ex10-29.htm


     

     

     

    Exhibit 10.29

    
      	 
      	 	 	 	 
      	 	 	 	 	 	 	 	
              FX
      rate =

            	 	 
      	 	 	 	 	 	 
	
              QUALYTEXTIL
      SA - reconciliation of Brazilian GAAP to US GAAP

            	 	 	 	 	 	 	 	 	1.94720	 	
              (g)

            	 	 	 	 	 	 
	
              Statement
      of Profit and Loss for the year ended December 31, 2007

            	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 
	 
      	 	

              Brazilian
      GAAP 

            	
               

            	 	
              Reclass-

            	 	 	
              As

            	 	 	
              Translated

            	 	 
      	 	
              Adjustments

            	 	 	
              US
      GAAP

            	 
	 
      	 	
              per
      Audit

            	 	
              Notes

            	 	
              ifications

            	 	 	
              reclassified

            	 	 	
              to
      USD

            	 	
              Notes

            	 	
              in
      USD

            	 	 	
              in
      USD

            	 
	 
      	 	
              report
      in BRL

            	 	 
      	 	 	 	 	
              in
      BRL

            	 	 	 	 	 	 
      	 	 	 	 	 	 
	 
      	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 
	
              Gross
      Income

            	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 
	 
      	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 
	
              Gross
      sales

            	 	 	22,104,656	 	 
      	 	 	 	 	 	22,104,656	 	 	 	 	 	 
      	 	 	 	 	 	 
	
              Cancellation
      and taxes on sales

            	 	 	(5,517,669	)	 
      	 	 	 	 	 	(5,517,669	)	 	 	 	 	 
      	 	 	 	 	 	 
	
              Net
      sales

            	 	 	16,586,987	 	 
      	 	 	0	 	 	 	16,586,987	 	 	 	8,518,379	 	 
      	 	 	0	 	 	 	8,518,379	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Cost
      of sales

            	 	 	8,750,612	 	 
      	 	 	 	 	 	 	8,750,612	 	 	 	4,493,946	 	
               (f)

            	 	 	(169,642	)	 	 	4,324,304	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Gross
      profit

            	 	 	7,836,375	 	 
      	 	 	0	 	 	 	7,836,375	 	 	 	4,024,433	 	 
      	 	 	169,642	 	 	 	4,194,075	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Operating
      expenses (income):

            	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
                 General
      and administrative expenses

            	 	 	2,193,850	 	
              (a)

            	 	 	27,344	 	 	 	2,221,194	 	 	 	1,140,712	 	
               (e)

            	 	 	215,174	 	 	 	1,355,886	 
	
              Selling
      expenses

            	 	 	2,785,569	 	 
      	 	 	 	 	 	 	2,785,569	 	 	 	1,430,551	 	 
      	 	 	 	 	 	 	1,430,551	 
	
              Net
      financial

            	 	 	667,297	 	
              (b)

            	 	 	(1,320,714	)	 	 	(653,417	)	 	 	(335,567	)	
               (c
      )

            	 	 	335,567	 	 	 	0	 
	
              Depreciation

            	 	 	117,405	 	 
      	 	 	 	 	 	 	117,405	 	 	 	60,294	 	 
      	 	 	 	 	 	 	60,294	 
	
               
      Other (income) expense

            	 	 	27,344	 	
              (a)

            	 	 	(27,344	)	 	 	0	 	 	 	 	 	 
      	 	 	 	 	 	 	0	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Operating
      result

            	 	 	2,044,910	 	 
      	 	 	1,320,714	 	 	 	3,365,624	 	 	 	1,728,443	 	 
      	 	 	(381,099	)	 	 	1,347,344	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Interest
      expense

            	 	 	 	 	
              (b)

            	 	 	(1,325,238	)	 	 	(1,325,238	)	 	 	(680,586	)	 
      	 	 	 	 	 	 	(680,586	)
	
              Interest
      income

            	 	 	 	 	
              (b)

