SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended: March 31, 2003
Commission file number 0-26559
CIK No. 0001082603
XIN NET CORP.
(Exact name of registrant as specified in this charter)
Florida 330-751560
------------------------------- --------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
#950 - 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 632-9638
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the filing
requirements for at least the past 90 days.
YES X NO
----- -----
As of March 31, 2003, there were 41,360,010 shares of $0.001 par value common
stock outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
XIN NET CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
March 31, December 31,
Stated in U.S. dollars 2003 2002
------------------- ------------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 1,274,108 $ 957,133
Investments - 1,266
Prepaid Expenses and Other Current Assets 20,785 22,422
Assets to be disposed of 2,696,501 2,186,337
Net Assets of Discontinued Operations 293,420 293,372
------------------- ------------------
Total Current Assets 4,284,814 3,460,530
Investment - at equity 293,204 319,600
Property and Equipment, Net 11,036 10,906
Goodwill 127,124 127,124
------------------- ------------------
Total Assets $ 4,716,178 $ 3,918,160
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Other Accrued Liabilities $ 211,911 $ 109,044
Deferred Revenue - 37,725
Liabilities to be disposed of 3,706,778 3,029,996
Security deposit from Sino-i.com Ltd. 362,430 -
------------------- ------------------
4,281,119 3,176,765
Commitments and Contingencies - -
Stockholders' Equity
Common Stock : $0.001 Par Value
Authorized : 50,000,000
Issued and Outstanding : 41,360,010 (2002: 41,360,010) 41,360 41,360
Additional Paid In Capital 8,194,045 8,194,045
Accumulated Deficit (7,658,939) (7,345,351)
Accumulated Other Comprehensive Loss (141,407) (148,659)
------------------- ------------------
Total Stockholders' Equity 435,059 741,395
------------------- ------------------
Total Liabilities and Stockholders' Equity $ 4,716,178 $ 3,918,160
=================== ==================
F-1
XIN NET CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
Stated in U.S. dollars 2003 2002
------------------ -------------------
Revenue
Tuition fee income 65,350 -
Expenses
Advertising and promotion 9,762 -
Consulting and professional 20,930 34,768
Depreciation 1,548 554
Foreign exchange loss 9,641 565
General and administrative 12,174 18,921
Rent 18,549 2,525
Salaries, wages and benefits 52,919 6,901
------------------ -------------------
125,523 64,234
Operating Loss (60,173) (64,234)
Other Income and Expenses
Interest income 4 637
Other income 5,995 -
Equity (loss) income in undistributed earnings of investee
company (26,396) 24,352
------------------ -------------------
(20,397) 24,989
------------------ -------------------
Loss from Continuing Operations (80,570) (39,245)
Loss from Discontinued Operations (233,018) (69,286)
------------------ -------------------
Net Loss Available to Common Stockholders $ (313,588) $ (108,531)
================== ===================
Loss per share attributable to common stockholders:
Loss from continuing operations $ (0.00) $ (0.00)
Loss from discontinued operations (0.01) (0.01)
------------------ -------------------
Total basic and diluted $ (0.01) $ (0.01)
================== ===================
Weighted average number of common shares outstanding:
Basic and diluted 41,360,010 21,360,010
================== ===================
F-2
XIN NET CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2003 AND YEARS ENDED DECEMBER 31, 2002 AND 2001
( Unaudited )
Accumulated
Stock Additional Other
Common Amount At Paid In Accumulated Comprehensive
Stated in U.S. dollars Shares Par Value Capital Deficit Income Total
---------------------------------------------------------------------------------------
Balance, December 31, 2000 21,360,010 21,360 7,214,045 (4,926,669) (152,256) 2,156,480
Net loss (1,510,903) (1,510,903)
Translation Adjustments 3,667 3,667
---------------------------------------------------------------------------------------
Balance, December 31, 2001 21,360,010 21,360 7,214,045 (6,437,572) (148,589) 649,244
Private placement for cash at $0.05 per 20,000,000 20,000 980,000 1,000,000
share in October 2002
Net loss (907,779) (907,779)
Translation Adjustments (70) (70)
---------------------------------------------------------------------------------------
Balance, December 31, 2002 41,360,010 41,360 8,194,045 (7,345,351) (148,659) 741,395
Net loss (313,588) (313,588)
Translation Adjustments 7,252 7,252
---------------------------------------------------------------------------------------
Balance, March 31, 2003 41,360,010 $ 41,360 $ 8,194,045 $ (7,658,939) $ (141,407) $ 435,059
=======================================================================================
F-3
