UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549  FORM 10-QSB  xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2010  OR  oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  Commission File Number:333-127170  WINSCON ELECTRONICS CO. LTD. (Exact name of Registrant as specified in its charter)   Delaware
(State or other jurisdiction of
incorporation or organization)98-0476582
(I.R.S. Employer Identification No.)  3950 Worthview Place Mississauga, Ontario, CANADA, L5N 6S7 (Address of principal executive offices, including zip code)  (905) 824-6200 (Registrant's telephone number, including area code)   Check 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 such filing requirements for the past 90 days.             Yes [X]              No [  ]  Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).             Yes [ ] No [X]   The number of shares of the Registrant's common stock issued and outstanding at January 31, 2009, was 1,503,631.  Transitional Small Business Disclosure Format: Yes [ ] No [X]      1        TABLE OF CONTENTS  PAGE  PART I FINANCIAL INFORMATION  Item 1.Condensed Financial Statements4Item 2.Managements Discussion And Analysis Of Financial Condition And Results
Of Operations23Item 3.
Item 4.Quantitative and Qualitative Disclosures About Market Risk
Controls and Procedures24
24      PART II OTHER INFORMATION  Item 1.Legal Proceedings25Item 2.Unregistered Sales of Equity Securities and Use of Proceeds25Item 3.Defaults Upon Senior Securities25Item 4.Submission of Matters to a Vote of Security Holders25Item 5.Other Information25Item 6.Exhibits25                    2        PART I - FINANCIAL INFORMATION  Statements in this Form 10-Q Quarterly Report may be forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10-Q Quarterly Report, under Managements Discussion and Analysis of Financial Condition or Plan of Operation and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law. x      ITEM 1.             CONDENSED FINANCIAL STATEMENTS                    PAGE   Condensed Consolidated Balance Sheets                                                                  4  Condensed Consolidated Statements of Operations    (Three Month and Six Month Periods)                                                                                                    5  Statements of Changes in Owners Equity and Comprehensive Income                  6 (Six Months Periods)  Condensed Consolidated Statements of Cash Flows   (Six Month Periods)             7  Notes to Condensed Consolidated Financial Statements                                          8     3    Winscon Electronics (Huizhou) Co., Ltd.Balance Sheets(Unaudited)January 31,July 31,20102009AssetsCurrent AssetsCash and cash equivalents$      52,982$      26,549Accounts receivable, net (Note 4)184,165251,097Accounts receivable, net - related parties (Note 4, 11)553,745472,639Inventories, net (Note 5)364,267331,534Prepaid expenses20,60824,129Other current assets68,514-Total current assets1,244,2811,105,948Prepayment and deposit[winsconjan2010q002.gif][winsconjan2010q004.gif]83,807[winsconjan2010q006.gif][winsconjan2010q008.gif]         47,838Property, plant, and equipment, net (Note 6)404,702464,039Total Assets$ 1,732,790$ 1,617,825Liabilities & Owners' EquityCurrent LiabilitiesShort-term loan (Note 7)$      64,552$              -Short-term loan - related parties (Note 11)80,000-Accounts payable608,793972,697Accrued expenses66,458118,684Other payables57,3668,832Due to related parties (Note 11)-50,000Total current liabilities877,1691,150,213Total liabilities877,1691,150,213Owners' EquityRegistered capital (Note 13)2,000,0001,908,302Additional paid-in capital274,042-Accumulated deficit (unrestricted)(1,563,814)(1,585,263)Accumulated other comprehensive income145,393144,573Total Owners' Equity855,621467,612Total Liabilities & Owners' Equity$ 1,732,790$ 1,617,825-The accompanying notes are an integral part of these financial statements.  4    Winscon Electronics (Huizhou) Co., Ltd.Statements of Operations(Unaudited)For the Three MonthsFor the Six MonthsEnded January 31,Ended January 31,2010200920102009RevenueSales - third parties$       3,474$      272,798$      357,041$      788,563Sales - related parties (Note 11)657,959135,8591,220,309519,630Total revenue661,433408,6571,577,3501,308,193Cost of Goods Sold(348,584)(333,461)(1,130,769)(1,228,899)Gross Profit312,84975,196446,58179,294Operating ExpensesSelling Expenses2,3012,5106,3835,433General and administrative247,368163,977421,588344,674Exchange loss9,529432,379(1,986)Total operating expenses259,198166,530430,350348,121Income(Loss) from operations53,651(91,334)16,231(268,827)Other income (expenses)Interest income112217455Interest expense(2,069)(7,115)(2,225)(14,231)Other income(expenses)2,22117,269(5,006)Total other income(expenses)264(7,112)5,218(19,182)Income(loss) before income taxes53,915(98,446)21,449(288,009)----Net Income(Loss)$     53,915$      (98,446)$        21,449$    (288,009)The accompanying notes are an integral part of these financial statements.    