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

                                   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, 2002

[ ]  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: $9,380,594

         As of March 17, 2003 the aggregate market value of the Common Stock
held by non-affiliates, approximately 35,482,957 shares of Common Stock, was
approximately $1,774,148 based on an average of the bid and ask prices of
approximately $.05 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 17, 2003 was 76,773,207 shares.

         DOCUMENTS INCORPORATED BY REFERENCE: None.

         Transitional Small Business Disclosure Format (check one):

         Yes [ ]; No [X]

<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.

HISTORY OF THE COMPANY

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


                                       1
<PAGE>

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.

BUSINESS OF THE COMPANY

The Company has two wholly-owned subsidiaries, FTCL and SLAIT. Through its
subsidiaries, the Company is developing innovative products, industry expertise,
project management skills and technologies necessary for the design and
implementation of large-scale, specifications-intensive integrated application
systems typically required by leading telecommunication service providers.

Our application solutions are developed on application integration platforms.
The 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    For-Mail: A high-power web mail system.


Currently, our business and operations concentrate in Beijing. The Company also
has a few customers in other cities of Mainland China. The head office of the
Company is situated in Beijing and we also have a software development center in
Chengdu. Additionally, the Company has a representative office in Shenyang.

To date, our customers include Beijing Mobile and Chongqing Mobile and network
service providers in China. We currently have approximately 160 employees, of
which 140 are full-time.

DISTRIBUTION METHODS UTILIZED

We sell our products and provide our services directly by ourselves to
customers.

COMPETITIVE CONDITIONS

As the Company is engaged in the development and sale of network software system
and provision of enterprise application system integration services for
telecommunication companies and network services providers, the Company stands
in a unique position in the growing market in the PRC. The Company has developed
"For-Series" network software systems, such as "ForOSS" and "For-Mail". These
products are used by a considerable number of reputable companies in the PRC.
Currently, the Company is not aware of any competitors in Beijing who provide
identical or similar products and services to the customers. However, the
Company is aware of other software development and system integration companies
in Beijing that may have enough technical know-how and ability to develop
products and provide services which are similar to the ones of the Company. In
order to solidify our products and services in a leading market position, we
plan to allocate more resources to the product developments.

DEPENDENCE OF MAJOR CUSTOMER

Beijing Mobile Communication Company accounted for 88% and 80% of the total
sales for the year 2002 and 2001, respectively.


                                       2
<PAGE>

REGULATION OF THE BUSINESS

There are no government regulations that have significant effect on our
business.

SOFTWARE DEVELOPMENT COST

For the year 2002, software development costs expensed were $575,485 (2001 were
$19,307). 90% of the software development expenses were salary for the software
and system development department. For the year 2001, the salary attributable to
software and system development department was expensed together with the salary
of administrative department. Accordingly, the comparative figure did not
include such kind of salary.

From time to time, we are developing new versions of our existing products such
as ForOSS and For-Mail.

MANAGEMENT OF GROWTH

If the Company is successful in implementing its growth strategy, the Company
believes it can undergo a period of rapid growth. The Company will focus on
"ForOSS" and "For-Mail" development and marketing promotion. The Company will
develop "ForOSS" and "For-Mail" in depth and, based on these two products,
develop more software application systems for users in the sectors of
telecommunications and network services providers.

ITEM 2. DESCRIPTION OF PROPERTY.

The Company currently rents its facilities in Beijing, China. It presently
leases space at 9/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.

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

The building located in Chengdu 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. The amount of the mortgage loan
of $62,067 ($69,996 in 2001) is accrued for in the financial statements.

The Company also rents facilities in Shengyang, China, as its representative
office, it is at Room 609, ShenYang KaiLai Hotel, No.32 YingBin Street, North
Station of ShenHe District, ShenYang, LiaoNing Province, China.

The Company believes its existing properties are adequate for the current
operations of the Company.

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 2002.


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<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

<Table>
<Caption>
Quarter Ended                           High Bid         Low Bid
-------------                           --------         -------
<S>                                     <C>              <C>
December 31, 2002                         $.065           $.035
September 30, 2002                        $.10            $.035
June 30, 2002                             $.10            $.045
March 31, 2002                            $.19            $.08

December 31, 2001                         $.40            $.09
September 30, 2001                        $.21            $.10
June 30, 2001                             $.25            $.15
March 31, 2001                            $.75            $.187
</Table>

HOLDERS

As of March 17, 2003, there were 76,773,207 shares of the Company's common stock
outstanding held of record by approximately 870 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

Set forth below is information regarding the issuance and sales of securities of
the Company without registration within the past three fiscal years.

On August 27, 2001, the Company issued an aggregate of 59,430,000 shares of its
common stock to Beijing Slait Science & Technology Development Limited Co.'s
("SLAIT") three owners in exchange for 100% of the outstanding equity of SLAIT,
pursuant to a Plan of Reorganization dated January 11, 2001 between the Company
and SLAIT (the "Agreement"). The former owners of SLAIT now own approximately
70% of the 85,073,207 issued and outstanding shares of the Company's common
stock and the Company owns 100% of the fully paid registered capital of SLAIT.
The Company believes that the transaction was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.


                                       4
<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 the Company believes 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. The Company cautions investors that any forward-looking
statements made by the Company 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 the
Company's 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 the Company's 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.

As discussed in the Company's current report on Form 8-K filed on August 31,
2001, on August 27, 2001, Forlink Software Corporation, Inc. completed the
acquisition of Beijing Slait Science & Technology Development Limited Co.
("SLAIT"). The Company is 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 the
PRC. As a significant part of system integration services, the Company is also
engaged in the sale of computer hardware.

CRITICAL ACCOUNTING POLICIES

The Company has identified certain accounting policies related to revenue
recognition, project and computer software development costs, impairment of
long-lived assets and accounting for goodwill as critical to its business
operations and the understanding of its results of operations.

REVENUE RECOGNITION

The Company's revenue recognition policy is significant because its revenue is a
key component of its results of operations. The Company recognizes revenue in
accordance with SEC Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements (SAB 101), as amended by SAB 101A and 101B. SAB 101
requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists; (2) delivery has occurred or
services rendered; (3) the fee is fixed and determinable; and (4) collectibility
is reasonably assured. Determination of criteria (3) and (4) are based on
management's judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectibility of those fees.
Should changes in conditions cause management to determine these criteria are
not met for certain future transactions, revenue recognized for any reporting
period could be adversely affected.


