10QSB 1 v093335_10qsb.htm Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-QSB
 


x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarter ended September 30, 2007

-OR-
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                             to                            
 
Commission File Number 000-12423
 


ALONG MOBILE TECHNOLOGIES, INC.
(Exact Name of small business issuer as specified in Its charter)
 
NEVADA
 
94-2906927
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
 
 
 
No. 88, 9th Floor, Western Part of the 2nd South Ring Road,
Xi’an City, Shaanxi Province, PRC
(Address of principal executive offices)
 
710065
(Zip code)

Issuer’s telephone number, including area code: 011-86-29-88360097

(Former name, former address or former fiscal year, if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x     No o

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

The number of shares outstanding of each of the Registrant’s classes of common stock, as of November 1, 2007 was 70,600,000 shares, all of one class of $0.001 par value Common Stock.

Transitional Small Business Disclosure Format (Check one): Yes o   No x



ALONG MOBILE TECHNOLOGIES, INC.
FORM 10-QSB
Quarter Ended September 30, 2007
TABLE OF CONTENTS

   
Page
     
 
 PART I— FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
 
     
 
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
3
     
 
Unaudited Condensed Consolidated Statements of Operations for the Three & Nine Months Ended September 30, 2007 and 2006
4
     
 
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006
5
     
 
Notes to Unaudited Condensed Consolidated Financial Statements for the Three & Nine Months Ended September 30, 2007 and 2006
6
     
Item 2.
Managements Discussion and Analysis of Financial Condition or Plan of Operation
15
     
Item 3.
Controls and Procedures
22
     
 
PART II—OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
22
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
22
     
Item 3.
Defaults Upon Senior Securities
22
     
Item 4.
Submission of Matters to a Vote of Security Holders
22
     
Item 5.
Other Information
22
     
Item 6.
Exhibits and Reports on Form 8-K
23
     
SIGNATURES
23

Page 2 of 23


PART 1: FINANCIAL INFORMATION

ALONG MOBILE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
(Stated in US Dollars)
 
   
September 30,
 
December 31,
 
   
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
ASSETS
             
Current Assets
             
Cash and cash equivalents
 
$
5,692,395
 
$
6,561,239
 
Accounts receivable (net of allowance for doubtful accounts of $386 in 2007, $382 in 2006)
   
59,795
   
64,076
 
Inventories (Note 7)
   
63,371
   
32,421
 
Deposits paid (Note 8)
   
3,658,082
   
2,750,240
 
Prepayments and other receivables
   
139,351
   
35,319
 
               
Total Current Assets
   
9,612,994
   
9,443,295
 
Property and equipment, net (Note 9)
   
8,192,286
   
4,186,065
 
Intangible assets, net (Note 10)
   
2,053,477
   
2,119,030
 
               
TOTAL ASSETS
 
$
19,858,757
 
$
15,748,390
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
             
               
Current Liabilities
             
Accounts payable
 
$
11,153
 
$
10,726
 
Receipt in advance
   
3
   
31,903
 
Deposits received
   
465,574
   
447,713
 
Other payables and accrued liabilities (Note 11)
   
700,945
   
752,729
 
Value added tax payable
   
-
   
788,602
 
Other taxes payable
   
121,072
   
163,546
 
Income tax payable
   
121,946
   
-
 
               
TOTAL LIABILITIES
   
1,420,693
   
2,195,219
 
               
COMMITMENTS AND CONTINGENCIES (NOTE 12)
             
               
STOCKHOLDERS’ EQUITY
             
               
Common stock: par value of $0.001 per share
   
70,600
   
70,600
 
Authorized 200,000,000 shares in 2007 and 2006; issued and outstanding 70,600,000 shares in 2007 and 2006
             
Additional paid-in capital
   
8,045,085
   
8,045,085
 
Retained earnings
   
7,690,496
   
3,949,214
 
Statutory and other reserves
   
1,555,000
   
1,045,174
 
Accumulated other comprehensive income
   
1,076,883
   
443,098
 
               
TOTAL STOCKHOLDERS’ EQUITY
   
18,438,064
   
13,553,171
 
               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
19,858,757
 
$
15,748,390
 
 
See the accompanying notes to condensed consolidated financial statements
 
Page 3 of 23


ALONG MOBILE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
   
Three months ended
September 30, (Unaudited)
 
Nine months ended
September 30, (Unaudited)
 
   
2007
 
2006
 
2007
 
2006
 
                   
Revenues
 
$
3,440,583
 
$
1,453,036
 
$
8,837,769
 
$
3,893,522
 
Cost of revenues
   
(1,011,578
)
 
(173,448
)
 
(2,394,803
)
 
(565,195
)
                           
Gross profit
   
2,429,005
   
1,279,588
   
6,442,966
   
3,328,327
 
                           
Operating expenses
                         
Selling and distribution
   
492,867
   
260,019
   
1,027,750
   
637,200
 
General and administrative
   
331,311
   
193,515
   
1,049,771
   
660,193
 
Professional fees
   
5,000
   
48,997
   
15,000
   
78,997
 
Depreciation
   
28,561
   
30,725
   
81,550
   
80,258
 
                           
Total expenses
   
857,739
   
533,256
   
2,174,071
   
1,456,648
 
                           
Operating income
   
1,571,266
   
746,332
   
4,268,895
   
1,871,679
 
Interest income
   
16
   
777
   
2,274
   
22,698
 
Other income
   
24,922
   
21,875
   
325,479
   
30,875
 
                           
Income before income taxes
   
1,596,204
   
768,984
   
4,596,648
   
1,925,252
 
Income taxes (Note 4)
   
