**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**Form 10-Q**




**x**
            
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934****For
                the Quarterly Period Ended June 30, 2008****OR****o**
            
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934**







**For
      the transition period
      from            to**




**Commission
      File No. 000-52933**




**NIVS
      IntelliMedia Technology Group, Inc.**


(Exact
      name of Registrant as specified in its charter)




**Delaware**
            
            **20-8057809**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)




**NIVS
      Industry Park, Shuikou, Huizhou, Guangdong, China 516006**


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)





**86-752-2323616**


(COMPANY’S
      TELEPHONE NUMBER, INCLUDING AREA CODE)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the registrant
      was required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days. Yes x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” as defined in Rule 12b-2 of the Exchange Act.




Large
                accelerated filero
            Accelerated
                filer ̈Non-accelerated
                filerx
            Smaller
                reporting company ̈





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




The
      number of shares outstanding of the registrant’s Common Stock, par value $0.0001
      per share, was 36,855,714 as of August 18, 2008.
















**EXPLANATORY
      NOTE**





Please
      note that NIVS IntelliMedia Technology Group, Inc. (the “Company,” “we” or “us”)
      was originally organized as a “blank check” shell company to investigate and
      acquire a target company or business seeking the perceived advantages of being
      a
      publicly held corporation. On July 25, 2008 (the “Effective Date”), the Company
      closed a share exchange transaction (the “Share Exchange”) pursuant to which it
      (i) became the 100% parent of NIVS Holding Company Limited, a British Virgin
      Islands corporation (“NIVS BVI”), and its subsidiaries, including its
      97.5%-owned subsidiary NIVS (Huizhou) Audio & Video Tech. Co., Ltd., a
      company organized under the laws of the PRC (“NIVS PRC”), (ii) assumed the
      operations of NIVS BVI and its subsidiaries, and (iii) changed its name from
      SRKP 19, Inc. to NIVS IntelliMedia Technology Group, Inc. The Company
      reported the closing of the Share Exchange in the Current Report on Form 8-K
      filed with the Securities and Exchange Commission on July 30, 2008. This
      Quarterly Report on Form 10-Q contains information regarding the Company and
      NIVS BVI, as indicated herein.





Since
      the
      Share Exchange closed subsequent to the reporting period covered by the
      Quarterly Report on Form 10-Q, this report includes both discussion of our
      business as it existed as of June 30, 2008 and of the Company’s business
      post-Share Exchange, as the 100% parent of NIVS BVI, to ensure that the
      disclosure included herein is complete and not misleading. The sections entitled
      “ *SRKP
      19, INC.* ”
      describe the Company prior to July 25, 2008 and the sections entitled
“ *NIVS
      IntelliMedia Technology Group, Inc.* ”
      describe the Company on and after July 25, 2008.











**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**





**FORM 10-Q**




**For
      the Quarterly Period Ended June 30, 2008**




**INDEX**




Page**Part I**
            
            **Financial
                Information**Item
                1.
            
            Financial
                Statements
            1**NIVS
                INTELLIMEDIA TECHNOLOGY GROUP, INC. (FORMERLY SRKP 19,
                INC.)**a)
            Balance
                Sheet as of June 30, 2008 (Unaudited) and December 31,
                2007
            1b)
            Statements
                of Operations for the Three and Six Months Ended June 30, 2008 and
                2007
                (Unaudited)
            2c)
            Statements
                of Cash Flows for the Six Months Ended June 30, 2008 and 2007
                (Unaudited)
            3d)
            Notes
                to Financial Statements (Unaudited)
            4**NIVS
                HOLDING COMPANY LIMITED**a)
            Condensed
                Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December
                31, 2007
            8b)
            Condensed
                Consolidated Statements of Operations for the Three and Six Months
                Ended
                June 30, 2008 and 2007 (Unaudited)
            9c)
            Consolidated
              Statements
              of Changes in Stockholders’
              Equity for
              the Years Ended December 31, 2007, 2006, and 2005 and the Six Months
              Ended
              June 30, 2008 (Unaudited)
            10d)
            Condensed
                Consolidated Statements of Cash Flows for the Six Months Ended June
                30,
                2008 and 2007 (Unaudited)
            11e)
            Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            12Item
                2.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            28Item
                3.
            
            Quantitative
                and Qualitative Disclosures About Market Risk
            35Item
                4.
            
            Controls
                and Procedures
            35**Part II**
            
            **Other
                Information**Item
                1.
            
            Legal
                Proceedings
            36Item
                1A.
            
            Risk
                Factors
            36Item
                2.
            
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            52Item
                3.
            
            Default
                Upon Senior Securities
            52Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            53Item
                5.
            
            Other
                Information
            53Item
                6.
            
            Exhibits
            53**Signatures**
            54











**Part I.
      Financial Information**




**Item
      1. Financial Statements**




**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**BALANCE
      SHEET**


**(Stated
      in US Dollars)**





**June 30, 2008**
              **(Unaudited)**
            
            **December 31,**
              **2007****ASSETS****CURRENT
                ASSETS**Cash
            
            $
            2,555
            
            $
            857**LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIT)****CURRENT
                LIABILITIES**Due
                to Stockholders
            
            $
            47,500
            
            $
            32,500**COMMITMENTS
                AND CONTINGENCIES****STOCKHOLDERS’
                EQUITY (DEFICIT):**Preferred
                stock, $.0001 par value, 10,000,000 shares authorized, none
                issued
            
            
            —
            
            
            —Common
                stock, $.0001 par value, 100,000,000 shares authorized, 7,096,390
                shares
                issued and outstanding
            
            
            710
            
            
            710Additional
                Paid in Capital
            
            
            6,790
            
            
            6,790(Deficit)
                accumulated during development stage
            
            
            (52,445
            )
            
            (39,143
            )Total
                Stockholders’ Equity (Deficit)
            
            
            (44,945
            )
            
            (31,643
            )$
            2,555
            
            $
            857





See
      accompanying notes to financial statements.





1





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**STATEMENTS
      OF OPERATIONS**


**(Stated
      in US Dollars)**


**(Unaudited)**





**Period From**
            
            **Cumulative from****Three Months**
            
            **Three Months**
            
            **Six Months**
            
            **January 3, 2007**
            
            **January 3, 2007****Ended**
            
            **Ended**
            
            **Ended**
            
            **(Inception) to**
            
            **(Inception) to****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008****REVENUE**
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —**EXPENSES**
            
            
            1,921
            
            
            15,441
            
            
            13,302
            
            
            15,441
            
            
            52,445**NET
                (LOSS)**
            
            $
            (1,921
            )
            $
            (15,441
            )
            $
            (13,302
            )
            $
            (15,441
            )
            $
            (52,445
            )**NET
                (LOSS) PER COMMON SHARE-BASIC**
            
            $
            *
            
            $
            *
            
            $
            *
            
            $
            ***WEIGHTED
                AVERAGE NUMBER OF COMMON****SHARES
                OUTSTANDING**
            
            
            7,096,390
            
            
            7,096,390
            
            
            7,096,390
            
            
            7,096,390





***** Less
      than
      $.01


See
      accompanying notes to financial statements.





2





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**STATEMENTS
      OF CASH FLOWS**


**(Stated
      in US Dollars)**


**(Unaudited)**




**Period From**
            
            **Cumulative from****Six Months**
            
            **January 3, 2007**
            
            **January 3, 2007****Ended**
            
            **to**
            
            **(Inception) to****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008****CASH
                FLOWS FROM (TO) OPERATING ACTIVITIES:**Net
                (loss)
            
            $
            (13,302
            )
            $
            (15,441
            )
            $
            (52,445
            )Net
                Cash (Used In) Operating Activities
            
            
            (13,302
            )
            $
            (15,441
            )
            
            (52,445
            )**CASH
                FLOWS FROM (TO) FINANCING ACTIVITIES:**Advances
                from stockholders
            
            
            15,000
            
            
            22,500
            
            
            47,500Warrants
                issued for cash
            
            
            —
            
            
            2,500
            
            
            2,500Common
                stock issued for cash
            
            
            —
            
            
            7,500
            
            
            5,000Net
                Cash Provided by Financing Activities
            
            
            15,000
            
            
            30,000
            
            
            55,000**NET
                INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS:**
            
            
            1,698
            
            
            14,559
            
            
            2,555**CASH
                AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
            
            
            857
            
            
            -
            
            
            -**CASH
                AND CASH EQUIVALENTS, END OF PERIOD**
            
            $
            2,555
            
            $
            14,559
            
            $
            2,555




See
      accompanying notes to financial statements.





3





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**NOTES
      TO FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





History





SRKP
      19,
      Inc. (the Company), a development stage company, was incorporated under the
      laws
      of the State of Delaware on December 7, 2006. There was no activity during
      2006
      and no equity was issued. The common stock of the Company was sold and issued
      on
      January 3, 2007 and, as such, has been used as the date of inception for the
      Company. The Company is in the development stage as defined in Financial
      Accounting Standards Board Statement No. 7. The fiscal year end is December
      31.





The
      Company filed a Form 10-SB registration statement with the Securities and
      Exchange Commission (SEC) pursuant to Section 12(g) of the Securities Exchange
      Act of 1934. The registration statement has been declared effective as of
      January 25, 2008.





Going
      Concern and Plan of Operation





The
      Company's financial statements have been presented on the basis that it is
      a
      going concern, which contemplates the realization of assets and the satisfaction
      of liabilities in the normal course of business. The Company is in the
      development stage and has negative working capital, negative stockholders’
equity and has not earned any revenues from operations to date. These conditions
      raise substantial doubt about its ability to continue as a going concern.





The
      Company is currently devoting its efforts to locating merger candidates. The
      Company's ability to continue as a going concern is dependent upon its ability
      to develop additional sources of capital, locate and complete a merger with
      another company, and ultimately, achieve profitable operations. The accompanying
      financial statements do not include any adjustments that might result from
      the
      outcome of these uncertainties.





4





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**NOTES
      TO FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





Income
      Taxes




The
      Company uses the liability method of accounting for income taxes pursuant to
      Statement of Financial Accounting Standards No. 109. Under this method, deferred
      income taxes are recorded to reflect the tax consequences in future years of
      temporary differences between the tax basis of the assets and liabilities and
      their financial amounts at year-end.





For
      federal income tax purposes, substantially all startup and organizational
      expenses must be deferred until the Company commences business. The Company
      may
      elect a limited deduction of up to $5,000 in the taxable year in which the
      trade
      or business begins. The $5,000 must be reduced by the amount of startup costs
      in
      excess of $50,000. The remainder of the expenses not deductible must be
      amortized over a 180-month period beginning with the month in which the active
      trade or business begins. These expenses will not be deducted for tax purposes
      and will represent a deferred tax asset. The Company will provide a valuation
      allowance in the full amount of the deferred tax asset since there is no
      assurance of future taxable income. Tax deductible losses can be carried forward
      for 20 years until utilized.





Deferred
      Offering Costs




Deferred
      offering costs, consisting of legal, accounting and filing fees relating to
      an
      offering will be capitalized. The deferred offering costs will be offset against
      offering proceeds in the event the offering is successful. In the event the
      offering is unsuccessful or is abandoned, the deferred offering costs will
      be
      expensed.





Cash
      and Cash Equivalents




Cash
      and
      cash equivalents consist primarily of cash in banks and highly liquid
      investments with original maturities of 90 days or less.





Concentrations
      of Credit Risk




The
      Company maintains all cash in deposit accounts, which at times may exceed
      federally insured limits. The Company has not experienced a loss in such
      accounts.





Earnings
      Per Common Share




Basic
      earnings per common share are computed based upon the weighted average number
      of
      common shares outstanding during the period. Diluted earnings per share consists
      of the weighted average number of common shares outstanding plus the dilutive
      effects of options and warrants calculated using the treasury stock method.
      In
      loss periods, dilutive common equivalent shares are excluded as the effect
      would
      be anti-dilutive.





At
      June
      30, 2008 and 2007, the only potential dilutive securities were 7,096,390 common
      stock warrants. Due to the net loss, none of the potentially dilutive securities
      were included in the calculation of diluted earnings per share since their
      effect would be anti-dilutive.





5





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**NOTES
      TO FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**NOTE
      1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**





Use
      of
      Estimates in the Preparation of Financial Statements




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities, the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting periods.
      Actual results could differ from those estimates and assumptions.





Recently
      Issued Accounting Pronouncements




The
      Company has adopted all recently issued accounting pronouncements. The adoption
      of the accounting pronouncements, including those not yet effective, is not
      anticipated to have a material effect on the financial position or results
      of
      operations of the Company.





**NOTE
      2 - STOCKHOLDERS' EQUITY**





During
      January 2007, the Company sold for $5,000 for a subscription receivable, which
      was paid in April 2007, 7,096,390 shares of its $0.0001 par value common stock
      to various investors. In addition, the Company also sold to these investors
      for
      $2,500 cash warrants to purchase 7,096,390 shares of common stock at an exercise
      price of $.0001.





These
      warrants expire at the earlier date of 10 years from date of purchase or 5
      years
      from the date the Company consummates a merger or other business combination
      with an operating business or any other event to which the Company ceases to
      be
      a “shell company.”





**NOTE
      3 - RELATED PARTY TRANSACTIONS**




The
      Company neither owns nor leases any real or personal property. Most office
      services are provided without charge by WestPark Capital. The Company’s
      President is also the Chief Executive Officer of WestPark Capital. Such costs
      are immaterial to the financial statements. The officers and directors of the
      Company are involved in other business activities and may, in the future, become
      involved in other business opportunities that become available. Such persons
      may
      face a conflict in selecting between the Company and their other business
      interests. The Company has not formulated a policy for the resolution of such
      conflicts.





**NOTE
      4 - DUE TO STOCKHOLDERS**





Since
      inception certain stockholders have advanced the Company $47,500 to pay for
      operating expenses. These funds have been advanced interest free, are unsecured,
      and are due on demand.





6





**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**


**(Formerly
      SRKP 19, Inc.)**





**NOTES
      TO FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**NOTE
      5 – SUBSEQUENT EVENT**





Share
      Exchange





On
      July
      25, 2008, the Company consummated a share exchange transaction (the “Share
      Exchange”) pursuant to a share exchange agreement (the “Exchange Agreement”)
      dated as of June 27, 2008, and amended as of July 25, 2008, by an among the
      Company, NIVS Holding Company Limited, a British Virgin Islands corporation
      (“NIVS BVI”) and the shareholders of NIVS BVI (the “Shareholders”), whereby the
      Company, in exchange for 27,546,667 shares of its common stock, acquired 100%
      of
      the issued and outstanding securities of NIVS BVI.





In
      addition, the Company agreed to cancel 4,756,390 shares of its common stock
      and
      an aggregate of 6,149,723 warrants such that there were 2,340,000 shares of
      common stock and 946,667 warrants outstanding immediately prior to the Share
      Exchange.





Private
      Placement





Pursuant
      to subscription agreements entered into with certain investors, the Company
      sold
      an aggregate of 5,239,460 shares of common stock in an initial closing of a
      private placement at $1.80 per share for aggregate gross proceeds of
      approximately $9.4 million on July 25, 2008. On August 12, 2008, the Company
      conducted a second and final closing of the private placement pursuant to which
      the Company sold an additional 1,304,587 shares of common stock at $1.80 per
      share for gross proceeds of approximately $2.3 million. Accordingly, we sold
      a
      total of 6,544,047 shares of common stock in the private placement for aggregate
      gross proceeds of approximately $11.8 million.





7





**Niveous
      Holding Company Limited and Subsidiaries**


**Condensed
      Consolidated Balance Sheets**


**(I** **n
      US Dollars)**


**June
                  30,**
              
              **December
                  31,****2008**
              
              **2007****(Unaudited)****Assets**Current
                  AssetsCash
                  and cash equivalents
              
              $
              984,981
              
              $
              1,438,651Short-term
                  investment, marketable securities
              
              
              10,711
              
              
              10,061Trade
                  receivables, net (Note 3)
              
              
              5,416,746
              
              
              4,510,833Inventories,
                  net (Note 6)
              
              
              18,830,860
              
              
              17,347,370Restricted
                  cash (Note 13)
              
              
              3,838,685
              
              
              1,983,247Prepaid
                  expenses and deposits
              
              
              82,754
              
              
              18,585**Total
                  current assets**
              
              
              29,164,737
              
              
              25,308,747Due
                  from related parties (Note 7)
              
              
              7,666,916
              
              
              2,213,370Property
                  and equipments, net (Note 8)
              
              
              50,197,852
              
              
              46,624,502Advances
                  to suppliers (Note 4)
              
              
              28,180,770
              
              
              14,391,650
 Intangible
                  assets, net (Note 9)
              
              
              2,338,369
              
              
              2,228,974**Total
                  Assets**
              
              $
              117,548,644
              
              $
              90,767,243**Liabilities
                  & Shareholders' Equity**Current
                  LiabilitiesAccounts
                  payable – trade
              
              $
              5,756,748
              
              $
              14,560,824Customer
                  deposit
              
              
              20,987,293
              
              
              2,454,761Accrued
                  liabilities and other payable
              
              
              1,309,809
              
              
              490,142Various
                  taxes payable
              
              
              234,675
              
              
              187,711Short-term
                  loans (Note 10)
              
              
              31,597,195
              
              
              28,645,571Current
                  portion of long-term bank loan payable (Note 12)
              
              
              2,554,125
              
              
              4,455,656Wages
                  payable
              
              
              407,032
              
              
              608,222Bank
                  notes payable (Note 13)
              
              
              13,182,685
              
              
              6,399,693Corporate
                  tax payable
              
              
              2,840,543
              
              
              1,725,765**Total
                  current liabilities**
              
              
              78,870,105
              
              
              59,528,345Due
                  to shareholder (Note 14)
              
              
              9,843,657
              
              
              11,008,770**Total
                  liabilities**
              
              
              88,713,762
              
              
              70,537,115**Minority
                  interest**
              
              
              856,090
              
              
              638,844**Shareholders'
                  Equity**Capital
                  shares ($1.00 par value, 50,000 shares authorized, 10,000 shares
                  issued
                  and outstanding) (Note 1)
              
              
              10,000
              
              
              10,000Accumulated
                  other comprehensive income
              
              
              3,872,843
              
              
              2,122,612Statutory
                  surplus reserve fund (Note 16)
              
              
              1,278,764
              
              
              1,278,764Retained
                  earnings (unrestricted)
              
              
              22,817,185
              
              
              16,179,908**Total
                  Shareholders' Equity**
              
              
              27,978,792
              
              
              19,591,284**Total
                  Liabilities & Shareholders' Equity**
              
              $
              117,548,644
              
              $
              90,767,243




The
        accompanying notes are an integral part of these consolidated financial
        statements.