5    Winscon Electronics (Huizhou) Co., Ltd.Statements of Changes in Owners' Equity and Comprehensive IncomeFor the Six Months Ended January 31, 2010 and 2009 (Unaudited)AccumulatedAdditionalOtherAccumulatedTotalPaid inComprehensiveDeficitOwners'ComprehensiveAmountCapitalIncome(Unrestricted)EquityIncomeBalance at July 31, 2008$ 1,623,139$            -$               144,448$     (1,265,437)$   502,150$                        -Foreign currency translation adjustment--39-3939Net income(loss) for the period---(288,009)(288,009)(288,009)Balance at January 31, 2009$ 1,623,139$            -$               144,487$     (1,553,446)$   214,180$            (287,970)Balance at July 31, 2009$ 1,908,302$            -$               144,573$     (1,585,263)$   467,612$                        -Capital contribution91,698274,042--365,740-Foreign currency translation adjustment--820-820820Net income(loss) for the period---21,44921,44921,449Balance at January 31, 2010$ 2,000,000$   274,042$               145,393$     (1,563,814)$   855,621$                 22,269The accompanying notes are an integral part of these financial statements.   6    Winscon Electronics (Huizhou) Co., Ltd.Statements of Cash Flows(Unaudited)For the Six MonthsEnded January 31,20102009Cash Flows From Operating ActivitiesNet income(loss)$      21,449$      (288,009)Adjustments to reconcile net income to net cash provided by operating activities:Depreciation99,20592,480Provision for obsolete inventories-8,640Changes in operating assets and liabilities:Accounts receivable, net66,9323,837Accounts receivable, net - related parties(81,106)177,594Inventories(32,733)(8,404)Prepaid expenses3,521(17,166)Other current assets(68,514)8,379Prepayment and deposit(35,969)(1,969)Accounts payable(363,904)31,788Accrued expenses(52,226)376Other payables48,53415,771Net cash provided by operating activities(394,811)23,317Cash Flows From Investing ActivitiesPurchases of property and equipment(39,522)(28,386)Net cash used in investing activities(39,522)(28,386)Cash Flows From Financing ActivitiesProceeds from capital contribution315,740-Proceeds from short-term loan64,520-Proceeds from short-term loan - related parties80,000-Proceeds from related parties-14,266Net cash provided by (used in) financing activities460,26014,266Effect of exchange rate changes on cash506(22)Net increase in cash and cash equivalents26,4339,175  7    Cash and cash equivalents, beginning of period26,54929,557Cash and cash equivalents, end of period$      52,982$         38,732Supplementary disclosure informationInterest expense paid$        1,425$           9,298Income taxes paid$              -$           -Supplementary disclosure of non-cash investing andfinancing activitiesConversion of debt to equity$      50,000$           -The accompanying notes are an integral part of these financial statements.  8   Winscon Electronics (Huizhou) Co., Ltd. Notes to Financial Statements January 31, 2010 (Unaudited)  1. ORGANIZATION AND BUSINESS BACKGROUND  Winscon Electronics (Huizhou) Co., Ltd. (Company) was incorporated as a Sino-American joint venture with a limited liability in Peoples Republic of China on September 30, 2005. The Company is located in Huizhou, Guangdong and principally engaged in manufacturing various printed flexible circuits.  As reflected in the accompanying combined financial statements, the Company has accumulated deficits of $1,563,814 at January 31, 2010. The Companys owners have funded the losses and cash shortfalls allowing management to develop sales and contingencies plans. The Company is also arranging for additional funding. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  a. Basis of Preparation  The accompanying financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("US GAAP").  In the opinion of the management, the financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of January 31, 2010, and the results of operations and cash flows for the six months ended January 31, 2010. b. Reclassification  Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.  c. Use of Estimates  In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the year reported. Actual results may differ from these estimates. The Company regularly evaluates estimates and assumptions related to obsolete inventory, useful life and recoverability of long lived assets, and goodwill. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Companys estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.  d. Subsequent Events  The Company has evaluated subsequent events through the date that these financial statements were issued, which was March 22, 2010, the date of the Companys Quarterly Report for the six months ended January 31, 2010.   9   e. Fair Value of Financial Instruments  The Company adopted the standard Fair Value Measurements, codified with ASC 820 and effective January 1, 2008.  The provisions of ASC 820 are to be applied prospectively.  ASC 820 clarifies that fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date).  Under ASC 820, fair value measurements are not adjusted for transaction cost.  ASC 820 provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities Level 2: Input other than quoted market prices that are observable, either directly or indirectly, and reasonably available.  Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs.  Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An asset or liabilitys level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  Availability of observable inputs can vary and is affected by a variety of factors.  