China Intelligence Information (OTC:IICN)

On June 19, 2012, Ms. Keyi Zhang resigned as the Company’s Chief Financial Officer, due to personal and family reasons. The Company approved Ms Zhang’s resignation, effective on June 19, 2012. There was no disagreement between Ms. Zhang and the Company prior to her resignation.

The Company is in the process of seeking a new Chief Financial Officer. Mr. Kunwu Li, the Chief Executive Officer of the Company, has assumes the role of interim Chief Financial Officer over the transition period until the Chief Financial Officer position is filled. The Company believes that Ms. Zhang’s resignation has no material adverse impact on the Company’s business and operation.

JINAN, China, Dec. 15, 2011 /PRNewswire-Asia-FirstCall/ -- China Intelligence Information Systems, Inc. ("China Intelligence", "the Company") (PINK: IICN), which offers virtualization technology application and cloud computing related consulting service, products, solutions and implementation service in the People's Republic of China, today announced through its wholly-owned subsidiary, Beijing PowerUnique Technology ("PowerUnique"), the signing of several datacenter integral virtualization project agreements totaling USD $ 2 million.

Through the integrated virtualization solution presented by PowerUnique, all clients, which include China Power Investment Corporation (CPI), CPI Power Engineering Co., Ltd., Zhengzhou Commodity Exchange and other nine companies and government departments, will enjoy the benefits of improved server utilization rate, enhanced datacenter management, high value-added consulting services on the cloud computing application and professional technical support after sale.

Mr. Kunwu Li, President and CEO of China Intelligence, stated, "The migration from traditional data center infrastructure to virtualization solutions and the cloud is a necessary step for companies in improving IT operating efficiency and cost, enhancing security of IT system and enjoying flexible business. By cooperating with well-known enterprises of virtualization and cloud computing, as well as combining our own software, we work with companies across all industries to understand the needs specific to their business. These agreements showcase our deep virtualization and cloud computing knowledge base; strong implementation capability and sales support all which have helped China Intelligence becomes a widely accepted provider. We have accumulated industry experience by working with these companies, which in turn allows us to create the most suitable and cost-effective virtualization and cloud computing solutions for companies from different industries and expand our client base."

JINAN, China, March 29, 2011 /PRNewswire-Asia-FirstCall/ -- China Intelligence Information Systems, Inc. today announced its financial results for the year ended December 31, 2010.

• Recorded revenue of $9,209,122 in 2010 as compared to $1,284,768 in 2009, an increase of $7,924,354 or 617%
• Recorded net income of $2,561,305 during 2010, compared to a net loss of $7,682,890 in 2009

The revenue consisted of software sales, software development, hardware sales and training.

"We are very pleased to report solid results for 2010," said Mr. Kunwu Li, President and CEO of the Company. "We have seen a significant uptrend in our virtualization business for 2010, the year we consummated our business transition."

JINAN, Shandong, China, Feb.25, 2011/ PRNewswire-FirstCall/ -- China Intelligence Information Systems, Inc. today announced that its wholly-owned subsidiary Jinan Yinquan Technology Co., Ltd. (Yinquan) has signed an additional contract with Xinwen Mining Group Co., Ltd (the Customer). This follow-on project expands the scope of a project to implement integrated virtualization solution for the Customer's datacenter announced on April 16, 2010.

The Customer will still use Yinquan's sophisticated integrated virtualization solution to improve their servers' utilization rates and enhance datacenter security this time.  Yinquan offers the Customer a complete backup solution and virtualization desktop solution (VDI) based its existing virtualized datacenter. Yinquan's virtualization solutions will also reduce purchasing and administrative expenses.  Yinquan was also awarded with a post-implementation services support contract.

JIANAN, Shandong, China, Feb. 7, 2011 /PRNewswire-Asia-FirstCall/ -- Jinan Yinquan Technology Co., Ltd. (Yinquan), one of the wholly-owned subsidiaries of China Intelligence Information Systems, Inc. announced today that its alliance system integrator has signed a virtualization contract with Shandong SEM Machinery Co., Ltd. to implement an integrated virtualization solution at the Customers' datacenter.

Mr. Kunwu Li, President and CEO of CIISI, is very pleased with the success of the alliance. He said, "We are glad to see our turn-key solutions have helped our SIs to expand their businesses. Yinquan played very important roles in assisting the SIs in these projects.  Using our own sales force and leveraging our SI partners, we plan to accelerate our market share growth, which will create a solid foundation for CIISI's long-term development in the virtualization industry. I am very confident that our SIs will win more numerous and successful contracts in the future."

