UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                         AMENDMENT NO. 1 TO FORM 10-KSB

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                   For the fiscal year ended December 31, 2004

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

        For the transition period from: ______________ to ______________

        Commission file number: 0-18731
                                -------

                       FORLINK SOFTWARE CORPORATION, INC.
--------------------------------------------------------------------------------
           (Name of small business issuer as specified in its charter)

           Nevada                                                84-0438458
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (IRS Employer
incorporation or organization)                               Identification No.)

9/F, Fang Yuan Mansion, No. 56 ZhongGuanCun South Road Yi,
Haidian District, Beijing, China                                        100044
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

Issuer's telephone number: 011-8610-88026368

Securities registered under Section 12(b) of the Exchange Act: None
                                                               ----

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value
-----------------------------

      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. Yes |X| No
|_|

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not 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. |_|

      State issuer's revenues for its most recent fiscal year: $10,166,733

      As of March 15, 2005 the aggregate market value of the Common Stock held
by non-affiliates, approximately 40,488,207 shares of Common Stock, was
approximately $7.3 million based on an average of the bid and ask prices of
approximately $.18 per share of Common Stock on such date.

      The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of March 15, 2005 was 76,900,707 shares.

      DOCUMENTS INCORPORATED BY REFERENCE: None.

      Transitional Small Business Disclosure Format (check one):

      Yes |_|; No |X|

<PAGE>

                   EXPLANATORY NOTE REGARDING THIS AMENDMENT:

This Amendment No. 1 to our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2004 ("Form 10-KSB/A") is filed to: (i) add disclosures in
Item 1 regarding the specific nature of the operations of each of the Company's
businesses, including that none of the entities were discontinued or dissolved
during the reporting period, management's plan for the entities going forward,
and information describing the principal activities of Forlink Technologies
(Hong Kong) Limited ("FTHK"), and Beijing Forlink Hua Xin Technology Co. Ltd.
("BFHX"); (ii) add disclosures in Item 1 regarding Company's relationship with
customers China Mobile and Beijing Mobile Communication Company ("Beijing
Mobile") and their impact on the Company's operating history; (iii) add
disclosures in Item 6 regarding the amount of product and services revenues
recognized from Beijing Mobile during the periods presented, the types of
services provided, the nature and length of the arrangement with Beijing Mobile,
and other information regarding the importance of Beijing Mobile to the
Company's operating performance; (iv) add disclosures in Item 6 and in Note 2 to
the Company's financial statements (both under subheading "Revenue Recognition")
regarding the Company's integration services for the Company's application
solution products being accounted for under SOP 97-2 and explanations as to how
the Company recognizes revenues and related costs under these types of
contracts; (v) add disclosures in Item 6 and in Note 2 to the Company's
financial statements (both under subheading "Revenue Recognition") regarding how
vendor-specific objective evidence ("VSOE") is determined for the Company's
multi-element contracts and how revenue related to services provided under those
contracts are recognized; (vi) add a disclosure in Item 6 and Note 2 to the
Company's financial statements (both under subheading "Revenue Recognition")
discussing how the Company is accounting for Application Services Providers
services (including how revenue is recognized) with reference to the
applicability of EITF 00-3 (Application of AICPA Statement of SOP 97-2 to
Arrangements That Include the Right to Use Software Stored on Another Entity's
Hardware); (vii) add a disclosure in Item 6 (under subheading "Liquidity and
Capital Resources") explaining the inventory decrease between December 31, 2003
and December 31, 2004; (viii) add a disclosure in Item 6 (under subheading
"Accounting for Goodwill") and in Note 9 to the Company's financial statements
(under subheading "Goodwill") regarding the goodwill that resulted from the
reverse acquisition transaction between Beijing Slait Science & Technology
Development Limited Co. and the Company, including how the goodwill amount was
recorded, how the amount recorded was determined, the goodwill impairments which
have been recorded since the initial recording of the goodwill, a description as
to how the Company tests for impairment, and the reasons why the Company
believes that as of December 31, 2003 and 2004, there has been no further
impairment in goodwill; and (ix) revise the Company's Consolidated Statement of
Operations (the "Statement of Operations") to remove, from its net sales, the
value added tax ("VAT") rebate that it receives in connection with software
sales and, instead, to present the VAT rebate that it receives as part of "Other
Income" in the Statement of Operations; (x) make revisions in Item 6 in the
discussion under the subheading "REVENUES" regarding the revenue breakdown by
business line to reflect the above-described revision of net sales in the
Statement of Operations; (xi) make revisions in Item 6 in the discussion under
the subheading "CONSOLIDATED RESULTS OF OPERATIONS" regarding net sales, gross
profits, net profits, and also add a disclosure regarding "Other Income" that
all correspond with the revisions made to the Company's Statement of Operations;
and (xii) add Note 17 to the Company's financial statements explaining the
restatement of certain items in the Statement of Operations in connection with
the removal of the VAT rebate from net sales and inclusion of the VAT rebate
instead as part of "Other Income." Except as required to reflect the changes
noted above, this Form 10-KSB/A does not attempt to modify or update any other
disclosures set forth in the original filing. Additionally, this Form 10-KSB/A
does not purport to provide a general update or discussion of any other
developments of the Registrant subsequent to the original filing. The filing of
this Form 10-KSB/A shall not be deemed an admission that the original filing,
when made, included any untrue statement of material fact or omitted to state a
material fact necessary to make a statement not misleading.

<PAGE>

                                     PART I

               CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
                THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO
            DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS

      Readers of this document and any document incorporated by reference
herein, are advised that this document and documents incorporated by reference
into this document contain both statements of historical facts and forward
looking statements. Forward looking statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially for those
indicated by the forward looking statements. Examples of forward looking
statements include, but are not limited to (i) projections of revenues, income
or loss, earning or loss per share, capital expenditures, dividends, capital
structure and other financial items, (ii) statements of the plans and objectives
of the Company or its management or Board of Directors, including the
introduction of new products, or estimates or predictions of actions by
customers, suppliers, competitors or regulatory authorities, (iii) statements of
future economic performance, and (iv) statements of assumptions underlying other
statements and statements about the Company or its business.

      This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ materially
from those indicated by forward looking statements. These risks and
uncertainties include price competition, the decisions of customers, the actions
of competitors, the effects of government regulation, possible delays in the
introduction of new products and services, customer acceptance of products and
services, the Company's ability to secure debt and/or equity financing on
reasonable terms, and other factors which are described herein and/or in
documents incorporated by reference herein.

      The cautionary statements made above and elsewhere by the Company should
not be construed as exhaustive or as any admission regarding the adequacy of
disclosures made by the Company. Forward looking statements are beyond the
ability of the Company to control and in many cases the Company cannot predict
what factors would cause results to differ materially from those indicated by
the forward looking statements.

Item 1. Description of Business.

Company History and Recent Developments

Forlink Software Corporation, Inc. (the "Company" or the "Registrant"), is a
Nevada corporation which was originally incorporated on January 7, 1986 as Why
Not?, Inc. under the laws of the State of Utah and subsequently reorganized
under the laws of Nevada on December 30, 1993. From 1996 until 1999, the Company
continued as an unfunded venture in search of a suitable business acquisition or
business combination.

On November 3, 1999, the Company entered into a Plan of Reorganization with
Beijing Forlink Software Technology Co., Ltd., (hereinafter "BFSTC"), under the
terms of which BFSTC gained control of the Company. Pursuant to the Plan of
Reorganization, the Company acquired 100% of the registered and fully paid-up
capital of BFSTC in exchange for 20,000,000 shares of the Company's authorized,
but unissued, common stock. BFSTC is engaged in the provision of computer
software consultancy and engineering services and the development and sale of
computer software in the PRC. As a part of computer consultancy and engineering
services, BFSTC also is engaged in sale of computer hardware. In June 2001,
BFSTC changed its name to Forlink Technologies Co. Ltd. ("FTCL").

In August 2001, the Company acquired Beijing Slait Science & Technology
Development Limited Co. ("SLAIT") pursuant to a Plan of Reorganization dated
January 11, 2001. The Company issued 59,430,000 shares of its common stock to
SLAIT's original beneficial owners in exchange for 100% of the outstanding
equity of SLAIT. As a result of the share exchange, the former beneficial owners
of SLAIT own approximately 70% of the issued and outstanding shares of the
Company. By virtue of the share exchange, SLAIT became a wholly-owned subsidiary
of the Company. The Company also agreed to transfer RMB1,085,000 (approximately
US$131,039) to the former owners of SLAIT. A change in control occurred in which
all but one of the officers and directors of the Company resigned and two former
directors (also former owners) of SLAIT became officers and directors of the
Company. SLAIT provides application system integration technology and
specializes in large volume transaction processing software for network such as
mobile phone billing and band operation. Subsequent to the acquisition, the
principal activities of SLAIT have been gradually shifted to Forlink
Technologies Co., Ltd. ("FTCL"). On February 13, 2004, SLAIT was officially
dissolved in accordance with relevant PRC regulations. FTCL is the major
operating company of the Group in Beijing.

                                       1
<PAGE>

On June 18, 2003, Forlink Technologies (Hong Kong) Limited ("FTHK") was
incorporated in Hong Kong as a limited liability company. In December 2003, FTHK
became a wholly owned subsidiary of Forlink. FTHK is an investment holding
company. Because of the favorable business environments in Hong Kong, we can
simplify and speed up investment transactions through this subsidiary. Through
FTHK, on December 18, 2003, we invested $760,870 in a privately held PRC
company, All China Logistics Online Co., Ltd. ("All China"), a leading provider
of logistic services in China, in exchange for 17.8% equity interests. Through
this investment, we have become the second largest shareholder of All China and
its sole software solution provider. On June 14, 2004, Forlink Technologies
(Chengdu) Limited ("FTCD") was established as a limited liability company in
Chengdu, PRC and subsequently it became a wholly owned subsidiary of FTHK in
September 2004. FTCD is our software supporting office currently under initial
development stage. Upon completion, it will be responsible for software
outsourcing projects and software development. The registered capital of FTCD is
$5,000,000 and the fully paid up capital was $750,000 as of December 31, 2004.
FTCD has not commenced operations since the date of establishment.

FTHK is also responsible for importing hardware needed in the integration
products from overseas companies directly, thus improve our hardware
pass-through profit margin.

Except for FTCD, which is currently under development stage, all other major
group companies, i.e. FTCL, FTHK and BFHX, are operating companies. During the
reporting period, none of the group companies' operation were discontinued or
dissolved.

In compliance with PRC's foreign investment restrictions on Telecom value-added
services and other laws and regulations, we conduct our Telecom value-added
services and application integration services for government organizations in
China via Beijing Forlink Hua Xin Technology Co. Ltd. ("BFHX"). BFHX was
established in PRC on September 19, 2003 as a limited liability company. The
registered capital of BFHX is $120,733 (RMB1,000,000) and the fully paid up
capital was $36,232 (RMB300,000) as of December 31, 2004. Mr. Yi He and Mr. Wei
Li were entrusted as nominee owners of BFHX to hold 70% and 30%, respectively,
of the fully paid up capital of BFHX on behalf of Forlink, and Forlink is the
primary beneficiary. BFHX is considered a Variable Interest Entity ("VIE") and
because Forlink is the primary beneficiary, Forlink's consolidated financial
statements include BFHX. Upon the request of Forlink, Mr. Yi He and Mr. Wei Li
are required to transfer their ownership in BFHX to Forlink or to designees of
Forlink at any time for the amount of the fully paid up capital of BFHX.

Mr. Yi He is a director and a major stockholder of Forlink. Mr. Wei Li is the
administration manager of FTCL.

Through BFHX, on September 28, 2004, we invested $36,232 in Huntington Network
Technologies (Beijing) Co., Ltd., which is a privately held PRC company and
operates the Gmgame.com, in exchange for 30% equity interests. Gmgame.com is a
fast growing online game portal committed to providing Chinese players with the
widest variety of online games available. This investment enables us to enter a
fast growing market and utilize our IT expertise to further diversify our
revenues.

                                       2
<PAGE>

Overview of our business.

We have three wholly owned subsidiaries, FTCL, FTHK, and BFHX. Through our
subsidiaries, we are developing innovative products, solutions, project
management skills, and industry expertise necessary for the design and
implementation of large-scale, specifications-intensive integrated application
systems, software and Information Technology ("IT") outsourcing services
typically required by leading companies in telecom, logistic, finance,
government, and other industry verticals.

Our head office is located in Beijing, with individual branch offices in
Chengdu, Shenyang, Shanghai and Guangzhou. We also have a R&D center at Chengdu.

Employees

As of December 31, 2004, we have 203 employees, of which 191 are full-time.
Approximately 120 of our full-time employees are software and information
technology specialists engaged in research and development, maintenance and
support activities; the remaining staffs are sales, marketing and administrative
personnel. As an incentive, we have created employee stock option plans that
include vesting provisions designed to encourage long-term employment.

Products and solutions

Our application solutions are developed on Enterprise Application Integration
(EAI) platforms. Some of our major product offerings include:

o     ForOSS: Our solution for Business & Operation Support Systems (BSS/OSS)
      for telecom carriers, particularly China Mobile; it consists of software
      products designed to support existing and expanding business operations of
      communications companies; ForOSS supports billing, customer care, customer
      relation management, accounting, decision support and other internal
      functionalities.

o     ForRMS: Forlink Resources Management System is an integrated platform
      designed to improve enterprises and organizations' resources management
      systems.

o     For-Online: For-Online is an Enterprise Application Integration platform
      designed to deliver ASP (Application Service Provider) services over
      internet. The applications that can be delivered over the internet include
      many Forlink flagship products, such as ForRMS (Resources Management
      System), For-Mail (E-mail system), For-ISMG (Internet Short Message
      Gateway), For-Online Electronic Trading System, and other Web-related
      applications.

Distribution methods of the products and services

We mainly sell our products and services to customers directly. We also utilize
distribution partners.

Research and Development

We are committed to continuously researching, designing and developing
information technology solutions and software products that meet the needs of
our customers. Our R&D expenses in 2004 and 2003 were $1,105,348 and $888,305,
respectively.

                                       3
<PAGE>

Status of new product or service

In May 2004, we launched For-online, which delivers enterprise applications and
services over the Internet to Small and Medium-sized Enterprises (SMEs) in
China. The version launched was 1.0. Since then we have been continuously
upgrading For-online to enhance its performance and provide added features and
functions. The current For-online version is 2.0.

Market Opportunities

Based on our extensive market research and industry insights, we believe that
the major market opportunities for our business include the following: EAI
(Enterprise Application Integration); ASP (Application Services Provider);
Software and IT outsourcing.