The Company uses judgment in determining fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 and Level 2 assets or liabilities. f. Cash and Cash Equivalents  Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. g. Accounts Receivable  Accounts receivable are stated at the amount management expects to collect from outstanding balances.  Management provides for probable uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts.  Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for bad debts and a credit to accounts receivable. h. Inventories  Inventories are stated at the lower of cost, as determined on a weighted average basis, or market value.  Costs of inventories include purchase and related costs incurred in bringing the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to managements estimates based on prevailing market conditions. Management writes down the inventories to market value if market value is below cost. Management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if a valuation allowance is required.  10    i. Property and Equipment  Property and equipment are initially recognized recorded at cost.  Gains or losses on disposals are reflected as gain or loss in the period of disposal.  The cost of improvements that extend the life of plant and equipment are capitalized.  These capitalized costs may include structural improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: j. Impairment of Long-Lived Assets  The Company accounts for impairment of plant and equipment and amortizable intangible assets in accordance with the standard, Accounting for Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of, codified with ASC 360, which requires the Group to evaluate a long-lived asset for recoverability when there is event or circumstance that indicate the carrying value of the asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over the assets (or asset groups) fair value. k. Comprehensive income  The standard, Reporting Comprehensive Income, codified with ASC 220, requires disclosure of all components of comprehensive income and loss on an annual and interim basis. Comprehensive income and loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.  The comprehensive income arose from the effect of foreign currency translation adjustments. l. Revenue recognition  The Company generates revenues from the sales of printed flexible circuits.  Sales are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.  Sales are presented net of value added tax (VAT). No return allowance is made as products returns are insignificant based on historical experience.  m. Research and development costs  Research and development costs are expensed to operations as incurred.  n. Income taxes  The Company accounts for income taxes in accordance with the standard, "Accounting for Income Taxes.",  codified with ASC 740, requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Group is able to realize their benefits, or that future deductibility is uncertain. o. Foreign currency translation  The reporting currency is the U.S. dollar.  The functional currency of the Company is the local currency, the Chinese Renminbi (RMB). The financial statements of the Company are translated into United States dollars in accordance with the standard, Foreign Currency Translation, codified with ASC 830, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At January 31, 2010 and July 31, 2009, the cumulative translation adjustments of $145,393 and $144,573, respectively, were classified as items of accumulated other comprehensive income  11   in the owners equity section of the balance sheet. For the six months ended January 31, 2010 and 2009, other comprehensive income was $820 and $39, respectively. The exchange rates used to translate amounts in RMB into U.S. dollars for the purposes of preparing the financial statements were as follows: As of January 31, 2010 and July 31, 2009, the Company used the period-end rates of exchange for assets and liabilities of $1 to RMB6.82679 and $1 to RMB6.83208 respectively. For the six months ended January 31, 2010 and 2009, the Company used the periods average rate of exchange to convert revenues, costs, and expenses of $1 to RMB6.8283 and $1 to RMB6.8386, respectively. The Company used historical rates for equity. p. Related parties  A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.  Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.  q. Recently issued accounting pronouncements In June 2009, the Financial Accounting Standards Board (the FASB) issued a standard that established the FASB Accounting Standards Codification (ASC) and amended the hierarchy of generally accepted accounting principles (GAAP) such that the ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC did not change current U.S. GAAP, but it was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). For the Company, the ASC was effective May 1, 2009. This standard did not have an impact on the Companys consolidated results of operations or financial condition. However, throughout the notes to the consolidated financial statements references that were previously made to various former authoritative U.S. GAAP pronouncements have been changed to coincide with the appropriate section of the ASC.  