(121,020
)
 
-
   
(345,540
)
 
-
 
                           
Net income
 
$
1,475,184
 
$
768,984
 
$
4,251,108
 
$
1,925,252
 
                           
Earnings per share
                         
- Basic and diluted (Note 5)
 
$
0.02
 
$
0.01
 
$
0.06
 
$
0.03
 
                           
Weighted average number of common stock outstanding
   
70,600,000
   
70,221,739
   
70,600,000
   
70,074,725
 
 
See the accompanying notes to condensed consolidated financial statements
 
Page 4 of 23


ALONG MOBILE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)


   
Nine months ended
September 30, (Unaudited)
 
   
2007
 
2006
 
           
Cash flows from operating activities
             
Net income
 
$
4,251,108
 
$
1,925,252
 
Adjustments to reconcile net income to net cash provided by operating activities:
             
Allowance for doubtful accounts
   
-
   
62,614
 
In-kind contribution
   
-
   
8,438
 
Amortization on intangible assets
   
146,995
   
101,631
 
Depreciation on property and equipment
   
724,916
   
80,258
 
Gain on disposal of property and equipment
   
(257,082
)
 
-
 
Changes in operating assets and liabilities
             
Accounts receivable
   
6,696
   
47,211
 
Inventories
   
(29,046
)
 
22,719
 
Deposits paid
   
(781,682
)
 
-
 
Prepayment and other receivables
   
(90,792
)
 
(2,362,774
)
Accounts payable
   
-
   
104
 
Receipt in advance
   
(32,489
)
 
-
 
Other payables and accrued liabilities
   
(74,912
)
 
418,305
 
Value added tax payable
   
(812,881
)
 
4,502
 
Other taxes payable
   
(47,988
)
 
-
 
Income tax payable
   
119,434
   
-
 
               
Net cash flows provided by operating activities
   
3,122,277
   
308,260
 
               
Cash flows from investing activities
             
Decrease in note receivable
   
-
   
1,237,624
 
Purchase of property and equipment
   
(6,312,435
)
 
(1,987,500
)
Proceeds from disposal of property and equipment
   
2,084,484
   
-
 
Purchase of intangible assets
   
-
   
(625,000
)
               
Net cash flows used in investing activities
   
(4,227,951
)
 
(1,374,876
)
               
Financing activities
             
Dividend paid
   
-
   
(309,406
)
               
Net cash used in financing activities
   
-
   
(309,406
)
               
Effect of foreign currency translation on cash and cash equivalents
   
236,830
   
64,828
 
               
Net decrease in cash and cash equivalents
   
(868,844
)
 
(1,311,194
)
               
Cash and cash equivalents, beginning of period
   
6,561,239
   
6,476,651
 
               
Cash and cash equivalents, end of period
 
$
5,692,395
 
$
5,165,457
 
               
Supplemental cash flow information
             
Interest paid
 
$
-
 
$
-
 
Income taxes paid
 
$
-
 
$
-
 

See the accompanying notes to condensed consolidated financial statements
 
Page 5 of 23


ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
1.
Corporation information

 
(a)
Along Mobile Technologies, Inc. (“AGMB” or the “Company”) was originally organized in the State of Utah in 1976 as Merit Diversified International, Inc. and subsequently reincorporated in the State of Nevada on August 9, 1994. Since its inception, AGMB has made several attempts to acquire and operate various businesses and has gone through several reorganizations and name changes.

The Company currently has two wholly-owned subsidiaries, namely Main Glory Holdings Limited (“Main Glory”) and Shaanxi Jialong Hi-Tech Incorporated Company (“Jialong”).

Main Glory was incorporated in Hong Kong on July 13, 2005 as an investment holding company. Jialong was established as a joint stock company in the People’s Republic of China (the “PRC”) on December 28, 2000 with its principal place of business in Xian, Shaanxi Province, the PRC. Jialong is a mobile high-technology corporation in the PRC. It is principally engaged in producing and selling wireless entertainment applications including ring-tones, games, images and e-books services for mobile devices through its unique downloading terminals. Jialong is also engaged in the research, development and sale of hardware including routers, firewalls, downloading terminals, PMP, MP3 and MP4.

AGMB, Main Glory and Jialong are hereafter collectively referred to as the “Group”.

 
(b)
On November 23, 2005, the stockholders of Jialong entered into a definitive agreement with Main Glory in which they exchanged 100% of their ownership of Jialong for 100% of ownership in Main Glory. As both companies are under common management, the exchange of shares has been accounted for as a reorganization of entities and the financial statements of Main Glory have been prepared as if the reorganization had occurred retroactively.

On December 1, 2005, the Company changed its name from International Synergy Holding Company, Ltd. to Along Mobile Technologies, Inc. and acquired all the issued and outstanding shares of Main Glory by issuing 56,911,443 shares of its common stock to the stockholders of Main Glory and 6,900,000 shares of its common stock to a third party consultant under an exchange agreement.

The merger of AGMB and Main Glory was treated for accounting purposes as a capital transaction and recapitalization by Main Glory and re-organization by AGMB.
 