Mr. Li continued, "The virtualization technology is relatively nascent in China. We are very lucky that we entered this industry at its rapidly developing early stage. We are committed to being a leading virtualization solution provider in China, and we constantly strive to provide our clients with superior solutions We designed all of our comprehensive virtualization datacenter solutions around the clients' business needs, and we are pleased to see that our customers' businesses have directly benefited from them. These individually customized solutions give us a clear competitive advantage. Our clients know we're in business to support their industries. This gives us the edge in the virtualization marketplace."

JIANAN, Shandong, China, Feb. 4, 2011 /PRNewswire-Asia-FirstCall/ -- Beijing PowerUnique Technologies Co., Ltd. (BPUT), one of the wholly-owned subsidiaries of China Intelligence Information Systems, Inc. (OTC Bulletin Board: IICN), announced today that its alliance system integrator (the SI) has signed a virtualization contract with China Mobile Zhongshan Branch (the Customer) in Guangdong Province to launch its integrated datacenter virtualization solution.

BPUT will assist the SI to provide the Customer with higher security and confidential virtualization solutions for its datacenter, which will help it maintain its business continuity. The solution will also help the Customer reduce purchasing and administrative expenses, meanwhile, provide the Customer with higher energy-savings and lower overall emissions thereby providing it with a more environmentally friendly computing solution.

JINAN, Shandong, China, Jan. 26, 2011 /PRNewswire-Asia-FirstCall/ -- Jinan Yinquan Technology Co., Ltd (Yinquan), one of the wholly-owned subsidiaries of China Intelligence Information Systems, Inc., announced today that its alliance system integrator (the SI) has signed a virtualization agreement with the Weihai National Taxation Bureau in Shandong Province to launch its integrated datacenter virtualization solution.

JINAN, China, Jan. 20, 2011 /PRNewswire-Asia-FirstCall/ -- China Intelligence Information Systems, Inc. 's wholly-owned subsidiary Beijing PowerUnique Technology Co., Ltd (BPUT), is very pleased to announce that it has signed a virtualization agreement with Yunnan Grid Corporation dispatch center to launch its integrated datacenter virtualization solution. It's another successful case of CVDT in China southern grid system recently.

JINAN, China, Jan. 13, 2011 /PRNewswire-Asia-FirstCall/ -- China Intelligence Information System, Inc.'s wholly-owned subsidiary Jinan Yinquan Technology (Yinquan), today announced that it has won the bid for the disaster tolerance and backup project under virtualization infrastructure of the Jinan Municipal National Taxation Bureau ("the Bureau"). The Bureau, a government administrative department, is responsible for all national tax revenues of Jinan City.

Page 20 of 2010 third quarter 10Q

As previously disclosed in the Company's Form 10-Q filed on August 14, 2008 and the Current Report Form 8-K filed on October 10, 2008, we received event of default redemption notices dated July 25, 2008 and dated October 6, 2008 respectively from an accredited investor with respect to the amended and restated terms of the Securities Purchase Agreement and related transaction documents dated December 21, 2007.  Both the July Default Notice and the October Default Notice stated that we were in default for failure to:

(1) cause the Initial Registration Statement to be declared effective by the SEC on or prior to June 18, 2008 and

(2) make the required Registration Delay Payments to the Investor on or prior to the applicable Payment Date.  We agreed to enter into the Amended Agreement (as defined below) and all related documents as a direct response to resolve the Default Notices and as an inducement for the Investor to issue us a formal withdrawal of the Default Notices.  Upon closing of the above Amended Agreement, the Investor agreed to withdraw the Default Notices and we will no longer be in default under the Financing Transaction and Amended Agreement.

On December 8, 2008, we entered into an Amendment and Exchange Agreement with the Investor in the Financing Transaction.  The Financing Transaction is disclosed in more detail in the Form 8-K filed on December 26, 2007.  In connection with the Amended Agreement, we agreed to exchange the note and warrants issued in the Financing Transaction for

(i) an amended and restated senior secured convertible note in the principal amount of $5,000,000 (the "2008 Note"), which is convertible into Common Stock,

(ii) an amended and restated Series A Warrant in the form, which is exercisable into 23,062,731 shares of Common Stock (the "Exchanged Series A Warrant "),

(iii) an amended and restated Series B Warrant which is exercisable into 16,143,911 shares of Common Stock (the "Exchanged Series B Warrant"),

(iv) an amended and restated Series C Warrant, which, subject to certain conditions, shall be exercisable to 16,489,852 shares of Common Stock (the "Exchanged Series C Warrant")

(v) a new Series D Warrant which is exercisable into 7,500,000 shares of Common Stock (the "Exchanged Series D Warrant,” and together with the Exchanged Series A Warrant, Exchanged Series B Warrant and Exchanged Series C Warrant, the “2008 Warrants”).