In April 2009, the FASB issued an accounting standard which modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The standard also requires additional disclosures for annual and interim periods with respect to both debt and equity securities. Under the standard, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the securitys entire amortized cost basis (even if the entity does not intend to sell). The standard further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the securitys fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. The standard requires entities to initially apply its provisions to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulated other comprehensive income. For the Company, this standard was effective beginning May 1, 2009. The adoption of this standard did not have a material impact on the Companys consolidated results of operations or financial condition. In May 2009, the FASB issued a new accounting standard regarding subsequent events. This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards, with the requirements concerning recognition and disclosure of subsequent events remaining essentially unchanged. This guidance addresses events which occur after the balance sheet date but before the issuance of financial statements. Under the new standard, as under previous practice, an entity must record the effects of subsequent events that provide evidence about conditions that  12   existed at the balance sheet date and must disclose but not record the effects of subsequent events which provide evidence about conditions that did not exist at the balance sheet date. This standard added additional required disclosure relative to the date through which subsequent events have been evaluated and whether that is the date on which the financial statements were issued. For the Company, this standard was effective beginning May 1, 2009. The additional disclosures required by this standard are included in Note 2. In June 2009, the FASB issued a new standard regarding the accounting for transfers of financial assets amending the existing guidance on transfers of financial assets to, among other things, eliminate the qualifying special-purpose entity concept, include a new unit of account definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarify and change the derecognition criteria for a transfer to be accounted for as a sale, and require significant additional disclosure. For the Company, this standard is effective for new transfers of financial assets beginning August 1, 2010. Because the Company historically does not have significant transfers of financial assets, the adoption of this standard is not expected to have a material impact on the Companys consolidated results of operations or financial condition. In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, a entity may use the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted prices for an identical liability traded as an asset may be considered Level 1 fair value measurements. For the Company, this ASU is effective August 1, 2009. The adoption of this ASU did not have a material impact on the Companys consolidated results of operations or financial condition. In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ASU indicates that, under certain circumstances, the fair value of such investments may be determined using net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure of the remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance, regardless of whether an entity used the practical expedient to measure the fair value of any of its investments. The disclosure provisions of this ASU are not applicable to an employers disclosures about pension and other postretirement benefit plan assets. For the Company, this ASU was effective November 1, 2009. The adoption of this ASU did not have a material impact on the Companys consolidated results of operations or financial condition. In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding the application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. For the Company, ASU No. 2009-13 is effective beginning August 1, 2010. The Company may elect to adopt the provisions prospectively to new or materially modified arrangements beginning on the effective date or retrospectively for all periods presented. The Company is  13   currently evaluating the impact of this standard on its Companys consolidated results of operations and financial condition. In October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elementsa consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software is considered more than incidental to the product or service. As a result of the amendments included in ASU No. 2009-14, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the ASU, the following components would be excluded from the scope of software revenue recognition guidance:  the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the products essential functionality, and undelivered components that relate to software that is essential to the tangible products functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). For the Company, ASU No. 2009-14 is effective beginning August 1, 2010. The Company is currently evaluating the impact of this standard on the its consolidated results of operations and financial condition. In January 2010, the FASB issued ASU No. 2010-6, Improving Disclosures About Fair Value Measurements, that amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of Levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchases, sales, issuances, and settlements relative to Level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. For the Company, this ASU is effective for the first quarter of 2010, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective beginning August 1, 2011. