UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




FORM
10-Q


x
            Quarterly
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended March 31,
2009.


or


 ̈
            Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the transition period
from  to.




Commission
File Number: 000-51725




JINGWEI
INTERNATIONAL LIMITED


(Exact
name of registrant as specified in its charter)


Nevada
                
                20-1970137(State
      or Other Jurisdiction of
                
                (I.R.S.
      EmployerIncorporation
      or Organization)
                
                Identification
      No.)




Room
1605, Tianan Hi-Tech Plaza Tower A, Tianan Cyber Park


Futian
District,


Shenzen, PRC
518040


(Address
of Principal Executive Offices including Zip Code)




+86
1085251198


(Registrant’s
Telephone Number, Including Area Code)




Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 xNo
 ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).*  Yes  o No  o *The registrant
has not yet been phased into the interactive data requirements.




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange. (Check
one):




Large
      Accelerated Filer  ̈
              Accelerated
      Filer  ̈
              Non-Accelerated
      Filer  ̈
              Smaller
      Reporting Company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈No x




As of May
19, 2009, there were 17,049,000 shares of the issuer’s common stock, par value
$0.001 per share, outstanding.







PART I. FINANCIAL INFORMATIONItem
      1.
                
                Condensed
      Consolidated Financial Statements
                1Item
      2.
                
                Management’s
      Discussion and Analysis or Plan of Operation
                20Item
      3.
                
                Quantitative
      and Qualitative Disclosures About Market Risk
                26Item
      4T.
                
                Controls
      and Procedures
                27PART
      II. OTHER INFORMATIONItem
      1.
                
                Legal
      Proceedings
                28Item
      1A.
                
                Risk
      Factors
                28Item
      2.
                
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                28Item
      3.
                
                Defaults
      Upon Senior Securities
                28Item
      4.
                
                Submission
      of Matters to a Vote of Security Holders
                28Item
      5.
                
                Other
      Information
                28Item 6.
                
                Exhibits
                28









Item
1.Condensed Consolidated Financial Statements


Jingwei
International Limited


and


Subsidiaries





CONTENTS
                    PageCondensed
      Consolidated Balance Sheets
                    2Condensed
      Consolidated Statements of Operations
                    3Condensed
      Consolidated Statements of Comprehensive Income
                    4Condensed
      Consolidated Statement of Stockholders' Equity
                    5Condensed
      Consolidated Statements of Cash  Flows
                    6Notes
      to Condensed Consolidated Financial Statements
                    7-19




1




Jingwei
International Limited And Subsidiaries


Condensed
Consolidated Balance Sheets


(Stated
in US Dollars)





March
      31
                          
                          
                          December
      312009
                          
                          
                          2008(Unaudited)
                          
                          
                          (Audited)ASSETSCurrent
      assetsCash
      and equivalents
                          
                          $
                          6,495,461
                          
                          
                          
                          5,472,408Inventories
                          
                          
                          4,473,557
                          
                          
                          
                          2,802,037Trade
      receivables (net of allowance of doubtful accounts of $141,045 and
      $135,422)
                          
                          
                          19,098,672
                          
                          
                          
                          19,371,524Other
      receivables, prepayments and deposits (net of allowance of doubtful
      accounts of $103,410 and $117,787)
                          
                          
                          1,516,194
                          
                          
                          
                          3,749,169Total
      Current Assets
                          
                          
                          31,583,884
                          
                          
                          
                          31,395,138Non-current
      assetsProperty,
      plant and equipment - Net
                          
                          
                          1,238,730
                          
                          
                          
                          1,305,917Aquired
      Intangible Assets
                          
                          
                          11,807,993
                          
                          
                          
                          12,238,501Long
      term Investment
                          
                          
                          1,784,943
                          
                          
                          
                          1,733,244Total
      Assets
                          
                          $
                          46,415,550
                          
                          
                          
                          46,672,800LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesTrade
      payables
                          
                          $
                          1,296,397
                          
                          
                          
                          1,965,619Accruals
      and other payables
                          
                          
                          1,055,994
                          
                          
                          
                          1,465,571Income
      Tax payable
                          
                          
                          463,247
                          
                          
                          
                          358,168Deferred
      Tax
                          
                          
                          267,890
                          
                          
                          
                          192,930Loan
      from a stockholder
                          
                          
                          487,905
                          
                          
                          
                          559,286Total
      Current Liabilities
                          
                          
                          3,571,433
                          
                          
                          
                          4,541,574Total
      Liabilities
                          
                          
                          3,571,433
                          
                          
                          
                          4,541,574EquityCommon
      stock, $.001 par value; 75,000,000 shares authorized, 17,049,000 shares
      issued and outstanding
                          
                          
                          17,049
                          
                          
                          
                          17,049Additional
      Paid-in Capital
                          
                          
                          15,442,714
                          
                          
                          
                          15,403,411Statutory
      and other reserves
                          
                          
                          883,936
                          
                          
                          
                          883,936Accumulated
      other comprehensive income
                          
                          
                          2,607,586
                          
                          
                          
                          2,564,066Retained
      Earnings
                          
                          
                          16,423,802
                          
                          
                          
                          15,803,104Total
      Jingwei International Limited Stockholders' Equity
                          
                          
                          35,375,087
                          
                          
                          
                          34,671,566Noncontrolling
      interest
                          
                          
                          7,469,030
                          
                          
                          
                          7,459,660Total
      Equity
                          
                          
                          42,844,117
                          
                          
                          
                          42,131,226Total
      Liabilities and Stockholders' Equity
                          
                          $
                          46,415,550
                          
                          
                          $
                          46,672,800





See
accompanying notes to condensed consolidated financial
statements.


2




Jingwei
International Limited And Subsidiaries


Condensed
Consolidated Statements of Operations (unaudited)


(Stated
in US Dollars)





Three
      months Ended March 31,
                                2009
                              
                              
                              Three
      months Ended
                                March
      31, 2008Sales
                              
                              $
                              3,943,718
                              
                              
                              $
                              5,753,448Cost
      of sales
                              
                              
                              (2,422,306
                              )
                              
                              
                              (2,069,388
                              )Gross
      profit
                              
                              
                              1,521,412
                              
                              
                              
                              3,684,060ExpensesSelling,General
      and Administrative expenses
                              
                              
                              (403,377
                              )
                              
                              
                              (697,524
                              )Research
      and development costs
                              
                              
                              (253,857
                              )
                              
                              
                              (164,992
                              )Total
      Expenses
                              
                              
                              (657,234
                              )
                              
                              
                              (862,516
                              )Income
      from operations
                              
                              
                              864,178
                              
                              
                              
                              2,821,544Other
      income (expenses)Subsidy
      income
                              
                              
                              121,216
                              
                              
                              
                              256,728Interest
      income
                              
                              
                              4,024
                              
                              
                              
                              4,925Finance
      costs
                              
                              
                              -
                              
                              
                              
                              (3,763
                              )Other
      income (expense)
                              
                              
                              (14,066
                              )
                              
                              
                              4,094Total
      other income
                              
                              
                              111,174
                              
                              
                              
                              261,984Income
      before income taxes
                              
                              
                              975,352
                              
                              
                              
                              3,083,528Income
      taxes
                              
                              
                              (354,654
                              )
                              
                              
                              (303,939
                              )Net
      income
                              
                              
                              620,698
                              
                              
                              
                              2,779,589Less:
      Net income attributable to the noncontrolling interest
                              
                              
                              -
                              
                              
                              
                              -Net
      Income attributable to Jingwei International Limited
                              
                              $
                              620,698
                              
                              
                              $
                              2,779,589Earnings
      Per Share (Basic)
                              
                              $
                              0.04
                              
                              
                              $
                              0.16Earnings
      Per Share (Diluted)
                              
                              $
                              0.04
                              
                              
                              $
                              0.16Weighted
      Average Common Shares OutstandingBasic
                              
                              
                              17,049,000
                              
                              
                              
                              17,049,000Diluted
                              
                              
                              17,049,000
                              
                              
                              
                              17,131,660





See
accompanying notes to condensed consolidated financial
statements.