8


**Niveous
        Holding Company Limited and Subsidiaries**
 **Condensed
        Consolidated Statements of Operations**
 **(In
        US Dollars)**
 
 **For Three Months Ended**
              
              **For Six Months Ended****June 30,**
              
              **June 30,****2008**
              
              **2007**
              
              **2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)**
              
              **(Unaudited)****Revenue**
              
              $
              24,860,574
              
              $
              17,561,852
              
              $
              51,636,895
              
              $
              33,929,853Other
                  Sales
              
              
              93,182
              
              
              178,006
              
              
              156,053
              
              
              285,381Cost
                  of Goods Sold
              
              
              (19,207,711
              )
              
              (13,735,656
              )
              
              (39,590,833
              )
              
              (25,998,678
              )**Gross
                  Profit**
              
              
              5,746,045
              
              
              4,004,202
              
              
              12,202,115
              
              
              8,216,556**Selling
                  Expenses**
              
              
              742,892
              
              
              795,160
              
              
              1,363,104
              
              
              1,716,987**General
                  and administrative**Amortization
              
              
              16,988
              
              
              15,434
              
              
              33,488
              
              
              30,624Depreciation
              
              
              65,729
              
              
              64,112
              
              
              161,209
              
              
              133,882Bad
                  debts expense (recovery)
              
              
              (68,199
              )
              
              629,430
              
              
              384,102
              
              
              783,623Others
                  General and administrative (Note 15)
              
              
              272,310
              
              
              570,557
              
              
              1,033,707
              
              
              1,101,328**Total
                  General and administrative**
              
              
              286,828
              
              
              1,279,533
              
              
              1,612,506
              
              
              2,049,457**Research
                  and development**
              
              
              252,410
              
              
              78,875
              
              
              407,182
              
              
              142,272**Total
                  operating expenses**
              
              
              1,282,130
              
              
              2,153,568
              
              
              3,382,792
              
              
              3,908,716**Income
                  from operations**
              
              
              4,463,915
              
              
              1,850,634
              
              
              8,819,323
              
              
              4,307,840**Other
                  income (expenses)**Write-down
                  of inventory
              
              
              -
              
              
              (3,107
              )
              
              -
              
              
              (390,406
              )Gain
                  on disposal of assets
              
              
              -
              
              
              -
              
              
              -
              
              
              -Interest
                  income
              
              
              139
              
              
              1,007
              
              
              139
              
              
              11,308Interest
                  expense
              
              
              (513,735
              )
              
              (353,946
              )
              
              (1,045,237
              )
              
              (640,095
              )Sundry
                  income (expense), net
              
              
              (6,559
              )
              
              (32,428
              )
              
              9,174
              
              
              (32,428
              )**Total
                  other income (expenses)**
              
              
              (520,155
              )
              
              (388,474
              )
              
              (1,035,924
              )
              
              (1,051,621
              )**Income
                  before minority interest and income taxes**
              
              
              3,943,760
              
              
              1,462,160
              
              
              7,783,399
              
              
              3,256,219Income
                  taxes
              
              
              (469,571
              )
              
              (217,510
              )
              
              (975,084
              )
              
              (434,122
              )Minority
                  interest
              
              
              (86,965
              )
              
              (31,222
              )
              
              (171,038
              )
              
              (70,891
              )**Net
                  Income**
              
              $
              3,387,224
              
              $
              1,213,428
              
              $
              6,637,277
              
              $
              2,751,206
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  9
  **Niveous
        Holding Company Limited and Subsidiaries**
 **Consolidated
        Statements of Changes in Stockholders' Equity**
 **For
        the years ended December 31, 2007, 2006 and 2005 and the six months ended
        June
        30, 2008 (unaudited)**
 **(In
        US Dollars)**
 
 **Accumulated****Statutory**
              
              **Other**
              
              **Retained**
              
              **Total****Capital Shares**
              
              **Reserve**
              
              **Comprehensive**
              
              **Earnings**
              
              **Stockholders'****Shares**
              
              **Amount**
              
              **Fund**
              
              **Income**
              
              **(Unrestricted)**
              
              **Equity****Balance
                  at December 31, 2004**
              
              
              10,000
              
              $
              10,000
              
              $
              -
              
              $
              (22,367
              )
              $
              1,022,410
              
              $
              1,010,043Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              92,536
              
              
              -
              
              
              92,536Net
                  income for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,132,291
              
              
              2,132,291**Balance
                  at December 31, 2005**
              
              
              10,000
              
              
              10,000
              
              
              -
              
              
              70,169
              
              
              3,154,701
              
              
              3,234,870Allocation
                  of retained earnings to statutory reserve fund
              
              
              -
              
              
              -
              
              
              522,058
              
              
              -
              
              
              (522,058
              )
              
              -Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              369,519
              
              
              -
              
              
              369,519Net
                  income for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              5,324,182
              
              
              5,324,182**Balance
                  at December 31, 2006**
              
              
              10,000
              
              
              10,000
              
              
              522,058
              
              
              439,688
              
              
              7,956,825
              
              
              8,928,571Allocation
                  of retained earnings to statutory reserve fund
              
              
              -
              
              
              -
              
              
              756,706
              
              
              -
              
              
              (756,706
              )
              
              -Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              1,682,924
              
              
              -
              
              
              1,682,924Net
                  income for the year
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,979,789
              
              
              8,979,789**Balance
                  at December 31, 2007**
              
              
              10,000
              
              
              10,000
              
              
              1,278,764
              
              
              2,122,612
              
              
              16,179,908
              
              
              19,591,284Allocation
                  of retained earnings to statutory reserve fund
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Foreign
                  currency translation adjustment
              
              
              -
              
              
              -
              
              
              -
              
              
              1,750,231
              
              
              -
              
              
              1,750,231Net
                  income for 6 months ended June 30, 2008
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,637,277
              
              
              6,637,277**Balance
                  at June 30, 2008 (Unaudited)**
              
              
              10,000
              
              $
              10,000
              
              $
              1,278,764
              
              $
              3,872,843
              
              $
              22,817,185
              
              $
              27,978,792
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  10
  **Niveous
        Holding Company Limited and Subsidiaries**
 **Consolidated
        Statements of Cash Flows**
 **(In
        US Dollars)**
 
 **For Six Months Ended****June 30,****2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)****Cash
                  Flows From Operating Activities**Net
                  Income
              
              $
              6,637,277
              
              $
              2,751,206Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Minority
                  Interest
              
              
              171,038
              
              
              70,891Depreciation
              
              
              2,347,467
              
              
              482,603Amortization
              
              
              33,488
              
              
              30,624Gain
                  on disposal of assets
              
              
              -
              
              
              -Write-down
                  of inventory
              
              
              -
              
              
              390,406Changes
                  in operating assets and liabilities:Account
                  receivable-trade, net
              
              
              (905,913
              )
              
              (5,056,414
              )Advance
                  to suppliers for purchases
              
              
              (13,789,120
              )
              
              (4,594,346
              )Prepaid
                  expenses and deposits
              
              
              (64,169
              )
              
              56,618Inventories,
                  net
              
              
              (1,483,490
              )
              
              183,641Restricted
                  cash
              
              
              (1,617,120
              )
              
              (267,974
              )Accounts
                  payable and accrued liabilities
              
              
              10,548,123
              
              
              1,573,274Various
                  taxes payable
              
              
              46,964
              
              
              (700,402
              )Wages
                  payable
              
              
              (201,190
              )
              
              (49,719
              )Corporate
                  tax payable
              
              
              1,114,778
              
              
              456,168**Net
                  cash provided by (used in) operating
                  activities**
              
              
              2,838,133
              
              
              (4,673,424
              )**Cash
                  Flows From Investing Activities**Purchases
                  of property and equipment
              
              
              (2,899,305
              )
              
              (978,698
              )**Net
                  cash provided by (used in) investing activities**
              
              
              (2,899,305
              )
              
              (978,698
              )**Cash
                  Flows From Financing Activities**Proceeds
                  of loans
              
              
              46,903,423
              
              
              33,302,808Repayments
                  of loans
              
              
              (48,352,615
              )
              
              (24,111,541
              )Proceeds
                  of bank notes
              
              
              19,740,993
              
              
              6,283,611Repayments
                  of bank notes
              
              
              (12,832,265
              )
              
              (6,198,643
              )Capital
                  lease payable
              
              
              -
              
              
              (61,669
              )Due
                  to shareholder
              
              
              (1,165,113
              )
              
              1,387,950Due
                  from related parties
              
              
              (5,453,546
              )
              
              (3,674,872
              )**Net
                  cash provided by (used in) financing activities**
              
              
              (1,159,123
              )
              
              6,927,644Effect
                  of exchange rate changes on cash
              
              
              766,625
              
              
              389,036**Net
                  increase in cash and cash equivalents**
              
              
              (453,670
              )
              
              1,664,558**Cash
                  and cash equivalents, beginning of period**
              
              
              1,438,651
              
              
              559,390**Cash
                  and cash equivalents, end of period**
              
              $
              984,981
              
              $
              2,223,948**Supplemental
                  disclosure information:**Interest
                  expense paid
              
              $
              1,045,237
              
              $
              640,095Income
                  taxes paid
              
              $
              975,084
              
              $
              434,122**Non-cash
                  investing and financing activities:**Exchange
                  of investment for equipment (Note 5)
              
              $
              -
              
              $
              -
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.


11


**Niveous
        Holding Company Limited and Subsidiaries**
 **Notes
        to Consolidated Financial Statements**
 (Amounts
        and disclosures at and for the three and six months ended June 30, 2008 and
        2007
        are unaudited)





**1.**
            **DESCRIPTION
                OF BUSINESS AND
                ORGANIZATION**





Niveous
      Holding Company Limited (“Niveous”) was incorporated in British Virgin Islands
      (BVI) on October 31, 2003. As at December 31, 2007, Niveous had 50,000 capital
      shares authorized with $1.00 par value and 10,000 shares issued and outstanding.
      As of December 31, 2007, Mr. Li Tianfu and Mr. Li Shuhui, both citizens of
      People’s Republic of China (PRC), hold 95% and 5% of total interests of Niveous,
      respectively.





In
      April,
      2004, Niveous acquired 97.5% of ownership of NIVS (HZ) Audio & Video Tech
      Company Limited (“NIVS PRC”) from its original shareholders. NIVS PRC is the
      main operating company located in Huizhou, PRC. It engages in research,
      development, production, marketing and sales of audio & video electronic
      equipments for domestic and international market. As at December 31, 2004,
      Niveous and Mr. Li Tianfu hold 97.5% and 2.5% of total interests of NIVS PRC,
      respectively.





In
      April,
      2005, Niveous acquired 100% of ownership of NIVS International (H.K.) Limited
      (“NIVS HK”) under an ownership transfer agreement. NIVS HK is a holding company
      incorporated in November 2004 in Hong Kong, PRC with the original sole
      shareholder Mr. Li Tianfu. Pursuant to the transfer agreement, Niveous agreed
      to
      paid Mr. Li Tianfu 1M HKD for the ownership transfer.





In
      February 2006, NIVS PRC established a branch company NIVS (HZ) Audio & Video
      Tech Company Limited Shenzhen Branch (“NIVS Shenzhen”) located in Shenzhen, PRC.
      The establishment of NIVS Shenzhen is for the purpose of corporate restructuring
      and planning.





In
      November 2007, Niveous entered an ownership transfer agreement to transfer
      its
      whole ownership of NIVS PRC to NIVS HK. After the restructuring, NIVS PRC became
      a subsidiary of NIVS HK. As at December 31, 2007, NIVS HK and Mr. Li Tianfu
      hold
      97.5% and 2.5% of total interests of NIVS PRC, respectively.





In
      June
      2008, NIVS HK entered a reverse ownership transfer agreement to transfer its
      whole ownership of NIVS PRC to Niveous. After the restructuring, NIVS PRC became
      a subsidiary of Niveous. As of June 30, 2008, Niveous and Mr. Li TianFu hold
      97.5% and 2.5% of total interest of NIVS PRC, respectively. Pursuant to the
      transfer agreement, Niveous agreed to pay NIVS HK 50M HKD for the ownership
      transfer.





Niveous
      and its subsidiaries - NIVS HK, NIVS PRC and NIVS Shenzhen shall be collectively
      referred throughout as the “Company”.





To
      summarize the paragraphs above, the organization and ownership structure of
      the
      Company is as follows:











12




**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)





2.  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





**a.**
            **Basis
                of preparation**





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





**b.**
            **Basis
                of consolidation**





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





**c.**
            **Use
                of estimates**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities, disclosure of contingent
      assets and liabilities at the date of the financial statements, and the reported
      amounts of revenues and expenses during the reporting year. Because of the
      use
      of estimates inherent in the financial reporting process, actual results could
      differ from those estimates.





**d.**
            **Fair
                values of financial
                instruments**





The
      Company values its financial instruments as required by Statement of Financial
      Accounting Standard (SFAS) No. 107, “Disclosures about Fair Value of Financial
      Instruments”. The estimated fair value amounts have been determined by the
      Company, using available market information and appropriate valuation
      methodologies. The estimates presented herein are not necessarily indicative
      of
      amounts that the Company could realize in a current market
      exchange.





The
      Company’s financial instruments primarily consist of cash and cash equivalents,
      trade receivables, short-term loans receivable, inventories, due from related
      parties, prepaid expenses and other receivables, accounts payable-trade, accrued
      liabilities and other payables, value-added taxes (VAT) payable, short term
      loans, current portion of bank loans payable, registration rights penalty
      payable, other taxes payable, wages payable, corporate income taxes payable,
      due
      to related parties.





As
      of the
      balance sheet date, the estimated fair values of the financial instruments
      were
      not materially different from their carrying values as presented due to the
      short maturities of these instruments and that the interest rates on the
      borrowings approximate those that would have been available for loans of similar
      remaining maturity and risk profile at respective year ends.





**e.**
            **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.





**f.**
            **Accounts
                Receivable**





Accounts
      receivables are recognized and carried at original invoiced amount less an
      allowance for uncollectible accounts, as needed.





The
      Company uses the aging method to estimate the valuation allowance for
      anticipated uncollectible receivable balances. Under the aging method, bad
      debts
      percentages determined by management based on historical experience as well
      as
      current economic climate are applied to customers’ balances categorized by the
      number of months the underlying invoices have remained outstanding. The
      valuation allowance balance is adjusted to the amount computed as a result of
      the aging method. When facts subsequently become available to indicate that
      the
      amount provided as the allowance was incorrect, an adjustment which classified
      as a change in estimate is made.


13





**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**g.**
            **Inventories**





Inventories
      are stated at the lower of cost, as determined on a weighted average basis,
      or
      market. 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. The management
      writes down the inventories to market value if it is below cost. The management
      also regularly evaluates the composition of its inventories to identify
      slow-moving and obsolete inventories to determine if valuation allowance is
      required.





**h.**
            **Property
                and Equipment**





Property
      and equipment are initially recognized and 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:





Building
            
            
            38
                yearsMolds
            
            
            8
                yearsMachinery
                and Equipment
            
            
            10
                yearsElectronic
                Equipment
            
            
            5
                yearsLeasehold
                Improvements
            
            
            5
                yearsOffice
                and Other Equipment
            
            
            5
                yearsAutomobiles
            
            
            5
                years





**i.**
            **Intangible
                Assets**





The
      Company’s intangible assets are stated at cost less accumulated amortization and
      are comprised of land-use rights and computer software use rights. Land-use
      rights are related to land the Company occupies in Guangdong Province, PRC
      and
      are being amortized on a straight-line basis over a period of 40 years. Computer
      software use rights are being amortized on a straight-line basis over a period
      of 10 years.








**j.**
            **Impairment
                of Long-Lived Assets**





The
      Company accounts for impairment of plant and equipment and amortizable
      intangible assets in accordance with SFAS No. 144, “Accounting for Impairment of
      Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the
      Company 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
      Company has adopted SFAS No. 130, ** Reporting
      Comprehensive Income, which
      establishes standards for reporting and displaying comprehensive income, its
      components, and accumulated balances in a full-set of general-purpose financial
      statements. Accumulated other comprehensive income represents the accumulated
      balance of foreign currency translation adjustments.


14


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**l.**
            **Segment
                information**





SFAS
      No.
      131, “Disclosures about Segments of an Enterprise and Related Information”,
      requires certain financial and supplementary information to be disclosed on
      an
      annual and interim basis for each reportable segment of an enterprise. The
      Company believes that it operates in one business segment (research,
      development, production, marketing and sales of auto electronic products) and
      in
      one geographical segment (China), as all of the Company’s current operations are
      carried out in China.





**m.**
            **Revenue
                recognition**





The
      Company generates revenues from the sales of auto electronic products and
      subcontracting activities. 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.




**n.**
            **Government
                grants**





Grants
      from the PRC government are recognized at their fair value where there is a
      reasonable assurance that the grant will be received and the Company will comply
      with all attached conditions.





Government
      grants are recognized as revenues or gains in the period received and as assets,
      decreases of liabilities, or expenses depending on the form of the grants
      received.




**o.**
            **Research
                and development costs**





Research
      and development costs are expensed to operations as incurred. The Company spent
      $407,182, and $142,272 on direct research and development (“R&D”) efforts
      for the six months ended June 30, 2008 and 2007, respectively.





**p.**
            **Income
                taxes**





The
      Company accounts for income taxes in accordance with SFAS No. 109, "Accounting
      for Income Taxes". SFAS No. 109 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 Company is able to realize their benefits, or that future
      deductibility is uncertain.





**q.**
            **Foreign
                currency translation**





The
      functional currency of Niveous and NIVS HK is Hong Kong Dollar (“HKD”). The
      Company maintains its financial statements using the functional currency.
      Monetary assets and liabilities denominated in currencies other than the
      functional currency are translated into the functional currency at rates of
      exchange prevailing at the balance sheet dates. Transactions denominated in
      currencies other than the functional currency are translated into the functional
      currency at the exchange rates prevailing at the dates of the transaction.
      Exchange gains or losses arising from foreign currency transactions are included
      in the determination of net income (loss) for the respective
      periods.





The
      functional currency of NIVS PRC and NIVS Shenzhen is the Renminbi (“RMB”), the
      PRC’s currency. These two companies maintain their financial statements using
      their own functional currency. Monetary assets and liabilities denominated
      in
      currencies other than the functional currency are translated into the functional
      currency at rates of exchange prevailing at the balance sheet dates.
      Transactions denominated in currencies other than the functional currency are
      translated into the functional currency at the exchange rates prevailing at
      the
      dates of the transaction. Exchange gains or losses arising from foreign currency
      transactions are included in the determination of net income (loss) for the
      respective periods.


15


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




For
      financial reporting purposes, the financial statements of Niveous and NIVS
      HK,
      which are prepared in HKD, are translated into the Company’s reporting currency,
      United States Dollars (“USD”); the financial statements of NIVS PRC and NIVS
      Shenzhen, which are prepared in RMB, are translated into the Company’s reporting
      currency, USD. Balance sheet accounts are translated using the closing exchange
      rate in effect at the balance sheet date and income and expense accounts are
      translated using the average exchange rate prevailing during the reporting
      period. Adjustments resulting from the translation, if any, are included in
      accumulated other comprehensive income (loss) in stockholder’s
      equity.





The
      exchange rates used for foreign currency translation were as follows (USD$1
      =
      RMB):


Period
                  Covered
              
              Balance
                  Sheet Date Rates
              
              Average
                  RatesFor
                  three months ended June 30, 2008
              
              
              6.85166
              
              
              6.98642For
                  three months ended June 30, 2007
              
              
              7.60456
              
              
              7.62241For
                  six months ended June 30, 2008
              
              
              6.85166
              
              
              7.05019For
                  six months ended June 30, 2007
              
              
              7.60456
              
              
              7.70950


The
        exchange rates used for foreign currency translation were as follows (USD$1
        =
        HKD):


Period
                  Covered
              
              Balance
                  Sheet Date Rates
              
              Average
                  RatesFor
                  three months ended June 30, 2008
              
              
              7.80092
              
              
              7.80012For
                  three months ended June 30, 2007
              
              
              7.79605
              
              
              7.76216For
                  six months ended June 30, 2008
              
              
              7.80092
              
              
              7.81678For
                  six months ended June 30, 2007
              
              
              7.79605
              
              
              7.78210




**r.**
            **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.




**s.**
            **Recently
                issued accounting
                pronouncements**





In
      June 2008, the Financial Accounting Standards Board (“FASB”) issued FSP
      No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
      Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP
      EITF 03-6-1 concludes that unvested share-based payment awards that contain
      rights to receive non-forfeitable dividends or dividend equivalents are
      participating securities, and thus, should be included in the two-class method
      of computing earnings per share (“EPS”). FSP EITF 03-6-1 is effective for fiscal
      years beginning after December 15, 2008, and interim periods within those
      years. Early application of EITF 03-6-1 is prohibited. It also requires that
      all
      prior-period EPS data be adjusted retrospectively. We have not yet determined
      the effect, if any, of the adoption of this statement on our financial condition
      or results of operations.




16


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




In
      April
      2008, the FASB issued Staff Position FAS 142-3, Determination of the Useful
      Life
      of Intangible Assets (“FSP FAS 142-3”) which amends the factors an entity should
      consider in developing renewal or extension assumptions used to determine the
      useful life of a recognized intangible asset under FAS No. 142, Goodwill and
      Other Intangible Assets (“FAS No. 142”). FSP FAS 142-3 applies to intangible
      assets that are acquired individually or with a group of assets and intangible
      assets acquired in both business combinations and asset acquisitions. It removes
      a provision under FAS No. 142, requiring an entity to consider whether a
      contractual renewal or extension clause can be accomplished without substantial
      cost or material modifications of the existing terms and conditions associated
      with the asset. Instead, FSP FAS 142-3 requires that an entity consider its
      own
      experience in renewing similar arrangements. An entity would consider market
      participant assumptions regarding renewal if no such relevant experience exists.
      FSP FAS 142-3 is effective for year ends beginning after December 15, 2008
      with
      early adoption prohibited. We have not yet determined the effect, if any, of
      the
      adoption of this statement on our financial condition or results of
      operations.





In
      March 2008, the FASB issued SFAS 161, “Disclosures about Derivative
      Instruments and Hedging Activities”. The new standard is intended to improve
      financial reporting about derivative instruments and hedging activities by
      requiring enhanced disclosures to enable investors to better understand their
      effects on an entity’s financial position, financial performance, and cash
      flows. It is effective for financial statements issued for fiscal years and
      interim periods beginning after November 15, 2008, with early application
      encouraged. The Company is currently evaluating the impact of adopting SFAS
      161
      on its consolidated financial statements.





In
      February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
      Derivative Instruments and Hedging Activities”, and SFAS No. 140, “Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities”. SFAS No. 155, permits fair value re-measurement for any hybrid
      financial instrument that contains an embedded derivative that otherwise would
      require bifurcation, clarifies which interest-only strips and principal-only
      strips are not subject to the requirements of SFAS No. 133, establishes a
      requirement to evaluate interest in securitized financial assets to identify
      interests that are freestanding derivatives or that are hybrid financial
      instruments that contain an embedded derivative requiring bifurcation, clarifies
      that concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
      qualifying special-purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. This statement is effective for all financial instruments acquired
      or issued after the beginning of the Company’s first fiscal year that begins
      after September 15, 2006. The adoption of this statement did not have a material
      impact on the Company’s financial position or results of
      operations.





