UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D. C. 20549
 
 FORM
10-KSB
 
 (Mark
One)
 
 |X|
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
 1934
 
 For the
fiscal year ended December 31, 2007
 
 |_|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
 OF
1934
 
 For the
transition period from ___________ to ___________
 
 Commission
file number: 000-50818
 
 ARTCRAFT
V, INC.
 (Name of
Small Business Issuer in its charter)
 
 DELAWARE
              26-0744863(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification NumberRoom
      1131, XianKeJiDian Building
                BaGuaSi
      Road Futian District
                Shenzhen
      City, China
              518029(Address
      of principal executive offices)
              (Zip
      code)
 
 011-86775
23990959
 Issuer's
Telephone Number
 
 Securities
registered under Section 12(b) of the Exchange Act:
 
 Title
      of each class registered:
              Name
      of each exchange on which registered:None
              None
 
 Securities
registered under Section 12(g) of the Exchange Act:
 
 Common
Stock, par value $.001
 (Title of
class)
   Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act |_|
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. |X| Yes |_| No
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|
 
 Indicate
by check whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act. |X| Yes |_| No
 
 Issuer's
revenues for its most recent fiscal year, December 31, 2007, were
$24,116.
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of March 11,
2008, was $ -0-.
 
 As of
March 20, 2008 the Company had 10,250,000 shares of common stock
outstanding.
 
 
 Table of Contents
 
 
 Forward
Looking Statements
 
 Certain
information contained herein should be considered "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 which
is subject to a number of risks and uncertainties. The preparation of
forward-looking statements requires the use of estimates of future revenues,
expenses, activity levels and economic and market conditions, many of which are
outside the control of Artcraft V, Inc. (the "Company") control. Specific
factors that could cause actual results to differ materially from those set
forth in the forward-looking statements include: economic conditions, labor
costs; competitive pressures on pricing; consumer perceptions of the Company's
products; other operational matters discussed herein and other risks and
uncertainties. Other factors and assumptions not identified above are also
involved in the preparation of forward-looking statements, and the failure of
such other factors and assumptions to be realized may also cause actual results
to differ materially from those discussed.
 
 
 Table of Contents
 
 
 
 ARTCRAFT
V, INC.
  TABLE OF CONTENTS
  
 PART
      I
              1ITEM 1. DESCRIPTION OF BUSINESS
              1ITEM 2. DESCRIPTION OF PROPERTY
              9ITEM 3. LEGAL PROCEEDINGS
              9ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
              9PART
      II
              9ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS
              9ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION
              10ITEM 7. FINANCIAL STATEMENTS
              13ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
              13ITEM 8A.CONTROLS AND PROCEDURES
              13PART
      III
              15ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
    ACT
              15ITEM 10.EXECUTIVE COMPENSATION
              16ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT
              17ITEM 12.CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS
              17ITEM 13:EXHIBITS AND REPORTS ON FORM
8-K
              17ITEM 14:PRINCIPAL ACCOUNTANT FEES AND
      SERVICES
              17SIGNATURES
              18
 
 
 
 Table of Contents
 
 
 PART
I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 
 Artcraft
V Inc. ("Artcraft") was incorporated on June 7, 2004, under the laws of the
State of Delaware. On November 7, 2005, we purchased all of the outstanding
shares of Top Interest for a total of 10,000,000 shares of Artcraft common stock
to Top Interest. Pursuant to the agreement, Top Interest became our wholly owned
subsidiary. Top Interest owns 70% of Shenzhen Xin Kai Yuan Information
Consulting Co., Ltd, which is their operating subsidiary. Shenzhen Xin Kai Yuan
Information Consulting Co., Ltd operates 188Info (http://www.188info.com/), a
professional information searching platform that categorizes the information it
provides based on geographical boundaries. Through the operating subsidiary
Shenzhen Xin Kai Yuan Information Consulting Co., Ltd, we provide a number of
services including information search engine, online web application and image
designing, digital network service, online market research, online promotion and
advertising services, and query searches for both individuals and
businesses.
 
 188Info
has a strong reputation among Shenzhen residents. Many Shenzhen residents use
188 Info to publish and search for information. 188Info enjoys several
competitive advantages including innovative information categorization,
sophisticated product and service categorization. For example, 188Info's
categories include career services, real estate, lodging accommodations,
transportation, computer networking, communications electronics, furniture,
gifts and apparel, printing presses, and other businesses. Information is
presented in a variety of ways to enhance readability.
 
 188Info
has succeeded in becoming one of the major information websites for Chinese in a
relatively short time period. 188Info has achieved its success on the basis of a
modest initial investment.
 
 In 2006,
Top Interest will continue to promote 188Info in an effort to expand its
usefulness among Chinese citizens. The Company's plans include:
  o
              Further
      promotion of 188Info and development of related websites to attract a
      younger demographic and achieve one million hits on a daily
      basis.o
              Promotion
      of a commercials exchange among various industrieso
              Establishment
      of a community information service in Shenzhen by cooperating with
      communitieso
              Publication
      of "yellow pages" in Shenzhen
  Industry
Background
 
 Internet
Users in China
 
 The
number of Internet users in China has grown rapidly. According to CNNIC, there
were approximately 94 million Internet users in China as of December 31, 2004.
The number of Internet users is expected to grow at a CAGR of 24.2% from 2005 to
2007, according to iResearch. The table below sets forth the number of Internet
users in China for the periods indicated and the CAGR from 2005 to
2007.
 
 2005
              2006
              2007
              06-07
                CAGRInternet
      Users (in millions)
              133
              166
              205
              24.2%
 
 Source:
iResearch: China Internet Search Market Report 2004
 
 Internet
Search Users in China
 
 China's
Internet search market is still at an early stage of development but is evolving
rapidly as an increasing number of users seek information, products and services
via the Internet. According to iResearch, there were approximately 83 million
Internet search users in China in 2004, and the number of Internet search users
is expected to grow at a CAGR of 27.5% from 2005 to 2007. The table below sets
forth the number of Internet search users in China for the periods indicated and
the CAGR from 2005 to 2007.
   1
 Table of Contents
 
 2002
              2003
              2004
              2005
              2006
              2007
              06-07
                CAGRInternet
      Search Users (in millions)
              38
              56
              83
              115
              149
              187
              27.5%
 
 Source:
iResearch: China Internet Search Market Report 2004
 
 With the
acceleration of broadband penetration in China and the proliferation of Chinese
language websites, the number of search queries in China has increased
significantly. According to iResearch, the total number of queries per day was
estimated to have reached approximately 188 million in 2004 and is expected to
grow at a CAGR of 49.8% from 2005 to 2007, and the total number of queries per
user per day is expected to grow from 2.3 per user in 2004 to 4.3 per user in
2007. The table below sets forth the total number of queries per day and queries
per user per day for the periods indicated and the respective CAGR from 2005 to
2007.
 
 2002
              2003
              2004
              2005
              2006
              2007
              06-07
                CAGRTotal
      Queries Per Day (in millions)(1)
              24
              81
              188
              360
              544
              808
              49.8%Total
      Queries Per User Per Day(1)
              0.6
              1.4
              2.3
              3.1
              3.6
              4.3
              17.8%
 
 (1) The
historical data based on the results of a survey conducted in December of each
year of Chinese Internet search providers and their estimated number of daily
search queries processed.
 
 Source:
iResearch: China Internet Search Market Report 2004
 
 Online
Marketing in China
 
 Similar
to the trend in the U.S., Internet search in China has evolved from
directory-based search to web search. Prior to 2001, Internet search in China
mainly included directory-based search. Major forms of online marketing
associated with directory-based search include pay-for-inclusion and fixed
ranking marketing.
 
 With the
growth of Internet usage and the rapid development of the Internet search market
in China, online marketing has become a more widely adopted marketing medium.
IDC reported that in 2003, 43.8% of China's Internet users clicked on various
forms of online marketing, higher than Internet users in most parts of the Asia
Pacific region (excluding Japan), and total online marketing revenues in China
would amount to approximately US$130 million in 2004. The paid search market is
expected to be the fastest growing segment of online marketing in the Asia
Pacific region (excluding Japan) through 2007. Forms of online marketing include
paid search as well as online advertisements such as text links and graphical
advertisements. The table below sets forth the various forms of online marketing
as a percentage of total online marketing revenues in China for the periods
indicated.
 
 (%
      of Online Marketing Revenues)
              2002
              2003
              2004
              2005
              2006Paid
      Search
              34.7
      %
              37.9
      %
              37.9
      %
              43.3
      %
              45.4
      %Online
      Advertisements
              60.8
      %
              59.3
      %
              60.0
      %
              54.9
      %
              53.1
      %Email
      Advertisements
              4.5
      %
              2.8
      %
              2.1
      %
              1.8
      %
              1.5
      %
 
 Source:
iResearch: China Internet Search Market Report 2004
 
 Paid
Search. Paid search is expected to be the fastest-growing segment of online
marketing in China. iResearch estimates that paid search will comprise
approximately 45% of online marketing revenues in 2006. The table below sets
forth the various forms of paid search as a percentage of total paid search
revenues in China for the periods indicated.
 
 (%
      of Paid Search Revenues)
              2002
              2003
              2004
              2005
              2006Pay-for-performance
              14
      %
              43
      %
              43
      %
              51
      %
              58
      %Fixed
      Ranking
              32
      %
              22
      %
              28
      %
              24
      %
              21
      %Address
      Bar
              50
      %
              29
      %
              24
      %
              19
      %
              15
      %Others
              4
      %
              6
      %
              5
      %
              6
      %
              6
      %
 
 Source:
iResearch: China Internet Search Market Report 2004
 
 Auction-based
P4P is a cost-effective platform designed to meet the need of businesses to
reach the increasing number of Internet users. P4P enables a customer to bid for
priority placement of its links in keyword search results. The customer is
required to pay the amount of its bid when a user clicks on the customer's
listing in the search results. In the fixed ranking model, a customer pays a
fixed fee to guarantee the display of its listing at a specified position on the
search result page.
 
 Online
Advertisements. Online advertisements include text links, buttons, banners and
other graphical advertisements. Online advertisements offered by search engines
include both query sensitive and non-query sensitive advertising products.
Advertisers purchase online advertising products directly from website operators
or indirectly through advertising agents. iResearch estimates that online
advertising revenues will comprise approximately 53% of online marketing
revenues in 2006.
 
  2
 Table of Contents
  Unique
Characteristics of Chinese Internet Search Market
 
 Diverse
Internet Search Needs. Internet users in China search for a variety of
information, such as web pages, news and multimedia files. According to a survey
of Internet search users in China conducted by iResearch in 2004, approximately
48% of those surveyed searched for MP3 files through search engines and
approximately 35% of those surveyed searched for pictures. The following chart
sets forth iResearch's survey results.
 