                                       5
<PAGE>

DETAILS OF REVENUE RECOGNITION POLICY ARE AS FOLLOWS:

Revenue from software sales is recognised when all shipment obligations have
been met, fees are fixed and determinable, collection of sales proceeds is
deemed probable and persuasive evidence of an arrangement exists.

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

The sale of computer hardware is recognised 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.

PROJECT AND COMPUTER SOFTWARE DEVELOPMENT COSTS

The Company's policy on project and computer software development costs
determines the timing of its recognition of certain development costs. In
addition, this policy determines whether the cost is classified as software
development expense or deferred software development costs or cost of service
income. Management is required to use professional judgment in determining
whether development costs meet the criteria for immediate expense or deferral.

The Company accounts for project and 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. 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.

ACCOUNTING FOR GOODWILL

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142 "Goodwill and Other Intangible Assets". SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other intangible
assets. This Statement changes the accounting for goodwill from an amortization
method to an impairment-only method. The amortization of goodwill, including
goodwill recorded in past business combinations ceased upon adoption of this
Statement, which began with the Company's fiscal year beginning January 1, 2002.
However,


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goodwill and intangible assets acquired after June 30, 2001 is subject to
immediate adoption of the Statement. As the Company's acquisition described in
Note 1 to the financial statements was accounted for under SFAS 141 and the
transition requirements of SFAS 142, the goodwill arising from such acquisition
has never been amortized. The Company does not have any other goodwill or
indefinite lived 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 the beginning of the fiscal
year. 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. 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.

RESULTS OF OPERATIONS

Year ended December 31, 2002 compared to year ended December 31, 2001.

<Table>
<Caption>
                                 Year ended                     Year ended
                              December 31, 2002              December 31, 2001
<S>                           <C>                            <C>
    Net sales                    $9,380,594                     $5,148,049
</Table>

Net sales were derived from network system integration services, computer
hardware sales and Forlink brand "For-Series" network software system sales.

Net sales were $9,380,594 for the year ended December 31, 2002. This represented
an increase of 82%, as compared to $5,148,049 for last year.

During the year, the Company mainly completed 31 system development and
integration contracts. These 31 contracts contributed revenue of $8,252,240 to
the Company. 28 out these 31 contracts were entered into with Beijing Mobile
Communication Company ("BMCC"). The Company also completed certain amount of
software development and sales contracts during the year. These contracts are
relatively small scale and were entered into with BMCC and other customers.
Including BMCC, the Company has over 30 customers.

During the forth quarter of 2002, the Company completed 4 major contracts which
the contract sum ranged from $266,000 to $2,569,000 (net of VAT). These
contracts were entered into at the end of August 2002 and completed in mid of
December 2002. It is the main reason of sale growth in the forth quarter of
2002.

On a yearly basis, the revenue growth was primarily attributable to marketing
efforts and increased "For-Series" brand awareness. Our "For-Series" network
software systems can support our customers, which include telecommunication
companies and network system providers, to build their Business Operation
Supporting System (BOSS). Our For-Series network software


                                       7
<PAGE>

systems are accepted by a considerable number of customers in PRC, such as BMCC,
Chongqing Mobile Communication Company and other network service providers.

The Company believes that it will generate further revenue in the foreseeable
future from the business of BOSS contracts and the encompassed business of sales
of computer hardware and system integration.

Costs of sales were $6,349,271 and $3,951,666 for the year ended December 31,
2002 and 2001, respectively. Cost of sales consisted principally of the cost of
computer hardware sold, salary and other costs which were directly attributable
to the cost of system integration services and other services rendered to
customers. Cost of sales for the year ended 2002 increased by $2,397,605 or 61%
over the corresponding year of 2001. The increase in cost of sales was driven by
the increase in sales.

Gross profit ratio was improved from 23% for year ended 2001 to 32% for the year
ended 2002. Previously, the Company's gross profit was mainly attributable to
the sale of computer hardware in a keen competition market and low margin system
integration services. As a result of SLAIT's reverse take-over with Forlink and
strong customer basis of SLAIT, the Company has much more room to introduce
network software systems and application system integration solutions and
products to our customers. The improvement in the gross profit margin was a
result of the higher profit margins earned for the sale and system integration
services in connection with ForOSS contracts.

Selling expenses of $294,198 for the year ended December 31, 2002 increased by
$134,206 or 84% over the corresponding year of 2001. The increase in selling
expenses was attributable to the increase in headcount number of the departments
of sales and customers service. As well, the Company has increased staff salary
to a competitive market level.

General and administrative ("G&A") expenses of $1,911,766 for the year ended
December 31, 2002 increased by $1,066,597 or 126% over the corresponding year of
2001. Included in the G&A expenses for the year ended December 31, 2002 were
rental charges of $313,002 (2001: $276,191), building management fee of $40,593
(2001: 11,955), depreciation charges of $49,536 (2001: $24,849), salaries and
staff welfare charges of $214,270 (2001: $107,162), software and technology
development expenses of $575,485 (comprised salaries of $533,000) and non-cash
compensation expenses of $186,722 (2001: $41,813). Non-cash compensation
expenses were incurred as a result of the accounting effect of granting common
stock and granting and repricing certain stock options under the Forlink's Stock
Plan.

The increase in G&A expenses was mainly due to the continuous expansion of the
business of the Company over the past few years. Especially, as a result of
Slait's reverse acquisition with Forlink, the number of employees was increased
from 60 as of August 2001 (date of Slait's reversed take-over) to 160 as of
December 31, 2002. Rental charges, salary and staff benefit expenses were
therefore increased significantly. Additionally, in order to recruit experienced
computer engineers/technicians, the Company has increased the salary of the
management team as well as the staff's salary to a competitive market level.