Page 6 of 23


ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)


2.
Description of business

The Company is a mobile value-added services (“MVAS”) provider in the PRC. The Company designs, produces, publishes, manufactures, provides and distributes proprietary wireless entertainment applications such as ring-tones, games images, videos and e-books (“Wireless Applications”) to its customers. The Company also designs and distributes portable digital hardware products such as MP3, MP4 and PMP’s (“Hardware Products”) which, together with mobile communication devices manufactured and/or distributed by unaffiliated third party manufacturers and distributors of such products, may be used in conjunction with the Company’s proprietary Wireless Applications. The Wireless Applications are intended to be downloaded by customers on a fee-basis by means of the Company’s proprietary public download terminals (“Terminals”) which are installed by the Company in strategic locations such as shopping centers, universities, entertainment centers, cinemas, hotels, airports, restaurants and parks and additionally, through the Company’s customers access to and, use of, the Internet. The customers for the Company’s Wireless Applications include anyone in Greater China who has a mobile telephone or other personal digital assistant communications devices. The customers for the Company’s Hardware Products are targeted throughout Greater China and these customers can purchase the Company’s Hardware Products through non-affiliated resellers and retailers located throughout China with whom the Company has established working agreements.
 
3.
Summary of significant accounting policies

Basis of presentation and consolidation

The accompanying condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three and nine month periods have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. These condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Form 10KSB as filed with the Securities and Exchange Commission on March 1, 2007.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
 
Page 7 of 23


ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)


3.
Summary of significant accounting policies (Cont’d)

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 consolidated 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 accounts receivable, inventories and the estimation on useful lives of property, plant and equipment and intangible assets. Actual results could differ from those estimates.

Accounts receivable

The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on managements’ assessment of the credit history with the customers and current relationships with them.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition. In assessing the ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or committed inventory levels.

Property and equipment

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 to write off the cost of the assets to the estimated residual value on a straight-line basis over their estimated useful lives. The principal annual rates are as follows:

Buildings
   
4
%
Downloading terminals
   
20
%
Furniture and equipment
   
20
%

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.

Intangible assets

Intangible assets are stated at cost less accumulated amortization. Amortization is provided on a straight-line basis over 10 years or the terms of the licensing period from the date of acquisition.
 
Page 8 of 23


ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
3.
Summary of significant accounting policies (Cont’d)

Stock-based compensation

The Company adopted SFAS No. 123R “Share-Based Payment” using the modified prospective method. Under SFAS 123R, equity instruments issued to service providers for their services are measured at the grant-date fair value and recognized in the statement of operations over the vesting period.

Basic and diluted earnings per share

The Company reports basic earnings per share in accordance with SFAS No. 128, “Earnings Per Share”. Basic earnings per share is computed using the weighted average number of shares outstanding during the periods presented. The weighted average number of shares of the Company represents the common stock outstanding during the periods.

Revenue recognition

The Company recognizes revenue from the sale of hardware and wireless entertainment applications.

Revenue is recognized from the sale of hardware at the time title to the products transfers, the amount is fixed and determinable, evidence of an agreement exists, and the customer bears the risk of loss. Revenue is recorded net of estimated provisions for returns, rebates and sales allowances.

Revenue from wireless entertainment applications download fees is based on a single fee per downloaded application or bundle of applications. Download fees are assessed on a per download basis for each game or bundle of games downloaded to a consumer’s mobile phone. Ring-tones and other features operate on the same basis. Revenue is recognized by delivery and acceptance of an application download to the end user. The Company reports to the owners of the downloading terminals the product and dollar amount of revenue earned and remits the agreed upon price for each download to the terminal owners. The Company records its revenue, net of downloading terminals’ owners fees.

Recently issued accounting standards

In July 2006, the FASB issued FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48)” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in consolidated financial statements. FIN 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. FIN 48 also provides guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement did not have a material effect on the Company’s future reported financial position or results of operations.
 
Page 9 of 23


ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
3.
Summary of significant accounting policies (Cont’d)

Recently issued accounting standards (cont’d)

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This Statement shall be effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The provisions of this Statement should be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except in some circumstances where the Statement shall be applied retrospectively. The Company is currently evaluating the effect, if any, of SFAS 157 on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of SFAS No. 159 on its consolidated financial position and results of operations.
 
4.
Income taxes

Income taxes are calculated at 7.5% on the estimated assessable profits of the subsidiary operating in the PRC.
 
5.
Earnings per share - basic and diluted

The basic and diluted earnings per share is calculated using the net income and the weighted average number of common stock outstanding during the reporting periods. The Company has no dilutive instruments and accordingly, the basic and diluted earnings per share are the same.
 
6.
Comprehensive income

   
Three months ended
September 30, (Unaudited)
 
Nine months ended
September 30, (Unaudited)
 
   
2007
 
2006
 
2007
 
2006
 
                   
Net income
 
$
1,475,184
 
$
768,984
 
$
4,251,108
 
$
1,925,252
 
Foreign currency translation adjustments
   
250,918
   
-
   
633,785
   
161,496
 
                           
Total comprehensive income
 
$
1,726,102
 
$
768,984
 
$
4,884,893
 
$
2,086,748
 

Page 10 of 23

 
 
ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
7.
Inventories
 
   
September 30,
 
December 31,
 
   
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
           
Hardware products
 
$
15,151
 
$
32,421
 
Consumables
   
48,220
   
-
 
               
   
$
63,371
 
$
32,421
 

8.
Deposits paid

Deposits paid represent the deposits made to third parties for the leasing of digital information kiosks (“Kiosks”), which provide the terminals for customers to download the entertainment applications.
 