 Information
Needs of Internet Search Users in China
 
 Represents
the percentage of Internet search users who searched for the specified type of
information in 2004. Source: iResearch: China Internet Search Market Report
2004
 
 Complexity
of the Chinese Language. The complexity of the Chinese language requires special
language processing technologies to generate relevant results. Sentences in
Chinese consist of phrases, equivalent to words in English, that are formed by
multiple characters. A search engine must index and segment the Chinese text
phrases before conducting keyword/phrase searches. Moreover, a Chinese language
phrase generally has more synonyms and closely associated phrases than an
English word. As a result, a Chinese language search engine must have a
comprehensive database of synonyms and closely associated phrases in order to
function effectively.
 
 Large
Base of SME Customers. While large enterprises represent an important part of
the paid search market, we believe that SMEs comprise a substantial and growing
portion of China's potential paid search customer base. According to iResearch,
the number of SMEs in China is estimated to reach 24.8 million by the end of
2006. iResearch also forecasts that the number of SMEs adopting some form of
online marketing will grow from 410,000 in 2004 to 680,000 in 2006, representing
a CAGR of 28.8%. SMEs are generally more likely to adopt paid search as a
marketing medium given their relatively modest budgets. Paid search allows SMEs
to maximize the return on their spending by reaching potential consumers that
they otherwise may not be able to reach cost-effectively.
 
 Reliance
on Distributors. China's paid search market relies heavily on distributors to
acquire customers, collect payments and provide customer service. This is in
part due to the large, fragmented and less sophisticated SME customer base,
which is at an early stage of adopting paid search as a marketing medium.
Moreover, since secure online payment and credit card systems are at early
stages of development in China, distributors serve as an effective channel to
collect payments from customers.
 
 Our
Strengths
 
 We focus
on providing Chinese language Internet search and related services. Our services
are designed to enable our users to find relevant information efficiently online
and to enable our customers to reach these users cost-effectively. We believe
that our position in is primarily attributable to the following
strengths:
 
 Large
Chinese Language Search Audience. We provide our customers with access to users
from our websites, which consisted of over 76,000 third-party websites as of
June 30, 2005. Our search engine significantly enhances our ability to attract
users and to provide our customers with increased exposure to users who may be
interested in their offerings.
 
 One of
the Most Widely Recognized Internet Search Brands in Shenzhen. 188info is one of
the most widely recognized Internet search brands in Shenzhen. Our brand has
grown mainly through word-of-mouth among our users and customers. We recently
initiated marketing campaigns to promote and strengthen our brand. The awareness
of our "188info" brand enhances our ability to attract more user traffic to our
188info.com website. It also allows us to attract more customers seeking to
target a broader base of potential consumers.
  Local
Market Experience and Expertise. We have a significant understanding of the
needs and preferences of our users and customers in China. We have expertise in
search technologies that cater to the search behavior of Chinese users and
address the unique features of Chinese language search. We also have a track
record of successfully introducing and expanding our services to paid search
customers across different regions of China. In addition, we have experience in
operating in the highly regulated and rapidly evolving Internet industry in
China.
 
 Leading
Technology. Our search technology provides users with relevant search results
and customers with an efficient way to reach potential consumers. Our
link-analysis, anti-spamming and Chinese language processing technologies form
the core of our algorithmic search technology.
 
 Extensive
and Effective Distribution and Customer Service Network. Our customers can
access our services directly or through our nationwide network of regional
distributors. Our distributors sell our services to customers and collect
payments for us. Our key distributors are restricted from selling similar
products offered by our competitors during our contractual period. We also
provide training to our distributors and evaluate their performance to ensure
high-quality customer service. In addition, we, along with our distributors,
provide training, keyword analysis and search reports to our customers to help
them better understand our services and achieve higher ROIs.
   3
 Table of Contents
  Our
Strategies
 
 Our goal
is to become a platform that provides users with the best way to find
information and allows businesses to reach a broad base of potential customers.
We intend to achieve our goal by implementing the following
strategies:
 
 Enhance
User Experience and Increase Traffic. We believe that continuous improvement of
our users' experience is essential to increasing traffic to our websites. We
plan to continue to introduce new features and functions to our search services,
including new forms of searchable content. We also plan to refine our search
algorithms and other related technologies, increase the size of our indexes and
improve index refresh rates to enable users to find relevant information more
efficiently.
 
 Grow
Online Marketing Business. We intend to grow our online marketing business by
attracting potential customers and increasing spending per customer on our
services. We plan to address the specific needs of our customers by offering
individual products and services and tailored solutions to maximize the
effectiveness of their marketing efforts. We aim to better understand their
online marketing needs through regular customer dialogues, cross selling of our
various products and services and introduction of new and innovative online
marketing solutions.
 
 Pursue
Selective Strategic Acquisitions and Alliances. We intend to pursue selective
strategic acquisitions of businesses, assets and technologies that complement
our existing capabilities and business.
  Products
and Services for Users
 
 We focus
on offering products and services that enable our users to find relevant
information quickly and easily. We offer the following services at 188info.com
to users free of charge:
 
 Web
Search. Our web search allows users to locate information, products and services
using Chinese language search terms. Through our search software, we build and
continuously refine a large database of Chinese synonyms and closely associated
phrases, which is essential for accurate and efficient execution of Chinese
language searches. The 188info.com home page prominently features a search box
that is designed to load quickly. After entering a search query, users are
generally presented with a list of search results, which may include our
customers' links. Users can then access the desired websites by clicking on the
hypertext links displayed in the search results.
 
 In
addition to providing access to more than 740 million indexed Chinese language
web pages, we have integrated additional features into our web search that help
users find information more easily. Our web search includes the following
features:
 
 o
              Related
      Search - provides alternative search terms based on the original queries
      to help users find relevant web pages
quickly;
 
 o
              Search
      in Results - enables users to conduct additional searches within the
      initial search results;
 
 o
              Search
      by Chinese Phonetics (Pinyin) - enables users to conduct quick searches by
      entering Chinese phonetics with letters of the English alphabet instead of
      Chinese characters;
 
 o
              Advanced
      Search - enables users to create more focused queries by employing
      techniques such as narrowing results to specified words or phrases,
      document formats, geographic regions, time frames or
    websites;
 
 o
              Travel
      Information - enables users to check domestic train and flight schedules
      as well as schedules of international flights departing from or arriving
      in China; and
 
 o
              Calculator
      - performs basic arithmetic and complicated math and converts between
      units of measure.
 
 Other
Prospect Services. We are continuously improving and introducing new products to
make 188info.com more attractive to our users. In 2008, Top Interest will
continue to promote 188Info in an effort to expand its usefulness among Chinese
citizens. The Company's plans include:
 
 o
              Further
      promotion of 188Info and  of related websites to attract a
      younger demographic and achieve one million hits on a daily
      basis
 o
              Promotion
      of a commercials exchange among various
  industries
 o
              Establishment
      of a community information service in Shenzhen by cooperating with
      communities
 o
              Publication
      of yellow pages in Shenzhen
 
  4
 Table of Contents
  Competition
 
 The
Internet search industry in China is rapidly evolving and highly competitive.
Our primary competitors include U.S.-based Internet search providers and Chinese
Internet companies. We compete with these entities for both users and customers
on the basis of user traffic, quality (relevance) and quantity (index size) of
search results, availability and ease of use of our products and services, the
number of customers, distribution channels and the number of associated
third-party websites. We also face competition from traditional advertising
media.
 
 U.S.-based
Internet Search Providers. U.S.-based Internet search providers, such as Google,
Yahoo! and Microsoft, have a strong global presence, well-established brand
names, more users and customers and significantly greater financial resources
than we do. The PRC government regulates the Internet industry extensively,
including foreign investment and license and permit requirements. We may face
more intense competition from our U.S. competitors as the regulatory environment
in China evolves, online payment systems and Internet infrastructure in China
mature, and our U.S. competitors increase their business activities
in
 China.
 
 Chinese
Internet Companies. Chinese Internet portals such as Sina, Sohu and Netease
offer a broad range of online services, including news, wireless value-added
services, email, online shopping, chat rooms and community networks. Sina
recently launched its self-developed search engine, "iAsk." Each of our Chinese
Internet portal competitors has generated significant traffic, a loyal user base
and a large and broad customer base. These portals have widely recognized brand
names in China and greater financial resources than we do. We compete with these
portals primarily for user traffic and online advertising. We also face growing
competition from other Internet search service providers such as Sougou, Yisou
and Zhong Sou. In addition, we compete with B2B service providers such as
Alibaba.
 
 Traditional
Advertising Media. Traditional advertising media, such as newspapers, yellow
pages, magazines, billboards and other forms of outdoor media, television and
radio, compete for a share of our customers' marketing budgets. Large
enterprises currently spend a relatively small percentage of their marketing
budgets on online marketing as compared to the percentage they spend on
traditional advertising media.
 
 Web
Search Technology
 
 Our web
search technology applies a combination of techniques to determine the
importance of a web page independent of a particular search query and the
relevance of that page to a particular search query.
 
 Link
Analysis Techniques. Link analysis is a technique that determines the relevance
between a user query and a web page by evaluating the combination of the anchor
texts and the number of web pages linked to that web page. We treat a link from
web page A to web page B as a "vote" by page A in favor of page B. The subject
of the "vote" is described in the anchor texts of that link. The more "votes" a
web page gets, the higher the relevance. We compare search queries with the
content of web pages to help determine relevance. Our text-based scoring
techniques do more than count the number of times a search term appears on a web
page. For example, our technology determines the proximity of individual search
terms to each other on a given web page, and prioritizes results that have the
search terms near each other. Other aspects of a page's content are also
considered. By combining link analysis with our information extraction
techniques, we are able to deliver relevant search results.
 
 Information
Extraction Techniques. We extract information from a web page using high
performance algorithms and information extraction techniques. Our techniques
enable us to understand web page content, delete extraneous data, build link
structures, identify duplicate and junk pages and decide whether to include or
exclude a web page based on its quality. Our techniques can process millions of
web pages quickly. In addition, our anti-spamming algorithms and tools can
identify and respond to spamming web pages quickly and effectively.
 
 Web
Crawling Techniques. Our powerful computer clusters and intelligent scheduling
algorithms allow us to crawl Chinese web pages efficiently. We can easily scale
up our system to collect billions of Chinese web pages. Our spider technology
enables us to refresh web indices at intervals ranging from every few minutes to
every few weeks. We set the index refresh frequency rate based on our knowledge
of Internet search users' needs and the nature of the information. For example,
our news index is typically updated every three to six minutes throughout the
day given the importance of timely information for news. We also mine multimedia
and other forms of files from web page repositories.
 