3




Jingwei
International Limited And Subsidiaries


Condensed
Consolidated Statements of Comprehensive Income (unaudited)


(Stated
in US Dollars)





Three
      Months
                      Ended
      March
                      31,
      2009
                    
                    
                    Three
      Months
                      Ended
      March
                      31,
      2008Net
      Income
                    
                    $
                    620,698
                    
                    
                    $
                    2,779,589Other
      Comprehensive IncomeForeign
      currency translation adjustment
                    
                    
                    43,520
                    
                    
                    
                    617,851Comprehensive
      Income
                    
                    
                    664,218
                    
                    
                    
                    3,397,440Comprehensive
      income attributable to the
      noncontrolling interest
                    
                    
                    -
                    
                    
                    
                    -Comprehensive
      income attributable to Jingwei Limited
                    
                    $
                    664,218
                    
                    
                    $
                    3,397,440





See
accompanying notes to condensed consolidated financial
statements.


4





Jingwei
International Limited And Subsidiaries


Condensed
Consolidated Statement of Stockholders' Equity


(Stated
in US Dollars)





Jingwei
      International Limited
                        StockholdersTotal
                      
                      
                      Comprehensive
                        Income
                      
                      
                      Retained
                        Earnings
                      
                      
                      Accumulated
                        Other
                        Comprehensive
                        income
                      
                      
                      Common
                        Stock
                      
                      
                      Additional
                        Paid-In
                        Capital
                      
                      
                      Statutory
      and
                        Other
                        Reserves
                      
                      
                      Noncontrolling
                        InterestBeginning
      Balance
                      
                      $
                      42,131,226
                      
                      
                      
                      
                      
                      $
                      15,803,104
                      
                      
                      $
                      2,564,066
                      
                      
                      $
                      17,049
                      
                      
                      $
                      15,403,411
                      
                      
                      $
                      883,936
                      
                      
                      $
                      7,459,660Comprehensive
      income:Net
      income (loss)
                      
                      
                      620,698
                      
                      
                      
                      620,698
                      
                      
                      
                      620,698Other
      comprehensive income:Foreign
      currency translation adjustment
                      
                      
                      52,890
                      
                      
                      
                      43,520
                      
                      
                      
                      
                      
                      
                      
                      43,520
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      9,370Share
      based compensation cost
                      
                      
                      39,303
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      39,303Ending
      balance(unaudited)
                      
                      $
                      42,844,117
                      
                      
                      
                      
                      
                      
                      $
                      16,423,802
                      
                      
                      $
                      2,607,586
                      
                      
                      $
                      17,049
                      
                      
                      $
                      15,442,714
                      
                      
                      $
                      883,936
                      
                      
                      $
                      7,469,030





See
accompanying notes to condensed consolidated financial
statements.


5




Jingwei
International Limited And Subsidiaries


Condensed
Consolidated Statements of Cash  Flows (unaudited)


(Stated
in US Dollars)





Three
      Months Ended
                    March
      31, 2009
                  
                  
                  Three
      Months
                    Ended
      March 31,
                    2008Cash
      flows from operating activitiesNet
      income attributable to Jingwei International Limited
                  
                  $
                  620,698
                  
                  
                  $
                  2,779,589Adjustments
      to reconcile net income to net cash(used in)provided by operating
      activities:Depreciation
      & amortisation
                  
                  
                  527,181
                  
                  
                  
                  326,288Allowance
      for doubful accounts
                  
                  
                  (9,072
                  )
                  
                  
                  22,565Amortization
      of stock options issued for services
                  
                  
                  39,303
                  
                  
                  
                  -Changes
      in operating assets and liabilities:Trade
      receivables
                  
                  
                  290,967
                  
                  
                  
                  (1,610,102
                  )Other
      receivables,prepayments and deposits
                  
                  
                  353,547
                  
                  
                  
                  (2,054,221
                  )Inventories
                  
                  
                  390,073
                  
                  
                  
                  (368,348
                  )Trade
      payables
                  
                  
                  (830,274
                  )
                  
                  
                  (1,384,250
                  )Other
      payables and accrued expenses
                  
                  
                  (410,779
                  )
                  
                  
                  (813,300
                  )Income
      tax payable
                  
                  
                  179,347
                  
                  
                  
                  (218,016
                  )Net
      cash flows provided by operating activities
                  
                  
                  1,150,991
                  
                  
                  
                  (3,319,795
                  )Cash
      flows from investing activitiesAcquisition
      of property and equipment
                  
                  
                  (10,289
                  )
                  
                  
                  (112,635
                  )Acquisition
      of intangible assets
                  
                  
                  (3,433
                  )
                  
                  
                  (1,176,981
                  )Long
      term Investment
                  
                  
                  (49,520
                  )
                  
                  
                  -Net
      cash flows used in investing activities
                  
                  
                  (63,242
                  )
                  
                  
                  (1,289,616
                  )Cash
      flows from financing activitiesNet
      proceeds from private placement
                  
                  
                  -
                  
                  
                  
                  -Loan
      from a stockholder
                  
                  
                  (71,579
                  )
                  
                  
                  -Repayment
      of stockholder loans
                  
                  
                  -
                  
                  
                  
                  -Net
      cash flows used in financing activities
                  
                  
                  (71,579
                  )
                  
                  
                  -Effect
      of foreign currency translation on cash and cash
    equivalents
                  
                  
                  6,883
                  
                  
                  
                  1,332,130Net
      increase (decrease) in cash and equivalents
                  
                  
                  1,023,053
                  
                  
                  
                  (3,277,281
                  )Cash
      and cash equivalents-beginning of period
                  
                  
                  5,472,408
                  
                  
                  
                  10,760,020Cash
      and cash equivalents-end of period
                  
                  
                  6,495,461
                  
                  
                  $
                  7,482,739Supplemental
      Disclosure of Cash Flow InformationIncome
      tax paid
                  
                  $
                  175,317
                  
                  
                  $
                  551,013Supplemental
      Disclosure of Non-cash Investing ActivitiesTransfer
      of prepayment to acquired intangible assets
                  
                  $
                  -
                  
                  
                  $
                  4,498,759





See
accompanying notes to condensed consolidated financial
statements.


6


JINGWEI
INTERNATIONAL LIMITED


NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Note
1       CORPORATE INFORMATION AND DESCRIPTION
OF BUSINESS





The
accompanying unaudited condensed consolidated financial statements have been
prepared by Jingwei International Limited (the “Company”).  These
statements include all adjustments (consisting only of their normal recurring
adjustments) which management believes necessary for a fair presentation of the
statements and have been prepared on a consistent basis using the accounting
policies described in the Form 10-K for the year ended December 31, 2008 (“2008
Form 10-K”).  Certain financial information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission, although the Company believes that the accompanying disclosures are
adequate to make the information presented not misleading.  The Notes
to Financial Statements included in the 2008 Form 10-K should be read in
conjunction with the accompanying interim financial statements. The interim
operating results for the three months ended March 31, 2009 may not be
indicative of operating results to be expected for the full year.





Note
2       SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Basis of
presentation and consolidation





The
accompanying consolidated financial statements of Jingwei International Limited
(“Jingwei International”), its subsidiaries, namely, Jingwei HK, Jingwei
Hengtong, and its variable interest entities, namely Jingwei Communication,
Yulong IT, Yulong Software and Beijing Media have been prepared in accordance
with generally accepted accounting principles in the United States of
America.