Pursuant to the Amended Agreement, we agreed to adjust the Conversion Price (as defined in the Exchanged Note) and the exercise prices of the Exchanges Series A Warrant, the Exchanged Series B Warrant and the Exchanged Series C Warrant to $0.2168. Accordingly, the Exchanged Series A Warrant is exercisable into 23,062,731 shares of Common Stock of the Company, the Exchanged Series B Warrant is exercisable into 16,143,911 shares of Common Stock of the Company, and the Exchanged Series C Warrant, subject to certain conditions, shall be exercisable into 16,489,852 shares of Common Stock of the Company.  Further, we amended the Expiration Date of the Series A Warrant and Series B Warrant to June 8, 2014, which is 78 months after the date of Amendment Date (as defined in the Exchanged Series A Warrant and the Exchanged Series B Warrant), and restated the expiration date of the Exchanged Series C Warrant to 78 months after the first time the Company elects a Company Optional Redemption (as defined in the Exchanged Note).

We also issued a new Series D Warrant, which can be exercised into 7,500,000 shares of the Common Stock of the Company with an exercise price of $0.2168 per share and expires on June 8, 2014.  There is also a cashless exercise feature that permits the Investor to exercise the warrant on a cashless basis if a registration statement covering the shares underlying the Series D Warrant is not in effect.  The Amended Agreement does not grant the Investor any additional registration rights so there is no requirement for us to register the shares underlying the Series D Warrant.

As disclosed in Form 10-K filed on March 31, 2009, we received an Investor Redemption Notice (the “Notice”) from the Investor on December 21, 2008, stating that they selected to redeem one third of the principal ($5,000,000) after one year of the investment since December 21, 2007 according to the Amendment Agreement. The Company received the Notice and was under discussion with the Investor to seek a consummate solution for the Company was not available to render the required amount before December 31, 2008, the deadline for the redemption. The issue would incur default for the Company and it was uncertain if we can get a resolution finally. 

As disclosed in From 8-K filed on June 30, 2009, we received an Event of Default Redemption Notice (the " Default Notice") from the Investor with respect to the certain Amended and Restated Senior Secured Convertible Note issued by the Company to the Investor on or about December 21, 2007, as amended December 8, 2008 (the “Financing Transaction”) on June 22, 2009. The Default Notice stated that we are in default for failure to (1) pay the Redemption Amount of $1,703,025.33 by no later than December 30, 2008;  (2) make timely payment of the interest covering the Calendar Quarter ended March 31, 2009; and (3) make required share conversion within two business days after getting the Conversion Notice; The total amount of the Default Redemption was calculated as $66,703,289. The Company did not believe that any of the events specified in the Notice constituted a default under the Note. 

As the Company previously reported in the January 11, 2010 Form 8-K (with regard to the Securities Redemption and Pay-off Agreement, the “Settlement Agreement”), the Investor agreed to accept $3,000,000 from the Company in exchange for the redemption of the 2008 Note and the 2008 Warrants, but only upon the terms and conditions expressly set forth in the Settlement Agreement (the “Conditions”). 

As previously disclosed in the Company’s Form 8-K filed on August 13, 2010, in April and July 29, 2010, the Company and the Investor entered into two Amended and Restated Securities Redemption and Pay-Off Agreements, pursuant to which the Company and the Investor agreed to extend the termination date in consideration for a payment by the Company to the Investor of an aggregate of $850,000.

The Company paid the $2,150,000 balance due under the Settlement Agreement, as amended, on August 16, 2010 in exchange for the redemption of the 2008 Note and the 2008 Warrants. The Investor and the Company released each other from all claims related to the Securities Purchase Agreement, as amended, the 2008 Note and the 2008 Warrants. In addition, pursuant to the Settlement Agreement, as amended, since January 5, 2010, the Company delivered to the Investor an aggregate of 1,100,000 shares of Common Stock pursuant the terms of the 2008 Note.  Under the Settlement Agreement, as amended, the Investor also returned the shares of common stock that were pledged in 2007.

JINAN, China, Dec. 14, 2010 /PRNewswire/ -- today announced that it has signed two key customers within the power generation industry to launch its integrated datacenter virtualization solutions. These two customers are China Power Investment Corporation (CPI) and its wholly-owned subsidiary, China Power Complete Equipment Co., Ltd. (CPCEC).