In
      March
      2006 FASB issued SFAS 156 “Accounting for Servicing of Financial Assets” this
      Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing
      of Financial Assets and Extinguishments of Liabilities, with respect to the
      accounting for separately recognized servicing assets and servicing liabilities.
      This Statement:





·
            Requires
                an entity to recognize a servicing asset or servicing liability each
                time
                it undertakes an obligation to service a financial asset by entering
                into
                a servicing contract.·
            Requires
                all separately recognized servicing assets and servicing liabilities
                to be
                initially measured at fair value, if practicable.·
            Permits
                an entity to choose 'Amortization method' or ‘Fair value measurement
                method’ for each class of separately recognized servicing assets and
                servicing liabilities.·
            At
                its initial adoption, permits a one-time reclassification of
                available-for-sale securities to trading securities by entities with
                recognized servicing rights, without calling into question the treatment
                of other available-for-sale securities under Statement 115, provided
                that
                the available-for-sale securities are identified in some manner as
                offsetting the entity's exposure to changes in fair value of servicing
                assets or servicing liabilities that a servicer elects to subsequently
                measure at fair value.


·
            Requires
                separate presentation of servicing assets and servicing liabilities
                subsequently measured at fair value in the statement of financial
                position
                and additional disclosures for all separately recognized servicing
                assets
                and servicing liabilities. An entity should adopt this Statement
                as of the
                beginning of its first fiscal year that begins after September 15,
                2006.





The
      adoption of this statement did not have a material impact on the Company’s
      financial position or results of operations.


17


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




In
      June
      2006, the Financial Accounting Standards Board (“FASB”) ratified the provisions
      of Emerging Issues Task Force (“EITF”) Issue No. 06-3, “How Taxes Collected from
      Customers and Remitted to Governmental Authorities Should Be Presented in the
      Income Statement (That Is, Gross versus Net Presentation).” EITF Issue No. 06-3
      requires that the presentation of taxes within revenue-producing transactions
      between a seller and a customer, including but not limited to sales, use, value
      added, and some excise taxes, should be on either a gross (included in revenue
      and cost) or a net (excluded from revenue) basis. In addition, for any such
      taxes that are reported on a gross basis, a company should disclose the amounts
      of those taxes in interim and annual financial statements for each period for
      which an income statement is presented if those amounts are significant. The
      disclosure of those taxes can be done on an aggregate basis. EITF Issue No.
      06-3
      is effective for fiscal years beginning after December 15, 2006, which will
      be
      the Company’s fiscal 2008. The adoption of EITF Issue No. 06-3 did not have a
      material impact on the Company’s consolidated results of operations or financial
      position.





In
      July
      2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
      Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
      company should recognize, measure, present and disclose in its financial
      statements uncertain tax positions that the company has taken or expects to
      take
      on a tax return (including a decision whether to file or not to file a return
      in
      a particular jurisdiction). The accounting provisions of FIN No. 48 are
      effective for fiscal years beginning after December 15, 2006. The adoption
      of
      this Interpretation had no impact on the Company’s financial position or results
      of operations.


In
        September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
        ("SFAS 157"). SFAS 157 defines fair value, establishes a framework and
        gives guidance regarding the methods used for measuring fair value, and expands
        disclosures about fair value measurements. In February 2008, the FASB issued
        FASB Staff Position 157-1, "Application of FASB Statement No. 157 to FASB
        Statement No. 13 and Other Accounting Pronouncements That Address Fair
        Value Measurements for Purposes of Lease Classification or Measurement under
        Statement 13" ("FSP 157-1") and FASB Staff Position 157-2, "Effective Date
        of
        FASB Statement No. 157" ("FSP 157-2"). FSP 157-1 amends SFAS 157 to
        remove certain leasing transactions from its scope. FSP 157-2 delays the
        effective date of SFAS 157 for all non-financial assets and non-financial
        liabilities, except for items that are recognized or disclosed at fair value
        in
        the financial statements on a recurring basis (at least annually), until
        fiscal
        years beginning after November 15, 2008. SFAS 157 is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007, and interim periods within those fiscal years. The Company adopted
        SFAS
        157 effective January 1, 2008 for all financial assets and liabilities as
        required. The adoption of SFAS 157 was not material to the
        Company's financial statements or results of operations.
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
        for Financial Assets and Financial Liabilities — Including an Amendment of FASB
        Statement No. 115,” (“SFAS 159”) which is effective for fiscal years
        beginning after November 15, 2007. SFAS 159 is an elective standard which
        permits an entity to choose to measure many financial instruments and certain
        other items at fair value at specified election dates. Subsequent unrealized
        gains and losses on items for which the fair value option has been elected
        will
        be reported in earnings. The Company has not elected the fair value option
        for
        any assets or liabilities under SFAS 159.
 
 SFAS
        No. 123R, *Share-Based Payment, an Amendment of SFAS No. 123* ,
        was
        issued in December 2004 and was effective as of the beginning of the
        Group’s 2006 fiscal year. SFAS No. 123R requires all share-based payments
        to qualified individuals, including grants of employee stock options, to
        be
        recognized as compensation expense in the financial statements based on their
        grant date fair values.


On
      December 4, 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
      Consolidated Financial Statements (SFAS No. 160). SFAS No. 160 requires all
      entities to report noncontrolling (minority) interests in subsidiaries as equity
      in the consolidated financial statements. The statement establishes a single
      method of accounting for changes in a parent’s ownership interest in a
      subsidiary that do not result in deconsolidation and expands disclosures in
      the
      consolidated financial statements. SFAS No. 160 is effective for fiscal years
      beginning after December 15, 2008 and interim periods within those fiscal years.
      We have not yet determined the impact of the adoption of SFAS No. 160 on our
      consolidated financial statements and footnote disclosures.




On
      December 4, 2007, the FASB issued SFAS No. 141R, Business Combinations (SFAS
      No.
      141R). SFAS No. 141R requires the acquiring entity in a business combination
      to
      recognize all the assets acquired and liabilities assumed, establishes the
      acquisition date fair value as the measurement objective for all assets acquired
      and liabilities assumed, and requires the acquirer to expand disclosures about
      the nature and financial effect of the business combination. SFAS No. 141R
      is
      effective for business combinations for which the acquisition date is on or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. We have not yet determined the impact of the adoption of
      SFAS
      No. 141R on our consolidated financial statements and footnote
      disclosures.





18





**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**t.**
            **Goodwill**





The
      Company has goodwill and other intangible assets **,** costs
      capitalized in connection with the acquisition in June 2008. Goodwill represents
      the excess of costs over the fair value of net assets of businesses acquired.
      Intangible assets with finite useful lives are amortized generally on a
      straight-line basis over the periods benefited, with a useful life of five
      years. Pursuant to Statement of Financial Accounting Standards (SFAS) Number
      142, Goodwill and Other Intangible Assets, goodwill is not amortized, but
      instead is tested for impairment at least annually in accordance with the
      provisions of SFAS Number 142. The impairment test compares the carrying amount
      of the reporting unit to the fair value of the reporting unit.





**u.**
            **Interim
                financial information**





The
      accompanying interim consolidated financial statements that accompany these
      notes are prepared in conformity with U.S. generally accepted accounting
      principles, consistent in all material respects with those applied in our Annual
      Report on Form 10-K for the year ended December 31, 2007. The results of
      operations for the period ended June 30, 2008 are not necessarily indicative
      of
      the operating results for the entire year.





The
      interim financial information is unaudited, but reflects all normal adjustments
      that are, in the opinion of management, necessary to provide a fair statement
      of
      results for the interim periods presented. This interim information should
      be
      read in conjunction with the consolidated financial statements in our Annual
      Report on Form 10-K for the year ended December 31, 2007.




3.  **ACCOUNTS
      RECEIVABLE**





Accounts
      receivable consists of the following:





June
                30,
            
            December
                31,2008
            
            2007Accounts
                receivable-trade
            
            $
            6,904,733
            
            $
            5,239,098Allowance
                for doubtful accounts
            
            
            (1,487,987
            )
            
            (728,265
            )Accounts
                receivable-trade, net
            
            $
            5,416,746
            
            $
            4,510,833





The
      change of the allowance for doubtful debts between the reporting periods, as
      of
      December 31, 2007, and June 30, 2008, is displayed as follows:





June
                30,
            
            December
                31,2008
            
            2007Beginning
                balance
            
            $
            (728,265
            )
            $
            (220,334
            )Provision/Reversal
                during the period
            
            
            (759,722
            )
            
            (507,931
            )Ending
                balance
            
            $
            (1,485,979
            )
            $
            (728,265
            )




19


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




4.  **ADVANCES
      TO SUPPLIERS**





Advances
      to suppliers consist of the following:




June
                30,
            
            December
                31,2008
            
            2007Dengfeng
                Digital
            
            $
            263,551
            
            $
            261,274Baolongda
            
            
            2,395,301
            
            
            -Liangchuan
                Chemical
            
            
            -
            
            
            280,309Guangdong
                Renxin
            
            
            -
            
            
            200,726Kiayi
                Techonology
            
            
            -
            
            
            116,994Yintian
                Chemical
            
            
            471,139
            
            
            411,120Desheng
                Digital
            
            
            13,912,476
            
            
            6,466,384Baoyitong
                Trading
            
            
            2,510,254
            
            
            2,696,980Huaneng
                Ltd
            
            
            243,665
            
            
            1,077,299Shenghang
            
            
            3,026,210
            
            
            949,118Yide
            
            
            3,871,647
            
            
            364,880Ningxia
                Yuanfeng
            
            
            -
            
            
            788,994Others
            
            
            1,486,527
            
            
            777,572$
            28,180,770
            
            $
            14,391,650





The
      above
      amounts are the advances that the Company paid to its suppliers for purchase
      of
      raw material and equipments. The contracts related to these purchases are
      considered to be a part of the Company’s long-term business relationships with
      its suppliers. The contracts do not have specific terms on receipt date for
      the
      purchase or specific terms on refund or repayment.




5.  **INVENTORY**





Inventory
      consists of the following:




June
                30,
            
            December
                31,2008
            
            2007Raw
                material
            
            $
            10,836,274
            
            $
            15,965,784Finished
                goods
            
            
            8,100,786
            
            
            1,486,977Reserve
                for obsolete inventory
            
            
            (106,200
            )
            
            (105,391
            )Inventory,
                net
            
            $
            18,830,860
            
            $
            17,347,370




20


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)


The
        change of the reserve for obsolete inventory between the reporting periods,
        as
        of June 30, 2008 and December 31, 2007, is displayed as
        follows:





June
                30,
            
            December
                31,2008
            
            2007Beginning
                balance
            
            $
            (105,391
            )
            $
            (5,130
            )Provision/Reversal
                during the period
            
            
            -
            
            
            (100,261
            )Foreign
                exchange adjustment
            
            
            (809
            )
            
            -Ending
                balance
            
            $
            (106,200
            )
            $
            (105,391
            )




6.  **DUE
      FROM RELATED PARTIES**





Due
      from
      (Due to) related parties consist of the following:





June
                30,
            
            December
                31,2008
            
            2007NIVS
                Investment (SZ) Co., Ltd.
            
            $
            (231,335
            )
            $
            773,234Zhongkena
                Technology Development
            
            
            -
            
            
            380,470Xentsan
                Technology (SZ) Co., Ltd.
            
            
            -
            
            
            356,452Hyundai
                Lighting & Electronic (Int'l) Holding
            
            
            4,195
            
            
            703,214NIVS
                Information & Technology (HZ) Co., Ltd
            
            
            7,298
            
            
            -Hyundai
                Light & Electric (HZ) Co., Ltd.
            
            
            7,887,268
            
            
            -Total
            
            $
            7,669,434
            
            $
            2,213,370





The
      above
      advances to related parties are unsecured, non-interest bearing and no fixed
      repayment date.





7.  **PROPERTY
      AND EQUIPMENT**





Property
      and equipments consist of the following:




June
                30,
            
            December
                31,2008
            
            2007Building
            
            $
            16,572,751
            
            $
            15,567,497Molds
            
            
            28,567,757
            
            
            26,834,921Machinery
                and Equipments
            
            
            9,107,938
            
            
            5,762,197Electronic,
                office and other equipments
            
            
            637,888
            
            
            590,063Automobiles
            
            
            899,112
            
            
            844,218Accumulated
                Depreciation
            
            
            (5,587,595
            )
            
            (2,974,394
            )Property
                and equipments, net
            
            $
            50,197,852
            
            $
            46,624,502




21





**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




The
      depreciation expenses are $2,336,727 and $274,909 for the six months ended
      June
      30, 2008 and 2007, respectively.





June
                30,
            
            June
                30,2008
            
            2007Cost
                of sales
            
            $
            2,175,519
            
            $
            141,027Operating
                expense
            
            
            161,209
            
            
            133,882Total
            
            $
            2,336,727
            
            $
            274,909





**8.**  **INTANGIBLE
      ASSETS**





Intangible
      assets consist of the following:




June 30,
            
            December 31,2008
            
            2007Land
                use rights
            
            $
            2,743,857
            
            $
            2,577,423Computer
                software use rights
            
            
            4,800
            
            
            4,509Accumulated
                amortization
            
            
            (410,288
            )
            
            (352,958
            )Intangible
                assets, net
            
            $
            2,338,369
            
            $
            2,228,974


The
        amortization expenses are $33,488 and $30,624 for the six months ended June
        30,
        2008 and 2007, respectively.




**9.**  **SHORT
      TERM LOANS**





Short
      term loans consist of the following:





June
                30,
            
            December
                31,2008
            
            2007Construction
                Bank
            
            $
            13,940,170
            
            $
            12,326,110Defutai
                Bank
            
            
            2,154,456
            
            
            2,023,773Agricultural
                Bank
            
            
            2,667,966
            
            
            4,590,011.10Nanyian
                Bank
            
            
            7,967,776
            
            
            7,421,508.58Henshen
                Bank
            
            
            212,368
            
            
            541,664.54Development
                Bank
            
            
            2,918,651
            
            
            1,742,504.22Dongya
                Bank
            
            
            1,735,808
            
            
            -$
            31,597,195
            
            $
            28,645,571




The
      above
      outstanding short term loans are used primarily for general working capital
      purposes. Except the short term loan from Wanlizhou Electronic Limited which
      has
      non-interest bearing and is unsecured, the others are recurring bank loans
      which
      carry annual interest rates of 4.87%~8.76% with maturity dates ranging from
      30
      days to one year. These loans are either non-secured or secured by the Company’s
      accounts receivable, building and land-use rights. The annual interest rates
      are
      shown as follows:


22


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




June
                30,
            
            December
                31,2008
            
            2007Construction
                Bank
            
            
            6.84
            %
            
            6.84
            %Defutai
                Bank
            
            
            4.92
            %
            
            4.92
            %Agricultural
                Bank
            
            
            7.20
            %
            
            7.20
            %Nanyian
                Bank
            
            
            6.84
            %
            
            6.84
            %Henshen
                Bank
            
            
            8.76
            %
            
            8.76
            %Development
                Bank
            
            
            6.48
            %
            
            6.48
            %





**10.**  **LONG
      TERM BANK LOAN**





Long
      term
      bank loans consist of the following:





June
                30,
            
            December
                31,2008
            
            2007Shenzhen
                Pinan Bank,
            
            $
            1,459,500
            
            $
            3,084,685starting
                12/08/2004 for 30 months, 1 year renewableat
                maturity, 7.85% per annum, secured by land-use rights,
              plant
                and buildingsAgricultural
                Bank of China,
            
            
            1,094,625
            
            
            1,370,971starting
                09/26/2005 for 2 years, 1 year renewable at maturity,5.76%
                per annum, secured by buildings.$
            2,554,125
            
            $
            4,455,656




**11.**  **BANK
      NOTES PAYABLE AND RESTRICTED CASH**





Bank
      notes payable consist of the following:





June
                30,
            
            December
                31,2008
            
            2007Shenzhen
                Pingan Bank
            
            $
            3,956,909
            
            $
            4,112,913Shenzhen
                Development Bank
            
            
            9,225,777
            
            
            2,286,780$
            13,182,685
            
            $
            6,399,693





The
      bank
      notes have no interest bearing. Additionally, the bank charges a 1⁄2 of 1 percent
      fee on the amounts borrowed by the Company.


23


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




The
      terms
      of the bank notes payable require the Company to maintain a deposit at the
      bank
      to secure the notes as follows:





June
                31,
            
            December
                31,2008
            
            2007Construction
                Bank
            
            $
            51,538.04
            
            $
            -Henshen
                Bank
            
            
            217,107.92
            
            
            749,373Shenzhen
                Development Bank
            
            
            1,854,788.06
            
            
            1,233,874Shenzhen
                Pingan Bank
            
            
            1,715,251.31
            
            
            -$
            3,838,685
            
            $
            1,983,247




**12.**  **DUE
      TO SHAREHOLDER**




Due
      to
      shareholder consists of the following:





June
                30,
            
            December
                31,2008
            
            2007Due
                to Mr. Li Tianfu
            
            $
            9,843,657
            
            $
            11,008,770




The
      above
      amounts are due to Mr. Li Tianfu. These amounts are non-secured, no interest
      bearing, and are considered to be long-term with no fixed repayment
      date.




**13.**  **OTHER
      GENERAL AND ADMINISTRATIVE**





For
      the
      six months ended June 30, 2008 and 2007 the amount of other general and
      administrative expenses mainly composed of the following events:




June
                30,
            
            June
                30,2008
            
            2007Audit
                and accounting
            
            $
            7,783
            
            $
            33,488Legal
                fee
            
            
            18,543
            
            
            -Office
                expenses
            
            
            593,622
            
            
            362,502Salary
                and wages
            
            
            275,733
            
            
            443,306Consulting
            
            
            56,580
            
            
            86,330Rent
                & Utilities
            
            
            81,065
            
            
            48,024Others
            
            
            381
            
            
            127,678$
            1,033,707
            
            $
            1,101,328




24





**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**14.**  **STATUTORY
      RESERVES**





As
      stipulated by the relevant laws and regulations for enterprises operating in
      PRC, the subsidiaries of the Company are required to make annual appropriations
      to a statutory surplus reserve fund. Specifically, the subsidiaries of the
      Company are required to allocate 10% of their profits after taxes, as determined
      in accordance with the PRC accounting standards applicable to the subsidiaries
      of the Company, to a statutory surplus reserve until such reserve reaches 50%
      of
      the registered capital of the subsidiaries of the Company.




**15.**  **INCOME
      TAX**





Niveous
      is registered in BVI and pays no taxes.





NIVS
      HK
      is a holding company registered in Hong Kong and has no operating profit for
      tax
      liabilities.





NIVS
      PRC
      is registered in PRC and has tax advantages granted by local government for
      corporate income taxes and sales taxes commencing April 6, 2004. NIVS PRC is
      entitled to have a full tax exemption for the first two profitable years,
      followed by a 50% reduction on normal tax rate of 24% for the following three
      consecutive years.





NIVS
      Shenzhen serves as a branch company of NIVS PRC. The assessment of its tax
      liabilities is combined with that of NIVS PRC.





The
      tax
      authority of the PRC Government conducts periodic and ad hoc tax filing reviews
      on business enterprises operating in the PRC after those enterprises had
      completed their relevant tax filings, hence the Company’s tax filings may not be
      finalized. It is therefore uncertain as to whether the PRC tax authority may
      take different views about the Company’s tax filings which may lead to
      additional tax liabilities.





The
      provision for taxes on earnings consisted of:




December
                  31,2007
              
              2006
              
              2005Current
                  income taxes expenses:PRC
                  Enterprises Income Tax
              
              $
              1,268,963
              
              $
              752,552
              
              $
              -United
                  States Federal Income Tax
              
              
              -
              
              
              -
              
              
              -Total
              
              $
              1,268,963
              
              $
              752,552
              
              $
              -





A
      reconciliation between the income tax computed at the U.S. statutory rate and
      the Group’s provision for income tax is as follows:


December
                  31,2007
              
              2006
              
              2005U.S.
                  statutory rate
              
              
              34
              %
              
              34
              %
              
              34
              %Foreign
                  income not recognized in the U.S.
              
