China is currently one of the world’s largest manufacturing centers. According to Global Insight, China’s exports grew to US$438.5 billion in 2003, making it the world’s fourth largest exporter, ranking behind only the United States, Germany and Japan. According to the same source, China’s export volume is expected to grow at a compound annual growth rate of approximately 18.5% from 2001 to 2008. An increasing proportion of the goods manufactured in China is being made for export to other countries, as businesses in such countries move their production capacity to China or source goods in China rather than producing such goods in their home countries.

According to Global Insight, China is currently the most populous country in the world, with approximately 1.3 billion people. The Economist Intelligence Unit estimates that China’s per capita personal disposable income increased from US$450 in 2000 to US$606 in 2003 and is expected to grow to US$937 in 2008, representing a compound annual growth rate of approximately 9.6% from 2000 to 2008. China’s size and the rapidly increasing purchasing power of its population is resulting in a significant rise in demand for goods of all kinds and, in particular, a significant market for imported goods.

According to Global Insight, the total value of import/export transactions in China reached US$851.6 billion in 2003, up from US$510.2 billion in 2001 and US$620.9 billion in 2002. As a result of the PRC’s accession into the WTO in 2001, it is expected that tariffs imposed by the PRC on all imported goods will be reduced and import quotas as well as some permit requirements will be gradually eliminated. Due to the combination of a rapidly growing economy and the PRC’s accession into the WTO, the value of import/export transactions in China is expected to reach approximately US$1.7 trillion by 2008, representing a compound annual growth rate of approximately 19.0% from 2001 to 2008, according to Global Insight.

Commercially introduced in August 2000, the iDeclare.CIQ series of products enables international trade enterprises to complete the declaration process electronically over the Internet. The Company’s iDeclare.CIQ users include a variety of international trade enterprises operating in a wide range of businesses. iDeclare.CIQ allows users to submit encrypted applications to the PRC Inspections Administration for examination, comment and approval online.

Currently, iDeclare.CIQ has three main applications: (i) Origin Certificate processing, (ii) declaration processing and (iii) registration and permit processing.

The iMonitor.CGA series of software and hardware products was commercially introduced in June 2004 and was designed to be installed at the customs clearing gates of PRC Customs branch offices to allow inspection of goods-in-bond. The purpose of an inspection of goods-in-bond is, among other things, to monitor and inspect shipping containers to prevent such shipping containers from passing PRC Customs without paying the required tariffs.

iMonitor.CGA has two main applications: data collection through container number recognition, and gate inspection.

A trial version of iValue was introduced in March 2004. iValue provides services that are complementary to a user’s interaction with the PRC Inspections Administration and PRC Customs. Currently, iValue has only one principal application: electronic bill payment. This application allows users to electronically pay PRC Inspections Administration- or PRC Customs-related fees over the Internet via a platform that the Company operates.

Operating expenses decreased by 31.5% to RMB38.8 million (US$4.7 million) in the first nine months of 2004 from RMB56.7 million in the first nine months of 2003.

General and administrative expenses increased by 150.1% to RMB23.2 million (US$2.8 million) in the first nine months of 2004 from RMB9.3 million in the first nine months of 2003.

Income taxes decreased by 66.3% to RMB1.1 million (US$129,000) in the first nine months of 2004 from RMB3.2 million in the first nine months of 2003.