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on the Companys consolidated results of operations or financial condition.  3. CONCENTRATION OF CREDIT RISK  Financial instruments which potentially expose the Company to concentrations of credit risk, consist of cash and accounts receivable as of January 31, 2010. The Company performs ongoing evaluations of its cash position and credit evaluations to ensure collections and minimize losses.  A portion of the Companys cash at January 31, 2010 is maintained at various financial institutions in the PRC which do not provide insurance for amounts on deposit.  The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area. For the six months ended January 31, 2010 and 2009, the Companys sales were mainly made to customers located in the PRC.In addition, total accounts receivables as of January 31, 2010 also arose from customers located in the PRC.  A significant percentage of the Companys business is generated from a small number of customers.  The following table sets forth information as to the revenue derived from those customers that accounted for more than 10% of our revenue in for the six months ended January 31, 2010 and 2009 For the Six MonthsEnded January 31,  20102009Winscon Electronic (HK) Co. Ltd.$      1,195,20976%476,33136%Shenzhen Shuang Lin Techology170,53011%209,20716%Shenzhen Ying Jin Electronics--330,37625%Shenzhen VTA Electronics--190,04315%  14      4. ACCOUNTS RECEIVABLE  Accounts receivable consist of the following: January 31,July 31,20102009Accounts receivable - third parties$         202,720$       312,176Accounts receivable - related parties609,538557,403812,258869,579Less: Allowance for doubtful accounts(74,348)(145,843)Accounts receivable, net$         737,910$       723,736  The provision for bad debt was $136,002 and $0 for the six months ended January 31, 2010 and 2009. For the six months ended January 31, 2010, $207,595 accounts receivable was written off due to remote possibility on collection of which $145,924 was accrued for allowance in prior years. Based on aging report, additional allowance, $74,331 was accrued for the six months ended January 31, 2010.  5. INVENTORIES  Inventories consist of the following: January 31,July 31,20102009Raw materials$          76,139$       74,927Work in progress258,443188,364Finished goods114,064152,556Others22,49322,476471,139438,323Less: Allowance for obsolescence(106,872)(106,789)Inventory, net$        364,267$     331,534  The provision on allowance for obsolescence was $0and $8,640 for the six months ended January 31, 2010 and 2009, respectively and included in the cost of goods sold.  15    6. PROPERTY, PLANT, AND EQUIPMENT  Property and equipment consist of the following:  January 31,July 31,20102009Machinery and equipment$        909,852$     891,876Office equipment109,05386,7401,018,905978,616Less: Accumulated depreciation(614,203)(514,577)Property, plant and equipment, net$        404,702$     464,039   The depreciation was $99,205 and $92,480 for the six months ended January 31, 2010 and 2009, respectively. They are broken down as follows: For the Six MonthsEnded January 31,20102009Cost of sales$          89,424$       84,069Operating expenses9,7818,411Total$          99,205$       92,480 7. SHORT-TERM LOAN  The short-term loan, jointly issued to the Company and Winscon Electronics (HK) Co., Ltd, is a revolving line of credit up to a maximum of $64,558(HKD 500,000) granted by the Hongkong and Shanghai Banking Corporation Limited in June, 2009. The loan is under the Special Loan Scheme sponsored by the Government of the Hong Kong Special Administrative Region. The revolving line of credit bears interest at a per annum rate of 3% above the banks best lending rate and is due on demand. Interest is payable monthly. The credit line expires in June, 2010. The loan is guaranteed by Huang, Yonglong, the Companys owner and prior CEO.  As of January 31, 2010, the outstanding balance of this short-term loan is $64,552(HKD 499,950) and the revolving line of credit balance is $6. For the six months ended January 31, 2010, the interest expense for this short-term loan is $1,425.  16    8. GENERAL AND ADMINISTRATIVE  For the six months ended January 31, 2010 and 2009, the amount of general and administrative expenses mainly composed of the following events:   For the Six MonthsEnded January 31,20102009Bad debts$        136,002$                   -Others128,394134,696Salary and wages79,31384,259Utilities30,48424,015Rent16,28813,095Office expenses13,20675,289Depreciation9,7818,411Professional fees5,000255Employee insurance3,1204,654Total General and Administrative$        421,588$        344,674    During the three month period ended January 31, 2010, we incurred no tax benefit nor had to record a provision for income taxes. The Company has significant tax loss that is more than sufficient to offset any current period potential tax liability in the period.   9. CHINA CONTRIBUTION PLAN  Full time employees of the Company participate in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Companys subsidiaries to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution. For the three months ended January 31, 2010 and 2009, the total provisions for such employee benefits were $3,120 and $4,654, respectively. Though provisions were made, the Company did not make full monthly contribution to these funds.  