For the year ended December 31, 2002, the Company sustained a net loss of
$6,085,137, compared to a net profit of $191,223 for the corresponding year
2001. The loss is mainly attributable to impairment losses related to goodwill
of $6,966,546 recorded during the year 2002. Additionally, as of September 30,
2002, the Company determined that it was no longer utilizing


                                       8
<PAGE>

the services provided by Netreach Studios, Ltd. as described in the contract,
and therefore expensed the remaining value of the stock and options issued
during the quarter ended September 30, 2002. In this respect, non-cash
compensation expense of $143,750 was recognised in the quarter ended September
30, 2002. Regardless of the loss on impairment of goodwill and non-cash
compensation expense, there is a remarkable improvement in the result for the
year ended 2002 in comparison with last year. Operating profit before goodwill
impairment for 2002 was $825,359 (2001: $191,222). The significant improvement
of the core business is a result of the business expansion over the past two
years, especially after SLAIT's reverse acquisition with Forlink.

In the quarter ended March 2002, the Company was awarded as one of the "Grade A
system integrator of 2001" by China Mobile Communication Company (the parent
company of BMCC). The Company believes that this award will bring more business
chances to the Company.

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2002, the Company used $126,227 to acquire
property, plant and equipment. As of December 31,2002, the Company had $536,050
cash on hand, and a working capital surplus of $1,254,148. However, due to the
rapid growth of the Company, additional capital may be required. 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 growth of future
revenue 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.

Principally, the Company relies on sale revenue and advances from major
stockholders of the Company as the sources of liquidity. In the event the
Company cannot meet the customers' requirements for the products and services
rendered and/or cannot complete projects on a pre-determined timetable, the
sales revenue can be deferred or even adversely affected. Additionally,
liquidity would also be affected if the major stockholders decided to stop
providing additional financing and called for repayment of their advances due to
their own accords.

CONTRACTUAL OBLIGATIONS

As of December 31, 2002, the Company had commitments under non-cancellable
operating leases expiring within one year amounting to $54,945 (2001: $36,964).

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 of the Company's shares, respectively. Additionally, at
closing all of the Company's officers and directors resigned with the exception
of Xiaoxia Zhao who remains as an officer and director and Yi He was appointed
as President and Director and Honkeung Lam as Director of the Company.


                                       9
<PAGE>

The Company, from time to time, received from or made repayment to Mr. Xiaoxia
Zhao and Mr. Yi He who are stockholders and directors 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, 2002 and December 31, 2001, the amounts due to stockholders
represented amount to be disbursed to the original owners of Slait in respect of
the recapitalization mentioned in Note 1 to the financial statements and
advances from stockholders.

As of December 31, 2002, amount due from stockholder represented travel advances
to Mr. Yi He.

The building located in Chengdu 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 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, 2002, the amount of
the mortgage loan is $62,067 ($69,996 as of December 31, 2001) and is included
in "Amounts due to stockholders" on the balance sheet.

In the opinions of directors, except for the arrangements in connection with the
purchase of 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 different 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.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections" was issued. This
statement provides guidance on the classification of gains and losses from the
extinguishment of debt and on the accounting for certain specified lease
transactions. The adoption of this statement will not have a material impact on
the Company's consolidated financial position, results of operations or cash
flows.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" ("SFAS No. 146"). SFAS No. 146 addresses
significant issues regarding the recognition, measurement, and reporting of
costs associated with exit and disposal activities, including restructuring
activities. SFAS No. 146 also addresses recognition of certain costs related to
terminating a contract that is not a capital lease, costs to consolidate
facilities or relocate employees, and termination benefits provided to employees
that are involuntarily terminated under the terms of a one-time benefit
arrangement that is not an ongoing benefit arrangement or an individual
deferred-compensation contract. SFAS No. 146 is effective for exit or disposal
activities that are initiated after December 31, 2002. Given that SFAS No. 146
was issued in June 2002 and is not yet effective, the impact on the Company's
financial position or results of operations from adopting SFAS No. 146 has not
been determined.


                                       10
<PAGE>

In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others". This
interpretation elaborates on the disclosures required in financial statements
concerning obligations under certain guarantees. It also clarifies the
requirements related to the recognition of liabilities by a guarantor at the
inception of certain guarantees. The Company adopted the disclosure requirements
of this interpretation on December 31, 2002. The recognition provisions of the
interpretation are applicable only to guarantees issued or modified after
December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". This statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based compensation, as outlined in SFAS No. 123,
"Accounting for Stock-Based Compensation". This statement also amends the
financial statement disclosure requirements relating to stock-based
compensation. The Company currently has no plans to adopt the fair value method
of accounting for stock-based compensation.

SUBSEQUENT EVENT

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 loans
from major stockholders of the Company.

RISK

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.


                                       11
<PAGE>

ITEM 7. FINANCIAL STATEMENTS.

The information required by Item 7 and an index thereto commences on page F-1,
which pages follow this page.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.


                                       12
<PAGE>

                       FORLINK SOFTWARE CORPORATION, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                               For the years ended
                           December 31, 2002 and 2001


<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   Index To Consolidated Financial Statements




<Table>
<Caption>
                                                                     Pages
<S>                                                                <C>
REPORT OF INDEPENDENT AUDITORS                                        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-19
</Table>
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS


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

We have audited the accompanying consolidated balance sheets of Forlink Software
Corporation, Inc. as of December 31, 2002 and 2001, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2002 and 2001. 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 generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
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, 2002 and 2001 and the results of
its consolidated operations and cash flows for the years ended December 31, 2002
and 2001, in conformity with generally accepted accounting principles in the
United States of America.




BDO International

Hong Kong
February 21, 2003


                                      F-1
<PAGE>

                       FORLINK SOFTWARE CORPORATION, INC.