              
              -34
              %
              
              -34
              %
              
              -34
              %PRC
                  preferential enterprise income tax rate
              
              
              24
              %
              
              24
              %
              
              24
              %Tax
                  holiday and relief granted to the Subsidiary
              
              
              -12
              %
              
              -12
              %
              
              -24
              %Provision
                  for income tax
              
              
              12
              %
              
              12
              %
              
              -


25


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**16.**  **COMMITMENTS
      AND** **CONTINGENCIES**





(1)
            The
                Company and its subsidiaries have entered into several tenancy agreements
                for the lease of factory premises and staff quarters. The Company’s
                commitment for minimum lease payments under these non-cancelable
                operating
                leases for the next five years and thereafter is as
                follows:





Year
                Ended December 31, 2007For
                the year 2008
            
            $
            179,093For
                the year 2009
            
            
            179,093For
                the year 2010
            
            
            179,093For
                the year 2011
            
            
            132,205For
                the year 2012
            
            
            41,483Total
            
            $
            710,966




(2)
            In
                2007, NIVS PRC was involved in litigation with KONINKLIJKE PHILIPS
                ELECTRONICS N.V. (“KONINKLIJKE”). KONINKLIJKE brought suit in the
                Provincial Court in PRC alleging that NIVS PRC violated its trade-mark
                use
                right. With the Court intermediation, KONINKLIJKE withdrew the accusation
                and an extracurial settlement was reached in April 2008. NIVS PRC
                agreed
                to pay KONINKLIJKE RMB300,000 (converted to US$41,129 as at 2007
                year-end
                rate 7.29410:1) to settle the claim.





**17.**  **OPERATING
      RISK**





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.




**18.**  **CONCENTRATION
      OF CREDIT RISK**





A
      significant portion of the Company’s cash at June 30, 2008 and December 31, 2007
      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.




The
      Company operates principally in the PRC and grants credit to its customers
      in
      this geographic region. Although the PRC is economically stable, it is always
      possible that unanticipated events in foreign countries could disrupt the
      Company’s operations.


26


**Niveous
      Holding Company Limited and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


(Amounts
      and disclosures at and for the three and six months ended June 30, 2008 and
      2007
      are unaudited)




**19.
      SUBSEQUENT EVENTS**




In
      June
      2008, Niveous entered into entered into a share exchange agreement with SRKP
      19,
      Inc., a Delaware corporation, and all of the shareholders of Niveous. Pursuant
      to the exchange agreement, as it was amended (the “Exchange Agreement”), SRKP 19
      agreed to issue an aggregate of 27,546,667 shares of its common stock in
      exchange for all of the issued and outstanding securities of Niveous (the “Share
      Exchange”). The Share Exchange closed in July 2008. Upon the closing of the
      Share Exchange on July 25, 2008, SRKP 19 issued an aggregate of 27,546,667
      shares of its common stock to the shareholders of Niveous and their designees
      in
      exchange for all of the issued and outstanding securities of Niveous.
      Immediately after the closing of the Share Exchange, SRKP 19 changed its
      corporate name from “SRKP 19, Inc.” to “NIVS IntelliMedia Technology Group,
      Inc.” For accounting purposes, the Share Exchange will be treated as a reverse
      acquisition.





Concurrently
      with the close of the Share Exchange, NIVS IntelliMedia Technology Group, Inc.
      conducted an initial closing of a private placement transaction pursuant to
      which NIVS IntelliMedia Technology Group, Inc. sold an aggregate of 5,239,460
      shares of common stock at $1.80 per share, for gross proceeds of approximately
      $9.4 million. On August 12, 2008, NIVS IntelliMedia Technology Group, Inc.
      conducted a second and final closing of the private placement pursuant to which
      NIVS IntelliMedia Technology Group, Inc. sold an aggregate of 1,304,587 shares
      of common stock at $1.80 per share, for gross proceeds of approximately $2.3
      million, of which $1.3 million was represented by subscription receivables.
      Accordingly, NIVS IntelliMedia Technology Group, Inc. sold a total of 6,544,047
      shares of common stock in the private placement for aggregate gross proceeds
      of
      $11.8. WestPark Capital, Inc., the placement agent for the Private Placement,
      was paid a commission equal to 6.5% of the gross proceeds from the financing,
      in
      addition to a $130,000 success fee for the Share Exchange, for an aggregate
      fee
      of approximately $896,000. NIVS IntelliMedia Technology Group, Inc. agreed
      to
      file a registration statement covering the common stock sold in the Private
      Placement within 30 days of the closing of the Share Exchange.


27







**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**




The
      following discussion relates to a discussion of the financial condition and
      results of operations of NIVS IntelliMedia Technology Group, Inc. (the
“Company”) and its wholly-owned subsidiary Niveous Holding Company Limited
      (referred to herein as “NIVS BVI”), and its subsidiaries, including its
      97.5%-owned subsidiary NIVS (Huizhou) Audio & Video Tech. Co., Ltd., a
      company organized under the laws of the PRC (“NIVS PRC”). This management’s
      discussion and analysis of financial condition and results of operations should
      be read in conjunction with its financial statements and the related notes,
      and
      the other financial information included in this information statement.





**Forward-Looking
      Statements**





This
      report contains forward-looking statements. The words “anticipated,” “believe,”
“expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and
      similar expressions are intended to identify forward-looking statements. These
      statements include, among others, information regarding future operations,
      future capital expenditures, and future net cash flow. Such statements reflect
      our management’s current views with respect to future events and financial
      performance and involve risks and uncertainties, including, without limitation,
      general economic and business conditions, changes in foreign, political, social,
      and economic conditions, regulatory initiatives and compliance with governmental
      regulations, the ability to achieve further market penetration and additional
      customers, and various other matters, many of which are beyond our control.
      Should one or more of these risks or uncertainties occur, or should underlying
      assumptions prove to be incorrect, actual results may vary materially and
      adversely from those anticipated, believed, estimated or otherwise indicated.
      Consequently, all of the forward-looking statements made in this filing are
      qualified by these cautionary statements and there can be no assurance of the
      actual results or developments.




**SRKP
      19, INC.**





Plan
      of Operation. SRKP 19, Inc. incurred a net loss of $(13,302) for the six months ended June
      30,
      2008 and $(15,441) for the corresponding period in 2007.  It is
      management’s assertion that these circumstances may hinder the Company’s ability
      to continue as a going concern.  The Company has not realized any revenues
      from operations since inception, and its plan of operation for the next twelve
      months shall be to continue its efforts to locate suitable acquisition
      candidates. See
      below
      at “Management’s Discussion and Analysis of Financial Condition and Results of
      Operations-- NIVS INTELLIMEDIA TECHNOLOGY GROUP, INC.” for information regarding
      the Share Exchange transaction closed on July 25, 2008.





Liquidity
      and Capital Resources. As
      of June 30, 2008, the Company had assets equal to $2,555 consisting exclusively
      of cash.  The Company can provide no assurance that it can continue to
      satisfy its cash requirements for at least the next twelve months.




Results
      of Operations. The Company has not conducted any active operations since inception, except
      for
      its efforts to locate suitable acquisition candidates.  No revenue has been
      generated by the Company from January 3, 2007 (inception) to June 30,
      2008.  It is unlikely the Company will have any revenues unless it is able
      to effect an acquisition of, or merger with, an operating company, of which
      there can be no assurance.




**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**





**Overview**





Through
      NIVS PRC, we engage in the development, production and sales of audio and video
      equipment, and set-top box products. In recent years, we have spent substantial
      resources on research and development to establish intelligent video and audio
      products (meaning products incorporating Chinese speech interactive technology)
      which we believe should help us diversify our revenue streams in addition to
      adding a higher margin product line. We combine our Chinese speech interactive
      technology with traditional video and audio products to form an intelligent
      audio visual system consisting of the audio system, TV set and DVB. Our audio
      products have a solid reputation and established brand name in the PRC, while
      abroad our products have been named among the most popular brands on consumer
      websites for several years.





We
      sell
      our products to wholesalers and distributors of electronic products. For export
      sales and OEM production, we produce based on customer demand and orders. For
      products with our own brand names, customers generally do not provide us with
      any long-term commitments. As a result it is necessary for us to estimate,
      based
      in part on non-binding estimates by our customers and potential customers,
      the
      requirements for our products. In addition, in some instances, we develop
      products based on anticipated customer demand with no assurance that we will
      receive the anticipated orders. To the extent that we do not receive the
      anticipated orders or that our customers require products in greater quantities
      than anticipated, our revenue and margins will be affected.


28


A
      small
      number of customers account for a very significant percentage of our revenue.
      For the six months ended June 30, 2008, we had eight customers that each
      accounted for at least 5% of the revenues that we generated, with one customer
      accounting for 11% of our revenue. These eight customers accounted for a total
      of approximately 65% of our revenue for that period. Similarly, during the
      year
      ended December 31, 2007, we had five customer that generated revenues of at
      least 5% of our revenues, with one customer accounting for 13% of our revenue.
      These five customers accounted for a total of approximately 38% of our revenue
      for the year ended December 31, 2007. For the year ended December 31, 2006,
      we
      had four customers that accounted for at least 5% of revenue, and these three
      customers accounted for approximately 49% of our revenue. Unless we replace
      a
      customer, the loss of any of these customers could have a material adverse
      effect upon our revenue and net income. We have long term supply contracts
      with
      stable supply source. This practice reduces our risk on shortage of raw material
      supply. But the purchase price fluctuation will still affect our production
      cost
      and gross margin.





On
      June
      27, 2008, SRKP 19, Inc., a Delaware corporation (“SRKP 19”), entered into a
      share exchange agreement, as amended on July 25, 2008 (the “Exchange
      Agreement”), with NIVS BVI and its shareholders, pursuant to which these
      shareholders would transfer all of the issued and outstanding securities of
      NIVS
      BVI to SRKP 19 in exchange for 27,546,667 shares of SRKP 19’s common stock. On
      July 25, 2008, the Share Exchange closed and we became a wholly-owned subsidiary
      of SRKP 19, which immediately changed its name to “NIVS IntelliMedia Technology
      Group, Inc.” A total of 27,546,667 shares were issued to the former shareholders
      of NIVS BVI and their designees.





In
      addition, on July 25, 2008, concurrently with the close of the Share Exchange,
      we conducted an initial closing of a private placement transaction pursuant
      to
      which we sold an aggregate of 5,239,460 shares of common stock at $1.80 per
      share, for gross proceeds of approximately $9.4 million. On August 12, 2008,
      we
      conducted a second and final closing of the private placement pursuant to which
      we sold an additional 1,304,587 shares of common stock at $1.80 per share for
      gross proceeds of approximately $2.3 million, of which $1.3 million was
      represented by subscription receivables. Accordingly, we sold a total of
      6,544,047 shares of common stock in the private placement for aggregate gross
      proceeds of approximately $11.8 million (the “Private Placement”). WestPark
      Capital, Inc., the placement agent for the Private Placement, was paid a
      commission equal to 6.5% of the gross proceeds from the financing, in addition
      to a $130,000 success fee for the Share Exchange, for an aggregate fee of
      approximately $896,000.





We
      entered into a consulting agreement with Nascent Value LLC (“Nascent”) pursuant
      to which Nascent will provide us with business consulting and investor relation
      services. As consideration for entering into the agreement and compensation
      for
      Nascent Value’s services under the agreement, we issued 425,000 shares of our
      common stock upon the closing of the Share Exchange. In connection with the
      issuance of the shares of common stock, we expect to recognize a charge to
      operations in an amount equal to approximately $765,000, which is derived from
      valuing each share at $1.80, the price at which shares of our common stock
      were
      sold in the Private Placement. We also agreed to pay Nascent $6,000 per month
      for their services.





**Critical
      Accounting Policies and Estimates**





The
      discussion and analysis of our financial condition and results of operations
      is
      based upon our financial statements which have been prepared in accordance
      with
      accounting principles generally accepted in the United States. The preparation
      of these financial statements requires us to make estimates and judgments that
      affect the reported amounts of assets and liabilities. On an on-going basis,
      we
      evaluate our estimates including the allowance for doubtful accounts, the
      salability and recoverability of inventory, income taxes and contingencies.
      We
      base our estimates on historical experience and on other assumptions that we
      believes to be reasonable under the circumstances, the results of which form
      our
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





We
      cannot
      predict what future laws and regulations might be passed that could have a
      material effect on our results of operations. We assess the impact of
      significant changes in laws and regulations on a regular basis and update the
      assumptions and estimates used to prepare our financial statements when we
      deem
      it necessary.





***Revenue
      recognition.*** We
      recognize revenue from the sales of products. 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
      collectivity is reasonably assured. Sales revenue is presented net of value
      added tax (VAT), sales rebates and returns. No return allowance is made as
      product returns are insignificant based on historical experience.





***Allowance
      for doubtful accounts.*** In
      estimating the collectability of accounts receivable we analyze historical
      write-offs, changes in our internal credit policies and customer concentrations
      when evaluating the adequacy of our allowance for doubtful accounts. Differences
      may result in the amount and timing of expenses for any period if we make
      different judgments or uses difference estimates. Our accounts receivable
      represent a significant portion of our current assets and total assets. Our
      realization on accounts receivable, expressed in terms of United States dollars
      may be affected by fluctuations in currency rates since the customer’s currency
      is frequently a currency other than United States dollars.


29


***Inventories.*** Inventories
      comprise raw materials and finished goods are stated at the lower of cost or
      market. Substantially all inventory costs are determined using the weighted
      average basis. Costs of finished goods include direct labor, direct materials,
      and production overhead before the goods are ready for sale. Inventory costs
      do
      not exceed net realizable value.





***Taxation.*** Under
      the
      tax laws of PRC, we have had tax advantages granted by local government for
      corporate income taxes and sales taxes commencing April 6, 2004. We have been
      entitled to have a full tax exemption for the first two profitable years,
      followed by a 50% reduction on normal tax rate of 24% for the following three
      consecutive years. On March 16, 2007, the National People’s Congress of China
      enacted a new PRC Enterprise Income Tax Law, under which foreign invested
      enterprises and domestic companies will be subject to enterprise income tax
      at a
      uniform rate of 25%. The new law became effective on January 1, 2008. During
      the
      transition period for enterprises established before March 16, the tax rate
      will
      be gradually increased starting in 2008 and be equal to the new tax rate in
      2012. We believe that our profitability will be negatively affected in the
      near
      future as a result of the new EIT Law. ****





**Recently
      Issued Accounting Pronouncements**





On
      December 4, 2007, the FASB issued SFAS No. 160, Noncontrolling interest in
      Consolidated Financial Statements (SFAS No. 160). SFAS No. 160 requires all
      entities to report noncontrolling (minority) interests in subsidiaries as equity
      in the consolidated financial statements. The statement establishes a single
      method of accounting for changes in a parent’s ownership interest in a
      subsidiary that do not result in deconsolidation and expands disclosures in
      the
      consolidated financial statements. SFAS No. 160 is effective for fiscal years
      beginning after December 15, 2008 and interim periods within those fiscal years.
      We have not yet determined the impact of the adoption of SFAS No. 160 on our
      consolidated financial statements and footnote disclosures.





On
      December 4, 2007, the FASB issued SFAS No. 141R, Business Combinations (SFAS
      No.
      141R). SFAS No. 141R requires the acquiring entity in a business combination
      to
      recognize all the assets acquired and liabilities assumed, establishes the
      acquisition date fair value as the measurement objective for all assets acquired
      and liabilities assumed, and requires the acquirer to expand disclosures about
      the nature and financial effect of the business combination. SFAS No. 141R
      is
      effective for business combinations for which the acquisition date is on or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. We have not yet determined the impact of the adoption of
      SFAS
      No. 141R on our consolidated financial statements and footnote
      disclosures.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements”, which establishes a framework for
      reporting fair value and expands disclosures about fair value measurements.
      SFAS
      No. 157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007 and interim periods within those fiscal years. The
      adoption of this standard had no impact on the Company’s financial position or
      results of operations.





In
      March
      2008, the FASB issued SFAS 161, “ *Disclosures
      about Derivative Instruments and Hedging Activities* ” *.* The
      new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial position, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008, with early
      application encouraged. The Company is currently evaluating the impact of
      adopting SFAS 161 on its consolidated financial statements.


In
        April
        2008, the FASB issued Staff Position FAS 142-3, Determination of the Useful
        Life
        of Intangible Assets (“FSP FAS 142-3”) which amends the factors an entity should
        consider in developing renewal or extension assumptions used to determine
        the
        useful life of a recognized intangible asset under FAS No. 142, Goodwill
        and
        Other Intangible Assets (“FAS No. 142”). FSP FAS 142-3 applies to intangible
        assets that are acquired individually or with a group of assets and intangible
        assets acquired in both business combinations and asset acquisitions. It
        removes
        a provision under FAS No. 142, requiring an entity to consider whether a
        contractual renewal or extension clause can be accomplished without substantial
        cost or material modifications of the existing terms and conditions associated
        with the asset. Instead, FSP FAS 142-3 requires that an entity consider its
        own
        experience in renewing similar arrangements. An entity would consider market
        participant assumptions regarding renewal if no such relevant experience
        exists.
        FSP FAS 142-3 is effective for year ends beginning after December 15, 2008
        with
        early adoption prohibited. We have not yet determined the effect, if any,
        of the
        adoption of this statement on our financial condition or results of operations.
 
 In
        June
        2008, the Financial Accounting Standards Board (“FASB”) issued FSP No. EITF
        03-6-1, Determining Whether Instruments Granted in Share-Based Payment
        Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1
        concludes that unvested share-based payment awards that contain rights to
        receive non-forfeitable dividends or dividend equivalents are participating
        securities, and thus, should be included in the two-class method of computing
        earnings per share (“EPS”). FSP EITF 03-6-1 is effective for fiscal years
        beginning after December 15, 2008, and interim periods within those years.
        Early
        application of EITF 03-6-1 is prohibited. It also requires that all prior-period
        EPS data be adjusted retrospectively. We have not yet determined the effect,
        if
        any, of the adoption of this statement on our financial condition or results
        of
        operations.


**Recently
      Adopted Accounting Pronouncements**





In
      July
      2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
      Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
      company should recognize, measure, present and disclose in its financial
      statements uncertain tax positions that the company has taken or expects to
      take
      on a tax return (including a decision whether to file or not to file a return
      in
      a particular jurisdiction). The accounting provisions of FIN No. 48 are
      effective for fiscal years beginning after December 15, 2006. The adoption
      of
      this Interpretation had no impact on the Company’s financial position or results
      of operations.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
      157"). SFAS 157 defines fair value, establishes a framework and gives guidance
      regarding the methods used for measuring fair value, and expands disclosures
      about fair value measurements. In February 2008, the FASB issued FASB Staff
      Position 157-1, "Application of FASB Statement No. 157 to FASB Statement No.
      13
      and Other Accounting Pronouncements That Address Fair Value Measurements for
      Purposes of Lease Classification or Measurement under Statement 13" ("FSP
      157-1") and FASB Staff Position 157-2, "Effective Date of FASB Statement No.
      157" ("FSP 157-2"). FSP 157-1 amends SFAS 157 to remove certain leasing
      transactions from its scope. FSP 157-2 delays the effective date of SFAS 157
      for
      all non-financial assets and non-financial liabilities, except for items that
      are recognized or disclosed at fair value in the financial statements on a
      recurring basis (at least annually), until fiscal years beginning after November
      15, 2008. SFAS 157 is effective for financial statements issued for fiscal
      years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company adopted SFAS 157 effective January 1, 2008 for all financial
      assets and liabilities as required. The adoption of SFAS 157 was not material
      to
      the Company's financial statements or results of operations.  30


In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities — Including an Amendment of FASB
      Statement No. 115,” (“SFAS 159”) which is effective for fiscal years beginning
      after November 15, 2007. SFAS 159 is an elective standard which permits an
      entity to choose to measure many financial instruments and certain other items
      at fair value at specified election dates. Subsequent unrealized gains and
      losses on items for which the fair value option has been elected will be
      reported in earnings. The Company has not elected the fair value option for
      any
      assets or liabilities under SFAS 159.





**Results
      of Operations**





***Three
      months ended June 30, 2008 and 2007***





Revenues,
      which consist of sales of our products, were $24.9 million for three months
      ended June 30, 2008, an increase of $7.3 million, or 41%, compared to $17.6
      million for the same period in 2007. The increase in revenue was attributed
      mainly to the increased demand for our products, which we believe is a result
      of
      our market expansion efforts. The increase of revenue was also due to the new
      sales of digital equipment and LCD products, as well as price increases of
      some
      of our audio system products.





Cost
      of
      sales, which include raw material, labor and manufacturing overhead, were $19.2
      million for three months ended June 30, 2008, an increase of $5.5 million,
      or
      40%, compared to $13.7 million for the same period in 2007. This increase in
      cost of sales was caused by an increase in sales and was consistent with the
      increase in the net revenue. As a percentage of the net revenue, cost of sales
      for the three months ended June 30, 2008 and 2007 were 77% and 78%,
      respectively.





Gross
      profit for the three months ended June 30, 2008 was $5.7 million, or 23% of
      revenues, compared to $4.0 million, or 23% of revenues, for the comparable
      period in 2007. Management considers gross profit to be a key performance
      indicator in managing our business. Gross profit margins are a factor of cost
      of
      sales, product mix and product demand.





Selling
      expenses, which mainly include marketing, shipping, insurance, wage and other
      expenses, were $0.7 million for three months ended June 30, 2008, a decrease
      of
      $0.1 million, or 13%, compared to $0.8 million for the same period in 2007.
      The
      decrease was primarily due to an implementation of cost control in advertising
      and marketing activities.