Our Strategy

Our objective is to be a leading China-based professional company providing
world class Enterprise Application Integration (EAI) solutions, software
services, and IT outsourcing services by continuing to enable our customers to
build, maintain, operate, manage and continuously improve their information
systems and processes. The key aspects of our strategy include the following:

Maximize revenue and reduce overall risk by applying shared core technologies &
platforms to different industry verticals. By capitalizing on our expertise in
core technologies and utilizing them as share platforms and resources, we aim to
become a leading IT solution provider for telecom, logistics, finance,
government, and other industry verticals in China. We believe this strategy will
increase our revenue and reduce overall risk.

Expand our software outsourcing and ASP (Application Services Provider) services
to enhance our value chains. Currently, we are working with University of
Sichuan, a prestigious university in Southern China, to establish and improve
our software factory's outsourcing services and ASP services. We are also
stepping up investments in these areas. As an important milestone, we have
achieved Level 2 (Managed Level of Software Process Maturity) of Capability
Maturity Model(R) Integration (CMMI). The CMMI project is a key technical
initiative at the Software Engineering Institute (SEI). Based on the
internationally recognized Capability Maturity Model (CMM(R)) framework for
software process improvement, CMMI provides an integrated approach to process
improvement. It is a new and more demanding model for assessing a company's
software engineering capability and the maturity of an organization's processes.
As an internationally recognized CMMI Level 2 company, our software factory can
provide trusted software outsourcing services at a lower price for oversea
companies; at the same time, its research and development capabilities will
enhance our value chains by serving as a shared support platform for our other
services, such as EAI, ASP, etc. We believe our investments in the above areas
will enhance our value chains and further consolidate our leading position as a
professional software and IT services provider.

Improve corporate governance and financial standing. To maximize our
shareholders' value, we are continuously striving to improve our corporate
governance and financial standing. It is our goal to apply for NASDAQ listing in
the future when the listing requirements are met.

Our competitive strengths

o     Professional software development and services system. Forlink
      Technologies has passed the ISO9001:2000 international quality assurance
      system certification and CMMI (Capability Maturity Model Integration)
      Level 2 certification. This indicates the status of Forlink's software
      development and services system in compliance with international
      standards. Our professional software development and services system has
      substantially strengthened our competitive advantages by ensuring that we
      are in compliance with all relevant international standards and
      regulations for business.

                                       4
<PAGE>

o     Twelve years of experience in industry applications with proven solutions
      and products. Forlink developed the core application software products
      such as ForOSS and ForRMS based on standardized application integration
      technologies. Recognized by our customers, partners and suppliers as a
      dependable provider of high quality services, solutions and products, our
      previous work has not only strengthened relationships but has continually
      provided new opportunities, as those who we deal with usually recommend us
      to those they deal with. Forlink is widely approbated by customers for its
      abundant application integration experience and proven solutions and
      products. For example, Forlink has been ranked as a Class A integration
      services provider by China Mobile (a global fortune 500 enterprise) for
      our OSS (Operation Support System), and top 5 leading billing solutions
      provider according to the regular performance review of the solutions by
      China Mobile.

o     Established customer relationships. Because of our successful track of
      record, we have established relationships with leading companies in
      telecom, logistic, finance, government, and other industry verticals in
      China. Our in-depth understanding of their requirements allows us to
      successfully deliver customized solutions and further strengthen our
      relationships. Moreover, we have strong customer service and research and
      development teams based in China, which allows us to respond quickly and
      efficiently to the needs of our customers.

o     Strong and stable management team. The current management team includes
      pioneers of Application Integration Technologies in China. The backgrounds
      of the individuals in our management offer a depth and breadth of
      experience that is capable of covering all aspects related to the control
      and development of AIT systems. Beyond expertise in the field, their close
      working relationships with major long-term customers demonstrates a proven
      ability to sustain and cultivate a successful business. The current
      management team has remained consistent since the commencement of our
      business.

Strategic partners

Partner strategies are essential elements of our business model. At the stage,
we have 4 layers of partners that contribute to a continued success of our
business.

o     Product partners - who provide products and solutions to be integrated in
      our solutions. We are authorized resellers of HP, Sun, EMC, Oracle and
      CISCO systems. We were awarded by HP for The Excellent sales achievement
      prize in 1999 and the Best Co-operation prize in 1999.

o     Technology development partners - who provide technologies (through
      licensing or other arrangement) to our solutions or for joint
      developments; major partners include: HP, Oracle, BEA, IONA, Redhat,
      Turbolinux, Redflag-linux.

o     Marketing & product partners - who provides products/technologies to be
      bundled with our solutions and products for marketing purposes; partners
      including HP, Intel, IBM, Sun, Compaq, Oracle, Informix, CA, Lenovo,
      Founder, Digital China.

o     Distribution partners - who distributes our solutions and products to our
      customers; partners include Beijing Federal.

Competitive conditions

The market for information technology services in China is rapidly growing and
changing. We compete with both international and local companies. Our principal
competitors in application integration services are: AsiaInfo, Linkage
Technology, Digital China. Our principal competitors in the ASP (Application
Services Provider) fields include: UFSOFT, MYCRM, HAN Consulting. Our principal
competitors in software outsourcing include: Neusoft, Dalian HaiHui, China
Software & Technology Corporation.

                                       5
<PAGE>

Government Regulation

The Chinese government has generally encouraged the development of the
information technology industry, and the products and services we offer are not
currently subject to extensive government regulations.

Dependence on major customer

Our largest customer has been Beijing Mobile Communication Company, which is a
subsidiary of China Mobile. Since 1998, we have been developing and maintaining
BOSS (Business Operation Support System) for the carrier. BOSS is an integrated
software platform and it is developed in stages to accommodate the carrier's
increasing subscribers and service offerings. We are currently developing and
maintaining phase two of BOSS.

Although we are an important strategic IT partner of Beijing Mobile, we do not
have long term contracts with the carrier. All of our agreements with the
carrier are for short term projects or sales of third-party hardware. While we
feel that our significant relationships with Beijing Mobile will likely provide
additional sales agreements in the future, Beijing Mobile is not contractually
bound to purchase any products or services from us. Loss of this customer could
hurt our business by reducing our revenues and profitability.

During the fiscal years ended December 31, 2001, 2002, 2003 and 2004, sales to
Beijing Mobile Communication Company were $4,097,560, $8,229,159, $8,999,662 and
$9,002,191 respectively, accounting for 80%, 88%, 96% and 89%, of our revenue
for these periods, respectively.

SEC Reports Available on Website

The SEC maintains an Internet site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. Our Annual Reports on Form 10-KSB, Quarterly
Reports on Form 10-QSB, Current Reports on Form 8-K and other SEC filings are
available on the SEC's website as well as our company website at
www.forlink.com.

Item 2. Description of Property.

We currently rent our facilities at 9/F, 16/F Fang Yuan Mansion, No. 56
Zhongguancun South Road Yi, Haidian District, Beijing, China and space at 11/F,
Bin He Plaza, No.1 Che Dao Gou Road, Haidian District, Beijing, China.

We own an office in Chengdu, China as a software development center. It is
located at B-16B, WangFuJing Business Mansion, No.5 HuaXingZheng Street,
ChengDu, SiChuan Province, China.

In addition, we have regional field support office in various cities in China,
namely Shanghai, Shenyang, Guangzhou.

Item 3. Legal Proceedings.

There are no pending legal proceedings involving the Company.

Item 4. Submission of Matter to a Vote of Security Holders.

The Company did not submit any matters to a vote of the shareholders in the
fourth quarter of 2004.

                                       6
<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The Common Stock of the Company is currently trading on the Over the Counter
Bulletin Board system under the symbol "FRLK". There is no assurance that the
Common Stock will continue to be quoted or that any liquidity exists for the
Company's shareholders.

The following table sets forth the range of high and low bid prices for the
Company's Common Stock for each quarterly period indicated, as reported by the
NASDAQ's Historical Research Department. Quotations reflect inter-dealer prices
without retail markup, markdown or commissions and may not represent actual
trades.

                                             Common Stock

Quarter Ended                         High Bid         Low Bid
-------------                         --------         -------

December 31, 2004                         $.45            $.33
September 30, 2004                        $.37            $.15
June 30, 2004                             $.20            $.10
March 31, 2004                            $.45            $.33

December 31, 2003                         $.45            $.23
September 30, 2003                        $.45            $.10
June 30, 2003                             $.40            $.06
March 31, 2003                            $.06            $.04

Holders

As of March 15, 2004, there were 76,900,707 shares of the Company's common stock
outstanding held of record by approximately 584 persons (not including
beneficial owners who hold shares at broker/dealers in "street name").

Dividends

The Company has never paid cash dividends on its Common Stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business.

Sales of unregistered securities

The Company has not issued or sold any of its securities without registration
within the past three fiscal years.

Repurchases of equity securities

The Company did not repurchase any of its outstanding equity securities during
the fourth quarter of the year ended December 31, 2004.

                                       7
<PAGE>

Item 6. Management's Discussion and Analysis or Plan of Operation.

GENERAL

Statements contained herein that are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform
Act of 1995. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, the forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
from those projected. We caution investors that any forward-looking statements
made by us are not guarantees of future performance and that actual results may
differ materially from those in the forward-looking statements. Such risks and
uncertainties include, without limitation: well-established competitors who have
substantially greater financial resources and longer operating histories,
regulatory delays or denials, ability to compete as a start-up company in a
highly competitive market, and access to sources of capital.

The following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this Form 10-KSB.
Except for the historical information contained herein, the discussion in this
Form 10-KSB contains certain forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-KSB should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-KSB. The Company's actual results could differ materially from
those discussed here.

OVERVIEW

We are a leading provider of software solutions and information technology
services in China (the "PRC" or "China"). We focus on providing Enterprise
Application Integration (EAI) solutions for large companies in telecom, finance,
and logistic industries. In May 2004, we launched For-online, which delivers
enterprise applications and services over the Internet to Small and Medium-sized
Enterprises (SMEs) in China. For-online is quickly becoming an important new
channel for delivering and distributing our products and services to more
customers.

On August 28, 2001, we completed the acquisition of Beijing Slait Science &
Technology Development Limited Co. ("Slait"). Slait was engaged in the
development and sale of network software systems and provision of enterprise
application system integration services for telecommunication companies and
network services providers in China. Slait was also engaged in the sale of
computer hardware. Subsequent to the acquisition, the principal activities of
Slait were gradually shifted to Forlink Technologies Co., Ltd. ("FTCL"). On
February 13, 2004, Slait was officially dissolved in accordance with relevant
PRC regulations. FTCL is the major operating company of the Group in Beijing.

We have derived, and believe that we will continue to derive, a significant
portion of our revenues from Beijing Mobile Communication Company, a subsidiary
of China Mobile. Since 1998, we have been developing and maintaining BOSS
(Business Operation Support System) for the carrier. BOSS is an integrated
software platform and it is developed in stages to accommodate the carrier's
increasing subscribers and service offerings. We are currently developing and
maintaining phase two of BOSS.

Although we are an important strategic IT partner of Beijing Mobile, we do not
have long term contracts with the carrier. All of our agreements with the
carrier are for short term projects or sales of third-party hardware. While we
feel that our significant relationships with Beijing Mobile will likely provide
additional sales agreements in the future, Beijing Mobile is not contractually
bound to purchase any products or services from us. Loss of this customer could
hurt our business by reducing our revenues and profitability.

During the fiscal years ended December 31, 2001, 2002, 2003 and 2004, sales to
Beijing Mobile Communication Company were $4,097,560, $ 8,229,159, $8,999,662
and $9,002,191 respectively, accounting for 80%, 88%, 96% and 89%, of our
revenue for these periods, respectively.

                                       8
<PAGE>

We believe that there are opportunities for us to expand into new business areas
and to grow our business both internally and through acquisitions. On June 14,
2004, Forlink Technologies (Chengdu) Limited ("FTCD") was established as a
limited liability company in Chengdu, PRC and subsequently it became a wholly
owned subsidiary of FTHK in September 2004. FTCD is our software supporting
office currently under initial development stage. Upon completion, it will be
responsible for software outsourcing projects and software development. The
registered capital of FTCD is $5,000,000 and the fully paid up capital was
$750,000 as of December 31, 2004. FTCD has not commenced operations since the
date of establishment. On September 28, 2004, we invested $36,232 in Huntington
Network Technologies (Beijing) Co., Ltd., which is a privately held PRC company
and operates the Gmgame.com, in exchange for 30% equity interests. Gmgame.com is
a fast growing online game portal committed to providing Chinese players with
the widest variety of online games available. This investment enables us to
enter a fast growing market and utilize our IT expertise to further diversify
our revenues.

REVENUES

Our business includes Forlink brand "For-series" software system sales such as
ForOSS, ForRMS, For-Mail and their copyright licensing, and "For-series" related
system integration, which consists of hardware sales and other related services
rendered to customers. The following table shows our revenue breakdown by
business line:

                                                      Year Ended December 31,
                                                    ---------------------------
                                                       2004             2003
                                                    ----------       ----------
Sales of For-series software                        $2,029,069       $2,223,348
  as a percentage of net sales                              20%              24%

For-series related system integration               $7,971,041       $7,167,849
  as a percentage of net sales                              80%              76%

As indicated in the foregoing table, sales of For-series software as a
percentage of net sales decreased from 24% in 2003 to 20% in 2004. For-series
related system integration as a percentage of net sales increased from 76% in
2003 to 80% in 2004. The change was mainly attributable to increased hardware
pass-through required by total-solution projects in the fourth quarter of 2004.

Generally, we offer our products and services to our customers on a
total-solutions basis. Most of the contracts we undertake for our customers
include revenue from hardware and software sales and professional services.

Major Revenues

Hardware Revenue

Revenues from sales of products are mainly derived from sales of hardware.
Normally, hardware we procure is in connection with total-solutions basis system
integration contracts.

Service Revenue

Service revenue consists of revenue for the professional services we provide to
our customers for network planning, design and systems integration, software
development, modification and installation and related training services.

Software License Revenue

We generate revenue in the form of fees received from customers for licenses to
use our software products for an agreed period of time. Our software license
revenue also includes the benefit of value added tax rebates on software license
sales, which are part of the Chinese government's policy of encouraging China's
software industry. Software sales in China are subject to a 17% value added tax,
however, companies that develop their own software and have the software
registered are generally entitled to a value added tax refund. If the net amount
of the value added tax payable exceeds 3% of software sales, the excess portion
of the value added tax is refundable upon our application to tax authority. This
policy is effective until 2010.

                                       9
<PAGE>

COST OF REVENUES

Our costs of revenue include hardware costs, software-related costs and
compensation and travel expenses for the professionals involved in the relevant
projects. Hardware costs consist primarily of third party hardware costs. We
recognize hardware costs in full upon delivery of the hardware to our customers.
Software-related costs consist primarily of packaging and written manual
expenses for our proprietary software products and software license fees paid to
third-party software providers for the right to sublicense their products to our
customers as part of our solutions offerings. The costs associated with
designing and modifying our proprietary software are classified as research and
development expenses as incurred.