                           CONSOLIDATED BALANCE SHEETS

(Expressed in US Dollars)

<Table>
<Caption>
                                                             DECEMBER 31,   DECEMBER 31,
                                                                 2002           2001
                                                             ------------   ------------
<S>                                                          <C>            <C>
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                                  $   536,050    $   993,100
  Accounts receivable (Note 3)                                 1,039,190        205,426
  Other receivables, deposits and prepayments (Note 4)           156,740        220,778
  Inventories (Note 5)                                           454,131         49,987
  Amount due from stockholder (Note 6)                            75,024             --
                                                             -----------    -----------

  Total current assets                                         2,261,135      1,469,291

Property, plant and equipment (Note 7)                           464,757        411,977
Goodwill (Note 8)                                              1,684,023      8,650,569
                                                             -----------    -----------

TOTAL ASSETS                                                 $ 4,409,915    $10,531,837
                                                             ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                           $    97,202    $        12
  Amounts due to stockholders (Note 6)                           244,051        229,811
  Customer deposits                                              350,311        767,336
  Other payables and accrued expenses (Note 9)                   272,418        144,683
  Income tax payable (Note 10)                                     3,841         15,083
  Other taxes payable (Note 11)                                   39,164         73,569
                                                             -----------    -----------

  Total current liabilities                                    1,006,987      1,230,494
                                                             -----------    -----------


COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS' EQUITY
  Common stock, par value $0.001 per share;
    100,000,000 shares authorized; 85,073,207 and
    85,073,207 shares issued and outstanding, respectively        85,073         85,073
  Additional paid-in capital                                   8,934,812      8,748,090
  Retained earnings/(accumulated losses)                      (5,616,957)       468,180
                                                             -----------    -----------

  Total stockholders' equity                                   3,402,928      9,301,343
                                                             -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 4,409,915    $10,531,837
                                                             ===========    ===========
</Table>


          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>

                       FORLINK SOFTWARE CORPORATION, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in US Dollars)

<Table>
<Caption>
                                                    YEAR ENDED      YEAR ENDED
                                                   DECEMBER 31,    DECEMBER 31,
                                                       2002            2001
                                                   ------------    ------------
<S>                                                <C>             <C>
NET SALES                                          $  9,380,594    $  5,148,049

COST OF SALES                                        (6,349,271)     (3,951,666)
                                                   ------------    ------------

GROSS PROFIT                                          3,031,323       1,196,383

SELLING EXPENSES                                       (294,198)       (159,992)

GENERAL AND ADMINISTRATIVE EXPENSES                  (1,911,766)       (845,169)

LOSS ON IMPAIRMENT OF GOODWILL                       (6,966,546)             --
                                                   ------------    ------------

OPERATING PROFIT/(LOSS)                              (6,141,187)        191,222

INTEREST EXPENSES                                            --          (2,277)

INTEREST INCOME                                           5,496           4,429

OTHER INCOME, NET                                        56,100          22,324
                                                   ------------    ------------

PROFIT/(LOSS) BEFORE INCOME TAX                      (6,079,591)        215,698

PROVISION FOR INCOME TAX (Note 10)                       (5,546)
                                                                        (24,475)
                                                   ------------    ------------

NET PROFIT/(LOSS)                                  $ (6,085,137)   $    191,223
                                                   ============    ============

EARNINGS/(LOSS) PER SHARE - BASIC AND DILUTED      $      (0.07)   $         --
                                                   ============    ============

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING - BASIC AND DILUTED                     85,073,207      68,261,295
                                                   ============    ============
</Table>


          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

                       FORLINK SOFTWARE CORPORATION, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Expressed in US Dollars)

<Table>
<Caption>
                                             COMMON STOCK
                                       -------------------------                RETAINED
                                      NUMBER                   ADDITIONAL       EARNINGS/      TOTAL
                                        OF                       PAID-IN      (ACCUMULATED  STOCKHOLDERS'
                                      SHARES       AMOUNT        CAPITAL         LOSSES)       EQUITY
                                   -----------   -----------   -----------    ------------  -------------
<S>                                <C>           <C>           <C>            <C>           <C>
Balance, December 31, 1999
  (Recapitalization of Slait)       59,430,000   $    59,430   $    71,609    $   263,472    $   394,511

Net income                                  --            --            --         13,485         13,485
                                   -----------   -----------   -----------    -----------    -----------

Balance, December 31, 2000          59,430,000   $    59,430   $    71,609    $   276,957    $   407,996

Issuance of common stock in
  respect of reverse acquisition    25,470,000        25,470     8,759,880             --      8,785,350

Return of capital to Slait's
  original owners                           --            --      (131,039)            --       (131,039)

Issuance of common stock in
  connection with compensation
  expenses                             173,207           173        22,034             --         22,207

Consultant's compensation
  expenses                                  --            --        25,606             --         25,606

Net income                                  --            --            --        191,223        191,223
                                   -----------   -----------   -----------    -----------    -----------

Balance, December 31, 2001          85,073,207   $    85,073   $ 8,748,090    $   468,180    $ 9,301,343

Consultant's compensation
  expenses                                  --            --       186,722             --        186,722

Net loss for the year ended
   December 31, 2002                        --            --            --    $(6,085,137)   $(6,085,137)
                                   -----------   -----------   -----------    -----------    -----------

Balance, December 31, 2002          85,073,207   $    85,073   $ 8,934,812    $(5,616,957)   $ 3,402,928
                                   ===========   ===========   ===========    ===========    ===========
</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,
                                                              2002           2001
                                                          -----------    -----------
<S>                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income/(loss)                                       $(6,085,137)   $   191,223
      Adjustments to reconcile net income/(loss)
        to net cash used in operating activities
      Depreciation of property, plant and equipment            73,447         37,979
      Loss on disposal of property, plant and equipment            --             34
      Transfer of computer equipment                               --        101,945
      Non-cash compensation expenses                          186,722         47,813
      Loss on impairment of goodwill                        6,966,546             --
      Change in:
        Accounts receivable                                  (833,764)      (129,138)
        Other receivables, deposits and prepayments            64,038        494,133
        Inventories                                          (404,144)        20,490
        Accounts payable                                       97,190       (342,604)
        Customer deposits                                    (417,025)       341,087
        Other payables and accrued expenses                   127,735     (1,013,729)
        Income tax payable                                    (11,242)        15,083
        Other taxes payable                                   (34,405)        16,621
                                                          -----------    -----------

NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES          (270,039)      (219,063)
                                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property, plant and equipment              (126,227)       (67,897)
   Proceeds from disposal of other investments                     --         60,386
   Cash increase due to reverse acquisition by Slait               --      2,356,978
                                                          -----------    -----------

NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES          (126,227)     2,349,467
                                                          -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Repayments from/(Advances to) stockholders                 (51,023)        53,197
   (Repayments to)/Advances from stockholders                  (9,761)        50,826
   Repayment from amount due from related company                  --        160,547
   Repayment of short-term bank loan                               --     (1,449,275)
                                                          -----------    -----------

NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES           (60,784)    (1,184,705)
                                                          ===========    ===========

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS         (457,050)       945,699

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                993,100         47,401
                                                          -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                  $   536,050    $   993,100
                                                          ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   INTEREST PAID                                                   --          2,277
   INCOME TAX PAID                                              8,320          9,392
</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 would
transfer $131,039 (RMB1,085,000) to Slait, the amount would be 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. The historical
financial statements prior to August 28, 2001 are those of Slait. All shares and
per share data prior to the acquisition have been restated to reflect the stock
issuance as a recapitalization of Slait. Forlink and its wholly owned
subsidiaries, namely, Slait and Forlink Technologies Co., Ltd. ("FTCL") are
collectively called as "the Company" thereafter.