9.
Property and equipment, net
 
   
September 30,
 
December 31,
 
   
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
           
Buildings
 
$
2,172,601
 
$
2,174,608
 
Furniture and equipment
   
59,860
   
57,563
 
Downloading terminals
   
6,801,260
   
2,431,615
 
               
     
9,033,721
   
4,663,786
 
Accumulated depreciation
   
(841,434
)
 
(477,721
)
               
Property and equipment, net
 
$
8,192,287
 
$
4,186,065
 

10.
Intangible assets
 
   
September 30,
 
December 31,
 
   
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
           
Patent rights
 
$1,330,212
 
$1,279,181
 
Prepaid license fee
   
1,341,918
   
1,290,438
 
               
     
2,672,130
   
2,569,619
 
Accumulated amortization
   
(618,653
)
 
(450,589
)
               
Intangible assets, net
 
$
2,053,477
 
$
2,119,030
 
 
Page 11 of 23

 
ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
11.
Other payables and accrued liabilities
 
   
September 30,
 
December 31,
 
   
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
           
Other payables
 
$
5,986
 
$
5,756
 
Accrued statutory staff welfare and salaries
   
405,377
   
464,658
 
Accrued liabilities
   
123,559
   
163,215
 
Accrued pension liabilities
   
166,023
   
119,100
 
               
Total other payables and accrued liabilities
 
$
700,945
 
$
752,729
 
 
12.
Commitments and contingencies

Operating lease commitment

The Company leases kiosks and office premises under various non-cancelable operating lease agreements that expire at various dates through years 2007 to 2011. All leases are on fixed rental basis and none of them include contingent rentals. Minimum future commitments payable under these agreements as of September 30, 2007 was $5,852,865.

13.
Defined contribution plan

The Company has a defined contribution plan for all its qualified employees in the PRC. The Company and its employees are each required to make contributions to the plan at the rates specified in the plan. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in future years. The defined contribution plan contributions were charged to the statement of operations. The Company contributed $72,740 and $Nil for the nine month periods ended September 30, 2007 and 2006 respectively and contributed $20,697 and $Nil for the three month periods ended September 30, 2007 and 2006 respectively
 
Page 12 of 23

 
ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
14.
Segment information

The Company operates in two reportable segment, Wireless Entertainment Applications and Hardware. The accounting policies of the segments are the same as described in the summary of significant accounting policies. The Company evaluates segment performance based on income from operations. As a result, the components of operating income for one segment may not be comparable to another segment. The following is a summary of the Company’s segment information:

   
Wireless Entertainment Applications
 
Hardware
 
Total
 
   
Nine months ended September 30,
(Unaudited)
 
Nine months ended September 30,
(Unaudited)
 
Nine months ended September 30,
(Unaudited)
 
   
2007
 
2006
 
2007
 
2006
 
2007
 
2006
 
                           
Revenues
 
$
8,810,363
 
$
3,767,002
 
$
27,406
 
$
126,520
 
$
8,837,769
 
$
3,893,522
 
Segment profit
 
$
4,588,447
 
$
1,939,111
 
$
23,201
 
$
65,138
 
$
4,611,648
 
$
2,004,249
 

   
Three months ended September 30,
(Unaudited)
 
Three months ended September 30,
(Unaudited)
 
Three months ended September 30,
(Unaudited)
 
   
2007
 
2006
 
2007
 
2006
 
2007
 
2006
 
                           
Revenues
 
$
3,440,583
 
$
1,447,032
 
$
-
 
$
6,004
 
$
3,440,583
 
$
1,453,036
 
Segment profit
 
$
1,601,204
 
$
814,627
 
$
-
 
$
3,354
 
$
1,601,204
 
$
817,981
 

   
September 30,
 
December 31,
 
September 30,
 
December 31,
 
September 30,
 
December 31,
 
   
2007
 
2006
 
2007
 
2006
 
2007
 
2006
 
   
(Unaudited)
 
(Audited)
 
(Unaudited)
 
(Audited)
 
(Unaudited)
 
(Audited)
 
                           
Segment assets
 
$
19,735,591
 
$
11,635,769
 
$
123,166
 
$
4,112,621
 
$
19,858,757
 
$
15,748,390
 
 
Page 13 of 23

 
ALONG MOBILE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007
(Stated in US Dollars)
 
14.
Segment information (Cont’d)

A reconciliation is provided for unallocated amounts relating to corporate operations which is not included in the segment information.

   
Three months ended
September 30, (Unaudited)
 
Nine months ended
September 30, (Unaudited)
 
   
2007
 
2006
 
2007
 
2006
 
                   
Total consolidated revenue
 
$
3,440,583
 
$
1,453,036
 
$
8,837,769
 
$
3,893,522
 
                           
Total income for reportable segments
 
$
1,601,204
 
$
817,981
 
$
4,611,648
 
$
2,004,249
 
Unallocated amounts relating to operations:
                         
Professional fees
   
(5,000
)
 
(48,997
)
 
(15,000
)
 
(78,997
)
                           
Income before income taxes
 
$
1,596,204
 
$
768,984
 
$
4,596,648
 
$
1,925,252
 

No reconciliation for assets is provided as there are no intersegment transactions and unallocated amounts relating to corporate operations and any other adjustments to determine the segment assets.
 