XIN NET CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
Stated in U.S. dollars 2003 2002
----------------- -----------------
Cash flows from operating activities
Net loss $ (313,588) $ (108,531)
Adjustments to reconcile net loss to net cash
Provided by (Used in) operating activities
Depreciation and amortization 61,786 57,029
Loss on disposal of capital assets 7,103 -
Translation adjustments 7,252 612
Equity (income) loss of The Link Group, Inc. 26,396 (24,352)
Changes in assets and liabilities
Increase in prepaid expenses and other current assets (245,684) (1,384)
Increase in inventory (104) (45)
Increase in deferred costs (161,682) (31,656)
Increase (Decrease) in accounts payable 559,016 (21,958)
Increase (Decrease) in deferred revenue 182,908 (42,812)
Increase in security deposits 362,430 -
----------------- -----------------
Net cash provided by (used in) operating activities 485,833 (173,097)
----------------- -----------------
Cash flows from investing activities
Purchases of property and equipment (19,264) (49,926)
Reduction in investment 1,266 1,292
Reduction in loan to ProtectServe Pacific Ltd. - 360,400
Investment in The Link Group, Inc. - (600,300)
----------------- -----------------
Net cash flows used in investing activities (17,998) (288,534)
----------------- -----------------
Cash flows from financing activities
Principal payments on capital lease obligations - (15,056)
----------------- -----------------
Net cash flows used in financing activities - (15,056)
----------------- -----------------
Increase (Decrease) in cash and cash equivalents 467,835 (476,687)
Cash and cash equivalents - beginning of period 1,694,649 1,360,071
----------------- -----------------
Cash and cash equivalents - end of period $ 2,162,484 $ 883,384
================= =================
Supplemental Information :
Cash paid for :
Interest $ 3,655 $ 2,971
Income taxes 8,701 -
F-4
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of America.
However, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted or condensed pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"). In the opinion of management,
all adjustments of a normal recurring nature necessary for a fair presentation
have been included. The results for interim periods are not necessarily
indicative of results for the entire year. These condensed consolidated
financial statements and accompanying notes should be read in conjunction with
the Company's annual consolidated financial statements and the notes thereto for
the fiscal year ended December 31, 2002 included in its Annual Report on Form
10-KSB.
The unaudited condensed consolidated financial statements include Xin Net Corp.
and its subsidiaries. Significant inter-company transactions and accounts have
been eliminated.
2. Property and Equipment
Property and equipment consists of the following:
March 31, 2003 December 31, 2002
-------------- -----------------
Equipment $ 20,684 $ 20,284
Library 9,146 9,146
Furniture 9,877 8,606
--------------------------------------------------------
Total 39,707 38,036
Less : Accumulated depreciation (28,671) (27,130)
--------------------------------------------------------
Net book value $ 11,036 $ 10,906
========================================================
The depreciation expense charged to continuing operations for the three-month
period ended March 31, 2003 was $1,539.
F-5
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
3. Investment in The Link Group, Inc. ("Link")
Pursuant to a Share Exchange Agreement dated December 20, 2001, the Company paid
$200,000 cash for 3,882,700 shares of The Link Group, Inc. ("Link").
Pursuant to a Subscription Agreement dated January 18, 2002, the Company paid
$600,300 in a private placement of Link for 14,500,000 (pre-reverse one for four
split) common shares at $0.0414 per share, as well as 10,875,000 special
warrants convertible into 10,875,000 post-reverse one for four split common
shares on or before January 31, 2004 at no additional consideration. The Company
exercised the 10,875,000 special warrants on March 12, 2002. An option to
purchase an additional 7,500,000 post-reverse one for four split common shares
at $0.04 per share, or $300,000, until February 15, 2002, was also granted to
the Company, which was not exercised.
By an agreement dated January 21, 2002, Link agreed to purchase all of the
outstanding shares of Protectserve Pacific Ltd. ("PSP") through the issuance of
37,500,000 (post-reverse one for four split) common shares. Link has the right
to buy back its shares at $0.001 per share from these individuals if PSP's after
tax profit is less than Hong Kong $9 million dollars ("HKD") for the twelve
months ending December 31, 2002. The buy back formula is for every HKD $333,333
that PSP falls short of the HKD $9 million after tax profit, Link can buy back
one million (post-reverse one for four split) common shares from these
individuals.