Subsequent to the reverse acquisition, the principal activities of Slait have
been shifted to FTCL gradually. The principal activities of the Company are the
development and sale of network software system, provision of enterprise
application system integration services in the PRC. As a significant part of
system integration services, 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
and FTCL. All material intercompany transactions have been eliminated.


                                      F-6
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - CONTINUED

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 fo the underlying stock on the date of
grant, no compensation expense is recognised.

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 Slait and FTCL is Renminbi (RMB) and the financial records are maintained and
the financial statements are prepared in RMB.

For Forlink, foreign currency transactions during the year are translated into
US$ 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 US$ at year end
exchange rates. All exchange differences are dealt with in the consolidated
statements of operations.

For Slait and FTCL, foreign currency transactions during the year are translated
into RMB 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 RMB 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 RMB have been translated into United States Dollars
at US$1.00 = RMB8.28, translation adjustments would be included as a component
of stockholders' equity.

Exchange rates between US$ and RMB are fairly stable during the years presented.
The rates ruling as of December 31, 2002 and 2001 are US$1: RMB8.28 and US$1:
RMB8.28, respectively. Due to the stability of the exchange rates, there were no
net adjustments in stockholders' equity.

REVENUE RECOGNITION

Revenue from software sales is recognised when all shipment obligations have
been met, fees are fixed and determinable, collection of sales proceeds is
deemed probable and persuasive evidence of an arrangement exists.

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

The sale of computer hardware is recognised 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.


                                      F-7
<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 the sale of computer
hardware, cost is calculated using first-in, first-out method. For inventory
used in system integration services, cost is calculated using the specific
identification 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.

CASH AND CASH EQUIVALENTS

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

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:

<Table>
<Caption>
                                                            ESTIMATED
                                                           USEFUL LIFE
                                                            (IN YEARS)
                                                         ---------------
<S>                                                      <C>
Building                                                        20
Computer equipment                                              5
Office equipment                                                5
Motor vehicle                                                  5-10
Leasehold improvements                                   Over lease term
</Table>

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.

ADVERTISING COSTS

All advertising costs incurred in the promotion of the Company's products and
services are expensed as incurred.


                                      F-8
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - CONTINUED

PROJECT AND 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 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.

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, 1,337,000 shares of options are
excluded as their effect is anti-dilutive.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of certain financial instruments approximate their fair
values as of December 31, 2002 and 2001 because of the relatively short-term
maturity of these instruments.


                                      F-9
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 2 - SUMMARY OF IMPORTANT ACCOUNTING POLICIES - CONTINUED

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.

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.

NEW ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others". This
interpretation elaborates on the disclosures required in financial statements
concerning obligations under certain guarantees. It also clarifies the
requirements related to the recognition of liabilities by a guarantor at the
inception of certain guarantees. The Company adopted the disclosure requirements
of this interpretation on December 31, 2002. The recognition provisions of the
interpretation are applicable only to guarantees issued or modified after
December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure". This statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based compensation, as outlined in SFAS No. 123,
"Accounting for Stock-Based Compensation". This statement also amends the
financial statement disclosure requirements relating to stock-based
compensation. The Company currently has no plans to adopt the fair value method
of accounting for stock-based compensation.


                                      F-10
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

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, 2002 is required.


NOTE 4 - OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

<Table>
<Caption>
                                                  DECEMBER 31,      DECEMBER 31,
                                                      2002              2001
                                                  ------------      ------------
<S>                                               <C>               <C>
Other receivables                                 $     13,968      $     68,173
Deposits                                                59,479           129,960
Prepayments                                             83,293            22,645
                                                  ------------      ------------
                                                  $    156,740      $    220,778
                                                  ============      ============
</Table>

NOTE 5 - INVENTORIES

<Table>
<Caption>
                                                 DECEMBER 31,       DECEMBER 31,
                                                     2002               2001
                                                 ------------       ------------
<S>                                              <C>                <C>
Computer hardware                                $    454,131       $     49,987
                                                 ============       ============
</Table>


                                      F-11
<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 three 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, 2002 and December 31, 2001, the amounts due to stockholders
represented amounts to be disbursed to the original owners of Slait in respect
of the recapitalization mentioned in Note 1 and advances from stockholders.

As of December 31, 2002, amount due from stockholder represented travel advances
to Mr. Yi He who is a director and stockholder of the Company.

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT, NET

<Table>
<Caption>
                                                   DECEMBER 31,    DECEMBER 31,
                                                       2002            2001
                                                   ------------    ------------
<S>                                                <C>             <C>
Building                                           $    155,648    $    155,648
Computer and office equipment                           288,344         229,789
Motor vehicles                                          183,725         116,053
Leasehold improvements                                   35,880          35,880
                                                   ------------    ------------
                                                        663,597         537,370
Less: Accumulated depreciation                         (198,840)       (125,393)
                                                   ------------    ------------
                                                   $    464,757    $    411,977
                                                   ============    ============
</Table>

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
2002, the amount of the mortgage loan is $62,067 ($69,996 as of December 31,
2001) and is included in "Amounts due to stockholders" on the balance sheet.


                                      F-12
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 8 - GOODWILL

Slait specializes in large volume transaction processing software for network
such as mobile phone billing and band operation. The acquisition as described in
Note 1 allows the Company to expand into the large-scale system integration and
software engineering market in the PRC.

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. 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.

As the acquisition has been accounted for as a "reverse acquisition" whereby
Slait is deemed to have purchased Forlink on August 27, 2001, Forlink's results
since August 28, 2001 have been included in the financial statements.