 Chinese
Language Processing Techniques. We analyze and understand Chinese web pages by
processing word-segmentation and utilizing an encoding method based on Chinese
language characteristics. For example, we can identify Chinese names on a web
page. When a user searches for a person based on the person's Chinese name, we
can display the web pages that are specifically related to that person. We also
mine user behavior and search interests from our large search query logs. We
provide additional web search features such as advanced search, spell check and
search by Chinese phonetics (Pinyin).
 
 Large-Scale
Systems Technology
 
 We
currently use a combination of off-the-shelf and custom software running on
clusters of low-cost computers. Our investment in our large-scale system
infrastructure has several key benefits: simplification of the storage and
processing of large amounts of data, facilitation of the deployment and
operation of large-scale products and services, automation of much of the
administration of large-scale clusters of computers. Moreover, this large
infrastructure is easily scalable to increases in traffic and dataset
volume.
 
  5
 Table of Contents
   Our
large-scale system infrastructure uses distributed software and high performance
parallel computing technologies to provide high-quality web search services and
web page collection with low cost computer clusters on a Linux operating system.
We also have management information systems that enable us to perform tasks such
as service operations, administrations, trouble-shootings and filtering with
relative ease and efficiency. In addition, we have software systems that can
test new ideas with real search queries to evaluate the actual effects without
affecting live services.
 
 Our
infrastructure significantly improves the relevance of our search and
advertising results by allowing us to apply superior search and retrieval
algorithms that are computationally intensive. We believe this infrastructure
also shortens our product development cycle and allows us to innovate more
cost-effectively. We also constantly evaluate new hardware alternatives and
software techniques to help further reduce our computational costs.
 
 Operations
 
 We
maintain our computer system at our corporate headquarters. Our operations are
dependent upon our ability to protect our systems against damage from fire,
hurricanes, power loss, telecommunications failure, break-ins, computer viruses
and other events beyond our control. We maintain access to the Internet through
third-party providers. Any disruption in our Internet access, failure of our
third party providers to handle higher volumes of users or damage or failure
that causes system disruptions or other significant interruptions in our
operations could have an adverse effect on our business.
 
 GOVERNMENT
AND STATE REGULATION
 
 Internet
Law
 
 Our
website is not currently subject to direct federal laws or regulations
applicable to access, content or commerce on the Internet. However, due to the
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted with respect to the Internet covering issues
such as:
 
 * user
privacy;
 * freedom
of expression;
 *
pricing;
 * content
and quality of products and services;
 *
taxation;
 *
advertising;
 *
intellectual property rights; and
 *
information security
 
 The
adoption of any such laws or regulations might decrease the rate of growth of
internet use, which in turn could decrease the demand for our services, increase
the cost of doing business or in some other manner have a material adverse
effect on our business, financial condition and operating results. In addition,
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy is uncertain. The vast majority of such laws were
adopted prior to the advent of the Internet and related technologies and, as a
result, do not contemplate or address the unique issues of the Internet and
related technologies. Regulations on News Display
 
 Displaying
news on a website and disseminating news through the Internet are highly
regulated in the PRC. In November 2000, the State Council News Office and the
Ministry of Information Industry promulgated the Provisional Measures for
Administrating Internet Websites Carrying on the News Displaying Business. These
measures require an ICP operator (other than a government authorized news unit)
to obtain State Council News Office approval to post news on its website or
disseminate news through the Internet. Furthermore, the disseminated news must
come from government-approved sources pursuant to contracts between the ICP
operator and these sources, copies of which must be filed with the relevant
government authorities.
 
 We
provide our search users with links to other domestic websites that display
news. According to our PRC legal counsel, providing links to news stories in
response to a search query does not constitute displaying news on a website or
disseminating news through the Internet. Therefore, we are not required to
obtain governmental approval for providing our search users with these news links.
 
 Regulation
on Internet Culture Activities On May 10, 2003, the Ministry of Culture
promulgated the Internet Culture Administration Tentative Measures, or the
Internet Culture Measures. The Internet Culture Measures require ICP operators
engaging in "Internet culture activities" to obtain a license from the Ministry
of Culture. The term "Internet culture activities" includes, among other things,
online dissemination of Internet cultural products (such as audio-video
products, gaming products, performances of plays or programs, works of art and
cartoons) and the production, reproduction, importation, sale (wholesale or
retail), leasing and broadcasting of Internet cultural products. The Internet
Culture Measures do not state whether the measures apply to Internet search
services that provide links to Internet cultural products, such as online
audio-video products offered by third-party websites.
   6
 Table of Contents
 
 According
to our PRC legal counsel, Internet search services that provide links to
third-party websites do not currently constitute engaging in Internet culture
activities under the Internet Culture Measures. We therefore believe that we do
not need to obtain an Internet culture business operation license.
 
 Regulation
on Broadcasting Audio-Video Programs through the Internet
 
 On
January 7, 2003, the State Administration of Radio, Film and Television
promulgated the Rules for Administration of Broadcasting of Audio-Video Programs
Through the Internet and Other Information Networks, or the Broadcasting Rules.
The Broadcasting Rules regulate Internet broadcasting of audio-video programs.
According to the Broadcasting Rules, anyone who wishes to engage in Internet
broadcasting activities must first obtain a license.
 
 On April
23, 2005, the State Council announced a policy regarding investment by
non-state-owned companies in culture-related business in China. The policy
restricts investment by non-state-owned companies in audio-video broadcasting
business or website news business, whether the business is conducted via
Internet or otherwise. The policy authorizes the Ministry of Culture, the State
Administration of Radio, Film and Television and the State Council News Office
to adopt detailed implementation rules according to the policy. As we provide
algorithm-generated links to third-party websites, we do not believe this policy
would have direct adverse impact on our business and operations.
 
 Regulations
on Advertisements
 
 The PRC
government regulates online advertising, principally through the State
Administration for Industry and Commerce, or the SAIC. Under the Rules for
Administration of Foreign Invested Advertising Enterprise, promulgated by the
SAIC and Ministry of Commerce on March 2, 2004, and the Guidance Catalogue,
foreign investors are currently permitted to own up to 70% of the equity
interest, individually or collectively, in a PRC advertising company. Starting
December 10, 2005, there will be no limit on the percentage of foreign equity ownership.
 
 Any
entity that wishes to conduct advertising business in the PRC must first obtain
approval from the SAIC or its local counterpart. Although the PRC laws or
regulations at the national level do not specifically regulate online
advertising businesses, certain provincial government authorities, such as the
Beijing Administration for Industry and Commerce, or Beijing AIC, regulate
online advertising businesses. In March 2001, Beijing AIC promulgated the Online
Advertising Tentative Administrative Measures, which require ICP operators that
provide online advertising services within the municipality of Beijing to obtain
an advertising operations license.
 
 Regulation
on Software Products
 
 On
October 27, 2000, the Ministry of Information Industry issued the Administrative
Measures on Software Products, or the Software Measures, to strengthen the
regulation of software products and to encourage the development of the PRC
software industry. Under the Software Measures, a software developer must have
all software products imported into or sold in the PRC tested by a testing
organization approved by the Ministry of Information Industry. The software
products must be registered with the Ministry of Information Industry or with
its provincial branch. The sale of unregistered software products in the PRC is
forbidden. Software products can be registered for five years, and the
registration is renewable upon expiration.
 
 Regulations
on Intellectual Property Rights
 
 China has
adopted legislation governing intellectual property rights, including
trademarks, patents and copyrights. China is a signatory to the main
international conventions on intellectual property rights and became a member of
the Agreement on Trade Related Aspects of Intellectual Property Rights upon its
accession to the WTO in December 2001.
 
 Patent.
The National People's Congress adopted the Patent Law in 1984, and amended it in
1992 and 2000. The purpose of the Patent Law is to protect and encourage
invention, foster applications of invention and promote the development of
science and technology. To be patentable, invention or utility models must meet
three conditions: novelty, inventiveness and practical applicability. Patents
cannot be granted for scientific discoveries, rules and methods for intellectual
activities, methods used to diagnose or treat diseases, animal and plant breeds
or substances obtained by means of nuclear transformation. The Patent Office
under the State Council is responsible for receiving, examining and approving
patent applications. A patent is valid for a term of twenty years in the case of
an invention and a term of ten years in the case of utility models and designs.
A third-party user must obtain consent or a proper license from the patent owner
to use the patent. Otherwise, the use constitutes an infringement of patent
rights.
 
  7
 Table of Contents
  Copyright.
The National People's Congress amended the Copyright Law in 2001 to widen the
scope of works and rights that are eligible for copyright protection. The
amended Copyright Law extends copyright protection to Internet activities,
products disseminated over the Internet and software products. In addition,
there is a voluntary registration system administered by the China Copyright
Protection Center.
 
 To
address copyright issues relating to the Internet, the PRC Supreme People's
Court on November 11, 2000 issued the Interpretations on Some Issues Concerning
Applicable Laws for Trial of Disputes Over Internet Copyright, or the
Interpretations, which were subsequently amended on December 23, 2003. The
Interpretations establish joint liability for ICP operators if they knowingly
participate in, assist in or incite infringing activities or fail to remove
infringing content from their websites after receiving notice from the rights
holder. In addition, any act intended to bypass circumvention technologies
designed to protect copyrights constitutes copyright infringement.
  To
address the problem of copyright infringement related to the content posted or
transmitted over the Internet, the PRC National Copyright Administration and the
Ministry of Information Industry jointly promulgated the Administrative Measures
for Copyright Protection Related to the Internet on April 30, 2005. This measure
became effective on May 30, 2005.
 
 This
measure applies to situations where an ICP operator (i) allows another person to
post or store any works, recordings, audio or video programs on the websites
operated by such ICP operator or (ii) provides links to, or search results for,
the works, recordings, audio or video programs posted or transmitted by such
person, without editing, revising or selecting the content of such material.
Upon receipt of an infringement notice from a legitimate copyright holder, an
ICP operator must take remedial actions immediately by removing or disabling
access to the infringing content. If an ICP operator knowingly transmits
infringing content or fails to take remedial actions after receipt of a notice
of infringement, the ICP operator could be subject to administrative penalties,
including: cessation of infringement activities; confiscation by the authorities
of all income derived from the infringement activities; and payment of a fine of
up to three times the unlawful income or, in cases where the amount of unlawful
income cannot be determined, a fine of up to RMB100,000. An ICP operator is also
required to retain all infringement notices for a minimum of six months and to
record the content, display time and IP addresses or the domain names related to
the infringement for a minimum of 60 days. Failure to comply with this
requirement could result in an administrative warning and a fine of up to
RMB30,000.
 