All of the Company’s long-lived assets and customers are located in the PRC. Accordingly, no geographic information is presented.
 
Page 14 of 23

 
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION

The following review concerns the nine months ended September 30, 2007 and September 30, 2006, which should be read in conjunction with the financial statements and notes thereto presented in the Form 10-KSB.

Forward Looking Statements

Certain statements in Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Overview 
 
ALONG MOBILE TECHOLOGIES, INC. (“AMT”, “we” or the “Company”) is a mobile value-added services (“MVAS”) provider in the People’s Republic of China (the “PRC” or “China”). The Company designs, produces, publishes, manufactures, provides and distributes proprietary wireless entertainment applications such as ring-tones, games, images, videos and e-books (“Wireless Applications”) to its customers. The Company also designed, produced and distributed portable digital hardware products such as MP3, MP4 and PMP’ s (“Hardware Products”) which, together with mobile communication devices manufactured and/or distributed by unaffiliated third party manufacturers and distributors of such products, may be used in conjunction with the Company’s proprietary Wireless Applications, however the management of the company has decided to concentrate their efforts on Wireless Applications and cease certain Hardware Products business since 2005, and ceased all the hardware products business as of Dec. 31 2005. Our Wireless Applications are intended to be downloaded by our customers on a fee-basis by means of our proprietary public downloading terminals (“Terminals”) which are installed by us in strategic locations such as shopping centers, universities, entertainment centers, cinemas, hotels, airports, restaurants and parks and additionally, through our customers access to and, use of, the Internet. The customers for our Wireless Applications include anyone in Greater China who has a mobile telephone or other personal digital assistant communications device. In 2006, the management of the Company decided to transfer the position from mobile value-added services provider to a leading provider of mobile interactive entertainment platform services in China.

The Company was initially incorporated in the State of Nevada in 1994 as Merit Diversified International Incorporated. From 1994 through 2005, the Company’s name was changed several times beginning in 1994 to Allied Artists Entertainment Group, Inc., in 2001 to International Synergy Holding Company, Ltd., and we adopted our current name, Along Mobile Technologies, Inc. in December, 2005. Our world headquarter is located at No. 88, 9th Floor Western, Part of the 2nd South Ring Road, Xi’an City, Shaanxi Province, PRC. 710065. In November, 2005, the Company, then named International Synergy Holding Company, Ltd., (“ISYH”) acquired, as a wholly owned subsidiary, Main Glory Holdings, Ltd., a Hong Kong company (“Main Glory”). The acquisition of Main Glory as a wholly owned subsidiary of ISYH was accomplished through the use of a Stock Exchange Agreement wherein ISYH received one hundred percent (100%) of all of the issued and outstanding common shares of Main Glory in return for the issuance to the Main Glory shareholders and consultants to such shareholders of Sixty Three Million Eight Hundred Eleven Thousand Four Hundred and Forty Three, (63,811,443) shares of ISYH common stock. Prior to ISYH’s acquisition of Main Glory as a wholly owned subsidiary in November 2005, Main Glory consummated a Stock Exchange Agreement with Shaanxi Jialong Hi-Tech Incorporated Company, a company formed in the PRC in 2002, (“Jialong”) whereby, Jialong became a wholly owned subsidiary of Main Glory.

 
Page 15 of 23

 

The Company’s goal is to enhance the value to its user base and thereby continue the expansion of its customer base throughout Greater China.  Through its efforts, the Company has established a significant scale and customer reach and has built a significant leadership position in the MVA market, more specific in achieving mobile interactive entertainment and serving its customers through its exclusive distribution platform in China. AMT continues to develop new products and build strategic partnerships to enhance its offerings and increase its customer base. These initiatives are designed to leverage AMT’s brand strength and expand its presence in the MVA industry in China.

The Company is continuing the process of implementing all the necessary requirements to file the appropriate documents to be listed on the American Stock Exchange (“AMEX”). No assurance can be given that such listing will be approved.

Strategy
 
Our aim is to be the leader in the Greater China market for MVA products and services. The core of our business is our on-going effort to provide AMT’s customers with continuously evolving and changing Wireless Applications and Hardware Products and the upgrading of technological platforms such as our Mobile Information & Entertainment Service Platform, (“MIESP”) all of which allow our customers easy, immediate and affordable access to our products. To advance this core business, we are growing our business in ways that we believe complement our strategic focus.

We have made a fundamental determination to remain in control of the dissemination of our products and direct oversight of our billing for the use of our products. We have determined that the possible negatives associated with being dependent upon third party communication providers such as China Mobile and China Unicom for the delivery of our products and services, the billing of our fees and collection of those fees can and, should be, avoided for the present time. We have determined that by vending our products into our own established and controlled distribution network we can make our products and services available to any one who uses a mobile telephone or other PDA device through direct connection over their mobile telephone or PDA; through the use of our proprietary web site and finally through the use of our proprietary public Terminals. In this manner we continue to have direct control over the promotion, sale and dissemination of our Wireless Application products and services as well as the ability to directly control the billing of our customers and collection from our customers without the use of a middleman or the fees that usually accompany the use of middleman providers such as China Mobile and China Unicom.