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

<Table>
<S>                                                                 <C>
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
                                                                    ===========
</Table>

In accordance with terms of the acquisition, Forlink would transfer $131,039
(RMB1,085,000) to Slait, this amount would be disbursed to the original owners
of Slait and financed by loans from major stockholders of Forlink.

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 the beginning of the fiscal
year. 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-13
<PAGE>

                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 9 - OTHER PAYABLES AND ACCRUED EXPENSES

<Table>
<Caption>
                                                    DECEMBER 31,    DECEMBER 31,
                                                        2002            2001
                                                    ------------    ------------
<S>                                                 <C>             <C>
Other payables                                      $     52,358    $     33,826
Accrued salaries & wages                                 156,395          66,757
Other accrued expenses                                    63,665          44,100
                                                    ------------    ------------
                                                    $    272,418    $    144,683
                                                    ============    ============
</Table>

NOTE 10 - INCOME TAX

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

Income tax represents current PRC income tax which is calculated at the
statutory income tax rate of 15% on the assessable income for the year ended
December 31, 2002.

The difference between the statutory rate and the effective rate relates
principally to nondeductible expenses.

Pursuant to an approval document dated October 22, 1998 issued by the Beijing
Tax Bureau, Slait being a "New Technology Enterprise", is eligible to full
exemption from PRC Corporate Income Tax for the period from February 1, 1999 to
December 31, 2000. Pursuant to an approved document dated June 18, 2001 issued
by the Beijing Tax Bureau, Slait is eligible to 50% tax reduction for PRC
Corporate Income Tax for the period from January 1, 2001 to December 31, 2003.

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 recognised 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 for the fiscal year 2003, 2004 and 2005.

The provision for income tax consisted of:

<Table>
<Caption>
                                                    DECEMBER 31,    DECEMBER 31,
                                                        2002            2001
                                                    ------------    ------------
<S>                                                 <C>             <C>
Current PRC corporate income tax                    $      5,546   $     24,475
Deferred tax                                                  --             --
                                                    ------------   ------------
Provision for income tax                            $      5,546   $     24,475
                                                    ============   ============
</Table>


                                      F-14
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 11 - 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 the provisions of computer consultancy services.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASE COMMITMENT

During the years ended December 31, 2002 and 2001, the Company incurred lease
expenses amounting to $313,002 and $279,191 respectively. As of December 31,
2002 and 2001, the Company had commitments under non-cancellable operating
leases expiring in one year amounting to $54,945 and $36,964 respectively.
Rental payments for each of the succeeding period are:

<Table>
<Caption>
                                                     DECEMBER 31,   DECEMBER 31,
                                                         2002           2001
                                                     ------------   ------------
<S>                                                  <C>            <C>
January 1, 2002 to December 31, 2002                 $         --   $     36,964
January 1, 2003 to December 31, 2003                       54,945             --
                                                     ------------   ------------

                                                     $     54,945   $     36,964
                                                     ============   ============
</Table>

NOTE 13 - 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-15
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 13 - STOCK PLAN - CONTINUED

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

<Table>
<Caption>
                                                                WEIGHTED AVERAGE
                                            NUMBER OF SHARES     EXERCISE PRICE
                                            ----------------    ----------------
<S>                                         <C>                 <C>
Outstanding at December 31, 2000               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, 2001               1,337,000              $1.00
Outstanding at December 31, 2002               1,337,000              $1.00
</Table>

All outstanding options at December 31, 2002 and December 31, 2001 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, 2002.

On June 1, 2000, a fee agreement was entered into between Forlink and Futro and
Trauernicht LLC, the corporate attorneys of Forlink ("the Attorneys"). It is
agreed that the Attorneys would accept as compensation in full for all legal
services provided from the date of September 1, 2000 to April 30, 2001, a fee
consisting of the following:

(a)  100,000 shares of common stock of Forlink; and

(b)  options to acquire 100,000 shares of common stock of Forlink, at an
     exercise price of $5.00 per share.

On July 20, 2000, 100,000 shares of common stock were issued to the Attorneys.
The market value as of that date was $4.00 per share. Expense is recorded based
on the fair value of the stock at grant date and recognized over the service
period of the contract. Up to date, the options have not been issued to the
Attorneys. However, on September 21, 2000, the terms of the agreement were
changed to issue 500,000 options at $1. The value of the options was recognized
as expense over the service period of the contract. As the related services have
been completed on April 30, 2001 (date before the acquisition as described in
Note 1), no expenses was recognized in the consolidated statement of operations.


                                      F-16
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 13 - STOCK PLAN - CONTINUED

On August 31, 2001, 69,797 shares of common stock were issued to the Attorneys
as compensation in full for settlement of legal fee of $11,866 up to July 31,
2001. The fair value of the common stock as of August 31, 2001 was $0.17 per
share.

On November 6, 2001, 103,410 shares of common stock were issued to the Attorneys
as compensation in full for settlement of legal fee of $10,341 up to October 30,
2001. The fair value of the common stock as of November 6, 2001 was $0.10 per
share.

On June 1, 2000, a consulting agreement was entered into between Forlink and
Netreach Studios, Ltd., a marketing consultant Forlink ("the Consultant"). The
Consultant would accept as compensation in full for all consulting services to
be provided from September 1, 2000 to May 31, 2004, a fee consisting of the
following:

(a) 100,000 shares of common stock of Forlink; and

(b) options to acquire 100,000 shares of common stock Forlink, at an exercise
price of $5.00 per share.

On August 22, 2000, 100,000 shares of common stock were issued to the
Consultant. The market value as of that date was $3.00 per share. Expense is
recorded based on the fair value of the stock at grant date and recognized over
the service period of the contract. On September 21, 2000, the terms of the
agreement were changed to issue 500,000 options at $1. Up to date, the options
have not been issued to the Consultant. The value of the options was being
recognized as expense over the service period of the contract. However, as of
September 30, 2002, the Company determined that it was no longer utilising the
services provided by Netreach Studios, Ltd. as described in the contract, and
therefore expensed the remaining value of the stock and options issued during
the quarter ended September 30, 2002. Compensation expense of $186,722 was
recognised during the year ended December 31, 2002.

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"). 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 8,000,000. 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. As of the latest practicable date, March 3, 2003, no
shares or options have been issued under this Plan.