OPERATING EXPENSES

Operating expenses are comprised of selling expenses, research and development
expenses and general and administrative expenses.

Selling expenses include compensation expenses for employees in our sales and
marketing departments, third party advertising expenses, as well as sales
commissions and sales agency fees.

Research and development expenses relate to the development of new software and
the modification of existing software. We expense such costs as they are
incurred.

TAXES

According to the relevant PRC tax rules and regulations, FTCL and BFHX, being
recognized as New Technology Enterprises operating within a New and High
Technology Development Zone, are entitled to an Enterprise Income Tax ("EIT")
rate of 15%.

Pursuant to approval documents dated September 23, 1999 and August 2, 2000
issued by the Beijing Tax Bureau and State Tax Bureau, respectively, FTCL, being
recognized as a New Technology Enterprise, is eligible for a full exemption from
EIT for the fiscal years 1999, 2000, 2001 and 2002. FTCL is also eligible for a
50% EIT reduction at the rate of 7.5% for the fiscal years 2003, 2004 and 2005.

Pursuant to an approval document dated January 19, 2004 issued by the State Tax
Bureau, BFHX, being recognized as a New Technology Enterprise, is eligible to
full exemption from EIT for the fiscal years 2004, 2005 and 2006.

Hong Kong profits tax is calculated at 17.5% on the estimate assessable profits
of FTHK for the period.

Revenue from the sale of hardware procured in China together with the related
system integration is subject to a 17% value added tax. Although sales of
software in China are subject to a 17% value added tax as well, companies that
develop their own software and have the software registered are generally
entitled to a value added tax refund. If the net amount of the value added tax
payable exceeds 3% of software sales, the excess portion of the value added tax
is refundable upon our application to tax authority. This policy is effective
until 2010. Changes in Chinese tax laws may adversely affect our future
operations.

FOREIGN EXCHANGE

The functional currency of Forlink is US$ and the financial records are
maintained and the financial statements prepared in US$. The functional currency
of FTHK is HK$ and the financial records are maintained and the financial
statements prepared in HK$. The functional currency of Slait, FTCL, BFHX and
FTCD is Renminbi (RMB) and the financial records are maintained and the
financial statements are prepared in RMB.

                                       10
<PAGE>

Foreign currency transactions during the year are translated into each company's
denominated currency at the exchange rates ruling at the transaction dates. Gain
and loss resulting from foreign currency transactions are included in the
consolidated statement of operations. Assets and liabilities denominated in
foreign currencies at the balance sheet date are translated into each company's
denominated currency at year end exchange rates. All exchange differences are
dealt with in the consolidated statements of operations.

For the purpose of preparing the Company's consolidated financial statements,
the financial statements in HK$ and RMB have been translated into United States
Dollars at US$1.00 = HK$7.75 and US$1.00 = RMB8.28 respectively, translation
adjustments would be included as a component of stockholders' equity.

Exchange rates between US$, HK$ and RMB are fairly stable during the years
presented. The rates ruling as of December 31, 2004 and 2003 are US$1: HK$7.75:
RMB8.28 and US$1: HK$7.75: RMB8.28, respectively. Due to the stability of the
exchange rates, there were no net adjustments in stockholders' equity.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance with generally
accepted accounting principles in the United States of America. The preparation
of those financial statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. On an
on-going basis, we evaluate our estimates and judgments, including those related
to revenues and cost of revenues under customer contracts, bad debts, income
taxes, investment in affiliate, long-lived assets and goodwill. We base our
estimates and judgments on historical experience and on various other factors
that we believe are reasonable. Actual results may differ from these estimates
under different assumptions or conditions. We believe the following critical
accounting policies affect the more significant judgments and estimates used in
the preparation of our consolidated financial statements.

Revenue Recognition

We generally provide services under multiple element arrangements, which include
software license fees, hardware and software sales, provision of system
integration services including consulting, implementation, and software
maintenance. We evaluate revenue recognition on a contract-by-contract basis as
the terms of each arrangement vary. The evaluation of the contractual
arrangements often requires judgments and estimates that affect the timing of
revenue recognized in the statements of operations. Specifically, we may be
required to make judgments about:

o     whether the fees associated with our products and services are fixed or
      determinable;
o     whether collection of our fees is reasonably assured;
o     whether professional services are essential to the functionality of the
      related software product;
o     whether we have the ability to make reasonably dependable estimates in the
      application of the percentage-of-completion method; and
o     whether we have verifiable objective evidence of fair value for our
      products and services.

We recognize revenues in accordance with the provisions of Statements of
Position, or SOP, No. 97-2, "Software Revenue Recognition", as amended by SOP
No. 98-9, "Modification of SOP 97-2, Software Revenue Recognition, with respect
to Certain Transactions", Staff Accounting Bulletin, or SAB, 104, "Revenue
Recognition". SOP 97-2 and SAB 104 require among other matters, that there be a
signed contract evidencing an arrangement exists, delivery has occurred, the fee
is fixed or determinable, and collectibility is probable.

                                       11
<PAGE>

Revenue from provision of system integration services and other related services
are recognized when services are rendered in stages as separate identifiable
phases of a project are completed and accepted by customers.

Revenue from software sales is recognized when the related products are
delivered and installed and collection of sales proceeds is deemed probable and
persuasive evidence of an arrangement exists.

Software license revenue is recognized over the accounting periods contained in
the terms of the relevant agreements, commencing upon the delivery of the
software provided that (1) there is evidence of an arrangement, (2) the fee is
fixed or determinable and (3) collection of the fee is considered probable.
Under certain arrangements, the Company capitalize related direct costs
consisting of third party software costs and direct software implementation
costs. These costs are amortized over the term of the arrangement.

In the case of maintenance revenues, vendor-specific objective evidence, or
VSOE, of fair value is based on substantive renewal prices, and the revenues are
recognized ratably over the maintenance period.

In the case of consulting and implementation services revenues, where VSOE is
based on prices from stand-alone sale transactions, and the revenues are
recognized as services are performed pursuant to paragraph 65 of SOP 97-2.

The sale of computer hardware is recognized as revenue on the transfer of risks
and rewards of ownership, which generally coincides with the time when the goods
are delivered to customers and title has passed, pursuant to SAB 104.

Remote hosting services, where VSOE is based upon consistent pricing charged to
customers based on volumes and performance requirements on a stand-alone basis
and substantive renewal terms, are recognized ratably over the contract term as
the services are performed. The remote hosting arrangements generally require
the Company to perform one-time set-up activities and include a one-time set-up
fee. This one-time set-up fee is generally paid by the customer at contact
execution. The Company determined that these set-up activities do not constitute
a separate unit of accounting, and accordingly the related set-up fees are
recognized ratably over the term of the contract.

We consider the applicability of EITF 00-3, "Application of AICPA Statement of
SOP 97-2 to Arrangements That Include the Right to Use Software Stored on
Another Entity's Hardware", to the hosting services arrangements on a
contract-by-contract basis. If we determine that the customer has the
contractual right to take possession of our software at any time during the
hosting period without significant penalty, and can feasibly run the software on
its own hardware or enter into another arrangement with a third party to hast
the software, a software element covered by SOP 97-2 exists. When a software
element exists in a hosting services arrangement, we recognize the license,
professional services and hosting services revenues pursuant to SOP 97-2,
whereby the fair value of the hosting service is recognized as revenue ratably
over the term of the hosting contract. If we determine that a software element
covered by SOP 97-2 is not present in a hosting services arrangement, we
recognize revenue for the hosting services arrangement, ratably over the term of
the hosting contract pursuant to SAB 104.

Revenue is recognized net of value added tax ("VAT") payable to, but includes
the benefit of the rebate of VAT on sale of software products received or
receivable from, the Chinese tax authorities as part of the PRC government's
policy of encouraging software development in the PRC. Sales of products in the
PRC are subject to a 17% VAT. Companies that fulfill certain criteria set by the
relevant authorities and which develop their own software products and have the
software products registered with the relevant authorities in the PRC are
entitled to a refund of VAT equivalent to the excess over 3% of revenue paid in
the month when output VAT exceeds input VAT (excluding export sales). The excess
portion of the VAT is refundable and is recorded on an accrual basis.

                                       12
<PAGE>

Computer Software Development Cost

We account for computer software development costs in accordance with SFAS No.
86 "Accounting for the Cost of Computer Software to be Sold, Leased or Otherwise
Marketed". Accordingly, software development costs are expensed as incurred
until technological feasibility in the form of a working model has been
established. Deferred software development costs will be amortized over the
estimated economic life of the software once the product is available for
general release to customers. For the current products, the Company determined
that technological feasibility was reached at the point in time it was available
for general distribution. Therefore, no costs were capitalized.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets might not be
recoverable. We do not perform a periodic assessment of assets for impairment in
the absence of such information or indicators. Conditions that would necessitate
an impairment assessment include a significant decline in the observable market
value of an asset, a significant change in the extent or manner in which an
asset is used, or a significant adverse change that would indicate that the
carrying amount of an asset or group of assets is not recoverable. For
long-lived assets to be held and used, we measure fair value based on quoted
market prices or based on discounted estimates of future cash flows.

Accounting for goodwill

We accounted for the acquisition in accordance with SFAS No. 141 "Business
Combinations", which resulted in the recognition of goodwill. Goodwill
represents the excess of acquisition cost over the estimated fair value of net
assets acquired as of August 27, 2001 as a result of the acquisition of Slait.
The acquisition cost is based upon a value of $0.34 per share, the closing price
of Forlink's common stock on January 11, 2001 (date of the agreement of Plan of
Reorganization), plus a value of $0.15 per option determined using a Black
Scholes model on January 11, 2001.

The purchase price, purchase-price allocation, and financing of the transaction
are summarized as follows:

Consideration paid as:
    Common stock of Forlink issued                                 $  8,659,800
    Options of Forlink issued                                           125,550
                                                                   ------------
                                                                      8,785,350
    Allocated to historical book value/fair value of
      Forlink's assets and liabilities                                 (134,781)
                                                                   ------------
    Excess purchase price over allocation to
      identifiable assets and liabilities (goodwill)               $  8,650,569
                                                                   ============

As the acquisition was completed after June 30, 2001, no amortization of
goodwill was necessary in accordance with SFAS No. 142 "Goodwill and other
Intangible Assets".

During the quarter ended June 30, 2002, we completed the first step of the
transitional goodwill impairment test (i.e. comparing the carrying amount of the
net assets, including goodwill, with the fair value of the Company as of January
1, 2002). Based on the results of the first step of the test, we believe that
there was no impairment of goodwill as of January 1, 2002.

                                       13
<PAGE>

However, in the quarter ended June 30, 2002, the closing trading price of the
Company's common stock had fallen to $0.05 per share, which indicated that there
might be a potential impairment of goodwill since January 1, 2002. Therefore, we
performed an additional impairment test as of June 30, 2002. As a result of the
impairment test performed, which was based on the fair value of the Company as
determined by the trading price of the Company's common stock, an impairment of
$5,308,760 was recorded in the quarter ended 30 June 2002. As the closing
trading price of the Company's common stock as of December 31, 2002 had fallen
to $0.04 per share, a total impairment of $6,966,546 was recorded for the year
ended December 31, 2002.

As of December 31, 2003 and 2004, we completed the annual impairment test. Based
on the result of the first step of the test, we believe that there was no
further impairment of goodwill as of December 31, 2003 and 2004.

Accounting Pronouncements Recently Adopted

o     We have adopted FASB Interpretation No. 46R (revised December 2003)
      "Consolidation of Variable Interest Entities, an interpretation of ARB No.
      51" ("FIN 46R"). FIN 46R requires a VIE to be consolidated by a company if
      that company is subject to a majority of the risk of loss for the variable
      interest entity's activities or is entitled to receive a majority of the
      entity's residual returns.

o     FASB issued Statement of Financial Accounting Standards No. 123 (revised
      2004), Share-Based Payment, which is a revision of SFAS No. 123,
      "Accounting for Stock Based Compensation". For public entities that file
      as small business issuers, this statement is effective as of the beginning
      of the first interim or annual reporting period that begins after December
      15, 2005. The statement will eliminate our ability to account for
      share-based compensation transactions using a fair-value based method. As
      a result of this accounting pronouncement, we anticipate that the adoption
      of this accounting standard will have a material impact on our financial
      statements. Prior to the adoption of SFAS(R), we will continue to utilize
      the accounting method prescribed by APB Opinion No. 25. "Accounting for
      Stock Issued to Employees" and related interpretations in accounting for
      its plans. Under APB No. 25, when the exercise price of employee stock
      options equals the market price for the underlying stock on the date of
      grant, no compensation expense is recognized.

CONSOLIDATED RESULTS OF OPERATIONS

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Net sales.

Our net sales increased 6% to $10,000,110 in 2004, from $9,391,197 in 2003. The
increase is mainly attributable to increased hardware pass-through required by
total-solution projects. When customers contract us for total-solution, we
provide hardware, software, and professional services needed in the projects.
Hardware pass-through may vary significantly depends on the project
requirements. Although it is our strategy to reduce hardware intensive projects,
we generally do not turn down total-solution projects, especially when we
believe these projects will lead to future projects, such as upgrade, expansion,
and services contracts.

Cost of sales.

Our cost of sales increased 8% in 2004 to $6,379,552, from $5,912,655 in 2003.
The increase is mainly due to increased hardware pass-through required by
total-solution projects.

Gross profit.

Gross profit increased 4.1% to $3,620,558 in 2004, from $3,478,542 in 2003.
Gross profit margin decreased to 36% in 2004, as compared to 37% in 2003. The
decrease in gross profit margin is primarily due to lower margins on hardware
pass-through.

                                       14
<PAGE>

Operating expenses.

Total operating expenses increased 32% to $3,282,027 in 2004, from $2,484,724 in
2003. These increases resulted largely from increases in selling expenses,
research and development expenses, and general and administrative expenses.

Selling expenses increased 56% to $599,921 in 2004, from $384,364 in 2003. This
increase was primarily due to our increased advertising expenses and sales
efforts to market our fast growing ASP (Application Service Provider) services
"For-online", IT outsourcing services, as well as our EAI (Enterprise
Application Integration) services.

Research and development expenses increased 24% to $1,105,348 in 2004, from
$888,305 in 2003 due to our continued focus on developing new products and
solutions to increase our competitive advantages.

General and administrative expenses increased 30% to $1,576,758 in 2004, from
$1,212,055 in 2003. The increase was primarily due to additional overhead and
salaries expenses associated with ASP services.

Operating profit (loss).

Our operating profits decreased 66% to $338,531 in 2004, from $993,818 in 2003.
Operating profit margin in 2004 and 2003 were 3% and 11%, respectively. The
decreases were largely the result of increased operating expenses associated
with new business lines, as discussed above.