We own and control our own studios and development center where we are constantly engaged in the research and development of the refinement and expansion of our product lines and services as well as the concepts embodied and required for the building and growing of our controlled distribution network. We are working to implement a growth strategy around expanding product and service lines and our controlled network infrastructure that includes the following key elements:

 
a heightened focus on the needs of our customer, delivering customer-specific solutions, high quality products and world-class customer service;

 
sales growth through market share gains, new products introductions and expansion into adjacent and related markets;

 
development of new sales channels and market opportunities through the use of partnerships and alliances with other application, service and equipment vendors, distributors, resellers and systems integrators;

 
lowering our cost structure through improved operational efficiencies and economies of scale to compete effectively in a more cost-conscious marketplace; and

 
applications, products and services portfolio additions and enhancements through both strategic acquisitions and our own research and development process.
 
 
Page 16 of 23

 
 
Customer Focus. We are committed to maximizing our efforts to better understand those Wireless Applications, and Services required and desired by our customers and then delivering those same Wireless Applications, and Services to our customers in a simple, direct and economical fashion. We strive to offer customer-specific solutions, price competitive products that offer great functionality and quality, and world-class customer service that offers on-time product delivery and highly responsive support. We believe those companies that best service their customers with compelling value propositions that include the aforementioned elements hold a competitive advantage in efforts to grow their businesses.

Growing Sales. In the current environment of constrained capital spending by MVA’s, we believe that we must grow our market share to significantly grow our business. We are undertaking several initiatives in our efforts to gain market share. Specifically, we look to sell more of our current portfolio of Wireless Applications to our existing customers, introduce new products and services to our existing customers, and introduce the entire AMT product and services portfolio to new customers. The cornerstone of these initiatives is our commitment to focus on the needs and demands of our customers. We also are committed to the development and introduction of new products that have applications in our current markets and as adjacent markets.

Lowering Cost Structure. We remain committed to lower our overall cost structure and be a low-cost industry leader. Over the next three years we want to work toward lowering our operating margin (exclusive of impairment, restructuring and acquisition-related charges, amortization of purchased intangibles and stock-based compensation expenses). To meet this goal we must contain costs.

Product Portfolio Additions. We continue to invest in research and development initiatives and to search for appropriate acquisition opportunities to strengthen our core product portfolio. Our efforts are focused on opportunities within our existing markets, as well as opportunities in adjacent or related markets that will strengthen our product offerings. In addition, we are focused on acquisitions that may enhance our geographic operations. We also will continue to evaluate and monitor our existing business and product lines for growth and profitability potential. If we believe it necessary, we will deemphasize or divest product lines that we no longer believe can advance our strategic vision.

Our ability to implement our strategy effectively is subject to numerous uncertainties, the most significant of which are described below in “Risk Factors” in this Form 10-QSB. We cannot assure you that our efforts will be successful.
 
 
Page 17 of 23

 

Results of Operations.
 
The following table compares our statement of operations data for the three and nine months ended September 30, 2007 and 2006. The trends suggested by this table may not be indicative of future operating results, which will depend on various factors and which can vary from quarter to quarter.
 
 
 
Nine Months Ended September 30, 
 
Three Months Ended September 30, 
 
 
 
2007
 
 
 
% of
increase/
 
2007
 
 
 
% of
increase/ 
 
 
 
(Consolidated)
 
2006
 
(decrease)
 
(Consolidated)
 
2006
 
(decrease)
 
Revenues
 
$
8,837,769
 
$
3,893,522
   
126.99
%
$
3,440,583
 
$
1,453,036
   
136.79
%
Cost of revenues
   
(2,394,803
)
 
(565,195
)
 
323.71
%
 
(1,011,578
)
 
(173,448
)
 
483.22
%
Gross margin
   
6,442,966
   
3,328,327
   
93.58
%
 
2,429,005
   
1,279,588
   
89.83
%
Selling and distribution expenses
   
1,027,750
   
637,200
   
61.29
%
 
492,867
   
260,019
   
89.55
%
General and administrative expenses
   
1,049,771
   
660,193
   
59.00
%
 
331,311
   
193,515
   
71.21
%
Professional fees
   
15,000
   
78,997
   
(81.01
%)
 
5,000
   
48,997
   
(89.80
%)
Depreciation and amortization
   
81,550
   
80,258
   
1.6
%
 
28,561
   
30,725
   
(7.04
%)
Other income
   
327,753
   
53,573
   
511.79
%
 
24,938
   
22,652
   
10.09
%
Income tax expense
   
(345,540
)
 
-
         
(121,020
)
 
-
   
-
 
Net income
   
4,251,108
   
1,925,252
   
120.81
%
 
1,475,184
   
768,984
   
91.84
%

Revenue, Cost of Revenue and Gross Profit Margin

Revenue increased by $4,944,247 from $3,893,522 for the nine months ended September 30, 2006 to $8,837,769 for the nine months ended September 30, 2007 and by $1,987,547 from $1,453,036 for the three months ended September 30, 2006 to $3,440,583 for the three months ended September 30, 2007.

The increase was mainly attributable to the additional 2000 downloading terminals were installed and operated in An Hui Province in the second quarter of 2007, making our total terminals to more than 4000, so that we gained the increase in sales of our Wireless Applications products. We shall continue to install additional terminals in suitable locations in the south eastern part of the PRC. Another factor to the increase is our success in enhancing our brand awareness through marketing activities.