                                      F-17
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 14 - BANK GUARANTEE

On July 9, 2002, the Company provided a bank letter of guarantee to a customer
in the amount of $1,362,461 to secure a system integration contract. As security
for the bank letter of guarantee, a cash deposit of $396,278 placed at the bank
and a Letter of Undertaking of $996,183 issued to the Bank by a third party
company, whose business is the provision of guarantees to unrelated parties. To
secure the Letter of Undertaking, motor vehicles with a total carrying value of
$114,608 and 50% of the registered capital of FTCL amounting to $500,000 were
pledged to the third party company.

The system integration project was completed in November 2002 and the bank
letter of guarantee and Letter of Undertaking were withdrawn and all assets so
pledged were released on November 30, 2002.

NOTE 15 - CONCENTRATION OF A CUSTOMER

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

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                                      2002              2001
                                                   ----------        ----------
<S>                                                <C>               <C>
Net sales derived from Customer A                  $8,229,159        $4,097,560
                                                   ==========        ==========

% to total net sales                                       88%               80%
                                                   ==========        ==========

Account receivable from Customer A                    952,244             9,517
                                                   ==========        ==========

% to total accounts receivable                             92%                5%
                                                   ==========        ==========
</Table>

NOTE 16 - PRO-FORMA INFORMATION

The following table reflects the results of operations on a pro forma basis as
if the acquisition had occurred at the beginning of the respective periods
shown.

<Table>
<Caption>
                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                                       2001
                                                                   ------------
                                                                    (UNAUDITED)
<S>                                                                <C>
Net sales                                                          $  5,380,124
                                                                   ============

Net loss                                                           $   (358,629)
                                                                   ============

Loss per share - basic and diluted                                 $         --
                                                                   ============
</Table>

The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the acquisition been consummated
as of the dates indicated, nor are they necessarily indicative of the future
operating results.


                                      F-18
<PAGE>
                       FORLINK SOFTWARE CORPORATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in US Dollars)

NOTE 17 - SUBSEQUENT EVENT

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 loans
from major stockholders of the Company.


                                      F-19
<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, 2002 and as of the date of filing this report, 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 were, and are, as follows:

<Table>
<Caption>
Name               Age     Position                                       Director Since
---------------    ---     -------------------------------------------    --------------
<S>                <C>     <C>                                            <C>
Yi He              36      President and Director                          August 2001

Xiaoxia Zhao       38      Chairman, Secretary, Treasurer, Chief          November 1999
                           Executive Officer, Chief Financial Officer,
                           Chief Accounting Officer and Director

Honkeung Lam       50      Director                                        August 2001
</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. Pursuant to the Plan of
Reorganization as of closing in August of 2001 and approval by the Board and a
majority of the shareholders of the Company, all of the former officers and
directors of the Company resigned except for Xiaoxia Zhao and two former owners
of SLAIT, Yi He and Honkeung Lam, were appointed as officers and directors of
the Company.

Yi He has been President and 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.

Xiaoxia Zhao has been Chairman, Secretary, Treasurer, Chief Executive Officer,
Chief Financial Officer, Chief Accounting Officer and Director of the Company
since August 2001. From November 1999 until August 2001, Mr. Zhao was Chairman,
President, Chief Technical Officer and Director of the Company. During the
period from January 1998 until October 1998, he was Vice President and Chief
Technical Officer of GBS InfoTech Co. From August 1997 to January 1998, he was
Chief Engineer and in charge of technology management and the system integration
department of Beijing Long Ma Software Development Co., Ltd. From 1996 until
1997, he was the leading engineer in charge of the Yahoo!Japan operation and
support. During the period from 1991 to 1996, he was a System Engineer with the
Japan Itochu Group CRC Research Institute. Xiaoxia Zhao has a Master Degree in
Computer Science.

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.

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, 2002, all Section 16(a) filing requirements
applicable to its officers, directors and ten percent


                                       13
<PAGE>
shareholders were in compliance with SEC regulations, except that Xiaoxia Zhao
has not yet reported a sale of 11,000 shares in approximately July 2002 under
Rule 144, and a sale of 174,375 shares of restricted common stock in a private
transaction in November 2002, which the Company expects will be reported late on
Form 5.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth information about compensation paid to, or
accrued for the benefit of the Company's officers and directors during the years
ended December 31, 2002, 2001, and 2000. None of the Company's directors or
executive officers earned more than $100,000 during the years ended December 31,
2002, 2001, and 2000.

                           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, President & Director                  2002          $27,108         -0-            -0-
                                             2001          $ 6,155         -0-            -0-
                                             2000            N/A           N/A            N/A

Xiaoxia Zhao, Chief Executive Officer,       2002          $29,819         -0-            -0-
Chairman, Secretary, Treasurer, Chief        2001          $21,826         -0-            -0-
Financial and Accounting Officer             2000          $19,955         -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, President & Director     2002         -0-            -0-             -0-           -0-
                                2001         -0-            -0-             -0-           -0-
                                2000         N/A            N/A             N/A           N/A

Xiaoxia Zhao, Chief             2002         -0-            -0-             -0-           -0-
Executive Officer,              2001         -0-            -0-             -0-           -0-
Chairman, Secretary,            2000         -0-            -0-             -0-           -0-
Treasurer, Chief Financial
and Accounting Officer
</Table>

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.


                                       14
<PAGE>

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, 2002. 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.

EMPLOYEE BENEFIT AND CONSULTING SERVICES COMPENSATION PLANS

As of December 31, 2002, 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.


                                       15
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of March 17, 2003, 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.

<Table>
<Caption>
                                     Amount and Nature     Percent Owned
                                       of Beneficial      Beneficially and
Name and Address of                      Ownership           of Record
  Beneficial Owner                        (1)(3)                (2)
---------------------------------    -----------------    ----------------
<S>                                  <C>                  <C>
Xiaoxia Zhao *                            4,990,250             6.5%
231-2-501 Hui Xing Li
Chao Yang District
Beijing, China

Yi He *                                  25,800,000            33.6%
9/F Fang Yuan Mansion
No. 56 Zhongguancun South Rd Yi
Haidian District, Beijing, China

Honkeung Lam *                           10,500,000            13.7%
9/F Fang Yuan Mansion
No. 56 Zhongguancun South Rd Yi
Haidian District, Beijing, Chin

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        41,290,250            53.8%
Company as a group (three persons)
</Table>

*    An officer and/or director of the Company.