The
consolidated financial statements include the accounts of Jingwei International,
its subsidiaries and variable interest entities.  All significant
inter-company accounts and transactions have been eliminated in
consolidation.





On
January 17, 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46:  Consolidation of Variable Interest Entities,
an interpretation of ARB 51 (“FIN 46”), which was superseded by a revised
interpretation (“FIN 46R”).  These interpretations address financial
reporting for entities over which control is achieved through means other than
voting rights.  According to the requirements of FIN 46R, Jingwei
International has evaluated its relationships with Jingwei
Communication.  Jingwei International has concluded that, Jingwei
Communication is a “variable interest entity” for accounting purposes, and as a
result of the contractual arrangements, which enable Jingwei International to
control Jingwei Communication, Jingwei International is the primary beneficiary
of Jingwei Communication.  Accordingly, Jingwei International adopted
the provisions of FIN 46R and consolidates Jingwei Communication. Jingwei
Communication’s original capital contribution is recorded as “Noncontrolling
interest” on the Company’s consolidated balance sheet.


7


Jingwei
International is the primary beneficiary of Jingwei Communication, New Yulong
IT, New Yulong Software, and Beijing New Media, which are qualified as variable
interest entities (VIE). The assets and liabilities and revenues and expenses of
the VIE have been included in the accompanying consolidated financial
statements. The principal activities of the VIE are in the provision of
datamining and software development services. As of March 31, 2009, the VIE had
assets of $44,490,399, liabilities of $16,987,478, revenues of $3,443,624, and
operating expenses of $490,030. No assets were pledged or given as collateral
against any borrowings.





Pursuant
to the operating agreement among Jingwei Hengtong, Jingwei Communication and the
shareholders of Jingwei Communication signed on February 8, 2007, Jingwei
Hengtong agrees to guarantee Jingwei Communication’s performance of its
obligations under contracts, agreements and transactions between Jingwei
Communication and third party customers. In return, Jingwei Communication had
pledged its accounts receivables and all of its assets to Jingwei
Hengtong.





Use of
estimates





In
preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting periods. These accounts and estimates include, but are not limited to,
the valuation of trade receivables and other receivables, inventories, and the
estimation on useful lives of property, plant and equipment and intangible
assets. Actual results could differ from those estimates.





Concentrations
of credit risk





Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash, and cash equivalents, trade and
other receivables. As of March 31, 2009, substantially all of the Company’s cash
and cash equivalents were held by major financial institutions located in the
PRC. With respect to trade and other receivables, the Company extends credit
based on an evaluation of the customer’s and other debtor’s financial condition.
The Company generally does not require collateral for trade and other
receivables and maintains an allowance for doubtful accounts of trade and other
receivables.





Fair
value of financial instruments





The
carrying values of the Company’s financial instruments, including cash and cash
equivalents, trade receivables, other receivables, prepayments and deposits,
trade and other payables, and loan from a stockholder approximate their fair
values due to the short-term maturity of such instruments.





It is
management’s opinion that the Company is not exposed to significant interest,
price or credit risks arising from these financial instruments. In respect of
foreign currency risk, the Company is not exposed to this risk as the majority
of its trading transactions are denominated in its functional
currency.





Comprehensive
Income





The
Company follows the Statement of Financial Accounting Standard (“SFAS”) No. 130,
Reporting Comprehensive Income. Comprehensive income is defined as the change in
equity of a company during a period from transactions and other events and
circumstances excluding transactions resulting from investments from owners and
distributions to owners. For the Company, comprehensive income for the periods
presented includes net income and foreign currency translation
adjustments.


8




Cash and
cash equivalents





Cash and
cash equivalents include all cash on hand, deposits in banks, and highly liquid
investments with original maturity of three months or less.





Allowance
of doubtful accounts





The
Company establishes an allowance for doubtful accounts based on management’s
assessment of the collectibility of trade and other receivables. A considerable
amount of judgment is required in assessing the amount of the allowance and the
Company considers the historical level of credit losses and applies percentages
to aged receivable categories. The Company makes judgments about the credit
worthiness of each customer based on ongoing credit evaluations, and monitors
current economic trends that might impact the level of credit losses in the
future. If the financial condition of the customers is to deteriorate, resulting
in their inability to make payments, a larger allowance may be
required.





Based on
the above assessment, during the reporting years, the management establishes the
general provisioning policy to make allowance according to the aging of trade
and other receivables as follows:





%
      of generalTrade
      and other receivables due:
                  
                  provisionWithin
      one year
                  
                  
                  0.3After
      one year but within two years
                  
                  
                  5.0After
      two years but within three years
                  
                  
                  20.0Over
      three years
                  
                  
                  100.0





Additional
specific provision is made against trade and other receivables aged less than
three years to the extent which they are considered to be doubtful.





Bad debts
are written off when identified. The Company extends unsecured credit to
customers ranging from four to seven months in the normal course of business.
The Company does not accrue interest on trade and other
receivables.





Property
and equipment, net





Property
and equipment are stated at cost less accumulated depreciation. Cost represents
the purchase price of the asset and other costs incurred to bring the asset into
its existing use.





Depreciation
is provided on straight-line basis over the assets’ estimated useful lives. The
principal depreciation rates are as follows:-





Annual
      rate
                  
                  
                  Residual
      valueSoftware
                  
                  
                  20.0
                  %
                  
                  
                  0
                  %Motor
      vehicles
                  
                  
                  19.4
                  %
                  
                  
                  3
                  %Office
      equipment and computers
                  
                  
                  19.4
                  %
                  
                  
                  3
                  %




9





Maintenance
or repairs are charged to expense as incurred. Upon sale or disposition, the
applicable amounts of asset cost and accumulated depreciation are removed from
the accounts and the net amount less proceeds from disposal is charged or
credited to income.





Acquired
intangible assets, net





Acquired
intangible assets are the database valued at acquisition cost less accumulated
amortization. Amortization is calculated using the straight-line method over
their expected useful lives of 8 years.





Impairment
of long-lived assets





The
Company follows SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets.  The Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. Long-lived assets and
intangibles are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable.  The Company recognizes impairment of long-lived assets
and intangibles in the event that the net book values of such assets exceed the
future undiscounted cash flows attributable to such assets. The Company is not
aware of any events or circumstances which indicate the existence of an
impairment which would be material to the Company’s financial
statements.





Revenue
recognition





In
accordance with Securities and Exchange Commission (“SEC”) Staff Accounting
Bulletin (“SAB”) No. 104, Revenue Recognition, the
Company recognizes revenue, net of taxes, when persuasive evidence of a customer
or distributor arrangement exists or acceptance occurs, receipt of goods by
customer occurs, the price is fixed or determinable, and the sales revenues are
considered collectible.





Software
and system services





Subject
to these criteria, the Company generally recognizes revenue from software and
system services when: a) a contract has been signed by the customers, b) the
Company has delivered software and system services to the customers as defined
by the customers receiving the work product, c) the project milestone delivered
is assigned a fixed price, and d) the customer acceptance of the project is
reasonably assured.





Datamining
services





Revenue
from datamining services is recognized when the services are
rendered.


10





Consumer
electronic sales





The
Company follows Emerging Issues Task Force (“EITF”) No. 99-19, “Reporting
Revenue as a Principal versus Net as an Agent”. Under the guidance of this EITF,
the assessment of whether revenue should be reported gross with separate display
of cost of sales to arrive at gross profit should be based on the following
considerations: the Company acts as principal in the transaction, takes titles
to the products and has risk and rewards of ownership (such as the risk of loss
for collection, delivery or return). Based on EITF No.99-19, the Company
recognized all revenue from the sales of consumer electronic goods on a net
basis as a marketing service fee. This is classified as datamining service for
the three months ended March 31, 2009 in Segment information in Note
8.