            	 	 	4,524	 	 	 	4,524	 	 	 	2,323	 	 
      	 	 	 	 	 	 	2,323	 
	
              Non
      operating other income / expense

            	 	 	27,564	 	 
      	 	 	 	 	 	 	27,564	 	 	 	14,155	 	 
      	 	 	 	 	 	 	14,155	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Profit
      (loss) for the year before income tax and social
    contribution

            	 	 	2,072,474	 	 
      	 	 	0	 	 	 	2,072,474	 	 	 	1,064,335	 	 
      	 	 	(381,099	)	 	 	683,236	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Provision
      for income tax and social contribution

            	 	 	470,417	 	 
      	 	 	 	 	 	 	470,417	 	 	 	241,586	 	
               (d)

            	 	 	(137,393	)	 	 	104,193	 
	 
      	 	 	 	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 
      	 	 	 	 	 	 	 	 
	
              Profit
      (loss) for the year

            	 	 	1,602,057	 	 
      	 	 	0	 	 	 	1,602,057	 	 	$	822,749	 	 
      	 	$	(243,706	)	 	$	579,043	 


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      Exhibit
10.29

      


      NOTES TO:
QUALYTEXTIL SA - Reconciliation
of Brazilian GAAP to US GAAP

      Year
ended December 31, 2007

      
        	
                (a)
      Reclassify provison for bad debt allowance to administrative
      expense

              	 
      	 
      	 
      	 
      
	
                (b)
      Reclassify interest expense and interest income out of "net financial"
      Under Brazilian GAAP, the category "net financial" includes interest
      expense and interest income and government incentives on VAT
      taxes.

              	 
      	 
      	 
      
	
                (c)
      Not used

              	 
      	 
      	 
      	 
      
	
                (d)
      Government income tax incentives classified as capital contribution for
      Brazilian GAAP

              	 
      	 
      	
                (176,037)

              
	
                Adjust
      tax accrual to 15.25% of final US GAAP pretax income

              	 
      	 
      	 
      	
                38,644

              
	
                  net
      tax adjustment

              	 
      	 
      	
                (d)

              	
                (137,393)

              
	
                (e)
      Net adjustment to administrative expenses

              	 
      	 
      	 
      	 
      
	
                Legal
      fees not accrued under Brazilian GAAP

              	 
      	 
      	 
      	
                58,933

              
	
                Management
      compensation not accrued under brazilian GAAP

              	 
      	 
      	 
      	
                107,266

              
	
                Misc.
      labor accrual

              	 
      	 
      	 
      	
                5,646

              
	
                Installment
      plan taxes not accrued - outsourcing sales contractor

              	 
      	 
      	 
      	
                4,623

              
	
                Installment
      plan taxes not accrued - outsourcing labor contractor

              	 
      	 
      	 
      	
                15,776

              
	
                Outsourcing
      labor contractor invoices recorded one month in arrears - accrue December
      2007

              	 
      	
                22,930

              
	
                (e)
      Net adjustment to administrative expenses

              	 
      	 
      	(e)	
                215,174

              
	
                (f)
      Net adjustment to cost of goods sold

              	 
      	 
      	 
      	 
      
	
                inventory
      reserve not recorded under Brazilian GAAP - slow moving raw
      material

              	 
      	 
      	
                73,367

              
	
                inventory
      reserve not recorded under Brazilian GAAP - reserve for rework returned
      finished goods

              	 
      	
                29,295

              
	
                reclassify
      a government VAT tax incentive (ICMS) as a reduction of cost of goods
      sold

              	 
      	 
      	
                (335,567)

              
	
                Outsourcing
      labor contractor invoices recorded one month in arrears - accrue December
      2007

              	 
      	
                48,106

              
	
                Installment
      plan taxes not accrued - outsourcing labor contractor

              	 
      	 
      	 
      	
                15,157

              
	
                (f)
      Net translation of the adjustment to cost of goods sold from BRL into
      USD

              	 
      	 
      	
                (f)

              	
                (169,642)

              
	
                (g)
      The 2007 statement of profit and loss has been derived from the internally
      generated monthly financial statements. These financial statements have
      been translated using the rate applicable to each month. The exchange rate
      of $1.94720 represents a weighted average of the monthly rates
      used.