In the event that any current or former employee files a complaint with the PRC government, the Company may be subject to administrative fines. As the Company believes that these fines would not be material, no accrual for such fines has been made in this regard.   17   10. STATUTORY RESERVES  Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable statutory surplus reserve fund. Subject to certain cumulative limits, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC ("PRC GAAP") at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the reserve fund. For foreign invested enterprises, the annual appropriation for the reserve fund cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). The Company did not make any appropriations to the reserve funds mentioned above due to lack of profit after tax since commencement of operations.  11. RELATED PARTY TRANSACTIONS  All transactions associated with the following companies or individuals are considered to be related party transactions. NameRelationshipWinscon Electronics (HK) Co., Ltd.Controlled by the Company's director and prior CEO;Owner of the Company*Winscon Electronics Co. Ltd. - USAOwner of the Company*Liconix Industries Inc.Prior owner of the Company*Huang, ZongxiDirector and prior owner of the Company*Zhou, HuixiangOwner of the CompanySong, Liang YuOwner of the CompanyHuang, YonglongOwner of the Company and prior CEOHe, GongyinPrior owner of the CompanyPatrick ChenPrior owner of the Company; President of LiconixLi, ShichengStockholder of Winscon Electronics Co. Ltd. - USA  *In August 2009, Liconix Industries transferred its 49% of the Companys equity to Winscon Electronics Co., Ltd-USA. On April 28, 2009, Winscon Electronics (HK) Co., Ltd acquired 31% of the Companys equity from other owners in PRC.  Sales to Related Parties  The sales to related parties were as follows:  For the Six MonthsEnded January 31,20102009Winscon Electronics (HK) Co., Ltd.$        1,195,209$          476,331Liconix Industries Inc.25,10043,299$        1,220,309$          519,630  18      Accounts Receivable, Net - Related Parties  Accounts receivable, net  related parties consist of the following: January 31,July 31,20102009Winscon Electronics (HK) Co., Ltd.$           597,651$          548,810Liconix Industries Inc.11,8878,593609,538557,403Less: Allowance for doubtful accounts(55,793)(84,764)Accounts receivable - related parties, net$           553,745$          472,639  Due to Related Parties  Due to related parties consist of the following:  January 31,July 31,20102009Patrick Chen$                    -$            50,000Totals$                    -$            50,000   In November 2007, the Company made borrowings from its related parties to meet the need of capital verification. Due to related parties represents loans payable that are unsecured and have no fixed terms of repayment, and are therefore, deem payable on demand. The loans are subject to interest at 10% per annum. The interest was $0 and $14,231 for the six months ended January 31, 2010 and 2009, respectively.  Short-Term Loan from Related Parties  On November 24, 2009, Li, Shicheng made a short-term loan of $80,000 to the Company. This loan bears an annual interest rate of 6% and expires on Jun 24, 2010. The loan is guaranteed by six Companys related parties: Song, Liangyu; Huang, Yonglong; Zhou, Huixiang; He, Gongyin; Huang, Zongxi; and Patrick Chen.  As of January 31, 2010, the outstanding balance of this short-term loan is $80,000. For the six months ended January 31, 2010, the interest expense for this short-term loan is $800.    12. SEGMENT INFORMATION  The Company operates in one industry segment  research, development, manufacture, marketing and sales of printed flexible circuits.  Substantially all of the Companys identifiable assets and operations for all periods presented were located in the PRC.  13. CONTINGENCIES, RISKS AND UNCERTAINTIES  Capital Commitment  According to the Articles of Association, the Company has to fulfill its registered capital requirement of $2,000,000. As of July 31, 2009 the Company had fulfilled $1,908,302 of its registered capital and had a registered capital  19   commitment of $91,698.  In August 2009, the Companys owners made another capital contribution of $365,740 of which $91,698 was to meet registered capital requirement. $274,042 was recognized as additional paid in capital since it has not been verified by PRC government as registered capital.  Operating Lease Commitment  The Company leases factory and office space under an operating lease which is for 5 years and, expires on November 30, 2010. The rents were $65,151 and $52,379 for the six months ended January 31, 2010 and 2009, respectively. They are broken down as follows:  For the Six MonthsEnded January 31,20102009Cost$             48,863$            39,284Operating expenses16,28813,095Total$             65,151$            52,379   Future minimum lease payments for operating leases with initial or remaining non cancelable terms in excess of one year are as follows: Year ending July 31, 20092010$           104,764201134,921$           139,685   Country Risk  The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. The Company can give no assurance that those changes in political and other conditions will not result in have a material adverse effect upon the Companys business and financial condition.  