Financial services institutions globally have spent heavily on IT for many years. In the fast-paced, competitive financial services industry, companies are increasingly relying on flexible and reliable IT infrastructure to gain competitive advantages. According to IDC, global banking and insurance IT spending reached $124.9 billion and $43.8 billion, respectively, in 2006 and is expected to grow at a compound annual growth rate, or CAGR, of 6.4% and 5.6%, respectively, to reach $170.7 billion and $57.5 billion, respectively, in 2011.

China’s economy has grown rapidly since the Chinese government adopted extensive national reform programs to create an open economy in the late 1970s and early 1980s. These reforms are focused on, among other things, transforming China’s centrally planned economy to a more market-oriented economy and enhancing the competitiveness of Chinese enterprises. As a result of these economic reforms, particularly following China’s accession to the World Trade Organization, or WTO, China’s economy has demonstrated strong growth.

China’s insurance market is one of the fastest growing insurance markets in the world. With improved living standards, higher disposable incomes and greater awareness about insurance products, personal insurance and property insurance premium revenues have been increasing in China. New growth areas, such as agricultural, enterprise annuity, healthcare, and liability insurance, also demonstrate strong growth momentum.

The Company provides custom-designed software solutions to address a comprehensive range of financial institution IT needs. The Company’s primary clients for custom-designed solutions are large national banks. On average, it takes approximately six months to complete a customized software project from design to implementation.

The Company leverages its customized software development efforts, including related platforms, modules, or elements, and its internal research and development efforts, to develop standardized solutions. The Company has marketed these solutions to financial institutions of varying sizes and needs. Typically, it takes one to two months to implement the Company’s standardized software solutions.

The Company offers fee-based, stand-alone supplemental warranty and service contracts that are typically for a duration of twelve months.

The solutions and services the Company offers to its financial institution clients, based on a combination of custom-designed software, standardized software and third-party software, cover all major categories of their information technology needs. The Company offers select solutions in the following broadly defined categories: channel-related solutions, business-related solutions, management-related solutions and other value-added solutions.

The Company also offers other services to address IT needs unrelated to software development divided into two segments: ATM maintenance services and ancillary services. Ancillary services include system integration services and miscellaneous services such as consulting, IT system management and other supplementary technology-related services.

Gross margins declined from 85.5% for the three months ended June 30, 2006 to 55.9% for the same period in 2007.

Research and development expenses increased from $317,000 for the three months ended June 30, 2006 to $437,000 for same period in 2007.

Sales and marketing expenses increased from $7,000 for the three months ended June 30, 2006 to $926,000 for same period in 2007.

Net income of $5.1 million for the three months ended June 30, 2006, compared to a net income of $4.9 million for the same period in 2007.