Other income

Our other income decreased 44% to $166,623 in 2004, from $298,045 in 2003. This
decrease was mainly due to decreased software sales. Our other income comes from
a value added tax refund associated with software sales. Software sales in China
are subject to a 17% value added tax, however, companies that develop their own
software and have the software registered are generally entitled to a value
added tax refund. If the net amount of the value added tax payable exceeds 3% of
software sales, the excess portion of the value added tax is refundable upon our
application to tax authority. This policy is effective until 2010.

Net income (loss).

Net income decreased 61% to $468,052 in 2004, or basic and diluted earnings of
$0.01 per share, from $1,211,448, or basic and diluted earnings of $0.02 per
share in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Our capital requirements are primarily working capital requirements related to
costs of hardware for network solution projects and costs associated with the
expansion of our business. In order to minimize our working capital
requirements, we generally obtain from our hardware vendors payment terms that
are timed to permit us to receive payment from our customers for the hardware
before our payments to our hardware vendors are due. However, we sometimes
obtain less favorable payment terms from our customers, thereby increasing our
working capital requirements. We have historically financed our working capital
and other financing requirements through careful management of our billing cycle
and, to a limited extent, bank loans.

Our accounts receivable balance at December 31, 2004 was $638,398.

Our inventory position at the end of 2004 was $24,639, as compared to $1,145,098
at the beginning of the year. This is because at the end of 2003, we had a large
software inventory item (in the amount of $1,039,939) in the process of delivery
to Beijing Mobile for a large project. This caused 2003 inventory to be larger
than usual.

At December 31, 2004, our Days Sales Outstanding were 23 days, as compared to 17
days at the end of the third quarter of 2004. This increase was attributable to
increased hardware pass through.

                                       15
<PAGE>

We ended the year with a cash position of $2,298,831. We had negative operating
cash flow of $506,019, primarily attributable to decreased customer deposits.
Customer deposits are advance payments for services which decrease as projects
near completion. In 2004, customer deposits decreased $1,352,404 to $425,368,
from $1,777,772 in 2003.

Although our revenues and operating results for any period are not necessarily
indicative of future periods, we anticipate that our available funds and cash
flows generated from operations will be sufficient to meet our anticipated needs
for working capital, capital expenditures and business expansion through 2005.
We may need to raise additional funds in the future, however, in order to fund
acquisitions, develop new or enhanced services or products, respond to
competitive pressures to compete successfully for larger projects involving
higher levels of hardware purchases, or if our business otherwise grows more
rapidly than we currently predict. If we do need to raise additional funds, we
expect to raise those funds through new issuances of shares of our equity
securities in one or more public offerings or private placements, or through
credit facilities extended by lending institutions.

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2004, we have not entered into any off-balance sheet
arrangements with any individuals or entities.

CONTRACTUAL OBLIGATIONS

As of December 31, 2004, we had commitments under non-cancelable operating
leases requiring annual minimum rental payments as follows:

January 1, 2005 to December 31, 2005           $203,748
January 1, 2006 to December 31, 2006           $214,146

RELATED PARTY TRANSACTIONS

On January 11, 2001, the Company entered into a Plan of Reorganization with
Beijing Slait Science & Technology Development Limited Co. (hereinafter
"Slait"), under the terms of which the Company acquired up to 100% of the
outstanding equity of Slait. Pursuant to the Plan of Reorganization (the
"Plan"), in August 2001, the Company acquired 100% of the registered and fully
paid-up capital of Slait in exchange for 59,430,000 shares of restricted common
stock of the Company. Under the terms of the Plan, three former beneficial
owners of Slait, Yi He, Honkeung Lam and Jing Zeng were issued 25,800,000,
10,500,000 and 5,760,000, respectively, of the Company's shares. Additionally,
at closing all of the Company's officers and directors resigned with the
exception of Xiaoxia Zhao who remained as an officer and director and Yi He was
appointed as President and Director and Honkeung Lam as Director of the Company.

The Company, from time to time, received from or made repayments to one major
stockholder who is also a member of the management of the Company. The amounts
due from/to stockholders do not bear any interest and do not have clearly
defined terms of repayment.

As of December 31, 2004 and December 31, 2003, the amount due from stockholder
represented travel advances to Mr. Yi He, a director and stockholder of the
Company.

As of December 31, 2004 and December 31, 2003, the amounts due to stockholders
represented advances from stockholders.

Mr. Yi He, an officer and director of the Company, purchased the building
located in Chengdu on behalf of the Company. By a stockholders' resolution
passed on March 8, 1999, it was ratified that the title to the building belonged
to SLAIT. The building has been pledged as collateral for the mortgage loan
granted to Mr. Yi He. The related mortgage still remains in the name of Mr. Yi
He, however the Company has agreed to pay Mr. Yi He amounts equal to the
required mortgage payments. As of December 31, 2004, the amount of the mortgage
loan is $44,584 ($53,010 as of December 31, 2003) and is included in "Amounts
due to stockholders" on the balance sheet.

                                       16
<PAGE>

To comply with PRC laws and regulations, Forlink will conduct its Internet
value-added services in PRC via Beijing Forlink Hua Xin Technology Co. Ltd.
("BFHX"). BFHX was established in PRC on September 19, 2003 as a limited
liability company. The registered capital of BFHX is $120,733 (RMB1,000,000) and
the fully paid up capital was $36,232 (RMB300,000) as of December 31, 2004. In
accordance with a directors' resolution of Forlink passed on September 15, 2003,
Mr. Yi He and Mr. Xiaoxia Zhao were entrusted as nominee owners of BFHX to hold
70% and 30% of the fully paid up capital of BFHX, respectively, on behalf of
Forlink and Forlink is the primary beneficiary. BFHX is considered a variable
interest entity ("VIE") and as Forlink is the primary beneficiary, Forlink's
consolidated financial statements include BFHX. Upon the request of Forlink, Mr.
Yi He and Mr. Xiaoxia Zhao are required to transfer their ownership in BFHX to
Forlink or to designees of Forlink at any time for the amount of the fully paid
up capital of BFHX.

In accordance with a registered capital transfer agreement dated and owners'
resolutions of BFHX passed on February 16, 2004, Mr. Xiaoxia Zhao transferred
the fully paid up capital of BFHX of $10,870 (RMB90,000) to Mr. Wei Li for
$10,870. Mr. Yi He and Mr. Wei Li entered into agreements with Forlink on
November 8, 2003 and March 18, 2004 respectively, under which agreements Mr. Yi
He and Mr. Wei Li were entrusted as nominee owners of BFHX to hold 70% and 30%,
respectively, of the fully paid up capital of BFHX on behalf of Forlink, and
Forlink is the primary beneficiary. Upon the request of Forlink, Mr. Yi He and
Mr. Wei Li are required to transfer their ownership in BFHX to Forlink or to
designees of Forlink at any time for the amount of the fully paid up capital of
BFHX.

The capital of BFHX was funded by FTCL and recorded as interest-free loans to
Mr. Yi He and Mr. Wei Li. These loans were eliminated with capital of BFHX
during consolidation. Mr. Yi He is an officer, director and a major stockholder
of Forlink. Mr. Xiaoxia Zhao is a former director and a major stockholder of
Forlink. Mr. Wei Li is the administration manager of FTCL.

In the opinion of the directors, except for the arrangements in connection with
the purchase of the office in Chengdu, all the above transactions were
negotiated at arm's length and entered into and executed under the normal course
of business with no difference from those which would be negotiated with a
clearly independent party. With respect to the purchase of the office in
Chengdu, if Mr. Yi He would not have been able to obtain a mortgage for the
property, the Company may not have been able to obtain one on its own and the
financial resources may not have been available for the Company to purchase the
property outright.

FACTORS AFFECTING OUR OPERATING RESULTS AND COMMON STOCK

In addition to the other information in this report, the following factors
should be considered in evaluating our business and our future prospects:

POLITICAL AND ECONOMIC POLICIES OF THE CHINESE GOVERNMENT COULD AFFECT OUR
INDUSTRY IN GENERAL AND OUR COMPETITIVE POSITION IN PARTICULAR

Since the establishment of the People's Republic of China in 1949, the Communist
Party has been the governing political party in the PRC. The highest bodies of
leadership are the Politburo of the Communist Party, the Central Committee and
the National People's Congress. The State Council, which is the highest
institution of government administration, reports to the National People's
Congress and has under its supervision various commissions, agencies and
ministries, including The Ministry of Information Industry, the
telecommunications regulatory body of the Chinese government. Since the late
1970s, the Chinese government has been reforming the Chinese economic system.
Although we believe that economic reform and the macroeconomic measures adopted
by the Chinese government have had and will continue to have a positive effect
on economic development in China, there can be no assurance that the economic
reform strategy will not from time to time be modified or revised. Such
modifications or revisions, if any, could have a material adverse effect on the
overall economic growth of China and investment in the Internet and the
telecommunications industry in China. Such developments could reduce, perhaps
significantly, the demand for our products and services. There is no guarantee
that the Chinese government will not impose other economic or regulatory
controls that would have a material adverse effect on our business. Furthermore,
changes in political, economic and social conditions in China, adjustments in
policies of the Chinese government or changes in laws and regulations could
affect our industry in general and our competitive position in particular.

                                       17
<PAGE>

THE GROWTH OF OUR BUSINESS IS DEPENDENT ON GOVERNMENT TELECOMMUNICATIONS
INFRASTRUCTURE AND BUDGETARY POLICY, PARTICULARLY THE ALLOCATION OF FUNDS TO
SUSTAIN THE GROWTH OF THE TELECOMMUNICATIONS INDUSTRY IN CHINA

Virtually all of our large customers are directly or indirectly owned or
controlled by the government of China. Accordingly, their business strategies,
capital expenditure budgets and spending plans are largely decided in accordance
with government policies, which, in turn, are determined on a centralized basis
at the highest level by the National Development and Reform Commission of China.
As a result, the growth of our business is heavily dependent on government
policies for telecommunications and Internet infrastructure. Insufficient
government allocation of funds to sustain the growth of China's
telecommunications industries in the future could reduce the demand for our
products and services and have a material adverse effect on our ability to grow
our business.

CURRENCY EXCHANGE RATE RISK DUE TO FLUCTUATIONS IN THE EXCHANGE RATE BETWEEN
U.S. DOLLARS AND RENMINBI

The functional currency of our operations is Renminbi and our financial
statements are expressed in U.S. dollars. As a result, we are subject to the
effects of exchange rate fluctuations between these currencies. Because of the
unitary exchange rate system introduced in China on January 1, 1994, the
official bank exchange rate for translation of Renminbi to U.S. dollars is set
to US$1 to RMB8.28. Any future devaluation of the Renminbi against the U.S.
dollars may have an adverse effect on our reported net income. As our operations
are conducted in the PRC, substantially all our revenues, expenses, assets and
liabilities are denominated in Renminbi. In general, our exposure to foreign
exchange risks should be limited. However, the value in our shares may be
affected by the foreign exchange rate between the U.S. dollar and the Renminbi
because the value of our business is effectively denominated in Renminbi, while
our shares are traded in U.S. dollars. Furthermore, a decline in the value of
Renminbi could reduce the U.S. dollar equivalent of the value of the earnings
from, and our investment in, our subsidiaries in the PRC; while an increase in
the value of the Renminbi may require us to exchange more U.S. dollars into
Renminbi to meet the working capital requirements of our subsidiaries in China.
Depreciation of the value of the U.S. dollar will also reduce the value of the
cash we hold in U.S. dollars, which we may use for purposes of future
acquisitions or other business expansion. We actively monitor our exposure to
these risks and adjust our cash position in the Renminbi and the U.S. dollar
when we believe such adjustments will reduce risks.

ASSET IMPAIRMENT REVIEWS MAY RESULT IN FUTURE PERIODIC WRITE-DOWNS

On January 1, 2002, we adopted Statement of Financial Accounting Standards No.
142 "Goodwill and Other Intangible Assets" which requires us, among other
things, to review goodwill and other intangible assets for impairment annually.
There is no assurance that future reviews will not result in write-downs to
goodwill and other intangible assets.

GENERAL RISK OF FINANCING

In order for the Company to meet its continuing cash requirements and to
successfully implement its growth strategy, the Company will need to rely on
increased future revenues and/or will require additional financing. In the event
additional financing is required, no assurances can be given that such financing
will be available in the amount required or, if available, that it can be on
terms satisfactory to the Company.

                                       18
<PAGE>

Item 7. Financial Statements.

The information required by Item 7 and an index thereto commences on the next
page.

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

Item 8A. Controls and Procedures.

Based on their most recent evaluation, which was completed as of the end of the
period covered by this annual report on Form 10-KSB, the Company's Chief
Executive Officer and Chief Financial Officer believe the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are
effective to ensure that information required to be disclosed by the Company in
this report is accumulated and communicated to the Company's management,
including its principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. During the
last fiscal quarter to which this report relates, there were no changes in the
Company's internal controls or other factors that could significantly affect
these controls subsequent to the date of their evaluation and there were no
corrective actions with regard to deficiencies and material weaknesses.

Item 8B. Other Information.

None.

                                       19
<PAGE>

                       Forlink Software Corporation, Inc.

                        Consolidated Financial Statements
                               For the years ended
                           December 31, 2004 and 2003

                   Index To Consolidated Financial Statements

                                                                        Pages

Report of Independent Registered Public Accounting Firm                  F-1

Consolidated Balance Sheets                                              F-2

Consolidated Statements of Operations                                    F-3

Consolidated Statements of Stockholders' Equity                          F-4

Consolidated Statements of Cash Flows                                    F-5

Notes to Consolidated Financial Statements                            F-6 - F-21

<PAGE>

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and stockholders of
Forlink Software Corporation, Inc.

We have audited the accompanying consolidated balance sheets of Forlink Software
Corporation, Inc. as of December 31, 2004 and 2003, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2004 and 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. The audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 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 Forlink
Software Corporation, Inc. as of December 31, 2004 and 2003 and the results of
its consolidated operations and cash flows for the years ended December 31, 2004
and 2003, in conformity with generally accepted accounting principles in the
United States of America.

As described in Note 17, the accompanying consolidated financial statements as
of December 31, 2004 and for the year then ended have been restated.

BDO McCabe Lo & Company

Hong Kong
March 2, 2005, except for Note 2, Note 9 and the effects of the restatement as
discussed in Note 17, for which the date is April 21, 2006

                                      F-1
<PAGE>

                       Forlink Software Corporation, Inc.