Source of Supply The Company purchases components for its products from a number of suppliers.  However, on occasion, a customers specifications may require us to purchase components from a specific supplier.  The Company does not have any long term contracts with any of its suppliers, and the Company believes that alternative suppliers are available.  Although the Company has not been subject to shortages for any of its components, since it does not have long-term contracts, the Company may be subject to cutbacks and price increases which it may not be able to pass on to its customers in the event that the demand for components generally exceeds the capacity of its suppliers.    20   ITEM  2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  FORWARD-LOOKING STATEMENTS  To the extent that the information presented in this Quarterly Report on Form 10-Q for the three months ended January 31, 2010, discusses financial projections, information or expectations about our products or markets, or otherwise makes statements about future events, such statements are forward looking.  We are making these forward-looking statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.  These risks and uncertainties are described, among other places in this Quarterly Report, in this Managements Discussion and Analysis of Financial Condition and Results of Operations.  Results of Operations THREE MONTH PERIOD ENDED JANUARY 31, 2010 COMPARED TO THE SAME PERIOD ENDED JANUARY 31, 2009 Revenues During the three months ended January 31, 2010 the Company generated revenues of $661,433 compared to $408,657 in the period ended January 31, 2009. The increase of $252,776 was driven by an increase in the current quarter of $522,100 to Related Parties, $657,959 in the current quarter versus $135,859 in the same quarter of 2009. This was offset by a reduction of $269,324 in sales to third parties, $3474 in the current quarter versus $272,798 in the same quarter a year ago. Cost of Revenues The Company incurred cost of revenues of $348,584 for the three month period ended January 31, 2010 and for the period January 31, 2009 was $333,461 which resulted in an increase of $15,123. The slight increase in the cost of revenues was offset by an increase in gross profit of $237,653 over the same quarter in 2009. The increase in gross profits reflects the same upwards trend as indicated in the six months period ended January 31, 2010 over the same six month period of 2009. Sales and Marketing Total sales and marketing expenses for the three months ended January 31, 2010 was $2301 compared to $2510for the same period in 2009.  The decrease was due to an increase in sales to related parties that reordered our products, which required little marketing effort or expense.  General and Administrative In the three month period ended January 31, 2010, general and administrative expenses increased by $83,391 over the same period in 2009. The increase in general and administrative expense in the current quarter was a result of increased compensation expenses as well increases in utilities and a significant increase in bad debts over the six month period ended January 31, 2010 versus the same period in 2009.  The provision for bad debt was $136,002 and $0 for the six months ended January 31, 2010 and 2009. For the six months ended January 31, 2010, $207,595 of accounts receivable was written off due to remote possibility on collection of which $145,924 was accrued for allowance in prior years. Based on aging report, additional allowance, $74,331 was accrued for the six months ended January 31, 2010.   21    Depreciation Our depreciation for the six months ended January 31, 2010, increased slightly over the same period in 2009 by $6725 due to increases in the cost of sales and operating expenses  Other Income/Expenses In the three months ended January 31, 2010, the Company expensed $2069 in interest expense resulting in a decrease of $5046 in interest expense over the same period in 2009. This reduction was largely due to reduced prime interest lending rates available to the Company from its current bankers as well as the direct result of increased cash flow which decreased lending levels on average during the current quarter versus the same period a year ago.  Income Taxes During the three month period ended January 31, 2010, we incurred no tax benefit nor had to record a provision for income taxes as the Company has significant loss carry forwards available to offset current net income results.  Net Income The Company recorded a net income for the three month period ended January 31, 2010 of $53,915 resulting in a increase of $152,361 when compared to the same period in 2009.  It is anticipated that this trend will continue into the next quarter due to the initiatives invested in production for our product lines and our commitment to increased sales and marketing activities.  It is our intended goal of achieving, at the very least, a break-even pre-tax income level by the fiscal year end of July 31, 2010.  Liquidity and Capital Resources At January 31, 2010, the Companys need for cash included satisfying $877,169 of current liabilities, which consisted entirely of accounts payable, a short term loan, and accrued expenses. Current liabilities have decreased by $273,044 over the same period in 2009. Accounts receivable increased by $14,174 and inventories increased by $32,733 over the same period in 2009.  