On February 18, 2002, the shareholders of Link approved the reverse split of the
issued and outstanding common shares of Link at the ratio of one for four,
thereby making the Company's total Link shares held equal to 15,370,675 shares,
representing 28.8% of the total issued and outstanding shares of Link. On
October 14, 2002, Link cancelled 8,300,000 outstanding common shares as part of
the consideration of the disposition of its subsidiary company and thereafter
the Company's holding in Link correspondingly increases to 34.1%. On March 21,
2003, Link issued 17,500,000 common shares and cancelled 14,000,000 common
shares and thereafter the Company's holding in Link correspondingly changes to
32.32%. The Company accounted for its investment in Link on the equity basis,
which is carried at cost, adjusted for the Company's proportionate share of
their undistributed earnings or losses as follow at March 31, 2003:
Original cost of 15,370,675 shares of The Link Group, Inc. $ 800,300
Equity in undistributed earnings of investee company (507,096)
-------------------
Investment - at equity $ 293,204
===================
F-6
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
4. Assets Held For Sale
On February 26, 2003, the Company entered into an agreement to sell the
internet-related services provided in China to a subsidiary company of
Sino-i.com Ltd., a company listed on the Hong Kong Stock Exchange for a total
consideration of RMB 20 million (approximately US$2,500,000). The transaction is
subject to the approval of shareholders. The Company has received RMB 3,000,000
(approximately US$362,430) as a security deposit for the transaction on January
25, 2003. The decision to sell was due to the lack of funding and high
competition in the market.
Assets to be disposed of comprise the following:
3/31/2003 12/31/2002
--------------- ---------------
Cash and cash equivalents $ 888,376 $ 737,516
Other current assets 435,400 187,975
Deferred costs 949,266 787,584
Property and equipment 423,459 473,262
--------------- ---------------
Assets held for sale $ 2,696,501 $ 2,186,337
=============== ===============
Liabilities to be disposed of comprise the following:
3/31/2003 12/31/2002
--------------- ---------------
Accounts payable and other accrued $ (624,326)
liabilities $ (1,080,475)
Deferred revenue (2,126,303) (1,905,670)
Security deposit (500,000) (500,000)
--------------- ---------------
Liabilities held for sale $ (3,706,778) $ (3,029,996)
=============== ===============
Results of operations for the assets held for sale, which are included in
discontinued operations, for the quarter ended March 31, 2003 and 2002 are as
follows:
2003 2002
--------------- ---------------
Revenue $ 1,079,846 $ 1,088,590
Operating Costs 1,312,864 1,157,876
--------------- ---------------
Net Loss (233,018) (69,286)
=============== ===============
The gain or loss on disposal of the assets held for sale cannot be quantified as
the Company has to maintain the internet-related business operations until the
approval on its disposition is obtained from the shareholders.
F-7
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
5. Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share are computed by dividing net earnings (loss)
available to common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed by
dividing net earnings available to common stockholders by the weighted-average
number of common shares outstanding during the period increased to include the
number of additional common shares that would have been outstanding if
potentially dilutive common shares had been issued.
The following table sets forth the computations of shares and net loss used in
the calculation of basic and diluted loss per share for the three-month period
ended March 31, 2003:
Three months ended
3/31/2003 3/31/2002
--------- ---------
Loss from continuing operations $ (80,570) $ (39,245)
Loss from discontinued operations (233,018) (69,286)
------------------- -------------------
Net loss for the period (313,588) (108,531)
Weighted-average shares outstanding 41,360,010 21,360,010
Effect of dilutive securities :
Dilutive options - $1.30 - -
Dilutive warrants - $1.00 - -
Dilutive warrants - $1.50 - -
------------------- -------------------
Dilutive potential common shares - -
------------------- -------------------
Adjusted weighted-average shares
And assumed conversions 41,360,010 21,360,010
Loss per share attributable to common shareholders:
Loss from continuing operations (0.00) (0.00)
Loss from discontinued operations (0.01) (0.01)
------------------- -------------------
Total basic and diluted loss per share $ (0.01)$ (0.01)
=================== ===================
F-8
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
5. Basic and Diluted Loss Per Share - Continued
The effect of outstanding options and warrants was not included as the effect
would be antidilutive.
6. Total Amount Advanced to Joint Venture
As at March 31, 2003, the total amount advanced to the joint venture project is
$3,212,205.