Government
subsidies that compensate the Company for general expenses incurred and research
and development activities are recognized as income at the time when the
approval documents are obtained from the relevant government authorities and
when they are received.





Subsidy
income





Government
subsidies that compensate the Company for general expenses incurred and research
and development activities are recognized as subsidy income at the time when the
approval documents are obtained from the relevant government authorities and
when the proceeds are received.





Included
in subsidy income for the three months ended March 31, 2009 of $121,216 is $
14,606 received from the Shenzhen Technology and Information Bureau on March 11,
2009, which is categorized as a subsidy to the Company for technology research
and development and $ 106,610 received from the Shenzhen tax bureau, as value
added tax refund.





Advertising,
transportation, research and development expenses





Advertising,
transportation and research and development expenses are charged to expense as
incurred.





For the
three months ended March 31, 2009, there were no advertising and transportation
costs incurred.





Retained
earnings -appropriated





In
accordance with the relevant PRC regulations and the Articles of Association of
the Company’s PRC entities, allocation from net income to the following reserves
is required:





(a)     Statutory
surplus reserve





In
accordance with the relevant laws and regulations of the PRC and the articles of
association of the Company’s PRC entities, these companies are required to
appropriate 10% of their net income reported in the PRC statutory accounts,
after offsetting any prior years’ losses, to the statutory surplus reserve on an
annual basis.  When the balance of such reserve reaches 50% of the
respective registered capital of the subsidiaries, any further appropriation is
optional.





The
statutory surplus reserve can be used to offset prior years’ losses, if any, and
may be converted into registered capital, provided that the remaining balance of
the reserve after such conversion is not less than 25% of registered capital.
The statutory surplus reserve is non-distributable.


11





(b)     Discretionary
surplus reserve





In accordance with the
articles of association ofthe Company’s PRC entities, the appropriation of net
income reported in the PRC statutory accounts to the discretionary surplus
reserve and its utilization are subject to the stockholders’approval at their
general meeting.  None of the Company’s PRC entitieshad appropriated their
earnings to discretionary surplus reserve from their respective dates of
inception to March 31, 2009.





Income
taxes





The
Company uses the asset and liability method of accounting for income taxes
pursuant to SFAS No. 109 “Accounting for Income Taxes”.  Under the
asset and liability method of SFAS 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary differences
between the financial statements carrying amounts of existing assets and
liabilities and loss carry forwards and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.





Off-balance
sheet arrangements





The
Company does not have any off-balance sheet arrangements.





Reporting
Currency and Translation





The
financial statements of the Company’s foreign subsidiaries are measured using
the local currency as the functional currency; however, the reporting currency
is the United States dollar (“USD”). Assets and liabilities of these companies
have been translated into dollars using the exchange rate at the balance sheet
date. Income and expense items are translated at average rate for the
period.  Translation adjustments are reported separately and
accumulated in a separate component of equity (cumulative translation
adjustment).





Foreign
Currency Transactions





Exchange
differences arising on settlement of monetary items or on translating monetary
items at the balance sheet date are recognized in the income statement except
for exchange differences arising on monetary items that form part of the
Company’s net investment in foreign subsidiaries, which are recognized reported
separately and accumulated in a separate component of equity (cumulative
translation adjustment).





Foreign
Operations





All of
the Company’s operations and assets are located in China. The Company may be
adversely affected by possible political or economic events in this country. The
effect of these factors cannot be accurately predicted.


12





Stock-based
compensation





The
Company adopted SFAS No. 123(R), Share-Based Payment effective January 1, 2006.
Common stock, stock options and common stock warrants issued to employees,
directors and non-employees are recorded on the basis of their fair value, as
required by SFAS No. 123(R). For stock options and common stock warrants issued
to non-employees, they are measured as of the date required by EITF Issue 96-18,
“Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.”





On April
16, 2008 the Company granted total of 44 key employees of the Company, options
to purchase a total of 260,400 shares of the Company’s common stock at a strike
price equal to US$4.95 and vested equally in four years with 65,100 shares in
each year. The contractual term is 10 years and it is non-transferable. Based on
the Black-Scholes option pricing model, the options were valued at $593,191
($2.278 per unit) with an assumed 80.20% volatility, 6.25 years term for the
options, a risk free rate of 3.27% and a dividend yield of 0%. There was $37,074
and $– of expense recognized for three months ended March 31, 2009 and
2008.





On
December 25, 2008 the Company granted to Yijia Bi (John), the CFO of the
Company, options to purchase a total of 100,000 shares of the Company’s common
stock at a strike price equal to $1.00 and vested equally in two years period.
The contractual term is 10 years. Based on the Black-Scholes option pricing
model, the options were valued at $53,500 ($ 0.535 per unit) with an assumed
74.5% volatility, a five year term for the options, a risk free rate of 2.10%
and a dividend yield of 0%. There was $2,229 and $- of expense recognized for
three months ended March 31, 2009 and 2008.





In
accordance with SFAS No. 123R, the Company has recorded stock-based compensation
expense during the three months ended March 31, 2009 of $ 39,303 in connection
with the issuance of these options.





The
Company does not have sufficient information to assess the volatility of its
equity securities since the Company has not been public long enough to support a
historical volatility analysis and there are no publicly traded options on the
Company stock to facilitate an implied volatility analysis. The management
utilized a peer group in order to assess its volatility. When a peer group is
used, the volatility estimate is generally either the average or the median
volatility of the group.





The
following table summarizes all Company stock option transactions between January
1, 2009 and March 31, 2009:





Options
      &
                  warrants
                  outstanding
                
                
                Vested
                  shares
                
                
                Range
      of Exercise price
                  per
      common shareBalance,
      January 1, 2009
                
                
                1,903,250
                
                
                
                1,542,850
                
                
                $
                1.00-$7.00Granted/vested
      during the three months ended March 31, 2009
                
                
                -
                
                
                
                -
                
                
                
                -Balance,
      March 31, 2009
                
                
                1,903,250
                
                
                
                1,542,850
                
                
                $
                1.00-$7.00




Options
      & warrants OutstandingWeightedAverageNumber Outstanding
                    
                    Remaining
                    
                    
                    Weighted AverageRange of
                    
                    Currently Exercisable
                    
                    Contractual Life
                    
                    
                    Exercise Price of OptionsExercise Prices
                    
                    at March 31, 2009
                    
                    (Years)
                    
                    
                    Currently Exercisable$1.00-$7.00
                    
                    1,542,850
                    
                    2.52
                    
                    $
                    5.99




13





Basic and
diluted earnings per share





In
accordance with SFAS No. 128, Earnings per Share, basic earnings per common
share is computed using net income divided by the weighted average number of
shares of common stock outstanding for the periods presented. Diluted earnings
per common share assumes that outstanding common shares were increased by shares
issuable upon exercise of those stock warrants for which the market price
exceeds the exercise price, less shares that could have been purchased by the
Company with related proceeds. For 2009, the basic and diluted earnings per
share was the same since assumed conversion of the options and warrants was
anti-dilutive. For 2008, the incremental shares from assumed conversion of the
options and warrants amounted to 82,660.