Research
      and development expenses, which were approximately $0.3 million for the three
      months ended June 30, 2008, an increase of approximately $0.2 million, or 200%,
      compared to $0.1 million for the same period in 2007. We believe that our focus
      on research and development contributed to the increase in our total sales.
      In
      the future, we expect to continue to increase our research and development
      efforts and to enable us to manufacture wider lines of products.





General
      and administrative expenses, which include wage, benefit, bad debts, utility,
      consulting, professional fee, various taxes and levies and other expenses,
      were
      $0.3 million for three months ended June 30, 2008, a decrease of $1.0 million,
      or 77%, compared to $1.3 million for the same period in 2007. The decrease
      was
      primarily a result of a decrease of bad debt reserves, professional fees and
      various tax and levies. We expect our general and administrative expenses to
      increase as a result of professional fees incurred as a result of being a
      publicly reporting company in the United States.





Interest
      expenses were $0.5 million and $0.4 million for the three months ended June
      30,
      2008 and 2007, respectively. The increase was due to new short-term and
      long-term bank loans during the three months ended June 30, 2008.





Income
      tax provisions for the three months ended June 30, 2008 were approximately
      $0.5
      million, as compared to approximately $0.2 million for the three months ended
      June 30, 2007. The increase was primarily due to an increase in the taxable
      income for the three months ended June 30, 2008. NIVS PRC is registered in
      PRC
      and has had tax advantages granted by local government for corporate income
      taxes and sales taxes commencing April 6, 2004. NIVS PRC has been entitled
      to
      have a full tax exemption for the first two profitable years, followed by a
      50%
      reduction on normal tax rate of 24% for the following three consecutive years.
      Our effective income tax rates for the three months ended June 30, 2008 and
      June
      30, 2007 were 12.5% and 12%, respectively. On March 16, 2007, the National
      People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under
      which foreign invested enterprises and domestic companies will be subject to
      enterprise income tax at a uniform rate of 25%. The new law became effective
      on
      January 1, 2008. During the transition period for enterprises established before
      March 16, the tax rate will be gradually increased starting in 2008 and be
      equal
      to the new tax rate in 2012. We believe that our profitability will be
      negatively affected in the near future as a result of the new EIT
      Law.


31


We
      had
      net income of $3.4 million for three months ended June 30, 2008, an increase
      of
      $2.2 million, or 183%, compared to $1.2 million for the same period in
      2007.





***Six
      months ended June 30, 2008 and 2007***





Revenues
      were $51.6 million for six months ended June 30, 2008, an increase of $17.7
      million, or 52%, compared to $33.9 million for the same period in 2007. The
      increase in revenue was attributed mainly to the increased demand for our
      products, which we believe is a result of our market expansion efforts. The
      increase of revenue was also due to the new sales of digital equipment and
      LCD
      products, as well as price increases of some of our audio system
      products.





Cost
      of
      sales were $39.6 million for six months ended June 30, 2008, an increase of
      $13.6 million, or 52%, compared to $26.0 million for the same period in 2007.
      This increase in cost of sales was caused by an increase in sales and was
      consistent with the increase in the net revenue. As a percentage of the net
      revenue, cost of sales for the six months ended June 30, 2008 and 2007 were
      77%
      and 77%, respectively.





Gross
      profit for the six months ended June 30, 2008 was $12.2 million, or 24% of
      revenues, compared to $8.2 million, or 24% of revenues, for the comparable
      period in 2007. Management considers gross profit to be a key performance
      indicator in managing our business. Gross profit margins are a factor of cost
      of
      sales, product mix and product demand.





Selling
      expenses were $1.4 million for six months ended June 30, 2008, a decrease of
      $0.3 million, or 18%, compared to $1.7 million for the same period in 2007.
      The
      decrease was primarily due to an implementation of cost control in advertising
      and marketing activities.




Research
      and development expenses, which were approximately $0.4 million for the six
      months ended June 30, 2008, an increase of approximately $0.3 million, or 300%,
      compared to $0.1 million for the same period in 2007. We believe that our focus
      on research and development contributed to the increase in our total sales.
      In
      the future, we expect to continue to increase our research and development
      efforts and to enable us to manufacture wider lines of products.





General
      and administrative expenses were $1.6 million for six months ended June 30,
      2008, a decrease of $0.4 million, or 20%, compared to $2.0 million for the
      same
      period in 2007. The decrease was primarily a result of a decrease of bad debt
      reserves, professional fees and varies tax and levies. We expect our general
      and
      administrative expenses to increase as a result of professional fees incurred
      as
      a result of being a publicly reporting company in the United
      States.





Interest
      expenses were $1.0 million and $0.6 million for the six months ended June 30,
      2008 and 2007, respectively. The increase was due to new short-term and
      long-term bank loans during the six months ended June 30, 2008.





Income
      tax provisions for the six months ended June 30, 2008 were approximately $1.0
      million, as compared to approximately $0.4 million for the six months ended
      June
      30, 2007. The increase was primarily due to an increase in the taxable income
      for the six months ended June 30, 2008. NIVS PRC is registered in PRC and has
      had tax advantages granted by local government for corporate income taxes and
      sales taxes commencing April 6, 2004. NIVS PRC has been entitled to have a
      full
      tax exemption for the first two profitable years, followed by a 50% reduction
      on
      normal tax rate of 24% for the following three consecutive years. Our effective
      income tax rates for the six months ended June 30, 2008 and June 30, 2007 were
      12.5% and 12%, respectively. On March 16, 2007, the National People’s Congress
      of China enacted a new PRC Enterprise Income Tax Law, under which foreign
      invested enterprises and domestic companies will be subject to enterprise income
      tax at a uniform rate of 25%. The new law became effective on January 1, 2008.
      During the transition period for enterprises established before March 16, the
      tax rate will be gradually increased starting in 2008 and be equal to the new
      tax rate in 2012. We believe that our profitability will be negatively affected
      in the near future as a result of the new EIT Law.





We
      had
      net income of $6.6 million for six months ended June 30, 2008, an increase
      of
      $3.8 million, or 136%, compared to $2.8 million for the same period in
      2007.


32


**Liquidity
      and Capital Resources**





We
      had an
      unrestricted cash balance of approximately $1.0 million as of June 30, 2008,
      as
      compared to $1.4 million as of December 31, 2007. Our funds are kept in
      financial institutions located in China, and these funds are not insured. In
      addition, we also had approximately $3.8 million in restricted cash as of June
      30, 2008, as compared to $2.0 million as of December 31, 2007. Our restricted
      cash is held as a security deposit for our recurring, short-term bank
      notes.





We
      are
      subject to the regulations of the PRC which restricts the transfer of cash
      from
      China, except under certain specific circumstances. Accordingly, such funds
      may
      not be readily available to us to satisfy obligations which have been incurred
      outside the PRC.





We
      had
      negative working capital of approximately $49.7 million and $12.5 million as
      at
      June 30, 2008 and 2007, respectively. The increase of negative working capital
      was largely caused by the substantial increases in financing from bank loans
      and
      notes.





Our
      accounts receivable has been an increasingly significant portion of our current
      assets, representing $5.4 million and $5.2 million, or 18% and 19% of current
      assets, as at June 30, 2008 and 2007, respectively. If customers responsible
      for
      a significant amount of accounts receivable were to become insolvent or
      otherwise unable to pay for our products, or to make payments in a timely
      manner, our liquidity and results of operations could be materially adversely
      affected. An economic or industry downturn could materially adversely affect
      the
      servicing of these accounts receivable, which could result in longer payment
      cycles, increased collections costs and defaults in excess of management’s
      expectations. A significant deterioration in our ability to collect on accounts
      receivable could affect our cash flow and working capital position and could
      also impact the cost or availability of financing available to us.





We
      provide our major customers with payment terms ranging from 30 to 90 days.
      Additionally, our production lead time is approximately three weeks, from the
      inspection of incoming materials, to production, testing and packaging. We
      need
      to keep a large supply of raw materials and work in process and finished goods
      inventory on hand to ensure timely delivery of our products to our customers.
      We
      typically offer certain of our customers 30 to 90 days credit terms for payment.
      We maintain an allowance for doubtful accounts for estimated losses resulting
      from the inability of our customers to make required payments. Allowance for
      doubtful accounts is based on our assessment of the collectability of specific
      customer accounts, the aging of accounts receivable, our history of bad debts,
      and the general condition of the industry. If a major customer’s credit
      worthiness deteriorates, or our customers’ actual defaults exceed historical
      experience, our estimates could change and impact our reported results. We
      have
      not experienced any significant amount of bad debt since the inception of our
      operation.





As
      of
      June 30, 2008, inventories amounted to $1.3 million, compared to $18.8 million
      at June 30, 2007.





We
      have
      entered into various revolving bank loans and bank notes to finance our
      operation. Most of the loans are one year renewable. We had bank loans of
      approximately $34 million and $26 million as at June 30, 2008 and 2007,
      respectively. These loans carry annual interest rates of approximately 5.6%
      to
      7.2% with maturity dates ranging from 30 days to one year. These loans are
      either unsecured or secured by Company’s buildings, receivables and land use
      rights.





Prior
      to
      the Share Exchange, we entered into loan transactions with our founder,
      principal shareholder, Chief Executive Officer, and Chairman of the Board,
      Tianfu Li. In these transactions, we would borrow funds from Mr. Li and we
      would
      also lend funds to entities that were owned and controlled by Mr. Li. These
      entities are NIVS Investment (SZ) Co., Ltd.; Zhongkena Technology Development;
      Xentsan Technology (SZ) Co., Ltd.; and Hyundai Lighting & Electronic (Int’l)
      Holding. The loans were not secured, do not bear interest, and were considered
      to be long-term with no fixed repayment date. We ceased to engage in these
      loan
      transactions immediately prior to the closing of the Share Exchange, and we
      do
      not intend to continue these loans to and from Mr. Li in the future. As of
      June
      30, 2008, the entities owned by Mr. Li had an aggregate outstanding loan balance
      of $1.7 million owed to us and we had an outstanding loan balance of $0.4
      million owed to Mr. Li. As of July 18, 2008, prior to the closing of the Share
      Exchange, the entities owned by Mr. Li had repaid all of the amounts owed to
      us
      and we had repaid all amounts owed to Mr. Li. As a result, Mr. Li, as of July
      18, 2008, did not directly or indirectly owe any loan amounts to us and we
      did
      not directly or indirectly owe any loan amounts to Mr. Li.





On
      July
      25, 2008, concurrently with the close of the Share Exchange, we conducted an
      initial closing of a private placement transaction pursuant to which we sold
      an
      aggregate of 5,239,460 shares of common stock at $1.80 per share, for gross
      proceeds of approximately $9.4 million. On August 12, 2008, we conducted a
      second and final closing of the private placement pursuant to which we sold
      an
      additional 1,304,587 shares of common stock at $1.80 per share for gross
      proceeds of approximately $2.3 million, of which $1.3 million was represented
      by
      subscription receivables. Accordingly, we sold a total of 6,544,047 shares
      of
      common stock in the private placement for aggregate gross proceeds of
      approximately $11.8 million (the “Private Placement”). WestPark Capital, Inc.,
      the placement agent for the Private Placement, was paid a commission equal
      to
      6.5% of the gross proceeds from the financing, in addition to a $130,000 success
      fee for the Share Exchange, for an aggregate fee of approximately $896,000.
      We
      agreed to file a registration statement covering the common stock sold in the
      Private Placement and to pay for all costs related to the registration of the
      shares.


33


We
      are
      required to contribute a portion of our employees’ total salaries to the Chinese
      government’s social insurance funds, including pension insurance, medical
      insurance, unemployment insurance, and job injuries insurance, and maternity
      insurance, in accordance with relevant regulations. Total contributions to
      the
      funds are approximately $93,000 and $85,000 for the six months ended June 30,
      2008 and 2007, respectively. We expect that the amount of our contribution
      to
      the government’s social insurance funds will increase in the future as we expand
      our workforce and operations and commence contributions to an employee housing
      fund.





Net
      cash
      used in operating activities was $2.8 million for the six months ended June
      30,
      2008, compared to net cash provided by operations of $4.6 million for the six
      months ended June 30, 2007. The $1.8 million decrease was primarily due to
      a
      decrease of restricted cash balance, in addition to an increase of accounts
      payable.




Net
      cash
      used in investing activities amounted to approximately $2.8 million for the
      six
      months ended June 30, 2008, compared to net cash used in investing activities
      of
      $0.9 million for the six months ended June 30, 2007. The change was due to
      the
      increase of purchasing of property and equipment.





Net
      cash
      used in financing activities amounted to $1.2 million for the six months
      ended June 30, 2008, compared to net cash provided by financing activities
      of
      $6.9 million for the six months ended June 30, 2007. The decrease of cash
      provided was primarily a result of an increase of proceeds of bank notes and
      bank loans.





Our
      ability to maintain sufficient liquidity depends partially on our ability to
      achieve anticipated levels of revenue, while continuing to control costs. If
      we
      did not have sufficient available cash, we would have to seek additional debt
      or
      equity financing through other external sources, which may not be available
      on
      acceptable terms, or at all. Failure to maintain financing arrangements on
      acceptable terms would have a material adverse effect on our business, results
      of operations and financial condition.


34


**Item
      3. Quantitative and Qualitative Discloses About Market Risk**




**SRKP
      19, INC.**




As
      a
“smaller reporting company,” as defined by Item 10 of Regulation S-K, SRKP 19,
      Inc. is not required to provide information required by this Item.




**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**





***Interest
      Rate Risk***





We
      may
      face some risk from potential fluctuations in interest rates, although our
      debt
      obligations are primarily short-term in nature, but some bank loans have
      variable rates. If interest rates have great fluctuations, our financing cost
      may be significantly affected.





***Foreign
      Currency Risk***





Substantially
      all of our operations are conducted in the PRC and our primary operational
      currency in Chinese Renminbi (“RMB”). As a result, currently the effect of the
      fluctuations of RMB exchange rates only has minimum impact on our business
      operations, but will be increasingly material as we introduce our products
      widely into new international markets. Substantially all of our revenues and
      expenses are denominated in RMB. However, we use the United States dollar for
      financial reporting purposes. Conversion of RMB into foreign currencies is
      regulated by the People’s Bank of China through a unified floating exchange rate
      system. Although the PRC government has stated our intention to support the
      value of the RMB, there can be no assurance that such exchange rate will not
      again become volatile or that the RMB will not devalue significantly against
      the
      U.S. dollar. Exchange rate fluctuations may adversely affect the value, in
      U.S.
      dollar terms, of our net assets and income derived from our operations in the
      PRC.





***Country
      Risk***





The
      substantial portion of our assets and operations are located and conducted
      in
      China. While the PRC economy has experienced significant growth in the past
      twenty years, growth has been uneven, both geographically and among various
      sectors of the economy. The Chinese government has implemented various measures
      to encourage economic growth and guide the allocation of resources. Some of
      these measures benefit the overall economy of China, but may also have a
      negative effect on us. For example, our operating results and financial
      condition may be adversely affected by government control over capital
      investments or changes in tax regulations applicable to us. If there are any
      changes in any policies by the Chinese government and our business is negatively
      affected as a result, then our financial results, including our ability to
      generate revenues and profits, will also be negatively affected.





**Item
      4. Controls and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain disclosure controls and procedures, which are designed to ensure that
      information required to be disclosed in the reports we file or submit under
      the
      Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
      and reported within the time periods specified in the Securities and Exchange
      Commission’s rules and forms, and that such information is accumulated and
      communicated to our management, including our Chief Executive Officer, or CEO,
      and Chief Financial Officer, or CFO, as appropriate to allow timely decisions
      regarding required disclosure.





Based
      on
      an evaluation carried out as of the end of the period covered by this quarterly
      report, under the supervision and with the participation of our management,
      including our CEO and CFO, our CEO and CFO have concluded that, as of the end
      of
      such period, our disclosure controls and procedures (as defined in
      Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
      1934) were effective as of June 30, 2008.


35


**Changes
      in Internal Control over Financial Reporting**





Based
      on
      the evaluation of our management as required by paragraph (d) of Rule 13a-15
      or
      15d-15 of the Exchange Act, there were no changes in our internal control over
      financial reporting that occurred during the second quarter of the fiscal year
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting. Please see Item 5 of Part II
      for
      a discussion of our internal control over financial reporting subsequent to
      the
      closing of the Share Exchange.




**Part II.
      Other Information**




**Item
      1. Legal Proceedings**




Not
      applicable




**Item
      1A. Risk Factors**




Any
      investment in our common stock involves a high degree of risk. Investors should
      carefully consider the risks described below and all of the information
      contained in this report before deciding whether to purchase our common stock.
      Our business, financial condition or results of operations could be materially
      adversely affected by these risks if any of them actually occur. Our shares
      of
      common stock are not currently listed or quoted for trading on any national
      securities exchange or national quotation system. If and when our common stock
      is traded, the trading price could decline due to any of these risks, and an
      investor may lose all or part of his or her investment. Some of these factors
      have affected our financial condition and operating results in the past or
      are
      currently affecting us. This Report also contains forward-looking statements
      that involve risks and uncertainties. Our actual results could differ materially
      from those anticipated in these forward-looking statements as a result of
      certain factors, including the risks described below and elsewhere in this
      report.





**SRKP
      19, INC.**





For
      a
      discussion of the risk factors related to SRKP 19, Inc., please refer to the
      Annual Report for the year ended December 31, 2007 filed with the SEC on March
      15, 2008, in addition to the risks discussed below.





**NIVEOUS
      HOLDING COMPANY LIMITED**





**RISKS
      RELATED TO OUR OPERATIONS**





**We
      depend on a small number of customers for the vast majority of our sales. A
      reduction in business from any of these customers could cause a significant
      decline in our sales and profitability.**


The
        vast
        majority of our sales are generated from a small number of customers. For
        three
        months ended June 30, 2008, we had eight customers that each accounted for
        at
        least 5% of the revenues that we generated, with one customer accounting
        for 11%
        of our revenue. These eight customers accounted for a total of approximately
        65%
        of our revenue for that period. During the years ended December 31, 2007
        and
        2006, we had five and four customers that generated revenues of at least
        5% of
        our revenues, with one customer accounting for 13% and 17% of our revenue,
        respectively. These customers accounted for a total of approximately 38%
        and 49%
        of our revenue for the years ended December 31, 2007 and 2006, respectively.
        We
        expect that we will continue to depend upon a small number of customers for
        a
        significant majority of our sales for the foreseeable
        future.


**Our
      lack of long-term purchase orders and commitments could lead to a rapid decline
      in our sales and profitability.**





All
      of
      our significant customers issue purchase orders solely in their own discretion,
      often only two to four weeks before the requested date of shipment. Our
      customers are generally able to cancel orders or delay the delivery of products
      on relatively short notice. In addition, our customers may decide not to
      purchase products from us for any reason. Accordingly, we cannot assure you
      that
      any of our current customers will continue to purchase our products in the
      future. As a result, our sales volume and profitability could decline rapidly
      with little or no warning whatsoever.





We
      cannot
      rely on long-term purchase orders or commitments to protect us from the negative
      financial effects of a decline in demand for our products. The limited certainty
      of product orders can make it difficult for us to forecast our sales and
      allocate our resources in a manner consistent with our actual sales. Moreover,
      our expense levels are based in part on our expectations of future sales and,
      if
      our expectations regarding future sales are inaccurate, we may be unable to
      reduce costs in a timely manner to adjust for sales shortfalls. Furthermore,
      because we depend on a small number of customers for the vast majority of our
      sales, the magnitude of the ramifications of these risks is greater than if
      our
      sales were less concentrated with a small number of customers. As a result
      of
      our lack of long-term purchase orders and purchase commitments we may experience
      a rapid decline in our sales and profitability.


36


**Historically,
      a substantial portion of our assets has been comprised of accounts receivable
      representing amounts owed by a small number of customers. If any of these
      customers fails to timely pay us amounts owed, we could suffer a significant
      decline in cash flow and liquidity which, in turn, could cause us to be unable
      pay our liabilities and purchase an adequate amount of inventory to sustain
      or
      expand our sales volume.**


Our
        accounts receivable represented approximately 18%, 18% and 1% of our total
        current assets as of June 30, 2008 and December 31, 2007 and 2006, respectively.
        As of June 30, 2008, 49.6% of our accounts receivable represented amounts
        owed
        by eight customers, each of which represented over 5% of the total amount
        of our
        accounts receivable. As a result of the substantial amount and concentration
        of
        our accounts receivable, if any of our major customers fails to timely pay
        us
        amounts owed, we could suffer a significant decline in cash flow and liquidity
        which could adversely affect our ability to borrow funds to pay our liabilities
        and to purchase inventory to sustain or expand our current sales
        volume.




In
      addition, our business is characterized by long periods for collection from
      our
      customers and short periods for payment to our suppliers, the combination of
      which may cause us to have liquidity problems. We experience an average accounts
      settlement period ranging from one month to as high as four months from the
      time
      we sell our products to the time we receive payment from our customers. In
      contrast, we typically need to place certain deposits and advances with our
      suppliers on a portion of the purchase price in advance and for some suppliers
      we must maintain a deposit for future orders. Because our payment cycle is
      considerably shorter than our receivable cycle, we may experience working
      capital shortages. Working capital management, including prompt and diligent
      billing and collection, is an important factor in our results of operations
      and
      liquidity. We cannot assure you that system problems, industry trends or other
      issues will not extend our collection period, adversely impact our working
      capital.