We have exhausted our $64,588 line of credit granted by the Hongkong and Shanghai Banking Corporation Ltd. Our ability to continue as a going concern is dependent on the Companys ability to obtain additional funding from expansion of our bank facility, an equity injection, and increased sales revenue.  The Company anticipates that its cash needs over the next 12 months will be met by primarily from a combination of profits, and investment banking.  If the Company is unable to obtain additional funding sources of debt and equity capital, then the failure to obtain this funding could have a material adverse effect on the Companys business and this may force the Company to reorganize, or to reduce the cost of all operations to a lower level of expenditure which may have the effect of reducing the Companys expected revenues and net income for the fiscal year 2010.  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable  22    ITEM 4.  CONTROLS AND PROCEDURES (a)   Evaluation of Disclosure Controls and Procedures.  Our President and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) as of the end of the period ended January 31, 2010.  Based on this evaluation, our President and Chief Financial Officer have concluded that our controls and procedures are effective in providing reasonable assurance that the information required to be disclosed in this report is accurate and complete and has been recorded, processed, summarized and reported within the time period required for the filing of this report.  (b)   Changes in internal controls.  There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  PART II  OTHER INFORMATION  ITEM 1.  LEGAL PROCEEDINGS  None.  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  None.  ITEM 6.  EXHIBITS  The following exhibits are filed as a part of this report on Form 10-SQB:  Exhibit No.                                  Description 31.1 31.1                             Rule 13(a)-14(a)/15(d)-14(a) Certification of President 31.2                             Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer 32.2                             Section 1350 Certification of President 32.3                             Section 1350 Certification of Chief Financial Officer  23   SIGNATURES   Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  Dated:  March 22, 2010  Winscon Electronics Co. Ltd.  By:           /s/ Luiz Brasil President                     24   Exhibit 31.1 CERTIFICATIONS  I,  Luiz Brasil, President, certify that:  1.   I have reviewed this quarterly report on Form 10-Q of WINSCON ELECTRONICS CO. LTD. 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-15(e) and 15d-15(e)) for the registrant and have; Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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; Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this quarterly report (the registrants first fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5.   The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions); All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.    Date:  March 22, 2010                                                                          /s/ Luiz Brasil President    25   Exhibit 31.2  CERTIFICATIONS  I, George Parselias, Chief Financial Officer, certify that:  1.   I have reviewed this quarterly report on Form 10-Q of WINSCON ELECTRONICS CO. LTD. 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-15(e) and 15d-15(e)) for the registrant and have; Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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; Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the period covered by this quarterly report (the registrants first fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5.   The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions); All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.    Date:  March 22, 2010                                                                           /s/ George Parselias Chief Financial Officer    26   Exhibit 32.1   CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Quarterly Report of WINSCON ELECTRONICS CO. LTD. (the Company) on Form 10Q for the six month period ended January 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Luiz A. Brasil, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that;  1.   The Report fully complies with the requirement of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and  2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.   /s/ Name:  Luiz Brasil Title:   President  Date:    March 22, 2010                         27   Exhibit 32.2  CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Quarterly Report of WINSCON ELECTRONICS CO. LTD. (the Company) on Form 10Q for the six month period ended January 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, George Parselias, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that;  1..   The Report fully complies with the requirement of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and  2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.   /s/ Name:  George Parselias Title:    Chief Financial Officer  Date:     March 22, 2010                          28