                           Consolidated Balance Sheets

(Expressed in US Dollars)
                                                   December 31,    December 31,
                                                       2004            2003
                                                   ------------    ------------
ASSETS

Current assets
  Cash and cash equivalents                        $  2,298,831    $  2,837,997
  Accounts receivable (Note 3)                          638,398         586,819
  Other receivables, deposits and
    prepayments (Note 4)                                440,401         442,641
  Inventories (Note 5)                                   24,639       1,145,098
  Amount due from stockholder (Note 6)                   38,286          14,251
                                                   ------------    ------------

  Total current assets                                3,440,555       5,026,806

Property, plant and equipment (Note 7)                  698,521         466,788
Long term investments (Note 8)                          798,001         760,870
Goodwill (Note 9)                                     1,684,023       1,684,023
                                                   ------------    ------------

Total assets                                       $  6,621,100    $  7,938,487
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable                                 $    269,745    $  1,097,428
  Amounts due to stockholders (Note 6)                  624,989         251,294
  Customer deposits                                     425,368       1,777,772
  Other payables and accrued expenses (Note 10)         204,252         268,806
  Income tax payable (Note 11)                           31,754          14,700
  Other taxes payable (Note 12)                         196,864         129,911
                                                   ------------    ------------

  Total current liabilities                        $  1,752,972    $  3,539,911
                                                   ------------    ------------

Commitments and contingencies (Note 13)

Stockholders' equity
  Common stock, par value $0.001 per
    share; 100,000,000 shares authorized;
    85,088,207 and 85,073,207 shares issued
    and 76,788,207 and 76,773,207 shares
    outstanding, respectively                            85,088          85,073
  Treasury stock (Note 14)                             (215,800)       (215,800)
  Additional paid-in capital                          8,936,297       8,934,812
  Accumulated losses                                 (3,937,457)     (4,405,509)
                                                   ------------    ------------

  Total stockholders' equity                          4,868,128       4,398,576
                                                   ------------    ------------

Total liabilities and stockholders' equity         $  6,621,100    $  7,938,487
                                                   ============    ============

          See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>

                       Forlink Software Corporation, Inc.

                      Consolidated Statements of Operations

(Expressed in US Dollars)

                                                  Year ended        Year ended
                                                 December 31,      December 31,
                                                     2004              2003
                                                 ------------      ------------

Net sales (Note 2)                               $ 10,000,110      $  9,391,197

Cost of sales                                      (6,379,552)       (5,912,655)
                                                 ------------      ------------

Gross profit                                        3,620,558         3,478,542

Selling expenses                                     (599,921)         (384,364)

Research and development expenses                  (1,105,348)         (888,305)

General and administrative expenses                (1,576,758)       (1,212,055)
                                                 ------------      ------------

Operating profit                                      338,531           993,818

Income from equity method investee                        899                --

Interest income                                        10,608             5,948

Other income, net                                     166,623           298,045
                                                 ------------      ------------

Profit before income tax                              516,661         1,297,811

Income tax (Note 11)                                  (48,609)          (86,363)
                                                 ------------      ------------

Net profit                                       $    468,052      $  1,211,448
                                                 ============      ============

Earnings per share - basic and diluted           $       0.01      $       0.02
                                                 ============      ============

Weighted average common shares
  outstanding - basic and diluted                  76,776,915        77,925,985
                                                 ============      ============

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                       Forlink Software Corporation, Inc.

                 Consolidated Statement of Stockholders' Equity

(Expressed in US Dollars)

                                                Common Stock
                            ---------------------------------------------------
                               Number     Number of      Number of
                              of Share      Share        Treasury
                               Issued    Outstanding      Stock        Amount
                            -----------  -----------   -----------  -----------
Balance, December 31, 2002   85,073,207   85,073,207            --  $    85,073

Purchase back of common
  Stock                              --   (8,300,000)    8,300,000           --

Net profit for the year              --           --            --           --
                            -----------  -----------   -----------  -----------

Balance, December 31, 2003   85,073,207   76,773,207     8,300,000  $    85,073

Shares issued under
  Plan 2002                      15,000       15,000            --           15

Net profit for the year              --           --            --           --
                            -----------  -----------   -----------  -----------

Balance, December 31, 2004   85,088,207   76,788,207     8,300,000  $    85,088
                            ===========  ===========   ===========  ===========

<TABLE>
<CAPTION>

                                                        Retained
                                           Additional   Profits/        Total
                             Treasury       Paid-in   (Accumulated   Stockholders'
                               Stock        Capital      Losses)       Equity
                            -----------   -----------  -----------   -----------
<S>                         <C>           <C>          <C>           <C>
Balance, December 31, 2002  $        --   $ 8,934,812  $(5,616,957)  $ 3,402,928

Purchase back of common
  Stock                        (215,800)           --           --      (215,800)

Net profit for the year              --            --    1,211,448     1,211,448
                            -----------   -----------  -----------   -----------

Balance, December 31, 2003  $  (215,800)  $ 8,934,812  $(4,405,509)  $ 4,398,576

Shares issued under
  Plan 2002                          --         1,485           --         1,500

Net profit for the year              --            --      468,052       468,052
                            -----------   -----------  -----------   -----------

Balance, December 31, 2004  $  (215,800)  $ 8,936,297  $(3,937,457)  $ 4,868,128
                            ===========   ===========  ===========   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                       Forlink Software Corporation, Inc.

                      Consolidated Statements of Cash Flows
                (Decrease)/Increase in Cash and Cash Equivalents

(Expressed in US Dollars)
<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                                2004           2003
                                                            ------------   ------------
<S>                                                         <C>            <C>
Cash flows from operating activities
  Net income                                                $    468,052   $  1,211,448
    Adjustments to reconcile net income to
      net cash (used in)/provided by operating activities
    Depreciation of property, plant and equipment                111,361         83,193
    Loss on disposal of property, plant and equipment              3,190          8,258
    Income from equity method investee                              (899)            --

    Change in:
      Accounts receivable                                        (51,579)       452,371
      Other receivables, deposits and prepayments                  4,031       (285,901)
      Inventories                                              1,120,459       (690,967)
      Accounts payable                                          (827,683)     1,000,226
      Customer deposits                                       (1,352,404)     1,427,461
      Other payables and accrued expenses                        (64,554)        (3,612)
      Income tax payable                                          17,054         10,859
      Other taxes payable                                         66,953         90,747
                                                            ------------   ------------

  Net cash (used in)/provided by operating activities           (506,019)     3,304,083
                                                            ------------   ------------

  Cash flows from investing activities
    Acquisition of property, plant and equipment                (358,974)      (111,115)
    Proceeds from insurance compensation/sale of equipment        10,899         17,633
    Cash payment associated with long term investments           (36,232)      (760,870)
                                                            ------------   ------------

Net cash used in investing activities                           (384,307)      (854,352)
                                                            ------------   ------------

Cash flows from financing activities
  (Advances to)/Repayments from stockholder                      (24,035)        60,773
  Advances from stockholders                                     373,695          7,243
  Proceeds from issuances of common stock under Plan 2002          1,500             --
  Purchase back of common stock (Note 14)                             --       (215,800)
                                                            ------------   ------------

Net cash provided by/(used in) financing activities              351,160       (147,784)
                                                            ------------   ------------

Net (decrease)/increase in cash and cash equivalents            (539,166)     2,301,947

        Cash and cash equivalents at beginning of year         2,837,997        536,050
                                                            ------------   ------------

Cash and cash equivalents at end of year                    $  2,298,831   $  2,837,997
                                                            ============   ============

Supplemental disclosure of cash flow information
  Income tax paid                                                 31,803         75,504
                                                            ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Beijing Slait Science & Technology Development Limited Co. ("Slait") was
established in the People's Republic of China (the "PRC") on January 25, 1998 as
a limited liability company. Slait commenced operations in May 1998. Slait was
beneficially owned by three individual PRC citizens, namely Yi He, Hongkeung Lam
and Jing Zeng. Slait has been granted a ten years operation period which can be
extended with approvals from relevant PRC authorities.

On January 11, 2001, Slait entered into an agreement of Plan of Reorganization
("the Plan") with Forlink Software Corporation, Inc. ("Forlink"). Forlink had
issued to the owners of Slait as individuals 59,430,000 authorized shares of
common stock of Forlink in exchange of 100% of the registered and fully paid up
capital of Slait. In accordance with the terms of the Plan, Forlink transferred
$131,039 (RMB1,085,000) to Slait, the amount was disbursed to the original
owners of Slait. The closing date of this exchange transaction was August 28,
2001.

As a result of the acquisition, the former owners of Slait hold a majority
interest in the combined entity. Generally accepted accounting principles
require in certain circumstances that a company whose stockholders retain the
majority voting interest in the combined business to be treated as the acquirer
for financial reporting purposes. Accordingly, the acquisition has been
accounted for as a "reverse acquisition" whereby Slait is deemed to have
purchased Forlink. However, Forlink remains the legal entity and the Registrant
for Securities and Exchange Commission reporting purposes.  Subsequent to the
reverse acquisition, the principal activities of Slait have been shifted to
Forlink Technologies Co., Ltd. ("FTCL") gradually. On February 13, 2004, Slait
was officially dissolved in accordance with relevant PRC regulations.

On June 18, 2003, Forlink Technologies (Hong Kong) Limited ("FTHK") was
incorporated in Hong Kong as a limited liability company with an authorized
share capital of $129,032 (HK$1,000,000) divided into 1,000,000 ordinary shares
of $0.129 (HK$1) each. At the time of incorporation, two ordinary shares of HK$1
each were issued to the subscribers. In December 2003, 999,998 ordinary shares
were issued to Forlink, since then FTHK becomes a wholly owned subsidiary of
Forlink. The principal activities of FTHK is investment holding.

To comply with PRC laws and regulations, Forlink will conduct its internet
value-added services in PRC via Beijing Forlink Hua Xin Technology Co. Ltd.
("BFHX"). BFHX was established in PRC on September 19, 2003 as a limited
liability company. The registered capital of BFHX is $120,733 (RMB1,000,000) and
the fully paid up capital was $36,232 (RMB300,000) as of December 31, 2004. In
accordance with a directors' resolution of Forlink passed on September 15, 2003,
Mr. Yi He and Mr. Xiaoxia Zhao were entrusted as nominee owners of BFHX to hold
70% and 30%, respectively, of the fully paid up capital of BFHX on behalf of
Forlink and Forlink is the primary beneficiary. BFHX is considered a Variable
Interest Entity ("VIE") and because Forlink is the primary beneficiary,
Forlink's consolidated financial statements include BFHX. Upon the request of
Forlink, Mr. Yi He and Mr. Xiaoxia Zhao are required to transfer their ownership
in BFHX to Forlink or to designees of Forlink at any time for the amount of the
fully paid up capital of BFHX.

                                      F-6
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS - Continued

In accordance with a registered capital transfer agreement dated and owners'
resolutions of BFHX passed on February 16, 2004, Mr. Xiaoxia Zhao transferred
the fully paid up capital of BFHX of $10,870 (RMB90,000) to Mr. Wei Li for
$10,870. Mr. Yi He and Mr. Wei Li entered into agreements with Forlink on
November 8, 2003 and March 18, 2004 respectively, under which agreements Mr. Yi
He and Mr. Wei Li were entrusted as nominee owners of BFHX to hold 70% and 30%
of the fully paid up capital of BFHX respectively on behalf of Forlink and
Forlink is the primary beneficiary. Upon the request of Forlink, Mr. Yi He and
Mr. Wei Li are required to transfer their ownership in BFHX to Forlink or to
designees of Forlink at any time for the amount of the fully paid up capital of
BFHX.

The capital of BFHX was funded by FTCL and recorded as interest-free loans to
Mr. Yi He and Mr. Wei Li. These loans were eliminated with capital of BFHX
during consolidation. Mr. Yi He is a director and a major stockholder of
Forlink. Mr. Xiaoxia Zhao is a former director and stockholder of Forlink. Mr.
Wei Li is the administration manager of FTCL.

On June 14, 2004, Forlink Technologies (Chengdu) Limited ("FTCD") was
established as a limited liability company in Chengdu, PRC. In September 2004,
FTHK invested $750,000 in FTCD, since then FTCD becomes a wholly owned
subsidiary of FTHK. The registered capital of FTCD is $5,000,000 and the fully
paid up capital was $750,000 as of December 31, 2004. FTCD has not commenced
operations since the date of establishment.

Forlink, its wholly owned subsidiaries and VIE are collectively referred to as
"the Company" hereafter.

The principal activities of the Company are the development and sale of network
software systems and the provision of enterprise application system integration
services in the PRC. The Company is also engaged in the sale of computer
hardware.

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES

Basis of Accounting and Principles of Consolidation

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America and present the
financial statements of Forlink and its wholly owned subsidiaries, namely,
Slait, FTCL, FTHK, BFHX and FTCD. All material intercompany transactions have
been eliminated.

Stock Based Compensation

The Company has adopted the disclosure provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation", but applies Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its plans. Under APB No. 25, when the exercise price of employee
stock options equals the market price for the underlying stock on the date of
grant, no compensation expense is recognised.

                                      F-7
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

Generally accepted accounting principles require companies that choose to
account for stock option grants using the intrinsic value method to also
determine the fair value of option grants using an option pricing model, such as
the Black-Scholes model, and to disclose the impact of fair value accounting in
a note to the financial statements. In December 2002, the FASB issued Statement
of Financial Accounting Standards No. 148, "Accounting for Stock-Based
Compensation Transition and Disclosure, an Amendment of FASB Statement No. 123."
The Company did not elect to voluntarily change to the fair value based method
of accounting for stock based employee compensation and record such amounts as
charges to operating expense. The impact of recognizing the fair value of stock
option grants and stock purchased under the Plan 2002 as an expense under FASB
Statement No. 148 would be as follows:

                                                                     Year ended
                                                                    December 31,
                                                                        2004

Net profit, as reported                                           $     468,052
Deduct: Stock-based compensation expense
  determined under fair value based method                             (107,906)
                                                                   ------------

Proforma net profit                                                     340,146
                                                                   ============

Earnings per share:
  Basic - Reported                                                         0.01
        - Pro forma                                                        0.00
  Diluted - Reported                                                       0.01
          - Pro forma                                                      0.00

The impact for the year ended December 31, 2003 was not available as the Company
had not completed the documentation in respect of the options to be issued until
the third quarter of 2004.

Foreign Currency Translation and Transactions

The functional currency of Forlink is US$ and the financial records are
maintained and the financial statements prepared in US$. The functional currency
of FTHK is HK$ and the financial records are maintained and the financial
statements prepared in HK$. The functional currency of Slait, FTCL, BFHX and
FTCD is Renminbi (RMB) and the financial records are maintained and the
financial statements are prepared in RMB.

Foreign currency transactions during the year are translated into each company's
denominated currency at the exchange rates ruling at the transaction dates. Gain
and loss resulting from foreign currency transactions are included in the
consolidated statement of operations. Assets and liabilities denominated in
foreign currencies at the balance sheet date are translated into each company's
denominated currency at year end exchange rates. All exchange differences are
dealt with in the consolidated statements of operations.