Recently
Issued Accounting Pronouncements





In
December 2007, the FASB issued FAS 160 “Non-controlling Interests in
Consolidated Financial Statements” (“FAS160”), which amends Accounting Research
Bulletin (“ARB 51”), “Consolidated Financial Statements “(ARB 51”). This
statement was adopted effective January 1, 2009. FAS160 provides guidance for
the accounting, reporting and disclosure of noncontrolling interests and
requires, among other things, that noncontroling interests be recorded as equity
in the consolidated financial statements. The adoption of this standard resulted
in the reclassification of $7,459,660 on January 1, 2009 of Minority Interests
(now referred to as noncontrolling interests) to a separate component of
Stockholders’ Equity on the Consolidated Balance Sheet. Additionally, net income
attributable to non controlling interests is now shown separately from parent
net income in the Consolidated Statement of Income. Prior periods have been
restated to reflect the presentation and disclosure requirements of FAS
160.





In May
2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement), which clarifies the accounting for convertible debt
instruments that may be settled in cash upon conversion, including partial cash
settlement. FSP APB 14-1 specifies that an issuer of such instruments should
separately account for the liability and equity components of the instruments in
a manner that reflects the issuer’s non-convertible debt borrowing rate when
interest costs are recognized in subsequent periods. FSP APB 14-1 is effective
for the Company’s fiscal year beginning January 1, 2009, and retrospective
application is required for all periods presented. FSP APB 14-1 is currently not
applicable to the Company.





In June
2008, the FASB issued EITF Issue No. 07-5, Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock(“EITF Issue
No. 07-5”), which is effective for financial statements for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. The Issue addresses the determination of whether an instrument (or an
embedded feature) is indexed to an entity’s own stock, which is the first part
of the scope exception in Paragraph 11(a) of SFAS No. 133 for the purpose of
determining whether the instrument is classified as an equity instrument or
accounted for as a derivative instrument which would be recognized either as an
asset or liability and measured at fair value. The guidance shall be applied to
outstanding instruments as of the beginning of the fiscal year in which this
Issue is initially applied. Any debt discount that was recognized when the
conversion option was initially bifurcated from the convertible debt instrument
shall continue to be amortized. The cumulative effect of the change in
accounting principles shall be recognized as an adjustment to the opening
balance of retained earnings. The adoption of EITF Issue No. 07-05 did not have
a material impact on the Company’s financial statements.


14





In June
2008, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force
(EITF) 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities. FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share under the two-class method as described in SFAS No.
128, Earnings Per
Share. Under the guidance of FSP EITF 03-6-1, unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and must be
included in the computation of earnings per share pursuant to the two-class
method. All prior period earnings per share information must be adjusted
retrospectively. The Company adopted FSP EITF 03-6-1 as of January 1, 2009. The
Company does not currently have any share-based awards that would qualify as
participating securities.





In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
No. 157 establishes a framework for measuring fair value and expands disclosures
about fair value measurements. The changes to current practice resulting from
the application of this statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007. In February 2008, the FASB issued FSP No. SFAS No. 157-2,
Effective Date of FASB
Statement No. 157, which provides a one-year deferral of the effective
date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed in the financial statements at
fair value at least annually. The Company adopted this statement for financial
assets and financial liabilities and nonfinancial assets and nonfinancial
liabilities disclosed or recognized at fair value on a recurring basis (at least
annually) as of January 1, 2008. The Company adopted the statement for
nonfinancial assets and nonfinancial liabilities on January 1, 2009. The
adoption of this statement in each period did not have a material impact on its
financial statements.





Recently
Issued Accounting Pronouncements Not Yet Adopted





In April
2009, the FASB issued FASB Staff Position No. 107-1 (“FSP FAS 107-1”) and APB
28-1 (“APB 28-1”), which amends FASB Statement No. 107, Disclosures about Fair Value of
Financial Instruments and APB Opinion No. 28, Interim Financial Reporting,
to require disclosures about the fair value of financial instruments for interim
reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for interim
reporting periods ending after June 15, 2009. The adoption of this staff
position will not have a material impact on the Company’s financial
statements.





In April
2009, the FASB issued FASB Staff Position No. 157-4 (“FSP FAS 157-4”), which
provides additional guidance in accordance with FASB No. 157, Fair Value Measurements, when
the volume and level of activity for the asset or liability has significantly
decreased. FSP FAS 157-4 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is currently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.





In April
2009, the FASB issued FASB Staff Position No. 115-2 (“FSP FAS 115-2”) and FASB
Staff Position No. 124-2 (“FSP FAS 124-2”), which amends the
other-than-temporary impairment guidance for debt and equity securities. FSP FAS
115-2 and FSP FAS 124-2 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is crrently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.


15





Note
3         INVENTORIES





March 31, 2009
                  
                  
                  December 31, 2008Project
      cost
                  
                  $
                  4,071,980
                  
                  
                  $
                  2,225,275Others
                  
                  
                  401,577
                  
                  
                  
                  576,762Total
                  
                  $
                  4,473,557
                  
                  
                  $
                  2,802,037





Note
4         OTHER RECEIVABLES,
PREPAYMENT AND DEPOSITS




The
following table summarizes the components of other receivables, prepayments and
deposits as of March 31, 2009 and December 31, 2008:


March 31, 2009
            
            
            December 31, 2008Prepayment
      for purchasing of data, goods and services
            
            $
            622,843
            
            
            $
            1,082,181Others
            
            
            893,351
            
            
            
            2,666,988Total
            
            $
            1,516,194
            
            
            $
            3,749,169




Note
5         ACQUIRED INTANGIBLE
ASSETS, NET





The
following table summarizes intangible assets as of December 31,
2008:


March 31, 2009
                  
                  
                  December 31, 2008Cost
                  
                  $
                  14,342,907
                  
                  
                  $
                  14,322,795Accumulated
      amortization
                  
                  
                  (2,534,914
                  )
                  
                  
                  (2,084,294
                  )Net
                  
                  $
                  11,807,993
                  
                  
                  $
                  12,238,501





The
acquired intangible assets represent cost of acquired databases net of
accumulated amortization. The increase in acquired intangible assets represents
databases that have been tested and been placed in service during the three
months ended March 31, 2009. The databases have estimated useful lives of 8
years. Amortization expenses related to intangible assets was $448,166 and
$281,577 for the three months ended March 31, 2009 and 2008.





Note
6         LONG TERM
INVESTMENT





In 2008,
one of the Company’s VIE, Yulong IT invested in a PRC company “Shanghai
Jiuhong”. Leveraging Jingwei’s core competency in software and datamining,
Shanghai Jiuhong is going to invest in High Tech companies. Yulong IT holds a
19.8% interest in the company. The investment is accounted for under the cost
method.





Note
7         INCOME TAXES





The
Company utilizes the asset and liability method of accounting for income taxes
in accordance with SFAS No. 109.


16





The
Company’s effective tax rates for the three months ended March 31, 2009 and
March 31, 2008 were 36.3% and 9.9% respectively.  These rates in those
periods differed from the statutory PRC rates of 25%, due mainly to the
differential tax rates applicable to New Yulong IT and New Yulong Software,
subsidy income that is exempt from income tax and additional deduction allowed
for research and development expenses by the Chinese tax authority. For three
months ended March 31, 2009, these differences were offset by an under-provision
of 2008 tax accruals.





As of
January 1, 2009 the Company had no unrecognized tax benefits on any related
interest or penalties. There was no change in unrecognized tax benefits and
accrual for uncertain tax positions the period ended March 31, 2009. Tax years
from 2006 to 2008 remain subject to examination by major tax
jurisdiction.





United
States




Jingwei
International is subject to US federal income taxes at a rate of 34%. No
provision for  US federal income taxes has been made as the Company
had no US taxable income for the years ended December 31, 2008, and 2007 and
believes that its earnings are permanently invested in the PRC. No tax benefit
has been recognized since a valuation allowance has offset the deferred tax
asset.