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

(2)  Based upon 76,773,207 shares of Common Stock outstanding as of March 17,
     2003.

(3)  All of the shares of Common Stock held by officers, directors and principal
     shareholders listed above are "restricted securities" and, as such, are
     subject to limitations on resale. The shares may be sold pursuant to Rule
     144 of the Securities Act of 1933, as amended, under certain circumstances.

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, 2002:

                                       16
<PAGE>
<Table>
<Caption>
                                                                                            Number of securities
                                                                                            available for future
                                Number of securities to be                                  issuance under equity
                                  issued upon exercise of         Weighted-average            compensation plans
                                   outstanding options,      exercise price of options,     (excluding securities
                                    warrants and rights         warrants and 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             1,337,000                      $1.00                     7,819,793

Total                                    1,337,000                      $1.00                     7,819,793
</Table>

As of December 31, 2002, 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.

See also Note 13 on page F-15 of the financial statements.


                                       17
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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 "Plan"), the Company acquired 100% of the issued and
outstanding shares of BFSTC in exchange for 20,000,000 shares of restricted
Common Stock of the Company. Under the terms of the Plan, Liang Che, Xiaoxia
Zhao, and Wei Song were issued 5,812,500 shares each, and Jie Zhang was issued
1,312,500 shares.

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 of the Company's shares, respectively. Additionally, at Closing all of
the Company's officers and directors resigned with the exception of Xiaoxia Zhao
who remains 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 repayment to Mr. Xiaoxia
Zhao and Mr. Yi He who are stockholders and also the directors of the Company.
The amounts due from/to stockholders do not bear any interest and do not have
clearly defined term of repayment.

The building located in Chengdu 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 December 31, 2002, the
amount of the mortgage loan is $62,067 and is included in "Amounts due to
stockholders" on the balance sheet.

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 AND REPORTS ON FORM 8-K

(a)      Exhibits

<Table>
<Caption>
Exhibit
Number      Description
-------     -----------
<S>         <C>
 2.1        Plan of Reorganization regarding acquisition of Beijing Forlink
            Software Technology Co. Ltd., dated November 3, 1999 (Incorporated
            by reference to Exhibit No. 2.1 of the current report on Form 8-K
            dated November 3, 1999, and filed November 18, 1999.)

 2.2        Addendum to the Plan of Reorganization acquisition of Beijing
            Forlink Software Technology Co. Ltd., dated November 3, 1999.
            (Incorporated by reference to Exhibit No. 2.2 of the current report
            on Form 8-K/A-2 dated November 3, 1999, and filed March 31 2000.)

 2.3        Plan of Reorganization dated January 11, 2001 between the Company
            and Beijing SLAIT Science & Technology Development Limited Co.
            (Incorporated by reference to Annex F
</Table>


                                       18
<PAGE>

<Table>
<Caption>
Exhibit
Number      Description
-------     -----------
<S>         <C>
            of the Definitive Information Statement pursuant to Section 14C of
            the Securities Exchange Act of 1934, as amended, filed July 24,
            2001.)

 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 (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.)
</Table>

(b)      Reports on Form 8-K

         The Company did not file any Current Reports on Form 8-K during the
quarter ended December 31, 2002.


ITEM 14. CONTROLS AND PROCEDURES

         The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the Company's disclosure controls and procedures within 90 days prior
to the date of filing of this Annual Report on Form 10-KSB. Management believes
that the Company's current internal controls and procedures are effective and
designed to ensure that information required to be disclosed by the Company in
its periodic reports is recorded, processed, summarized and reported, within the
appropriate time periods specified by the SEC, and that such information is
accumulated and communicated to the Company's CEO and CFO as appropriate to
allow timely decisions to be made regarding required disclosure. As of the date
of filing of this report, there were no significant corrective actions taken by
the Company or other changes made to these internal controls. Management of the
Company does not believe there were changes in other factors that could
significantly affect these controls subsequent to the date of the evaluation.


                                       19
<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:  March 28, 2003.

                                   By: /s/ Xiaoxia Zhao
                                       -----------------------------------------
                                       Xiaoxia Zhao, Chairman, Secretary,
                                       Treasurer and Chief Executive Officer and
                                       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/ Xiaoxia Zhao
                                       -----------------------------------------
                                       Xiaoxia Zhao, Chairman, Secretary,
                                       Treasurer and Chief Executive Officer and
                                       Chief Financial and Accounting Officer

                                   Date: March 28, 2003


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

                                   Date: March 28, 2003


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

                                   Date: March 28, 2003


                            CERTIFICATION PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Solely for the purposes of complying with, and the extent required by 18 U.S.C.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the
undersigned certifies, in his capacity as the Chief Executive Officer and Chief
Financial Officer of Forlink Software Corporation, Inc., that, to his knowledge,
the Annual Report of the company on Form 10-KSB for the period ended December
31, 2002, fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934 and that the information contained in the report
fairly presents, in all material respects, the company's financial condition and
results of operations.

March 28, 2003


/s/ Xiaoxia Zhao
-----------------------------------------------------------------
Xiaoxia Zhao, Chief Executive Officer and Chief Financial Officer


                                       20
<PAGE>

                            CERTIFICATION PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, Xiaoxia Zhao, Chief Executive Officer and Chief Financial Officer of
Forlink Software Corporation, Inc., certify that:

         1. I have reviewed this annual report on Form 10-KSB of Forlink
Software Corporation, Inc.;

         2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

         3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

                  a) designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

                  b) evaluated the effectiveness of the registrant's disclosure
         controls and procedures as of a date within 90 days prior to the filing
         date of this annual report (the "Evaluation Date"); and

                  c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

         5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

                  a) all significant deficiencies in the design or operation of
         internal controls which could adversely affect the registrant's ability
         to record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

                  b) any fraud, whether or not material, that involves
         management or other employees who have a significant role in the
         registrant's internal controls; and

         6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

March 28, 2003

/s/ Xiaoxia Zhao
-----------------------------------------------------------------
Xiaoxia Zhao, Chief Executive Officer and Chief Financial Officer


                                       21