**Our
      substantial leverage could adversely affect our ability to raise additional
      capital to fund our operations and limit our ability to react to changes in
      the
      economy or our industry.**


We
        had
        negative working capital of approximately $28.8 million, $12.6 million, $34
        million and $12 million as at June 30, 2008 and 2007 and as of December 31,
        2007
        and 2006, respectively. The increase of negative working capital was largely
        caused by the substantial increases in financing from bank loans and notes.
        Our
        substantial leverage could adversely affect our ability to raise additional
        capital to fund our operations, limit our ability to react to changes in
        the
        economy or our industry, expose us to interest rate risk to the extent of
        our
        variable rate debt and prevent us from meeting our obligations under the
        Notes
        and Credit Facility. Our high degree of leverage could have important
        consequences for you, including:





·
            increasing
                our vulnerability to adverse economic, industry or competitive
                developments;




·
            requiring
                a substantial portion of cash flow from operations to be dedicated
                to the
                payment of principal and interest on our indebtedness, therefore
                reducing
                our ability to use our cash flow to fund our operations, capital
                expenditures and future business
                opportunities;




·
            exposing
                us to the risk of increased interest
                rates;




·
            making
                it more difficult for us to satisfy our obligations with respect
                to our
                indebtedness and any failure to comply with the obligations of any
                of our
                debt instruments that we may have or obtain, including restrictive
                covenants and borrowing conditions, could result in an event of default
                the agreements governing such other
                indebtedness;




·
            restricting
                us from making strategic acquisitions or causing us to make non-strategic
                divestitures;




·
            limiting
                our ability to obtain additional financing for working capital, capital
                expenditures, product development, debt service requirements, acquisitions
                and general corporate or other purposes;
                and




·
            limiting
                our flexibility in planning for, or reacting to, changes in our business
                or market conditions and placing us at a competitive disadvantage
                compared
                to our competitors who are less highly leveraged and who therefore,
                may be
                able to take advantage of opportunities that our leverage prevents
                us from
                exploiting.




37


**Consumer
      electronics products are subject to rapid technological changes. If we fail
      to
      accurately anticipate and adapt to these changes, the products we sell will
      become obsolete, causing a decline in our sales and
      profitability.**





Consumer
      electronics products are subject to rapid technological changes which often
      cause product obsolescence. Companies within the consumer electronics industry
      are continuously developing new products with heightened performance and
      functionality. This puts pricing pressure on existing products and constantly
      threatens to make them, or causes them to be, obsolete. Our typical product's
      life cycle is extremely short, generating lower average selling prices as the
      cycle matures. If we fail to accurately anticipate the introduction of new
      technologies, we may possess significant amounts of obsolete inventory that
      can
      only be sold at substantially lower prices and profit margins than we
      anticipated. In addition, if we fail to accurately anticipate the introduction
      of new technologies, we may be unable to compete effectively due to our failure
      to offer products most demanded by the marketplace. If any of these failures
      occur, our sales, profit margins and profitability will be adversely
      affected.





In
      addition, we form alliances or business relationships with, and make strategic
      partnerships with, other companies to introduce new technologies. This is
      particularly important to the development and enhancement of our Chinese
      interactive speech technology. In some cases, such relationships are crucial
      to
      our goal of introducing new products and services, but we may not be able to
      successfully collaborate or achieve expected synergies with our partners. We
      do
      not, however, control these partners, who may make decisions regarding their
      business undertakings with us that may be contrary to our interests. In
      addition, if these partners change their business strategies, we may fail to
      maintain these relationships.




**We
      do not carry any business interruption insurance, products liability insurance
      or any other insurance policy except for a limited property insurance policy.
      As
      a result, we may incur uninsured losses, increasing the possibility that you
      would lose your entire investment in our company.**




We
      could
      be exposed to liabilities or other claims for which we would have no insurance
      protection. We do not currently maintain any business interruption insurance,
      products liability insurance, or any other comprehensive insurance policy except
      for property insurance policies with limited coverage. As a result, we may
      incur
      uninsured liabilities and losses as a result of the conduct of our business.
      There can be no guarantee that we will be able to obtain additional insurance
      coverage in the future, and even if we are able to obtain additional coverage,
      we may not carry sufficient insurance coverage to satisfy potential claims.
      Should uninsured losses occur, any purchasers of our common stock could lose
      their entire investment.





Because
      we do not carry products liability insurance, a failure of any of the products
      marketed by us may subject us to the risk of product liability claims and
      litigation arising from injuries allegedly caused by the improper functioning
      or
      design of our products. We cannot assure that we will have enough funds to
      defend or pay for liabilities arising out of a products liability claim. To
      the
      extent we incur any product liability or other litigation losses, our expenses
      could materially increase substantially. There can be no assurance that we
      will
      have sufficient funds to pay for such expenses, which could end our operations
      and you would lose your entire investment.





**We
      expect to incur additional expenses due to contributions to a PRC housing
      assistance fund for our employees.**





We
      have
      employees based in Huizhou, China, and under applicable regulations we intend
      to
      commence contributions to a housing assistance fund for these employees. We
      expect to commence contributions to the fund after the proposed listing of
      our
      securities on a national securities exchange, which could occur as early as
      the
      fourth quarter of 2008. We expect to incur increased operation costs and
      expenses in connection with these planned contributions and could have negative
      effect on our results of operations.





**We
      may incur design and development expenses and purchase inventory in anticipation
      of orders which are not placed.**





In
      order
      to transact business, we assess the integrity and creditworthiness of our
      customers and suppliers and we may, based on this assessment, incur design
      and
      development costs that we expect to recoup over a number of orders produced
      for
      the customer. Such assessments are not always accurate and expose us to
      potential costs, including the write off of costs incurred and inventory
      obsolescence if the orders anticipated do not materialize. We may also
      occasionally place orders with suppliers based on a customer’s forecast or in
      anticipation of an order that is not realized. Additionally, from time to time,
      we may purchase quantities of supplies and materials greater than required
      by
      customer orders to secure more favorable pricing, delivery or credit terms.
      These purchases can expose us to losses from cancellation costs, inventory
      carrying costs or inventory obsolescence, and hence adversely affect our
      business and operating results.





**We
      are subject to market risk through our sales to international
      markets.**





A
      growing
      percentage of our sales are being derived from international markets. These international sales
      are
      primarily focused in Europe, Southeast Asia, and North America. These operations
      are subject to risks that are inherent in operating in foreign countries,
      including the following:


38


·
            foreign
                countries could change regulations or impose currency restrictions
                and
                other restraints;




·
            changes
                in foreign currency exchange rates and hyperinflation or deflation
                in the
                foreign countries in which we
                operate;




·
            exchange
                controls;




·
            some
                countries impose burdensome tariffs and
                quotas;




·
            political
                changes and economic crises may lead to changes in the business
                environment in which we operate;




·
            international
                conflict, including terrorist acts, could significantly impact our
                financial condition and results of operations;
                and




·
            Economic
                downturns, political instability and war or civil disturbances may
                disrupt
                distribution logistics or limit sales in individual
                markets.




In
      addition, we utilize third-party distributors to act as our representative
      for
      the geographic region that they have been assigned. Sales through distributors
      represent approximately 70% of total revenue. Significant terms and conditions
      of distributor agreements include FOB source, net 30 days payment terms, with
      no
      return or exchange rights, and no price protection. Since the product transfers
      title to the distributor at the time of shipment by us, the products are not
      considered inventory on consignment. Our success is dependent on these
      distributors finding new customers and receiving new orders from existing
      customers.





**If
      our third party sales representatives and distributors fail to adequately
      promote, market and sell our products, our revenues could significantly
      decrease.**





A
      significant portion of our product sales are made through third party sales
      representative organizations, whose members are not our employees. Our level
      of
      sales depends on the effectiveness of these organizations, as well as the
      effectiveness of our own employees. Some of these third party representatives
      may sell (and do sell), with our permission, competitive products of third
      parties as well as our products. During our fiscal years ended December 31,
      2007
      and 2006, these organizations were responsible for approximately 18% and 26%,
      respectively, of our net revenues during such periods. If any of the third
      party
      sales representative organizations engaged by us fails to adequately promote,
      market and sell our products, our revenues could be significantly decreased
      until a replacement organization or distributor can be retained by us. Finding
      replacement organizations and distributors can be a time consuming process
      during which our revenues could be negatively impacted.





**Our
      speech-controlled products may not achieve widespread acceptance or may have
      bugs, which could result in delayed or lost revenue, expensive correction,
      liability to our customers or claims against us.**




We
      have
      invested and expect to continue to invest heavily in the research, development
      and marketing of our Chinese-speech technology consumer products. The market
      for
      these products are is relatively new and rapidly evolving. Our ability to
      increase revenue in the future depends largely on acceptance of
      speech-controlled consumer electronic products in general and our products
      in
      particular. The continued development of the market for our current and future
      speech solutions will also depend on:





·
            consumer
                and business demand for speech-enabled products and
                applications;




·
            continuous
                improvement in speech interactive technology;
                and




·
            development
                by third-party vendors and manufacturers of applications using speech
                technologies.




Sales
      of
      our speech-controlled products would be harmed if the market for such products
      does not continue to develop or develops more slowly than we expect, and,
      consequently, our business would be harmed and we may not recover the costs
      associated with our investment in our speech interactive
      technologies.





In
      addition, complex software applications, such as our Chinese speech interactive
      technology, often contain errors, defects or bugs. Defects in the solutions
      or
      products that we develop and sell to our customers could require expensive
      corrections and result in delayed or lost revenue, adverse customer reaction
      and
      negative publicity about us or our products and services. Customers who are
      not
      satisfied with any of our products may also bring claims against us for damages,
      which, even if unsuccessful, would likely be time-consuming to defend, and
      could
      result in costly litigation and payment of damages. Such claims could harm
      our
      reputation, financial results and competitive position.


39


**We
      have significant outstanding short-term borrowings, and we may not be able
      to
      obtain extensions when they mature.**




Our
      notes
      payable to banks for short-term borrowings as of June 30, 2008 and December
      31,
      2007 and 2006 were approximately $13.2 million, $28.6 million and $13.0 million,
      respectively. Generally, these short-term bank loans mature in one year or
      less
      and contain no specific renewal terms. However, in China it is customary
      practice for banks and borrowers to negotiate roll-overs or renewals of
      short-term borrowings on an on-going basis shortly before they mature. Although
      we have renewed our short-term borrowings in the past, we cannot assure you
      that
      we will be able to renew these loans in the future as they mature. If we are
      unable to obtain renewals of these loans or sufficient alternative funding
      on
      reasonable terms from banks or other parties, we will have to repay these
      borrowings with the cash on our balance sheet or cash generated by our future
      operations, if any. We cannot assure you that our business will generate
      sufficient cash flow from operations to repay these borrowings.




**We
      are subject to intense competition in the industry in which we operate, which
      could cause material reductions in the selling price of our products or losses
      of our market share.**





The
      consumer electronics industry is highly competitive, especially with respect
      to
      pricing and the introduction of new products and features. Our products compete
      in the medium- to high- priced sector of the consumer electronics market and
      compete primarily on the basis of:





·
            reliability;




·
            brand
                recognition;




·
            quality;




·
            price;




·
            design;




·
            consumer
                acceptance of our trademark; and




·
            quality
                service and support to retailers and our
                customers.




In
      recent
      years, we and many of our competitors, have regularly lowered prices, and we
      expect these pricing pressures to continue. If these pricing pressures are
      not
      mitigated by increases in volume, cost reductions from our supplier or changes
      in product mix, our revenues and profits could be substantially reduced. As
      compared to us, many of our competitors have:





·
            significantly
                longer operating histories;




·
            significantly
                greater managerial, financial, marketing, technical and other competitive
                resources; and




·
            greater
                brand recognition.




As
      a
      result, our competitors may be able to:





·
            adapt
                more quickly to new or emerging technologies and changes in customer
                requirements;




·
            devote
                greater resources to the promotion and sale of their products and
                services; and




·
            respond
                more effectively to pricing
                pressures.




These
      factors could materially adversely affect our operations and financial
      condition. In addition, competition could increase if:





·
            new
                companies enter the market;




·
            existing
                competitors expand their product mix;
                or




·
            we
                expand into new markets.




An
      increase in competition could result in material price reductions or loss of
      our
      market share.


40


**The
      consumer electronics industry is subject to significant fluctuations in the
      availability of raw materials and components. If we do not properly anticipate
      the need for critical raw materials and components, we may be unable to meet
      the
      demands of our customers and end-users, which could reduce our competitiveness,
      cause a decline in our market share and have a material adverse effect on our
      results of operations.**





As
      the
      availability of raw materials and components decreases, the cost of acquiring
      those raw materials and components ordinarily increases. If we fail to procure
      adequate supplies of raw materials and components in anticipation of our
      customers' orders or end-users’ demand, our gross margins may be negatively
      impacted due to higher prices that we are required to pay for raw materials
      and
      components in short supply. High growth product categories have experienced
      chronic shortages of raw materials and components during periods of
      exceptionally high demand. If we do not properly anticipate the need for
      critical raw materials and components, we may pay higher prices for the raw
      materials and components, we may not be unable to meet the demands of our
      customers and end-users, which could reduce our competitiveness, cause a decline
      in our market share and have a material adverse effect on our results of
      operations.





**Unanticipated
      disruptions in our operations or slowdowns by our suppliers and shipping
      companies could adversely affect our ability to deliver our products and service
      our customers which could materially and adversely affect our revenues and
      our
      relationships with our customers.**





Our
      ability to provide high quality customer service, process and fulfill orders
      and
      manage inventory depends on:





·
            the
                efficient and uninterrupted operation of our distribution centers;
                and




·
            the
                timely and uninterrupted performance of third party suppliers, shipping
                companies, and dock workers.




Any
      material disruption or slowdown in the operation of our distribution centers,
      manufacturing facilities or management information systems, or comparable
      disruptions or slowdowns suffered by our principal manufacturers, suppliers
      and
      shippers could cause delays in our ability to receive, process and fulfill
      customer orders and may cause orders to be canceled, lost or delivered late,
      goods to be returned or receipt of goods to be refused. As a result, our
      revenues and operating results could be materially and adversely
      affected.





**We
      rely heavily on our founder and Chief Executive Officer, Tianfu Li. The loss
      of
      his services could adversely affect our ability to source products from our
      key
      suppliers and our ability to sell our products to our
      customers.**





Our
      success depends, to a significant extent, upon the continued services of Tianfu
      Li, who is our founder, Chairman of the Board, and Chief Executive Officer.
      Mr.
      Li has, among other things, developed key personal relationships with our
      suppliers and customers. We greatly rely on these relationships in the conduct
      of our operations and the execution of our business strategies. The loss of
      Mr.
      Li could, therefore, result in the loss of favorable relationships with one
      or
      more of our suppliers and/or customers. We do not maintain "key person" life
      insurance covering Mr. Li or any other executive officer. The loss of Mr. Li
      could significantly delay or prevent the achievement of our business objectives
      and adversely affect our business, financial condition and results of
      operations.





**We
      may not be able to effectively recruit and retain skilled employees,
      particularly scientific, technical and management
      professionals.**




Our
      ability to compete effectively depends largely on our ability to attract and
      retain certain key personnel, including scientific, technical and management
      professionals. We anticipate that we will need to hire additional skilled
      personnel in all areas of our business. Industry demand for such employees,
      however, exceeds the number of personnel available, and the competition for
      attracting and retaining these employees is intense. Because of this intense
      competition for skilled employees, we may be unable to retain our existing
      personnel or attract additional qualified employees to keep up with future
      business needs. If this should happen, our business, operating results and
      financial condition could be adversely affected.





**Our
      labor costs are likely to increase as a result of changes in Chinese labor
      laws.**




We
      expect
      to experience an increase in our cost of labor. Recent changes in Chinese labor
      laws that are effective January 1, 2008 are likely to increase costs further
      and
      impose restrictions on our relationship with our employees. There can be no
      assurance that the labor laws will not change further or that their
      interpretation and implementation will vary, which may have a negative effect
      upon our business and results of operations.


41


**Our
      business could be materially adversely affected if we cannot protect our
      intellectual property rights or if we infringe on the intellectual property
      rights of others.**





Our
      ability to compete effectively will depend on our ability to maintain and
      protect our proprietary rights. We own a trademark related to the sale of our
      NIVS products, which is materially important to our business, as well as our
      licenses, other trademarks and proprietary rights that are used for certain
      of
      our home entertainment and consumer electronics products. Our trademarks are
      registered in China. However, third parties may seek to challenge, invalidate,
      circumvent or render unenforceable any proprietary rights owned by or licensed
      to us. In addition, in the event third party licensees fail to protect the
      integrity of our trademarks, the value of these marks could be materially
      adversely affected.





Our
      inability to protect our proprietary rights could materially adversely affect
      the license of our trade names and trademarks to third parties as well as our
      ability to sell our products. Litigation may be necessary to:





·
            enforce
                our intellectual property rights;




·
            protect
                our trade secrets; and




·
            determine
                the scope and validity of such intellectual property
                rights.




Any
      such
      litigation, whether or not successful, could result in substantial costs and
      diversion of resources and management’s attention from the operation of our
      business.





We
      may
      receive notice of claims of infringement of other parties’ proprietary rights.
      Such actions could result in litigation and we could incur significant costs
      and
      diversion of resources in defending such claims. The party making such claims
      could secure a judgment awarding substantial damages, as well as injunctive
      or
      other equitable relief. Such relief could effectively block our ability to
      make,
      use, sell, distribute or market our products and services in such jurisdiction.
      We may also be required to seek licenses to such intellectual property. We
      cannot predict, however, whether such licenses would be available or, if
      available, that such licenses could be obtained on terms that are commercially
      reasonable and acceptable to us. The failure to obtain the necessary licenses
      or
      other rights could delay or preclude the sale, manufacture or distribution
      of
      our products and could result in increased costs to us.





**We
      may need additional capital to implement our current business strategy, which
      may not be available to us, and if we raise additional capital, it may dilute
      your ownership in us.**





We
      currently depend on bank loans and net revenues to meet our short-term cash
      requirements. In order to grow revenues and sustain profitability, we will
      need
      additional capital. As of the date of this filing, we do intend to conduct
      a
      public offering financing. Obtaining additional financing will be subject to
      a
      number of factors, including market conditions, our operating performance and
      investor sentiment. These factors may make the timing, amount, terms and
      conditions of additional financing unattractive to us. We cannot assure you
      that
      we will be able to obtain any additional financing. If we are unable to obtain
      the financing needed to implement our business strategy, our ability to increase
      revenues will be impaired and we may not be able to sustain
      profitability.




**Our
      failure to effectively manage growth could harm our
      business.**




We
      have
      rapidly and significantly expanded the number and types of products we sell,
      and
      we will endeavor to further expand our product portfolio. We must continually
      introduce new products and technologies, enhance existing products in order
      to
      remain competitive, and effectively stimulate customer demand for new products
      and upgraded versions of our existing products.




This
      expansion of our products places a significant strain on our management,
      operations and engineering resources. Specifically, the areas that are strained
      most by our growth include the following:




·
            New
                Product Launch: With the growth of our product portfolio, we experience
                increased complexity in coordinating product development, manufacturing,
                and shipping. As this complexity increases, it places a strain on
                our
                ability to accurately coordinate the commercial launch of our products
                with adequate supply to meet anticipated customer demand and effective
                marketing to stimulate demand and market acceptance. If we are unable
                to
                scale and improve our product launch coordination, we could frustrate
                our
                customers and lose retail shelf space and product
                sales;




42




·
            Forecasting,
                Planning and Supply Chain Logistics: With the growth of our product
                portfolio, we also experience increased complexity in forecasting
                customer
                demand and in planning for production, and transportation and logistics
                management. If we are unable to scale and improve our forecasting,
                planning and logistics management, we could frustrate our customers,
                lose
                product sales or accumulate excess inventory;
                and




·
            Support
                Processes: To manage the growth of our operations, we will need to
                continue to improve our transaction processing, operational and financial
                systems, and procedures and controls to effectively manage the increased
                complexity. If we are unable to scale and improve these areas, the
                consequences could include: delays in shipment of product, degradation
                in
                levels of customer support, lost sales, decreased cash flows, and
                increased inventory. These difficulties could harm or limit our ability
                to
                expand.




**Our
      facilities and information systems could be damaged as a result of disasters
      or
      unpredictable events, which could have an adverse effect on our business
      operations.**




Our
      headquarters and major facilities including manufacturing plants, sales offices
      and research and development centers are located in China. We also operate
      procurement, logistics, sales and marketing facilities in other parts of the
      world. If major disasters such as earthquakes, fires, floods, wars, terrorist
      attacks, computer viruses, transportation disasters or other events occur,
      or
      our information system or communications network breaks down or operates
      improperly as a result of such events, our facilities may be seriously damaged,
      and we may have to stop or delay production and shipment. We may incur expenses
      relating to such damages.