BVI


Jingwei
BVI was incorporated in the BVI and, under the current laws of the BVI, it is
not subject to income taxes.





Hong
Kong




Jingwei
HK  was incorporated in Hong Kong and is subject to Hong Kong profits
tax. The Company is subject to Hong Kong taxation on its activities conducted in
Hong Kong and income arising in or derived from Hong Kong. The applicable
statutory tax rate for the three months ended March 31, 2009 and 2008 is
16.5%.





PRC





The
Company generated substantially all of its net income from its PRC operations
for the three months ended March 31, 2009. New Yulong IT and New Yulong Software
were registered in Shenzhen, a special economic zone in the People’s Republic of
China (“PRC”). The two companies are entitled to a preferential income tax rate
of 15% and 10% respectively in 2009.  According to the pronouncement
of the tax bureau, this rate will gradually increase to 25%, the statutory
income tax rate in the PRC, in 4 years (i.e. 20% in 2009, 22% in 2010, 24% in
2011 and 25% from 2012). However, New Yulong Software is a government certified
advanced and new technology enterprise in Shenzhen and therefore half of its
taxable income is exempt income tax in 2008 and 2009. New Yulong IT applied for
government certified advanced and new technology enterprise in China in 2008,
and was notified that the application has been approved. Its income tax rate is
15% effective January 1, 2009.





Note
8         SEGMENT
INFORMATION





Beginning
February 1, 2007, with the acquisition of Jingwei Communication, the Company has
two reportable segments based on the type of services provided, datamining
services, and software and system services. Information for the segments for the
three months ended March 31, 2009 and 2008 in accordance with FAS 131, “Disclosures about Segments of an
Enterprise and Related Information” are as follows:


17





Three Months Ended March 312009
                      
                      
                      2008Datamining
                        Services
                      
                      
                      Software
                        Services
                      
                      
                      Total
                      
                      
                      Datamining
                        Services
                      
                      
                      Software
                        Services
                      
                      
                      TotalNet
      Revenue
                      
                      $
                      2,189,696
                      
                      
                      $
                      1,754,022
                      
                      
                      $
                      3,943,718
                      
                      
                      $
                      3,256,241
                      
                      
                      $
                      2,497,207
                      
                      
                      $
                      5,753,448Gross
      Profit
                      
                      
                      988,257
                      
                      
                      
                      533,155
                      
                      
                      
                      1,521,412
                      
                      
                      
                      1,938,017
                      
                      
                      
                      1,746,043
                      
                      
                      
                      3,684,060Net
      Income
                      
                      
                      403,184
                      
                      
                      
                      217,514
                      
                      
                      
                      620,698
                      
                      
                      
                      1,462,193
                      
                      
                      
                      1,317,395
                      
                      
                      
                      2,779,588Segment
      Assets
                      
                      
                      34,599,731
                      
                      
                      
                      11,068,069
                      
                      
                      
                      46,415,550
                      
                      
                      
                      20,673,330
                      
                      
                      
                      18,626,089
                      
                      
                      
                      39,299,419Depreciation&
      Amortization
                      
                      
                      491,757
                      
                      
                      
                      35,424
                      
                      
                      
                      527,181
                      
                      
                      
                      309,349
                      
                      
                      
                      16,939
                      
                      
                      
                      326,288Expenditure
      for Segment Assets
                      
                      
                      13,720
                      
                      
                      
                      -
                      
                      
                      
                      13,720
                      
                      
                      
                      1,289,616
                      
                      
                      
                      -
                      
                      
                      
                      1,289,616





There is
no inter-segment revenue. The Company generates all its revenue from the PRC.
Segment assets include property, plant and equipment and intangible
assets.





Note
9         LEASE COMMITMENT AND
OTHER CONTACTRAL OBILIGATIONS




Lease
Commitment





On May
21, 2008, one of the Company’s VIE, Beijing Media entered into a lease agreement
with a lease term of 39 months from October 1, 2008 to December 31, 2011 at a
monthly rental of RMB 184,932 ($27,015) and a monthly service charge of RMB
26,534 ($3,876). This agreement provides office space for the operation of
Beijing Media. Beijing Media is not obligated to pay rent for the following
months: October 2008, October 2009, November 2009, November 2010, December
2010 and December 2011. A 3-month deposit has been paid.





On March
21, 2009, Beijing Media signed an agreement with Beijing Huaxia Fengjing Network
Technology Co., Ltd (“Beijing Huaxia”). According to the agreement, Beijing
Huaxia will assume the rental liability effective January 1, 2009 and the
service charge effective April 1, 2009. The monthly rent is RMB 184,932
($27,015) and the monthly service charge is RMB 26,534 ($3,876).





Other
contractual obligations





On
February 29, 2008, one of the Company’s VIE, New Yulong IT engaged Tsinghua
University to provide research and development service for total consideration
of RMB 7.0M ($1,021,272). As of December 31, 2008, RMB 500,000 ($72,948) has
been paid. The remaining balance is required to be paid in four installments
with RMB 1.5M ($219,119) to be paid by March 31, 2009 based on the progress of
project development, RMB 2.5M ($365,198) to be paid by February 29,
2010 and RMB 2.5M ($365,198) to be paid by February 29, 2011. Since the project
did not meet the planned target on March 31, 2009, $219,119 was not accrued or
paid.





18





Note
10         MAJOR
CUSTOMERS





The
Company had sales to five customers that accounted for approximately 67% of net
sales during the three months ended March 31, 2009 and approximately 9% of trade
receivable balance at March 31, 2009.





Note
11         MAJOR
SUPPLIERS





The
Company had purchases from two vendors that accounted for approximately 28% of
purchases during the three months ended March 31, 2009 and approximately 8% of
trade payable at March 31, 2009.


19




Item
2.  Management’s Discussion and Analysis or Plan of
Operation




NOTE
REGARDING FORWARD-LOOKING STATEMENTS




This
report includes forward-looking statements. Generally, the words “believes,”
“anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,”
“continue,” and similar expressions or the negative thereof or comparable
terminology are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, including the matters set forth
in this report or other reports or documents we file with the Securities and
Exchange Commission from time to time, which could cause actual results or
outcomes to differ materially from those projected. Undue reliance should not be
placed on these forward-looking statements, which speak only as of the date
hereof. We undertake no obligation to update these forward-looking
statements.




The
following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this report.




Business
Overview




Jingwei
International Limited (“we,” “us,” “the Company,” or “Jingwei”) is one of the
leading providers of data mining and customer relationship marketing services in
the People’s Republic of China (the “PRC” or “China”). With a customer database
of about 300 million Chinese consumers, we enable leading multinational and
Chinese companies to reach their target audience. Our services include market
segmentation, customer trend and churn analysis, fraud detection and direct
marketing services such as telemarketing, direct mailing and Wireless Value
Added Services (“WVAS”). We also operate a software services business, which
provides a broad range of billing systems, provisioning solutions, decision
support and customer relationship management systems for China’s leading mobile
telecommunication carriers. The software services business strengthens sales
opportunities for our high margin data mining platform, and allows us to enhance
our customer database. In addition, it allows us to leverage the telecom
resources to provide comprehensive marketing and advertising delivery channels
to reach the target consumers for our corporate customers. We plan to evolve
into an integrated marketing platform with targeted outbound sales campaigns via
mobile phone advertising on consent basis, and customer service/order
fulfillment at call centers throughout the country.




Currently,
we offer 17 software platforms and our intellectual property portfolio is
covered by nine patents issued by the National Intellectual Property
Administration of China and the Shenzhen Bureau of Science, Technology and
Information. When these patents were registered with the appropriate authority,
we received a certificate with respect to our protected intellectual property in
such software. We then license the software to our customers for a usage fee. We
presently do not have any registered trademarks. We continue to expand our
product offerings as well as creating innovative data mining software tools to
enhance our service offerings to support database marketing for our corporate
customers.