 
Revenue
 
For nine months
ended September 30,  
 
 
 
For three months
ended September 30,
 
 
 
 
 
2007
 
 
 
Increase/ 
 
2007
 
 
 
Increase/ 
 
Product
 
(Consolidated)
 
2006 
 
(decrease) 
 
(Consolidated) 
 
2006
 
(decrease) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wireless Entertainment Applications
 
$
8,810,363
 
$
3,767,002
 
$
5,043,361
 
$
3,440,583
 
$
1,447,032
 
$
1,993,551
 
Hardware
   
27,406
   
126,520
   
(99,114
)
 
-
   
6,004
   
(6,004
)
 
                         
TOTAL
 
$
8,837,769
 
$
3,893,522
 
$
4,944,247
 
$
3,440,583
 
$
1,453,036
 
$
1,987,547
 
 
 
Page 18 of 23

 

Cost of revenue increased from $565,195 for the nine months ended September 30, 2006 to $2,394,803 for the nine months ended September 30, 2007 and from $173,448 for three months ended September 30, 2006 to $1,001,646 for the three months ended September 30, 2007.

The increase in cost of revenue was mainly due to the more reasonable expenses was taken account into this item, like Salaries, Depreciation of network download terminals, Rental expenses for information stations and etc.
 
Cost of
revenue
 
For nine months
ended September 30,
 
 
 
For three months
ended September 30,
 
 
 
 
 
2007
 
 
 
Increase/
 
2007
 
 
 
Increase/ 
 
Product
 
(Consolidated) 
 
2006
 
(Decrease)
 
(Consolidated)
 
2006
 
(Decrease) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wireless Entertainment Applications
 
$
2,376,804
 
$
483,437
 
$
1,893,367
 
$
1,011,578
 
$
169,645
 
$
841,933
 
Hardware
   
17,999
   
81,758
   
(63,759
)
 
-
   
3,803
   
(3,803
)
 
                         
TOTAL
 
$
2,394,803
 
$
565,195
 
$
1,829,608
)
$
1,011,578
 
$
173,448
 
$
838,130
 

Our gross profit for the nine months ended September 30, 2007 was $6,442,966 with a substantial increase of $3,114,639 as compared with $3,328,327 for the nine months ended September 30, 2006. The gross profit increased from $1,279,588 for the three months ended September 30, 2006 to $2,429,005 for the three months ended September 30, 2007.

Our overall gross profit margin decreased from 85.48% for the nine months ended September 30, 2006 to 72.90% for the nine months ended September 30, 2007 and from 88.06% for the three months ended September 30, 2006 to 70.60% for the three months ended September 30, 2007.

Our gross profit margin for Wireless Applications decreased from 87.17% for the nine months ended September 30, 2006 to 73.02% for the nine months ended September 30, 2007 and from 88.28% for the three months ended September 30, 2006 to 70.60% for the three months ended September 30, 2007. The decrease in gross profit margins is primarily due to the change of calculation of cost of revenue.

The gross profit margin for Hardware Products decreased slightly from 35.38% for the nine months ended September 30, 2006 to 34.32% for the nine months ended September 30, 2007 and we have ceased our hardware business by the end of 2006, the revenue generated for the nine months ended September 30, 2007 was because of inventories, and we haven’t gained any revenue since the beginning of third quarter of 2007.
 
General and Administrative Expenses

General and Administrative expenses were $1,049,771 for the nine months ended September 30, 2007 with an increase of $389,578 from $660,193 for the nine months ended September 30, 2006. General and Administrative expenses increased from $193,515 for the three months ended September 30, 2006 to $331,311 for the three months ended September 30, 2007. The increase in general and administrative expenses was mainly due to the increase in operation expenses related to new business development. In August 2007, we had attended the Fifth Annual China Digital Entertainment Expo & Conference (China Joy) in Shanghai. Costs related to the exhibition, product demonstration, traveling and promotional related expenses represented the majority of increase in general expenses for the third quarter of 2007. We anticipated that promotional related expenses could be steadily increased in accordance with our business plan and expansion. Nevertheless, the management still adopts a conservative approach and control to lower the increase of costs in relation to new business expansion.

 
Page 19 of 23

 

Selling and Distribution Expenses

Selling and distribution expenses increased by $390,550 from $637,200 for the nine months ended September 30, 2006 to $1,027,750 for the nine months ended September 30, 2007 and by $232,848 from $260,019 for the three months ended September 30, 2006 to $492,867 for the three months ended September 30, 2007. The increase in our selling and distribution expenses was mainly due to the participation in the exhibition as mentioned above. During the third quarter of 2007, we also incurred rental expenses for the lease of kiosks where our downloading terminals are installed.

Liquidity and Capital Resources
 
Cash
 
Our cash balance amounted to $5,692,395 as of September 30, 2007, which was decreased by $868,844 as compared to $6,561,239 as of December 31, 2006. The decrease in cash balance was mainly due to cash used for the operations from business expansion.
 
For the nine months ended September 30, 2007, our cash provided by operating activities amounted to $3,122,277 as compared to $308,260 for the nine months ended September 30, 2006. The increase was mainly due to the much more cash generated from our new business expansion by installing additional 2000 downloading terminals in An Hui Province.