                                      F-8
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

For the purpose of preparing the Company's consolidated financial statements,
the financial statements in HK$ and RMB have been translated into United States
Dollars at US$1.00 = HK$7.75 and US$1.00 = RMB8.28 respectively, translation
adjustments would be included as a component of stockholders' equity.

Exchange rates between US$, HK$ and RMB are fairly stable during the years
presented. The rates ruling as of December 31, 2004 and 2003 are US$1: HK$7.75:
RMB8.28 and US$1: HK$7.75: RMB8.28, respectively. Due to the stability of the
exchange rates, there were no net adjustments in stockholders' equity.

Revenue Recognition

The Company generally provides services under multiple element arrangements,
which include software license fees, hardware and software sales, provision of
system integration services including consulting, implementation, and software
maintenance. The Company evaluates revenue recognition on a contract-by-contract
basis as the terms of each arrangement vary. The evaluation of the contractual
arrangements often requires judgments and estimates that affect the timing of
revenue recognized in the statements of operations. Specifically, the Company
may be required to make judgments about:

o     whether the fees associated with our products and services are fixed or
      determinable;
o     whether collection of our fees is reasonably assured;
o     whether professional services are essential to the functionality of the
      related software product;
o     whether we have the ability to make reasonably dependable estimates in the
      application of the percentage-of-completion method; and
o     whether we have verifiable objective evidence of fair value for our
      products and services.

The Company recognize revenues in accordance with the provisions of Statements
of Position, or SOP, No. 97-2, "Software Revenue Recognition", as amended by SOP
No. 98-9, "Modification of SOP 97-2, Software Revenue Recognition, with respect
to Certain Transactions", Staff Accounting Bulletin, or SAB, 104, "Revenue
Recognition". SOP 97-2 and SAB 104 require among other matters, that there be a
signed contract evidencing an arrangement exists, delivery has occurred, the fee
is fixed or determinable, and collectibility is probable.

Software license revenue is recognized over the accounting periods contained in
the terms of the relevant agreements, commencing upon the delivery of the
software provided that (1) there is evidence of an arrangement, (2) the fee is
fixed or determinable and (3) collection of the fee is considered probable.
Under certain arrangements, the Company capitalize related direct costs
consisting of third party software costs and direct software implementation
costs. These costs are amortized over the term of the arrangement.

In the case of maintenance revenues, vendor-specific objective evidence, or
VSOE, of fair value is based on substantive renewal prices, and the revenues are
recognized ratably over the maintenance period.

In the case of consulting and implementation services revenues, where VSOE is
based on prices from stand-alone sale transactions, and the revenues are
recognized as services are performed pursuant to paragraph 65 of SOP 97-2.

The sale of computer hardware is recognized as revenue on the transfer of risks
and rewards of ownership, which generally coincides with the time when the goods
are delivered to customers and title has passed, pursuant to SAB 104.

                                      F-9
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

Remote hosting services, where VSOE is based upon consistent pricing charged to
customers based on volumes and performance requirements on a stand-alone basis
and substantive renewal terms, are recognized ratably over the contract term as
the services are performed. The remote hosting arrangements generally require
the Company to perform one-time set-up activities and include a one-time set-up
fee. This one-time set-up fee is generally paid by the customer at contact
execution. The Company determined that these set-up activities do not constitute
a separate unit of accounting, and accordingly the related set-up fees are
recognized ratably over the term of the contract.

The Company considers the applicability of EITF 00-3, "Application of AICPA
Statement of SOP 97-2 to Arrangements That Include the Right to Use Software
Stored on Another Entity's Hardware", to the hosting services arrangements on a
contract-by-contract basis. If the Company determines that the customer has the
contractual right to take possession of the Company's software at any time
during the hosting period without significant penalty, and can feasibly run the
software on its own hardware or enter into another arrangement with a third
party to hast the software, a software element covered by SOP 97-2 exists. When
a software element exists in a hosting services arrangement, the Company
recognizes the license, professional services and hosting services revenues
pursuant to SOP 97-2, whereby the fair value of the hosting service is
recognized as revenue ratably over the term of the hosting contract. If the
Company determines that a software element covered by SOP 97-2 is not present in
a hosting services arrangement, the Company recognizes revenue for the hosting
services arrangement, ratably over the term of the hosting contract pursuant to
SAB 104.

Revenue is recognized net of value added tax ("VAT") payable to, but includes
the benefit of the rebate of VAT on sale of software products received or
receivable from, the Chinese tax authorities as part of the PRC government's
policy of encouraging software development in the PRC. Sales of products in the
PRC are subject to a 17% VAT. Companies that fulfill certain criteria set by the
relevant authorities and which develop their own software products and have the
software products registered with the relevant authorities in the PRC are
entitled to a refund of VAT equivalent to the excess over 3% of revenue paid in
the month when output VAT exceeds input VAT (excluding export sales). The excess
portion of the VAT is refundable and is recorded on an accrual basis. The VAT
rebate was $166,623 and $296,927 in 2004 and 2003 respectively.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less.

                                      F-10
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

Inventories

Inventories are stated at the lower of cost or market. For inventory used in
system integration services, cost is calculated using the specific
identification method. For the sale of computer hardware, cost is calculated
using first-in, first-out method. Cost includes all costs of purchase, cost of
conversion and other costs incurred in bringing the inventories to their present
location and condition. Market value is determined by reference to the sales
proceeds of items sold in the ordinary course of business after the balance
sheet date or to management estimates based on prevailing market conditions.

Property, Plant, Equipment and Depreciation

Property, plant and equipment are stated at cost. Depreciation is computed using
the straight-line method to allocate the cost of depreciable assets over the
estimated useful lives of the assets as follows:

                               Estimated useful life
                                    (in years)
                               ---------------------
Building                                20
Computer equipment                       5
Office equipment                         5
Motor vehicle                           10

Maintenance, repairs and minor renewals are charged directly to the statement of
operations as incurred. Additions and betterments to office equipment are
capitalized. When assets are disposed of, the related cost and accumulated
depreciation thereon are removed from the accounts and any resulting gain or
loss is included in the statement of operations.

Computer Software Development Costs

In accordance with SFAS No. 86 "Accounting for the Cost of Computer Software to
be Sold, Leased or Otherwise Marketed" software development costs are expensed
as incurred until technological feasibility in the form of a working model has
been established. Deferred software development costs will be amortized over the
estimated economic life of the software once the product is available for
general release to customers. For the current software products, the Company
determined that technological feasibility was reached at the point in time it
was available for general distribution. Therefore, no costs were capitalized.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets might not be
recoverable. The Company does not perform a periodic assessment of assets for
impairment in the absence of such information or indicators. Conditions that
would necessitate an impairment assessment include a significant decline in the
observable market value of an asset, a significant change in the extent or
manner in which an asset is used, or a significant adverse change that would
indicate that the carrying amount of an asset or group of assets is not
recoverable. For long-lived assets to be held and used, the Company measures
fair value based on quoted market prices or based on discounted estimates of
future cash flows.

                                      F-11
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

Advertising costs

All advertising costs incurred in the promotion of the Company's products and
services are expensed as incurred. Advertising expenses were $145,181 and
$127,970 for 2004 and 2003 respectively.

Long term investments

The Company's long term investments consist of (1) Equity Investments which are
accounted for in accordance with the equity method (the 'Equity Method') and (2)
Cost Investments which are accounted for under the Cost Method. Under the Equity
Method each such investment is reported at cost plus the Company's proportionate
share of the income or loss or other changes in stockholders' equity of each
such investee since its acquisition. The consolidated results of operations
include such proportionate share of income or loss.

See Note 8 for further disclosure of the Company's long term investments.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes". Under SFAS No. 109, deferred tax liabilities or
assets at the end of each period are determined using the tax rate expected to
be in effect when taxes are actually paid or recovered. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.

Net Earnings Per Common Share

The Company computes net earnings per share in accordance with SFAS No. 128,
"Earnings per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under
the provisions of SFAS No. 128 and SAB 98, basic net earnings per share is
computed by dividing the net earnings available to common shareholders for the
period by the weighted average number of shares of common stock outstanding
during the period. The calculation of diluted net earnings per share gives
effect to common stock equivalents, however, potential common stock in the
diluted EPS computation are excluded in net loss periods, as their effect is
anti-dilutive.

Use of Estimates

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect 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.

Fair Values of Financial Instruments

The carrying amounts of certain financial instruments approximate their fair
values as of December 31, 2004 and 2003 because of the relatively short-term
maturity of these instruments.

                                      F-12
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - Continued

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically
identified amounts that the Company believes to be uncollectible. The Company
has a limited number of customers with individually large amounts due at any
given balance sheet date. Any unanticipated change in one of those customer's
credit worthiness or other matters affecting the collectibility of amounts due
from such customers, could have a material affect on the results of operations
in the period in which such changes or events occur. After all attempts to
collect a receivable have failed, the receivable is written off against the
allowance.

NOTE 3 - ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are customer obligations due under normal trade terms. The
Company performs continuing credit evaluations of the customers' financial
condition and the Company generally does not require collateral.

Senior management reviews accounts receivable from time to time to determine if
any receivables will potentially be uncollectible. The Company include any
accounts receivable balances that are determined to be uncollectible in the
allowance for doubtful accounts. After all attempts to collect a receivable have
failed, the receivable is written off against the allowance. Based on the
information available to the Company, no allowance for doubtful accounts as of
December 31, 2004 is required.

NOTE 4 - OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

                                                    December 31,    December 31,
                                                        2004            2003
                                                    ------------    ------------

Other receivables                                   $    127,038    $     51,822
Deposits                                                 119,305         344,509
Prepayments                                              194,058          46,310
                                                    ------------    ------------

                                                    $    440,401    $    442,641
                                                    ============    ============

NOTE 5 - INVENTORIES
                                                    December 31,    December 31,
                                                        2004            2002
                                                    ------------    ------------

Computer hardware and software                      $     24,639    $  1,145,098
                                                    ============    ============

All the inventories were purchased for identified system integration contracts.

                                      F-13
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 6 - RELATED PARTY

A related party is an entity that can control or significantly influence the
management or operating policies of another entity to the extent one of the
entities may be prevented from pursuing its own interests. A related party may
also be any party the entity deals with that can exercise that control.

Amounts due from/to stockholders

The Company, from time to time, received from or made repayment to two major
stockholders who also are the management of the Company. The amounts due from/to
stockholders do not bear any interest and do not have clearly defined term of
repayment.

As of December 31, 2004 and December 31, 2003, amount due from stockholder
represented travel advances to Mr. Yi He who is a director and stockholder of
the Company.

As of December 31, 2004 and December 31, 2003, the amounts due to stockholders
represented advances from stockholders.

Related Party Transactions

During the year, net sales derived from All China Logistics Online Co., Ltd.,
(note 8) was $445,972 (2003: $184,000). As of December 31, 2004 and 2003,
accounts receivable from the affiliate was $157,609 and $0, respectively.

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT, NET

                                                   December 31,    December 31,
                                                       2004            2003
                                                   ------------    ------------

Building                                           $    155,648    $    155,648
Computer and office equipment                           662,708         376,132
Motor vehicles                                          190,317         165,718
Construction in progress                                 24,152              --
                                                   ------------    ------------

                                                      1,032,825         697,498
Less: Accumulated depreciation                         (334,304)       (230,710)
                                                   ------------    ------------

                                                   $    698,521    $    466,788
                                                   ============    ============

The building is located in Chengdu, PRC and was purchased on behalf of the
Company by Mr. Yi He, one of the stockholders and directors of the Company. By a
stockholders' resolution passed on March 8, 1999, it was ratified that the title
to the building belonged to the Company. The building has been pledged as
collateral for the mortgage loan granted to Mr. Yi He. The related mortgage
still remains in the name of Mr. Yi He, however, the Company has agreed to pay
Mr. Yi He amounts equal to the required mortgage payments. As of 31 December
2004, the amount of the mortgage loan is $44,584 ($53,010 as of December 31,
2003) and is included in "Amounts due to stockholders" on the balance sheet.

                                      F-14
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 8 - LONG TERM INVESTMENTS

The Company invested $760,870 in a privately held PRC company, All China
Logistics Online Co., Ltd., for a 17.8% equity interest. The Company records the
investment at cost because it does not have the ability to exercise significant
influence over the investee.

In October 2004, the Company invested $36,232 in a privately held PRC company,
Huntington Network Technologies (Beijing) Co., Ltd. ("HNTB"), for a 30% equity
interest through BFHX. The investment in HNTB is accounted for under the equity
method of accounting due to the Company's significant influence over the
operational and financial policies of HNTB and accordingly, the share of HNTB's
net profit of $899 during the period is included in investment income in the
accompanying statements of operations.

NOTE 9 - GOODWILL

The Company accounted for the acquisition in accordance with SFAS No. 141
"Business Combinations", which resulted in the recognition of goodwill. Goodwill
represents the excess of acquisition cost over the estimated fair value of net
assets acquired as of August 27, 2001 as a result of acquisition of Slait. The
acquisition cost is based upon a value of $0.34 per share, the closing price of
Forlink's common stock on January 11, 2001 (date of the agreement of Plan of
Reorganization), plus a value of $0.15 per option determined using a Black
Scholes model on January 11, 2001.

The purchase price, purchase-price allocation, and financing of the transaction
are summarized as follows:

Consideration paid as:
  Common stock of Forlink issued                                   $  8,659,800
  Options of Forlink issued                                             125,550
                                                                   ------------
                                                                      8,785,350
  Allocated to historical book value/fair value of
    Forlink's assets and liabilities                                   (134,781)
                                                                   ------------
  Excess purchase price over allocation to
    identifiable assets and liabilities (goodwill)                 $  8,650,569
                                                                   ============

As the acquisition was completed after June 30, 2001, no amortization of
goodwill was necessary in accordance with SFAS No. 142 "Goodwill and other
Intangible Assets".

During the quarter ended June 30, 2002, the Company completed the first step of
the transitional goodwill impairment test (i.e. comparing the carrying amount of
the net assets, including goodwill, with the fair value of the Company as of
January 1, 2002). Based on the results of the first step of the test, the
Company believes that there was no impairment of goodwill as of January 1, 2002.

However, in the quarter ended June 30, 2002, the closing trading price of the
Company's common stock had fallen to $0.05 per share, which indicated that there
might be a potential impairment of goodwill since January 1, 2002. Therefore,
the Company performed an additional impairment test as of June 30, 2002. As a
result of the impairment test performed, which was based on the fair value of
the Company as determined by the trading price of the Company's common stock, an
impairment of $5,308,760 was recorded in the quarter ended 30 June 2002. As the
closing trading price of the Company's common stock as of December 31, 2002 had
fallen to $0.04 per share, a total impairment of $6,966,546 was recorded for the
year ended December 31, 2002.