The
primary geographic focus of our operations is in China, where we derive all of
our revenues. We conduct our business operations through Jingwei HengTong, a
wholly-owned subsidiary company that became the primary beneficiary of Jingwei
Communication via various contractual agreements. Jingwei Communication has two
subsidiaries, New Yulong Information Technology Co. Ltd (”New Yulong IT”) and
New Yulong Software Technology Development Co. Ltd ( “New Yulong
Software”)




We
believe our future growth is in the broad adoption of our data mining service
across various business segments and to leverage our vast consumer data to
provide target marketing for domestic and multinational companies who want to
carve out a burgeoning consumer market in China. In order to cement our
leadership position in data mining and marketing, we will need to enhance our
data mining infrastructure such as hardware and software tools as well as our
data center. In addition, we plan to continue to acquire more consumer data from
different industries and to constantly refresh and update the data that will
help strengthen our data mining business.


20




How
The Company Generates Revenue




In the
first quarter of 2009, we have continued to derive our revenues from data mining
and software services. Beginning in 2009, the Company has increased its
marketing activities to target companies with national presence for products and
sales promotions. We mainly provide targeted consumer marketing based on our
proprietary consumer database, the revenue from which was included in the
revenue from data mining.




Our
products and services are sold by our sales and marketing organization, as well
as an established reseller network. Data mining services are sold on a project
by project basis and, in addition to fees we share in the revenues derived from
consumer purchases resulting from our database marketing and promotion
activities.




We
operate under exclusive software licensing and revenue sharing agreements with
China Mobile in eight provinces and China Unicom in three provinces, and have
software installations with several additional telecom companies, including
China Broadcast, China Netcom, China Rail Com and China Telecom. In addition, we
have recently begun managing third-party software platforms for affiliates of
China Mobile in five other provinces and for affiliates of China Unicom in three
other provinces.




We own
and manage a database containing detailed biographical, demographic and
purchasing information on about 300 million Chinese consumers and a selected
group of small and medium-sized enterprises. We believe our database is the
largest in China, and that it would be difficult for competitors to duplicate.
The breadth of our database affords us the ability to conduct a wide range of
data mining processes. Once a target audience is identified through data mining
analysis, we assist our customers in the promotion and marketing of new products
and services through telemarketing, direct marketing and mobile text and
interactive advertising. We share in the revenues derived from consumer
purchases resulting from our marketing and promotion activities. Within our data
mining services operations, we also offer telecom providers a vast range of
WVAS. Unlike our competitors who mainly use telecom providers’ networks simply
as a distribution channel, we create and manage WVAS for telecom providers to
offer to their customers under their own brands.




Business
Outlook and Other Recent Developments




With the
Chinese government’s recent stimulus measure, the economy in China has started
to see signs of recovery. The Company has experienced revived demands for its
Data Mining and Data Marketing services in financial, real estate and retail as
well as in the telecom sector.




Jingwei
has won several sales contracts in the financial and real estate
industry.  It has been providing nationwide database marketing
campaigns to promote financial services for multinational banks and new and
existing projects for national real estate companies such as Wanke. The Company
also commenced marketing campaign for McDonald’s in Southern China to help
increase sales of its new breakfast products.




As the
Chinese government had issued 3G licenses to the three operators in the first
quarter of 2009, tremendous investments have been poured into building the 3G
network. Jingwei’s marketing and software services will come into play helping
to enhance value added services management with its billing software and
increase new subscriptions to the 3G network with its marketing services. The
Company has continued implementing a small trial of its software services for 3G
services in several provinces with China Unicom and China
Telecom.


21




The
Company has also initiated EDM (Email Direct Marketing) system to provide
additional marketing tools for its data mining services. With this system,
Jingwei will be able to help its clients to take advantage the power of the
internet for promoting their products. With the combination of targeted
marketing in mobile, telemarketing, direct mail, and now EDM, corporate
customers will be able to effectively reach consumers with expected higher
conversion rates. This system will be implemented during the second quarter in
2009 and we expect to see revenue in the subsequent quarters.




Critical
Accounting Policies and Estimates




We
prepare our consolidated financial statements in accordance with generally
accepted accounting principles in the United States. In doing so, we have to
make estimates and assumptions that affect our reported amount of assets,
liabilities, revenues and expenses, as well as related disclosure of contingent
assets and liabilities. In some cases, changes in the accounting estimates are
reasonably likely to occur from period to period. Accordingly, actual results
could differ materially from our estimates. To the extent that there are
material differences between these estimates and actual results, our financial
condition or results of operations will be affected. We base our estimates on
historical data and trends and other assumptions that we believe are reasonable
under the circumstances, and we evaluate these estimates on an ongoing basis.
For further information on our critical accounting policies, see the discussion
in Note 2 to the Condensed Consolidated Financial Statements.




RECENT
ACCOUNTING PRONOUNCEMENTS




There
have been no material changes to the recent accounting pronouncements as
previously reported in our Annual Report on Form 10-K for the year ended
December 31, 2008.




RESULTS
OF OPERATIONS




Net
revenues




Three Months Ended March 312009
                  
                  
                  2008
                  
                  
                  % Change(In thousands, except percentages)% of net
                    revenue
                  
                  
                  
                  
                  
                  % of net
                    revenueNet
      revenues:Data
      mining
                  
                  $
                  2,190
                  
                  
                  
                  56
                  %
                  
                  $
                  3,256
                  
                  
                  
                  57
                  %
                  
                  
                  (33
                  )%Software
      Services
                  
                  
                  1,754
                  
                  
                  
                  44
                  %
                  
                  
                  2,497
                  
                  
                  
                  43
                  %
                  
                  
                  (30
                  )%Total
      net revenue
                  
                  $
                  3,944
                  
                  
                  
                  100
                  %
                  
                  $
                  5,753
                  
                  
                  
                  100
                  %
                  
                  
                  (31
                  )%




22




Total net
revenue decreased 31% for the first quarter of 2009 year over year. This was
primarily due to year over year decrease in data mining by 33% and software by
30%.




Data mining.Data mining revenue decreased 33% for the first quarter of 2009 year over
year. The global financial crisis and down turn of economy in China was resulted
in drop of business in datamining sector, where corporations cut product
promotion budget and SME terminated new media promotion expenses.. Both price
and number of contracts were decreased.




Software
Services.  Software services revenue decreased 30% for the
first quarter of 2009 year over year. Because of the delay of rolling out 3G
application, our software business was not be able to maintain stable growth
while in the foreseeable future we believe that we are going to pick up the
curve along with the implementation of 3G applications.




Cost
of revenues


Three Months Ended March 312009
                    
                    
                    2008
                    
                    
                    % Change(In thousands, except percentages)Cost of
      revenues:Data
      mining
                    
                    $
                    1,201
                    
                    
                    $
                    1,318
                    
                    
                    
                    (9
                    )%Software
      Services
                    
                    
                    1,221
                    
                    
                    
                    751
                    
                    
                    
                    63
                    %Total
      cost of revenues
                    
                    $
                    2,422
                    
                    
                    $
                    2,069
                    
                    
                    
                    17
                    %




Total
cost of revenues increased 17% for the first quarter of 2009 year over
year.




Data mining.Cost of data mining revenue decreased 9% for the first quarter of 2009
year over year. This decrease was associated with the decrease in data mining
services and amortization costs of acquired database assets.




Cost of
data mining revenue consists mainly of  a) compensation and expenses
for the professionals involved in data mining and data analysis, b) amortization
of acquired database assets, and c) fees paid to third-party software service
companies, mobile operators et cetera for their services and
resources.