Working Capital
 
As of September 30, 2007, we had cash and cash equivalents of $5,692,395, other current assets of $3,920,599 and current liabilities of $1,420,693. We believe we have sufficient cash to continue our current business. However, we planed to raise additional funds from sources other than operating activities to grow our business. We estimate that the upgrading of our existing technological platforms such as our MIESP so as to allow our customers easy, immediate and affordable access to our products together with subsequent development and marketing expenses and expansion of our current downloading network will cost us approximately $10,000,000. We plan to finance this capital expenditure through the issuance of debt or equity securities.

Critical Accounting Policies

Management's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The Company's financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See note 3 to the Company's condensed consolidated financial statements, "Summary of Significant Accounting Policies". Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company believes that the following reflect the more critical accounting policies that currently affect the Company's financial condition and results of operations.

Long-lived Assets

The Company accounts for long-lived assets under the Statements of Financial Accounting Standards Nos. 142 and 144 “Accounting for Goodwill and Other Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived Assets” (“SFAS No. 142 and 144”). In accordance with SFAS No. 142 and 144, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, when undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. The Company believes that no impairment of property and equipment exist at September 30, 2007.

Page 20 of 23

 
Revenue recognition

The Company recognizes revenue from wireless entertainment applications.

Revenue from wireless entertainment applications download fees is based on a single fee per downloaded application or bundle of applications. Download fees are assessed on a per download basis for each game or bundle of games downloaded to a consumer’s mobile phone. Ring-tones and other features operate on the same basis. Revenue is recognized by delivery and acceptance of an application download to the end users. Where downloading terminals are owned by third parties, the Company reports to the owners of the downloading terminals the product and dollar amount of revenue earned and remits the agreed upon price for each download to the terminal owners. The Company records its revenue net of downloading terminals’ owners fees.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred.

Depreciation is provided on a straight-line basis, less estimated residual value over the asset’s estimated useful lives.

Income taxes

The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities 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. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

Off-Balance Sheet arrangements

The Company has not engaged in any off-balance sheet transactions since its inception.

Employees 

As of September 30, 2007, we had approximately 162 full-time employees employed in Greater China. From time to time we employ independent contractors to support our production, engineering, marketing, and sales departments.

Web Site Access to Our Periodic SEC Reports 

Our corporate Internet address is http://www.Alonggame.com. We make available free of charge on or through our web site our annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). We may from time to time provide important disclosures to investors by posting them in the investor relations section of our web site, as allowed by SEC rules. Information contained on AMT’s web site is not part of this report or any other report filed with the SEC. You may read and copy any public reports we filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site http://www.sec.gov that contains reports and information statements, and other information that we filed electronically.

Page 21 of 23

 
Foreign Currency Exchange Rate Risk 

The majority of our revenues derived and expenses and liabilities incurred are in Chinese Renminbi (“RMB”) with a relatively small amount in Hong Kong dollars (“HK$”) and the United States dollars (“US$” or “$”). Thus, our revenues and operating results may be impacted by exchange rate fluctuations in the currencies of China and Hong Kong. We have not tried to reduce our exposure to exchange rate fluctuations by using hedging transactions. However, we may choose to do so in the future. The availability and effectiveness of any hedging transactions may be limited and we may not be able to successfully hedge our exchange rate risks. Accordingly, we may experience economic losses and negative impacts on earnings and equity as a result of foreign exchange rate fluctuations.

ITEM 3. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. They concluded that the controls and procedures were effective as of September 30, 2007 to provide reasonable assurance that the information required to be disclosed by the Company in reports it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. While our disclosure controls and procedures provide reasonable assurance that the appropriate information will be available on a timely basis, this assurance is subject to limitations inherent in any control system, no matter how well it may be designed or administered.
Changes in Internal Controls. There was no change in our internal control over financial reporting during the quarter ended September 30, 2007, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not involved in any material pending legal proceedings at this time, and management is not aware of any contemplated proceeding by any governmental authority.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 

None.

ITEM 5. OTHER INFORMATION

On July 6, 2007, the Company filed a Form 8-K with the Commission stating that on April 10, 2007, the Company’s wholly-owned subsidiary, Shaanxi Jialong Hi-Tech Industries, Inc. (“Jialong”), completed the purchase of four offices located on the 23rd Floor of B Suite Building 1 Huanjing Square No. 20, Fengshui South Road, Hi-Tech Development Zone Xi’an City. The Registrant believes that the location of these offices will improve its daily business practices.

On July 23, 2007, the Company filed a Form 8-K with the Commission stating that on July 9, 2007 the Company had entered into an Investment Relations Agreement (“Agreement”) with CCG Elite Investor Relations, an affiliate of CCG Investor Relations which is an investment relations and strategic communications firm. The term of the Agreement commenced on July 15, 2007 and continues for a twelve (12) month period. Following the primary term of the engagement, the Agreement will continue on a month-to-month basis and shall be terminable by either party by thirty (30) day advance written notice.

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ITEM 6. EXHIBITS

INDEX TO EXHIBITS
OF
ALONG MOBILE TECHNOLOGIES, INC.

31.1
Rule 13a-14 (a)/15d-14 (a) Certification of Chief Executive Officer
   
31.2
Rule 13a-14 (a)/15d-14 (a) Certification of Chief Financial Officer
   
32
Section 1350 Certifications


SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALONG MOBILE TECHNOLOGIES, INC.
(Registrant)
 
 
By:
  /s/ Jianwei Li
 
 
 
Jianwei Li, President
 
 
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