                                      F-15
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

As of December 31, 2003 and 2004, the Company completed the annual impairment
test. Based on the result of the first step of the test, the Company believes
that there was no further impairment of goodwill as of December 31, 2003 and
2004.

NOTE 10 - OTHER PAYABLES AND ACCRUED EXPENSES

                                                     December 31,   December 31,
                                                         2004           2003
                                                     ------------   ------------

Other payables                                       $     70,765   $     46,055
Accrued salaries & wages                                   98,418        155,446
Other accrued expenses                                     35,069         67,305
                                                     ------------   ------------

                                                     $    204,252   $    268,806
                                                     ============   ============

NOTE 11 - INCOME TAX

According to the relevant PRC tax rules and regulations, FTCL and BFHX, being
recognized New Technology Enterprises operating within a New and High Technology
Development Zone, are entitled to an Enterprise Income Tax ("EIT") rate of 15%.

Pursuant to approval documents dated September 23, 1999 and August 2, 2000
issued by the Beijing Tax Bureau and State Tax Bureau respectively, FTCL, being
a recognized New Technology Enterprise is eligible to full exemption from EIT
for the fiscal year 1999, 2000, 2001 and 2002. The Company is also eligible to
50% EIT reduction at the rate of 7.5% for the fiscal year 2003, 2004 and 2005.

Pursuant to an approval document dated January 19,2004 issued by State Tax
Burean, BFHX, being a recognized New Technology Enterprise, is eligible to full
exemption from EIT for fiscal years 2004, 2005 and 2006.

Hong Kong profits tax is calculated at 17.5% on the estimate assessable profits
of FTHK for the year.

No provision for EIT was made for FTCD as it has not commenced operations during
the year.

                                      F-16
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 11 - INCOME TAX - Continued

Income tax represents current PRC income tax and Hong Kong profit tax which is
calculated at the respective statutory income tax rates on the assessable income
for the year ended December 31, 2004 and 2003.

Reconciliation between the provision for income taxes computed by applying the
statutory tax rate in Mainland China to income before income taxes and the
actual provision for income taxes is as follows:

                                                      Years Ended December 31,
                                                        2004           2003
                                                    ------------   ------------

Provision for income taxes at statutory tax
  rate of 15%                                       $     77,499   $    194,672
Tax holidays and concessions                             (57,538)      (111,956)
Effect of different tax rate of a subsidiary
  operating in Hong Kong                                   4,507           (535)
Permanent difference                                      31,696        (25,911)
Increase in valuation allowances                           1,508         34,101
Others                                                    (9,063)        (4,008)
                                                    ------------   ------------

Effective tax                                       $     48,609   $     86,363
                                                    ============   ============
The components of deferred tax assets are
  as follows:

                                                    December 31,   December 31,
                                                        2004           2003
                                                    ------------   ------------

Net operating loss carried forwards                 $      1,508   $     45,050
Less: Valuation allowances                                (1,508)       (45,050)
                                                    ------------   ------------

                                                    $         --   $         --
                                                    ============   ============

The provision for income tax consisted of:
                                                    December 31,   December 31,
                                                        2004           2003
                                                    ------------   ------------

Current PRC corporate income tax                    $     16,855   $     86,363
Current Hong Kong profit tax                              31,754             --
Deferred tax                                                  --             --
                                                    ------------   ------------

Provision for income tax                            $     48,609   $     86,363
                                                    ============   ============

NOTE 12 - OTHER TAXES PAYABLE

Other taxes payable comprise mainly Valued-Added Tax ("VAT") and Business Tax
("BT"). The Company is subject to output VAT levied at the rate of 17% of its
operating revenue. The input VAT paid on purchases of materials and other direct
inputs can be used to offset the output VAT levied on operating revenue to
determine the net VAT payable or recoverable. BT is charged at a rate of 5% on
the revenue from other services.

                                      F-17
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Operating Lease Commitment

During the years ended December 31, 2004 and 2003, the Company incurred lease
expenses amounting to $367,626 and $361,122 respectively. As of December 31,
2004 and 2003, the Company had commitments under non-cancellable operating
leases, requiring annual minimum rentals as follows:
                                                      December 31,  December 31,
                                                          2004          2003
                                                      ------------  ------------

January 1, 2004 to December 31, 2004                            --        95,441
January 1, 2005 to December 31, 2005                       203,748        23,531
January 1, 2006 to December 31, 2007                       214,146            --

                                                      ------------  ------------
                                                      $    417,894  $    118,972
                                                      ============  ============

NOTE 14 - PURCHASE BACK OF COMMON STOCK

On February 20, 2003, the Company purchased back 4,300,000 and 4,000,000 shares
of the Company's own common stock from two stockholders respectively, at a
consideration of US$0.026 per share. These transactions were financed by the
Company's cash at bank.

NOTE 15 - STOCK PLAN

On June 1, 2000, the Company adopted a plan of stock-based compensation
incentives for selected eligible participants who are the staff and consultants
of Forlink. This plan is known as the "Forlink Software Corporation, Inc. Stock
Plan" ("the Plan"). The total number of shares of common stock reserved for
issuance by Forlink either directly as stock awards or underlying options
granted under this Plan shall not be more than 1,600,000. Under the terms of
this Plan, options can be issued to purchase shares of Forlink's common stock.
The Board of Directors shall determine the terms and conditions of each option
granted to eligible participants, which terms shall be set forth in writing. The
terms and conditions so set by the Board of Directors may vary from one eligible
participant to another.

The Company will account for the options issued to employees using the intrinsic
value method of accounting prescribed by the Accounting Principle Board Opinion
No. 25, "Accounting for Stock Issued to Employees".

                                      F-18
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 15 - STOCK PLAN - Continued

The following table summarizes the activity on stock options under the Plan:

                                                                Weighted average
                                          Number of shares       exercise price

Outstanding at December 31, 2002             1,337,000                $1.00
Granted                                      1,968,000                $2.28
Exercised                                            0                    0
Forfeited or Cancelled                         631,000                $5.00
Outstanding at December 31, 2003             1,337,000                $1.00
Outstanding at December 31, 2004             1,337,000                $1.00

All outstanding options at December 31, 2004 and December 31, 2003 are
exercisable.

In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation, an interpretation of APB Opinion No. 25. The Interpretation, which
has been adopted prospectively as of July 1, 2000, requires that stock options
that have been modified to reduce the exercise price be accounted for as
variable. Forlink re-priced 337,000 stock options on September 21, 2000, and
reduced the exercise price to $1 per share, the then-current market price of the
stock. Under the Interpretation, the options are accounted for as variable from
September 21, 2000 until the options are exercised, forfeited or expire
unexercised. Since September 21, 2000, the market price of the Forlink's stock
decreased to a level lower than the exercise price. Accordingly, there are no
effects of adopting the Interpretation for the year ended December 31, 2004 and
2003.

On August 16, 2002, the Company established a plan of stock-based compensation
incentives for selected eligible participants of the Company and its affiliated
corporations. This plan is known as the "Forlink Software Corporation, Inc. 2002
Stock Plan" (the "Plan 2002"). The total number of shares of common stock
reserved for issuance by Forlink either directly as stock awards or underlying
options granted under the Plan 2002 shall not be more than 8,000,000. Under the
terms of the Plan 2002, options can be issued to purchase shares of Forlink's
common stock. The Board of Directors shall determine the terms and conditions of
each option granted to eligible participants, which terms shall be set forth in
writing. The terms and conditions so set by the Board of Directors may vary from
one eligible participant to another.

On September 7, 2004, 3,315,000 options were granted to the Company's employees
to purchase the Company's shares of common stock, $0.001 par value, at an
exercise price of $0.10 per share. Of the 3,315,000 options, 800,000 options
were granted to an employee with 5 years vesting period, 2,515,000 options were
granted to employees with 3 years vesting period. The expiration date for
2,385,000 options is December 30, 2006 (the "December 2006 Options"). The
expiration date for 130,000 options is June 30, 2007 (the "June 2007 Options").
The expiration date for 800,000 options is June 30, 2009 (the "June 2009
Options"). On September 7, 2004, 854,500 options were vested to employees. The
market price of the stock as of September 7, 2004 was $0.10 per share.

                                      F-19
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 15 - STOCK PLAN - Continued

The following table summarizes the activity on stock options under the Plan
2002:

                                                                Weighted average
                                          Number of shares       exercise price

Granted on September 7, 2004                 3,315,000                $0.10
Vested                                         854,500                $0.10
Exercised                                      (15,000)               $0.10
Forfeited or Cancelled                               0                $0.00
Outstanding at December 31, 2004             3,300,000                $1.00

The weighted average fair value of the December 2006 Options, the June 2007
Options and the June 2009 Options granted in year ended December 31, 2004, were
$0.147, $0.152 and $0.168 per option, respectively.

The Company calculated the fair value of each option award on the date of grant
using the Black-Scholes option pricing model. The following assumptions were
used for each respective period. Assumptions for the year ended December 31,
2003 was not available as the Company had not completed the documentation in
respect of the options to be issued until the third quarter of 2004.

                                                                     Year ended
                                                                    December 31,
                                                                        2004

The value of the December 2006 Options:

Risk-free interest rate                                                1.89%
Expected lives (in years)                                               1.00
Dividend yield                                                           0%
Expected volatility                                                     100%

The value of the June 2007 Options:

Risk-free interest rate                                                2.01%
Expected lives (in years)                                               1.25
Dividend yield                                                           0%
Expected volatility                                                     100%

The value of the June 2009 Options:

Risk-free interest rate                                                2.238%
Expected lives (in years)                                               2.25
Dividend yield                                                           0%
Expected volatility                                                     100%

                                      F-20
<PAGE>

                       Forlink Software Corporation, Inc.

                   Notes to Consolidated Financial Statements

(Expressed in US Dollars)

NOTE 16 - CONCENTRATION OF A CUSTOMER

During the year, Customer A accounted for more than 10% of total sales:

                                                       Year Ended December 31,
                                                        2004           2003
                                                    ------------   ------------

Net sales derived from Customer A                   $  9,002,191   $  8,999,662
                                                    ============   ============

% to total net sales                                          89%            96%
                                                    ============   ============

Account receivable from Customer A                       253,053        536,394
                                                    ============   ============

% to total accounts receivable                                40%            91%
                                                    ============   ============

NOTE 17 - RESTATEMENT

Subsequent to the issuance of the consolidated financial statements for the year
ended December 31, 2004, the Company restated certain items of the consolidated
statements of operations for the year ended December 31, 2004 for better
presentation of the figures of net sales and other income. The Company removed,
from its "Net Sales", the VAT rebate that the Company received in connection
with software sales and presented the VAT rebate as part of the "Other Income"
in the consolidated statement of operations for the fiscal year 2004. Such VAT
rebate was previously included as part of the net sales in the consolidated
statement of operations for the fiscal year 2004. As described in Note 12,
software sales in PRC are subject to a 17% VAT and the Company is responsible
for billing, collecting, and submitting the tax to the Chinese tax authorities
(i.e. the PRC Local and Federal Tax Authorities) for amounts attributable to
both VAT related receivables and payables. However, to encourage local software
development in China, the Chinese tax authorities provide a refund of a certain
percentage of the VAT to companies who develop their own software products and
have the software products registered with the relevant authorities in China.
The Company is qualified to apply for such VAT rebate and thus if the net amount
of the VAT payable exceeds 3% of software sales, the excess portion of the value
added tax is refundable upon the Company's application to the tax authority for
such VAT rebate.

These corrections have no effect on the Company's consolidated balance sheet,
consolidated statements of cash flows and stockholders' equity contained in the
financial statements. Additionally, the restatements would not affect net income
as reported in the Company's consolidated statements of operations. The
following is a summary of the effects of these changes on the Company's
consolidated statements of operations for the fiscal year 2004:

                                        Consolidated Statements of Operations
                                            As
                                        previously
For the Year Ended December 31, 2004     reported     Adjustments    As restated
                                       ------------                 ------------

Net sales                              $ 10,166,733      (166,623)  $ 10,000,110

Gross profit                              3,787,181      (166,623)     3,620,558

Operating (loss) / profit                   505,154      (166,623)       338,531

Other income, net                      $         --       166,623   $    166,623

                                      F-21
<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(A) of the Exchange Act.

As of December 31, 2004, the directors and executive officers of the Company,
their ages, positions in the Company, the dates of their initial election or
appointment as director or executive officer, and the expiration of the terms as
directors (if applicable) were as follows:

<TABLE>
<CAPTION>
Name                          Age     Position                                           Director Since
------------------------------------------------------------------------------------------------------------

<S>                           <C>     <C>                                                 <C>
Yi He                         38      Chief Executive Officer, Chairman and               August 2001
                                      Director

Honkeung Lam                  52      Chief Financial Officer, Chief Accounting           August 2001
                                      Officer, Secretary and Director

Guoliang Tian                 65      Director                                               May 2003

Yu Fang                       59      Director                                               May 2003
</TABLE>

As of the date of filing of this report, the current directors and executive
officers of the Company, their ages, positions in the Company, the dates of
their initial election or appointment as director or executive officer, and the
expiration of the terms as directors (if applicable) are as follows:

<TABLE>
<CAPTION>
Name                          Age     Position                                           Director Since
------------------------------------------------------------------------------------------------------------

<S>                           <C>     <C>                                                 <C>
Yi He                         38      Chief Executive Officer, Chairman, President        August 2001
                                      and Director

Honkeung Lam                  52      Chief Financial Officer, Chief Accounting           August 2001
                                      Officer, Secretary and Director
Guoliang Tian                 65      Director                                               May 2003

Yu Fang                       59      Director                                               May 2003
</TABLE>

The Company's directors hold office until their successors are elected and
qualified. The Company's officers are appointed annually by the Board of
Directors and serve at the pleasure of the Board.

Yi He has been a director of the Company since August 2001. From January 1998 to
August of 2001, Mr. He was the Founder, Chairman and President of Beijing SLAIT
Science & Technology Development Limited Co. From March 1993 to January 1998,
Mr. He was the President of Beijing Sunny Computer System Engineering Co. Mr. He
has a Master Degree in Computer Science from Peking University.

Honkeung Lam, has been a director of the Company since August 2001. From July
2000 to August 2001, Mr. Lam has been the Chairman of Beijing Hi Sun In Soft
Information Technology Ltd. From June 1998 to June 2000, Mr. Lam was the
Chairman and President of Beijing Jinshili Information Technology Ltd. From 1992
to February 1998, Mr. Lam was the Manager of Beijing office of Taiwan Acer
Computer (Far East) Co.