7. Segment and Geographic Data
The Company's reportable segments are geographic areas that provide
internet-related services and products to the Chinese markets. Summarized
financial information concerning the Company's reportable segments is shown in
the following table. The "Other" column includes corporate related items, and,
as it relates to segment profit (loss), income and expenses not allocated to
reportable segments.
China Canada Other Total
For the three months ended March 31, 2003
Revenue from continuing operations $ - $ 65,350 $ -$ 65,350
Operating loss (786) (49,332) (10,055) (60,173)
Total Assets 3,825,596 33,647 856,935 4,716,178
For the three months ended March 31, 2002
Revenue from continuing operations $ - $ - $ - $ -
Operating Loss (513) (5,309) (58,412) (64,234)
Total Assets 2,553,326 6,763 1,005,778 3,565,867
F-9
XIN NET CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
( Unaudited )
8. Subsequent Events
On April 1, 2003, the Company extended its outstanding 5,884,990 million Series
"A" Share Purchase Warrants as follows:
(i) the exercise price of the Series "A" Share Purchase Warrants is
adjusted to $0.50 each and their term is extended to March 31,
2005:
(ii) upon exercise of one Series "A" Share Purchase Warrants at $0.50,
the holder will receive one common share of the company and one
Series "B" Share Purchase Warrant; and
(iii) the exercise price of the Series "B" Share Purchase Warrants is
adjusted to $0.75 each and their term is extended to March 31,
2006;
(iv) upon exercise of one Series "B" Share Purchase Warrant at $0.75,
the holder will receive one common share of the Company.
F-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information presented here should be read in conjunction with Xin Net
Corp.'s consolidated financial statements and related notes. In addition to
historical information, the following discussion and other parts of this
document contain certain forward-looking information. When used in this
discussion, the words "believes," "anticipates," "expects," and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected due to a number of factors beyond the
Company's control. The Company does not undertake to publicly update or revise
any of its forward-looking statements even if experience or future changes show
that the indicated results or events will not be realized. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. Readers are also urged to carefully review and
consider the Company's discussions regarding the various factors, which affect
its business, included in this section and elsewhere in this report.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 2003 COMPARED TO THE SAME
PERIOD IN 2002.
The Company had $65,350 in revenue in the period in 2003 from educational
services, which division it acquired in early 2003. The Company discontinued
operations in China for its domain name registration service within its Infonet
subsidiary, since it has been sold, and results of 2002 revenues (now
discontinued) for the period have been omitted.
The Company incurred expenses in the quarter totalling $125,523 in 2003
compared to $64,234 in 2002. These expenses were those of the registrant (in
2002), not of the discontinued operations in China. The largest components of
expenses were consulting and professional of $20,930 in 2003 and $34,768 in
2002, wages, salaries, and benefits of $52,919 in 2003 compared to $6,901 in
2002, general and administrative of $12,174 in 2003 and $18,921 in 2002, rent of
$18,549 in 2003 and $2,525 in 2002, foreign exchange loss of $9,641 in 2003 and
$565 in 2002, and depreciation of $1,548 in 2003 and $554 in 2002.
The Company had other income of $5,995 in the period in 2003 compared to
none in 2002. The Company had a loss of ($26,396) in 2003 and a gain of $24,352
in 2002 for equity income (loss) in undistributed earnings of investee company.
The loss from continuing operations was ($80,570) in 2003 in the period
compared to ($39,245) in 2002. The loss from discontinued operations was
($233,018) in the period in 2003 and ($69,286) in 2002. Total net loss was
($313,588) in the quarter in 2003 compared to ($108,531) in the same quarter in
2002. The loss per share was nominal in 2003 and 2002 on continuing operations.
The loss per share was ($.01) in 2003 and 2002 in the quarter, on discontinued
operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company had net cash, accrued interest, receivables and investments of
$1,274,108 at March 31, 2003.
The Company has no other capital resources other than the ability to use
its common stock to achieve additional capital raising. It did not raise any
additional capital during the first quarter of 2003. It has equipment of
$11,036 on the books, which is not necessarily liquid at such value. It has an
investment in The Link Group, Inc. valued at $293,204. Other than cash capital,
its other assets would be illiquid.