Software
Services.  Cost of data mining revenue increased 63% for the
first quarter of 2009 year over year.The increased cost mainly was contributed to keep
the human capital of our projects team while revenue was not able to justify the
cost.




Cost of
software services revenue consists mainly of a) compensation and expenses for
the professionals and engineers involved in modifying, customizing or installing
our software products and solutions, system maintenance and
support  b) fees paid to third-party software service companies for
their services or license right, and c) materials or hardware integrated with
our software products and purchased from third-parties.


23




Gross
profit margin





Three Months Ended March 312009
                  
                  
                  2008(In thousands, except percentages)Gross
      profit margin:Data
      mining
                  
                  
                  45
                  %
                  
                  
                  60
                  %Software
      Services
                  
                  
                  30
                  %
                  
                  
                  70
                  %Overall
                  
                  
                  39
                  %
                  
                  
                  64
                  %




Overall
gross margin decreased 25 percentage points year over year for the first quarter
of 2009 which was mainly due to the decrease in the gross margins of data mining
and software services.




Data
mining. The gross margin of data mining decreased 15 percentage points
year over year for the first quarter of 2009. The decreased price and incremental
functionality of the projects brought lower margin.




Software
Services.  The gross margin of software services decreased 40
percentage points year over year for the first quarter of 2009. This was mainly
due to the increase in compensation costs and expenses caused by increased
project headcount.




Operating
Expenses





Three Months Ended March 312009
                  
                  
                  2008
                  
                  
                  %Change(In thousands, except percentages)% of
                    total net
                    revenue
                  
                  
                  
                  
                  
                  % of
                    total net
                    revenueSelling,
      General and Administrative Expenses
                  
                  $
                  403
                  
                  
                  
                  10
                  %
                  
                  $
                  698
                  
                  
                  
                  12
                  %
                  
                  
                  (42
                  )%Research
      and Development Costs
                  
                  
                  254
                  
                  
                  
                  6
                  %
                  
                  
                  165
                  
                  
                  
                  3
                  %
                  
                  
                  54
                  %


24




Selling, General
and Administrative Expenses.  Selling, general and
administrative expenses consist primarily of compensation and incentive
expenses, entertaining and marketing expenses, fees for professional services,
traveling and transportation expenses, and office expenses. This decrease
reflected the gradually decreased headcount from the second half year of 2008 as
the financial crisis occurred.




Research and
Development Costs.  Research and development costs consist
primarily of personnel-related expenses incurred for the development of software
and maintenance of our database. We increased the investment in research and
development after we consummated the share exchange and became a publicly traded
company. We expect our research and development expenses to continue to increase
in absolute dollars in the near future.




LIQUIDITY
AND CAPITAL RESOURCES




As of March 312009
                    
                    
                    2008(In thousands)Cash
      and cash equivalents
                    
                    $
                    6,495
                    
                    
                    $
                    7,483Working
      capital
                    
                    $
                    28,012
                    
                    
                    $
                    22,545Shareholder’s
      equity
                    
                    $
                    35,375
                    
                    
                    $
                    27,360




As of
March 31, 2009, we had $6.5 million in cash and cash equivalents to meet the
future requirements of our operating activities. We believe that our existing
cash and cash equivalents will be sufficient to fund our operating activities,
capital expenditures and other obligations through 2009.




However,
we may sell additional equities or obtain credit facilities to enhance our
liquidity position or to increase our cash reserve for future acquisitions. The
sale of additional equity would result in further dilution to our shareholders.
The incurrence in indebtedness would result in increased fixed obligations and
could result in operating covenants that would restrict our operations. We
cannot assure you that financing will be available in amounts or on terms
acceptable to us, if at all.





The
following tables set forth the movements of our cash and cash equivalents for
the periods presented:





Three Months Ended March 312009
                  
                  
                  2008(In
      thousands)Net
      cash (used in) provided by operating activities
                  
                  $
                  1,151
                  
                  
                  $
                  (3,320
                  )Net
      cash (used in) provided by investing activities
                  
                  
                  (63
                  )
                  
                  
                  (1,289
                  )Net
      cash used in financing activities
                  
                  
                  (72
                  )
                  
                  
                  -Effect
      of foreign currency translation on cash and cash
    equivalents
                  
                  
                  7
                  
                  
                  
                  1,332Net
      (decrease) increase in cash and cash equivalents
                  
                  
                  1,023
                  
                  
                  
                  (3,277
                  )Cash
      and cash equivalents - beginning of period
                  
                  
                  5,472
                  
                  
                  
                  10,760Cash
      and cash equivalents - end of period
                  
                  $
                  6,495
                  
                  
                  $
                  7,483


25




Operating
activities




Our net
cash provided by operating activities for the three months ended March 31, 2009
was $1,150,991. This was primarily attributable to the net income of $620,698,
adjusted by non-cash related expenses of $557,412 and a net increase in the
components of our working capital of $27,119. The net increase in working
capital items was primarily due to an increase in trade receivables and decrease
in trade payables and other payables. We extend credit to customers ranging from
four to seven months in the normal course of business and our trade receivables
are within our credit control. We will pay more effort to speed up collection
process in the next quarter.




Investing
activities




Cash used
in investing activities for the three months ended March 31, 2009 was $63,242
which was mainly attributable to the acquisition of golf membership and office
software.




Financing
activities




Cash flow
used in financing activities for the three months ended March 31, 2009 was
$71,579 which is due to loan from stockholder.




OFF-BALANCE
SHEET ARRANGEMENTS




We do not
have any off-balance sheet arrangements.




Item
3.  Quantitative and Qualitative Disclosures About Market
Risk




Not
applicable.


26




Item
4T.  Controls and Procedures





Disclosure Controls and
Procedures





Under the
supervision and with the participation of our management, including our chief
executive officer and the chief financial officer, we conducted an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of March 31, 2009, the end of the period covered by
this report (the “Evaluation Date”). Based on this evaluation, our chief
executive officer and chief financial officer concluded as of the Evaluation
Date that our disclosure controls and procedures were effective such that the
material information required to be included in our Securities and Exchange
Commission (“SEC”) reports is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms relating to us and our
consolidated subsidiaries, and was made known to others within those entities,
particularly during the period when this report was being prepared.





Changes
in internal controls over financial reporting





There
were no changes in our internal controls over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during
the three months ended March 31, 2009 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.


27




PART
II.OTHER INFORMATION




Item
1. Legal
Proceedings




Not
applicable.




Item 1A. Risk
Factors




We are
not required to respond to this item because we are a smaller reporting
company.




Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds




Not
applicable.




Item
3. Defaults
Upon Senior Securities




Not
applicable.




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




No matter
was submitted to a vote of security holders during the quarter ended March 31,
2009.




Item
5. Other
Information




None.




Item
6. Exhibits




The
following exhibits are furnished as part of the Quarterly Report on Form
10-Q:




Exhibit
              
              Description31.1
              
              Certification
      of the Chief Executive Officer (Principal Executive Officer) pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32
              
              Certifications
      of the Chief Executive Officer (Principal Executive Officer) and the Chief
      Financial Officer pursuant to Section  906 of the Sarbanes-Oxley
      Act of 2002.


28




SIGNATURES




In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




Dated:
May 20, 2009




JINGWEI
      INTERNATIONAL LIMITEDBy:
                    /s/
      Regis KwongName:
      Regis KwongTitle:
      Chief Executive Officer(Principal
      Executive Officer)By:
                    /s/
      Yijia (John) BiName:
      Yijia (John) BiTitle:
      Chief Financial Officer(Principal
      Accounting and Financial
Officer)


29