0
Other receivable	20
Inventory	347
Non-current assets within one year	0
Other current assets	66
	------------------
Current assets	1,160
Fixed assets	70
Construction in progress	0
Intangible assets	0
Long-term investment	0
Deferred income tax assets	0
Other non-current assets	0
	------------------
Total assets	1,230
	=============
Short-term loans	0
Notes payable	0
Accounts payable	390
Welfares payable	0
Taxes payable	0
Advances from clients	0
Other payable	974
Other current liabilities	566
	------------------
Current liabilities	1,930
Non-current liabilities	0
	------------------
Total liabilities	1,930
Equities	-700
	------------------
Total liabilities & equities	1,230
	=============

Income Statement

Unit: CNY’000	As of Dec. 31, 2012
Revenue	1,034
Cost of sales	195
Sales expense	0
Management expense	1,355
Finance expense	0
Profit before tax	-525
Less: profit tax	0
Profits	-525

Important Ratios

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

	As of Dec. 31, 2012
*Current ratio	0.60
*Quick ratio	0.42
*Liabilities to assets	1.57
*Net profit margin (%)	-50.77
*Return on total assets (%)	-42.68
*Inventory / Revenue ×365	123 days
*Accounts receivable / Revenue ×365	131 days
*Revenue / Total assets	0.84
*Cost of sales / Revenue	0.19

FINANCIAL COMMENTS

PROFITABILITY: POOR

The revenue of SC appears fair in its line.

SC’s net profit margin is poor.

SC’s return on total assets is poor.

SC’s cost of sales is low, comparing with its revenue.

LIQUIDITY: FAIR

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

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

The inventory of SC appears fairly large.

The accounts receivable of SC appears fairly large.

SC has no short-term loans.

SC’s revenue is in a fair level, comparing with the size of its total assets.

LEVERAGE: POOR

The debt ratio of SC is too high.

The risk for SC to go bankrupt is fairly high.

Overall financial condition of the SC: Poor.

CONCLUSIONS

SC is considered small-sized in its line with poor financial conditions. The fairly large amount of inventory and accounts receivable may be a threat to SC’s financial condition.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.61.49
UK Pound	1	Rs.98.71
Euro	1	Rs.84.49

INFORMATION DETAILS

Report Prepared by :

SDA

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.