**RISKS
      RELATED TO US DOING BUSINESS IN CHINA**





**Substantially
      all of our assets are located in the PRC and substantially all of our revenues
      are derived from our operations in China, and changes in the political and
      economic policies of the PRC government could have a significant impact upon
      the
      business we may be able to conduct in the PRC and accordingly on the results
      of
      our operations and financial condition.**





Our
      business operations may be adversely affected by the current and future
      political environment in the PRC. The Chinese government exerts substantial
      influence and control over the manner in which we must conduct our business
      activities. Our ability to operate in China may be adversely affected by changes
      in Chinese laws and regulations, including those relating to taxation, import
      and export tariffs, raw materials, environmental regulations, land use rights,
      property and other matters. Under the current government leadership, the
      government of the PRC has been pursuing economic reform policies that encourage
      private economic activity and greater economic decentralization. There is no
      assurance, however, that the government of the PRC will continue to pursue
      these
      policies, or that it will not significantly alter these policies from time
      to
      time without notice.





**Our
      operations are subject to PRC laws and regulations that are sometimes vague
      and
      uncertain. Any changes in such PRC laws and regulations, or the interpretations
      thereof, may have a material and adverse effect on our business.**





The
      PRC’s
      legal system is a civil law system based on written statutes. Unlike the common
      law system prevalent in the United States, decided legal cases have little
      value
      as precedent in China. There are substantial uncertainties regarding the
      interpretation and application of PRC laws and regulations, including but not
      limited to, governmental approvals required for conducting business and
      investments, laws and regulations governing the consumer electronics business
      and electric product safety, national security-related laws and regulations
      and
      export/import laws and regulations, as well as commercial, antitrust, patent,
      product liability, environmental laws and regulations, consumer protection,
      and
      financial and business taxation laws and regulations.





The
      Chinese government has been developing a comprehensive system of commercial
      laws, and considerable progress has been made in introducing laws and
      regulations dealing with economic matters. However, because these laws and
      regulations are relatively new, and because of the limited volume of published
      cases and judicial interpretation and their lack of force as precedents,
      interpretation and enforcement of these laws and regulations involve significant
      uncertainties. New laws and regulations that affect existing and proposed future
      businesses may also be applied retroactively.





Our
      principal operating subsidiary, Huizhou NIVS Audio & Video Technology
      Company Limited, (“NIVS PRC”), is considered a foreign invested enterprise under
      PRC laws, and as a result is required to comply with PRC laws and regulations,
      including laws and regulations specifically governing the activities and conduct
      of foreign invested enterprises. We cannot predict what effect the
      interpretation of existing or new PRC laws or regulations may have on our
      businesses. If the relevant authorities find us in violation of PRC laws or
      regulations, they would have broad discretion in dealing with such a violation,
      including, without limitation:


43


·
            levying
                fines;




·
            revoking
                our business license, other licenses or
                authorities;




·
            requiring
                that we restructure our ownership or operations;
                and




·
            requiring
                that we discontinue any portion or all of our
                business.




**Investors
      may experience difficulties in effecting service of legal process, enforcing
      foreign judgments or bringing original actions in China based upon U.S. laws,
      including the federal securities laws or other foreign laws against us or our
      management.**





Most
      of
      our current operations, including the manufacturing and distribution of our
      products, are conducted in China. Moreover, all of our directors and officers
      are nationals and residents of China or Hong Kong. All or substantially all
      of
      the assets of these persons are located outside the United States and in the
      PRC. As a result, it may not be possible to effect service of process within
      the
      United States or elsewhere outside China upon these persons. In addition,
      uncertainty exists as to whether the courts of China would recognize or enforce
      judgments of U.S. courts obtained against us or such officers and/or directors
      predicated upon the civil liability provisions of the securities laws of the
      United States or any state thereof, or be competent to hear original actions
      brought in China against us or such persons predicated upon the securities
      laws
      of the United States or any state thereof.





**The
      scope of our business license in China is limited, and we may not expand or
      continue our business without government approval and renewal,
      respectively.**





Our
      principal operating subsidiary, NIVS PRC, is a Sino-foreign Equity Joint
      Venture, which can only conduct business within its approved business scope,
      which ultimately appears on its business license. Any amendment to the scope
      of
      our business requires further application and government approval. In order
      for
      us to expand our business beyond the scope of our license, it will be required
      to enter into a negotiation with the authorities for the approval to expand
      the
      scope of our business. We cannot assure investors that NIVS PRC will be able
      to
      obtain the necessary government approval for any change or expansion of its
      business.





**We
      are subject to a variety of environmental laws and regulations related to our
      manufacturing operations. Our failure to comply with environmental laws and
      regulations may have a material adverse effect on our business and results
      of
      operations.**





We
      are
      subject to various environmental laws and regulations that require us to obtain
      environmental permits for our electronics manufacturing operations. Our
      environmental permit from the Huizhou Environmental Protection Bureau covering
      our manufacturing operations will expire in December 2010. The permit only
      covers of the existing premises at our manufacturing facility, and if we expand
      our operations, we will have to obtain further certification from the Bureau.
      In
      addition, we are required to renew some of our environmental certificates each
      year. If we do not receive the renewed permit or we fail to comply with the
      provisions of the renewed permit, we could be subject to fines, criminal charges
      or other sanctions by regulators, including the suspension or termination of
      our
      manufacturing operations.




We
      cannot
      assure you that at all times we will be in compliance with environmental laws
      and regulations or our environmental permits or that we will not be required
      to
      expend significant funds to comply with, or discharge liabilities arising under,
      environmental laws, regulations and permits.





**Recent
      PRC regulations relating to acquisitions of PRC companies by foreign entities
      may create regulatory uncertainties that could restrict or limit our ability
      to
      operate. Our failure to obtain the prior approval of the China Securities
      Regulatory Commission, or the CSRC, for our proposed public offering and the
      listing and trading of our common stock could have a material adverse effect
      on
      our business, operating results, reputation and trading price of our common
      stock.**





The
      PRC
      State Administration of Foreign Exchange, or “SAFE,” issued a public notice in
      November 2005, known as Circular 75, concerning the use of offshore holding
      companies in mergers and acquisitions in China. The public notice provides
      that
      if an offshore company controlled by PRC residents intends to acquire a PRC
      company, such acquisition will be subject to registration with the relevant
      foreign exchange authorities. The public notice also suggests that registration
      with the relevant foreign exchange authorities is required for any sale or
      transfer by the PRC residents of shares in an offshore holding company that
      owns
      an onshore company. The PRC residents must each submit a registration form
      to
      the local SAFE branch with respect to their ownership interests in the offshore
      company, and must also file an amendment to such registration if the offshore
      company experiences material events, such as changes in the share capital,
      share
      transfer, mergers and acquisitions, spin-off transactions or use of assets
      in
      China to guarantee offshore obligations. If any PRC resident stockholder of
      an
      offshore holding company fails to make the required SAFE registration and
      amended registration, the onshore PRC subsidiaries of that offshore company
      may
      be prohibited from distributing their profits and the proceeds from any
      reduction in capital, share transfer or liquidation to the offshore entity.
      Failure to comply with the SAFE registration and amendment requirements
      described above could result in liability under PRC laws for evasion of
      applicable foreign exchange restrictions. Most of our PRC resident stockholders,
      as defined in the SAFE notice, have not registered with the relevant branch
      of
      SAFE, as currently required, in connection with their equity interests in NIVS
      BVI. Because of uncertainty in how the SAFE notice will be interpreted and
      enforced, we cannot be sure how it will affect our business operations or future
      plans. For example, NIVS PRC’s ability to conduct foreign exchange activities,
      such as the remittance of dividends and foreign currency-denominated borrowings,
      may be subject to compliance with the SAFE notice by our PRC resident beneficial
      holders. Failure by our PRC resident beneficial holders could subject these
      PRC
      resident beneficial holders to fines or legal sanctions, restrict our overseas
      or cross-border investment activities, limit NIVS PRC’s ability to make
      distributions or pay dividends or affect our ownership structure, which could
      adversely affect our business and prospects.


44


On
      August
      8, 2006, the PRC Ministry of Commerce (“MOFCOM”), joined by the State-owned
      Assets Supervision and Administration Commission of the State Council, the
      State
      Administration of Taxation, the State Administration for Industry and Commerce,
      the China Securities Regulatory Commission and SAFE, released a substantially
      amended version of the Provisions for Foreign Investors to Merge with or Acquire
      Domestic Enterprises (the “Revised M&A Regulations”), which took effect
      September 8, 2006. These new rules significantly revised China’s regulatory
      framework governing onshore-to-offshore restructurings and foreign acquisitions
      of domestic enterprises. These new rules signify greater PRC government
      attention to cross-border merger, acquisition and other investment activities,
      by confirming MOFCOM as a key regulator for issues related to mergers and
      acquisitions in China and requiring MOFCOM approval of a broad range of merger,
      acquisition and investment transactions. Further, the new rules establish
      reporting requirements for acquisition of control by foreigners of companies
      in
      key industries, and reinforce the ability of the Chinese government to monitor
      and prohibit foreign control transactions in key industries.





Among
      other things, the revised M&A Regulations include new provisions that
      purport to require that an offshore special purpose vehicle, or SPV, formed
      for
      listing purposes and controlled directly or indirectly by PRC companies or
      individuals must obtain the approval of the CSRC prior to the listing and
      trading of such SPV’s securities on an overseas stock exchange. On September 21,
      2006, the CSRC published on its official website procedures specifying documents
      and materials required to be submitted to it by SPVs seeking CSRC approval
      of
      their overseas listings. However, the application of this PRC regulation remains
      unclear with no consensus currently existing among the leading PRC law firms
      regarding the scope and applicability of the CSRC approval requirement. NIVS’
PRC counsel, Guangdong Laowei Law Firm, has advised us that because we completed
      our onshore-to-offshore restructuring before September 8, 2006, the effective
      date of the new regulation, it is not necessary for us to submit the application
      to the CSRC for its approval, and the listing and trading of our Common Stock
      does not require CSRC approval.




If
      the
      CSRC or another PRC regulatory agency subsequently determines that CSRC approval
      was required, we may face regulatory actions or other sanctions from the CSRC
      or
      other PRC regulatory agencies. These regulatory agencies may impose fines and
      penalties on our operations in the PRC, limit our operating privileges in the
      PRC, delay or restrict the repatriation of the proceeds from our proposed public
      offering into the PRC, or take other actions that could have a material adverse
      effect on our business, financial condition, results of operations, reputation
      and prospects, as well as the trading price of our common stock. The CSRC or
      other PRC regulatory agencies also may take actions requiring us, or making
      it
      advisable for us, to halt our proposed public offering before settlement and
      delivery of the common stock offered thereby. Consequently, if investors engage
      in market trading or other activities in anticipation of and prior to settlement
      and delivery, they do so at the risk that settlement and delivery may not occur.





Also,
      if
      later the CSRC requires that we obtain its approval, we may be unable to obtain
      a waiver of the CSRC approval requirements, if and when procedures are
      established to obtain such a waiver. Any uncertainties and/or negative publicity
      regarding this CSRC approval requirement could have a material adverse effect
      on
      the trading price of our common stock. Furthermore, published news reports
      in
      China recently indicated that the CSRC may have curtailed or suspended overseas
      listings for Chinese private companies. These news reports have created further
      uncertainty regarding the approach that the CSRC and other PRC regulators may
      take with respect to us.





It
      is
      uncertain how our business operations or future strategy will be affected by
      the
      interpretations and implementation of Circular 75 and the Revised M&A
      Regulations. It is anticipated that application of the new rules will be subject
      to significant administrative interpretation, and we will need to closely
      monitor how MOFCOM and other ministries apply the rules to ensure that our
      domestic and offshore activities continue to comply with PRC law. Given the
      uncertainties regarding interpretation and application of the new rules, we
      may
      need to expend significant time and resources to maintain compliance.


45


**The
      foreign currency exchange rate between U.S. Dollars and Renminbi could adversely
      affect our financial condition.**





To
      the
      extent that we need to convert U.S. Dollars into Renminbi for our operational
      needs, our financial position and the price of our common stock may be adversely
      affected should the Renminbi appreciate against the U.S. Dollar at that time.
      Conversely, if we decide to convert our Renminbi into U.S. Dollars for the
      operational needs or paying dividends on our common stock, the dollar equivalent
      of our earnings from our subsidiaries in China would be reduced should the
      dollar appreciate against the Renminbi. We currently do not hedge our exposure
      to fluctuations in currency exchange rates.





Until
      1994, the Renminbi experienced a gradual but significant devaluation against
      most major currencies, including dollars, and there was a significant
      devaluation of the Renminbi on January 1, 1994 in connection with the
      replacement of the dual exchange rate system with a unified managed floating
      rate foreign exchange system. Since 1994, the value of the Renminbi relative
      to
      the U.S. Dollar has remained stable and has appreciated slightly against the
      U.S. Dollar. Countries, including the United States, have argued that the
      Renminbi is artificially undervalued due to China’s current monetary policies
      and have pressured China to allow the Renminbi to float freely in world markets.
      In July 2005, the PRC government changed its policy of pegging the value of
      the
      Renminbi to the dollar. Under the new policy the Renminbi is permitted to
      fluctuate within a narrow and managed band against a basket of designated
      foreign currencies. While the international reaction to the Renminbi revaluation
      has generally been positive, there remains significant international pressure
      on
      the PRC government to adopt an even more flexible currency policy, which could
      result in further and more significant appreciation of the Renminbi against
      the
      dollar.





**Inflation
      in the PRC could negatively affect our profitability and
      growth.**





While
      the
      PRC economy has experienced rapid growth, such growth has been uneven among
      various sectors of the economy and in different geographical areas of the
      country. Rapid economic growth can lead to growth in the money supply and rising
      inflation. According to the National Bureau of Statistics of China, the
      inflation rate in China reached a high point of 4.8% in 2007 as compared to
      the
      past several years. The inflation rate in China was 1.8% in 2005 and 1.5% in
      2006. The inflation rate is expected to continue to increase in 2008. If prices
      for our products and services rise at a rate that is insufficient to compensate
      for the rise in the costs of supplies such as raw materials, it may have an
      adverse effect on our profitability.





Furthermore,
      in order to control inflation in the past, the PRC government has imposed
      controls on bank credits, limits on loans for fixed assets and restrictions
      on
      state bank lending. The implementation of such policies may impede economic
      growth. In October 2004, the People’s Bank of China, the PRC’s central bank,
      raised interest rates for the first time in nearly a decade and indicated in
      a
      statement that the measure was prompted by inflationary concerns in the Chinese
      economy. In April 2006, the People’s Bank of China raised the interest rate
      again. Repeated rises in interest rates by the central bank would likely slow
      economic activity in China which could, in turn, materially increase our costs
      and also reduce demand for our products and services.




**Because
      our funds are held in banks which do not provide insurance, the failure of
      any
      bank in which we deposit our funds could affect our ability to continue in
      business.**





Banks
      and
      other financial institutions in the PRC do not provide insurance for funds
      held
      on deposit. A significant portion of our assets are in the form of cash
      deposited with banks in the PRC, and in the event of a bank failure, we may
      not
      have access to our funds on deposit. Depending upon the amount of money we
      maintain in a bank that fails, our inability to have access to our cash could
      impair our operations, and, if we are not able to access funds to pay our
      suppliers, employees and other creditors, we may be unable to continue in
      business.





**Failure
      to comply with the United States Foreign Corrupt Practices Act could subject
      us
      to penalties and other adverse consequences.**





As
      our
      ultimate holding company is a Delaware corporation, we are subject to the United
      States Foreign Corrupt Practices Act, which generally prohibits United States
      companies from engaging in bribery or other prohibited payments to foreign
      officials for the purpose of obtaining or retaining business. Foreign companies,
      including some that may compete with us, are not subject to these prohibitions.
      Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices
      may occur from time-to-time in the PRC. We can make no assurance, however,
      that
      our employees or other agents will not engage in such conduct for which we
      might
      be held responsible. If our employees or other agents are found to have engaged
      in such practices, we could suffer severe penalties and other consequences
      that
      may have a material adverse effect on our business, financial condition and
      results of operations.


46


**If
      we make equity compensation grants to persons who are PRC citizens, they may
      be
      required to register with the State Administration of Foreign Exchange of the
      PRC, or SAFE. We may also face regulatory uncertainties that could restrict
      our
      ability to adopt an equity compensation plan for our directors and employees
      and
      other parties under PRC law.**





On
      April
      6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic
      Individuals Participating in the Employee Stock Ownership Plan or Stock Option
      Plan of An Overseas Listed Company, also know as “Circular 78.” It is not clear
      whether Circular 78 covers all forms of equity compensation plans or only those
      which provide for the granting of stock options. For any plans which are so
      covered and are adopted by a non-PRC listed company after April 6, 2007,
      Circular 78 requires all participants who are PRC citizens to register with
      and
      obtain approvals from SAFE prior to their participation in the plan. In
      addition, Circular 78 also requires PRC citizens to register with SAFE and
      make
      the necessary applications and filings if they participated in an overseas
      listed company’s covered equity compensation plan prior to April 6, 2007. We
      intend to adopt an equity compensation plan in the future and make option grants
      to our officers and directors, most of who are PRC citizens. Circular 78 may
      require our officers and directors who receive option grants and are PRC
      citizens to register with SAFE. We believe that the registration and approval
      requirements contemplated in Circular 78 will be burdensome and time consuming.
      If it is determined that any of our equity compensation plans are subject to
      Circular 78, failure to comply with such provisions may subject us and
      participants of our equity incentive plan who are PRC citizens to fines and
      legal sanctions and prevent us from being able to grant equity compensation
      to
      our PRC employees. In that case, our ability to compensate our employees and
      directors through equity compensation would be hindered and our business
      operations may be adversely affected.





**We
      have enjoyed certain preferential tax concessions and the loss of these
      preferential tax concessions may cause our tax liabilities to increase and
      our
      profitability to decline.**





Under
      the
      tax laws of PRC, we have had tax advantages granted by local government for
      corporate income taxes and sales taxes commencing April 6, 2004. We have been
      entitled to have a full tax exemption for the first two profitable years,
      followed by a 50% reduction on normal tax rate of 24% for the following three
      consecutive years. On March 16, 2007, the National People’s Congress of China
      enacted a new PRC Enterprise Income Tax Law, under which foreign invested
      enterprises and domestic companies will be subject to enterprise income tax
      at a
      uniform rate of 25%. The new law became effective on January 1, 2008. During
      the
      transition period for enterprises established before March 16, the tax rate
      will
      be gradually increased starting in 2008 and be equal to the new tax rate in
      2012. The expiration of the preferential tax treatment will increase our tax
      liabilities and reduce our profitability.




**Any
      recurrence of Severe Acute Respiratory Syndrome (SARS), Avian Flu, or another
      widespread public health problem, in the PRC could adversely affect our
      operations.**





A
      renewed
      outbreak of SARS, Avian Flu or another widespread public health problem in
      China, where all of our manufacturing facilities are located and where the
      substantial portion of our sales occur, could have a negative effect on our
      operations. Our business is dependent upon its ability to continue to
      manufacture products. Such an outbreak could have an impact on our operations
      as
      a result of:





·
            quarantines
                or closures of some of our manufacturing facilities, which would
                severely
                disrupt our operations,




·
            the
                sickness or death of our key officers and employees,
                and




·
            a
                general slowdown in the Chinese
                economy.




Any
      of
      the foregoing events or other unforeseen consequences of public health problems
      could adversely affect our operations.





**A
      downturn in the economy of the PRC may slow our growth and
      profitability.**





A
      significant portion of our revenues are generated from sales in China. The
      growth of the Chinese economy has been uneven across geographic regions and
      economic sectors. There can be no assurance that growth of the Chinese economy
      will be steady or that any downturn will not have a negative effect on our
      business, especially if it results in either a decreased use of our products
      or
      in pressure on us to lower our prices.


47


**Because
      our business is located in the PRC, we may have difficulty establishing adequate
      management, legal and financial controls, which we are required to do in order
      to comply with U.S. securities laws.**





PRC
      companies have historically not adopted a Western style of management and
      financial reporting concepts and practices, which includes strong corporate
      governance, internal controls and, computer, financial and other control
      systems. Most of our middle and top management staff are not educated and
      trained in the Western system, and we may have difficulty hiring new employees
      in the PRC with such training. In addition, we may have difficulty in hiring
      and
      retaining a sufficient number of qualified employees to work in the PRC. As
      a
      result of these factors, we may experience difficulty in establishing
      management, legal and financial controls, collecting financial data and
      preparing financial statements, books of account and corporate records and
      instituting business practices that meet Western standards. Therefore, we may,
      in turn, experience difficulties in implementing and maintaining adequate
      internal controls as required under Section 404 of the Sarbanes-Oxley Act of
      2002. This may result in significant deficiencies or material weaknesses in
      our
      internal controls which could impact the reliability of our financial statements
      and prevent us from complying with SEC rules and regulations and the
      requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies,
      weaknesses or lack of compliance could have a materially adverse effect on
      our
      business.