At the end of the quarter, it had $4,716,178 in current assets, of which
$2,696,501 represented "Assets to be disposed of," and current liabilities of
$4,281,119, primarily consisting of "Liabilities to be disposed of,"
($3,706,778) and a security deposit ($362,430) received from Sino-i.com, Ltd. in
connection with the sale of its Internet Access Provision business in February
2003. Current assets also included "Net assets of Discontinued Operations,"
representing net assets disposed of in the sale of its ISP operations in the PRC
in per an agreement dated June 22, 2001. (The Company is experiencing some
delays in obtaining new funding; it plans to close the sale of its Internet
Access Provision services when this issue is resolved).
Changes in Financial Condition:
The cash capital at the end of the quarter of $1,274,108 will be used to
fund continued operations, which management believes is adequate to satisfy its
cash requirements for at least the next twelve months. The trend of operating
losses could continue due to costs of equipment, design of new value-added
services, start up operations for new locations and advertising & marketing
which precede development of additional revenue for the Company.
Net cash flows used in operating activities decreased to $485,833 in the
first quarter in 2003 from ($173,097) in the corresponding quarter in 2002. Net
cash flow used in investing activities decreased to ($17,998) in first quarter
2003 as compared ($288,534) in the first quarter of 2002. Net cash flow used in
financing activities was $0 in first quarter of 2003 compared to ($15,056) in
first quarter 2002.
The positive changes resulted from the sale of its operations in China
and the achievement of a private placement of stock for $1,000,000 in late 2002.
Need for Additional Financing:
The Company believes it has sufficient capital to meet its short-term cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934. But if losses continue it
may have to seek loans or equity placements to cover longer term cash needs to
continue operations and expansion.
No commitments to provide additional funds have been made by management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to the Company to allow it to cover operations expenses.
If future revenue declines, or operations are unprofitable, it will be
forced to develop another line of business, or to finance its operations through
the sale of assets it has, or enter into the sale of stock for additional
capital, none of which may be feasible when needed. The Company has no specific
management ability, nor financial resources or plans to enter any other business
as of this date.
From the aspect of whether it can continue toward the business goal of
maintaining and expanding the joint venture for internet services in China, it
may use all of its available capital without generating a profit.
The effects of inflation have not had a material impact on its operation,
nor is it expected to in the immediate future.
Although the Company is unaware of any major seasonal aspect that would
have a material effect on the financial condition or results of operation, the
first quarter of each fiscal year is always a financial concern. It is not
uncommon for companies to shut down their operation or operate on a skeletal
crew during the Chinese New Year holiday. Therefore in effect, the first quarter
really has only two months for generating revenue, as it relates to the results
of operations for the internet-related services provided in China, and shown in
the statement of operations in the caption "loss from discontinued operations."
Market Risk:
The Company's investments in The Link Group, Inc. will be subject to market
volatility. It does not hold any derivatives or other investments that are
subject to market risk. The carrying values of any financial instruments,
approximate fair value as of those dates because of the relatively short-term
maturity of these instruments which eliminates any potential market risk
associated with such instruments.
Future Trends:
The Company will continue its cost-saving measures and ongoing efforts to
increase revenues in order to achieve profitability. However the Company cannot
assure that any profit on revenues can occur in the future. It may have to
continue to advertise and promote its business. Operating losses may continue.
If the Company acquires additional capital, for example through sale of stock in
private placements or through investors exercising warrants, it may be able to
advertise and promote its services more aggressively and expand its business
more rapidly.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None.
Item 2. Changes in securities - None.
Item 3. Defaults upon senior securities - None.
Item 4. Submission of matters to a vote of security holders - None.
Item 5. Other information - None.
Item 6. Exhibits and reports on Form 8-K
(a) The following are filed as Exhibits to this
Quarterly Report. The numbers refer to the Exhibit Table of
Item 601 of Regulation S-K:
None.
(b) Reports on Form 8-K filed during the three months
ended March 31, 2003. (incorporated by reference)
8-K fild 1-23-03
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Dated: May 20, 2003
XIN NET CORP.
by: /s/ Ernest Cheung
----------------------------
Ernest Cheung, Secretary/Director
CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES OXLEY ACT
I, Angela Du, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Xin Net Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 20, 2003
/s/ Angela Du
-----------------------
Angela Du, President, CEO
CERTIFICATION PURSUANT TO SECTION
302 OF THE SARBANES OXLEY ACT
I, Ernest Cheung, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Xin Net Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 20, 2003
/s/ Ernest Cheung
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Ernest Cheung, CFO