 Under PRC
copyright laws, a copyright holder can sue Internet service providers for
copyright infringement. For example, in 2004, a Chinese record company sued a
Chinese Internet music content provider, alleging that the defendant enabled
users to download certain MP3 music files without the plaintiff's authorization.
The Beijing Municipal Supreme People's Court found the defendant liable for
knowingly participating in infringing activities and fined the defendant
RMB100,000 (US$12,082). On the other hand, in a 2001 case in which an author
sued a Chinese Internet company for providing search links to a third-party
website which displayed his book online without his authorization, the Haidian
District People's Court in Beijing held that the Internet company was not liable
for providing algorithm-generated search links to the third-party website
without knowledge of the website's infringing activities. However, if an
Internet search provider does not promptly remove links to the infringing
content after receiving notices from the copyright holders, the Internet search
provider can be held liable by a PRC court. For example, in 2000, a copyright
holder of a book brought a copyright infringement claim against another Chinese
Internet company in the Beijing Intermediate People's Court, alleging that the
defendant provided search links to certain third-party websites that posted the
plaintiff's book without authorization and refused to remove such links to the
infringing websites after the plaintiff requested the defendant to do so. The
court found the defendant liable based primarily on the fact that it received
notices of infringement from the plaintiff but did not timely remove the search
links, and ordered the defendant to pay RMB3,000 (US$362.5) to the plaintiff as
compensatory damage.
 
 We do not
host MP3 music files or movies on our servers. We provide algorithm-generated
links to MP3 music files and provide index to movies located on third-party
websites in response to our users' search queries. We have adopted measures to
mitigate copyright infringement risks.
  For
example, our policy is to remove links to web pages if we know these web pages
contain materials that infringe third-party rights or if we are notified by the
legitimate copyright holder of the infringement.
 
 Regulation
of Information Security
 
 The
National People's Congress has enacted legislation that prohibits use of the
Internet that breaches the public security, disseminates socially destabilizing
content or leaks state secrets. Breach of public security includes breach of
national security and infringement on legal rights and interests of the state,
society or citizens. Socially destabilizing content includes any content that
incites defiance or violations of PRC laws or subversion of the PRC government
or its political system, spreads socially disruptive rumors or involves cult
activities, superstition, obscenities, pornography, gambling or violence. State
secrets are defined broadly to include information concerning PRC national
defense, state affairs and other matters as determined by the PRC
authorities.
 
 According
to this legislation and other relevant regulations, ICP operators must complete
mandatory security filing procedures with local public security authorities and
must also report any public dissemination of prohibited content.
   8
 Table of Contents
  Regulations
on Internet Privacy
 
 The PRC
Constitution states that PRC laws protect the freedom and privacy of
communications of citizens and prohibits infringement of such rights. In recent
years, PRC government authorities have enacted legislation on Internet use to
protect personal information from any unauthorized disclosure. The Internet
Measures prohibit an ICP operator from insulting or slandering a third party or
infringing upon the lawful rights and interests of a third party. Pursuant to
the BBS Measures, ICP operators that provide electronic messaging services must
keep users' personal information confidential and must not disclose such
personal information to any third party without the users' consent or unless
required by law. The regulations further authorize the relevant
telecommunications authorities to order ICP operators to rectify unauthorized
disclosure. ICP operators are subject to legal liability if the unauthorized
disclosure results in damages or losses to users. The PRC government, however,
has the power and authority to order ICP operators to turn over personal
information if an Internet user posts any prohibited content or engages in
illegal activities on the Internet.
 
 Regulations
on Foreign Exchange
 
 Foreign
Currency Exchange
 
 Pursuant
to the Foreign Currency Administration Rules promulgated in 1996 and amended in
1997 and various regulations issued by the State Administration of Foreign
Exchange, or the SAFE, and other relevant PRC government authorities, RMB is
freely convertible only to the extent of current account items, such as trade
related receipts and payments, interest and dividends. Capital account items,
such as direct equity investments, loans and repatriation of investment, require
prior approval from the SAFE or its provincial branch for conversion of RMB into
a foreign currency, such as U.S. dollars, and remittance of the foreign currency
outside the PRC.
 
 Payments
for transactions that take place within the PRC must be made in RMB. Unless
otherwise approved, PRC companies must repatriate foreign currency payments
received from abroad. Foreign-invested enterprises may retain foreign exchange
in accounts with designated foreign exchange banks subject to a cap set by SAFE
or its local counterpart. Unless otherwise approved, domestic enterprises must
convert all of their foreign currency receipts into RMB.
 
 Employees
 
 As of
March 12, 2008, we have 10 full time employees located in China. We will hire
additional employees as we continue to implement our plan of operation. None of
our employees are represented under a collective bargaining agreement, and we
believe that our relationship with our employees is satisfactory.
 
 ITEM 2. DESCRIPTION OF PROPERTY
 
 We
currently operate our business from our corporate office located at Room 1131,
XianKeJiDian Building, BaGuaSi Road, Futian District, Shenzhen City, China
518029.
 
 ITEM 3. LEGAL
PROCEEDINGS.
 
 There are
no legal proceedings pending or threatened by or against us.
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
 
 No matter
was submitted to a vote of our security holders through the solicitation of
proxies or otherwise during the fiscal year ended December 31,
2007.
 
  PART
II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
 
 Market
Information
 
 Our
common stock was approved for quotation on the OTC Bulletin Board, our stock
symbol is “AFTV”. There is currently no quotation for our shares of common
stock.
 
 Holders
 
 As of
March 11, 2008, we had 50 shareholders holding an aggregate of 10,250,000 shares
of our common stock
 
  9
 Table of Contents
  Dividends
 
 We have
never paid a cash dividend on our common stock. It is our present policy to
retain earnings, if any, to finance the development and growth of our business.
Accordingly, we do not anticipate that cash dividends will be paid until our
earnings and financial condition justify such dividends. There can be no
assurance that we can achieve such earnings.
 
 Recent
Sales of Unregistered Securities
 
 None.
 
 Equity
Compensation Plan Information
 
 The
following table sets forth certain information as of March 11, 2008, with
respect to compensation plans under which our equity securities are authorized
for issuance:
 
  (a)
              (b)
              (c)_________________
              _________________
              _________________Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              Weighted-average
      exercise price of outstanding options, warrants and rights
              Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))Equity
      compensation
              NonePlans
      approved bySecurity
      holdersEquity
      compensation
              NonePlans
      not approvedBy
      security holdersTotal
 
 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
 
 In this
section, "Management's Discussion and Analysis or Plan of Operation," references
to "we," "us," "our," and "ours" refer to Artcraft V, Inc. and its
subsidiary.
 
 The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-KSB.
The following discussion contains forward-looking statements. Our actual results
may differ significantly from those projected in the forward-looking
statements.
 
 Critical
Accounting Policies:
 
 Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
generally accepted accounting principles in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amount of assets, liabilities and expenses,
and related disclosure of contingent assets and liabilities. We bases our
estimates on historical experience and on other various assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis from making judgments about carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates under difference assumptions or conditions.
 
 Overview:
 
 We
operate our business through our wholly owned subsidiary, Top Interest
International Limited, which operates our "188Info" service. 188Info provides a
number of services including information search engine, online web application
and image designing, digital network service, online market research, online
promotion and advertising services, and query searches for both individuals and
businesses.
 
 188Info
has a strong reputation among Shenzhen residents. Many Shenzhen residents use
188Info to publish and search for information.
 
 188Info
enjoys several competitive advantages including innovative information
categorization, sophisticated product and service categorization. For example,
188Info's categories include career services, real estate, lodging
accommodations, transportation, computer networking, communications electronics,
furniture, gifts and apparel, printing presses, and other businesses.
Information is presented in a variety of ways to enhance
readability.
   10
 Table of Contents
  188Info
has succeeded in becoming one of the major information websites for Chinese in a
relatively short time period. 188Info has achieved its success on the basis of a
modest initial investment.
 
 We are
also completing a website to be utilized in various real estate services such as
relocation, listings of real estate sales or rentals, mortgage information and
other real estate related information or content. We have not spent any money
for research and development.
 
 Plan of
Operation:
 
 We intend
to grow through internal development and strategic alliances. Because of
uncertainties surrounding our growth and limited operating history, we
anticipate incurring losses in the foreseeable future. We have already incurred
significant net losses, with a net loss of $1,781 in 2005 and a net loss of
$92,812 in 2006. The difference was due to an increase in operating expenses,
and as we attempt to grow are business, these expenses will certainly increase.
Also, we may incur substantial net losses in the future due to the relatively
high risk associated with our revenue and the high level of planned operating
and capital expenditures, including sales and marketing costs, personnel hires,
and product development. Also, maintaining and further expanding our brand is
critical to our ability to expand our user base and our revenues. We believe
that the importance of brand recognition will increase as the number of Internet
users in China grows. In order to attract and retain Internet users,
advertisers, subscribers, and wireless and e-commerce customers, we may need to
substantially increase our expenditures for creating and maintaining brand
loyalty. If our revenues do not increase proportionately, our results of
operations and liquidity will suffer. For some periods, we may have net profits;
however, we may not sustain profitability over time.
  Accordingly,
our ability to achieve our business objectives is contingent upon our success in
raising additional capital until adequate revenues are realized from operations.
During the next twelve months, we expect to take the following steps in
connection with the expansion of our business and the continuance of our
operations:
  1)
Initiate substantive construction of our corporate website. We currently have
constructed a comprehensive and well designed site webpage at www.188info.com
which outlines the products and services that we offer and such website includes
additional sub-pages, our phone and email information, navigational tools and a
more detailed description of our products and services. 188 infonet features a
wide range of Web advertisement. Web advertising can reach any part of the world
equally fast, which is an impossible feat for conventional advertisement. Our
multimedia presentation is rich in audio, and video. Our web content is
interactive by nature. Current programs such as Flash, Shockwave provide vivid,
animated interaction.
 
 The
next stage of web expansion will focus on promoting 188 infonet and expand its
influence into people’s daily activities. Including a plan to discuss with
various industries consultants to assist us, as well as companies within the
industry to partner with; further promote of 188Info and develop related
websites to attract a younger demographic and achieve one million hits on a
daily basis; Establish a community information service in Shenzhen by
cooperating with communities, Such as publish yellow pages in
Shenzhen.
  Incorporation
of these services could run from $2,500 to $100,000 depending upon the level of
detail in these services and the nature of the partnerships reached. If we reach
partnerships whereby we incorporate other company’s services into our site and
co-brand with partners, programming will be far simpler and thereby cheaper than
if we have to offer users the ability to design their own service
requests.
  Further
website expansion 2008 will be in various phases subject to revenue and capital
availability.
 