**RISKS
      RELATED TO OUR CAPITAL STRUCTURE**





**Our
      wholly-owned subsidiary, NIVS BVI, as the 97.5% owner of NIVS PRC, is required
      to pay to NIVS PRC an amount equal to approximately $8.7 million for NIVS BVI’s
      unpaid equity interest in NIVS PRC. If this payment is not made, we may be
      subject to penalties and, if amounts due are not eventually paid, we may not
      be
      able to continue to participate in the profits of NIVS PRC.**





If
      NIVS
      BVI does not timely make payment to NIVS PRC an aggregate amount of $8.7 million
      for the unpaid equity interests owned by NIVS BVI, we may be subject to
      penalties from the PRC government. In addition, the PRC government has the
      discretion to prevent NIVS BVI from participating in the profits of NIVS PRC
      until such amount is paid, which would have a substantial material adverse
      effect on our business, financial condition and results of operations. We expect
      to cause NIVS BVI to pay all amounts due in October 2008, prior to the due
      dates; however, there can be no assurance that we or NIVS BVI will have
      sufficient funds to make such payment, which would cause our stock price to
      decline.




**There
      is no current trading market for our common stock, and there is no assurance
      of
      an established public trading market, which would adversely affect the ability
      of our investors to sell their securities in the public
      market.**




Our
      common stock is not currently listed or quoted for trading on any national
      securities exchange or national quotation system. We intend to apply for the
      listing of our common stock on the American Stock Exchange in the future. There
      is no guarantee that the American Stock Exchange, or any other exchange or
      quotation system, will permit our shares to be listed and traded. If we fail
      to
      obtain a listing on the American Stock Exchange, we may seek quotation on the
      OTC Bulletin Board. The FINRA has enacted changes that limit quotations on
      the
      OTC Bulletin Board to securities of issuers that are current in their reports
      filed with the Securities and Exchange Commission. The effect on the OTC
      Bulletin Board of these rule changes and other proposed changes cannot be
      determined at this time. The OTC Bulletin Board is an inter-dealer,
      over-the-counter market that provides significantly less liquidity than the
      NASDAQ Global Market (the “NASDAQ Global Market”). Quotes for stocks included on
      the OTC Bulletin Board are not listed in the financial sections of newspapers
      as
      are those for the NASDAQ Global Market. Therefore, prices for securities traded
      solely on the OTC Bulletin Board may be difficult to obtain and holders of
      common stock may be unable to resell their securities at or near their original
      offering price or at any price.





**Shares
      eligible for future sale may adversely affect the market price of our common
      stock, as the future sale of a substantial amount of outstanding stock in the
      public marketplace could reduce the price of our common
      stock.**




Pursuant
      to the terms of the Share Exchange, we agreed to file a registration statement
      with the Securities and Exchange Commission to register the shares of our common
      stock issued in an equity financing that was conducted in concurrently with
      the
      Share Exchange. The registration statement must be filed within 30 days of
      the
      closing of the Share Exchange. Each investor may sell or transfer any shares
      of
      the common stock after the effective date of the registration statement except
      that they entered into a lock-up agreement pursuant to which they agreed not
      to
      conduct any sales until 90 days after our common stock is first listed or quoted
      on a national securities exchange, at which time one-twelfth of the shares
      purchased may be sold, and thereafter the shares will be automatically released
      from the lock-up every thirty (30) days in eleven equal installments. In
      addition, the placement agent, in its discretion, may release some or all the
      Shares earlier than the schedule set forth in this section. Any such early
      release by the placement agent will apply equally to each of the
      investors in the Private Placement.





We
      also
      intend to register with the Private Placement shares all of the 425,000 shares
      that we expect to issue to an investor relations firm and 2,340,000 shares
      of
      common stock held by our shareholders immediately prior to the Share Exchange
      and all of the 946,667 shares of common stock underlying the 946,667 warrants
      held by our shareholders immediately prior to the Share Exchange. Of the
      2,340,000 shares and 946,667 shares, 477,594 shares and 193,214 shares,
      respectively, will be covered by the registration statement filed in connection
      with the Private Placement, and 1,862,406 shares and 753,453 shares,
      respectively, which are beneficially owned by affiliates of the placement agent,
      will be included in a subsequent registration statement filed by us within
      10
      days after the end of the six-month period that immediately follows the date
      on
      which we file the registration statement to register the shares issued in the
      Private Placement. All of the shares included in an effective registration
      statement may be freely sold and transferred, subject to a lock-up
      agreement.


48


Additionally,
      following the Share Exchange, the former stockholders of NIVS BVI, and their
      designees, may be eligible to sell all or some of our shares of common stock
      by
      means of ordinary brokerage transactions in the open market pursuant to Rule
      144, promulgated under the Securities Act (“Rule 144”), subject to certain
      limitations. Under Rule 144, an affiliate stockholder who has satisfied the
      required holding period may, under certain circumstances, sell within any
      three-month period a number of securities which does not exceed the greater
      of
      1% of the then outstanding shares of common stock or the average weekly trading
      volume of the class during the four calendar weeks prior to such sale. As of
      the
      closing of the Share Exchange, 1% of our issued and outstanding shares of common
      stock was approximately 382,200 shares. Non-affiliate stockholders are not
      subject to volume limitations. Any substantial sale of common stock pursuant
      to
      any resale prospectus or Rule 144 may have an adverse effect on the market
      price
      of our common stock by creating an excessive supply.





**The
      interests of the existing minority shareholder in NIVS PRC may diverge from
      our
      own interests and this may adversely affect our ability to manage NIVS
      PRC.**





NIVS
      PRC,
      our principal operating subsidiary, is an equity joint venture in which we
      directly own a 97.5% interest and our founder, Chief Executive Office, and
      Chairman of the Board, Tianfu Li, owns the remaining 2.5% interest. Mr. Li’s
      interest may not be aligned with our interest at all times. If our interests
      diverge, Mr. Li may exercise his rights, as dictated under PRC laws, to protect
      his own interest, which may be adverse to us and our investors. For example,
      should we wish to transfer our equity interest in NIVS PRC, in whole or in
      part,
      to a third-party, Mr. Li will have a right to force us to repurchase his
      interests under general company regulations. If Mr. Li exercises his rights,
      our
      control of NIVS PRC may be compromised and our financial condition and results
      of operations may suffer.




**Following
      the Share Exchange, the former principal shareholders of NIVS BVI have
      significant influence over us.**





The
      former shareholders of NIVS BVI, and their designees, beneficially own or
      control approximately 77.5% of our outstanding shares as of the close of the
      Share Exchange. If these shareholders were to act as a group, they would have
      a
      controlling influence in determining the outcome of any corporate transaction
      or
      other matters submitted to our stockholders for approval, including mergers,
      consolidations and the sale of all or substantially all of our assets, election
      of directors, and other significant corporate actions. Such shareholders may
      also have the power to prevent or cause a change in control. In addition,
      without the consent of the former NIVS BVI shareholders and their designees,
      we
      could be prevented from entering into transactions that could be beneficial
      to
      us. The interests of the former NIVS BVI shareholders and their designees may
      differ from the interests of our other stockholders.





**If
      we fail to maintain effective internal controls over financial reporting, the
      price of our common stock may be adversely affected.**





We
      are
      required to establish and maintain appropriate internal controls over financial
      reporting. Failure to establish those controls, or any failure of those controls
      once established, could adversely impact our public disclosures regarding our
      business, financial condition or results of operations. Any failure of these
      controls could also prevent us from maintaining accurate accounting records
      and
      discovering accounting errors and financial frauds. Rules adopted by the SEC
      pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual
      assessment of our internal control over financial reporting, and attestation
      of
      this assessment by our independent registered public accountants. The SEC
      extended the compliance dates for non-accelerated filers, as defined by the
      SEC.
      Accordingly, we believe that the annual assessment of our internal controls
      requirement will first apply to our annual report for the 2008 fiscal year
      and
      the attestation requirement of management’s assessment by our independent
      registered public accountants will first apply to our annual report for the
      2009
      fiscal year. The standards that must be met for management to assess the
      internal control over financial reporting as effective are new and complex,
      and
      require significant documentation, testing and possible remediation to meet
      the
      detailed standards. We may encounter problems or delays in completing activities
      necessary to make an assessment of our internal control over financial
      reporting. In addition, the attestation process by our independent registered
      public accountants is new and we may encounter problems or delays in completing
      the implementation of any requested improvements and receiving an attestation
      of
      our assessment by our independent registered public accountants. If we cannot
      assess our internal control over financial reporting as effective, or our
      independent registered public accountants are unable to provide an unqualified
      attestation report on such assessment, investor confidence and share value
      may
      be negatively impacted.


49


In
      addition, management’s assessment of internal controls over financial reporting
      may identify weaknesses and conditions that need to be addressed in our internal
      controls over financial reporting or other matters that may raise concerns
      for
      investors. Any actual or perceived weaknesses and conditions that need to be
      addressed in our internal control over financial reporting, disclosure of
      management’s assessment of our internal controls over financial reporting, or
      disclosure of our public accounting firm’s attestation to or report on
      management’s assessment of our internal controls over financial reporting may
      have an adverse impact on the price of our common stock.





**We
      may not be able to achieve the benefits we expect to result from the Share
      Exchange.**




On
      June
      27, 2008, we entered into the Exchange Agreement with all of the shareholders
      of
      NIVS BVI, pursuant to which we agreed to acquire 100% of the issued and
      outstanding securities of NIVS BVI in exchange for shares of our common stock.
      On July 25, 2008, the Exchange Agreement was amended, the Share Exchange closed,
      NIVS BVI became our 100%-owned subsidiary, and our sole business operations
      became that of NIVS BVI. We also have a new Board of Directors and management
      consisting of persons from NIVS BVI and changed our corporate name from SRKP
      19,
      Inc. to NIVS IntelliMedia Technology Group, Inc.





We
      may
      not realize the benefits that we hoped to receive as a result of the Share
      Exchange, which include:





·
            access
                to the capital markets of the United
                States;




·
            the
                increased market liquidity expected to result from exchanging stock
                in a
                private company for securities of a public company that may eventually
                be
                traded;




·
            the
                ability to use registered securities to make acquisition of assets
                or
                businesses;




·
            increased
                visibility in the financial
                community;




·
            enhanced
                access to the capital markets;




·
            improved
                transparency of operations; and




·
            perceived
                credibility and enhanced corporate image of being a publicly traded
                company.




There
      can
      be no assurance that any of the anticipated benefits of the Share Exchange
      will
      be realized with respect to our new business operations. In addition, the
      attention and effort devoted to achieving the benefits of the Share Exchange
      and
      attending to the obligations of being a public company, such as reporting
      requirements and securities regulations, could significantly divert management’s
      attention from other important issues, which could materially and adversely
      affect our operating results or stock price in the future.





**Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses.**




Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC
      regulations, have created uncertainty for public companies and significantly
      increased the costs and risks associated with accessing the public markets
      and
      public reporting. NIVS’ management team will need to invest significant
      management time and financial resources to comply with both existing and
      evolving standards for public companies, which will lead to increased general
      and administrative expenses and a diversion of management time and attention
      from revenue generating activities to compliance activities.





**We
      will incur an expense charge of up to approximately $765,000 in connection
      with
      the issuance of 425,000 shares of common stock that we intend to issue for
      investor relation services.**





We
      entered into an agreement to with an investor relations agreement with Nascent
      Value LLC (“Nascent”) pursuant to which we issued 425,000 shares of our common
      stock to Nascent upon the closing of the Share Exchange in exchange for investor
      relation services. We expect to recognize a charge to operations in an amount
      equal to up to approximately $765,000, which is derived from valuing each share
      at $1.80, the price at which shares of our common stock were sold in the Private
      Placement. The expense will have a negative effect on our results of operations
      and we may not realize a benefit from the investor relation services that is
      comparable to such negative effect. As a result, our operations may suffer
      and
      our stock price may decline.


50


**Our
      common stock may be considered a “penny stock,” and thereby be subject to
      additional sale and trading regulations that may make it more difficult to
      sell.**




Our
      common stock, which is not currently listed or quoted for trading, may be
      considered to be a “penny stock” if it does not qualify for one of the
      exemptions from the definition of “penny stock” under Section 3a51-1 of the
      Securities Exchange Act for 1934, as amended (the “Exchange Act”) once, and if,
      it starts trading. Our common stock may be a “penny stock” if it meets one or
      more of the following conditions (i) the stock trades at a price less than
      $5.00
      per share; (ii) it is NOT traded on a “recognized” national exchange; (iii) it
      is NOT quoted on the Nasdaq Capital Market, or even if so, has a price less
      than
      $5.00 per share; or (iv) is issued by a company that has been in business less
      than three years with net tangible assets less than $5 million.





The
      principal result or effect of being designated a “penny stock” is that
      securities broker-dealers participating in sales of our common stock will be
      subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9
      promulgated under the Exchange Act. For example, Rule 15g-2 requires
      broker-dealers dealing in penny stocks to provide potential investors with
      a
      document disclosing the risks of penny stocks and to obtain a manually signed
      and dated written receipt of the document at least two business days before
      effecting any transaction in a penny stock for the investor’s account. Moreover,
      Rule 15g-9 requires broker-dealers in penny stocks to approve the account of
      any
      investor for transactions in such stocks before selling any penny stock to
      that
      investor. This procedure requires the broker-dealer to (i) obtain from the
      investor information concerning his or her financial situation, investment
      experience and investment objectives; (ii) reasonably determine, based on that
      information, that transactions in penny stocks are suitable for the investor
      and
      that the investor has sufficient knowledge and experience as to be reasonably
      capable of evaluating the risks of penny stock transactions; (iii) provide
      the
      investor with a written statement setting forth the basis on which the
      broker-dealer made the determination in (ii) above; and (iv) receive a signed
      and dated copy of such statement from the investor, confirming that it
      accurately reflects the investor’s financial situation, investment experience
      and investment objectives. Compliance with these requirements may make it more
      difficult and time consuming for holders of our common stock to resell their
      shares to third parties or to otherwise dispose of them in the market or
      otherwise.




**We
      do not foresee paying cash dividends in the foreseeable future and, as a result,
      our investors’ sole source of gain, if any, will depend on capital appreciation,
      if any.**





We
      do not
      plan to declare or pay any cash dividends on our shares of common stock in
      the
      foreseeable future and currently intend to retain any future earnings for
      funding growth. As a result, investors should not rely on an investment in
      our
      securities if they require the investment to produce dividend income. Capital
      appreciation, if any, of our shares may be investors’ sole source of gain for
      the foreseeable future. Moreover, investors may not be able to resell their
      shares of NIVS at or above the price they paid for them.





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**




The
      information contained in this report, including in the documents incorporated
      by
      reference into this report, includes some statements that are not purely
      historical and that are “forward-looking statements.” Such forward-looking
      statements include, but are not limited to, statements regarding our company’s
      and our management’s expectations, hopes, beliefs, intentions or strategies
      regarding the future, including our financial condition, results of operations,
      and the expected impact of the Share Exchange. In addition, any statements
      that
      refer to projections, forecasts or other characterizations of future events
      or
      circumstances, including any underlying assumptions, are forward-looking
      statements. The words “anticipates,” “believes,” “continue,” “could,”
“estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,”
“potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and
      similar expressions, or the negatives of such terms, may identify
      forward-looking statements, but the absence of these words does not mean that
      a
      statement is not forward-looking.





The
      forward-looking statements contained in this report are based on current
      expectations and beliefs concerning future developments and the potential
      effects on the parties and the transaction. There can be no assurance that
      future developments actually affecting us will be those anticipated. These
      forward-looking statements involve a number of risks, uncertainties (some of
      which are beyond the parties’ control) or other assumptions that may cause
      actual results or performance to be materially different from those expressed
      or
      implied by these forward-looking statements, including the
      following:





·
            Our
                reliance on our major customers for a large portion of our net sales;




·
            Our
                ability to develop and market new
                products;


51





·
            Our
                ability to raise additional capital to fund our
                operations;




·
            Our
                ability to accurately forecast amounts of supplies needed to meet
                customer
                demand;




·
            Exposure
                to market risk through sales in international
                markets;




·
            The
                market acceptance of our products;




·
            Exposure
                to product liability and defect
                claims;




·
            Fluctuations
                in the availability of raw materials and components needed for our
                products;




·
            Protection
                of our intellectual property
                rights;




·
            Changes
                in the laws of the PRC that affect our
                operations;




·
            Inflation
                and fluctuations in foreign currency exchange
                rates;




·
            Our
                ability to obtain all necessary government certifications, approvals,
                and/or licenses to conduct our
                business;




·
            Development
                of a public trading market for our
                securities;




·
            The
                cost of complying with current and future governmental regulations
                and the
                impact of any changes in the regulations on our operations;
                and




·
            The
                other factors referenced in this report, including, without limitation,
                under the sections entitled “Risk Factors” and “Management’s Discussion
                and Analysis of Financial Condition and Results of
                Operations.”




The
      risks
      included above are not exhaustive. Other sections of this report may include
      additional factors that could adversely impact our business and operating
      results. Moreover, we operate in a very competitive and rapidly changing
      environment. New risk factors emerge from time to time and we cannot predict
      all
      such risk factors, nor can we assess the impact of all such risk factors on
      our
      business or the extent to which any factor, or combination of factors, may
      cause
      actual results to differ materially from those contained in any forward-looking
      statements.




You
      should not rely upon forward-looking statements as predictions of future events.
      We cannot assure you that the events and circumstances reflected in the
      forward-looking statements will be achieved or occur. Although we believe that
      the expectations reflected in the forward-looking statements are reasonable,
      we
      cannot guarantee future results, levels of activity, performance or
      achievements. Moreover, neither we nor any other person assume responsibility
      for the accuracy and completeness of the forward-looking statements. Except
      as
      required by law, we undertake no obligation to update publicly any
      forward-looking statements for any reason after the date of this report to
      conform these statements to actual results or to changes in our expectations.




You
      should read this report, and the documents that we reference in this report
      and
      have filed as exhibits to this report with the Securities and Exchange
      Commission, completely and with the understanding that our actual future
      results, levels of activity, performance and achievements may materially differ
      from what we expect. We qualify all of our forward-looking statements by these
      cautionary statements.





**Item
      2. Unregistered Sale of Equity Securities and Use of Proceeds**





Not
      applicable.




**Item
      3. Default Upon Senior Securities**




Not
      applicable.


52




**Item
      4. Submission of Matters to a Vote of Security Holders**




Not
      applicable.




**Item
      5. Other Information**




On
      July
      25, 2008, we consummated a share exchange transaction (the “Share Exchange”)
      pursuant to a share exchange agreement (the “Exchange Agreement”) dated as of
      June 27, 2008, and amended as of July 25, 2008, with NIVS Holding Company
      Limited, a British Virgin Islands corporation (“NIVS BVI”) and the shareholders
      of NIVS BVI (the “Shareholders”), whereby we (i) became the 100% parent of NIVS
      BVI and its subsidiaries, including its 97.5%-owned subsidiary NIVS (Huizhou)
      Audio & Video Tech. Co., Ltd., a company organized under the laws of the PRC
      (“NIVS PRC”); (ii) assumed the operations of NIVS BVI and its subsidiaries and
      (iii) changed our name from SRKP 19, Inc. to NIVS IntelliMedia Technology Group,
      Inc. Upon the closing of the Share Exchange on July 25, 2008, which occurred
      after the end of the period covered by this report, the internal control over
      financial reporting utilized by NIVS BVI prior to the Share Exchange became
      the
      internal control over financial reporting of our company. Following the Share
      Exchange the sole business conducted by our company became the business
      conducted by NIVS BVI, and we appointed new officers and directors.




**Item
      6. Exhibits**




(a)  Exhibits




**Exhibit**
              **Number**
            
            **Description of Document**31.1
            
            Certification
                of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation
                S-K,
                as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.31.2
            
            Certification
                of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation
                S-K,
                as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to 18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.*







*
            This
                exhibit shall not be deemed “filed” for purposes of Section 18 of the
                Securities Exchange Act of 1934 or otherwise subject to the liabilities
                of
                that section, nor shall it be deemed incorporated by reference in
                any
                filing under the Securities Act of 1933 or the Securities Exchange
                Act of
                1934, whether made before or after the date hereof and irrespective
                of any
                general incorporation language in any
                filings.


53


**NIVS
      INTELLIMEDIA TECHNOLOGY GROUP, INC.**




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.


**NIVS
                  IntelliMedia Technology Group, Inc.**Dated:
                  August 18, 2008
              /s/
                Tianfu LiBy:
              Tianfu
                  LiIts:
              Chairman
                  of the Board and Chief Executive
                  Officer


54