CPI is one of the five largest state-owned power producers in the People's Republic of China, administrated by SASAC for the State Council. It is engaged in the development, investment, construction, operation and management of power plants and power generators in 27 provinces in China. CPI has total assets of RMB 377.6 billion that are distributed in 28 provinces, municipalities, autonomous regions, Hong Kong and Macau, 6 listed companies and 24 large operating power plants of 1000MW and above each. At present, CPI has controlled installed capacity of 60GW, coal production capacity of 50.15 million tons and aluminum production capacity of 1,755,000 tons. Clean energy accounts for 30% of its total power mix, the largest proportion among the top five generation companies in China. CPCEC is engaged in sales and procurement services, complete equipment service, as well as equipment consulting and supervision businesses in China's power industry.

BPUT will provide these customers with world-leading comprehensive datacenter solutions. This will help the customers reduce investment and operating expenses and lower the total cost of business ownership. It will also help the customers enhance their datacenter security and reduce the required number of servers, resulting in higher energy savings, lower emissions and more environmentally-friendly effects.

"I am extremely pleased to announce that we have obtained two such significant customers within the power supply industry of China," said Mr. Kunwu Li, President and CEO of China Intelligence Information Systems. "China's power industry is in a phenomenal growth phase that promises to continue for the foreseeable future. These new contracts demonstrate our growing market dominance within China's power industry. Next, we plan to expand our virtualization solution offerings in the giant national power market. I believe by penetrating the enormous national market, CIISI will capture a major revenue stream in the near future."

Highlights for the Quarter:

• Revenue was $3,388,676, an increase of $3,252,456, or 2,388%, compared to $136,220 for the three months ended September 30, 2009

• Gross profit was $1.9 million , an increase of $1,842,581 or 2,332%,, compared with $79,021 for the three months ended September 30, 2009

• Operating profit was $1,661,496, compared to operating loss of $1,039,037 for the three months ended September 30, 2009

• Net income was approximately $2.7 million, compared to a net loss of $0.8 million for the three months ended September 30, 2009

• Earnings per share reached $0.07 for the first nine months in 2010 and $0.04 for the third quarter in 2010.

"We reported excellent financial and operating results in the third quarter," said Mr. Li Kunwu, President and CEO. "We saw strong demand from diverse industries for our integrated datacenter virtualization solutions and services. We're also increasingly successful in signing additional contracts with our existing clients. This growing customer base supports the rapid revenue increase and solid profit for this quarter."

Mr. Li explained further, "Starting in 2010, we focused on obtaining customers and signing virtualization solutions and services contracts in several strategic industries. We believe these are the critical components of economic growth in China. Penetrating these markets with our virtualization solutions and services is a vital execution for our business' long-term growth. We are pleased to report that we succeeded in gaining several important customers in a number of large-scale industries: healthcare, power supply, education, mining, and the government. Through our alliance program, which was launched earlier this year, we have reached our goals in the four main parts of the Southern Grid system: Guandong, Guizhou, Yunnan and Guangxi grids. To occupy the southern grid market is one of the most important steps for us in reaching our revenue and earnings targets that we set in our 2010 guidance."

The Company's leading virtualization technology solutions and services have the potential to significantly optimize traditional IT infrastructures. Just as important, they can not only help their customers reduce costs and increase energy savings, but also enhance system security. These contracts provide the Company not only with software implementation revenues, but also recurring annual technical support revenues from service contracts.

Mr. Li continued, "We are confident that we can deliver $15 million in revenue and $3.5 million in EBITDA for 2010 based on our virtualization pipelines and existing contracts. In the last couple of months, we have signed virtualization contracts with several high-caliber multinationals including Huaneng Power International Inc., CITIC Group, and China Southern Power Grid. We expect to continue to penetrate these markets and maintain our leadership position."

GeoTeam Note: A one time non-operating gain of $0.02 boosted the 2010 third quarter. 

2010 Third Qtr

On June 22, 2009, we received an Event of Default Redemption Notice from Castlerigg Master Investments Ltd. with respect to the certain Amended and Restated Senior Secured Convertible Note issued by the Registrant to Castlerigg on or about December 21,2007, as amended December 8, 2008 (the “Financing Transaction”). The Financing Transaction is disclosed in more detail in the Form 8-k filed on December 26, 2007 and December 10, 2008, and all transaction documents are attached to that Form 8-ks and are herein incorporated by reference.

Source: SEC Form 8K (June 30, 2009)