 2) We
are currently identifying funding options to raise additional capital for the
company and key geographic markets to target during our first phase of
operations. We intend to seek funding options such as equity or debt financing.
However, currently we have had no preliminary discussions with any group
regarding such financing. As we grow and the overall economic climate improves,
we expect to be in a better position to raise outside capital later. The only
associated costs for such funding may be the due diligence costs or expenses
associated with putting a financing deal together. The costs would be as much as
5%-6% of the funding raised, but any such fees would be taken out of the closing
of the funding transaction. Searching for capital will likely be an ongoing
process even if we raise an initial amount of funds. The only potential expenses
would be if we decide to pay for outside research or if business trips are
required.
  3) Hire
and train additional staff, including management, marketing staff, and
administrative personnel; we anticipate hiring at a minimum 10 employees in the
next twelve months. The number of employees hired will be dependent upon a
variety of factors including our progress in implementing our business plan and
available capital. Ultimately, we expect to require approximately $10,000 per
month for payroll. We will need additional capital to meet these expenses and
will scale down accordingly until we are in such a position. The hiring of
employees will be an ongoing process during the company’s
existence.
   11
 Table of Contents
  We intend
to grow through internal development and strategic alliances.  Because
of uncertainties surrounding our growth and strong competition, we anticipate
incurring losses in the foreseeable future. Our ability to achieve our business
objectives is contingent upon its success in raising additional capital until
adequate revenues are realized from operations.
 
 Employees
 
 As of
March 11, 2008, we have 10 full time employees located in China. We intend to
hire and train additional staff, including management, marketing staff, and
administrative personnel. We anticipate hiring a minimum of 10 employees in the
next twelve months. The number of employees hired will depend on a variety of
factors including our progress in implementing our business plan and available
capital. Ultimately, we expect to require approximately $10,000 per month for
payroll. We will need additional capital to meet these expenses and will scale
down accordingly until we are in such a position. The hiring of employees will
be an ongoing process during the Company's existence.
  RESULTS
OF OPERATIONS FOR THE YEAR S ENDED DECEMBER 31, 2007 AND 2006
 
 The
following table presents certain consolidated statement of operations
information for the years ended December 31, 2007 and 2006. The discussion
following the table is based on these results. Certain columns may not add due
to rounding.
 
 2007
                
                
                2006Revenue,
      net
                
                $
                24,116
                
                
                $
                20,883General
      and administrative expenses
                
                
                274,939
                
                
                
                120,992Income
      from operations
                
                
                (250,824
                )
                
                
                (100,109
                )Other
      (Income) ExpenseInterest
      income
                
                
                (1,796
                )
                
                
                (1,989
                )Miscellaneous
      expense
                
                
                13
                
                
                
                -Minority
      interest
                
                
                (30,615
                )
                
                
                (5,446
                )Interest
      expense
                
                
                69
                
                
                
                138Total
      Other (Income) Expense
                
                
                (32,329
                )
                
                
                (7,297
                )Net
      loss
                
                $
                (218,495
                )
                
                $
                (92,812
                )
 
 Net
Revenue
  Net
sales for the year ended December 31, 2007 totaled $24,116 compared to $20,883
for the year ended December 31, 2006, an increase of $3,233 or approximately
15.4%. In 2007, due to marketing department’s hard working and technical
departments development, our website was improved with more categories and
information  available to our users. This was the main reason for the
increase in the number is users, as well as the revenue.
 
 Operating
Expense
  General and administrative
expenses for the year ended December 31, 2007 totaled $274,939 or approximately
1,140% of net revenue compared to $120,992 or approximately 579% of net revenue
for the year ended December 31, 2006.  The increase in operating
expense of $153,947 or approximately 127% was mainly due to bad debt expense of
approximately $143,000 recognized from loan and other receivable.
 
 Income
(Loss) from Operations
  Income (loss)
from operations for the year ended December 31, 2007 totaled $(250,824) or
approximately 1,040% of net revenue compared to $(100,109) or approximately
479.4% of net revenue for the year ended December31, 2006, a decrease of
$150,715 or approximately 151%. The decrease in income from
operations was primarily due to increase in expenses as stated
above.
 
 Net
Income (Loss)
  Net
income (loss) for the year ended December 31, 2007 totaled $(218,495) compared
to $(92,812) for the year ended December 31, 2006, a decrease of $125,683 or
approximately 135%. The decrease in net loss was primarily due to reason
described above.
 
 
 12
 Table of Contents
   LIQUIDTY
AND CAPITAL RESOURCES
  We have
limited liquidity and capital resources. Earnings were insufficient in years
2006 and 2007 to meet the liquidity needs of operations in those periods. We
believe we will be able to generate revenues from sales and raise capital
through private placement offerings of its equity securities to provide the
necessary cash flow to meet anticipated working capital requirements. Our actual
working capital needs for the long and short term will depend upon numerous
factors, including our operating results, competition, and the availability of
credit facilities, none of which can be predicted with certainty. Our future
expansion will depend on operating results and will be limited by its ability to
enter into financings and raise capital.
 
 On
November 7, 2005, pursuant to the closing of the Stock Purchase Agreement and
Share Exchange with Top Interest International Limited, we ceased being a "blank
check" company, as that term is defined in rule 419 of Regulation C under the
rules of the Securities Act of 1933, and began operating an a professional
information searching platform that categorizes the information it provides
based on geographical boundaries.
  Our cash
requirements consist of general and administrative expenses, and professional
fees, which are expected to average $1,700 per month for the next 12 months. We
believe we have sufficient cash to meet our minimum development and operating
costs for the next 12 months. We will need to raise additional capital to
continue our operations past 12 months, and there is no assurance we will be
successful in raising the needed capital. Due to difficult market conditions, we
are focusing on growing through strategic alliances without the necessity of
outlaying cash.
  Working Capital
Requirements
  Historically
operations and short term financing have been sufficient to meet our cash needs.
We believe that we will be able to generate revenues from sales and raise
capital through private placement offerings of its equity securities to provide
the necessary cash flow to meet anticipated working capital requirements.
However, our actual working capital needs for the long and short term will
depend upon numerous factors, including operating results, competition, and the
availability of credit facilities, none of which can be predicted with
certainty. Future expansion will be limited by the availability of financing
products and raising capital.
  OFF-BALANCE
SHEET ARRANGEMENTS
  We have
never entered into any off-balance sheet financing arrangements and have never
established any special purpose entities. We have not guaranteed any debt or
commitments of other entities or entered into any options on non-financial
assets.
 
 ITEM 7. FINANCIAL STATEMENTS
 
 The
Company's Financial Statements and Notes to Financial Statements are attached
hereto beginning with page F-1.
 
 ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
 
 On
January 4, 2006, we terminated the client-auditor relationship with Webb &
Company, P.A. ("Webb & Company") effective  January 4, 2006. We
engaged Kabani & Company, Inc. of Los Angeles, California, as our new
independent auditors as of January 4, 2006. Prior to such date, we did not
consult with Kabani & Company, Inc. regarding (i) the application of
accounting principles, (ii) the type of audit opinion that might be rendered by
Kabani & Company, Inc. or (iii) any other matter that was the subject of a
disagreement between us and our former auditor as described in Item
304(a)(1)(iv) of Regulation S-B.
 
 In
connection with its review of financial statements through August 31, 2005,
there have been no disagreements with Webb & Company on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Webb & Company would have caused them to make reference thereto in their
report on the financial statements. During the most recent review period and the
interim period subsequent to January 4, 2006, there have been no reportable
events with us as set forth in Item 304(a)(i)(v) of Regulation S-K. Webb &
Company's audit of our financial statements on Form 10-KSB for the year ending
May 31, 2005 contained an explanatory paragraph expressing substantial doubt
about our ability to continue as a going concern. Except as noted in the
previous sentence, the reports of Webb & Company, P.A. contained no adverse
opinion or disclaimer of opinion and was not qualified or modified as to audit
scope or accounting principles.
  On
January 4, 2006, we elected to change our fiscal year end to December 31st based
on the fiscal year end of our operating subsidiary.
  ITEM 8A. CONTROLS AND PROCEDURES
 
 Evaluation
of disclosure controls and procedures
 
  13
 Table of Contents
   Our chief
executive officer and chief financial officer have each evaluated our disclosure
controls and procedures (as defined in rule 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934, as amended) as of a date within 90 days before
the filing of this annual report (the Evaluation Date). Based on that
evaluation, our principal executive officer and principal financial officer
concluded that, as of the Evaluation Date, the disclosure controls and
procedures in place were adequate to ensure that information required to be
disclosed by us, including our consolidated subsidiaries, in reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.
Although our principal executive officer and principal financial officer
believes our existing disclosure controls and procedures are adequate to enable
us to comply with our disclosure obligations, we intend to formalize and
document the procedures already in place and establish a disclosure
committee.
 
 Changes
in internal controls
 
 We have
not made any significant changes to our internal controls subsequent to the
Evaluation Date. We have not identified any significant deficiencies or material
weaknesses or other factors that could significantly affect these controls, and
therefore, no corrective action was taken.
 
 ITEM
8B. OTHER INFORMATION.
 
 There is
no information required to be disclosed in a report on Form 8-K during the
fourth quarter of the fiscal year covered by this Form 10-KSB but not
reported.
 
 
  14
 Table of Contents
 
 
 PART
III
 
 ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
 
 Directors
and Executive Officers
 
 The
following table sets forth information about our executive officers and
directors.
  NAME
              AGE
              POSITIONLi
      Te Xiao
              30
              President,
      Chief Executive Officer, Chief Financial Officer, Secretary and
      Director
 
 The above
listed officer and director will remain in office until the next annual meeting
of our stockholders, and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of Directors. We
have not compensated our Director for service on our Board of Directors, any
committee thereof, or reimbursed for expenses incurred for attendance at
meetings of our Board of Directors and/or any committee of our Board of
Directors. Officers are appointed annually by our Board of Directors and each
Executive Officer serves at the discretion of our Board of Directors. We do not
have any standing committees.
 
 Li Te
Xiao was appointed as our Chief Executive Officer, Chief Financial Officer,
President, Secretary and Director effective December 20, 2004. Li Te Xiao has
been the General Manager for Shenzhen E'Jinie Technology Development Co., Ltd
from 2001 to October, 2004. From 1999 to 2001, he also worked as the General
Manager for Shun De Taiwan Fan Sai Te Lamp Manufacture, in Shun De, Guang Dong,
China. Li Te Xiao Graduated with a bachelor degree in 1997 from Hubei Province
Normal School with a major in English.
 