Guoliang Tian has been a director since May 2003. Currently, Mr. Tian is a
Professor with the Institute of Remote Sensing Applications at the Chinese
Academy of Sciences, where he has been employed since 1986, in charge of the
study of natural disaster monitoring and assessment. His areas of experience and
interest involve the use of remote sensing data to research and monitor
geographic and atmospheric changes. He has published 105 papers and 4 books. In
1965, Mr. Tian received a degree in physics from Jilin University of China.

                                       21
<PAGE>

Yu Fang has been a director since May 2003. Currently Mr. Fang is a Professor at
Peking University, where he has been employed since 1987. He has served as the
Vice Director of the Institute of Remote Sensing and Geographic Information
System at Peking University since 2001. From 1982 until 2000, he worked in the
Department of Computer Science & Technology at Peking University, and served as
Vice Chairman of the Department of Computer Science & Technology at Peking
University from 1987 to 1999. His areas of experience and interest are software
engineering, geographic information systems, management information systems, and
parallel processing and distribution systems. He has written 68 articles and 5
books. In 1982, Mr. Fang received a Masters Degree in Computer Science at Peking
University after graduating from the Department of Mathematics at Peking
University in 1968.

Audit Committee and Audit Committee Financial Expert Disclosure

The Company does not have a separately-designated standing audit committee at
this time because it is not required to do so. Accordingly, the Company does not
have an audit committee financial expert.

Code of Ethics

On August 3, 2004, the Board of Directors established a written code of ethics
that applies to the Company's senior executive and financial officers. A copy of
the code of ethics is posted on the Corporation's web-site at www.forlink.com.

Compliance With Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors, and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of copies of such reports received or written
representations from certain reporting persons, the Company believes that,
during the year ended December 31, 2004, all Section 16(a) filing requirements
applicable to its officers, directors and ten percent shareholders were in
compliance with SEC regulations.

Item 10. Executive Compensation.

The following table sets forth information about compensation paid to, or
accrued for the benefit of the Company's Chief Executive Officer during the
years ended December 31, 2004, 2003, and 2002. None of the Company's executive
officers earned more than $100,000 during the years ended December 31, 2004,
2003, and 2002.

                                       22
<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                   Annual Compensation
                                                       ----------------------------------------------
                  (a)                        (b)             (c)           (d)            (e)
                 Name                        Year                                        Other
                  And                       Ended                                        Annual
               Principal                   December        Salary         Bonus       Compensation
               Position                       31             ($)           ($)            ($)
---------------------------------------- ------------- ---------------- ----------- -----------------
<S>                                          <C>           <C>             <C>            <C>
Yi He, Chief Executive Officer (n1)          2004          $47,226         -0-            -0-
                                             2003          $21,739         -0-            -0-
                                             2002          $27,108         -0-            -0-
</TABLE>

<TABLE>
<CAPTION>
                                                    Long Term Compensation
                                         -------------------------------------------
                                                    Awards                Payouts
                                         ------------------------------ ------------
           (a)                  (b)          (f)            (g)             (h)            (i)
          Name                 Year      Restricted                                        All
           And                Ended         Stock          Shares          LTIP           Other
        Principal            December     Award(s)       Underlying       Payouts     Compensation
        Position                31           ($)          Options           ($)            ($)
-------------------------- ------------- ------------ ----------------- ------------ ----------------
<S>                            <C>           <C>            <C>             <C>            <C>
Yi He, Chief Executive         2004          -0-            -0-             -0-            -0-
Officer (n1)                   2003          -0-            -0-             -0-            -0-
                               2002          -0-            -0-             -0-            -0-
</TABLE>

(n1)  Yi He became the Company's Chief Executive Officer on May 15, 2003.

Because no options, stock appreciation rights or Long-Term Incentive Plans have
been granted to any of the executive officers, the information and tables
otherwise required by this Item which relate to such forms of compensation have
been omitted.

Employment Contracts

There are no formal employment agreements with any of the Company's executive
officers.

Compensation of Directors

No compensation was paid by the Company to its Directors for any service
provided as a Director during the year ended December 31, 2004. There are no
other formal or informal understandings or arrangements relating to
compensation; however, Directors may be reimbursed for all reasonable expenses
incurred by them in conducting the Company's business. These expenses would
include out-of-pocket expenses for such items as travel, telephone, and postage.

                                       23
<PAGE>

Employee Benefit and Consulting Services Compensation Plans

As of December 31, 2004, the Company had two Employee Benefit and Consulting
Services Compensation Plans in effect:

1. On June 1, 2000, the Company adopted an employee benefit and consulting
services compensation plan entitled the Forlink Software Corporation, Inc. Stock
Plan. The plan covers up to 1,600,000 shares of common stock. The plan has not
previously been approved by security holders.

2. On August 16, 2002, the Company adopted an employee benefit and consulting
services compensation plan entitled the Forlink Software Corporation, Inc. 2002
Stock Plan. The plan covers up to 8,000,000 shares of common stock. The plan has
not previously been approved by security holders.

Under each plan, the Company may issue common stock and/or options to purchase
common stock to certain officers, directors and employees and consultants of the
Company and its subsidiaries. The purpose of each plan is to promote the best
interests of the Company and its shareholders by providing a means of non-cash
remuneration to eligible participants who contribute to operating progress and
earning power of the Company. Each plan is administered by the Company's Board
of Directors or a committee thereof which has the discretion to determine from
time to time the eligible participants to receive an award; the number of shares
of stock issuable directly or to be granted pursuant to option; the price at
which the option may be exercised or the price per share in cash or cancellation
of fees or other payment which the Company or its subsidiaries is liable if a
direct issue of stock and all other terms on which each option shall be granted.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth, as of March 15, 2005, the stock ownership of
each person known to the Company to be the beneficial owner of five percent (5%)
or more of the Company's Common Stock, each executive officer and director
individually and all executive and directors of the Company as a group.

                                                                  Percent Owned
                                         Amount and Nature of   Beneficially and
  Name and Address of                    Beneficial Ownership      of Record
   Beneficial Owner                             (n1)                  (n2)
--------------------------------------------------------------------------------

Yi He *                                       25,800,000              33.5%

Honkeung Lam *                                10,500,000              13.7%

Guoliang Tian *                                   -0-                  --

Yu Fang *                                         -0-                  --

Jing Zeng                                      5,760,000              7.5%
9/F Fang Yuan Mansion
No. 56 Zhongguancun South Rd Yi Haidian
District, Beijing, China

All officers and directors of the             36,300,000              47.2%
Company as a group (four persons)

*     An officer and/or director of the Company. The address for each officer
      and director is in care of the Company at 9/F Fang Yuan Mansion, No. 56
      Zhongguancun South Rd Yi Haidian District, Beijing, China.

                                       24
<PAGE>

      (n1)  Unless otherwise indicated, all shares are directly owned and
            investing power is held by the persons named in the table.

      (n2)  Based upon 76,900,707 shares of Common Stock outstanding as of March
            15, 2005.

Equity Compensation Plan Information

      The following information concerning the Company's equity compensation
plan is as of the end of the year ended December 31, 2004:

<TABLE>
<CAPTION>
                                                                                            Number of securities
                                                                                            available for future
                                Number of securities to be       Weighted-average           issuance under equity
                                  issued upon exercise of        exercise price of           compensation plans
                                   outstanding options,        options, warrants and        (excluding securities
                                    warrants and rights               rights              reflected in column (a))
        Plan category                       (a)                         (b)                          (c)
----------------------------------------------------------------------------------------------------------------------
<S>                             <C>                          <C>                        <C>
Equity compensation plans
approved by security holders    N/A                          N/A                        N/A
----------------------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders
                                3,285,000                    $.10                       4,700,000
----------------------------------------------------------------------------------------------------------------------
Total                           3,285,000                    $.10                       4,700,000
----------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 2004, the Company had two Employee Benefit and Consulting
Services Compensation Plans in effect:

1. On June 1, 2000, the Company adopted an employee benefit and consulting
services compensation plan entitled the Forlink Software Corporation, Inc. Stock
Plan. The plan covers up to 1,600,000 shares of common stock. The plan has not
previously been approved by security holders.

2. On August 16, 2002, the Company adopted an employee benefit and consulting
services compensation plan entitled the Forlink Software Corporation, Inc. 2002
Stock Plan. The plan covers up to 8,000,000 shares of common stock. The plan has
not previously been approved by security holders.

Under each plan, the Company may issue common stock and/or options to purchase
common stock to certain officers, directors and employees and consultants of the
Company and its subsidiaries. The purpose of each plan is to promote the best
interests of the Company and its shareholders by providing a means of non-cash
remuneration to eligible participants who contribute to operating progress and
earning power of the Company. Each plan is administered by the Company's Board
of Directors or a committee thereof which has the discretion to determine from
time to time the eligible participants to receive an award; the number of shares
of stock issuable directly or to be granted pursuant to option; the price at
which the option may be exercised or the price per share in cash or cancellation
of fees or other payment which the Company or its subsidiaries is liable if a
direct issue of stock and all other terms on which each option shall be granted.

                                       25
<PAGE>

Item 12. Certain Relationships and Related Transactions.

During the last two fiscal years, the Company entered into the following
transactions in which an officer, director, or beneficial owner of more than 5%
of the Company's voting securities had a material interest:

On February 20, 2003, the Company purchased back 4,300,000 and 4,000,000 shares
of the Company's own common stock from two stockholders (Liang Che and Wei Song,
respectively), at a consideration of US$0.026 per share. At the time of the
repurchase, each stockholder owned over 5% of the outstanding common stock of
the Company. These transactions were financed by loans from major stockholders
of the Company.

Item 13. Exhibits.

Exhibit
Number   Description
------   -----------

3.1      Articles of Incorporation, as amended and currently in effect.
         (Incorporated by reference to Exhibit No. 3.1 of the Form 10-QSB for
         the quarter ended March 31, 2000, and filed on May 13, 2000.)

3.2      Bylaws dated May 11, 2000. (Incorporated by reference to Exhibit No.
         3.2 of the Form 10-QSB for the quarter ended March 31, 2000, and filed
         on May 13, 2000.)

10.1     Forlink Software Corporation, Inc. Stock Plan dated June 1, 2000.
         (Incorporated by reference to Exhibit 10.1 of the Company's
         Registration Statement on Form S-8 (file no. 333-41700) filed July 19,
         2000.)

10.2     Forlink Software Corporation, Inc. 2002 Stock Plan dated August 16,
         2002. (Incorporated by reference to Exhibit 10.2 of the Company's
         Registration Statement on Form S-8 (file no. 333-100645) filed October
         21, 2002.)

21.1     List of Subsidiaries. (Incorporated by reference to Exhibit 21.1 of the
         Company's Annual Report of Form 10-KSB for the year ended December 31,
         2003.)

31.1     Section 302 Certification by the Corporation's Chief Executive Officer.
         (Filed herewith.)

31.2     Section 302 Certification by the Corporation's Chief Financial Officer.
         (Filed herewith.)

32.1     Section 906 Certification by the Corporation's Chief Executive Officer.
         (Filed herewith.)

32.2     Section 906 Certification by the Corporation's Chief Financial Officer.
         (Filed herewith.)

                                       26
<PAGE>

Item 14. Principal Accountant Fees and Services.

The Company's board of directors reviews and approves audit and permissible
non-audit services performed by BDO McCabe Lo & Company ("BDO"), as well as the
fees charged by BDO for such services. In its review of non-audit service fees
and its appointment of BDO as the Company's independent accountants, the board
of directors considered whether the provision of such services is compatible
with maintaining BDO's independence. All of the services provided and fees
charged by BDO in 2004 and 2003 were pre-approved by the board of directors.

Audit Fees

The aggregate fees billed for professional services rendered by BDO for the
audit of our annual financial statements and the reviews of the financial
statements included in our quarterly reports on Form 10-QSB for fiscal years
2004 and 2003 were $55,500 and $50,900, respectively.

Audit-Related Fees

There were no other fees billed by BDO during the last two fiscal years for
assurance and related services that were reasonably related to the performance
of the audit or review of the Company's financial statements and not reported
under "Audit Fees" above.

Tax Fees

The aggregate fees billed for professional services rendered by BDO for tax
compliance services in fiscal years 2004 and 2003 were $nil and $6,500,
respectively.

All Other Fees

There were no other fees billed by BDO during the last two fiscal years for
products and services provided by BDO.

                                       27
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             FORLINK SOFTWARE CORPORATION, INC.
Dated: April 27, 2006
                                             By: /s/ Yi He
                                                 -------------------------------
                                                  Yi He, Chief Executive Officer

Dated: April 27, 2006
                                             By: /s/ Hongkeung Lam
                                                 -------------------------------
                                                  Hongkeung Lam, Chief Financial
                                                  and Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

                                             By: /s/ Yi He
                                                 -------------------------------
                                                  Yi He, Director

                                             Date:  April 27, 2006

                                             By: /s/ Hongkeung Lam
                                                 -------------------------------
                                                  Hongkeung Lam, Director

                                             Date:  April 27, 2006

                                             By: /s/ Guoliang Tian
                                                 -------------------------------
                                                  Guoliang Tian, Director

                                             Date:  April 27, 2006

                                             By: /s/ Yu Fang
                                                 -------------------------------
                                                  Yu Fang, Director

                                             Date:  April 27, 2006

                                       28
<PAGE>

                                  EXHIBIT INDEX

Exhibit Number and Brief Description.
-------------------------------------

3.1   Articles of Incorporation, as amended and currently in effect.
      (Incorporated by reference to Exhibit No. 3.1 of the Form 10-QSB for the
      quarter ended March 31, 2000, and filed on May 13, 2000.)

3.2   Bylaws dated May 11, 2000. (Incorporated by reference to Exhibit No. 3.2
      of the Form 10-QSB for the quarter ended March 31, 2000, and filed on May
      13, 2000.)

10.1  Forlink Software Corporation, Inc. Stock Plan dated June 1, 2000.
      (Incorporated by reference to Exhibit 10.1 of the Company's Registration
      Statement on Form S-8 (file no. 333-41700) filed July 19, 2000.)

10.2  Forlink Software Corporation, Inc. 2002 Stock Plan dated August 16, 2002.
      (Incorporated by reference to Exhibit 10.2 of the Company's Registration
      Statement on Form S-8 (file no. 333-100645) filed October 21, 2002.)

21.1  List of Subsidiaries. (Incorporated by reference to Exhibit 21.1 of the
      Company's Annual Report of Form 10-KSB for the year ended December 31,
      2003.)

31.1  Section 302 Certification by the Corporation's Chief Executive Officer.
      (Filed herewith.)

31.2  Section 302 Certification by the Corporation's Chief Financial Officer.
      (Filed herewith.)

32.1  Section 906 Certification by the Corporation's Chief Executive Officer.
      (Filed herewith.)

32.2  Section 906 Certification by the Corporation's Chief Financial Officer.
      (Filed herewith.)