 Our sole
Director and Executive Officer has not during the past five years:
  (a)
              Had
      any bankruptcy petition filed by or against any business of which such
      person was a general partner or executive officer either at the time of
      the bankruptcy or within two years prior to that time;(b)
              Been
      convicted in a criminal proceeding or subject to a pending criminal
      proceeding;(c)
              Been
      subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      and(d)
              Been
      found by a court of competent jurisdiction (in a civil action), the
      Commission or the Commodity Futures Trading Commission to have violated a
      federal or state securities or commodities law, and the judgment has not
      been reversed, suspended, or
vacated.
  Compliance
with Section 16(a) of the Securities Exchange Act of 1934
 
 The
Company knows of no person, who at any time during the period from January 1,
2003, to the present, was a director, officer, beneficial owner of more than ten
percent of any class of equity securities of the Company (a "Reporting Person"),
that failed to file on a timely basis any reports required to be furnished
pursuant to Section 16(a). Based upon a review of Forms 3, 4 and 5 furnished to
the Company under Rule 16(a)-3(d) the Company knows of no Reporting Person that
failed to file the required reports within the required time
limits.
 
 Audit
Committee and Audit Committee Financial Expert
 
 We do not
currently have a standing audit committee. The entire board of directors of the
Company acts as the audit committee. Currently, due to the recent changes, we do
not have an audit committee financial expert. We are actively conducting a
search for a suitable individual to join the board of directors who qualifies as
an audit committee financial expert.
 
 Code of
Ethics
 
 The
Company has adopted a Code of Ethics applicable to its Chief Executive Officer
and Chief Financial Officer. This Code of Ethics is filed herewith as an
exhibit.
 
  15
 Table of Contents
  ITEM
9A. CONTROL AND PROCEDURES
  Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Accounting Officer (“CAO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CAO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CAO, as appropriate, to allow timely decisions regarding required
disclosure.
  Management’s Report on
Internal Controls over Financial Reporting
 
 Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of consolidated financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.  There has been no change in
the Company’s internal control over financial reporting during the year ended
December 31, 2007 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
  The
Company’s management, including the Company’s CEO and CAO, does not expect that
the Company’s disclosure controls and procedures or the Company’s internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected.
 
 Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the
company’s internal control over financial reporting was effective as of December
31, 2007.
  ITEM 10. EXECUTIVE COMPENSATION
 
 To date,
we have not entered into any employment agreements with our officers and do not
presently intend to do so. Our officer does not receive any compensation for his
services rendered and has not received such compensation in the past, and is not
accruing any compensation pursuant to any agreement with us.
 
 No
retirement, pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by us for the benefit of our
employees.
  The table
below summarizes all compensation awarded to, earned by, or paid to our
executive officers by any person for all services rendered in all capacities to
us from the date of our inception until the year ended December 31,
2007.
  SUMMARY
COMPENSATION TABLE
  Annual
      CompensationName
      and Principal Position
              Year
              
              Salary
              
              
              Bonus
              
              
              Stock
      Awards
                ($)
              
              
              Option
      Awards
                ($)
              
              
              Non-Equity Incentive Plan
      Compensation ($)
              
              
              Non-Qualified
      Deferred Compensation Earnings
                ($)
              
              
              All
      Other Compensation
                ($)
              
              
              Totals
                ($)Li
      Te Xiao President Chief Executive
                Officer
      and Director2007
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              02006
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
              
              
              $
              0
 
 Our
shareholders may in the future determine to pay Directors’ fees and reimburse
Directors for expenses related to their activities
  
  16
 Table of Contents
  Stock
Options
  We do not
have, nor do we anticipate adopting a stock option plan. Additionally, we do not
have any retirement, pension, profit sharing, stock option or other similar
programs.
 
 Employment
Contracts
 
 We
presently have no employment agreements.
 
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
 
 The
following table sets forth certain information derived from the named person, or
Company, concerning the ownership of common stock as of April 13, 2006, of (i)
each person who is known to us to be the beneficial owner of more than 5% of the
common stock; (ii) all directors and executive officers; and (iii) directors and
executive officers as a group:
 
 NAME
      AND ADDRESS OF
                BENEFICIAL
      OWNER
              AMOUNT
      AND NATURE OF
                BENEFICIAL
      OWNERSHIP
              PERCENT
      OF
                OUTSTANDING
      SHARES (1)5%
      STOCKHOLDERS -Zu
      Da Xu
                Baimang
      Checking Station
                1st
      Building South
                Mountain
      Xili Town,
                Shenzhen,
      China
              10,000,000
              97.56%Li
      Te Xiao
                Baimang
      Checking Station
                1st
      Building South
                Mountain
      Xili Town,
                Shenzhen,
      China
              36,000
              0.35%Officers
      and Directors as a Group (1 person)
              36,000
              0.35%
 
 (1) Based
on 10,250,000 shares of common stock issued and outstanding as of March 20,
2008.
 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
 
 None.
 
 ITEM 13: EXHIBITS AND REPORTS ON FORM 8-K
 
 (a) Reports on
Form 8-K
 
 None
 
 (b) Exhibits
 
 3.1
              Articles
      of Incorporation and Amendments (1)3.2
              By-Laws
      (1)10.1
              Securities
      purchase Agreement with Top Interest (3)International
      Limited (1)10.2
              Amendment
      One to the Securities Purchase Agreement with Top Interest International
      Limited (2)14
              Code
      of Ethics21
              List
      of Subsidiaries (1)31
              Certification32
              Certification
  (1) Filed
with Form SB-2 registration statement on January 13, 2006 (SEC File No.
333-131019) and incorporated by reference.
 
 (2) Filed
with Amendment 2 to Form SB-2 registration statement on December 12, 2006 (SEC
File No. 333-131019) and incorporated by reference.
  ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit
Fees
 
 The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the registrant's
annual financial statements and review of financial statements included in the
registrant's 10-QSB (17 CFR 249.308b) or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years are:
 
 2006
Audit and Review fees $22,000
 2007
Audit and Review fees $39,500
  17
 Table of Contents
  Audit
Related Fees
 
 The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit or review of the registrant's financial statements and
are not reported under Item 9(e)(1) of Schedule 14A are: $-0-
 
 Tax
Fees
  The
Company was billed $0 for professional services rendered for tax compliance, tax
advice, and tax planning in each of the last two fiscal years.
 
 All Other
Fees
 
 The
Company did not incur any other fees in each of the last two fiscal years for
products and services provided by the principal accountant, other than the
services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A.
 
 
 
 SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934 The
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 Artcraft
V, Inc.
 (Registrant)
 
 By:   /s/ Li
Te Xiao
 Li Te
Xiao, President, Chief Executive Officer,
 Chief
Financial Officer and Director
 
 
 In
accordance with the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
 
 /s/ Li Te
Xiao
 Li Te
Xiao, Director
 
 
 Dated:
March 20, 2008
   18
 Table of Contents


ARTCRAFT V, INC. AND SUBSIDIARIES


CONSOLIDATED FINANCIAL STATEMENTS
 
 DECEMBER
31, 2007
 
       
 
 
 Table of Contents
 
 
 TABLE
OF CONTENTS
 
  PageReport of Independent
      Registered Public Accounting Firm
                        F-2Consolidated
      Balance Sheet
                        F-3Consolidated
      Statement of Operations
                        F-4Consolidated
      Statement of Cash Flow
                        F-5Consolidated
      Statements of Changes in Stockholders’ Deficit
                        F-6Notes
      to Consolidated Financial Statements
                        F-7
      - F-17
 
 
 F-1
 Table of Contents
 
 
 Report
of Independent Registered Public Accounting Firm
  Board of
Directors and Stockholders of
 Artcraft
V Inc. and Subsidiaries
 
 We have
audited the accompanying consolidated balance sheet of Artcraft V Inc. and
Subsidiaries (a Delaware corporation) as of December 31, 2007, and the related
consolidated statements of income, stockholders' deficit, and cash flows for the
two years ended December 31, 2007 and 2006. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Artcraft V Inc.
and Subsidiaries as of December 31, 2007, and the consolidated results of their
operations, stockholders' deficit and their consolidated cash flows for the two
years ended December 31, 2007 and 2006, in conformity with U.S. generally
accepted accounting principles.
  The
Company’s consolidated financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The company has accumulated deficit of $313,965 at December 31, 2007
including a net loss of $218,495 during the year ended December 31, 2007. These
factors as discussed in Note 12 to the financial statements, raise substantial
doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 12. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
  /s/
Kabani & Company, Inc.
 Certified
Public Accountants
 
 Los
Angeles, California
 March
20,
2008
    F-2
 Table of Contents
   ARTCRAFT
      V, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETDECEMBER
      31, 2007ASSETSCurrent
      AssetsCash
      and cash equivalents
                
                $
                18,070Other
      receivable from related parties
                
                
                274Loan
      receivable,net
                
                
                26,250Total
      Current Assets
                
                
                44,595Property
      & equipment, net
                
                
                15,777Intangible
      assets, net
                
                
                6,636$
                67,007LIABILITIES AND
      STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      payable and accrued expenses
                
                $
                36,142Loan
      payable to related party
                
                
                265,721Deferred
      revenue
                
                
                3,313Total
      Current Liabilities
                
                
                305,176Stockholders'
      DeficitCommon
      stock, $.001 par value, 100,000,000shares authorized, 10,250,000 issued and outstanding 
      10,250Additional
      paid in capital
                
                
                108,872Subscription
      receivable
                
                
                (50,000
                )Other
      accumulated comprehensive gain
                
                
                6,673Accumulated
      deficit
                
                
                (313,965
                )Total
      Stockholders' Deficit
                
                
                (238,170
                )$
                67,007
  The
accompanying notes are an integral part of these audited consolidated financial
statements.
  F-3
 Table of Contents
  ARTCRAFT
      V, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 20062007
                
                
                2006Revenue,
      net
                
                $
                24,116
                
                
                $
                20,883Operating
      Expenses:General
      and administrative expenses
                
                
                274,939
                
                
                
                120,992Loss
      from operations
                
                
                (250,824
                )
                
                
                (100,109
                )Other
      (Income) ExpenseInterest
      income
                
                
                (1,796
                )
                
                
                (1,989
                )Miscellaneous
      expense
                
                
                13
                
                
                
                -Interest
      expense
                
                
                69
                
                
                
                138Total
      Other Expense
                
                
                (1,714
                )
                
                
                (1,851
                )Net
      loss before minority interest
                
                
                (249,109
                )
                
                
                (98,258
                )Minority
      interest
                
                
                30,615
                
                
                
                5,446Net
      loss
                
                
                (218,495
                )
                
                
                (92,812
                )Other
      comprehensive incomeForeign
      currency translation
                
                
                3,092
                
                
                
                3,619Comprehensive
      Income
                
                
                (215,403
                )
                
                
                (89,193
                )Net
      loss per share:Basic
      & diluted
                
                $
                (0.0215
                )
                
                $
                (0.0092
                )Weighted
      average number of shares outstanding:Basic
      & diluted
                
                
                10,153,836
                
                
                
                10,100,000
 Weighted
average number of shares for dilutive securities has not been taken since the
effect of dilutive securities is anti-dilutive
  The accompanying notes are
an integral part of these audited consolidated financial
statements.
  F-4
 Table of Contents
  ARTCRAFT
      V, INC. AND SUBSIDIARIESFOR
      THE TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 20062007
                
                
                2006CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Loss
                
                $
                (218,495
                )
                
                $
                (92,812
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      & amortization
                
                
                8,840
                
                
                
                8,421Bad
      debt reserve
                
                
                140,641
                
                
                
                -Minority
      Interest
                
                
                (30,615
                )
                
                
                (5,446
                )Increase
      in assets:Other
      receivables
                
                
                (81,394
                )
                
                
                (8,247
                )Increase/
      (decrease) in current liabilities:Accounts
      payable and accrued expenses
                
                
                1,374
                
                
                
                28,964Deferred
      revenue
                
                
                (2,963
                )
                
                
                3,764Total
      Adjustments
                
                
                42,203
                
                
                
                27,456Net
      cash used in operations
                
                
                (176,292
                )
                
                
                (65,355
                )CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of shares
                
                
                60,000
                
                
                
                -Loan
      from related party
                
                
                126,598
                
                
                
                55,123Net
      cash provided by  financing activities
                
                
                186,598
                
                
                
                55,123Effect
      of exchange rate changes on cash and cash
equivalents
                
                
                15
                
                
                
                363Net
      increase (decrease) in cash and cash equivalents
                
                
                10,320
                
                
                
                (9,869
                )Cash
      and cash equivalents, beginning balance
                
                
                7,750
                
                
                
                17,619Cash
      and cash equivalents, ending balance
                
                $
                18,070
                
                
                $
                7,750SUPPLEMENTAL
      DISCLOSURES:Cash
      paid during the year for:Interest
      payments
                
                $
                69
                
                
                $
                138
  The accompanying notes are
an integral part of these audited consolidated financial
statements
   F-5
 Table of Contents
  ARTCRAFT
      V, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF STOCKHOLDERS' DEFICITFOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006Additional
                
                
                Other
                
                
                Shares
To
                
                
                
                
                
                
                
                
                TotalCommon
      Stock
                
                
                Paid-In
                
                
                Comprehensive
                
                
                be
                
                
                Subscription
                
                
                (Accumulated
                
                
                Stockholders'Shares
                
                
                Amount
                
                
                Capital
                
                
                Gain
      (Loss)
                
                
                Issued
                
                
                Receivable
                
                
                Deficit)
                
                
                EquityBalance
      December 31, 2005
                
                
                10,100,000
                
                
                $
                10,100
                
                
                $
                42,700
                
                
                $
                (38
                )
                
                
                60,000
                
                
                $
                (110,000
                )
                
                $
                (2,658
                )
                
                $
                (59,896
                )Foreign
      currency translation adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,619
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,619Net
      loss for the year ended December 31, 2006
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (92,812
                )
                
                
                (92,812
                )Balance
      December 31, 2006
                
                
                10,100,000
                
                
                
                10,100
                
                
                
                42,700
                
                
                
                3,581
                
                
                
                60,000
                
                
                
                (110,000
                )
                
                
                (95,469
                )
                
                
                (89,088
                )Issuance
      of common stock
                
                
                150,000
                
                
                
                150
                
                
                
                59,850
                
                
                
                
                
                
                
                (60,000
                )
                
                
                60,000
                
                
                
                
                
                
                
                60,000Director
      Contribution
                
                
                -
                
                
                
                -
                
                
                
                6,322
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                6,322Foreign
      currency translation adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,092
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,092Net
      loss for the year ended December 31, 2007
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (218,496
                )
                
                
                (218,496
                )Balance
      December 31, 2007
                
                
                10,250,000
                
                
                $
                10,250
                
                
                $
                108,872
                
                
                $
                6,673
                
                
                
                -
                
                
                $
                (50,000
                )
                
                $
                (313,965
                )
                
                $
                (238,170
                )
 The accompanying notes are
an integral part of these audited consolidated financial
statements


F-6
 Table of Contents







Note
1 – ORGANIZATION
 
 Artcraft
V, Inc. was incorporated under the laws of the State of Delaware on June 7,
2004.  On November 7, 2005, the Company entered into an Exchange
Agreement with Top Interest International Limited (“Top
Interest”).  Top Interest owns 70% equity interest of Shenzhen Xin Kai
Yuan Info Consult Co., Ltd. (“188info.com”) which operates 188info.com, a
professional information searching platform that is engaged in the business of
providing information search engine, online web application and image designing,
digital network service, online market research, online promotion and
advertising services, and query searches for both individuals and
businesses.  Top Interest was incorporated under the laws of the
British Virgin Islands.  188info.com was legally established under the
laws of the People’s Republic of China.  When used in these notes, the
terms “Company”, “we”, “our” or “us” mean Artcraft V, Inc. and its
subsidiaries.
 
 Pursuant
to the Stock Purchase and Share Exchange Agreement, the Company purchased all of
the issued and outstanding shares of Top Interest from the shareholders for
issuance of a total of 10,000,000 shares of the Company’s common stock, or
approximately 99% of the total issued and outstanding shares.  This
transaction closed on November 7, 2005 and has been accounted for as a reverse
acquisition.
 
 Note
2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of
Presentation
 
 The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America.  The Company’s functional currency is the Chinese Renminbi
(CNY); however the accompanying consolidated financial statements have been
translated and presented in United States Dollars.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of Artcraft V, Inc. and
its wholly owned subsidiary Top Interest International and majority owned
subsidiary Shenzhen Xin Kai Yuan Info Consult Co., Ltd., collectively referred
to within as the Company.  All material intercompany accounts,
transactions and profits have been eliminated in consolidation.
 
 Exchange Gain
(Loss)
 
 During
the years ended December 31, 2007 and 2006, the transactions of Shenzhen were
denominated in foreign currency and were recorded in CNY at the rates of
exchange in effect when the transactions occur. Exchange gains and losses are
recognized for the different foreign exchange rates applied when the foreign
currency assets and liabilities are settled.
 
 Translation
Adjustment
 
 As of
December 31, 2007 and 2006, the accounts of Shenzhen were maintained, and its
financial statements were expressed, in CNY. Such financial statements were
translated into U.S. Dollars (USD) in accordance with Statement of Financial
Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation,” with the CNY
as the functional currency. According to the Statement, all assets and
liabilities were translated at the current exchange rate, stockholder’s equity
are translated at the historical rates and income statement items are translated
at the average exchange rate for the period. The resulting translation
adjustments are reported under other comprehensive income in accordance with
SFAS No. 130, “Reporting Comprehensive Income” as a component of shareholders’
equity.
 
  F-7
 Table of Contents
  
 Note
2 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Use of
Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
 Risks and
Uncertainties
 
 The
Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history, foreign currency exchange rates and the volatility of
public markets.
 
 Contingencies
 
 Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur.  The Company’s management
and legal counsel assess such contingent liabilities, and such assessment
inherently involves an exercise of judgment.  In assessing loss
contingencies related to legal proceedings that are pending against the Company
or unasserted claims that may result in such proceedings, the Company’s legal
counsel evaluates the perceived merits of any legal proceedings or unasserted
claims as well as the perceived merits of the amount of relief sought or
expected to be sought.
 
 If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial
statements.  If the assessment indicates that a potential material
loss contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, together with
an estimate of the range of possible loss if determinable and material would be
disclosed.
 
 Loss
contingencies considered to be remote by management are generally not disclosed
unless they involve guarantees, in which case the guarantee would be
disclosed.
 
 Cash and Cash
Equivalents
 
 Cash and
cash equivalents include cash in hand and cash in time deposits, certificates of
deposit and all highly liquid debt instruments with original maturities of three
months or less.
 
 Property, Plant &
Equipment
 
 Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives of:
 
 Automobile                                            5
years
 Office
equipment                                  
5 years
 
 
 F-8
 Table of Contents
  
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
  As of
December 31, 2007 Property, Plant & Equipment consist of the
following:
 
 Automobile
                
                $
                11,957Office
      equipment
                
                
                20,79432,751Accumulated
      depreciation
                
                
                (16,974
                )$
                15,777
 
 Depreciation
expenses were $6,292 and $5,993 for the years ended December 31, 2007, and
2006.
 
 Intangible
Assets
 
 Intangible
assets consist of software for information search engine and online web
application. The Company evaluates intangible assets for impairment, at least on
an annual basis and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows.
Recoverability of intangible assets, other long-lived assets and, goodwill is
measured by comparing their net book value to the related projected undiscounted
cash flows from these assets, considering a number of factors including past
operating results, budgets, economic projections, market trends and product
development cycles. If the net book value of the asset exceeds the related
undiscounted cash flows, the asset is considered impaired, and a second test is
performed to measure the amount of impairment loss.  As of December
31, 2007, there is no impairment of intangible assets.
  As of
December 31, 2007 Intangible Assets consist of the following:
 
 Software
                
                $
                13,27113,271Accumulated
      amortization
                
                
                (6,635
                )$
                6,636
 
 Amortization
expenses were $2,548 and $2,428 for the years ended December 31, 2007 and
2006.
  Amortization
expenses for the next 3 years are as follows:
 
 Year
ending
 2008                                $2,549
 2009                                  2,549
 2010                                1,538
 
 Total                               $6,636
 
 
 
 F-9
 Table of Contents
 
 
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Long-Lived
Assets
  Effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards
No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
144”), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
the Results of Operations for a Disposal of a Segment of a Business.” The
Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets’ carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal. Based on its review, the Company believes
that, as of December 31, 2007 there were no significant impairments of its
long-lived assets.
  Fair Value of Financial
Instruments
  Statement
of financial accounting standard No. 107, Disclosures about fair value of
financial instruments, requires that the Company disclose estimated fair values
of financial instruments. The carrying amounts reported in the statements of
financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
  Revenue
Recognition
 
 The
Company’s revenue recognition policies are in compliance with Staff accounting
bulletin (SAB) 104. Revenue from marketing services through World Wide Web is
recognized when services are rendered. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as deferred
revenue. As of December 31, 2007, deferred revene was $3,313.
  Stock-Based
Compensation
  In
October 1995, the FASB issued SFAS No. 123, “Accounting for Stock-Based
Compensation”. SFAS No. 123 prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using the existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, “Accounting for stock issued to employees” (APB 25) and
related interpretations with proforma disclosure of what net income and earnings
per share would have been had the Company adopted the new fair value method. The
Company uses the intrinsic value method prescribed by APB 25 and has opted for
the disclosure provisions of SFAS No.123. During the year ended December 31,
2007, the company did not grant or issue any option or warrant.
  Advertising
 
 Advertising
expenses consist primarily of costs of promotion for corporate image and product
marketing and costs of direct advertising. The Company expenses all advertising
costs as incurred. The company did not incur any advertising expense during the
years ended December 31, 2007 and 2006.
  F-10
 Table of Contents
   Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
  Income
Taxes
  The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
  Basic and Diluted Earnings
(Loss) Per Share
  Earnings
(loss) per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net income (loss)
per share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period. Basic and diluted loss per share were $0.0096 and $0.0092 for the
years ended December 31, 2007 and 2006 respectively.
  Statement of Cash
Flows
  In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company’s operations is based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash flows will
not necessarily agree with changes in the corresponding balances on the balance
sheet.
  Concentration of Credit
Risk
  Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be
credit-worthy financial institutions. The Company has a diversified customer
base. The Company controls credit risk related to accounts receivable through
credit approvals, credit limits and monitoring procedures. The Company routinely
assesses the financial strength of its customers and, based upon factors
surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
  One
reportable business segment. All revenue is from customers in People’s Republic
of China. All of the Company’s assets are located in People’s Republic of
China.
 
 
 F-11
 Table of Contents
  
 Note
2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Segment
Reporting
 
 Statement
of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure about
Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
is based on the way a company’s management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company’s consolidated financial statements as the
Company consists of one reportable business segment. All revenue is from
customers in People’s Republic of China. All of the Company’s assets are located
in People’s Republic of China.
 
 Recent accounting
pronouncements
 
 In
September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The management is currently
evaluating the effect of this pronouncement on financial
statements.
 
 In
September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
employer to recognize the over funded or under funded status of a defined
benefit postretirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position and to recognize changes in
that funded status in the year in which the changes occur through comprehensive
income of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This Statement also improves financial reporting by
requiring an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity securities is
required to recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:
  a.  A
brief description of the provisions of this Statement
  b.  The
date that adoption is required
  c.  The
date the employer plans to adopt the recognition provisions of this Statement,
if earlier.
  The
requirement to measure plan assets and benefit obligations as of the date of the
employer’s fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial
statements.
 
 In
February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.
 
 The new
Statement allows entities to choose, at specified election dates, to measure
eligible financial assets and liabilities at fair value that are not otherwise
required to be measured at fair value. If a company elects the fair value option
for an eligible item, changes in that item's fair value in subsequent reporting
periods must be recognized in current earnings. FAS 159 also establishes
presentation and disclosure requirements designed to draw comparison
between entities that elect different measurement attributes for similar assets
and liabilities.
  
 F-12
 Table of Contents
 
 Note 2 -SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 In December 2007, the FASB
issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements”. This Statement amends ARB 51 to establish accounting and reporting
standards for the noncontrolling (minority) interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in
a subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. SFAS No. 160 is
effective for the Company’s fiscal year beginning October 1, 2009. Management is
currently evaluating the effect of this pronouncement on financial
statements.
  In December 2007, the FASB
issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS
No. 141, Business Combinations. This Statement retains the fundamental
requirements in Statement 141 that the acquisition method of accounting (which
Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination. This
Statement also establishes principles and requirements for how the acquirer: a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase and c) determines what information
to disclose to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. SFAS No. 141(R) will apply
prospectively to business combinations for which the acquisition date is on or
after Company’s fiscal year beginning October 1, 2009. While the Company has not
yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will
have on its consolidated financial statements, the Company will be required to
expense costs related to any acquisitions after September 30, 2009.
  Note
3-  LOANRECEIVABLE
 
 As of
December 31, 2007, the Company has advanced loans to an ex-shareholder. The loan
receivable of $62,129 is unsecured, non interest-bearing and due on
demand.
 
 The loan
receivable of $84,038 is due on demand and interest bearing to the same
ex-shareholder. Interest receivable of $5,263 has been accrued as of December
31, 2007 on the loan at the prevailing bank deposit interest rate of 2.25%
per China Renmin Bank.  Interest incomes were $1,796 and $1,989 for
the years ended December 31, 2007 and 2006 respectively.
 
 The
principal or interest on the loans have not been recovered by the Company
through December 31, 2007 or subsequently, hence, the loan receivables have been
fully reserved.as of December 31, 2007.
 
 The
Company has loan receivables of $26,250 to third parties as of December 31,
2007. These loans are unsecured, non interest-bearing and due on demand. $13,750
of the loans of $26,250 was recovered in January 2008.
  Note
4 – ACCOUNTS PAYABLE
AND ACCRUED EXPENSES
 
 As of
December 31, 2007, account payable and accrued expenses were $36,142, including
$26,344 accrued professional expenses and $9,798 accrued payroll and welfare
expenses.
 
 Note
5 – LOAN PAYBLE TO
RELATED PARTIES
 
 As of
December 31, 2007, total loan payable to related parties were $265,721,
including a non interest-bearing, unsecured and due on demand note payable to an
officer of a subsidiary amouting $84,000 and a non interest-bearing,
unsecured and due on demand note payable to a shareholder of the Compny in the
amount of $181,721.
 
 Note
6 – COMMON
STOCK
 
 On May
17, 2005, the Company agreed to issue 150,000 shares of common stock to
individuals forsubscriptions receivable
of $60,000 ($0.40 per share). The shares were issued during the month of
August 2007. However, the physical certificates were not issued as the
company was still waiting for the SB-2 filing to become
effective.  The Company plans to issue the certificates in next few
months.
 
 On
November 7, 2005, the Company issued 10,000,000 shares of common stock at par of
$0.001 per share for purchase all of the issued and outstanding shares of Top
Interest from its shareholders.
  F-13
 Table of Contents
 
  Note
7 -  STOCKEXCHANGE
AGREEMENT
 
 On
November 7, 2005, the Company entered into an Exchange Agreement with Top
Interest, a company incorporated under the laws of the British Virgin
Islands.  Top Interest owns 70% of equity interest of 188info.com
which is incorporated under the laws of the People’s Republic of China, and is
engaged in the business of providing information search engine, online web
application and image designing, digital network service, online market
research, online promotion and advertising services, and query searches for both
individuals and businesses.
 
 Pursuant
to the Stock Purchase and Share Exchange Agreement, the Company purchased all of
the issued and outstanding shares of Top Interest form the shareholders for
issuance of a total of 10,000,000 shares of the Company’s common stock, or
approximately 99% of the total issued and outstanding shares.  This
transaction closed on November 7, 2005.
 
 As a
result of the exchange agreement, the reorganization was treated as an
acquisition by the accounting acquiree that is being accounted for as a
recapitalization and as a reverse merger by the legal acquirer for accounting
purposes. Pursuant to the recapitalization, all capital stock shares and amounts
and per share data have been retroactively restated. Accordingly, the financial
statements include the following:
 
 (1)   The balance sheet
consists of the net assets of the accounting acquirer at historical cost and the
net assets of the legal acquirer at historical cost.
  (2)   The
statements of operations include the operations of the accounting acquirer for
the period presented and the operations of the legal acquirer from the date of
the merger.
  Note
8 – ADDITIONAL PAID-IN
CAPITAL
 The
Company utilizes office space arranged by an officer of the Compny, free of
charge. The fair maket rent value amounting $6,322 has been taken as a
contribution to the capital from officer and credited to the additional paid in
capital as of December 31, 2007.
  Note
9 – INCOME
TAXES
  The
Company through its subsidiary, 188info.com, is governed by the Income Tax Laws
of the PRC.  Operations in the United States of America have incurred
net accumulated operating losses for income tax purposes.  The Company
believes that it is more likely than not that these net accumulated operating
losses will not be utilized in the future and hence the Company has not recorded
any deferred assets as of December 31, 2007.
  Pursuant
to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) is at a statutory
rate of 33%, which is comprises of 30% national income tax and 3% local income
tax.
  December
      31, 2007Provision
      for PRC Income and local taxes
                
                $
                0U.S
      Statutory rates
                
                
                34
                %Foreign
      income not recognized in USA
                
                
                (34
                %)PRC
      income tax benefit
                
                
                33
                %Valuation
      allowance
                
                
                (33
                %)
  
 F-14
 Table of Contents
 
 
 Note
10 – STATUTORY
RESERVE
 
 In
accordance with the laws and regulations of the PRC, after the payment of the
PRC income taxes shall be allocated to the statutory surplus reserves and
statutory public welfare fund for staff and workers.  The proportion
of allocation for reserve is 5 to 10 percent of the profit after tax until the
accumulated amount of allocation for statutory reserve reaches 50 percent of the
registered capital.  Statutory surplus reserves are to be utilized to
offset prior years’ losses, or to increase its share capital. Statutory public
welfare fund is no longer requested for the companies invested by foreign
countries in 2006.
  General
reserve fund and statutory surplus fund are restricted for set off against
losses, expansion of production and operation or increase in register capital of
the respective company. Statutory public welfare fund is restricted to the
capital expenditures for the collective welfare of employees. These reserves are
not transferable to the Company in the form of cash dividends, loans or
advances. These reserves are therefore not available for distribution except in
liquidation. As of December 31, 2007, the Company had no reserves to these
non-distributable reserve funds since it had no income from
operations.
 
 Note
11 – OTHER
COMPREHENSIVE INCOME (LOSS)
 
 Balances
of related after-tax components comprising accumulated other comprehensive
income (loss), included in Stockholders’ Deficit, at December 31, 2007 are
as follows:
  Foreign
      Currency Translation AdjustmentBalance
      at December 31, 2006
              $
      3,581Change
      for 2007
              3,092Balance
      at December 31, 2007
              $
      6,673
 
 Note
12  – CURRENT VULNERABILITY DUE TO
RISK FACTORS
 
 The
Company’s operations are carried out in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, by the general state of
the PRC’s economy. The Company’s business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
 
 F-15
 Table of Contents
 
  Note
13  – GOING
CONCERN
 
 The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles which contemplate continuation of
the company as a going concern.  However, the Company has an
accumulated deficit of $313,965 as of December 31, 2007 including losses of
$218,495 and $92,812 for the years ended December 31, 2007 and 2006. The
Company’s current liabilities exceed its current assets by $260,581. In view of
the matters described above, recoverability of a major portion of the recorded
asset amounts shown in the accompanying consolidated balance sheet is dependent
upon continued operations of the company, which in turn is dependent upon the
Company’s ability to raise additional capital, obtain financing and succeed in
its future operations, The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
 
 Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern.  Management devoted
considerable effort from inception through the year ended December 31, 2007,
towards obtaining additional equity and management of accrued expenses and
accounts payable.
 
 Management
believes that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
  F-16